10-QPeriod: Q3 FY2017

METLIFE INC Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 6, 2017For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife Inc. reported its third-quarter 2017 financial results, marked by a significant strategic shift with the completion of the Brighthouse Financial, Inc. separation. This separation, completed on August 4, 2017, resulted in a substantial portion of MetLife's former retail segment being spun off, impacting comparability with prior periods and leading to a reported net loss in continuing operations for the quarter, primarily driven by the costs associated with the separation. However, excluding separation-related costs and certain other adjustments, the company's operating earnings showed resilience, driven by broad-based business growth across its international segments (Asia, Latin America, EMEA) and improvements in certain product lines within the U.S. Despite a challenging low-interest-rate environment and increased competition, MetLife demonstrated effective risk management through its investment portfolio and derivative hedging strategies. The company continued to focus on its "Accelerating Value" strategy, emphasizing digital transformation, operational excellence, and enhanced customer value propositions. The company's outlook for 2018 anticipates growth in operating earnings driven by ongoing expense discipline and business expansion, with an increasing contribution from its international operations.

Financial Highlights

38 data points
Beta

Revenue

$16.17B

Net Income

-$91.00M

-0.6% Net Margin

EPS (Diluted)

$-0.09

Total Assets

$720.51B

Cash & Equivalents

$13.02B

Free Cash Flow

$4.73B

Financial Statements
Beta
Revenue$16.17B
Operating Expenses$3.32B
Operating Income$2.62B
Net Income-$91.00M
EPS (Basic)$-0.09
EPS (Diluted)$-0.09
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Completion of Brighthouse Financial separation in August 2017, with MetLife retaining a 19.2% stake.
  • 2Net loss from continuing operations for the quarter due to separation costs, while operating earnings showed resilience.
  • 3Broad-based sales growth in international segments (Asia, Latin America, EMEA) partially offset by U.S. segment declines.
  • 4Continued focus on "Accelerating Value" strategy with an emphasis on digital, operational excellence, and customer value.
  • 5Investment portfolio managed with a focus on ALM principles, with over 80% in fixed income and mortgage loans.
  • 6Effective use of derivatives for risk management, particularly for variable annuity guarantees and interest rate hedging.
  • 7Anticipated 2018 operating earnings growth driven by international expansion and expense discipline.

Frequently Asked Questions

The separation of Brighthouse Financial, Inc. was completed on August 4, 2017. MetLife Inc. recorded a net loss of $1,084 million (net of tax) in the third quarter of 2017 related to the separation, which included losses on the retained investment in Brighthouse, tax charges, and transaction costs. The results of Brighthouse are reflected as discontinued operations.

Operating earnings available to common shareholders decreased by $187 million, net of income tax, to $1.2 billion, net of income tax, for the three months ended September 30, 2017, compared to $1.4 billion, net of income tax, for the prior year period. This decrease was primarily driven by higher taxes and lower investment yields, partially offset by the impact of their annual actuarial assumption review.

MetLife anticipates post-Separation operating earnings to grow in 2018, driven by both business growth and expense discipline. They expect to generate over 40% of operating earnings from outside the United States in 2018, with that percentage expected to grow over time.

MetLife manages its investment portfolio using disciplined asset/liability management (ALM) principles, focusing on cash flow and duration matching. Over 80% of the portfolio is invested in fixed income securities and mortgage loans. The company also uses derivatives extensively to hedge risks related to interest rates, foreign currency exchange rates, credit spreads, and equity market levels.