10-QPeriod: Q2 FY2022

METLIFE INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife Inc.'s (MET) second-quarter 2022 results, filed on August 3, 2022, showed a significant decrease in net income available to common shareholders to $103 million from $3.37 billion in the prior year's quarter. This decline was primarily driven by unfavorable changes in net investment gains (losses) and net derivative gains (losses), alongside a decrease in adjusted earnings. For the six-month period, net income available to common shareholders also saw a substantial drop to $709 million from $3.66 billion. The company's overall revenue saw a decrease, influenced by market factors such as rising interest rates and volatile equity markets, which impacted net investment income and derivative results. Despite these challenges, the company reported favorable underwriting results, largely due to a decline in COVID-19 related claims. Strategic initiatives, including international business dispositions and a focus on core operations, continue to shape the company's financial performance. Investors should note the significant impact of market volatility on the company's earnings, particularly through investment gains/losses and derivative activities.

Financial Highlights

36 data points
Beta

Revenue

$15.47B

Net Income

$915.00M

5.9% Net Margin

EPS (Diluted)

$1.08

Total Assets

$662.89B

Cash & Equivalents

$20.55B

Free Cash Flow

$4.39B

Financial Statements
Beta
Revenue$15.47B
Operating Expenses$2.91B
Net Income$915.00M
EPS (Basic)$1.09
EPS (Diluted)$1.08
Shares Outstanding (Basic)809.70M
Shares Outstanding (Diluted)814.50M

Key Highlights

  • 1Net income available to common shareholders decreased significantly to $103 million for Q2 2022 from $3.37 billion in Q2 2021, primarily due to unfavorable investment and derivative results.
  • 2Total revenues decreased to $15.56 billion in Q2 2022 from $18.52 billion in Q2 2021.
  • 3Adjusted earnings available to common shareholders declined to $1.63 billion in Q2 2022 from $2.09 billion in Q2 2021, reflecting lower investment yields and higher expenses.
  • 4The company saw a substantial increase in its investment portfolio, with total investments at $436.03 billion as of June 30, 2022, down from $494.82 billion at December 31, 2021.
  • 5MetLife continues to manage its capital effectively, with total stockholders' equity decreasing to $37.37 billion from $67.75 billion, partly due to a significant decrease in Accumulated Other Comprehensive Income (Loss).
  • 6The company repurchased approximately $2.06 billion of its common stock during the first six months of 2022.
  • 7Dispositions of subsidiaries in Poland and Greece were completed, with a net loss of $25 million recorded for the six months ended June 30, 2022.

Frequently Asked Questions

The primary driver for the significant decrease in net income available to common shareholders was the unfavorable change in net investment gains (losses) and net derivative gains (losses). For the second quarter of 2022, net investment gains (losses) were a loss of $685 million compared to a gain of $1.61 billion in the prior year, and net derivative gains (losses) were a loss of $1.19 billion compared to a gain of $421 million in the prior year.

Market factors, including rising interest rates and lower equity market returns, negatively impacted MetLife's results. This led to lower investment yields, particularly affecting private equity and hedge funds, and an unfavorable change in the valuation of derivatives. While these factors reduced adjusted earnings, the company benefited from higher net investment income due to a larger invested asset base and favorable underwriting, especially a decline in COVID-19 related claims.

MetLife uses derivatives as an integral part of its risk management strategy to hedge against risks related to interest rates, foreign currency exchange rates, credit, and equity markets. These strategies include using freestanding derivatives to hedge invested assets and insurance liabilities, and some of these are designated as accounting hedges to reduce earnings volatility. For certain variable annuity products with guaranteed minimum benefits, the company also uses derivatives to hedge inherent market risks, with changes in fair value recorded in net derivative gains (losses).

The substantial decrease in Accumulated Other Comprehensive Income (Loss) from $10.9 billion at the end of 2021 to a loss of $17.4 billion at June 30, 2022, is primarily due to unrealized investment losses. This significant negative movement in AOCI reflects the impact of changing market conditions, particularly rising interest rates and widening credit spreads, on the fair value of the company's investment portfolio.