Annuities Outlook
The insurer expects to sell about $11 billion in individual variable annuities this year, after raising prices and cutting benefits on the products, according to a projection that month. MetLife sold $17.7 billion of the retirement products in 2012, down from $28.4 billion the prior year.
MetLife is building sales outside the U.S. after acquiring American Life Insurance Co. from American International Group Inc. in 2010 and adding Chilean pension provider AFP Provida SA this year. Kandarian’s company announced in September a life- insurance joint venture in Vietnam.
MetLife set a target of earning at least 20 percent of operating profit from emerging markets by 2016, compared with 14 percent in 2012. It is working to expand in group benefits and protection products while cutting costs, mainly in the U.S.
The Standard & Poor’s 500 Insurance Index is one of the four worst performers among 24 S&P 500 industry groups over the past decade. Every stock on the 21-company measure has gained in 2013, led by Genworth Financial Inc., which doubled through yesterday. Prudential Financial Inc., the No. 2 U.S. life insurer, gained 67 percent.
Wave Riding
“They’re all riding the same wave,” Randy Binner, an analyst at FBR Capital Markets, said by phone. “A better stock market and higher interest rates.”
MetLife is “outperforming our peers,” said John Calagna, a spokesman for the insurer, who said the best basis of comparison includes global competitors like France’s Axa SA and The Hague-based Aegon NV, which each advanced less than 40 percent this year though yesterday.
Uncertainty over the prospect for stock repurchases may pressure MetLife shares, according to Eric Berg, an analyst at RBC Capital Markets. He cut his price target last month by $5 to $55 and rates the shares the equivalent of neutral. Regulators are reviewing whether to label MetLife a systemically important financial institution, a designation that could lead to tighter capital requirements.
“There may be no share repurchases next year as Met sorts through what being a SIFI will mean,” Berg said by phone. “My concern is that they will have a further buildup of excess capital.”