01—Abstract
Summary
Summary of the 8-K filed February 5, 2025. Cited figures are marked; the original filing is the authoritative source.
MetLife reported a solid close to 2024, with full-year adjusted earnings of $5.8 billiona ($8.15 per share, up 12%) and adjusted earnings excluding total notable items of $5.77 billion ($8.11 per share, up 11%).
Fourth-quarter adjusted earnings were $1.5 billionb ($2.09 per share), and GAAP net income for the year rose to $4.2 billion ($5.94 per share) from $1.4 billion, helped by market risk benefit remeasurement gains and lower derivative and investment losses than in 2023. Growth was strongest in Asia (+26% for the year, +50% in Q4) and EMEA, while Group Benefits and RIS saw pressure in the quarter from lower non-medical health margins and recurring interest margins. Book value per share fell 4% to $34.28 because of unrealized investment losses, while adjusted book value rose 2% to $54.81.
The key forward-looking news is the launch of the New Frontier five-year strategy and an upgraded outlook. Management raised its near-term adjusted return on equity target to 15%-17% from 13%-15%, set a new target of double-digit adjusted EPS growth, and lowered its direct expense ratio target to 12.1% near term and 11.3% over the New Frontier period. It also expects to generate roughly $25 billionc of free cash flow over five years and to maintain its $3.0-$4.0 billion holding company cash target, with $5.1 billion currently held above that range.
Capital and liquidity appear strong, with a U.S. RBC ratio above the 360%d target and no material liquidity deficiencies expected. Investors should keep in mind that the outlook depends on assumptions about interest rates, a 5% S&P 500 return, and 9%-11% private equity returns.
Variable investment income of $800 million for the year came in below the roughly $1.5 billion guidance, driven by weaker real estate returns, and the 2025 outlook for Group Benefits and RIS includes FX headwinds. The 8-K also notes that adjusted earnings in Q4 included net notable items of $10 million, primarily from a tax adjustment offset by a litigation charge.
02—Key points
Key Highlights
- Full-year 2024 adjusted EPS of $8.15 (up 12%); excluding total notable items, $8.11 (up 11%), with adjusted earnings of $5.8 billion
- Q4 2024 adjusted earnings of $1.5 billion, or $2.09 per share, up 14% on a per-share basis; GAAP net income of $1.2 billion ($1.78 per share) versus $574 million a year earlier
- Raised adjusted ROE target to 15%-17% from 13%-15%, and set a new target of double-digit adjusted EPS growth in the near term under the New Frontier strategy
- Lowered direct expense ratio target (ex. notable items and PRT) to 12.1% near term and 11.3% over the New Frontier period, from 12.3%
- Book value per share fell 4% to $34.28 on unrealized investment losses, while adjusted book value rose 2% to $54.81
- Holding company cash of $5.1 billion sits above the $3.0-$4.0 billion target; about $21.0 billion returned to shareholders over 2020-2024 and ~$25.0 billion of free cash flow expected over the next five years
- Variable investment income of $800 million for 2024 fell short of the ~$1.5 billion guidance due to lower real estate returns; 2025 VII guidance is ~$1.7 billion
03—Questions
Frequently Asked Questions
What drove MetLife's earnings growth in 2024?
Adjusted earnings rose 12% per share for the full year, led by Asia (adjusted earnings up 26% reported, 30% constant currency) and EMEA (up 7%). Higher variable investment income from private equity and asset growth also helped, offset in part by weaker Group Benefits and RIS results in the fourth quarter, where lower non-medical health underwriting margins and recurring interest margins pulled earnings down.
Why did book value per share decline while adjusted book value rose?
Reported book value per share fell 4% to $34.28 mainly because unrealized investment losses increased and reduced accumulated other comprehensive income. Adjusted book value per share, which excludes most AOCI components including unrealized gains and losses, rose 2% to $54.81, reflecting retained earnings and share repurchases. Investors should look at adjusted book value as the more operating-focused measure.
What do the New Frontier targets mean for shareholders?
Management now targets adjusted ROE of 15%-17% in the near term, up from 13%-15%, and expects double-digit adjusted EPS growth. These targets assume a 10-year Treasury rate of 4.69% at year-end 2025, a 5% S&P 500 return, and 9%-11% private equity returns. They also target a free cash flow ratio of 65%-75% of adjusted earnings and roughly $25 billion of free cash flow over five years. Shifts in rates, equity markets, or private equity performance could move these outcomes materially.
Are there any risks or weak spots investors should watch?
Variable investment income of about $800 million missed the ~$1.5 billion guidance, mainly due to lower real estate returns. Group Benefits and RIS posted declines in Q4 adjusted earnings. The 2025 outlook includes FX headwinds on reported results for Asia, Latin America and EMEA, and a stronger U.S. dollar is expected. The company also notes that its outlook may be revised as economic, regulatory and other conditions evolve.
04—Continue