Metlife Inc (MET) Is Starting Its Run

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Metlife Inc (NYSE:MET), along with other property & casualty (P&C) insurers, is on a roll.

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First was the indication that the Federal Reserve is likely to raise interest rates in December, followed by encouraging employment and spending news.

Insurers sit on huge piles of cash that they put to work to grow their funds before they are used to pay off claims. Because regulators expect that these companies will be able to pay customers quickly when disaster occurs, a large percentage of this cash is kept in highly liquid, rock-solid U.S. Treasuries.

When interest rates on Treasuries rise, it benefits big P&C players, as well as many national banks.

Metlife Is Eager for Change

There is also a fair amount of talk that MET, American International Group Inc (NYSE:AIG) and Prudential Financial Inc (NYSE:PRU) will lose their SIFI designation. SIFI is the “systematically important financial institution” label that was issued to some of the nation’s biggest institutions after the financial crisis.

If you’re a SIFI, you have to hold more of your money in reserves (which equates to less money working), higher capital standards, and maintain robust contingency plans in case there is another market meltdown.

These requirements have hampered many big banks and insurers, but Metlife has been working to get out from under the SIFI label, and it seems to be working. Earlier this year, MET spun off its U.S. retail insurance and annuities arm in the hopes that decentralizing operations may be helpful.

The second boost to MET stock came with the election of Donald Trump and majorities of Republicans in the House and Senate. One of Trump’s pledges, as well as that of most the House and Senate leadership, is to de-fang the massive regulatory albatross known as Dodd-Frank.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was put in place right after the financial crisis to make up for all the problems that were created when the Glass-Steagall Act was repealed in 1993. The problem was that the Dodd-Frank bill became a monster on Capitol Hill as special riders and amendments were quickly piled on. Now, the whole thing is so unwieldy it makes competing with big firms almost impossible.

Bottom Line for MET Stock

The new Trump administration could be a significant boon for MET stock, and shares have reacted to these new conditions. In the past month, MET stock is up 14%. But, the run started before that. Over the past 6 months, MET is up more than 23%, which is a very significant move for a stock the size of MET.

Beyond all the upsides on the growth side, MET stock continues to throw off a solid 3% dividend yield, even after this big run. The bottom line is, there’s plenty to like in Metlife moving forward.

Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/11/metlife-met-is-starting-its-run/.

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