Sterne Agee Reports On MetLife Post Investor Day

Sterne Agee has published a research report on MetLife, Inc. MET after the company hosted an investor day. In the report, Sterne Agee writes "Mgmt reminded us that MET will submit their filing for the second version of the Fed's stress testing of the 19 largest financial institutions in January. Recall in early 2009, MET came through the first stress test as one of the clear stand-outs, and with credit markets having recovered nicely, and earnings and capital levels higher, we would expect the second round will indicate a very healthy buffer against the Fed's stress scenario. Mgmt intimated that post the results of the second stress testing, MET and other financial institutions would be in a better position to potentially begin deploying “excess” capital into buybacks and/or other shareholder friendly activities. And to the extent that stress test results confirm healthy capital levels for MET and the others, perhaps the rating agencies would follow with more constructive commentary as well. Maybe, but maybe not, a lot to hope for. But certainly a potentially positive catalyst that would come at an opportune time with AIG ($43.60, N/R) freeing up to sell 50% of their MET stake (~75m shares fully converted) on Aug 1st. At current price level, we estimate every $500m of buybacks should add about 1% to annual EPS." Sterne Agee maintains its Buy rating and $49 price target. MetLife, Inc. closed yesterday at $40.75.