.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Dear Mr. Berko:

Dear N.K.:

Jumpin’ Jack Flash, MetLife Inc. has certainly had a downhill ride in the last 52 weeks, as its stock crumbled, stumbled and tumbled from $66 to $16. Yet MetLife Inc. (MET-$23.30) is inarguably the largest life insurance company in the United States. Its $3.5 trillion of life insurance policies helped produce nearly $32 billion in premium income in 2008. MET has 54,139 employees and enjoys a swank address at 200 Park Ave. in the Big Apple, where it serves 13.2 million households in the United States and more than 70 branch offices in 34 countries.

MET had to take staggering losses in 2008, a result of deterioration in the equity and credit markets that caused its investment income to crash nearly 25 percent. Though lower investment income will continue to hamper MET’s performance, the company will not face such disastrous losses again. I’m certain, however, that continued weakness in our economy will dampen any hopes for investment appreciation.

Fortunately, MET’s insurance business has remained strong. The company has a diverse product base that also includes retirement and savings products, variable annuities and auto, homeowners, dental and long-term-care insurance, all of which help stabilize earnings. MET’s institutional business and revenues and its international business grew nicely in 2008, thanks to its strong presence in Latin America. Continued growth overseas, according to several analysts, should move earnings from 2008’s $3.71 a share to $3.92 a share in 2009. But it will be a few years until MET experiences earnings of $6 to $7 a share, which it did in 2005 and 2006.

Even though investment income fell by $4 billion last year, MET has substantial cash reserves augmented by an October 2008 offering that raised more than $2 billion. Most analysts believe management will use this money to take advantage of crashing valuations and purchase a smaller rival.

Meanwhile, the annual dividend of 74 cents a share might be increased this year to 85 cents, providing a modest 3.6 percent yield. Though the stock trades nearly 15 points below its estimated 2009 book value of $38, I would not be a buyer just yet. I think the price might be about five to seven points too high, and it could be four to six years before MET begins to return to its previous glory of the mid-$60s.

If you want to emulate the 9.5 percent annualized return of the Dow Jones (between 1926 and today), I’m not sure that MET’s common stock can do it for you. So here’s my suggestion: Consider the MET Life 6.5 percent, $25 par value preferred stock, trading at $16.33 with a 10 percent current return. Put 200 shares of that preferred (MET-B) in your IRA.

MET will post that dividend the 15th of every March, June, September and December. Though this preferred is rated only BBB, I have no doubt that the dividend will be paid every three months.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service