10-QPeriod: Q1 FY2017

METLIFE INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife, Inc. reported its first quarter results for 2017, indicating a mixed financial performance compared to the prior year. While total revenues saw a decrease, largely due to a significant unfavorable change in net derivative gains (losses), the company's operating earnings available to common shareholders saw an increase. This improvement in operating earnings was driven by higher net investment income, favorable tax benefits, and increased asset-based fees, despite some unfavorable underwriting results and refinements to deferred policy acquisition costs. The company continues to navigate a complex financial and economic environment, with a particular focus on the planned separation of its Brighthouse Financial business. This strategic initiative, along with the divestiture of its U.S. retail advisor force, is intended to optimize the business portfolio and enhance shareholder value. Management anticipates ongoing costs associated with these strategic transactions in 2017, which are expected to impact operating earnings in the short term but position the company for future growth and improved diversification. MetLife remains committed to its capital management strategies, including share repurchases and dividend payments, subject to regulatory and market conditions.

Financial Highlights

37 data points
Beta

Revenue

$14.96B

Net Income

$873.00M

5.8% Net Margin

EPS (Diluted)

$0.79

Total Assets

$914.69B

Cash & Equivalents

$11.60B

Free Cash Flow

$2.10B

Financial Statements
Beta
Revenue$14.96B
Operating Expenses$3.27B
Operating Income$943.00M
Net Income$873.00M
EPS (Basic)$0.80
EPS (Diluted)$0.79
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1MetLife reported a decrease in net income to $829 million from $2,203 million in the prior year's quarter, primarily due to an unfavorable change in net derivative gains (losses) of $2.3 billion.
  • 2Operating earnings available to common shareholders increased by $217 million (net of tax) to $1.5 billion, driven by higher net investment income and improved equity market performance boosting asset-based fees.
  • 3Total revenues decreased to $16,269 million from $18,433 million, largely impacted by the significant decline in net derivative gains.
  • 4Premiums, a key revenue driver, saw a slight decrease to $9,315 million from $9,693 million year-over-year.
  • 5The company repurchased approximately 16 million shares of common stock in the first quarter of 2017 for $858 million, demonstrating a commitment to returning capital to shareholders.
  • 6MetLife is actively pursuing the separation of its Brighthouse Financial business, with significant steps taken towards this strategic initiative during the quarter.
  • 7The company's total investments grew to $506.9 billion from $500.4 billion at the end of 2016, primarily in fixed maturity securities.

Frequently Asked Questions

The primary driver of the decrease in net income was an unfavorable change in net derivative gains (losses), which amounted to a loss of $926 million in the current quarter compared to a gain of $1,335 million in the prior year's quarter, representing a significant year-over-year swing.

While the separation is a strategic initiative for future value creation, it led to increased expenses and operational adjustments in the current quarter. The company noted that these separation-related costs and activities, along with the divestiture of its U.S. retail advisor force, impacted current period results, particularly in segments like MetLife Holdings and Brighthouse Financial where sales were affected.

MetLife repurchased a significant number of shares in the first quarter and has $1.8 billion remaining under its common stock repurchase authorization. The company also declared a common stock dividend of $0.40 per share for the second quarter. The continuation of these capital actions depends on factors such as capital position, liquidity, financial strength, market conditions, and regulatory approvals.

The company's investment portfolio, heavily weighted towards fixed income securities, generated higher net investment income due to improved equity market performance and portfolio growth. However, the low interest rate environment continues to be a factor, and MetLife is managing interest rate risk through ALM strategies and derivatives. The Federal Reserve's actions on interest rates are being monitored for their potential impact.