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Will Lower Net Investment Income Hurt MetLife (MET) Q4 Earnings?
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MetLife, Inc. (MET - Free Report) is slated to release fourth-quarter 2021 earnings on Feb 2, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for MET’s fourth-quarter earnings per share is pegged at $1.42, which indicates a decline of 30% from the prior-year quarter.
The consensus mark for revenues stands at $17.2 billion, suggesting a decrease of 16.4% from the year-ago quarter.
Earnings Surprise History
MetLife boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average negative surprise being 43.13%. This is depicted in the chart below:
Lower premiums and reduced net investment income are likely to have dented MetLife’s to-be-reported quarter's top line. The Zacks Consensus Estimate for premiums stands at $9.7 billion, which suggests decline of 30.5% from the prior-year quarter. Meanwhile, the same for net investment income is pegged at $4.5 billion indicating a 13.6% decline from the year-ago reported number.
Talking about segmental performances, MetLife’s U.S. business is likely to have been aided by strong performance of its Retirement and Income Solutions (RIS) sub-segment. The sub-unit is likely to have benefited from improved variable investment income and volume growth. Unfavorable underwriting margins in Group Life, partly offset by volume growth and inclusion of Versant Health and sound expense margins, are expected to have shaped Group Benefits’ (another sub-segment of U.S. business) performance in the fourth quarter. The Zacks Consensus Estimate for adjusted earnings of this segment is pegged at $525 million, which suggests a decline of 48.6% from the prior-year quarter.
For the Asia segment, strong volume growth owing to increased general account assets under management is likely to have provided a boost to the unit in the to-be-reported quarter. However, reduced accident and health utilization, and several COVID-19 inflicted volatilities throughout the region may have acted as partial offsets. The consensus mark for adjusted earnings of MET’s Asia business stands at $411 million, suggesting a decline of 16.8% from the year-ago quarter.
MetLife’s Latin America business in the fourth quarter is likely to have benefited from favorable investment and expense margins, partly offset by softer underwriting results. The Zacks Consensus Estimate for the segment’s adjusted earnings is pegged at $17 million, which indicates an improvement of 21.4% from the prior-year quarter.
In the Europe, the Middle East and Africa (EMEA) segment, robust volumes and favourable underwriting margins might have benefited the to-be-reported quarter's performance in the to-be-reported quarter. However, management expects adjusted earnings for this segment to witness a fall in the fourth quarter on account of specific technology investments’ timing across the region. The consensus mark for EMEA’s adjusted earnings stands at $64 million suggesting a 21% plunge year over year.
In the fourth quarter, MetLife’s direct expense ratio is expected to remain high due to certain investments’ timing and seasonal enrollment costs.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: MetLife has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: MET carries a Zacks Rank #3.
Stocks to Consider
Some stocks worth considering from the insurance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.88% and a Zacks Rank #3. AIG is slated to release fourth-quarter 2021 results on Feb 16.
Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank of 3 at present. PRU is slated to release fourth-quarter 2021 results on Feb 3.
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Will Lower Net Investment Income Hurt MetLife (MET) Q4 Earnings?
MetLife, Inc. (MET - Free Report) is slated to release fourth-quarter 2021 earnings on Feb 2, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for MET’s fourth-quarter earnings per share is pegged at $1.42, which indicates a decline of 30% from the prior-year quarter.
The consensus mark for revenues stands at $17.2 billion, suggesting a decrease of 16.4% from the year-ago quarter.
Earnings Surprise History
MetLife boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average negative surprise being 43.13%. This is depicted in the chart below:
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
Factors to Note
Lower premiums and reduced net investment income are likely to have dented MetLife’s to-be-reported quarter's top line. The Zacks Consensus Estimate for premiums stands at $9.7 billion, which suggests decline of 30.5% from the prior-year quarter. Meanwhile, the same for net investment income is pegged at $4.5 billion indicating a 13.6% decline from the year-ago reported number.
Talking about segmental performances, MetLife’s U.S. business is likely to have been aided by strong performance of its Retirement and Income Solutions (RIS) sub-segment. The sub-unit is likely to have benefited from improved variable investment income and volume growth. Unfavorable underwriting margins in Group Life, partly offset by volume growth and inclusion of Versant Health and sound expense margins, are expected to have shaped Group Benefits’ (another sub-segment of U.S. business) performance in the fourth quarter. The Zacks Consensus Estimate for adjusted earnings of this segment is pegged at $525 million, which suggests a decline of 48.6% from the prior-year quarter.
For the Asia segment, strong volume growth owing to increased general account assets under management is likely to have provided a boost to the unit in the to-be-reported quarter. However, reduced accident and health utilization, and several COVID-19 inflicted volatilities throughout the region may have acted as partial offsets. The consensus mark for adjusted earnings of MET’s Asia business stands at $411 million, suggesting a decline of 16.8% from the year-ago quarter.
MetLife’s Latin America business in the fourth quarter is likely to have benefited from favorable investment and expense margins, partly offset by softer underwriting results. The Zacks Consensus Estimate for the segment’s adjusted earnings is pegged at $17 million, which indicates an improvement of 21.4% from the prior-year quarter.
In the Europe, the Middle East and Africa (EMEA) segment, robust volumes and favourable underwriting margins might have benefited the to-be-reported quarter's performance in the to-be-reported quarter. However, management expects adjusted earnings for this segment to witness a fall in the fourth quarter on account of specific technology investments’ timing across the region. The consensus mark for EMEA’s adjusted earnings stands at $64 million suggesting a 21% plunge year over year.
In the fourth quarter, MetLife’s direct expense ratio is expected to remain high due to certain investments’ timing and seasonal enrollment costs.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: MetLife has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: MET carries a Zacks Rank #3.
Stocks to Consider
Some stocks worth considering from the insurance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.48% and a Zacks Rank #2. ACGL is scheduled to report fourth-quarter 2021 results on Feb 9. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.88% and a Zacks Rank #3. AIG is slated to release fourth-quarter 2021 results on Feb 16.
Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank of 3 at present. PRU is slated to release fourth-quarter 2021 results on Feb 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.