MetLife, Inc. (NYSE:MET) today announced its results for the second
quarter ended June 30, 2018.
Second Quarter Results Summary
“MetLife delivered a very strong second quarter driven by solid
underwriting and expense management around the globe,” said Steven A.
Kandarian, chairman, president and CEO of MetLife, Inc. “During the
quarter we divested our remaining stake in Brighthouse and returned
approximately $1.5 billion to shareholders through common stock
repurchases and dividends. We remain focused on improving our return on
equity, maintaining strong free cash flow, meeting our expense targets,
and distributing capital to shareholders.”
Second Quarter 2018 Summary
Direct expense ratio, excluding total notable items related to
direct expenses and pension risk transfer (PRT)
MetLife reported second quarter 2018 net income of $845 million,
compared to net income of $865 million in the second quarter of 2017.
On a per share basis, net income was $0.83, compared to net income of
$0.80 in the prior-year period.
Net investment income was $4.5 billion, up 7 percent.
Net derivative losses amounted to $47 million after tax during the
quarter.
Premiums, fees & other revenues were $17.0 billion, up 51 percent over
the second quarter of 2017. Adjusted premiums, fees & other revenues*
were $16.9 billion, up 48 percent from the prior-year period on both a
reported and constant currency basis*.
MetLife reported adjusted earnings of $1.3 billion, up 18 percent over
the second quarter of 2017, on both a reported and constant currency
basis. On a per share basis, which includes the impact of share
repurchases, adjusted earnings were $1.30, up 25 percent from the
prior-year period.
Supplemental slides for the second quarter of 2018, titled “2Q18
Supplemental Slides,” are available on the MetLife Investor Relations
website at www.metlife.com
in the Conferences & Presentations section, and in the Form 8-K
furnished by MetLife to the U.S. Securities and Exchange Commission in
connection with this earnings news release.
Adjusted Earnings by Segment Summary
Change from prior-year period
Change (from prior-year period on a
constant currency basis)
Business Discussions
All comparisons of the results for the second quarter of 2018 in the
business discussions that follow are with the second quarter of 2017,
unless otherwise noted. See the second quarter 2018 notable items table
that follows the Business Discussions section of this release for
additional information on notable items incurred in the second quarter
of 2018.
U.S.
Group Benefits
Retirement and Income Solutions
Property & Casualty
ASIA
LATIN AMERICA
EMEA
METLIFE HOLDINGS
CORPORATE & OTHER
INVESTMENTS
SECOND QUARTER 2018 NOTABLE ITEMS
LatinAmerica
MetLifeHoldings
Corporate&Other
GroupBenefits
Retirementand IncomeSolutions
Property&Casualty
*Information regarding the non-GAAP and other financial measures
included in this news release and the reconciliation of the non-GAAP
financial measures to GAAP measures is provided in the Non-GAAP and
Other Financial Disclosures discussions below, as well as the tables
that accompany this news release. Adjusted measures were formerly
referred to as operating measures.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates
(MetLife), is one of the world’s leading financial services companies,
providing insurance, annuities, employee benefits and asset management
to help its individual and institutional customers navigate their
changing world. Founded in 1868, MetLife has operations in more than 40
countries and holds leading market positions in the United States,
Japan, Latin America, Asia, Europe and the Middle East. For more
information, visit www.metlife.com.
Conference Call
MetLife will hold its second quarter 2018 earnings conference call and
audio webcast on Thursday, August 2, 2018, from 9-10 a.m. (ET). The
conference call will be available live via telephone and the internet.
To listen via telephone, dial 877-209-9920 (U.S.) or 612-332-0530
(outside the U.S.). To listen to the conference call via the internet,
visit www.metlife.com
through a link on the Investor Relations page. Those who want to listen
to the call via telephone or the internet should dial in or go to the
website at least 15 minutes prior to the call to register, and/or
download and install any necessary audio software.
The conference call will be available for replay via telephone and the
internet beginning at 11 a.m. (ET) on Thursday, August 2, 2018, until
Thursday August 9, 2018, at 11:59 p.m. (ET). To listen to a replay of
the conference call via telephone, dial 800-475-6701 (U.S.) or
320-365-3844 (outside the U.S.). The access code for the replay is
433150. To access the replay of the conference call over the internet,
visit the above-mentioned website.
Non-GAAP and Other Financial Disclosures
Any references in this news release (except in this section and
the tables that accompany this release) to:
In this news release, MetLife presents certain measures of its
performance that are not calculated in accordance with accounting
principles generally accepted in the United States of America (GAAP).
MetLife believes that these non-GAAP financial measures enhance the
understanding of MetLife’s performance by highlighting the results of
operations and the underlying profitability drivers of the business.
The following non-GAAP financial measures should not be viewed as
substitutes for the most directly comparable financial measures
calculated in accordance with GAAP:
Reconciliations of these non-GAAP measures to the most directly
comparable GAAP measures are included in this earnings news release and
in this period’s quarterly financial supplement, which is available at www.metlife.com.
MetLife’s definitions of the various non-GAAP and other financial
measures discussed in this news release may differ from those used by
other companies:
Adjusted earnings and related measures
These measures are used by management to evaluate performance and
allocate resources. Consistent with GAAP guidance for segment reporting,
adjusted earnings is also MetLife’s GAAP measure of segment performance.
Adjusted earnings and other financial measures based on adjusted
earnings are also the measures by which MetLife senior management’s and
many other employees’ performance is evaluated for the purposes of
determining their compensation under applicable compensation plans.
Adjusted earnings and other financial measures based on adjusted
earnings allow analysis of MetLife’s performance relative to its
business plan and facilitate comparisons to industry results.
Adjusted earnings is defined as adjusted revenues less adjusted
expenses, both net of income tax. Adjusted loss is defined as negative
adjusted earnings. Adjusted earnings available to common shareholders is
defined as adjusted earnings less preferred stock dividends.
Adjusted revenues and adjusted expenses
These financial measures, along with the related adjusted premiums, fees
and other revenues, focus on our primary businesses principally by
excluding the impact of market volatility, which could distort trends,
and revenues and costs related to non-core products and certain entities
required to be consolidated under GAAP. Also, these measures exclude
results of discontinued operations under GAAP and other businesses that
have been or will be sold or exited by MetLife but do not meet the
discontinued operations criteria under GAAP and are referred to as
divested businesses. Divested businesses also includes the net impact of
transactions with exited businesses that have been eliminated in
consolidation under GAAP and costs relating to businesses that have been
or will be sold or exited by MetLife that do not meet the criteria to be
included in results of discontinued operations under GAAP.
Adjusted revenues also excludes net investment gains (losses) (NIGL) and
net derivative gains (losses) (NDGL). Adjusted expenses also excludes
goodwill impairments.
The following additional adjustments are made to revenues, in the line
items indicated, in calculating adjusted revenues:
The following additional adjustments are made to expenses, in the line
items indicated, in calculating adjusted expenses:
Adjusted earnings also excludes the recognition of certain contingent
assets and liabilities that could not be recognized at acquisition or
adjusted for during the measurement period under GAAP business
combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of
the U.S. or foreign statutory tax rate, which could differ from the
MetLife’s effective tax rate. Additionally, the provision for income tax
(expense) benefit also includes the impact related to the timing of
certain tax credits, as well as certain tax reforms.
Investment portfolio gains (losses) and derivative gains (losses)
These are measures of investment and hedging activity. Investment
portfolio gains (losses) principally excludes amounts that are reported
within net investment gains (losses) but do not relate to the
performance of the investment portfolio, such as gains (losses) on sales
and divestitures of businesses, goodwill impairment or changes in
estimated fair value. Derivative gains (losses) principally excludes
earned income on derivatives and amortization of premium on derivatives,
where such derivatives are either hedges of investments or are used to
replicate certain investments, and where such derivatives do not qualify
for hedge accounting. This earned income and amortization of premium is
reported within adjusted earnings and not within derivative gains
(losses).
Return on equity, allocated equity, tangible equity and related
measures
The above measures represent a level of equity consistent with the view
that, in the ordinary course of business, MetLife does not plan to sell
most investments for the sole purpose of realizing gains or losses. Also
refer to the utilization of adjusted earnings and other financial
measures based on adjusted earnings mentioned above.
The above measures are, when considered in conjunction with regulatory
capital ratios, a measure of capital adequacy.
Expense ratio, direct expense ratio, adjusted expense ratio and
related measures
The following additional information is relevant to an
understanding of MetLife’s performance results:
Forward-Looking Statements
This news release may contain or incorporate by reference information
that includes or is based upon forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements give expectations or forecasts of future
events. These statements can be identified by the fact that they do not
relate strictly to historical or current facts. They use words and terms
such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” “will,” and other words and terms of similar meaning, or are
tied to future periods, in connection with a discussion of future
performance. In particular, these include statements relating to future
actions, prospective services or products, future performance or results
of current and anticipated services or products, sales efforts,
expenses, the outcome of contingencies such as legal proceedings, trends
in operations and financial results.
Many factors will be important in determining the results of MetLife,
Inc., its subsidiaries and affiliates. Forward-looking statements are
based on our assumptions and current expectations, which may be
inaccurate, and on the current economic environment, which may change.
These statements are not guarantees of future performance. They involve
a number of risks and uncertainties that are difficult to predict.
Results could differ materially from those expressed or implied in the
forward-looking statements. Risks, uncertainties, and other factors that
might cause such differences include the risks, uncertainties and other
factors identified in MetLife, Inc.’s filings with the U.S. Securities
and Exchange Commission. These factors include: (1) adverse effects
which may arise in connection with the material weaknesses in our
internal control over financial reporting or our failure to promptly
remediate them; (2) difficult conditions in the global capital markets;
(3) increased volatility and disruption of the global capital and credit
markets, which may affect our ability to meet liquidity needs and access
capital, including through our credit facilities, generate fee income
and market-related revenue and finance statutory reserve requirements
and may require us to pledge collateral or make payments related to
declines in value of specified assets, including assets supporting risks
ceded to certain of our captive reinsurers or hedging arrangements
associated with those risks; (4) exposure to global financial and
capital market risks, including as a result of the United Kingdom’s
notice of withdrawal from the European Union or other disruption in
global political, security or economic conditions; (5) impact on us of
comprehensive financial services regulation reform; (6) numerous
rulemaking initiatives required or permitted by the Dodd-Frank Wall
Street Reform and Consumer Protection Act which may impact how we
conduct our business, including those compelling the liquidation of
certain financial institutions; (7) regulatory, legislative or tax
changes relating to our insurance, international, or other operations
that may affect the cost of, or demand for, our products or services, or
increase the cost or administrative burdens of providing benefits to
employees; (8) adverse results or other consequences from litigation,
arbitration or regulatory investigations; (9) potential liquidity and
other risks resulting from our participation in a securities lending
program and other transactions; (10) investment losses and defaults, and
changes to investment valuations; (11) changes in assumptions related to
investment valuations, deferred policy acquisition costs, deferred sales
inducements, value of business acquired or goodwill; (12) impairments of
goodwill and realized losses or market value impairments to illiquid
assets; (13) defaults on our mortgage loans; (14) the defaults or
deteriorating credit of other financial institutions that could
adversely affect us; (15) economic, political, legal, currency and other
risks relating to our international operations, including with respect
to fluctuations of exchange rates; (16) downgrades in our claims paying
ability, financial strength or credit ratings; (17) a deterioration in
the experience of the closed block established in connection with the
reorganization of Metropolitan Life Insurance Company; (18) availability
and effectiveness of reinsurance, hedging or indemnification
arrangements, as well as any default or failure of counterparties to
perform; (19) differences between actual claims experience and
underwriting and reserving assumptions; (20) ineffectiveness of risk
management policies and procedures; (21) catastrophe losses;
(22) increasing cost and limited market capacity for statutory life
insurance reserve financings; (23) heightened competition, including
with respect to pricing, entry of new competitors, consolidation of
distributors, the development of new products by new and existing
competitors, and for personnel; (24) exposure to losses related to
variable annuity guarantee benefits, including from significant and
sustained downturns or extreme volatility in equity markets, reduced
interest rates, unanticipated policyholder behavior, mortality or
longevity, and any adjustment for nonperformance risk; (25) our ability
to address difficulties, unforeseen liabilities, asset impairments, or
rating agency actions arising from (a) business acquisitions and
integrating and managing the growth of such acquired businesses, (b)
dispositions of businesses via sale, initial public offering, spin-off
or otherwise, including failure to achieve projected operational benefit
from such transactions and any restrictions, liabilities, losses or
indemnification obligations arising from any transitional services or
tax arrangements related to the separation of any business, or from the
failure of such a separation to qualify for any intended tax-free
treatment, (c) entry into joint ventures, or (d) legal entity
reorganizations; (26) unanticipated or adverse developments that could
adversely affect our achieving expected operational or other benefits
from the separation of Brighthouse Financial, Inc. and its subsidiaries
(“Brighthouse”); (27) liabilities, losses or indemnification obligations
arising from our transitional services, investment management or tax
arrangements or other agreements with Brighthouse; (28) failure of the
separation of Brighthouse to qualify for intended tax-free treatment;
(29) legal, regulatory and other restrictions affecting MetLife, Inc.’s
ability to pay dividends and repurchase common stock; (30) MetLife,
Inc.’s and its subsidiary holding companies’ primary reliance, as
holding companies, on dividends from subsidiaries to meet free cash flow
targets and debt payment obligations and the applicable regulatory
restrictions on the ability of the subsidiaries to pay such dividends;
(31) the possibility that MetLife, Inc.’s Board of Directors may
influence the outcome of stockholder votes through the voting provisions
of the MetLife Policyholder Trust; (32) changes in accounting standards,
practices and/or policies; (33) increased expenses relating to pension
and postretirement benefit plans, as well as health care and other
employee benefits; (34) inability to protect our intellectual property
rights or claims of infringement of the intellectual property rights of
others; (35) difficulties in marketing and distributing products through
our distribution channels; (36) provisions of laws and our incorporation
documents that may delay, deter or prevent takeovers and corporate
combinations involving MetLife; (37) the effects of business disruption
or economic contraction due to disasters such as terrorist attacks,
cyberattacks, other hostilities, or natural catastrophes, including any
related impact on the value of our investment portfolio, our disaster
recovery systems, cyber- or other information security systems and
management continuity planning; (38) any failure to protect the
confidentiality of client information; (39) the effectiveness of our
programs and practices in avoiding giving our associates incentives to
take excessive risks; (40) the impact of technological changes on our
businesses; and (41) other risks and uncertainties described from time
to time in MetLife, Inc.’s filings with the U.S. Securities and Exchange
Commission.
MetLife, Inc. does not undertake any obligation to publicly correct or
update any forward-looking statement if MetLife, Inc. later becomes
aware that such statement is not likely to be achieved. Please consult
any further disclosures MetLife, Inc. makes on related subjects in
reports to the U.S. Securities and Exchange Commission.
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Reconciliation of Other Expenses to Other Expenses, as reported
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