What is LDTI and why is MetLife reporting on it?

LDTI stands for ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. MetLife adopted these new accounting standards on January 1, 2023. The company is providing updated historical financial information for 2022 to help investors understand the impact of this accounting change on its financial statements and key performance metrics.

Does the adoption of LDTI mean MetLife's business performance has changed?

No, the adoption of LDTI is primarily an accounting change. It affects how MetLife recognizes and measures certain revenues, expenses, and contract liabilities. It does not represent a change in the underlying economic performance or operational strategy of the company itself. The provided supplement shows how prior periods would have looked under the new rules.

How does LDTI affect MetLife's reported earnings?

LDTI simplifies the accounting model for certain aspects like deferred policy acquisition costs (DAC) and value of business acquired (VOBA). MetLife has also updated its non-GAAP 'adjusted earnings' measure. This updated measure now excludes certain prior adjustments related to DAC/VOBA amortization and incorporates changes in how certain guarantees and market risk benefits are accounted for. Investors should consult the 'Historical Results Financial Supplement' for the specific adjustments.

Where can I find the revised financial data?

The revised historical financial data, reflecting the adoption of LDTI for periods in 2022, is available in the "Historical Results Financial Supplement" which is attached as Exhibit 99.1 to this 8-K filing. This supplement is furnished, not filed.

METLIFE INC 8-K: Regulation FD

Summary

MetLife Inc. (MET) filed an 8-K on April 17, 2023, to disclose the impact of adopting new accounting standards for long-duration insurance contracts (ASU 2018-12, also known as LDTI) effective January 1, 2023. The company has provided a "Historical Results Financial Supplement" which revises financial data for several quarters in 2022 and the full year 2022 to reflect these changes. This adoption is primarily an accounting change and does not represent a fundamental shift in the company's business operations or financial performance drivers. The primary impact of LDTI on MetLife's reporting is a simplification of measurement models for deferred policy acquisition costs (DAC) and value of business acquired (VOBA), along with reclassifying most embedded derivatives as market risk benefits. Consequently, MetLife has updated its non-GAAP "adjusted earnings" metric to exclude certain adjustments previously made for amortization of DAC/VOBA and to incorporate changes related to guaranteed benefits. Investors should refer to the "Historical Results Financial Supplement" (Exhibit 99.1) for the updated historical financial information.

Key Highlights

1MetLife adopted new accounting standards for long-duration insurance contracts (LDTI) effective January 1, 2023.
2A "Historical Results Financial Supplement" (Exhibit 99.1) has been provided, revising financial data for Q1-Q4 2022 and FY 2022.
3The adoption of LDTI simplifies accounting for deferred policy acquisition costs (DAC) and value of business acquired (VOBA).
4Most embedded derivatives related to insurance contracts are now reclassified as market risk benefits under LDTI.
5MetLife has updated its non-GAAP adjusted earnings calculation to exclude certain amortization adjustments and reflect changes in guarantee measurements.
6This filing primarily serves to provide updated historical financial data reflecting the accounting standard change, not to announce new business developments or material events.

METLIFE INC 8-K Report, Regulation FD Disclosure (Apr 17, 2023)

Summary

Key Highlights

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