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Can Lower Premiums Dampen MetLife's (MET) Q4 Earnings?

MetLife, Inc. MET is slated to report fourth-quarter 2022 results on Feb 1, after the closing bell.

Q4 Estimates

The Zacks Consensus Estimate for MET’s fourth-quarter earnings per share is pegged at $1.76, which indicates a decline of 18.9% from the prior-year quarter’s reported number and is lower than our estimate of $1.77.

The consensus mark for revenues stands at $16,952 million, suggesting a 16.1% fall from the year-ago quarter’s reported figure.

Earnings Surprise History

MetLife boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 28.00%. This is depicted in the chart below:

MetLife, Inc. Price and EPS Surprise

 

MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise

MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote

 

Factors to Note

In the fourth quarter, the revenues of MetLife are likely to have suffered due to declining premiums. The Zacks Consensus Estimate for premiums is pegged at $10,841 million, which indicates a 17.2% fall from the prior-year quarter’s reported figure and is lower than our estimate of $10,976.8 million.

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Reduced variable investment income leading to declining net investment income coupled with lower universal life and investment-type product policy fees might have dampened MET’s top-line growth in the to-be-reported quarter.

The consensus mark for net investment income and universal life and investment-type product policy fees stands at $4,308 million and $1,236 million, indicating a decline of 17.7% and 13.1%, respectively, from the year-ago quarter. The consensus estimates for the metrics came higher than our estimates of $3,704.4 million and $1,088.3 million, respectively.

Meanwhile, the softer performance of the Asia segment is expected to have dampened the quarterly performance of MetLife. The unit might have suffered a blow due to lower variable investment income and feeble underwriting results in the fourth quarter. The Zacks Consensus Estimate for adjusted earnings of MET’s Asia business is pegged at $364 million, suggesting a 37.9% plunge from the prior-year quarter’s reported number.

Nevertheless, the downside to the quarterly results is likely to have been partly offset by strong performances of the U.S., Latin America and the Europe, the Middle East and Africa (EMEA) segments. Solid volumes coupled with a significant decline in COVID life insurance claims might have contributed to the sound performance of the U.S. business in the to-be-reported quarter. The consensus mark for the segments’ adjusted earnings stands at $742 million, which indicates an improvement of 15.9% from the year-ago quarter’s figure.

Both the Latin America segment and the EMEA segment are expected to have benefited on the back of robust sales in the fourth quarter. The consensus mark for adjusted earnings of the segments stand at $160 million and $60 million, hinting toward advancements of 28% and 42.9%, respectively, from the year-ago quarter’s reported number.

However, an escalating expense level due to rising policyholder benefits and claims might have strained the margins of MetLife in the to-be-reported quarter.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: MetLife has an Earnings ESP of -1.50% because the Most Accurate Estimate of $1.74 is pegged lower than the Zacks Consensus Estimate of $1.76. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: MET carries a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for MetLife, here are some companies from the insurance space which according to our model have the right combination of elements to post an earnings beat this time:

American International Group, Inc. AIG has an Earnings ESP of +5.73% and a Zacks Rank of 2. The Zacks Consensus Estimate for AIG’s fourth-quarter 2022 earnings is pegged at $1.19 per shar, suggesting a fall of 24.7% from the year-ago quarter’s reported number.

The bottom line of American International beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 13.01%.

Everest Re Group, Ltd. RE has an Earnings ESP of +5.61% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for RE’s fourth-quarter 2022 earnings stands at $9.29 per share, which highlights a rise of 1.9% from the prior-year quarter's reported figure.

Everest Re’s earnings beat estimates in three of the four reported quarters and missed the mark once, the average surprise being 10.26%.

The Hartford Financial Services Group, Inc. HIG has an Earnings ESP of +0.18% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for HIG’s fourth-quarter 2022 earnings is pegged at $1.86 per share, which indicates a 7.9% decline from the prior-year quarter.

The bottom line of Hartford Financial beat estimates in each of the trailing four quarters, the average surprise being 23.10%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report

American International Group, Inc. (AIG) : Free Stock Analysis Report

MetLife, Inc. (MET) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

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