Lehman/A.M. Best Co. 2nd Annual Conference

"We are looking at re-engineering with reinsurance--not just for catastrophes but to smooth quarterly results."
Stewart G. Nagler
Vice Chairman of the Board & Chief Financial Officer
Metropolitan Life Insurance Co.

MetLife Works Toward 15% Earnings Growth

A year into its reorganization as a public company, MetLife Inc. (NYSE: MET) is holding steady to its goal of growing earnings per share by 15% a year and reaching an 11.5% return on equity by next year.

The route to those goals includes targeting the growing retirement market through sales of wealth accumulation products and long-term-care policies. MetLife is reaching for a total customer count of more than 100 million by 2010, according to Stewart G. Nagler, MetLife's vice chairman and chief financial officer, who spoke during the second annual Insurance Conference held May 21 and 22 in New York, co-sponsored by Lehman Bros. and A.M. Best Co.

The company's twin towers of individual life and group life business will continue to be its largest business segments, Nagler said. MetLife sells those products through its career agents, New England Financial's distribution system, the independent agents that market General American's products and a new distribution channel--MetLife Investor's Group--that markets to banks and securities brokers.

MetLife finds its stock an attractive repurchase, having authorized buybacks of as much as $2 billion since last June. The stock sold at $14.25 a share on the first day of trading in April 2000. Since then it has traded as high as $36.62. It was trading at $30.41 a share on May 22. MetLife had spent $838 million as of March 23 to buy back shares, including $214 million after its initial public offering and $624 million under a $1 billion repurchase program announced June 27, 2000. An additional $1 billion buyback authorization was announced March 28.

The company posted a 22% jump in first-quarter net income. However, during a conference call to discuss earnings, Robert H. Benmosche, chairman and chief executive officer, said the quarter had been difficult. Bad weather hurt the auto and homeowners lines and tough equity markets in the first and fourth quarters shrank assets under management (BestWire, May 8, 2001).

As a result, MetLife expects to become a bigger buyer of reinsurance, which it uses now primarily to protect against catastrophe exposure. "People don't like volatility in the auto and homeowners business," Nagler said. "We are looking at re-engineering with reinsurance--not just for catastrophes but to smooth quarterly results."

(By Marilyn Ostermiller, executive editor, ostermm@ambest.com)