GL - MetLife Looks Like An Undervalued Property In An Unpopular Neighborhood
2024-06-26 05:25:10 ET
Summary
- MetLife shares have outperformed peers, but life insurance stocks have not really been in favor given concerns about CRE losses and rate cuts.
- Higher rates have allowed MetLife to reprice its investment portfolio at higher rates and sell more spread products, and the benefits will last even as rates fall.
- There are understandable concerns about MetLife's CRE exposure (office in particular), as the insurer is overweight here, but losses will take years to materialize and can be absorbed.
- MetLife's focus on profitable core businesses like group life and health, pension risk transfer, and international markets should lead to steady growth and returns for investors.
- This is something of a contrarian call given weak sector sentiment, but MetLife's differentiated model and ability to out-earn its cost of equity should drive outperformance.
There’s only so far that a company’s own outperformance can result above and beyond that of its peer group; I’ve seen studies in the past that suggested that 70% to 80% of a stock’s move could be attributed to its sector. That’s not great news for MetLife ( MET ), as life insurance stocks in general aren’t really in favor and haven’t been for a while....
MetLife Looks Like An Undervalued Property In An Unpopular Neighborhood