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MetLife Hedges Its Way onto a Perilous Path

In the second quarter of 2013 MetLife had total operating revenue of slightly more than $17 billion. This amount didn't include its disappointing investment results.

Operating earnings which also didn't include investment losses increased to $1.44 a share from the prior year's $1.34.

Book value of MetLife's stock, excluding accumulated other comprehensive income, fell 3% from the second quarter of 2012, mainly due to the net derivative losses that resulted in lower net income.

As you can see from the 1-year chart below MetLife's shares enjoyed a substantial move higher. But the quarterly revenue-per-share fell off a cliff in the beginning of the second quarter.

MET Chart MET data by YCharts

"MetLife delivered strong performance in the second quarter through favorable investment margins, expense discipline in the United States and good results in Asia," said Steven A. Kandarian, chairman, president and chief executive officer of MetLife during the earnings call.

"We continued to execute on our strategy by growing our top line in emerging markets and shifting our business mix toward lower capital intensive products. We expect our strategy will continue to increase shareholder value over time."

Like insurance companies who experience unusually high payouts as a result of natural disasters, MetLife will have to recover from its undesirable investment results. As the CEO indicated it will take some time.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the ┬┐herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.


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