10-QPeriod: Q3 FY2008

METLIFE INC Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 7, 2008For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife, Inc. (MET) reported mixed financial results for the third quarter of 2008, impacted by significant global financial market disruptions. Net income available to common shareholders decreased by 39% year-over-year to $600 million, or $0.83 per diluted share, primarily due to a substantial increase in losses from discontinued operations, largely stemming from the split-off of its interest in Reinsurance Group of America (RGA). Total revenues grew by 16% to $13.4 billion, driven by increases in premiums and fees across several segments, particularly Institutional and International. However, higher expenses, notably in DAC amortization and corporate costs related to an efficiency initiative, also pressured profitability. The company's investment portfolio experienced increased unrealized losses due to deteriorating market conditions, with net investment income declining 10% year-over-year, though this was partially offset by gains from derivatives. Despite the challenging environment, MetLife highlighted stable policyholder lapse and surrender rates in its Individual and Institutional segments and maintained a strong liquidity position. The company also issued common stock in October 2008, raising $2.3 billion to bolster its capital base.

Financial Highlights

20 data points
Beta

Revenue

$13.35B

Net Income

$630.00M

4.7% Net Margin

EPS (Diluted)

$0.83

Cash & Equivalents

$20.18B

Free Cash Flow

$1.58B

Financial Statements
Beta
Revenue$13.35B
Operating Expenses$11.77B
Net Income$630.00M
EPS (Basic)$0.84
EPS (Diluted)$0.83

Key Highlights

  • 1Net income available to common shareholders decreased 39% to $600 million ($0.83/share) from $985 million ($1.29/share) in Q3 2007.
  • 2Total revenues increased 16% to $13.4 billion, driven by premium growth across segments.
  • 3Net investment income decreased 10% to $4.1 billion due to lower yields, partially offset by higher average invested assets.
  • 4Net investment gains (losses) improved significantly, turning from a $209 million loss in Q3 2007 to a $745 million gain, primarily due to derivative gains offsetting security impairments.
  • 5Other expenses increased 18% to $2.9 billion, driven by higher DAC amortization, corporate initiatives, and legal costs.
  • 6Discontinued operations resulted in a loss of $431 million, largely due to the RGA split-off transaction, compared to income of $76 million in Q3 2007.
  • 7The company ended the quarter with $20.2 billion in cash and cash equivalents, and maintained $3.3 billion in committed credit facilities.

Frequently Asked Questions

MetLife's net income available to common shareholders decreased by 39% to $600 million in the third quarter of 2008 compared to $985 million in the same period of 2007. This decline was primarily attributed to a significant increase in losses from discontinued operations, largely due to the RGA split-off, and higher operating expenses, partially offset by improved net investment gains and premium growth.

The company's investment portfolio experienced increased unrealized losses due to deteriorating market conditions, including widening credit spreads and declining equity markets. Net investment income decreased due to lower yields, but this was partially offset by gains from derivative instruments, which helped mitigate some of the negative impact from security impairments.

MetLife maintained a strong liquidity position, with $20.2 billion in cash and cash equivalents. Additionally, the company had access to $3.3 billion in committed credit facilities, providing further financial flexibility in the challenging market environment.

Yes, MetLife completed the tax-free split-off of its majority-owned subsidiary, Reinsurance Group of America (RGA), during the quarter. This transaction resulted in a significant loss from discontinued operations. Additionally, MetLife raised $2.3 billion in proceeds from a common stock issuance in October 2008.