MetLife, Inc. (NYSE: MET) today reported the following results for the fourth quarter and full year 2012:
Fourth Quarter Results
MetLife reported operating earnings* of $1.4 billion, or $1.25 per share, up 10% over the fourth quarter of 2011. Growth was driven by a 21% increase in operating earnings in the Americas and a 26% increase (34% when adjusted for the impact of foreign currency exchange rates) in the Europe, Middle East and Africa (EMEA) segment. Operating earnings in Asia were down 24% primarily due to the annual review of actuarial assumptions.
Fourth quarter 2012 operating earnings included the following items:
- variable investment income above the company’s 2012 quarterly plan range by $80 million, or $0.07 per share, after tax and the impact of deferred policy acquisition costs (DAC);
- favorable claim development related to prior accident years in the company’s property & casualty business of $13 million, or $0.01 per share, after tax;
- catastrophes of $70 million, or $0.06 per share, after tax, above the company’s quarterly plan provision;
- a $13 million, or $0.01 per share, after tax, negative impact from the annual global review of assumptions related to DAC, reserves and certain intangibles; and
- certain reorganization costs of $23 million, or $0.02 per share, after tax.
- a deferred tax benefit of $324 million related to the conversion of the company’s Japan branch to a subsidiary and
- a total after tax charge of $752 million associated with the global review of assumptions related to DAC, reserves and certain intangibles, of which $342 million, after tax, was reflected in the after tax total of $855 million in net derivative losses for the quarter. MetLife uses derivatives as part of its broader asset-liability management strategy to hedge certain risks, such as movements in interest rates and foreign currencies. This hedging activity often generates derivative gains or losses and creates fluctuations in net income because the risk being hedged may not have the same GAAP accounting treatment.
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