MetLife, Inc. (NYSE: MET) today reported second quarter 2010 net income1
of $1.5 billion, or $1.84 per share. Net income reflects net investment
gains of $767 million, after tax, including gains on derivatives.
Operating earnings2 for the second quarter of 2010 were $1.0
billion, or $1.23 per share.
?MetLife continued to deliver strong results during the second quarter
as we achieved top line growth and increased operating earnings by 41%
over the prior year period,? said C. Robert Henrikson, chairman,
president & chief executive officer of MetLife, Inc. ?Highlights of the
quarter included strong underwriting results, higher net investment
income and our disciplined approach to expense management. Through our
strong presence in the U.S. and with the pending acquisition of Alico,
we are well positioned to provide valuable financial solutions for a
growing customer base. This increased reach and diverse business mix
will help drive future growth and generate long-term value for our
shareholders.?
1 All references in this press release (except under
?Non-GAAP and Other Financial Disclosures?) to net income (loss), net
income (loss) per share, operating earnings, operating earnings per
share and book value per share should be read as net income (loss)
available to MetLife, Inc.'s common shareholders, net income (loss)
available to MetLife, Inc.'s common shareholders per diluted common
share, operating earnings available to MetLife, Inc.'s common
shareholders, operating earnings available to MetLife, Inc.'s common
shareholders per diluted common share and book value per common share,
respectively.
2 Operating earnings available to common shareholders,
operating revenues, operating expenses, operating earnings available to
common shareholders per diluted common share and book value per common
share, excluding accumulated other comprehensive income (AOCI), are not
calculated based on generally accepted accounting principles (GAAP).
Information regarding non-GAAP financial measures and the reconciliation
of them to GAAP measures are provided in the Non-GAAP and Other
Financial Disclosures discussion below, as well as in the tables that
accompany this release and the Second Quarter 2010 Quarterly Financial
Supplement. Please see the Non-GAAP and Other Financial Disclosures
discussion below for the definition of sales, the presentation of
historical information on a constant currency basis and the method of
calculating the constant currency amount.
SECOND QUARTER 2010 SUMMARY
-
Premiums, fees & other revenues of $8.7 billion, up 4% from the second
quarter of 2009, driven by growth in both the U.S. and International
Businesses
-
Strong U.S. annuity sales of $4.8 billion, including an 11% increase
in variable annuity sales over the first quarter of 2010
-
Operating earnings of $1.0 billion ($1.23 per share), reflecting:
-
strong variable investment income, which was above the plan range
by $62 million ($0.07 per share), after tax and the impact of
deferred acquisition costs
-
gains from the company's hedge program, which more than offset the
impact of lower equity markets and interest rates in both the U.S.
and International Businesses, benefiting earnings by $43 million
($0.05 per share), after tax
|
($ in millions, except per share data)
|
For the three months ended June 30,
|
|
|
2010
|
|
2009
|
|
Change
|
|
Premiums, fees & other revenues
|
$
|
8,684
|
|
$
|
8,375
|
|
|
4
|
%
|
|
Total operating revenues
|
$
|
12,827
|
|
$
|
12,234
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
1,526
|
|
$
|
(1,433
|
)
|
|
–
|
|
|
Net income (loss) per share
|
$
|
1.84
|
|
$
|
(1.74
|
)
|
|
–
|
|
|
Operating earnings
|
$
|
1,022
|
|
$
|
723
|
|
|
41
|
%
|
|
Operating earnings per share
|
$
|
1.23
|
|
$
|
0.88
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
$
|
45.51
|
|
$
|
30.85
|
|
|
48
|
%
|
|
Book value per share excluding AOCI
|
$
|
44.50
|
|
$
|
42.86
|
|
|
4
|
%
|
BUSINESS SEGMENT DISCUSSIONS
All comparisons of second quarter 2010 results in the segment
discussions below are with the second quarter of 2009, unless otherwise
noted. Reconciliations of segment net income to segment operating
earnings are provided in the tables that accompany this release and in
the Second Quarter 2010 Quarterly Financial Supplement, which is
available on the Investor Relations section of www.metlife.com.
U.S. BUSINESS
-
U.S. Business premiums, fees & other revenues of $7.2 billion, up 2%
as a 34% increase in Retirement Products was offset by lower pension
closeout sales in Corporate Benefit Funding
-
Excellent underwriting results in group life; improved experience in
dental and solid underwriting results in individual life
-
Total annuity sales of $4.8 billion and continued low lapse rates
generated significantly positive net flows
-
Operating earnings of $918 million, up 39% due to favorable
underwriting, higher net investment income and lower expenses
Insurance Products
Premiums, fees & other revenues for Insurance Products – which includes
group life, individual life and non-medical health insurance – were up
2%, largely driven by an increase in group life. In non-medical health,
revenue growth in the dental business was offset by a decline in
disability. In individual life, premiums, fees & other revenues
increased slightly.
Operating earnings for Insurance Products were $369 million, up 29% due
to favorable underwriting, higher net investment income and lower
expenses.
Retirement Products
Premiums, fees & other revenues for Retirement Products – which includes
the company's U.S. annuity products – were $766 million, up 34% largely
on increased fee revenue. Compared with the first quarter of 2010, total
annuity sales were up 10%, including an 11% increase in variable annuity
sales.
Operating earnings for Retirement Products were $238 million, up 66%.
During the second quarter of 2010, gains from the company's hedge
program more than offset the impact of lower equity markets and interest
rates. In addition, results also benefited from improved net investment
income.
Corporate Benefit Funding
Premiums, fees & other revenues for Corporate Benefit Funding – which
includes the U.S. and U.K. pension closeout businesses, structured
settlements and other corporate benefit funding products – were $688
million, down 17% due to lower pension closeout sales, which can
fluctuate from quarter to quarter. In addition, structured settlement
premiums grew 9%.
Corporate Benefit Funding operating earnings were $238 million, up 54%
largely due to higher net investment income.
Auto & Home
Net written premiums for Auto & Home were $764 million, up 2%. Operating
earnings were $73 million, down 4% largely due to a $20 million, after
tax, increase in catastrophe losses over the second quarter of 2009.
Catastrophe losses also were $11 million, after tax, higher than
expected in the second quarter of 2010. Favorable non-catastrophe claim
development related to prior accident years was $12 million, after tax,
compared with $3 million, after tax in the second quarter of 2009.
Excluding catastrophes, Auto & Home's combined ratio was 85.5%, compared
with 88.0% in the second quarter of 2009.
INTERNATIONAL BUSINESS
-
International premiums, fees & other revenues of $1.2 billion, up 21%
on a reported basis and 13% on a constant currency basis, due to
growth across all three regions
-
Operating earnings of $145 million, with solid performance in Latin
America and Asia Pacific partially offset by weaker equity markets in
Japan
International premiums, fees & other revenues were $1.2 billion, up 21%
with business growth across the company's three international regions.
In the Latin America region, premiums, fees & other revenues grew 23%
(15% on a constant currency basis) due to growth in Mexico, Chile and
Brazil. Premiums, fees & other revenues grew 20% (11% on a constant
currency basis) in the Asia Pacific region due to growth in South Korea
and Hong Kong. In the EMEI (Europe/Middle East/India) region, premiums,
fees & other revenues were up 13% on both a reported and constant
currency basis due to growth in India and the European variable annuity
business.
International operating earnings were $145 million, down 8% as business
growth was offset by the impact of lower equity markets in Japan.
BANKING, CORPORATE & OTHER
Total operating revenues for MetLife Bank were $337 million, down 16%
due to lower mortgage refinancing activity. Total assets at June 30,
2010 were $14.5 billion, down slightly from June 30, 2009. MetLife Bank
operating earnings were $67 million, down $9 million.
Corporate & Other had an operating loss of $108 million, compared with
an operating loss of $170 million. The second quarter of 2010 benefited
from higher net investment income.
INVESTMENTS
-
Net investment gain of $767 million, after tax (including impairments
of $112 million, after tax), compared with a net investment loss of
$2.6 billion, after tax
-
Net unrealized gain increased to $7.3 billion from $1.5 billion at
March 31, 2010
Net investment income was $4.1 billion, up 7% from $3.9 billion in the
second quarter of 2009 and down slightly from $4.3 billion in the first
quarter of 2010. During the second quarter of 2010, variable investment
income was $296 million ($192 million, after tax and the impact of
deferred acquisition costs), largely due to strong performance from
private equity funds.
For the quarter, MetLife reported a $767 million, after tax, net
investment gain, which was primarily due to derivative gains. MetLife
uses derivatives – in connection with its broader portfolio management
strategy – to hedge a number of risks, including changes in interest
rates and fluctuations in foreign currencies. Movement in interest
rates, foreign currencies and MetLife's own credit spread – which
impacts the valuation of certain insurance liabilities – can generate
derivative gains or losses. Derivative gains or losses related to
MetLife's own credit spread do not have an economic impact on the
company.
Earnings Conference Call
MetLife will hold its second quarter 2010 earnings conference call and
audio Webcast on Friday, July 30, 2010, from 8:00 to 9:00 a.m. (ET). The
conference call will be available live via telephone and the Internet.
To listen over the telephone, dial (612) 326-1011 (domestic and
international callers). To listen to the conference call over the
Internet, visit www.metlife.com
(through a link on the Investor Relations page). Those who want to
listen to the call on the telephone or via the Internet should dial in
or go to the Web site at least fifteen 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 10:00 a.m. (ET) on Friday, July 30, 2010, until
Friday, August 6, 2010, at 11:59 p.m. (ET). To listen to a replay of the
conference call over the telephone, dial (320) 365-3844 (domestic and
international callers). The access code for the replay is 151271. To
access the replay of the conference call over the Internet, visit the
above-mentioned Web site.
Non-GAAP and Other Financial Disclosures
All references in this press release (except in this section) to net
income (loss), net income (loss) per share, operating earnings and
operating earnings per share should be read as net income (loss)
available to MetLife, Inc.'s common shareholders, net income (loss)
available to MetLife, Inc.'s common shareholders per diluted common
share, operating earnings available to MetLife, Inc.'s common
shareholders and operating earnings available to MetLife, Inc.'s common
shareholders per diluted common share, respectively.
The historical and forward-looking financial information presented in
this press release include performance measures which are based on
methodologies other than generally accepted accounting principles
(?GAAP?). MetLife, Inc. analyzes its performance using financial
measures, such as operating earnings, operating revenues, operating
expenses, operating earnings available to common shareholders and
operating earnings available to common shareholders per diluted common
share, that are not based on GAAP. MetLife believes the presentation of
operating earnings as MetLife measures it for management purposes
enhances the understanding of its performance by highlighting the
results from operations and the underlying profitability drivers of the
business. Operating earnings, operating revenues, operating expenses,
operating earnings available to common shareholders and operating
earnings available to common shareholders per diluted common share
should not be viewed as substitutes for GAAP net income (loss) from
continuing operations, net of income tax, GAAP revenues, GAAP expenses,
GAAP net income (loss) available to MetLife, Inc.'s common shareholders
and GAAP net income (loss) available to MetLife, Inc.'s common
shareholders per diluted common share, respectively. Operating earnings
is the measure of segment profit or loss MetLife uses to evaluate
segment performance and allocate resources and, consistent with GAAP
accounting guidance for segment reporting, 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, net of income tax. Operating earnings available to common
shareholders is defined as operating earnings less preferred stock
dividends and operating earnings available to common shareholders per
diluted common share is calculated by dividing operating earnings
available to common shareholders by the number of weighted average
diluted common shares outstanding for the period indicated.
Operating revenues is defined as GAAP revenues (i) less net investment
gains (losses), (ii) less amortization of unearned revenue related to
net investment gains (losses), (iii) plus scheduled periodic settlement
payments on derivatives that are hedges of investments but do not
qualify for hedge accounting treatment, (iv) plus income from
discontinued real estate operations and (v) plus, for operating joint
ventures reported under the equity method of accounting, the
aforementioned adjustments, those identified in the definition of
operating expenses and changes in fair value of hedges of operating
joint venture liabilities, all net of income tax.
Operating expenses is defined as GAAP expenses (i) less changes in
policyholder benefits associated with asset value fluctuations related
to experience-rated contractholder liabilities and certain
inflation-indexed liabilities, (ii) less costs related to business
combinations (since January 1, 2009) and noncontrolling interests, (iii)
less amortization of deferred policy acquisition costs and value of
business acquired and changes in the policyholder dividend obligation
related to net investment gains (losses) and (iv) plus scheduled
periodic settlement payments on derivatives that are hedges of
policyholder account balances but do not qualify for hedge accounting
treatment.
In addition, operating revenues and operating expenses do not reflect
the consolidation of certain securitization vehicles that are variable
interest entities as required under GAAP.
Statistical sales information for life insurance is calculated by
MetLife using the LIMRA International, Inc. 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. Individual annuities sales
consists of statutory premiums direct and assumed, excluding company
sponsored internal exchanges.
Constant Currency Comparison
International premiums, fees & other revenues in the second quarter of
2009 were $1.0 billion and $1.1 billion, on a reported basis and
constant currency basis, respectively. Latin America premiums, fees &
other revenues in the second quarter of 2009 were $503 million and $538
million, on a reported basis and constant currency basis, respectively.
Asia Pacific premiums, fees & other revenues in the second quarter of
2009 were $408 million and $440 million, on a reported basis and
constant currency basis, respectively. EMEI premiums, fees & other
revenues in the second quarter of 2009 were $94 million on both a
reported and constant currency basis. The constant currency basis
amounts for both periods are calculated using the average foreign
currency exchange rates of the second quarter of 2010.
About MetLife
MetLife, Inc. is a leading provider of insurance, employee benefits and
financial services with operations throughout the United States and the
Latin America, Europe and Asia Pacific regions. Through its subsidiaries
and affiliates, MetLife, Inc. reaches more than 70 million customers
around the world and MetLife is the largest life insurer in the United
States (based on life insurance in-force). The MetLife companies offer
life insurance, annuities, auto and home insurance, retail banking and
other financial services to individuals, as well as group insurance and
retirement & savings products and services to corporations and other
institutions. For more information, visit www.metlife.com.
This press 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 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
MetLife's actual future results. 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: (i)
difficult and adverse conditions in the global and domestic capital and
credit markets; (ii) increased volatility and disruption of the capital
and credit markets, which may affect the company's ability to seek
financing or access its credit facilities; (iii) uncertainty about the
discontinuance of the U.S. government's programs to stabilize the
financial system, the imposition of fees relating thereto, or the
promulgation of additional regulations; (iv) exposure to financial and
capital market risk; (v) changes in general economic conditions,
including the performance of financial markets and interest rates, which
may affect the company's ability to raise capital, generate fee income
and market-related revenue and finance statutory reserve requirements
and may require the company to pledge collateral or make payments
related to declines in value of specified assets; (vi) potential
liquidity and other risks resulting from MetLife's participation in a
securities lending program and other transactions; (vii) investment
losses and defaults, and changes to investment valuations; (viii)
impairments of goodwill and realized losses or market value impairments
to illiquid assets; (ix) defaults on the company's mortgage loans; (x)
the impairment of other financial institutions; (xi) MetLife's ability
to identify, finance and consummate any future acquisitions, including
the acquisition of American Life Insurance Company (?Alico?), and to
successfully integrate acquired businesses with minimal disruption;
(xii) economic, political, currency and other risks relating to the
company's international operations; (xiii) MetLife, Inc.'s primary
reliance, as a holding company, on dividends from its subsidiaries to
meet debt payment obligations and the applicable regulatory restrictions
on the ability of the subsidiaries to pay such dividends; (xiv)
downgrades in MetLife, Inc.'s and its affiliates' claims paying ability,
financial strength or credit ratings; (xv) ineffectiveness of risk
management policies and procedures, including with respect to guaranteed
benefits (which may be affected by estimated fair value adjustments
arising from changes in the company's own credit spread) on certain of
the company's variable annuity products; (xvi) availability and
effectiveness of reinsurance or indemnification arrangements; (xvii)
discrepancies between actual claims experience and assumptions used in
setting prices for the company's products and establishing the
liabilities for the company's obligations for future policy benefits and
claims; (xviii) catastrophe losses; (xix) heightened competition,
including with respect to pricing, entry of new competitors,
consolidation of distributors, the development of new products by new
and existing competitors, distribution of amounts available under U.S.
government programs, and for personnel; (xx) unanticipated changes in
industry trends; (xxi) changes in accounting standards, practices and/or
policies; (xxii) changes in assumptions related to deferred policy
acquisition costs, value of business acquired or goodwill; (xxiii)
increased expenses relating to pension and postretirement benefit plans,
as well as health care and other employee benefits; (xxiv) deterioration
in the experience of the ?closed block? established in connection with
the reorganization of Metropolitan Life Insurance Company; (xxv) adverse
results or other consequences from litigation, arbitration or regulatory
investigations; (xxvi) discrepancies between actual experience and
assumptions used in establishing liabilities related to other
contingencies or obligations; (xxvii) regulatory, legislative or tax
changes relating to the company's insurance, banking, international, or
other operations that may affect the cost of, or demand for, the
company's products or services, impair the company's ability to attract
and retain talented and experienced management and other employees, or
increase the cost or administrative burdens of providing benefits to
employees; (xxviii) the effects of business disruption or economic
contraction due to terrorism, other hostilities, or natural
catastrophes; (xxix) the effectiveness of the company's programs and
practices in avoiding giving its associates incentives to take excessive
risks; (xxx) other risks and uncertainties described from time to time
in MetLife, Inc.'s filings with the SEC; and (xxxi) any of the foregoing
factors as they relate to Alico and its operations.
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 Operations (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Six Months
|
|
|
|
|
|
Ended June 30,
|
|
Ended June 30,
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
(In millions)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
6,662
|
|
|
$
|
6,576
|
|
|
$
|
13,516
|
|
|
$
|
12,698
|
|
|
Universal life and investment-type product policy fees
|
|
|
1,485
|
|
|
|
1,216
|
|
|
|
2,892
|
|
|
|
2,399
|
|
|
Net investment income
|
|
|
4,087
|
|
|
|
3,730
|
|
|
|
8,431
|
|
|
|
6,991
|
|
|
Other revenues
|
|
|
544
|
|
|
|
572
|
|
|
|
1,057
|
|
|
|
1,126
|
|
|
Net investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
Other-than-temporary impairments on fixed maturity securities
|
|
|
(244
|
)
|
|
|
(566
|
)
|
|
|
(395
|
)
|
|
|
(1,119
|
)
|
|
|
Other-than-temporary impairments on fixed maturity securities
transferred to other comprehensive income (loss)
|
|
|
98
|
|
|
|
234
|
|
|
|
157
|
|
|
|
234
|
|
|
|
Other net investment gains (losses), net
|
|
|
1,614
|
|
|
|
(3,497
|
)
|
|
|
1,778
|
|
|
|
(3,850
|
)
|
|
|
|
Total net investment gains (losses)
|
|
|
1,468
|
|
|
|
(3,829
|
)
|
|
|
1,540
|
|
|
|
(4,735
|
)
|
|
|
|
Total revenues
|
|
|
14,246
|
|
|
|
8,265
|
|
|
|
27,436
|
|
|
|
18,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Policyholder benefits and claims
|
|
|
7,018
|
|
|
|
6,946
|
|
|
|
14,555
|
|
|
|
13,528
|
|
|
Interest credited to policyholder account balances
|
|
|
1,049
|
|
|
|
1,229
|
|
|
|
2,192
|
|
|
|
2,397
|
|
|
Policyholder dividends
|
|
|
388
|
|
|
|
434
|
|
|
|
765
|
|
|
|
858
|
|
|
Other expenses
|
|
|
3,420
|
|
|
|
2,031
|
|
|
|
6,362
|
|
|
|
© Business Wire 2010
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