01—Abstract
Summary
Summary of the 10-K filed March 2, 2009. Cited figures are marked; the original filing is the authoritative source.
MetLife Inc. reported its 2008 annual results, a year significantly impacted by the global financial crisis.
The company experienced a notable decrease in net income available to common shareholders, primarily due to increased losses from discontinued operations related to the split-off of Reinsurance Group of America (RGA). However, the company's core insurance segments demonstrated resilience, with premiums, fees, and other revenues increasing across Institutional and International segments, driven by business growth. Despite a decrease in net investment income, MetLife's robust derivative hedging strategies helped offset some of the losses on embedded derivatives associated with variable annuities, resulting in net investment gains for the year.
Management anticipates continued financial market volatility in 2009, projecting mixed results across segments. Key challenges include lower fee income from separate account businesses and potential declines in retirement and savings product demand.
MetLife is focusing on disciplined underwriting, pricing, hedging, and expense management to navigate the economic environment. The company also raised capital through common stock offerings in 2008 to strengthen its position.
02—Key points
Key Highlights
- Net income available to common shareholders decreased by 26% to $3,084 million in 2008 compared to $4,180 million in 2007.
- The decrease in net income was largely driven by increased losses from discontinued operations, primarily related to the split-off of RGA.
- Premiums, fees, and other revenues increased by 11% to $32,881 million in 2008, with notable growth in the Institutional and International segments.
- Net investment income decreased by 10% to $16,296 million, primarily due to lower returns on various investment asset classes.
- Net investment gains (losses) improved significantly, shifting from a loss of $578 million in 2007 to a gain of $1,812 million in 2008, largely due to gains on freestanding derivatives that offset losses on embedded derivatives.
- The company raised $2.3 billion in October 2008 through a common stock offering to strengthen its capital position.
- MetLife is focused on disciplined underwriting, pricing, hedging strategies, and expense management to navigate the challenging economic environment in 2009.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed March 2, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $50.98B$47.15B | +8.1% |
| Operating Expenses | $11.95B$10.40B | +14.8% |
| Operating Income | $3.38B— | — |
| Interest Expense | $1.05B— | — |
| Net Income | $3.21B$4.32B | −25.7% |
| EPS (Basic) | $4.19$5.62 | −25.4% |
| EPS (Diluted) | $4.14$5.48 | −24.5% |
| Shares Outstanding (Basic) | 735.18M— | — |
| Shares Outstanding (Diluted) | 744.79M— | — |
05—Questions
Frequently Asked Questions
How did the 2008 financial crisis impact MetLife's financial results?
The global financial crisis significantly impacted MetLife's financial results in 2008, leading to a decrease in net income available to common shareholders. This was primarily driven by increased losses from discontinued operations related to the RGA split-off, as well as a decrease in net investment income due to lower returns across various asset classes. However, the company's proactive hedging strategies helped generate net investment gains, offsetting some of the negative impacts.
What is MetLife's outlook for 2009?
MetLife anticipates continued financial market volatility in 2009. The company expects a modest increase in premiums, fees, and other revenues on a constant exchange rate basis, but anticipates lower fee income from separate account businesses and potential reductions in retirement and savings product demand. Management is focusing on disciplined underwriting, pricing, hedging, and expense management to navigate these challenges.
How did MetLife manage its liquidity during the 2008 financial crisis?
MetLife purposefully enhanced its liquidity position in the second half of 2008 by holding historically high levels of cash, cash equivalents, and short-term investments. The company also utilized intersegment transfers of assets rather than selling assets into a distressed market and participated to a limited extent in certain government programs. In October 2008, MetLife raised $2.3 billion in common stock offerings to further strengthen its capital position.
What are the main drivers of MetLife's Other Expenses?
Other expenses increased by 14% to $11,924 million in 2008. Key drivers for this increase included higher deferred policy acquisition costs (DAC) amortization in the Individual segment due to lower expected future gross profits from market declines, increased corporate expenses related to the 'Operational Excellence' initiative, higher legal costs, and increased expenses in MetLife Bank due to acquisitions.
06—Continue