This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

MetLife Management Discusses Q2 2012 Results - Earnings Call Transcript

Emerging market growth, another strategic priority, was very strong in Latin America with earnings up 5% on a reported basis and by 19% on a constant currency basis. Perhaps no area better reflects the disciplined approach we take to the business than our actions to manage interest rate exposure. As you know, we provided extensive disclosure about our interest rate risk in conjunction with the third quarter 2011 earnings call. Interest rates have come down further since then. And we have done additional analysis on the impact to MetLife's earnings. I would like to share those results with you today.

The interest rate scenario we discussed last fall assumed a rate curve with a 10-year Treasury rate held flat at 2% for 5 years. We reran that scenario using a more recent yield curve with a 10-year Treasury at a record low 1.4%. The result was essentially no incremental impact on MetLife's earning per share for 2012 and 2013 and only roughly $0.05 per share in 2014.

We also examined the impact of the low interest rate environment on MetLife's return on equity. At our Investor Day in May, we said we expected to have an ROE of 12% to 14% by 2016. Even if the 10-year Treasury rate were to remain at 1.4% through the end of 2016, we would expect to hit the lower end of that range, adding roughly 100 basis points of ROE from this year's expected level despite the low interest rate environment. The impact of low interest rates on MetLife's earnings is more benign than many suspect for 2 main reasons. First, we still have room to adjust credit rates on a number of our products in response to changes in interest rates. And second, our hedging program has been highly effective. We made a forward-looking call in 2004 to start buying low rate protection when the 10-year Treasury was trading above 4%. We are reaping the benefits today, and we will continue to do so for a number of years to come.

Read the rest of this transcript for free on seekingalpha.com

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,044.63 +13.49 0.08%
S&P 500 1,985.31 +1.18 0.06%
NASDAQ 4,509.88 -9.0220 -0.20%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs