MetLife Inc. has tax-code changes and a deal with FedEx Corp. to thank for second-quarter profit that beat analysts’ expectations.
Earnings at the U.S. business surged 36 percent from a year earlier, fueled by a reduced corporate-tax rate and a pension-risk transfer contract won from FedEx, the New York-based life insurer said Wednesday in a statement. Adjusted earnings per share came in at $1.30, beating the $1.17 estimate from 17 analysts surveyed by Bloomberg.
Chief Executive Officer Steven Kandarian has been seeking to bolster the company amid regulatory investigations and financial-control weaknesses after MetLife lost track of about 13,500 customers owed pension payments. The $6 billion FedEx deal, announced in May, helped ease investor concern that the insurer would be hampered by the pension mishap.
“While there had been some concerns that MET’s issues that arose for missing payments for pension customers may negatively impact the sourcing of this business, so far MET has remained competitive,” Tom Gallagher, an analyst at Evercore ISI, said in a note to clients before earnings were released.
MetLife has been working to solve the accounting problems, one of which is tied to the pension mishap. The company said in March that it had another issue, this time because it had set aside too much money for a block of Japanese variable annuities. MetLife didn’t provide an update in its earnings release.
The insurer has said it’s working to locate and pay people owed money from pensions. It has also revamped management, naming John McCallion as chief financial officer to replace John Hele, who stepped down in May and agreed to work as a senior adviser until September.
The U.S. unit’s adjusted earnings surged to $671 million from $493 million a year earlier. Profit at the Asia business climbed 17 percent to $363 million, helped by higher income from investments and better sales in China and Japan.
In the second quarter, MetLife exchanged Brighthouse Financial Inc. shares to retire debt, exiting a stake in the U.S. retail business it spun off last year. Return on equity in the period was 6.5 percent, up from 5.2 percent a year ago. MetLife shares climbed 1.1 percent to $46.12 at 4:43 p.m. in extended New York trading after the announcement.
“We divested our remaining stake in Brighthouse and returned approximately $1.5 billion to shareholders through common stock repurchases and dividends,” Kandarian said in the statement. “We remain focused on improving our return on equity, maintaining strong free cash flow, meeting our expense targets and distributing capital to shareholders.”
Prudential Results