Life insurance and financial services provider MetLife (NYSE:MET) reported fourth-quarter financial results on Wednesday. These results demonstrated that the company's hefty investment losses, which were brought on as a result of volatile credit markets, are beginning to subside. The potential purchase of a major division from an archrival could also boost the firm's recovery potential.

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Fourth-Quarter Highlights
Total revenues fell 11.6% to $12.3 billion while premiums, fees and other revenue improved 14% to $9.3 billion. MetLife reported particular strength in the U.S. annuity business and overall insurance products, including group life and individual life insurance. International premiums grew an impressive 22% on double-digit increases in the Latin American and Asia Pacific operating regions.

Net investment income grew 11.1% to $4 billion, though total net investment losses continued, reaching $898 million on more derivative losses, which totaled $527 million during the quarter. Reported net income plummeted 70% to $289 million, or 35 cents per share. MetLife relayed that operating earnings were 96 cents per share when excluding investment losses.

For the full year, reported losses were $2.89 per share. However, there was a positive $2.87 in terms of operating earnings as MetLife reported a 19.5% decline in total revenues to $41.1 billion. Total investment losses were $7.8 billion.

AIG ALICO Acquisition
Rumors have also been circling about MetLife's intention to acquire American Life Insurance Company, or ALICO for short, from embattled insurance giant AIG (NYSE:AIG). ALICO is one of AIG's premiere global life insurance subsidiaries and counts on Japan for an estimated 70% of revenue. The thought is that the deal will improve ALICO's image by removing its association with the tarnished AIG brand, and will provide MetLife with a much bigger presence in an aging market that will increasingly turn to life and annuity products. MetLife confirmed it was in discussions regarding acquiring the unit and believes it has the financial resources to complete a deal, though it offered no assurances that it would be completed.

Bottom Line
MetLife reported year-end book value of $37.54 per share. Therefore, at a current share price below $35, the stock is trading below book value. It has historically traded above book and even reached 185% of book value in 2008 before the financial crisis adversely impacted its investment portfolio. As one of the largest life insurers in the world, along with Prudential (NYSE:PRU), China Life (NYSE:LFC), and Axa (NYSE:AXA), MetLife should continue to see its fortunes improve as investment losses are already subsiding and global demographics point to an aging population . A purchase of ALICO would also add to its global footprint. (For more, see How Much Life Insurance Should You Carry?)

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