I know that insurance is often a backwater kind of area for individual investors. There's strange terminology like "combined ratio," the financial statements look different, you don't get the dynamic growth of a tech company, and you run the occasional risk that big catastrophes will smack earnings as they did for reinsurers such as RenaissanceRe
Results this quarter looked quite good. Revenue rose by more than 12%, and operating earnings climbed 25%, though net income was down. Most folks pay attention to the operating earnings in this sector, since it excludes the impact of investment gains and losses. And while MetLife's outperformance was due in some part to reserve releases and so forth, even stripping those away leaves a number that was better than analyst projections.
Growth was rather even across the businesses. The institutional business experienced good growth in retirement and savings earnings, while the individual business benefited from a near doubling of annuity fees and a 51% rise in annuity deposits. Auto and home insurance also did well, even though the combined ratio here struck me as a little high relative to Allstate
Management sounded a few notes of caution -- low quote activity and more aggressive pricing in some markets -- but overall, I think the picture for MetLife is quite sunny. Not only is the base business doing better, but there also might be some nice Easter eggs hidden away. The company should have its balance sheet in a state where it can start applying cash toward repurchases, and the company's hedging positions should help offset the risks of further compression in interest spreads.
What's more, the company could ultimately sell its stake in life reinsurance specialist Reinsurance Group of America
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).