Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MetLife Inc (MET, Financial) reported a 12% increase in year-to-date adjusted earnings per share, excluding notable items, indicating strong momentum and a favorable environment for its businesses.
- The company achieved a 14.6% adjusted return on equity, exceeding its target range of 13% to 15% for the full year, demonstrating effective capital deployment for growth and high returns.
- MetLife Inc (MET) returned approximately $1.2 billion to shareholders in the third quarter through dividends and share repurchases, showcasing its commitment to shareholder value.
- The company reported strong sales in its retirement and income solutions segment, with $5.6 billion in pension risk transfer sales closed so far in 2024, indicating robust market demand.
- MetLife Inc (MET) has a strong cash position with $4.5 billion in cash and liquid assets at its holding companies, above its target cash buffer, ensuring financial flexibility.
Negative Points
- Variable investment income (VII) was below expectations, impacting adjusted earnings, primarily due to lower private equity returns.
- The group benefits business saw a decline in adjusted earnings, down 11% year over year, due to less favorable nonmedical health underwriting margins.
- Asia's adjusted earnings decreased by 6% from the previous year, affected by market-related items, although partially offset by favorable underwriting margins.
- MetLife Holdings experienced a 17% decline in adjusted earnings compared to the prior-year quarter, driven by foregone earnings from a reinsurance transaction.
- The company faced challenges in Japan sales, particularly in single premium FX products, due to yen volatility impacting foreign currency product sales.
Q & A Highlights
Q: Can you discuss the competitive environment and pricing strategy in the group benefits sector, particularly in dental?
A: Ramy Tadros, President of U.S. Business, stated that the competitive environment remains stable and not irrational. The short-term nature of products like dental allows for quick adjustments in pricing. MetLife is managing dental block through cycles and can reprice about 80% of the business annually, aiming to return to target margins by 2025.
Q: What is driving the improvement in the internal rate of return (IRR) and reduction in the payback period for new business value (VNB)?
A: Michel Khalaf, CEO, highlighted the focus on allocating capital to high-return businesses like group benefits and Latin America. John McCallion, CFO, added that favorable regulatory changes, pricing refinements, and unit cost improvements contribute to the positive momentum in IRR and payback period.
Q: How are Japan sales affected by the yen-dollar exchange rate, and what strategies are in place to mitigate this impact?
A: Lyndon Oliver, President of Asia Business, noted that FX volatility impacts sales of foreign currency products, with customers staying on the sidelines. MetLife is diversifying its product portfolio with new yen-denominated and US dollar products to maintain competitiveness.
Q: What is the outlook for commercial real estate, particularly office and non-office sectors?
A: John McCallion, CFO, mentioned that outside of office, the market seems to have hit a trough with a positive outlook. There is increasing transaction activity, and MetLife expects a more positive environment in 2025. The exposure to single borrower CMBS is relatively small.
Q: Can you provide insights into the expected stabilization of RIS spreads and variable investment income (VII)?
A: John McCallion, CFO, indicated that RIS spreads are expected to stabilize in the fourth quarter, with a potential slight increase. For VII, while the sector adjusts to higher rates, MetLife anticipates a return to more normalized levels, possibly higher than the current quarter but not reaching Q2 levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
