NEW YORK MetLife Inc., the No. 1 life insurer in the United States, said second-quarter earnings rose 12% as it trimmed expenses.
The company said that profits, excluding realized gains or losses, rose to $419 million, or 54 cents a share, from $374 million, or 48 cents, a year ago. Revenue fell 2%, to $7.94 billion. The results beat the average estimate of 53 cents a share, according to a survey of analysts by Thomson Financial/First Call.
After 85 years as a mutual company, MetLife converted to a shareholder-owned firm in April 2000 and has been cutting costs to boost earnings as the stock market slump curbed demand for variable annuity products.
Theyve done a good job on expense reductions, said Seth Glickenhaus, a fund manager at Glickenhaus & Co. in New York, which owns MetLife shares.
The company has also been trying to raise prices in its small auto and homeowners division, where it lost $24 million in the first quarter because of storm damage claims.
In the latest quarter MetLife said cost cuts were a factor in increasing the profits of its institutional business by 38%, to $204 million. Earnings in the individual life insurance unit fell 4%, to $186 million, and the auto and homeowners unit posted a profit of $11 million, compared with a loss of $13 million a year ago.
MetLife said second-quarter earnings also benefited from its range of businesses, which include annuities; asset management; reinsurance; and life, international, and auto and homeowners insurance. The profits of the international and reinsurance businesses rose, but asset management earnings fell, reflecting the sale of the NVEST LP unit last October.
The company posted net income of $320 million, or 41 cents a share, versus a net loss of $115 million in the year-ago period just before the conversion.
Under chief executive Robert Benmosche, a former PaineWebber Inc. executive, 133-year-old MetLife has been trimming expenses to bring the firm more in line with its publicly traded peers.
Mr. Benmosche said that the company is committed to achieving our revised full-year earnings per share guidance of 12% growth for 2001 and 15% in 2002.
However, analysts say that the CEO must take steps to get rid of the auto and homeowners unit, because of its tendency toward earnings swings, and boost the performance of the asset management business.