A Wall Street analyst last week raised his 2015 earnings estimates for MetLife and Prudential, but lowered them for Voya Financial. This was in the wake of conference calls earlier this month reflecting the latest changes to the companies’ financials.
Ryan Krueger of Keefe, Bruyette & Woods, in a note to clients, raised MetLife’s full-year 2015 earnings per share to $5.85 per share, a 10-cent increase. This was after the global giant delivered better-than-expected first quarter numbers.
MetLife also is expected to reap the rewards of a favorable tax benefit from the company’s operations in Asia in the second quarter, the analyst added.
MetLife, which like other life insurers is struggling with falling interest rates, was branded a Systemically Important Financial Institution (SIFI) Institution by the Financial Stability Oversight Council last year.
The carrier claims the designation will affect its competitive position and is appealing the designation.
MetLife reported first quarter net income of $2.1 billion, an increase of 64 percent compared with a year ago, on operating revenue of $17 billion, down slightly from $17.1 billion in the year-ago quarter.
Krueger also trimmed MetLife’s 2016 earnings per share estimates to $6.20 per share from $6.25 due to a share repurchase of $2 billion compared with $2.5 billion previously.
Prudential saw its year-end 2015 earnings per share estimates raised to $10.10 per share from $9.65 after it, too, bested first-quarter earnings estimates and on the news that its excess capital grew to $2.5 billion from $2 billion.
Prudential, also a designated SIFI, ended the year on a sour note in the wake of interest rate declines. But the company rebounded with first quarter net income of $2.03 billion, a 64 percent increase compared with the year-ago period, on revenue of $11.8 billion. This was an increase of nearly 8 percent compared with the year-ago figure.
Krueger said that a more favorable tax rate caused him to increase his 2015 estimates, and he raised Prudential’s 2016 earnings per share estimates to $10.15 from $10.05.
Voya reported first quarter 2015 net income of $186 million, a 28 percent drop from the year-ago period.
The company announced an after-tax loss of $22 million in connection with its Closed Block Variable Annuity, and another $71 million in after-tax losses connected to hedging and expenses related to the spinoff and restructuring of Voya from ING Group.
Krueger, in his note to clients, said that Voya “may accelerate some of the $300 to $350 million in incremental investment spend” planned for 2015 to 2018 “beyond the prior $50 million guidance.”
The analyst reduced Voya’s 2015 earnings per share estimates to $3.20 from $3.30 “to assume $100 million of spending this year,” but maintained his earnings per share estimate of $3.70 for Voya in 2016.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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