It’s been a while since I’ve written on MetLife (MET), but not much has changed for the good as far as the stock price is concerned. Although there are still growth opportunities in areas like pension risk transfer and group benefits, and reinsurance transactions could free up capital from MetLife Holdings, the market doesn’t seem to give much credit for those, nor is the market assigning much incremental value to the company’s progress in becoming a simpler, less capital-intensive company.
Rates are certainly a valid worry now, as MetLife management has highlighted the downside risk to a prolonged period of lower rates. Even if MetLife can only manage very low single-digit core operating earnings growth over the long term, with a long-term adjusted ROE below 10%, I still believe the shares should trade closer to the high $40’s. Add in the decent dividend, and I think this is a risk worth taking, though it will take some time to work out.
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