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Annuities Slam Analysts’ Predictions


In the Annuity News Journal article “Prudential and MetLife Top Analyst Expectations,” we learn from Henry Steelman that annuities really made the difference in improved numbers for both Prudential and MetLife.  Analysts’ expectations for the fourth quarter numbers of both insurance companies didn’t take into account the increased sales they would have for annuity products.  A net income of $51 million in the fourth quarter of 2010 for MetLife equates to five cents per share.  In the fourth quarter of 2009, MetLife had net income of $281 million which was 35 cents per share.  Analysts’ average prediction for MetLife’s operating profit was $1.09 per share, but their operating profit of $1.16 billion totals $1.14 per share, a significant increase over expectations.

Prudential had $213 million of income in the fourth quarter.  This makes for 45 cents per share.  In 2009, their income of $1.79 billion equated to $3.78 per share.  Much like the prediction for MetLife, analysts predicted an operating income of $1.49 per share while Prudential’s actual operating income of $861 million amounts to $1.78 per share.  Annuities were the main reason that both insurance companies outperformed their net income expectations.  Prudential set a new record as the value of their annuity accounts reached $106.2 billion.  They also saw a $1 billion increase in sales of variable annuities, from $3.2 billion in 2009 to $4.2 billion in the fourth quarter of 2010.  MetLife set a record for their variable annuity sales as well.  Their fourth quarter sales of $5.1 billion were a 38% increase from the same quarter in the previous year.

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