MetLife: Low Rates Won't Dent Earnings
NEW YORK--Executives at MetLife Inc. said profits would continue to grow in coming years even if interest rates remain near historic lows, though earnings at its U.S. operations would be roughly flat.</br></br>The life insurer said Friday that if U.S. Treasury rates remain flat for five years, unemployment levels are unchanged and economic growth doesn't pick up, operating results would be reduced by 21 cents a share next year and 42 cents in 2013.</br></br>Despite that hit, MetLife Chief Financial Officer Bill Wheeler said the company expects to continue to grow--though at a slower rate. The company said its annual growth rate could be about 4% under that scenario, instead of 8% in a normalized environment.</br></br>"It would have an impact on our financial performance," Mr. Wheeler said. "But it definitely would not weaken the company or put us in a perilous financial position."</br></br>MetLife's analysis is some of the most explicit so far available to insurance-industry analysts and investors, who have expressed concern about the mounting impact of low rates. Life insurers are sensitive to interest rates because premiums that pour in from policyholders are mostly invested in bonds whose returns help the company meet its obligations. The lower the rates, the lower their investment returns.