MetLife posts higher profit in fourth quarter

02/13/2014 10:11 AM

02/13/2014 10:32 AM

MetLife reported an increase in fourth-quarter profit from a year ago as it logged smaller derivatives losses and lower insurance claims.

MetLife, the largest life insurer in the U.S., reported operating earnings of $1.6 billion, up 14 percent from a year ago. Operating earnings were $1.37 per share, beating analysts’ expectations of $1.30.

Results were helped by much lower derivatives losses. MetLife, like other insurers, uses derivatives to hedge risks, such as fluctuations in interest rates. Derivatives losses in the fourth quarter totaled $373 million, down from $1.3 billion in such losses a year ago.

Expenses were lower from a year ago, thanks in part to lower policyholder benefits payments and claims.

As the company scales back from products vulnerable to market fluctuations, such as variable annuities, it has been expanding its presence in international markets. For example, last year the company acquired Chile-based pension fund administrator AFP Provida.

The company told analysts in an earnings call Thursday that it continues to brace for the possibility that U.S. financial regulators will designate it a systemically important financial institution. Such designation is given to companies, such as large banks, that regulators believe would pose a threat to the broader economy if they were to collapse.

The designation would require MetLife to have a large capital cushion to absorb losses. MetLife CEO Steven Kandarian has said giving the designation to life insurers could force them to raise the price of products or stop offering certain products.

A year ago next month, the company announced plans to open a retail hub in Charlotte, consolidating its U.S. retail operations in Ballantyne Corporate Park. In December, the company said it had hired 640 people for the hub, surpassing its intent to create 500 jobs by the end of 2013.

The hub is expected to employ 1,300 when all hires are made by a 2015 target. The company is moving into two new buildings in Ballantyne Corporate Park, where the employees will work for an average salary of $58,000.

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