Met Life in solid shape

Press, 23 May 1988, Page 16

Met Life in solid shape

PA Auckland Met Life Group, Ltd, has performed strongly in all sectors since its January 31 balance date, its chairman, Mr Charles St Clair Brown, told the annual meeting.

Mr Brown said life insurances to the end of April were more than 20 per cent up on 1987. He said fire and general insurance premium income was 35.41 per cent ahead of 1987 and mortgage lending was unchanged. Sales of associate company, Toy Warehouse, Ltd, were 42 per cent up on 1987, which had been a record year for the company.

Aqua Source Holdings NZ, Ltd, which produces bottled water, had strong sales and received orders from Japan, Hong Kong and Singapore. All units at the retirement villages at Masterton and Pakuranga were sold and the nursing homes were operating profitably.

Mr Brown told shareholders Met Life shares were among the most underrated in the sharemarket. In his view the market would soon wake up to that fact and, the price would rise.

He noted the earnings of 24.05 c a share for Met Life in the year to January 31 represented a price earnings ratio of 3.5 at present prices. The average for listed insurance companies in New Zealand, Australia and the United Kingdom was about 9. “If our PE was 9, the market value of our shares would be 216 c” Mr Brown said. Met Life shares closed on the market on Friday at 92, up sc. Mr Brown said Met Life had made detailed submissions to the review

committee on taxation of life companies and superannuation.

Met Life, he said, had suggested to the committee the Government should announce transitional measures which would move life companies on to a basis consistent with other forms of saving. The company had also suggested the most equitable tax regime for life offices is to tax investment income earned for the benefit of policyholders at a rate based on the personal rates of policyholders. ■

Met Life had said a rate could be 24c in the dollar. The company also suggested underwriting profits and the proportion of investment income allocated to shareholders should then be taxed for proprietary companies such as Met Life, at the corporate tax rate of 28c in the dollar. Mr Brown said another suggestion was that the savings component of underwriting profits should be excluded if such profits were to become taxable and that imputation tax credits should be available to shareholders of life companies. He announced that Met Life on Friday had settled on the purchase of the B. J. Ball building in Graham Street, Auckland. He did not disclose the cost of the building but said it was $2 million below the Met Life valuation.

The building which was fully let had a yield of 12 per cent, he said. He also announced that all executive directors had exercised their options since balance date, lifting issued capital to 46 million shares. There were now no options on issue. The management options were not due for conversion until 1991.