10-QPeriod: Q2 FY2009

METLIFE INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 4, 2009For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife Inc. reported a net loss of $1.433 billion, or $1.74 per diluted share, for the second quarter of 2009, a significant decline from the $915 million net income ($1.26 per diluted share) reported in the same period of 2008. This was primarily driven by substantial net investment losses of $3.829 billion, largely due to increased losses on derivatives and impairments across various asset classes, reflecting ongoing market volatility. Premiums, fees, and other revenues saw a modest increase, but were outpaced by the investment losses and higher policyholder benefits. The company maintained a strong liquidity position with $13.2 billion in cash and cash equivalents, though it is holding higher than usual levels of short-term investments to navigate market uncertainty. Management highlighted ongoing cost reduction initiatives and a focus on disciplined underwriting and hedging strategies to manage the challenging economic environment.

Financial Highlights

37 data points
Beta

Revenue

$8.26B

Net Income

-$1.40B

-17.0% Net Margin

EPS (Diluted)

$-1.74

Total Assets

$509.46B

Cash & Equivalents

$13.21B

Free Cash Flow

-$242.00M

Financial Statements
Beta
Revenue$8.26B
Operating Expenses$2.03B
Operating Income-$2.04B
Interest Expense$256.00M
Net Income-$1.40B
EPS (Basic)$-1.74
EPS (Diluted)$-1.74
Shares Outstanding (Basic)821.59M
Shares Outstanding (Diluted)821.59M

Key Highlights

  • 1Net loss of $1.433 billion for Q2 2009, down from a net income of $915 million in Q2 2008.
  • 2Diluted loss per share of $1.74 in Q2 2009, compared to diluted income per share of $1.26 in Q2 2008.
  • 3Total revenues decreased to $8.266 billion in Q2 2009 from $12.049 billion in Q2 2008, primarily due to lower net investment income and increased net investment losses.
  • 4Net investment losses significantly increased to $3.829 billion in Q2 2009, driven by derivatives and impairments, compared to $357 million in Q2 2008.
  • 5Policyholder benefits and claims increased to $6.946 billion in Q2 2009 from $6.579 billion in Q2 2008.
  • 6Other expenses decreased to $2.031 billion in Q2 2009 from $2.607 billion in Q2 2008, reflecting cost reduction initiatives.
  • 7Cash and cash equivalents stood at $13.213 billion at June 30, 2009, demonstrating continued liquidity.

Frequently Asked Questions

The primary driver for the substantial decrease in net income to a net loss of $1.433 billion was a significant increase in net investment losses, which totaled $3.829 billion for the quarter. This was largely due to increased losses on derivatives and impairments across various asset classes, reflecting ongoing market volatility and economic pressures.

The investment portfolio experienced a challenging quarter. Net investment income decreased to $3.731 billion from $4.319 billion in the prior year quarter, largely due to lower yields across various asset classes. More significantly, net investment losses surged to $3.829 billion due to adverse movements in derivatives, impairments on fixed maturity and equity securities, and losses in other asset classes like limited partnership interests and real estate.

MetLife maintained a strong liquidity position, with cash and cash equivalents totaling $13.213 billion at the end of the second quarter of 2009. The company is strategically holding a higher than normal level of short-term investments to navigate market uncertainty and has access to significant committed credit facilities.

MetLife is involved in numerous litigation matters, including class action lawsuits related to its demutualization, asbestos claims against its subsidiary MLIC, and various sales practices claims. While the company believes it has strong defenses and adequate provisions for most matters, the outcomes of these litigations are inherently uncertain and could potentially have a material adverse effect on net income or cash flows in specific periods.