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Understanding the Performance of MetLife’s Holdings Division

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Jan. 23 2018, Updated 7:31 a.m. ET

Substantial rise

MetLife’s (MET) holdings division saw a substantial rise in its operating earnings from $500 million in the first nine months of 2016 to $1.0 billion in the first nine months of 2017. 

The division generated net investment income of $4.2 billion in the first nine months of 2017 compared to $4.5 billion in the first nine months of 2016. The fall was the result of a fall in the division’s invested asset base, which also led to unfavorable momentum in the division’s operating earnings.

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However, the above-mentioned fall in the division’s asset base was compensated by the net asset growth witnessed by the long-term care and life businesses. The MetLife holdings business reported premiums of $3.1 billion in the first nine months of 2017 compared to $3.3 billion in the first nine months of 2016.

Total operating expenses

In the life business, universal life sales saw unfavorable momentum, leading to a fall in the division’s fee income in the first nine months of 2017 compared to the first nine months of 2016. This fall further suppressed the division’s operating earnings. Its operating earnings rose $138 million due to a fall in its expenses, which was mainly the result of MET’s US retail advisor force divestiture.

The rise in the holdings division’s operating earnings was offset by expenses related to MetLife’s separation from Brighthouse Financial (BHF). The division saw a fall in its other revenues from $512 million in the first nine months of 2016 to $170 million in the first nine months of 2017.

MetLife’s forward annual dividend yield stands at 3.2%. Its peers (XLF) Reinsurance Group of America (RGA), CNO Financial Group (CNO), and Allstate Corporation (ALL) have forward annual dividend yields of 1.3%, 1.4%, and 1.5%, respectively.

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