01—Abstract
Summary
Summary of the 8-K filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
MetLife reported first quarter 2024 net income available to common shareholders of $800 milliona, or $1.10 per diluted share, versus $14 million ($0.02) a year earlier.
Adjusted earnings rose 13% to $1.33 billionb, or $1.83 per share (up 20%), and management reported no notable items in the quarter. Growth was broad-based: total revenues increased to $16.1 billion, premiums, fees and other revenues rose 4%, and net investment income grew 17% on higher variable investment income (about $260 million, versus a loss in the prior-year period), higher interest rates, and private equity returns. Asia (adjusted earnings up 51%) and EMEA (up 28%) were standout segments, while Group Benefits declined 7% on lower non-medical health margins.
Book value per share fell 6% to $34.54c, though book value excluding most AOCI was roughly flat at $53.13 (down 1%). Capital and liquidity remained strong. Holding company cash and liquid assets were $5.2 billion, above the company's $3.0–$4.0 billion target buffer.
MetLife repurchased about $1.2 billiond of stock in the quarter, with a further roughly $330 million in April, and the board approved a new $3 billion buyback authorization. The 2023 combined U.S. RBC ratio was 407%, above the 360% target, and the Japan solvency margin was an estimated 725%. Return on equity improved to 12.6% from 0.2%, and adjusted ROE excluding AOCI other than FCTA was 13.8%, up from 11.3%.
Key watch items include the sizeable net derivative losses of $979 million (driven by a stronger U.S. dollar, higher equities, and rising long-term rates), net investment losses of $375 million, and the sustainability of elevated variable investment income, which the company targets at about $375 million per quarter based on full-year 2024 guidance of roughly $1.5 billion. The Group Benefits margin pressure and reliance on volatile private equity income also warrant monitoring.
02—Key points
Key Highlights
- Net income available to common shareholders of $800M ($1.10/share) vs. $14M ($0.02/share) in 1Q23; adjusted earnings of $1.33B ($1.83/share), up 13% (20% per share), with no notable items
- Asia adjusted earnings up 51% (57% constant currency) to $423M on higher variable investment income and favorable underwriting; EMEA up 28%; Latin America up 8%; Group Benefits down 7% on lower non-medical health margins
- Net investment income rose 17% to $5.4B, with variable investment income of $260M versus a $44M loss a year earlier; adjusted NII up 10% to $5.1B
- Book value per share fell 6% to $34.54 (down 1% to $53.13 excluding AOCI other than FCTA); ROE improved to 12.6% from 0.2%, and adjusted ROE excluding AOCI other than FCTA rose to 13.8% from 11.3%
- Capital return: ~$1.2B of share repurchases in 1Q24 plus ~$330M in April 2024; board approved a new $3B repurchase authorization
- Strong balance sheet: holding company cash and liquid assets of $5.2B, above the $3.0–$4.0B target buffer; 2023 combined U.S. RBC ratio of 407% vs. 360% target; Japan solvency margin ~725%
- Net derivative losses of $979M and net investment losses of $375M weigh on GAAP results, though these are excluded from adjusted earnings
03—Questions
Frequently Asked Questions
Why did GAAP net income rise so sharply compared with the prior year?
GAAP net income available to common shareholders climbed to $800M from $14M, driven mainly by higher adjusted earnings ($1.33B vs. $1.18B) and smaller net investment losses ($375M vs. $684M). A favorable $694M market risk benefit remeasurement gain versus a $188M loss in 1Q23 also helped, though net derivative losses of $979M partly offset these gains.
Is the $3 billion buyback authorization a meaningful signal for investors?
The authorization is sizable relative to the company's market value and follows roughly $1.2B of repurchases in the quarter, indicating management's intent to continue returning excess capital. Share count fell to 715.7M from 769.2M a year earlier (about 7%), which supports per-share earnings growth. Investors should still weigh the buyback against the $5.2B holding company liquidity and the target cash buffer.
How sustainable are the strong 1Q24 investment returns?
Variable investment income of $260M was well above the company's quarterly target of about $375M based on full-year guidance of ~$1.5B, so it is not necessarily a run-rate. Much of it came from higher private equity returns, which are inherently volatile. Recurring investment income of $4.8B, up from $4.7B, is more predictable and is supported by higher interest rates.
Why did book value per share decline even though earnings were strong?
Book value per share fell 6% to $34.54, largely because of AOCI movements, principally higher net unrealized investment losses ($23.21 per share deduction) on the fixed income portfolio as rates remained elevated. Excluding AOCI other than FCTA, book value per share was $53.13, down only 1%. Management emphasizes the adjusted measure because it strips out interest-rate-driven swings that do not reflect operating performance.
What are the main risks or weak spots highlighted in the quarter?
Group Benefits adjusted earnings fell 7% on lower non-medical health underwriting margins, and MetLife Holdings' adjusted premiums declined 12% after the November 2023 Global Atlantic reinsurance transaction. Corporate & Other losses widened slightly to $241M, and net derivative losses of $979M reflected dollar strength and rising long-term rates. Investors should monitor these areas alongside the reliance on volatile private equity income.
04—Continue