MetLife Profit Rises, Prudential's Falls -- WSJ

One insurer benefits from expense management, other is hurt by higher pay

By Leslie Scism 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 2, 2019).

The two largest publicly traded U.S. life-insurance companies -- MetLife Inc. and Prudential Financial Inc. -- posted divergent earnings Wednesday as one was able to overcome a tough market in the first quarter and the other wasn't.

MetLife's profit rose 8% in the last earnings period for former President and Chief Executive Steven Kandarian. Mr. Kandarian had been CEO since May 2011. Meanwhile, rival Prudential Financial Inc. reported a 32% drop in first-quarter earnings as a new CEO delivered his first full quarter of results.

MetLife is the biggest life-focused U.S. insurer as measured by market capitalization, while Prudential is the biggest by total assets. Both are leading sellers of life insurance and other benefits offered by employers to workers, and have large international life-insurance operations. Prudential is a large seller of insurance and annuities to Americans.

Prudential's net income was weighed down by higher deferred and long-term-employee compensation expenses. The higher pay was related to both corporate staff and the company's PGIM global investment-management unit, which has $1.22 trillion in assets, it said

The backdrop to both insurers' quarterly results was a declining yield on the benchmark 10-year Treasury note, making it more challenging to deliver strong results on the policyholder premiums they invest until needed to pay claims.

"Our business performance more than offset some market headwinds," Michel Khalaf, who became MetLife's CEO on Wednesday, said in an earnings release.

Prudential's first-quarter results were delivered under CEO Charles Lowrey, who took the post in December and became chairman in April. Mr. Lowrey joined the company in 2001 and since 2014 served as chief operating officer of the insurer's international business.

Mr. Lowrey said the results "increased our book value per share and generated good business fundamentals."

Among other big insurance carriers reporting quarterly results Wednesday, Allstate Corp. posted a 42% surge in net income. The big car and home insurer's results benefited from lower catastrophe losses, reduced federal taxes and "an unexpected decline in auto accident frequency," said Chief Executive Tom Wilson.

He said the Allstate and Esurance brands "increased policies in force, due to higher customer retention and increased new business."

MetLife's net income rose to $1.35 billion in the quarter, while closely watched adjusted earnings were flat at $1.42 billion. On a per-share basis, adjusted earnings rose 9%, to $1.48, reflecting a stock-buyback program that reduced the number of shares outstanding. MetLife cited expense management and volume growth for part of the year-over-year improvement.

At Prudential, based in Newark, N.J., net income fell to $932 million from $1.36 billion in the year-earlier period. Adjusted earnings declined 6% to $1.26 billion, or $3 a share, from $3.08 in the year-ago quarter. Prudential cited higher expenses and disappointing variable investment income, among other drivers, for its weaker results.

While MetLife's results beat analysts' expectations, Prudential's fell short.

Adjusted earnings are tracked by Wall Street analysts because they exclude realized capital gains and losses in insurers' big investment portfolios and other items considered nonrecurring.

Mr. Khalaf joined MetLife in 2010 through the company's acquisition of an international life-insurance business from American International Group Inc. Mr. Khalaf was promoted to president of MetLife's core U.S. business in June 2017. He previously was president of its European, Middle East and African operations.

MetLife's U.S. operations posted an 11% increase in adjusted earnings. Its operations in Japan and other Asian countries reported a 9% gain, while Latin American results were down 4%.

Write to Leslie Scism at [e-mail]

(END) Dow Jones Newswires

May 02, 2019 02:47 ET (06:47 GMT)

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