Hurricanes reduced the third-quarter results of big insurers MetLife Inc. and Allstate Corp. with their large homeowner and car-insurance businesses, while the rallying stock market helped life insurers industrywide with products tied to market returns.
MetLife's results, released after Wednesday's closing bell, are the first following its spinoff in August of much of its U.S. retail life-insurance business into a new company named Brighthouse Financial Inc. Separation-related charges of $1.1 billion drove the company to a quarterly loss of $87 million, versus a profit of $571 million in the year-earlier period.
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MetLife also said it would divest its remaining 19% stake in Brighthouse in 2018 in a move that will return all of the capital to shareholders. Based on Brighthouse's current market capitalization, that position is worth about $1.4 billion. That capital return will be in addition to the $2 billion that the board added to its share buyback program.
Catastrophe-modeling firms have estimated insured losses from hurricanes Harvey, Irma and Maria and two earthquakes in Mexico, which also struck during the quarter, to total $68 billion to $148 billion industrywide.
Allstate's third-quarter results included $861 million of those costs, a 79% jump from a year earlier. The company touted improved profits in its auto insurance segment and pointed to a significant decline in the frequency of auto accidents, which it said helped offset the big spike in catastrophe losses.
Harvey's extensive flooding meant an unusually large number of vehicles were damaged, and those costs are covered under many people's car policies.
MetLife didn't break out its catastrophe costs but said hurricanes Harvey and Irma were primarily responsible for a 12% decline in operating earnings for its property-casualty unit, to $51 million.
During the quarter, insurers enjoyed generally favorable macroeconomic conditions, so there was less volatility in the reserves they set up to reflect their obligations to consumers, analysts said. A rallying stock market helps insurers that have blocks of variable annuities on their books. Many of these products guarantee lifetime income streams, and a higher stock market translates into reduced costs for insurers. They also earn more fees from the assets under management.
MetLife spun off much of its variable-annuity business but retains a block of older contracts on its books, while Prudential Financial Inc. continues as a leading seller of the product to consumers.
Among the results:
Net income surged to $2.24 billion, up from $1.83 billion the year before. Its operating income increased to $1.32 billion, or $3.01 a share, from $1.19 billion, or $2.66 a share. Prudential Chief Executive John Strangfeld cited "record assets under management and account values" in businesses including asset management and annuities.
Operating income at Allstate jumped 24% to $587 million, or $1.60 a share, from $474 million, or $1.26 a share, a year earlier. That figure easily beat consensus estimates. Revenue inched up 4.8% to $9.66 billion, as property-liability insurance premiums increased 3.2% and net investment income increased 13%.
Operating earnings declined 14% to $1.17 billion, or $1.09 a share, from $1.36 billion, or $1.22 a share. It was ahead of analysts' consensus expectations. Premiums, fees and other revenue increased 9.3% to $12.61 billion.
Operating earnings in its U.S. unit, which includes property-casualty and some other businesses, declined 1.1% to $546 million. At the company's big business of selling benefits such as life and dental insurance to employers, earnings surged 30%. They were down modestly in many parts of its international business, but Latin American posted a 23% increase.
In its first report as a public company, Brighthouse posted a net loss of $943 million, or $7.87 a share, tied to a tax expense ahead of its separation. On an operating basis, excluding that expense, earnings were $397 million, or $3.31 a share. Operating earnings improved in its annuities segment but declined in the life division.
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November 01, 2017 17:18 ET (21:18 GMT)