MetLife, Inc. (NYSE:MET) today reported the following results
for the second quarter of 2015:
MetLife reported operating earnings* of $1.8 billion, up 11
percent from the second quarter of 2014, and up 16 percent on a
constant currency basis*. On a per share basis, operating earnings
were $1.56, up 12 percent over the prior year quarter. Operating
earnings in the Americas grew 4 percent on a reported basis and 6
percent on a constant currency basis. Operating earnings in Asia
increased 31 percent on a reported basis and were up 45 percent on
a constant currency basis. Operating earnings in Europe, the Middle
East and Africa (EMEA) decreased 31 percent on a reported basis and
were down 7 percent on a constant currency basis.
Second quarter 2015 operating earnings included the following
item:
- a one-time tax rate change in Japan,
which increased operating earnings by $61 million, or $0.05 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 12.5 percent for the
second quarter of 2015, and the company’s tangible operating ROE*
was 15.3 percent.
On a GAAP basis, MetLife reported second quarter 2015 net income
of $1.0 billion, or $0.92 per share. Net income includes $593
million, after tax, in net derivative losses, mainly due to rising
interest rates, as well as weakening of the U.S. dollar against
certain currencies. MetLife uses derivatives as part of its broader
asset-liability management strategy to hedge certain risks, such as
movements in interest rates 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 second quarter variance between operating earnings and net
income reflects asymmetrical and non-economic accounting of $856
million, after tax. Net income adjusted for asymmetrical and
non-economic accounting was above operating earnings primarily due
to the portion of the one-time tax benefit in Japan relating to net
investment gains.
Premiums, fees & other revenues* were $12.2 billion, down 4
percent (essentially unchanged on a constant currency basis) over
the second quarter of 2014.
Book value, excluding AOCI other than FCTA*, was $50.73 per
share, up 4 percent from $48.60 at June 30, 2014.
“MetLife delivered strong double-digit operating earnings growth
in the second quarter,” said Steven A. Kandarian, chairman,
president and chief executive officer of MetLife, Inc. “Investment
margins remained healthy despite persistent low interest rates, and
underwriting margins improved year over year for the fourth
consecutive quarter.”
SECOND QUARTER 2015 SUMMARY
($ in millions, except per share data)
Three
months ended June 30 2015 2014
Change Premiums, fees & other revenues $ 12,175 $ 12,706
(4 %) Total operating revenues $ 17,360 $ 17,801 (2 %) Operating
earnings $ 1,765 $ 1,590 11 % Operating earnings per share $ 1.56 $
1.39 12 % Net income $ 1,042 $ 1,335 (22 %) Net income per share $
0.92 $ 1.17 (21 %) Book value per share, excluding AOCI
other than FCTA
$ 50.73 $ 48.60 4 % Book value per share – tangible common
stockholders’ equity
$ 41.73 $ 38.69 8 % Book value per share $ 60.27
$ 59.96 1 %
*Information regarding the non-GAAP 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 release and/or the Second Quarter 2015
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 second quarter of 2015 in
the business discussions that follow are with the second quarter of
2014, unless otherwise noted.
THE AMERICAS
Total operating earnings for the Americas were $1.4 billion, up
4 percent (6 percent on a constant currency basis), driven by
investment and underwriting margins, as well as business growth.
Operating return on allocated equity* was 14.8 percent for the
second quarter and operating return on allocated tangible equity*
was 16.6 percent. Premiums, fees & other revenues were $9.2
billion, down 4 percent, and down 2 percent on a constant currency
basis. Excluding pension closeouts, premiums, fees & other
revenues were down 1 percent (and essentially unchanged on a
constant currency basis).
Retail
Operating earnings for Retail were $690 million, up 2 percent,
driven by underwriting and higher variable investment income.
Premiums, fees & other revenues were $3.3 billion, down 2
percent mostly due to lower income annuity sales.
Group, Voluntary & Worksite
Benefits
Operating earnings for Group, Voluntary & Worksite Benefits
were $231 million, up 11 percent, driven by business growth and
underwriting. Premiums, fees & other revenues were $4.4
billion, up 2 percent reflecting an increase in life, dental, and
voluntary products.
Corporate Benefit Funding
Operating earnings for Corporate Benefit Funding were $406
million, up 12 percent, due to an increase in investment margins.
Premiums, fees & other revenues were $455 million, down 44
percent, due to lower pension closeouts and structured settlement
annuity sales.
Latin America
Operating earnings for Latin America were $116 million, down 15
percent on a reported basis, but up 3 percent on a constant
currency basis. Excluding U.S. Direct, operating earnings were down
5 percent on a reported basis, but up 13 percent on a constant
currency basis. Total premiums, fees & other revenues were $1.1
billion, down 3 percent on a reported basis, but up 13 percent on a
constant currency basis, with growth across the region. Total sales
for the region decreased 40 percent on a constant currency basis,
primarily due to the impact of a large contract in Mexico in the
second quarter of 2014. Excluding this large contract, sales were
up 4 percent in the region in the second quarter of 2015.
ASIA
Operating earnings for Asia were $425 million, up 31 percent on
a reported basis, and up 45 percent on a constant currency basis.
This includes the previously mentioned $61 million Japan tax rate
change. Excluding this tax item, operating earnings were up 24
percent on a constant currency basis, reflecting strong business
growth. Operating return on allocated equity was 14.8 percent for
the second quarter and operating return on allocated tangible
equity was 25.4 percent. Excluding the tax item, operating return
on allocated equity was 12.7 percent and operating return on
allocated tangible equity was 21.8 percent. Premiums, fees &
other revenues in Asia were $2.2 billion, down 4 percent on a
reported basis, but up 9 percent on a constant currency basis,
driven by strong growth across all key markets. Total sales for the
region increased 1 percent on a constant currency basis, due to
growth in Japan and continued strong growth in accident &
health sales across the region, offset by a decline in retirement
sales.
EMEA
Operating earnings for EMEA were $50 million, down 31 percent on
a reported basis, and down 7 percent on a constant currency basis.
Second quarter 2014 results were aided by $7 million in tax-related
items. Operating return on allocated equity was 6.0 percent for the
second quarter and operating return on allocated tangible equity
was 11.2 percent. Premiums, fees & other revenues were $658
million, down 8 percent on a reported basis, but up 10 percent on a
constant currency basis. Total sales for the region increased 7
percent on a constant currency basis, driven by employee benefit
and accident & health sales.
INVESTMENTS
Net investment income was $5.2 billion, up 2 percent. Variable
investment income was $427 million ($278 million, after tax and
deferred acquisition costs (DAC)), compared with $342 million ($221
million, after tax and DAC) in the second quarter of 2014.
Rising interest rates contributed to derivative net losses of
$721 million, after tax and other adjustments. Derivative net gains
in the second quarter of 2014 were $71 million, after tax and other
adjustments.
CORPORATE & OTHER
Corporate & Other had an operating loss of $153 million
compared with an operating loss of $191 million in the second
quarter of 2014.
Conference Call
MetLife will hold its second quarter 2015 earnings conference
call and audio webcast on Thursday, July 30, 2015, from 8-9 a.m.
EDT. The conference call will be available live via telephone and
the Internet. To listen via telephone, dial 800-230-1074 (U.S.) or
612-234-9959 (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, July 30,
2015, until Thursday, August 6, 2015, 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 344936. To access the replay of the conference call over
the Internet, visit the above-mentioned website.
A brief video of CFO John Hele discussing second quarter 2015
results can be viewed 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
DisclosuresAny references in this news release (except in
this section and in the tables that accompany this release) to net
income (loss), net income (loss) per share, operating earnings,
operating earnings per share, book value per share, book value per
share, excluding accumulated other comprehensive income (loss)
(AOCI) other than foreign currency translation adjustments (FCTA),
book value per share-tangible common stockholders’ equity,
premiums, fees and other revenues, operating return on equity,
excluding AOCI other than FCTA, and tangible operating return on
equity 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 common shareholders, operating earnings
available to common shareholders per diluted common share, book
value per common share, book value per common share, excluding AOCI
other than FCTA, book value per common share-tangible common
stockholders’ equity, premiums, fees and other revenues
(operating), operating return on MetLife, Inc.’s common
stockholders’ equity, excluding AOCI other than FCTA, and operating
return on MetLife, Inc.’s tangible common stockholders’ equity,
respectively.
Operating earnings is the measure of segment profit or loss that
MetLife uses to evaluate segment performance and allocate
resources. Consistent with accounting principles generally accepted
in the United States of America (GAAP) accounting 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. 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 scheduled periodic settlement payments 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 scheduled
periodic settlement payments 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 and
integration 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.
MetLife, Inc.’s tangible common stockholders’ equity is defined
as MetLife, Inc.’s common stockholders’ equity, excluding the net
unrealized investment gains (losses) and defined benefit plans
adjustment components of AOCI and is also 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, is defined as 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.
MetLife believes the presentation of operating earnings and
operating earnings available to common shareholders as MetLife
measures it for management purposes enhances the understanding of
the company’s performance by highlighting the results of operations
and the underlying profitability drivers of the
business. Operating revenues, operating expenses, operating
earnings, operating earnings available to common shareholders,
operating earnings available to common shareholders per diluted
common share, investment portfolio gains (losses) and derivative
gains (losses) should not be viewed as substitutes for the
following financial measures calculated in accordance with
GAAP: GAAP revenues, GAAP expenses, income (loss) from
continuing operations, net of income tax, net income (loss)
available to MetLife, Inc.’s common shareholders, net income (loss)
available to MetLife, Inc.’s common shareholders per diluted common
share, net investment gains (losses) and net derivative gains
(losses), respectively. MetLife, Inc.’s tangible common
stockholders’ equity and MetLife, Inc.’s common stockholders’
equity, excluding AOCI other than FCTA, should not be viewed as
substitutes for total MetLife, Inc.’s stockholders’ equity
calculated in accordance with GAAP. Reconciliations of these
measures to the most directly comparable GAAP measures are included
in the Second Quarter 2015 Financial Supplement and/or in the
tables that accompany this earnings news release.
Operating return on MetLife, Inc.'s tangible common
stockholders' equity is defined as 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,
excluding AOCI other than FCTA, is defined as 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 common stockholders' equity
is defined as operating earnings available to common shareholders
divided by MetLife, Inc.'s average common stockholders' equity.
Return on MetLife, Inc.’s tangible common stockholders' equity
is defined as 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, excluding
AOCI other than FCTA, is defined as 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 common stockholders’ equity is defined
as net income (loss) available to MetLife, Inc.’s common
shareholders divided by MetLife, Inc.’s average common
stockholders’ equity.
Allocated equity is defined as the 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 allocated equity is defined as operating
earnings available to common shareholders divided by allocated
equity.
Operating return on allocated tangible equity is defined as
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 is defined as net income (loss)
available to MetLife, Inc.’s common shareholders divided by
allocated equity.
Return on allocated tangible equity is defined as 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.
We sometimes refer to sales activity for various products. These
sales statistics do not correspond to revenues under GAAP, but are
used as relevant measures of business activity. Statistical sales
information for life insurance is calculated by MetLife 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. Individual annuities sales
consists of statutory premiums direct and assumed, excluding
company sponsored internal exchanges. Statistical sales information
for Latin America, Asia and EMEA is 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 and health and
group).
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.
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.
Operating expense ratio is calculated by dividing operating
expenses (other expenses, net of capitalization of DAC) by
operating premiums, fees and other revenues.
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 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
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 of comprehensive
financial services regulation reform on us, 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) potential
liquidity and other risks resulting from our participation in a
securities lending program and other transactions;
(9) investment losses and defaults, and changes to investment
valuations; (10) changes in assumptions related to investment
valuations, deferred policy acquisition costs, deferred sales
inducements, value of business acquired or goodwill;
(11) impairments of goodwill and realized losses or market
value impairments to illiquid assets; (12) defaults on our
mortgage loans; (13) the defaults or deteriorating credit of
other financial institutions that could adversely affect us;
(14) economic, political, legal, currency and other risks
relating to our international operations, including with respect to
fluctuations of exchange rates; (15) downgrades in our claims
paying ability, financial strength or credit ratings; (16) a
deterioration in the experience of the “closed block” established
in connection with the reorganization of Metropolitan Life
Insurance Company; (17) availability and effectiveness of
reinsurance or indemnification arrangements, as well as any default
or failure of counterparties to perform; (18) differences
between actual claims experience and underwriting and reserving
assumptions; (19) ineffectiveness of risk management policies
and procedures; (20) catastrophe losses; (21) increasing
cost and limited market capacity for statutory life insurance
reserve financings; (22) 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; (23) 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; (24) our ability to address difficulties,
unforeseen liabilities, asset impairments, or rating agency actions
arising from business acquisitions, including our acquisition of
American Life Insurance Company and Delaware American Life
Insurance Company, and integrating and managing the growth of such
acquired businesses, or arising from dispositions of businesses or
legal entity reorganizations; (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 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 For the Six Months Ended June 30, June 30, 2015 2014
2015 2014 (In millions) (In millions)
OPERATING REVENUES
Premiums $ 9,313 $ 9,853 $ 18,566 $ 19,070 Universal life and
investment-type product policy fees 2,335 2,360 4,629 4,683 Net
investment income 5,185 5,095 10,167 10,180 Other revenues
527 493 1,030 984
Total operating revenues 17,360 17,801
34,392 34,917
OPERATING
EXPENSES Policyholder benefits and claims and policyholder
dividends 9,503 9,964 18,950 19,337 Interest credited to
policyholder account balances 1,342 1,425 2,673 2,826
Capitalization of DAC (927 ) (1,031 ) (1,895 ) (2,077 )
Amortization of DAC and VOBA 1,001 1,025 1,954 2,075 Amortization
of negative VOBA (83 ) (99 ) (173 ) (202 ) Interest expense on debt
307 299 604 593 Other expenses 3,882 3,979
7,682 7,930 Total operating
expenses 15,025 15,562 29,795
30,482 Operating earnings before
provision for income tax 2,335 2,239 4,597 4,435 Provision for
income tax expense (benefit) 539 618
1,133 1,222 Operating earnings 1,796
1,621 3,464 3,213 Preferred stock dividends 31
31 61 61
OPERATING EARNINGS
AVAILABLE TO COMMON SHAREHOLDERS $ 1,765 $ 1,590
$ 3,403 $ 3,152
Reconciliation to
Net Income (Loss) and Financial Statement Line Item Adjustments
from GAAP
Operating earnings $ 1,796 $ 1,621 $ 3,464 $ 3,213 Adjustments from
operating earnings to income (loss) from continuing operations, net
of income tax: Net investment gains (losses) (1), (2) (133 ) (125 )
153 (536 ) Net derivative gains (losses) (2) (912 ) 311 (91 ) 654
Premiums (1 ) 20 (1 ) 22 Universal life and investment-type product
policy fees 99 98 199 196 Net investment income (238 ) 164 241 114
Other revenues (9 ) (3 ) (17 ) (16 ) Policyholder benefits and
claims and policyholder dividends (2) (180 ) (421 ) (329 ) (675 )
Interest credited to policyholder account balances 44 (284 ) (620 )
(352 ) Capitalization of DAC - 1 - 1 Amortization of DAC and VOBA
(2) 104 (37 ) 32 (45 ) Amortization of negative VOBA 9 12 19 24
Interest expense on debt (1 ) (13 ) (2 ) (31 ) Other expenses (4 )
(12 ) (9 ) (15 ) Goodwill impairment - - - - Provision for income
tax (expense) benefit (2) 545 44
243 164 Income (loss) from continuing
operations, net of income tax 1,119 1,376 3,282 2,718 Income (loss)
from discontinued operations, net of income tax -
- - (3 ) Net income (loss) 1,119
1,376 3,282 2,715 Less: Net income (loss) attributable to
noncontrolling interests 4 10 9
21 Net income (loss) attributable to MetLife,
Inc. 1,115 1,366 3,273 2,694 Less: Preferred stock dividends 31 31
61 61 Less: Preferred stock repurchase premium 42
- 42 - Net income (loss)
available to MetLife, Inc.'s common shareholders $ 1,042 $
1,335 $ 3,170 $ 2,633 See footnotes on
last page.
MetLife, Inc. (Unaudited)
For the Three Months Ended For the Six Months
Ended June 30, June 30, 2015 2014 2015 2014 Earnings Per Weighted
Average Common Shares
Diluted
Earnings Per Weighted Average Common Shares
Diluted
Earnings Per Weighted Average Common
Shares
Diluted
Earnings Per Weighted Average Common Shares
Diluted
(In millions, except per share data) (In millions, except per share
data)
Reconciliation to
Net Income (Loss) Available to MetLife, Inc.'s Common
Shareholders
Operating earnings available to common shareholders $ 1,765 $ 1.56
$ 1,590 $ 1.39 $ 3,403 $ 3.01 $ 3,152 $ 2.76 Adjustments
from operating earnings available to common shareholders to net
income (loss) available to MetLife, Inc.'s common shareholders:
Add: Net investment gains (losses) (1) (133 ) (0.12 ) (125 ) (0.11
) 153 0.14 (536 ) (0.47 ) Add: Net derivative gains (losses) (912 )
(0.81 ) 311 0.27 (91 ) (0.08 ) 654 0.57 Add: Goodwill impairment -
- - - - - - - Add: Other adjustments to continuing operations (177
) (0.15 ) (475 ) (0.41 ) (487 ) (0.43 ) (777 ) (0.67 ) Add:
Provision for income tax (expense) benefit 545 0.48 44 0.04 243
0.21 164 0.14 Add: Income (loss) from discontinued operations, net
of income tax - - - - - - (3 ) - Less: Net income (loss)
attributable to noncontrolling interests 4 - 10 0.01 9 0.01 21 0.02
Less: Preferred stock repurchase premium 42
0.04 - - 42
0.04 - - Net income (loss)
available to MetLife, Inc.'s common shareholders $ 1,042 $
0.92 $ 1,335 $ 1.17 $ 3,170 $ 2.80
$ 2,633 $ 2.31 Weighted average common
shares outstanding - diluted 1128.4 1142.3 1131.1 1140.8
For the Three Months Ended For the Six Months Ended
June 30, June 30, 2015 2014 2015 2014 (In millions) (In millions)
Reconciliation to
GAAP Premiums, Fees and Other Revenues
Total operating premiums, fees and other revenues $ 12,175 $ 12,706
$ 24,225 $ 24,737 Add: Adjustments to premiums, fees and other
revenues 89 115 181
202 Total premiums, fees and other revenues $ 12,264
$ 12,821 $ 24,406 $ 24,939
Reconciliation to
GAAP Revenues and GAAP Expenses
Total operating revenues $ 17,360 $ 17,801 $ 34,392 $ 34,917
Add: Net investment gains (losses) (1) (133 ) (125 ) 153 (536 )
Add: Net derivative gains (losses) (912 ) 311 (91 ) 654 Add:
Adjustments related to net investment gains (losses) and net
derivative gains (losses) 3 3 7 6 Add: Other adjustments to
revenues (152 ) 276 415
310 Total revenues $ 16,166 $ 18,266 $ 34,876
$ 35,351 Total operating expenses $ 15,025 $
15,562 $ 29,795 $ 30,482 Add: Adjustments related to net investment
gains (losses) and net derivative gains (losses) (94 ) 63 1 64 Add:
Goodwill impairment - - - - Add: Other adjustments to expenses
122 691 908 1,029
Total expenses $ 15,053 $ 16,316 $ 30,704
$ 31,575 See footnotes on last page.
MetLife, Inc. (Unaudited)
June 30,
Book
Value (3) 2015 2014 Book value per common share $ 60.27
$ 59.96 Less: Net unrealized investment gains (losses), net of
income tax 11.52 12.77 Less: Defined benefit plans adjustment, net
of income tax (1.98 ) (1.41 ) Book value per
common share, excluding AOCI other than FCTA $ 50.73 $ 48.60 Less:
Goodwill, net of income tax 8.51 9.19 Less: VODA and VOCRA, net of
income tax 0.49 0.72 Book value per
common share - tangible common stockholders' equity (excludes AOCI
other than FCTA) $ 41.73 $ 38.69 Common shares
outstanding, end of period (In millions) 1,116.8 1,126.6
For the Three Months Ended For the Year Ended June 30,
December 31,
Return on Equity (4) 2015 2014 2014 Operating
return on MetLife, Inc.'s: Common stockholders' equity 10.2 % 9.7 %
10.0 % Common stockholders' equity, excluding AOCI other than FCTA
12.5 % 11.7 % 12.0 % Tangible common stockholders' equity (excludes
AOCI other than FCTA) 15.3 % 14.9 % 15.2 % Return on
MetLife, Inc.'s: Common stockholders' equity 6.0 % 8.1 % 9.4 %
Common stockholders' equity, excluding AOCI other than FCTA 7.4 %
9.9 % 11.3 % Tangible common stockholders' equity (excludes AOCI
other than FCTA) 9.1 % 12.5 % 14.3 % Operating return on
allocated equity: Americas 14.8 % 14.8 % Asia 14.8 % 11.1 % EMEA
6.0 % 8.3 % Operating return on allocated tangible
equity: Americas 16.6 % 16.9 % Asia 25.4 % 19.2 % EMEA 11.2 % 16.1
% Return on allocated equity: Americas 10.4 % 12.8 %
Asia 19.6 % 11.4 % EMEA 7.7 % 13.2 % Return on
Allocated Tangible Equity: Americas 11.7 % 14.6 % Asia 33.7 % 19.7
% EMEA 14.2 % 25.2 % See footnotes on last
page.
MetLife, Inc. Reconciliations to Net
Income (Loss) Available to Common Shareholders
(Unaudited) For
the Three Months Ended For the Six Months Ended June 30, June 30,
2015 2014 2015 2014 (In millions) (In millions) Total Americas
Operations: Operating earnings available to common shareholders $
1,443 $ 1,385 $ 2,824 $ 2,709 Add: Net investment gains (losses)
(1) (14 ) (189 ) 260 (706 ) Add: Net derivative gains (losses) (508
) 429 69 715 Add: Other adjustments to continuing operations (124 )
(484 ) (392 ) (759 ) Add: Provision for income tax (expense)
benefit 221 62 16 231 Add: Income (loss) from discontinued
operations, net of income tax - - - (3 ) Less: Net income (loss)
attributable to noncontrolling interests 3 4
6 9 Net income (loss) available
to MetLife, Inc.'s common shareholders $ 1,015 $ 1,199
$ 2,771 $ 2,178 Retail: Operating
earnings available to common shareholders $ 690 $ 677 $ 1,343 $
1,313 Add: Net investment gains (losses) 9 10 77 16 Add: Net
derivative gains (losses) (95 ) 225 218 296 Add: Other adjustments
to continuing operations (72 ) (274 ) (264 ) (421 ) Add: Provision
for income tax (expense) benefit 55 14 (11 ) 39 Add: Income (loss)
from discontinued operations, net of income tax -
- - (2 ) Net income (loss)
available to MetLife, Inc.'s common shareholders $ 587 $ 652
$ 1,363 $ 1,241 Group, Voluntary &
Worksite Benefits: Operating earnings available to common
shareholders $ 231 $ 209 $ 459 $ 399 Add: Net investment gains
(losses) 8 10 11 (1 ) Add: Net derivative gains (losses) (264 ) 71
(59 ) 187 Add: Other adjustments to continuing operations (41 ) (42
) (83 ) (81 ) Add: Provision for income tax (expense) benefit
104 (14 ) 46 (37 ) Net
income (loss) available to MetLife, Inc.'s common shareholders $ 38
$ 234 $ 374 $ 467 Corporate
Benefit Funding: Operating earnings available to common
shareholders $ 406 $ 363 $ 775 $ 703 Add: Net investment gains
(losses) (31 ) (195 ) 174 (736 ) Add: Net derivative gains (losses)
(1) (134 ) 125 (54 ) 228 Add: Other adjustments to continuing
operations 13 (22 ) (26 ) (24 ) Add: Provision for income tax
(expense) benefit 53 24 (33 ) 172 Add: Income (loss) from
discontinued operations, net of income tax - -
- (1 ) Net income (loss) available to
MetLife, Inc.'s common shareholders $ 307 $ 295 $ 836
$ 342 Latin America: Operating earnings
available to common shareholders $ 116 $ 136 $ 247 $ 294 Add: Net
investment gains (losses) - (14 ) (2 ) 15 Add: Net derivative gains
(losses) (15 ) 8 (36 ) 4 Add: Other adjustments to continuing
operations (24 ) (146 ) (19 ) (233 ) Add: Provision for income tax
(expense) benefit 9 38 14 57 Less: Net income (loss) attributable
to noncontrolling interests 3 4
6 9 Net income (loss) available to MetLife,
Inc.'s common shareholders $ 83 $ 18 $ 198 $
128 Asia: Operating earnings available to common
shareholders $ 425 $ 324 $ 752 $ 657 Add: Net investment gains
(losses) 57 82 125 239 Add: Net derivative gains (losses) 9 (35 )
27 (42 ) Add: Other adjustments to continuing operations (37 ) (6 )
(92 ) (18 ) Add: Provision for income tax (expense) benefit 111 (27
) 101 (68 ) Less: Net income (loss) attributable to noncontrolling
interests 1 4 1 10
Net income (loss) available to MetLife, Inc.'s common
shareholders $ 564 $ 334 $ 912 $ 758
EMEA: Operating earnings available to common shareholders $
50 $ 72 $ 120 $ 143 Add: Net investment gains (losses) 5 2 8 (7 )
Add: Net derivative gains (losses) 13 49 14 87 Add: Other
adjustments to continuing operations (12 ) 31 7 30 Add: Provision
for income tax (expense) benefit 7 (38 ) (19 ) (51 ) Less: Net
income (loss) attributable to noncontrolling interests (1 )
1 1 1 Net income (loss)
available to MetLife, Inc.'s common shareholders $ 64 $ 115
$ 129 $ 201 Corporate & Other:
Operating earnings available to common shareholders $ (153 ) $ (191
) $ (293 ) $ (357 ) Add: Net investment gains (losses) (181 ) (20 )
(240 ) (62 ) Add: Net derivative gains (losses) (426 ) (132 ) (201
) (106 ) Add: Other adjustments to continuing operations (4 ) (16 )
(10 ) (30 ) Add: Provision for income tax (expense) benefit 206 47
145 52 Less: Net income (loss) attributable to noncontrolling
interests 1 1 1 1 Less: Preferred stock repurchase premium
42 - 42 - Net
income (loss) available to MetLife, Inc.'s common shareholders $
(601 ) $ (313 ) $ (642 ) $ (504 ) See footnotes on last
page.
MetLife, Inc. GAAP Interim Condensed
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended For
the Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In
millions) (In millions)
Revenues Premiums $ 9,312 $ 9,873 $
18,565 $ 19,092 Universal life and investment-type product policy
fees 2,434 2,458 4,828 4,879 Net investment income 4,947 5,259
10,408 10,294 Other revenues 518 490 1,013 968 Net investment gains
(losses): Other-than-temporary impairments on fixed maturity
securities - (9 ) (8 ) (23 ) Other-than-temporary impairments on
fixed maturity securities transferred to other comprehensive income
(loss) (2 ) (6 ) (12 ) (2 ) Other net investment gains (losses) (1)
(131 ) (110 ) 173 (511 ) Total
net investment gains (losses) (133 ) (125 ) 153 (536 ) Net
derivative gains (losses) (912 ) 311
(91 ) 654 Total revenues 16,166
18,266 34,876 35,351
Expenses Policyholder benefits and claims 9,352 9,988 18,609
19,312 Interest credited to policyholder account balances 1,298
1,709 3,293 3,178 Policyholder dividends 331 397 670 700 Other
expenses 4,072 4,222 8,132
8,385 Total expenses 15,053
16,316 30,704 31,575
Income (loss) from continuing operations before provision
for income tax 1,113 1,950 4,172 3,776 Provision for income tax
expense (benefit) (6 ) 574 890
1,058 Income (loss) from continuing operations, net
of income tax 1,119 1,376 3,282 2,718 Income (loss) from
discontinued operations, net of income tax - -
- (3 ) Net income (loss) 1,119 1,376
3,282 2,715 Less: Net income (loss) attributable to noncontrolling
interests 4 10 9
21 Net income (loss) attributable to MetLife, Inc. 1,115
1,366 3,273 2,694 Less: Preferred stock dividends 31 31 61 61
Preferred stock repurchase premium 42 -
42 - Net income (loss) available to
MetLife, Inc.'s common shareholders $ 1,042 $ 1,335 $
3,170 $ 2,633 (1) The three months and
six months ended June 30, 2014 include a pre-tax net investment
loss of $138 million and $633 million, respectively, related to the
sale of MetLife, Inc.'s wholly-owned subsidiary, MetLife Assurance
Limited. (2) The impacts of asymmetrical and non-economic
accounting for the three months ended June 30, 2015 are as follows:
i) Net investment gains (losses) - ($199) million; ii) Net
derivative gains (losses) - ($1,192) million; iii) Policyholder
benefits and claims and policyholder dividends - $25 million; iv)
Amortization of DAC and VOBA - $48 million; and v) Provision for
income tax (expense) benefit - $462 million. (3) Book values
exclude $2,066 million and $2,043 million of equity related to
preferred stock at June 30, 2015 and 2014, respectively. (4)
Annualized using quarter-to-date results.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006555/en/
MetLife, Inc.For Media:John Calagna, 212-578-6252orFor
Investors:Edward Spehar, 212-578-7888
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