MetLife Inc.’s share price up, announces its first share buyback in six years

The biggest life insurer by assets in the U.S. – MetLife Inc. made an official statement today, announcing its first stock buybacks since 2008. The step is considered part of the efforts of companys Chief Executive Officer Mr. Steven Kandarian to reward investors.

According to MetLife Inc.s statement, about 1 billion of common stock will be bought back as an effort to return capital to its shareholders. The announcement comes at a moment when the company is waiting to find out if it will be named a non-bank systemically important financial institution (SIFI). As MetLife explained, it will use the existing approval of its board of directors for the buy-back. This would be the first time the company repurchases shares since the beginning of the global financial crisis in 2008.

Chief Executive Officer Mr. Kandarian said in the companys announcement, which was cited by Bloomberg: “Our philosophy is that excess capital belongs to our shareholders. The challenge is to strike the right balance between adherence to our philosophy and recognition that MetLife’s required capital levels remain unknown.” As reported by the Wall Street Journal, Mr. Kandarian also added: “We anticipated that the non-bank SIFI capital rules would be known by now, but recent statements by the Federal Reserve suggest that we may not see draft rules until 2015. Meanwhile, our capital continues to grow.”

The CEO also explained in the published statement that the insurer has made the decision of repurchasing shares, because it has continued to gather capital. In May, Mr. Kandarian explained that the company is considering to “take a conservative approach to capital management” until it becomes clear how it will be regulated. Before that Mr. Kandarian said that MetLife preferred dividends over buybacks because the expenses are smaller.

MetLife Inc. was 0.68% up to trade at 55.03 dollars per share by 13:55 GMT, marking a one-year change of +20.68%. According to the information published on CNN Money, the 18 analysts offering 12-month price forecasts for Metlife Inc. have a median target of 60.00, with a high estimate of 67.00 and a low estimate of 56.00. The median estimate represents a +9.77% increase from the last price of 54.66.