10-QPeriod: Q3 FY2007

METLIFE INC Quarterly Report for Q3 Ended Sep 30, 2007

Filed November 5, 2007For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife Inc. reported net income available to common shareholders of $985 million for the third quarter of 2007, a slight decrease of 1% compared to $999 million in the same period of 2006. Diluted earnings per common share remained flat at $1.29 for both periods. The company experienced a significant increase in net investment income, up 13% to $4.7 billion, driven by a larger asset base and higher yields, though management anticipates potential declines in income from limited partnership interests due to market volatility. However, this was offset by a substantial increase in net investment losses, which widened to $269 million from a gain of $256 million in the prior year, largely due to derivative mark-to-market losses and losses on fixed maturity securities repositioning. Overall, total revenues grew by 6% to $13.1 billion, driven by increases in premiums and fees across most segments, but higher policyholder benefits and claims, and increased other expenses also impacted profitability.

Key Highlights

  • 1Net income available to common shareholders decreased slightly by 1% to $985 million in Q3 2007, with diluted EPS flat at $1.29.
  • 2Net investment income increased by 13% to $4.7 billion, reflecting growth in the average asset base and higher yields.
  • 3Net investment losses widened significantly to $269 million in Q3 2007 from a gain of $256 million in Q3 2006, driven by derivative mark-to-market and fixed maturity securities losses.
  • 4Total revenues increased by 6% to $13.1 billion, supported by growth in premiums and fees across most operating segments.
  • 5Other expenses increased by 0.5% to $2.76 billion, with notable increases in the Individual segment driven by higher DAC amortization and business growth.
  • 6The company's total assets grew to $563.1 billion as of September 30, 2007, up from $527.7 billion at December 31, 2006.
  • 7MetLife continues to manage significant litigation and regulatory matters, including asbestos-related claims and sales practices claims, with provisions made for probable and estimable losses.

Frequently Asked Questions

MetLife reported net income available to common shareholders of $985 million for the third quarter of 2007, a slight decrease of 1% from $999 million in the same period of 2006. Diluted earnings per common share remained flat at $1.29 for both periods.

Net investment income increased by 13% to $4.7 billion, primarily due to a larger average asset base and higher yields on various investment types. However, management anticipates potential declines in income from limited partnership interests due to increased market volatility.

Net investment losses widened substantially to $269 million from a gain of $256 million in the prior year. This was mainly due to increased losses from mark-to-market accounting on derivatives, losses on fixed maturity securities resulting from portfolio repositioning, and losses from liability-based foreign currency transactions, partially offset by gains on equity securities and mortgage loans.

Total assets increased to $563.1 billion as of September 30, 2007, from $527.7 billion at December 31, 2006. The company's liquidity appears sufficient, with $9.0 billion in cash and cash equivalents and short-term investments. MetLife also maintains significant committed credit facilities totaling $4.0 billion.

Yes, MetLife faces ongoing litigation and regulatory investigations across its businesses, including significant asbestos-related claims, sales practices claims, and property and casualty actions related to Hurricane Katrina. The company believes it has made adequate provisions for probable and reasonably estimable losses related to these matters.