MetLife, Inc. (MET) Earnings Call Transcript & Summary

Hello, and thank you for joining as I discuss MetLife's results for the second quarter of 2023. MetLife delivered another solid quarter. While variable investment income remains below historical returns, they improved sequentially, and our underlying fundamentals were strong with good top line growth as well as disciplined underwriting and expense management. And the pending reinsurance transaction with Global Atlantic further demonstrates our commitment to focusing on value creation and deploying capital to its highest and best use. Second quarter net income was $370 million compared to $881 million in the second quarter of 2022, primarily the result of certain required accounting adjustments associated with the pending reinsurance transaction. Adjusted earnings were $1.5 billion compared to adjusted earnings of $1.7 billion a year ago, primarily driven by lower variable investment income. Underwriting margins were also less favorable than the prior year but within our targeted ranges. Higher recurring interest margins and solid volume growth were partial offsets. On a per share basis, adjusted earnings were $1.94 compared to $2.13 a year ago. Now let's turn to our business segments. Starting with the U.S. business. Group Benefits adjusted earnings were $372 million, down 8%, primarily driven by less favorable underwriting margins and variable expenses, partially offset by volume growth. Year-to-date sales were up 13%, reflecting strong growth across all market segments. Retirement and Income Solutions adjusted earnings were $417 million, up 11%, largely driven by higher recurring interest margins and volume growth, partially offset by lower variable investment income. Adjusted premiums, fees and other revenues, excluding pension risk transfer sales were up 73%, primarily driven by strong structured settlement sales and growth in U.K. longevity reinsurance. Regarding pension risk transfer sales, we completed 2 transactions worth $2 billion in the quarter. In Asia, adjusted earnings were down 11% on a reported basis and down 9% on a constant currency basis. The primary driver was lower variable investment income. Sales in the quarter were up 34% on a constant currency basis, driven by strong sales across the region, particularly in Japan. In Latin America, adjusted earnings were $219 million, down 13% on a reported basis and down 21% on a constant currency basis. This reflected a COVID-related reserve release in the prior year period and capital market factors. Strong sales and solid persistency across the region contributed to top line growth, with adjusted premiums, fees and other revenues up 14% on a constant currency basis. In EMEA, adjusted earnings were up 6% on a reported basis and up 15% on a constant currency basis, primarily driven by higher recurring interest margins. In addition, sales were up 13% on a constant currency basis, reflecting solid growth across the region. And finally, in MetLife Holdings adjusted earnings were down 45%. The primary driver was lower variable investment income. Further details regarding the performance of our business segments can be found in our earnings release dated August 2. Here are some key enterprise metrics. MetLife's adjusted return on equity was 14.6% and book value per common share was $53.55. Turning to cash and capital management. Cash and liquid assets at our holding companies was $4.2 billion at June 30, above our target cash buffer of $3 billion to $4 billion. In the second quarter, we bought back more than $670 million of our common shares and paid approximately $400 million in common stock dividends. In addition, our Board of Directors recently increased our share repurchase authorization to $4 billion and declared a third quarter common stock dividend of $0.52 per share, all reflecting the ongoing confidence in our business. In summary, MetLife delivered strong financial results in the quarter. Our underlying fundamentals are robust. We are well capitalized, and we continue to see attractive growth prospects around the world as we drive long-term value for all of our stakeholders. Thank you for watching.