MetLife, Inc. (NYSE:MET) today announced the following results
for the first quarter of 2016:
First Quarter Results
MetLife reported operating earnings* of $1.3 billion, down 19
percent from the first quarter of 2015, and 17 percent on a
constant currency basis*. On a per share basis, operating earnings
were $1.20, down 17 percent from the prior year quarter. Operating
earnings in the Americas decreased 18 percent, and 16 percent on a
constant currency basis. Operating earnings in Asia decreased 7
percent, and 5 percent on a constant currency basis. Operating
earnings in Europe, the Middle East and Africa (EMEA) decreased 10
percent, and 3 percent on a constant currency basis.
First quarter 2016 operating earnings included the following
items:
- variable investment income below the
company’s 2016 quarterly plan range by $86 million, or $0.08 per
share, after tax and the impact of deferred acquisition costs
(DAC)
- unfavorable catastrophe experience,
which decreased operating earnings by $45 million, or $0.04 per
share, after tax
- a one-time tax benefit in Japan,
partially offset by a tax charge in Chile, resulting in an overall
increase in operating earnings of $10 million, or $0.01 per share,
after tax
MetLife’s operating return on equity (ROE), excluding
accumulated other comprehensive income (AOCI) other than foreign
currency translation adjustments (FCTA)*, was 9.3 percent for the
first quarter of 2016, and the company’s tangible operating ROE*
was 11.3 percent.
On a GAAP basis, MetLife reported first quarter 2016 net income
of $2.2 billion, or $1.98 per share. Net income includes $868
million, after tax, in net derivative gains, reflecting changes in
interest rates, equity markets and foreign currencies. MetLife uses
derivatives as part of its broader asset-liability management
strategy to hedge certain risks, such as movements in interest
rates, equity markets and foreign currencies. This hedging activity
often generates derivative gains or losses and creates fluctuations
in net income because the risk being hedged may not have the same
GAAP accounting treatment.
The first quarter variance between operating earnings and net
income reflects a favorable impact of $824 million, after-tax,
related to asymmetrical and non-economic accounting.
Premiums, fees & other revenues* were $11.9 billion, down 1
percent, but essentially unchanged on a constant currency basis
over the first quarter of 2015.
Book value, excluding AOCI other than FCTA*, was $53.31 per
share, up 6 percent from $50.45 at March 31, 2015.
“While market headwinds remain, we experienced volume growth and
underwriting results were solid,” said Steven A. Kandarian,
chairman, president and CEO, MetLife, Inc. “We continue to make
good progress on our initiatives to maximize shareholder value,
including expense control and the planned separation of a
substantial portion of the U.S. Retail business.”
FIRST QUARTER 2016 SUMMARY
($ in millions, except per share data)
Three months ended March 31 2016
2015 Change Premiums,
fees & other revenues $ 11,905 $ 12,050 (1 )% Total operating
revenues $ 16,611 $ 17,032 (2 )% Operating earnings $ 1,329
$ 1,638 (19 )% Operating earnings per share $ 1.20 $ 1.44 (17 )%
Net income $ 2,195 $ 2,128 3 % Net income per share $ 1.98 $
1.87 6 % Book value per share, excluding AOCI other than
FCTA $ 53.31 $ 50.45 6 % Book value per share – tangible common
stockholders’ equity $ 44.17 $ 41.32 7 % Book value per share
$ 67.10 $ 64.37
4 %
*Information regarding the non-GAAP and other financial measures
included in this news release and the reconciliation of the
non-GAAP financial measures to GAAP measures is provided in the
Non-GAAP and Other Financial Disclosures discussion below, as well
as in the tables that accompany this news release and/or the First
Quarter 2016 Financial Supplement (which is available on the
MetLife Investor Relations Web page at www.metlife.com).
BUSINESS DISCUSSIONS
All comparisons of the results for the first quarter of 2016 in
the business discussions that follow are with the first quarter of
2015, unless otherwise noted.
THE AMERICAS
Total operating earnings for the Americas were $1.1 billion,
down 18 percent, and 16 percent on a constant currency basis, due
to unfavorable market performance, lower investment margins, and
higher catastrophe losses in property & casualty. Operating
return on allocated equity* was 11.7 percent, and operating return
on allocated tangible equity* was 13 percent. Premiums, fees &
other revenues were $9.2 billion, essentially unchanged from the
first quarter of 2015, and up 2 percent on a constant currency
basis. Excluding pension risk transfers, premiums, fees & other
revenues were also essentially unchanged from the first quarter of
2015, and up 2 percent on a constant currency basis.
Retail
Operating earnings for Retail were $532 million, down 19
percent, impacted by unfavorable market performance, lower
investment margins, and higher catastrophes in property &
casualty, partially offset by improved underwriting results.
Premiums, fees & other revenues were $3.1 billion, down 4
percent, putting pressure on expense margins. Retail life sales*
were down 5 percent, and Retail annuity sales were up 14
percent.
Group, Voluntary & Worksite
Benefits
Operating earnings for Group, Voluntary & Worksite Benefits
were $174 million, down 24 percent, mostly due to a comparatively
strong underwriting result in the first quarter of 2015, and lower
investment margins in the first quarter of 2016. Premiums, fees
& other revenues were $4.6 billion, up 4 percent, due to
increases in both group and voluntary products. Sales were up 28
percent across both group and voluntary products.
Corporate Benefit Funding
Operating earnings for Corporate Benefit Funding were $295
million, down 20 percent, due to lower investment margins.
Premiums, fees & other revenues were $508 million, down 6
percent. Excluding pension risk transfers, premiums, fees &
other revenues were up 2 percent.
Latin America
Operating earnings for Latin America were $137 million, up 5
percent, and 32 percent on a constant currency basis, driven by
volume growth, and favorable investment and underwriting margins.
Operating earnings were negatively impacted by the previously
mentioned one-time tax charge in Chile. Premiums, fees & other
revenues were $966 million, down 4 percent, but up 14 percent on a
constant currency basis. U.S. direct premiums, fees & other
revenues were up 35 percent, while Latin America premiums, fees
& other revenues were up 12 percent on a constant currency
basis. Total sales for the region were unchanged on a constant
currency basis, as higher Latin America sales were offset by lower
U.S. direct sales.
ASIA
Operating earnings for Asia were $305 million, down 7 percent,
and 5 percent on a constant currency basis, including the impact of
the previously mentioned favorable tax item in Japan, as well as
lower variable investment income in the region. Volume growth was
more than offset by expected lower fixed annuity surrenders in
Japan and higher project costs and other expenses in the region.
Operating return on allocated equity was 11 percent, and operating
return on allocated tangible equity was 19 percent. Premiums, fees
& other revenues in Asia were $2.0 billion, down 7 percent on
both a reported and constant currency basis. Excluding the impact
of the deconsolidation of our India operations and the withdrawal
in Japan of single premium accident & health Yen products in
2015, premiums, fees & other revenues were up 2 percent on a
constant currency basis. Total sales for the region were down
10 percent on a constant currency basis, reflecting the impact of
management actions to improve value in targeted markets. This
includes actions in Japan, such as the planned reduction in Yen
life sales, which were down 35 percent on a constant currency
basis, and a shift to sales of foreign currency life policies,
which were up 53 percent on a constant currency basis.
EMEA
Operating earnings for EMEA were $63 million, down 10 percent,
and 3 percent on a constant currency basis. The first quarter of
2015 benefitted from favorable underwriting margins and lower
expenses. Volume growth in the first quarter of 2016 was in line
with expectations. Operating return on allocated equity was 7.8
percent, and operating return on allocated tangible equity was 13.5
percent. Premiums, fees & other revenues were $615 million,
down 1 percent, but up 3 percent on a constant currency basis.
Total sales for the region increased 3 percent on a constant
currency basis, driven by growth in employee benefits in the Middle
East and accident & health products across the region.
INVESTMENTS
Net investment income was $4.7 billion, down 6 percent. Variable
investment income was $165 million ($109 million, after tax and
DAC), compared to $371 million ($241 million, after tax and DAC) in
the first quarter of 2015, mostly due to weak hedge fund
performance.
Interest rates and foreign currencies drove derivative net gains
of $634 million, after tax and other adjustments. Derivative net
gains in the first quarter of 2015 were $394 million, after tax and
other adjustments.
CORPORATE & OTHER
Corporate & Other had an operating loss of $177 million
compared to an operating loss of $140 million in the first quarter
of 2015.
Conference Call
MetLife will hold its first quarter 2016 earnings conference
call and audio webcast on Thursday, May 5, 2016, from 8-9 a.m.
(EDT). The conference call will be available live via telephone and
the Internet. To listen via telephone, dial 800-401-8436 (U.S.) or
612-288-0340 (outside the U.S.). To listen to the conference call
via the Internet, visit www.metlife.com through a link on the
Investor Relations page. Those who want to listen to the call via
telephone or the Internet should dial in or go to the website at
least 15 minutes prior to the call to register, and/or download and
install any necessary audio software.
The conference call will be available for replay via telephone
and the Internet beginning at 10 a.m. (EDT) on Thursday, May 5,
2016, until Thursday, May 12, 2016, at 11:59 p.m. (EDT). To listen
to a replay of the conference call via telephone, dial 800-475-6701
(U.S.) or 320-365-3844 (outside the U.S.). The access code for the
replay is 370607. To access the replay of the conference call over
the Internet, visit the above-mentioned website.
A brief video of CFO John Hele discussing first quarter 2016
results can be viewed shortly after the issuance of this news
release at www.metlife.com/earningsvideo.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and
affiliates (“MetLife”), is one of the largest life insurance
companies in the world. Founded in 1868, MetLife is a global
provider of life insurance, annuities, employee benefits and asset
management. Serving approximately 100 million customers, MetLife
has operations in nearly 50 countries and holds leading market
positions in the United States, Japan, Latin America, Asia, Europe
and the Middle East. For more information, visit
www.metlife.com.
Non-GAAP and Other
Financial Disclosures
Any references in this news release
(except in this section
and the tables that accompany this
release) to:
should be read as,
respectively: (i) net income (loss); (i)
net income (loss) available to MetLife, Inc.’s common shareholders;
(ii) net income (loss) per share; (ii) net income (loss)
available to MetLife, Inc.’s common shareholders per diluted common
share; (iii) operating earnings; (iii) operating earnings
available to common shareholders; (iv) operating earnings
per share; (iv) operating earnings available to common shareholders
per diluted common share; (v) book value per share; (v) book
value per common share; (vi)
book value per share, excluding
accumulated other
comprehensive income (loss) (AOCI) other
than
foreign currency translation adjustments
(FCTA);
(vi) book value per common share, excluding AOCI other than FCTA;
(vii) book value per share-tangible common stockholders’
equity; (vii) book value per common share-tangible common
stockholders’ equity; (viii) premiums, fees and other
revenues; (viii) premiums, fees and other revenues (operating);
(ix) operating return on equity, excluding AOCI other than
FCTA; and (ix) operating return on MetLife, Inc.’s common
stockholders’ equity, excluding AOCI other than FCTA; and
(x) tangible operating return on equity. (x) operating return on
MetLife, Inc.’s tangible common stockholders’ equity.
In this news release, MetLife presents certain measures of its
performance that are not calculated in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”). MetLife believes that these non-GAAP financial measures
enhance the understanding of MetLife’s performance by highlighting
the results of operations and the underlying profitability drivers
of the business. The following non-GAAP financial measures should
not be viewed as substitutes for the most directly comparable
financial measures calculated in accordance with GAAP:
Non-GAAP financial measures:
Comparable GAAP financial
measures:
(i) operating revenues; (i) GAAP revenues;
(ii) operating expenses; (ii) GAAP expenses; (iii) operating
earnings; (iii) income (loss) from continuing operations, net of
income tax; (iv) operating earnings available to common
shareholders; (iv) net income (loss) available to MetLife, Inc.’s
common shareholders; (v) operating earnings available to
common shareholders, adjusted for total notable items; (v) net
income (loss) available to MetLife, Inc.’s common shareholders;
(vi) operating earnings available to common shareholders per
diluted common share; (vi) net income (loss) available to MetLife,
Inc.’s common shareholders per diluted common share; (vii)
investment portfolio gains (losses); (vii) net investment gains
(losses); (viii) derivative gains (losses); (viii) net
derivative gains (losses); (ix) MetLife, Inc.’s tangible
common stockholders’ equity; (ix) MetLife, Inc.’s stockholders’
equity; (x) MetLife, Inc.’s tangible common stockholders’
equity, adjusted for total notable items; (x) MetLife, Inc.’s
stockholders’ equity; (xi) MetLife, Inc.’s common
stockholders’ equity, excluding AOCI other than FCTA; (xi) MetLife,
Inc.’s stockholders’ equity; (xii) MetLife, Inc.’s common
stockholders’ equity, excluding AOCI other than FCTA, adjusted for
total notable items; and (xii) MetLife, Inc.’s stockholders’
equity; and (xiii) free cash flow of all holding companies.
(xiii) MetLife, Inc.’s net cash provided by operating activities.
Reconciliations of these measures to the most directly
comparable GAAP measures are included in this earnings news release
and in this period’s quarterly financial supplement.
MetLife’s definitions of the various non-GAAP and other
financial measures discussed in this new release may differ from
those used by other companies:
Operating earnings is the measure of segment profit or loss that
MetLife uses to evaluate segment performance and allocate
resources. Consistent with GAAP guidance for segment reporting,
operating earnings is MetLife’s measure of segment performance.
Operating earnings is also a measure by which MetLife senior
management’s and many other employees’ performance is evaluated for
the purposes of determining their compensation under applicable
compensation plans.
Operating earnings is defined as operating revenues less
operating expenses, both net of income tax. Operating earnings
available to common shareholders is defined as operating earnings
less preferred stock dividends.
Operating revenues and operating expenses exclude results of
discontinued operations and other businesses that have been or will
be sold or exited by MetLife and are referred to as divested
businesses. In addition, for the three months ended March 31, 2016,
operating revenues and operating expenses exclude the financial
impact of converting MetLife’s Japan operations to calendar-year
end reporting without retrospective application of this change to
prior periods and is referred to as lag elimination. Operating
revenues also excludes net investment gains (losses) (NIGL) and net
derivative gains (losses) (NDGL). Operating expenses also excludes
goodwill impairments.
The following additional adjustments are made to GAAP revenues,
in the line items indicated, in calculating operating revenues:
- Universal life and investment-type
product policy fees excludes the amortization of unearned revenue
related to NIGL and NDGL and certain variable annuity guaranteed
minimum income benefits (GMIB) fees (GMIB fees);
- Net investment income: (i) includes
amounts for earned income on derivatives and amortization of
premium on derivatives that are hedges of investments or that are
used to replicate certain investments but do not qualify for hedge
accounting treatment, (ii) includes income from discontinued real
estate operations, (iii) excludes post-tax operating earnings
adjustments relating to insurance joint ventures accounted for
under the equity method, (iv) excludes certain amounts related to
contractholder-directed unit-linked investments, and (v) excludes
certain amounts related to securitization entities that are
variable interest entities (VIEs) consolidated under GAAP; and
- Other revenues are adjusted for
settlements of foreign currency earnings hedges.
The following additional adjustments are made to GAAP expenses,
in the line items indicated, in calculating operating expenses:
- Policyholder benefits and claims and
policyholder dividends excludes: (i) changes in the policyholder
dividend obligation related to NIGL and NDGL, (ii)
inflation-indexed benefit adjustments associated with contracts
backed by inflation-indexed investments and amounts associated with
periodic crediting rate adjustments based on the total return of a
contractually referenced pool of assets and other pass through
adjustments, (iii) benefits and hedging costs related to GMIBs
(GMIB costs), and (iv) market value adjustments associated with
surrenders or terminations of contracts (Market value
adjustments);
- Interest credited to policyholder
account balances includes adjustments for earned income on
derivatives and amortization of premium on derivatives that are
hedges of policyholder account balances but do not qualify for
hedge accounting treatment and excludes amounts related to net
investment income earned on contractholder-directed unit-linked
investments;
- Amortization of DAC and value of
business acquired (VOBA) excludes amounts related to: (i) NIGL and
NDGL, (ii) GMIB fees and GMIB costs and (iii) Market value
adjustments;
- Amortization of negative VOBA excludes
amounts related to Market value adjustments;
- Interest expense on debt excludes
certain amounts related to securitization entities that are VIEs
consolidated under GAAP; and
- Other expenses excludes costs related
to: (i) noncontrolling interests, (ii) implementation of new
insurance regulatory requirements, and (iii) acquisition,
integration and other costs.
Operating earnings also excludes the recognition of certain
contingent assets and liabilities that could not be recognized at
acquisition or adjusted for during the measurement period under
GAAP business combination accounting guidance. In addition to the
tax impact of the adjustments mentioned above, provision for income
tax (expense) benefit also includes the impact related to the
timing of certain tax credits, as well as certain tax reforms.
The following additional information is relevant to an
understanding of MetLife’s performance results:
- MetLife, Inc.’s tangible common
stockholders’ equity or tangible equity - MetLife, Inc.’s common
stockholders’ equity, excluding the net unrealized investment gains
(losses) and defined benefit plans adjustment components of AOCI
reduced by the impact of goodwill, value of distribution agreements
(VODA) and value of customer relationships acquired (VOCRA), all
net of income tax.
- MetLife, Inc.’s common stockholders’
equity, excluding AOCI other than FCTA - MetLife, Inc.’s common
stockholders’ equity, excluding the net unrealized investment gains
(losses) and defined benefit plans adjustment components of AOCI,
net of income tax.
- Allocated equity - portion of MetLife,
Inc.’s common stockholders’ equity that management allocates to
each of its segments and sub-segments based on local capital
requirements and economic capital. Economic capital is an
internally developed risk capital model, the purpose of which is to
measure the risk in the business and to provide a basis upon which
capital is deployed. MetLife management periodically reviews this
model to ensure that it remains consistent with emerging industry
practice standards and the local capital requirements; allocated
equity may be adjusted if warranted by such review. Allocated
equity excludes the impact of AOCI other than FCTA.
- Operating return on MetLife, Inc.'s
common stockholders' equity, excluding AOCI other than FCTA -
operating earnings available to common shareholders divided by
MetLife, Inc.'s average common stockholders' equity, excluding AOCI
other than FCTA.
- Operating return on MetLife, Inc.'s
tangible common stockholders' equity - operating earnings available
to common shareholders, excluding amortization of VODA and VOCRA,
net of income tax, divided by MetLife, Inc.'s average tangible
common stockholders' equity.
- Operating return on MetLife, Inc.'s
common stockholders' equity - operating earnings available to
common shareholders divided by MetLife, Inc.'s average common
stockholders' equity.
- Return on MetLife, Inc.'s common
stockholders' equity, excluding AOCI other than FCTA - net income
(loss) available to MetLife, Inc.’s common shareholders divided by
MetLife, Inc.'s average common stockholders' equity, excluding AOCI
other than FCTA.
- Return on MetLife, Inc.’s tangible
common stockholders' equity - net income (loss) available to
MetLife, Inc.’s common shareholders, excluding goodwill impairment
and amortization of VODA and VOCRA, net of income tax, divided by
MetLife, Inc.'s average tangible common stockholders' equity.
- Return on MetLife, Inc.’s common
stockholders’ equity - net income (loss) available to MetLife,
Inc.’s common shareholders divided by MetLife, Inc.’s average
common stockholders’ equity.
- Operating return on allocated equity -
operating earnings available to common shareholders divided by
allocated equity.
- Operating return on allocated tangible
equity - operating earnings available to common shareholders,
excluding amortization of VODA and VOCRA, net of income tax,
divided by allocated tangible equity.
- Return on allocated equity - net income
(loss) available to MetLife, Inc.’s common shareholders divided by
allocated equity.
- Return on allocated tangible equity -
net income (loss) available to MetLife, Inc.’s common shareholders,
excluding amortization of VODA and VOCRA, net of income tax,
divided by allocated tangible equity.
- Operating expense ratio - calculated by
dividing operating expenses (other expenses, net of capitalization
of DAC) by operating premiums, fees and other revenues.
- Statistical sales information for
Retail- Life sales are calculated using the LIMRA definition of
sales for core direct sales, excluding company-sponsored internal
exchanges, corporate-owned life insurance, bank-owned life
insurance, and private placement variable universal life insurance.
Annuity sales consist of statutory premiums direct and assumed,
excluding company sponsored internal exchanges. Sales statistics do
not correspond to revenues under GAAP, but are used as relevant
measures of business activity.
- Statistical sales information for Latin
America, Asia and EMEA - calculated using 10% of single-premium
deposits (mainly from retirement products such as variable annuity,
fixed annuity and pensions), 20% of single-premium deposits from
credit insurance and 100% of annualized full-year premiums and fees
from recurring-premium policy sales of all products (mainly from
risk and protection products such as individual life, accident
&health and group). Sales statistics do not correspond to
revenues under GAAP, but are used as relevant measures of business
activity.
- All comparisons on a constant currency
basis reflect the impact of changes in foreign currency exchange
rates and are calculated using the average foreign currency
exchange rates for the current period and are applied to each of
the comparable periods.
- Volume growth, as discussed in the
context of business growth, is the period over period percentage
change in operating earnings available to common shareholders
attributable to operating premiums, fees and other revenues and
assets under management levels, applying a model in which certain
margins and factors are held constant. The most significant of
such items are underwriting margins, investment margins, changes in
equity market performance, expense margins and the impact of
changes in foreign currency exchange rates.
- Asymmetrical and non-economic
accounting refer to: (i) the portion of net derivative gains
(losses) on embedded derivatives attributable to the inclusion of
MetLife’s credit spreads in the liability valuations, (ii) hedging
activity that generates net derivative gains (losses) and creates
fluctuations in net income because hedge accounting cannot be
achieved and the item being hedged does not a have an offsetting
gain or loss recognized in earnings,(iii) inflation-indexed benefit
adjustments associated with contracts backed by inflation-indexed
investments and amounts associated with periodic crediting rate
adjustments based on the total return of a contractually referenced
pool of assets and other pass through adjustments, and (iv) impact
of changes in foreign currency exchange rates on the re-measurement
of foreign denominated unhedged funding agreements and financing
transactions to the U.S. dollar and the re-measurement of certain
liabilities from non-functional currencies to functional
currencies.
- MetLife uses a measure of free cash
flow to facilitate an understanding of its ability to generate cash
for reinvestment into its businesses or use in discretionary
capital actions. MetLife defines free cash flow as the sum of cash
available at MetLife’s holding companies from dividends from
operating subsidiaries, expenses and other net flows of the holding
companies, and net contributions from debt to be at or below target
leverage ratios. This measure of free cash flow is prior to
discretionary capital deployment, including common stock dividends
and repurchases, debt reduction and mergers and acquisitions. Free
cash flow should not be viewed as a substitute for net cash
provided by (used in) operating activities calculated in accordance
with GAAP. The free cash flow ratio is typically expressed as a
percentage of annual operating earnings available to common
shareholders.
Forward-Looking Statements
This news release may contain or incorporate by reference
information that includes or is based upon forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements give expectations or
forecasts of future events. These statements can be identified by
the fact that they do not relate strictly to historical or current
facts. They use words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe” and other words and terms of
similar meaning, or are tied to future periods, in connection with
a discussion of future operating or financial performance. In
particular, these include statements relating to future actions,
prospective services or products, future performance or results of
current and anticipated services or products, sales efforts,
expenses, the outcome of contingencies such as legal proceedings,
trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong.
They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties. Many such factors will be
important in determining the actual future results of MetLife,
Inc., its subsidiaries and affiliates. These statements are based
on current expectations and the current economic environment. They
involve a number of risks and uncertainties that are difficult to
predict. These statements are not guarantees of future performance.
Actual results could differ materially from those expressed or
implied in the forward-looking statements. Risks, uncertainties,
and other factors that might cause such differences include the
risks, uncertainties and other factors identified in MetLife,
Inc.’s filings with the U.S. Securities and Exchange Commission
(the SEC). These factors include: (1) difficult conditions in the
global capital markets; (2) increased volatility and disruption of
the global capital and credit markets, which may affect our ability
to meet liquidity needs and access capital, including through our
credit facilities, generate fee income and market-related revenue
and finance statutory reserve requirements and may require us to
pledge collateral or make payments related to declines in value of
specified assets, including assets supporting risks ceded to
certain of our captive reinsurers or hedging arrangements
associated with those risks; (3) exposure to global financial and
capital market risks, including as a result of the disruption in
Europe and possible withdrawal of one or more countries from the
Euro zone; (4) impact on us of comprehensive financial services
regulation reform, including potential regulation of MetLife, Inc.
as a non-bank systemically important financial institution, or
otherwise; (5) numerous rulemaking initiatives required or
permitted by the Dodd-Frank Wall Street Reform and Consumer
Protection Act which may impact how we conduct our business,
including those compelling the liquidation of certain financial
institutions; (6) regulatory, legislative or tax changes relating
to our insurance, international, or other operations that may
affect the cost of, or demand for, our products or services, or
increase the cost or administrative burdens of providing benefits
to employees; (7) adverse results or other consequences from
litigation, arbitration or regulatory investigations; (8) our
ability to address difficulties, unforeseen liabilities, asset
impairments, or rating agency actions arising from (a) business
acquisitions and integrating and managing the growth of such
acquired businesses, (b) dispositions of businesses via sale,
initial public offering, spin-off or otherwise, (c) entry into
joint ventures, or (d) legal entity reorganizations; (9) potential
liquidity and other risks resulting from our participation in a
securities lending program and other transactions; (10) investment
losses and defaults, and changes to investment valuations; (11)
changes in assumptions related to investment valuations, deferred
policy acquisition costs, deferred sales inducements, value of
business acquired or goodwill; (12) impairments of goodwill and
realized losses or market value impairments to illiquid assets;
(13) defaults on our mortgage loans; (14) the defaults or
deteriorating credit of other financial institutions that could
adversely affect us; (15) economic, political, legal, currency and
other risks relating to our international operations, including
with respect to fluctuations of exchange rates; (16) downgrades in
our claims paying ability, financial strength or credit ratings;
(17) a deterioration in the experience of the “closed block”
established in connection with the reorganization of Metropolitan
Life Insurance Company; (18) availability and effectiveness of
reinsurance or indemnification arrangements, as well as any default
or failure of counterparties to perform; (19) differences between
actual claims experience and underwriting and reserving
assumptions; (20) ineffectiveness of risk management policies and
procedures; (21) catastrophe losses; (22) increasing cost and
limited market capacity for statutory life insurance reserve
financings; (23) heightened competition, including with respect to
pricing, entry of new competitors, consolidation of distributors,
the development of new products by new and existing competitors,
and for personnel; (24) exposure to losses related to variable
annuity guarantee benefits, including from significant and
sustained downturns or extreme volatility in equity markets,
reduced interest rates, unanticipated policyholder behavior,
mortality or longevity, and the adjustment for nonperformance risk;
(25) regulatory and other restrictions affecting MetLife, Inc.’s
ability to pay dividends and repurchase common stock; (26) MetLife,
Inc.’s primary reliance, as a holding company, on dividends from
its subsidiaries to meet its free cash flow targets and debt
payment obligations and the applicable regulatory restrictions on
the ability of the subsidiaries to pay such dividends; (27) the
possibility that MetLife, Inc.’s Board of Directors may influence
the outcome of stockholder votes through the voting provisions of
the MetLife Policyholder Trust; (28) changes in accounting
standards, practices and/or policies; (29) increased expenses
relating to pension and postretirement benefit plans, as well as
health care and other employee benefits; (30) inability to protect
our intellectual property rights or claims of infringement of the
intellectual property rights of others; (31) inability to attract
and retain sales representatives; (32) provisions of laws and our
incorporation documents may delay, deter or prevent takeovers and
corporate combinations involving MetLife; (33) the effects of
business disruption or economic contraction due to disasters such
as terrorist attacks, cyberattacks, other hostilities, or natural
catastrophes, including any related impact on the value of our
investment portfolio, our disaster recovery systems, cyber- or
other information security systems and management continuity
planning; (34) the effectiveness of our programs and practices in
avoiding giving our associates incentives to take excessive risks;
and (35) other risks and uncertainties described from time to time
in MetLife, Inc.’s filings with the SEC.
MetLife, Inc. does not undertake any obligation to publicly
correct or update any forward-looking statement if MetLife, Inc.
later becomes aware that such statement is not likely to be
achieved. Please consult any further disclosures MetLife, Inc.
makes on related subjects in reports to the SEC.
MetLife, Inc. Consolidated Statements of Operating
Earnings Available to Common Shareholders (Unaudited)
For the Three Months Ended March
31, 2016 2015 (In millions)
OPERATING
REVENUES Premiums $ 9,267 $ 9,253 Universal life and
investment-type product policy fees 2,151 2,294 Net investment
income 4,706 4,982 Other revenues 487 503
Total operating revenues 16,611 17,032
OPERATING EXPENSES Policyholder benefits and
claims and policyholder dividends 9,593 9,447 Interest credited to
policyholder account balances 1,301 1,331 Capitalization of DAC
(876 ) (968 ) Amortization of DAC and VOBA 881 953 Amortization of
negative VOBA (67 ) (90 ) Interest expense on debt 312 297 Other
expenses 3,710 3,800 Total operating
expenses 14,854 14,770 Operating
earnings before provision for income tax 1,757 2,262 Provision for
income tax expense (benefit) 422 594
Operating earnings 1,335 1,668 Preferred stock dividends 6
30
OPERATING EARNINGS AVAILABLE TO COMMON
SHAREHOLDERS $ 1,329 $ 1,638
Reconciliation to
Net Income (Loss) and Financial Statement Line Item Adjustments
from GAAP
Operating earnings $ 1,335 $ 1,668 Adjustments from operating
earnings to income (loss) from continuing operations, net of income
tax: Net investment gains (losses) (1) 15 286 Net derivative gains
(losses) (1) 1,335 821 Premiums 426 - Universal life and
investment-type product policy fees 193 100 Net investment income
(147 ) 479 Other revenues - (8 ) Policyholder benefits and claims
and policyholder dividends (1) (400 ) (149 ) Interest credited to
policyholder account balances (25 ) (664 ) Capitalization of DAC
105 - Amortization of DAC and VOBA (1) (114 ) (72 ) Amortization of
negative VOBA 32 10 Interest expense on debt - (1 ) Other expenses
(255 ) (5 ) Goodwill impairment - - Provision for income tax
(expense) benefit (1) (297 ) (302 ) Income (loss)
from continuing operations, net of income tax 2,203 2,163 Income
(loss) from discontinued operations, net of income tax -
- Net income (loss) 2,203 2,163 Less: Net
income (loss) attributable to noncontrolling interests 2
5 Net income (loss) attributable to MetLife,
Inc. 2,201 2,158 Less: Preferred stock dividends 6 30 Less:
Preferred stock repurchase premium - -
Net income (loss) available to MetLife, Inc.'s common shareholders
$ 2,195 $ 2,128 See footnotes on last page.
MetLife, Inc. (Unaudited)
For the Three Months Ended March 31, 2016
2015
Earnings Per
Weighted
Average Common
Shares
Diluted (2)
Earnings Per
Weighted
Average Common
Shares
Diluted (2)
(In millions, except per share data)
Reconciliation to Net
Income (Loss) Available to MetLife, Inc.'s Common Shareholders
Operating earnings available to common
shareholders, adjusted for total notable items $ 1,450 $ 1.31 $
1,654 $ 1.46 Add: Total notable items (121 ) (0.11 )
(16 ) (0.01 ) Operating earnings available to common
shareholders $ 1,329 $ 1.20 $ 1,638 $ 1.44 Adjustments from
operating earnings available to common shareholders to net income
(loss) available to MetLife, Inc.'s common shareholders: Add: Net
investment gains (losses) 15 0.01 286 0.25 Add: Net derivative
gains (losses) 1,335 1.20 821 0.72 Add: Goodwill impairment - - - -
Add: Other adjustments to continuing operations (185 ) (0.16 ) (310
) (0.27 ) Add: Provision for income tax (expense) benefit (297 )
(0.27 ) (302 ) (0.27 ) Add: Income (loss) from discontinued
operations, net of income tax - - - - Less: Net income (loss)
attributable to noncontrolling interests 2 - 5 - Less: Preferred
stock repurchase premium - - -
- Net income (loss) available to MetLife,
Inc.'s common shareholders $ 2,195 $ 1.98 $ 2,128
$ 1.87 Weighted average common shares
outstanding - diluted 1108.6 1135.8 For the
Three Months Ended March 31, 2016 2015
(In millions)
Reconciliation to GAAP Premiums, Fees and Other
Revenues Total operating premiums, fees and other revenues $
11,905 $ 12,050 Add: Adjustments to premiums, fees and other
revenues 619 92 Total premiums, fees
and other revenues $ 12,524 $ 12,142
Reconciliation to GAAP Revenues and GAAP Expenses
Total operating revenues $ 16,611 $ 17,032 Add: Net investment
gains (losses) 15 286 Add: Net derivative gains (losses) 1,335 821
Add: Adjustments related to net investment gains (losses) and net
derivative gains (losses) 25 4 Add: Other adjustments to revenues
447 567 Total revenues $ 18,433
$ 18,710 Total operating expenses $ 14,854 $ 14,770
Add: Adjustments related to net investment gains (losses) and net
derivative gains (losses) 6 95 Add: Goodwill impairment - - Add:
Other adjustments to expenses 651 786
Total expenses $ 15,511 $ 15,651 See footnotes
on last page.
MetLife, Inc. (Unaudited)
March 31,
Book Value (3) 2016 2015 Book
value per common share $ 67.10 $ 64.37 Less: Net unrealized
investment gains (losses), net of income tax 15.63 15.94 Less:
Defined benefit plans adjustment, net of income tax (1.84 )
(2.02 ) Book value per common share, excluding AOCI other
than FCTA $ 53.31 $ 50.45 Less: Goodwill, net of income tax 8.70
8.61 Less: VODA and VOCRA, net of income tax 0.44
0.52 Book value per common share - tangible common
stockholders' equity $ 44.17 $ 41.32 Common
shares outstanding, end of period (In millions) 1,098.5 1,114.3
For the Three Months Ended March 31,
Return on
Equity (4) 2016 2015 Operating return on MetLife, Inc.'s:
Common stockholders' equity 7.6 % 9.2 % Common stockholders'
equity, excluding AOCI other than FCTA 9.3 % 11.7 % Common
stockholders' equity, excluding AOCI other than FCTA, adjusted for
total notable items 10.0 % 11.8 % Tangible common stockholders'
equity 11.3 % 14.4 % Tangible common stockholders' equity, adjusted
for total notable items 12.1 % 14.6 % Return on MetLife,
Inc.'s: Common stockholders' equity 12.6 % 12.0 % Common
stockholders' equity, excluding AOCI other than FCTA 15.3 % 15.2 %
Tangible common stockholders' equity 18.6 % 18.7 % Operating
Return on Allocated Equity: Americas 11.7 % 14.1 % Asia 11.0 % 11.4
% EMEA 7.8 % 8.4 % Operating Return on Allocated
Tangible Equity: Americas 13.0 % 15.9 % Asia 19.0 % 19.6 % EMEA
13.5 % 15.4 % Return on Allocated Equity: Americas
11.4 % 18.0 % Asia 31.3 % 12.1 % EMEA 9.1 % 7.8 %
Return on Allocated Tangible Equity: Americas 12.6 % 20.2 % Asia
53.7 % 20.8 % EMEA 15.6 % 14.4 % See footnotes
on last page.
MetLife, Inc. Reconciliations
to Net Income (Loss) Available to Common Shareholders
(Unaudited) For the Three
Months Ended March 31, 2016 2015 (In millions)
Total Americas Operations: Operating earnings available to common
shareholders, adjusted for total notable items $ 1,254 $ 1,397 Add:
Total notable items (116 ) (16 ) Operating earnings
available to common shareholders 1,138 1,381 Add: Net investment
gains (losses) (271 ) 274 Add: Net derivative gains (losses) 449
577 Add: Other adjustments to continuing operations (202 ) (268 )
Add: Provision for income tax (expense) benefit (8 ) (205 ) Less:
Net income (loss) attributable to noncontrolling interests 1
3 Net income (loss) available to MetLife,
Inc.'s common shareholders $ 1,105 $ 1,756
Retail: Operating earnings available to common shareholders,
adjusted for total notable items $ 586 $ 656 Add: Total notable
items (54 ) (3 ) Operating earnings available to
common shareholders 532 653 Add: Net investment gains (losses) (117
) 68 Add: Net derivative gains (losses) (11 ) 313 Add: Other
adjustments to continuing operations (32 ) (192 ) Add: Provision
for income tax (expense) benefit 56 (66 ) Net
income (loss) available to MetLife, Inc.'s common shareholders $
428 $ 776 Group, Voluntary & Worksite
Benefits: Operating earnings available to common shareholders,
adjusted for total notable items $ 191 $ 240 Add: Total notable
items (17 ) (12 ) Operating earnings available to
common shareholders 174 228 Add: Net investment gains (losses) (39
) 3 Add: Net derivative gains (losses) 291 205 Add: Other
adjustments to continuing operations (45 ) (42 ) Add: Provision for
income tax (expense) benefit (72 ) (58 ) Net income
(loss) available to MetLife, Inc.'s common shareholders $ 309
$ 336 Corporate Benefit Funding: Operating
earnings available to common shareholders, adjusted for total
notable items $ 325 $ 369 Add: Total notable items (30 )
- Operating earnings available to common shareholders
295 369 Add: Net investment gains (losses) (93 ) 205 Add: Net
derivative gains (losses) 85 80 Add: Other adjustments to
continuing operations (75 ) (39 ) Add: Provision for income tax
(expense) benefit 29 (86 ) Net income (loss)
available to MetLife, Inc.'s common shareholders $ 241 $ 529
Latin America: Operating earnings available to common
shareholders, adjusted for total notable items $ 152 $ 132 Add:
Total notable items (15 ) (1 ) Operating earnings
available to common shareholders 137 131 Add: Net investment gains
(losses) (22 ) (2 ) Add: Net derivative gains (losses) 84 (21 )
Add: Other adjustments to continuing operations (50 ) 5 Add:
Provision for income tax (expense) benefit (21 ) 5 Less: Net income
(loss) attributable to noncontrolling interests 1
3 Net income (loss) available to MetLife, Inc.'s
common shareholders $ 127 $ 115 Asia:
Operating earnings available to common shareholders, adjusted for
total notable items $ 305 $ 327 Add: Total notable items -
- Operating earnings available to common
shareholders 305 327 Add: Net investment gains (losses) 223 68 Add:
Net derivative gains (losses) 411 18 Add: Other adjustments to
continuing operations 67 (55 ) Add: Provision for income tax
(expense) benefit (143 ) (10 ) Net income (loss)
available to MetLife, Inc.'s common shareholders $ 863 $ 348
EMEA: Operating earnings available to common
shareholders, adjusted for total notable items $ 63 $ 70 Add: Total
notable items - - Operating earnings
available to common shareholders 63 70 Add: Net investment gains
(losses) 8 3 Add: Net derivative gains (losses) (1 ) 1 Add: Other
adjustments to continuing operations 18 19 Add: Provision for
income tax (expense) benefit (14 ) (26 ) Less: Net income (loss)
attributable to noncontrolling interests 1 2
Net income (loss) available to MetLife, Inc.'s common
shareholders $ 73 $ 65 Corporate & Other:
Operating earnings available to common shareholders, adjusted for
total notable items $ (172 ) $ (140 ) Add: Total notable items
(5 ) - Operating earnings available to common
shareholders (177 ) (140 ) Add: Net investment gains (losses) 55
(59 ) Add: Net derivative gains (losses) 476 225 Add: Other
adjustments to continuing operations (68 ) (6 ) Add: Provision for
income tax (expense) benefit (132 ) (61 ) Net income
(loss) available to MetLife, Inc.'s common shareholders $ 154
$ (41 ) See footnotes on last page.
MetLife, Inc. GAAP Interim Condensed Consolidated
Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2016
2015 (In millions)
Revenues Premiums $
9,693 $ 9,253 Universal life and investment-type product policy
fees 2,344 2,394 Net investment income 4,559 5,461 Other revenues
487 495 Net investment gains (losses): Other-than-temporary
impairments on fixed maturity securities (78 ) (8 )
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss) - (10 ) Other net
investment gains (losses) 93 304 Total
net investment gains (losses) 15 286 Net derivative gains (losses)
1,335 821 Total revenues 18,433
18,710
Expenses Policyholder
benefits and claims 9,678 9,257 Interest credited to policyholder
account balances 1,326 1,995 Policyholder dividends 315 339 Other
expenses 4,192 4,060 Total expenses
15,511 15,651 Income (loss) from
continuing operations before provision for income tax 2,922 3,059
Provision for income tax expense (benefit) 719
896 Income (loss) from continuing operations, net of income
tax 2,203 2,163 Income (loss) from discontinued operations, net of
income tax - - Net Income (loss) 2,203
2,163 Less: Net income (loss) attributable to noncontrolling
interests 2 5 Net income (loss)
attributable to MetLife, Inc. 2,201 2,158 Less: Preferred stock
dividends 6 30 Net income (loss)
available to MetLife, Inc.'s common shareholders $ 2,195 $
2,128 (1) The impacts of
asymmetrical and non-economic accounting for the three months ended
March 31, 2016 are as follows: (i) Net investment gains (losses) -
$160 million; (ii) Net derivative gains (losses) - $1.2 billion;
(iii) Policyholder benefits and claims and policyholder dividends -
($71) million; (iv) Amortization of DAC and VOBA - ($53) million;
and (v) Provision for income tax (expense) benefit - $444 million.
(2) Operating earnings available to common shareholders per
diluted share is calculated on a stand alone basis and may not
equal the sum of operating earnings available to common
shareholders per diluted share, adjusted for total notable items
and total notable items. (3) Book values exclude $2,066
million and $2,043 million of equity related to preferred stock at
March 31, 2016 and 2015, respectively. (4) Annualized using
quarter-to-date results.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160504006538/en/
MetLife, Inc.For Media:John Calagna, 212-578-6252orFor
Investors:Edward Spehar, 212-578-7888
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