(Updates with litigation reserve in the eighth paragraph, investment income in the 12th.)
Feb. 12 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, said profit increased in the fourth quarter as Chief Executive Officer Steve Kandarian targets growth outside the company’s main market.
Net income climbed to $908 million from $127 million a year earlier, the New York-based insurer said today in a statement. Operating profit, which excludes some investing results, was $1.37 a share, beating the $1.29 average estimate of 20 analysts surveyed by Bloomberg.
MetLife is counting on earnings from outside the U.S. to help increase return on equity from about 11 percent in 2012. The profitability measure hit 12 percent last year. The firm is scaling back from products that are vulnerable to market swings, such as variable annuities, while emphasizing growth in emerging markets to meet the 2016 ROE goal of 12 percent to 14 percent.
“He set a reasonable benchmark and he’s going out slowly and diligently to do it,” Cathy Seifert, an analyst at Standard & Poor’s Capital IQ, said in an interview before results were announced. “Acquisitions should help in overseas markets.”
MetLife is using deals to bolster international growth, after the $16 billion acquisition of American Life Insurance Co. from American International Group Inc. in 2010. The company’s $2 billion purchase of Chilean pension provider AFP Provida SA will add about $200 million to operating profit this year, MetLife said in December. The company reached deals last year to expand in Vietnam and Malaysia.
In Asia, MetLife posted operating profit of $324 million, a 64 percent increase from a year earlier when the company recorded higher costs. Premiums, fees and other revenue fell 8 percent to $2.3 billion at the division, overseen by Chris Townsend.
In the Americas region led by Bill Wheeler, operating profit increased 13 percent to $1.4 billion. Book value, a measure of assets minus liabilities, rose to $53.04 per share from $52.54 three months earlier.
Full-year profit jumped to $3.37 billion from $1.32 billion in 2012. The insurer said it added to litigation reserves in the fourth quarter, reducing earnings by $46 million.
MetLife gained 0.7 percent to $50.22 at 6:47 p.m. in New York, after results were announced. The stock has gained 34 percent in the past 12 months, compared with the 48 percent rally of smaller rival Prudential Financial Inc.
Prudential posted a $460 million loss in the fourth quarter, as the yen weakened and growth stalled at the insurer’s international operations. The Newark, New Jersey-based company expanded its Japan business by buying two life insurers from AIG in 2011.
Life insurers benefited last year from climbing bond yields and the 30 percent rally in the S&P 500 Index. The Federal Reserve began scaling back its bond-buying efforts as the economy improved, helping send the yield on the 10-year Treasury to 3.03 percent on Dec. 31.
MetLife’s investment income rose 2.5 percent to $5.3 billion in the fourth quarter. The insurer counts on a portfolio of more than $488 billion to generate profits and back future payouts to policyholders. Even after interest rates rose last year, results have been pressured by yields that remain below historical averages.
--Editors: Dan Reichl, Dan Kraut