Why did GAAP net income more than triple while adjusted earnings declined?

GAAP net income was lifted by $767 million of net derivative gains, driven by a stronger yen and lower interest rates, and it was partly offset by $531 million of market risk benefit remeasurement losses. Adjusted earnings exclude these market-driven items to show underlying operating performance, and on that basis earnings fell 8% in dollars, mainly due to Group Benefits and MetLife Holdings.

What drove the decline in Group Benefits earnings?

Group Benefits adjusted earnings fell 27% to $373 million, primarily because of a liability refinement in the annual actuarial assumption review (related to an annuity payout feature on a small part of the Group Life portfolio) and less favorable non-medical health underwriting. Excluding notable items, the segment declined 11%, and management indicated the refinement has no ongoing impact.

Is MetLife's capital position strong enough to support shareholder returns?

Yes, based on the disclosures. Holding company cash and liquid assets of $4.5 billion sat above the $3.0 to $4.0 billion target buffer, U.S. statutory adjusted capital was expected at about $17.6 billion (down 2% from June 30), and the Japan solvency margin ratio was approximately 745%. The company repurchased about $0.8 billion of shares in the quarter and about $130 million in October.

How are revenue trends looking beneath the headline numbers?

Reported premiums, fees and other revenues fell 5% to $12.5 billion, largely because pension risk transfer (PRT) volume dropped from $1.46 billion to $529 million. Excluding PRT, adjusted premiums, fees and other revenues rose 2% to $11.9 billion, with Group Benefits up 5% and Latin America up 1% on a reported basis (11% constant currency). Sales were up 9% year to date in Group Benefits and 42% in RIS, showing continued underlying momentum.

METLIFE INC 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.

MetLife (MET) reported third quarter 2024 results on October 30, 2024, with GAAP net income available to common shareholders of $1.3 billion^a ($1.81 per diluted share), up sharply from $422 million ($0.56) a year earlier.

The increase was driven primarily by net derivative gains of $767 million^b, which were partly offset by market risk benefit remeasurement losses of $531 million. Net income is volatile and largely reflects market-driven items, so investors should focus on the company's adjusted metrics. On an adjusted basis, which strips out market volatility and accounting asymmetries, adjusted earnings were $1.4 billion ($1.95 per share), down 8% in dollar terms and 1% per share versus the prior year.

Excluding total notable items, adjusted earnings were $1.36 billion^c ($1.93 per share). The decline was concentrated in Group Benefits (down 27%, reflecting a liability refinement in the annual actuarial assumption review and less favorable non-medical health underwriting) and MetLife Holdings (down 13%, reflecting the 2023 reinsurance transaction). Asia (up 11%) and Latin America (up 11%) grew, and total adjusted premiums, fees and other revenues fell 5% to $12.5 billion, though excluding pension risk transfers they rose 2%.

Capital and returns metrics remained solid. Adjusted ROE, excluding AOCI other than FCTA, was 14.6%, and book value per share excluding AOCI other than FCTA rose 3% to $54.72^d.

Holding company cash and liquid assets were $4.5 billion, above the $3.0 to $4.0 billion target buffer. Management repurchased approximately $0.8 billion of stock in the quarter and roughly $130 million in October 2024, reflecting continued capital return alongside a modest decline in variable investment income.

02—Key points

Key Highlights

GAAP net income available to common shareholders was $1.275 billion ($1.81 per diluted share), up from $422 million ($0.56) in Q3 2023, driven mainly by $767 million of net derivative gains.
Adjusted earnings were $1.375 billion ($1.95 per diluted share), down 8% in dollars and 1% per share year over year; excluding total notable items, adjusted EPS was $1.93.
Group Benefits adjusted earnings fell 27% to $373 million, reflecting an actuarial assumption refinement and weaker non-medical health underwriting, while Group Benefits premiums grew 5%.
Asia and Latin America adjusted earnings each rose 11% on a reported basis, supported by favorable underwriting and higher Chilean encaje returns; EMEA adjusted earnings fell 20%.
Adjusted ROE excluding AOCI other than FCTA was 14.6%, and book value per share excluding AOCI other than FCTA increased 3% to $54.72.
Holding company cash and liquid assets totaled $4.5 billion, above the $3.0 to $4.0 billion target buffer, with about $0.8 billion of share repurchases in Q3 and roughly $130 million in October 2024.
Variable investment income declined to $162 million from $179 million on lower private equity returns, and total adjusted net investment income rose 2% to $5.1 billion on higher interest rates and asset growth.

03—Questions

Frequently Asked Questions

Why did GAAP net income more than triple while adjusted earnings declined?
GAAP net income was lifted by $767 million of net derivative gains, driven by a stronger yen and lower interest rates, and it was partly offset by $531 million of market risk benefit remeasurement losses. Adjusted earnings exclude these market-driven items to show underlying operating performance, and on that basis earnings fell 8% in dollars, mainly due to Group Benefits and MetLife Holdings.
What drove the decline in Group Benefits earnings?
Group Benefits adjusted earnings fell 27% to $373 million, primarily because of a liability refinement in the annual actuarial assumption review (related to an annuity payout feature on a small part of the Group Life portfolio) and less favorable non-medical health underwriting. Excluding notable items, the segment declined 11%, and management indicated the refinement has no ongoing impact.
Is MetLife's capital position strong enough to support shareholder returns?
Yes, based on the disclosures. Holding company cash and liquid assets of $4.5 billion sat above the $3.0 to $4.0 billion target buffer, U.S. statutory adjusted capital was expected at about $17.6 billion (down 2% from June 30), and the Japan solvency margin ratio was approximately 745%. The company repurchased about $0.8 billion of shares in the quarter and about $130 million in October.
How are revenue trends looking beneath the headline numbers?
Reported premiums, fees and other revenues fell 5% to $12.5 billion, largely because pension risk transfer (PRT) volume dropped from $1.46 billion to $529 million. Excluding PRT, adjusted premiums, fees and other revenues rose 2% to $11.9 billion, with Group Benefits up 5% and Latin America up 1% on a reported basis (11% constant currency). Sales were up 9% year to date in Group Benefits and 42% in RIS, showing continued underlying momentum.

04—Continue

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