Lobbying Charges Shrink for MetLife - Analyst Blog

MetLife Inc. (MET) has reported that it spent $1.40 million during the second quarter 2010 to address concerns related to financial regulations and other issues. The lobbying charges have plummeted for MetLife from $1.74 million in the year-ago quarter and $1.61 million during the first quarter of 2010.

According to the report filed on July 20, MetLife lobbied the Congress, the U.S. Trade Representative's office and the Treasury Department. MetLife also lobbied the federal government on the sweeping financial overhaul and other legislations that were signed in July to prevent any kind of excessive risk-taking that led to the global economic crisis.

MetLife also lobbied on other issues such as health care, flood insurance, domestic partnerships, taxes and derivatives.

Besides MetLife, its competitors in the insurance sector Marsh & McLennan Companies, Inc. (MMC) spent $260,000 and Hartford Financial Services Group, Inc. (HIG) spent $490,000 in the second quarter to lobby the federal government.

Marsh lobbied on health care legislation and other issues and also on executive compensation practices, trade sanctions, taxes, retirement plans and financial regulatory reform. Besides lawmakers, Marsh & McLennan lobbied the departments of Defense and Veterans Affairs.

On the other hand, Hartford lobbied the Congress and the Treasury Department in the May-June period on issues related to the financial overhaul bill. Hartford also lobbied on other issues of flood insurance, taxes, catastrophic insurance, workers' compensation, drywall safety, health care reform and retirement account disclosures.

The sweeping financial overhaul bill will add an additional layer of regulation for Metlife and other big financial firms. It would create an agency for monitoring consumer financial products, make the Federal Reserve the overseer of companies deemed too big to fail, and bring hedge and private equity funds under federal scrutiny.

Accordingly, a new office has been created at the Treasury Department to monitor the insurance industry and that would ensure if an insurer is big enough to warrant tighter oversight.

Nevertheless, we believe that the solid earnings performance in the second quarter has injected confidence in MetLife to invest in healthy projects that would generate modest-to-strong returns in the long run. Recently, MetLife also raised money from the market through a stock offering, in order to meet its long-term growth targets. Also, the pending ALICO acquisition is expected to close by the end of 2010 and will be immediately accretive to earnings, although related debt cost could mount pressure on the bottom line for some time.

While we think MetLife should continue to benefit from its diversified business mix as well as its leading brand, risk of loss in the investment portfolio is likely to impact the results in the upcoming quarters.
 
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