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MetLife Announces Second Quarter 2018 Results

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MetLife, Inc. (NYSE:MET) today announced its results for the second
quarter ended June 30, 2018.

Second Quarter Results Summary

  • Net income of $845 million, compared to net income of $865 million in
    the second quarter of 2017. On a per share basis, net income of $0.83,
    compared to net income of $0.80 in the prior-year period.
  • Adjusted earnings* of $1.3 billion, or $1.30 per share, compared to
    adjusted earnings of $1.1 billion, or $1.04 per share in the second
    quarter of 2017.
  • Book value of $50.28 per share, down 21 percent from $63.63 per share
    at June 30, 2017, primarily due to the separation of Brighthouse
    Financial, Inc. and its subsidiaries (Brighthouse).
  • Book value, excluding accumulated other comprehensive income (AOCI)
    other than foreign currency translation adjustments (FCTA)*, of $42.76
    per share, down 17 percent from $51.29 per share at June 30, 2017,
    also primarily due to the separation of Brighthouse.
  • Return on Equity (ROE) of 6.5 percent.
  • Adjusted ROE, excluding AOCI other than FCTA*, of 12.2 percent.

"MetLife delivered a very strong second quarter driven by solid
underwriting and expense management around the globe," said Steven A.
Kandarian, chairman, president and CEO of MetLife, Inc. "During the
quarter we divested our remaining stake in Brighthouse and returned
approximately $1.5 billion to shareholders through common stock
repurchases and dividends. We remain focused on improving our return on
equity, maintaining strong free cash flow, meeting our expense targets,
and distributing capital to shareholders."

Second Quarter 2018 Summary

     
  Three months ended
($ in millions, except per share data) June 30,
2018   2017   Change
Premiums, fees & other revenues $16,998 $11,236 51%
Net investment income 4,473 4,193 7%
Net investment gains (losses) (227) 104
Net derivative gains (losses) (59)   (200)   71%
Total revenues $21,185 $15,333 38%
 
Total adjusted revenues $21,216 $15,511 37%
Adjusted premiums, fees & other revenues $16,889 $11,398 48%
 
Net income (loss) $845 $865 (2)%
Net income (loss) per share $0.83 $0.80 4%
 
Adjusted earnings $1,326 $1,121 18%
Adjusted earnings per share $1.30 $1.04 25%
 
Book value per share $50.28 $63.63 (21)%
Book value per share, excluding AOCI other than FCTA $42.76 $51.29 (17)%
Book value per share - tangible common stockholders' equity $33.22 $42.26 (21)%
 
Expense ratio 14.6% 21.2%

Direct expense ratio, excluding total notable items related to
direct expenses and pension risk transfer (PRT)

13.0% 12.9%
Adjusted expense ratio, excluding total notable items related to
other expenses and PRT
20.7% 20.5%
 
ROE 6.5% 5.2%
ROE, excluding AOCI other than FCTA 7.8% 6.3%
Tangible ROE 10.1% 7.8%
Adjusted ROE, excluding AOCI other than FCTA 12.2% 8.2%
Adjusted tangible ROE   15.8%   10.0%    
 

MetLife reported second quarter 2018 net income of $845 million,
compared to net income of $865 million in the second quarter of 2017.

On a per share basis, net income was $0.83, compared to net income of
$0.80 in the prior-year period.

Net investment income was $4.5 billion, up 7 percent.

Net derivative losses amounted to $47 million after tax during the
quarter.

Premiums, fees & other revenues were $17.0 billion, up 51 percent over
the second quarter of 2017. Adjusted premiums, fees & other revenues*
were $16.9 billion, up 48 percent from the prior-year period on both a
reported and constant currency basis*.

MetLife reported adjusted earnings of $1.3 billion, up 18 percent over
the second quarter of 2017, on both a reported and constant currency
basis. On a per share basis, which includes the impact of share
repurchases, adjusted earnings were $1.30, up 25 percent from the
prior-year period.

Supplemental slides for the second quarter of 2018, titled "2Q18
Supplemental Slides," are available on the MetLife Investor Relations
website at www.metlife.com
in the Conferences & Presentations section, and in the Form 8-K
furnished by MetLife to the U.S. Securities and Exchange Commission in
connection with this earnings news release.

Adjusted Earnings by Segment Summary

     
  Three months ended
    June 30, 2018
Segment  

Change from
prior-year period

 

Change (from
prior-year period
on a
constant

currency basis)

U.S.   36%   36%
Asia   17%   16%
Latin America   (6)%   (3)%
Europe, the Middle East and Africa (EMEA)   19%   15%
MetLife Holdings   18%   18%
 

Business Discussions

All comparisons of the results for the second quarter of 2018 in the
business discussions that follow are with the second quarter of 2017,
unless otherwise noted. See the second quarter 2018 notable items table
that follows the Business Discussions section of this release for
additional information on notable items incurred in the second quarter
of 2018.

U.S.

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $671   $493   36%
Adjusted premiums, fees & other revenues   $11,767   $6,327   86%
Adjusted premiums, fees & other revenues, excluding pension risk
transfers
  $5,815   $5,518   5%
Notable item(s)   $0   $0    
 
  • Total adjusted earnings for the U.S. were $671 million, up
    36 percent. Excluding the impact of U.S. tax reform, adjusted earnings
    were up 13 percent driven by favorable underwriting and volume growth.
  • Adjusted return on allocated equity was 24.7 percent, and
    adjusted return on allocated tangible equity was 28.6 percent.
  • Adjusted premiums, fees & other revenues were
    $11.8 billion, up 86 percent, driven by a large pension risk transfer
    transaction in Retirement and Income Solutions. Excluding pension risk
    transfers, adjusted premiums, fees & other revenues were up 5 percent.

Group Benefits

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $261   $203   29%
Adjusted premiums, fees & other revenues   $4,378   $4,202   4%
Notable item(s)   $0   $0    
 
  • Adjusted earnings for Group Benefits were $261 million, up 29
    percent. Excluding the impact of U.S. tax reform, adjusted earnings
    were up 6 percent driven by favorable underwriting and volume growth.
  • Adjusted premiums, fees & other revenues were $4.4 billion,
    up 4 percent.
  • Sales for Group Benefits were down 4 percent year-to-date
    compared to the first half of 2017 which saw record jumbo case sales.

Retirement and Income Solutions

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $347   $262   32%
Adjusted premiums, fees & other revenues   $6,492   $1,238   424%
Notable item(s)   $0   $0    
 
  • Adjusted earnings for Retirement and Income Solutions were
    $347 million, up 32 percent. Excluding the impact of U.S. tax reform,
    adjusted earnings were up 9 percent driven by favorable interest
    margins, underwriting and volume growth.
  • Adjusted premiums, fees & other revenues were $6.5 billion,
    up 424 percent from the prior-year period, primarily driven by a large
    pension risk transfer transaction.
  • Excluding pension risk transfers, adjusted premiums, fees & other
    revenues
    were up 26% percent.

Property & Casualty

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $63   $28   125%
Adjusted premiums, fees & other revenues   $897   $887   1%
Notable item(s)   $0   $0    
 
  • Adjusted earnings for Property & Casualty were $63 million,
    up 125 percent, primarily due to favorable underwriting in both auto
    and home.
  • Adjusted premiums, fees & other revenues were $897 million,
    up 1 percent.
  • Pre-tax catastrophe losses and prior year development totaled
    $104 million, compared to $122 million in the prior-year period.
  • Sales for Property & Casualty were $157 million, up 23
    percent.

ASIA

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $363   $310   17%
Adjusted earnings (constant currency)   $363   $314   16%
Adjusted premiums, fees & other revenues   $2,066   $2,045   1%
Notable item(s)   $0   $12    
 
  • Adjusted earnings for Asia were $363 million, up 17 percent,
    and up 16 percent on a constant currency basis, driven by volume
    growth, higher investment income and lower taxes.
  • Adjusted return on allocated equity was 10.2 percent, and
    adjusted return on allocated tangible equity was 15.4 percent.
  • Adjusted premiums, fees & other revenues were $2.1 billion,
    up 1 percent and down 1 percent on a constant currency basis,
    reflecting the continued shift away from premium-based products to
    fee-based products.
  • Total sales for the region were $688 million, up 26 percent on
    a constant currency basis. Japan sales were up 42 percent primarily
    driven by foreign currency denominated products. Other Asia sales were
    up 3 percent, primarily driven by China.

LATIN AMERICA

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $145   $154   (6)%
Adjusted earnings (constant currency)   $145   $150   (3)%
Adjusted premiums, fees & other revenues   $972   $928   5%
Notable item(s)   $0   $0    
 
  • Adjusted earnings for Latin America were $145 million, down 6
    percent, and down 3 percent on a constant currency basis, primarily
    due to higher taxes in the region. Excluding the negative impact of
    U.S. tax reform, adjusted earnings were up 1 percent, and 4 percent on
    a constant currency basis, driven by volume growth.
  • Adjusted return on allocated equity was 18.5 percent, and
    adjusted return on allocated tangible equity was 30.9 percent.
  • Adjusted premiums, fees & other revenues were $972 million,
    up 5 percent, and up 7 percent on a constant currency basis, due to
    growth across the region.
  • Total sales for the region were up 6 percent on a constant
    currency basis, driven by higher direct marketing sales.

EMEA

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $86   $72   19%
Adjusted earnings (constant currency)   $86   $75   15%
Adjusted premiums, fees & other revenues   $673   $625   8%
Notable item(s)   $0   $0    
 
  • Adjusted earnings for EMEA were $86 million, up 19 percent, and
    up 15 percent on a constant currency basis. Excluding the negative
    impact of U.S. tax reform, adjusted earnings were up 34 percent, and
    28 percent on a constant currency basis.
  • Adjusted return on allocated equity was 9.9 percent, and
    adjusted return on allocated tangible equity was 16.2 percent.
  • Adjusted premiums, fees & other revenues were $673 million,
    up 8 percent, and up 5 percent on a constant currency basis.
  • Total sales for the region were $228 million, down 6 percent on
    a constant currency basis. Excluding the impact from exiting the UK
    wealth management business in mid-2017, sales were up 1 percent.

METLIFE HOLDINGS

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $280   $237   18%
Adjusted premiums, fees & other revenues   $1,326   $1,404   (6)%
Notable item(s)   $0   $(40)    
 
  • Adjusted earnings for MetLife Holdings were
    $280 million, up 18 percent. Excluding the impact of U.S. tax reform,
    and adjusting for the notable item in the prior-year period, adjusted
    earnings were down 14 percent due to lower investment income and life
    underwriting, partially offset by favorable expenses.
  • Adjusted return on allocated equity was 11.1 percent,
    and adjusted return on allocated tangible equity was 12.6 percent.
  • Adjusted premiums, fees & other revenues were
    $1.3 billion, down 6 percent.

CORPORATE & OTHER

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Adjusted earnings   $(219)   $(145)   (51)%
Notable item(s)   $(62)   $(31)    
 
  • Corporate & Other had an adjusted loss of $219 million,
    compared to an adjusted loss of $145 million in the second quarter of
    2017, primarily due to the negative impact of U.S. tax reform. The
    notable item in the current period is related to the company's expense
    initiative costs.

INVESTMENTS

             
  Three months ended   Three months ended  
($ in millions)   June 30, 2018   June 30, 2017   Change
Net investment income (as reported on an adjusted basis)   $4,327   $4,113   5%
 
  • As reported on an adjusted basis, net investment income was
    $4.3 billion, up 5 percent. Variable investment income was
    $176 million ($139 million, after tax), as compared to $222 million
    ($144 million, after tax) in the second quarter of 2017, primarily due
    to lower private equity and hedge fund income.

SECOND QUARTER 2018 NOTABLE ITEMS

($ in millions)   Adjusted Earnings
  Three months ended June 30, 2018
Notable Items   U.S.   Asia  

Latin
America

  EMEA  

MetLife
Holdings

 

Corporate
&
Other

  Total
 

Group
Benefits

 

Retirement
and Income
Solutions

 

Property
&
Casualty

           
Expense initiative costs                               $(62)   $(62)
Total notable items   $0   $0   $0   $0   $0   $0   $0   $(62)   $(62)
   

*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 discussions below, as well as the tables
that accompany this news release. Adjusted measures were formerly
referred to as operating measures.

About MetLife

MetLife, Inc. (NYSE:MET), through its subsidiaries and affiliates
(MetLife), is one of the world's leading financial services companies,
providing insurance, annuities, employee benefits and asset management
to help its individual and institutional customers navigate their
changing world. Founded in 1868, MetLife has operations in more than 40
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.

Conference Call

MetLife will hold its second quarter 2018 earnings conference call and
audio webcast on Thursday, August 2, 2018, from 9-10 a.m. (ET). The
conference call will be available live via telephone and the internet.
To listen via telephone, dial 877-209-9920 (U.S.) or 612-332-0530
(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 11 a.m. (ET) on Thursday, August 2, 2018, until
Thursday August 9, 2018, at 11:59 p.m. (ET). 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
433150. To access the replay of the conference call over the internet,
visit the above-mentioned website.

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) adjusted earnings; (iii) adjusted earnings available to common shareholders;
(iv) adjusted earnings per share; (iv) adjusted 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 AOCI other than 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 (adjusted);
(ix) return on equity; (ix) return on MetLife, Inc.'s common stockholders' equity;
(x) return on equity, excluding AOCI other than FCTA; (x) return on MetLife, Inc.'s common stockholders' equity, excluding
AOCI, other than FCTA;
(xi) adjusted return on equity, excluding AOCI other than FCTA; (xi) adjusted return on MetLife, Inc.'s common stockholders' equity,
excluding AOCI other than FCTA;
(xii) tangible return on equity; and (xii) return on MetLife, Inc.'s tangible common stockholders' equity; and
(xiii) adjusted tangible return on equity. (xiii) adjusted 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)   adjusted revenues; (i) revenues;
(ii) adjusted expenses; (ii) expenses;
(iii) adjusted premiums, fees and other revenues; (iii) premiums, fees and other revenues;
(iv) adjusted earnings; (iv) income (loss) from continuing operations, net of income tax;
(v) adjusted earnings available to common shareholders; (v) net income (loss) available to MetLife, Inc.'s common shareholders;
(vi) adjusted earnings available to common shareholders on a constant
currency basis;
(vi) net income (loss) available to MetLife, Inc.'s common shareholders;
(vii) adjusted earnings available to common shareholders, excluding total
notable items;
(vii) net income (loss) available to MetLife, Inc.'s common shareholders;
(viii) adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis;
(viii) net income (loss) available to MetLife, Inc.'s common shareholders;
(ix) adjusted earnings available to common shareholders per diluted
common share;
(ix) net income (loss) available to MetLife, Inc.'s common shareholders
per diluted common share;
(x) adjusted earnings available to common shareholders, excluding total
notable items, per diluted common share;
(x) net income (loss) available to MetLife, Inc.'s common shareholders
per diluted common share;
(xi) adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis per diluted common share;
(xi) net income (loss) available to MetLife, Inc.'s common shareholders
per diluted common share;
(xii) adjusted return on equity; (xii) return on equity;
(xiii) adjusted return on equity, excluding AOCI other than FCTA; (xiii) return on equity;
(xiv) adjusted tangible return on equity; (xiv) return on equity;
(xv) investment portfolio gains (losses); (xv) net investment gains (losses);
(xvi) derivative gains (losses); (xvi) net derivative gains (losses);
(xvii) MetLife, Inc.'s tangible common stockholders' equity; (xvii) MetLife, Inc.'s stockholders' equity;
(xviii) MetLife, Inc.'s tangible common stockholders' equity, excluding
total notable items;
(xviii) MetLife, Inc.'s stockholders' equity;
(xix) MetLife, Inc.'s common stockholders' equity, excluding AOCI other
than FCTA;
(xix) MetLife, Inc.'s stockholders' equity;
(xx) MetLife, Inc.'s common stockholders' equity, excluding total notable
items (excludes AOCI other than FCTA);
(xx) MetLife, Inc.'s stockholders' equity;
(xxi) MetLife, Inc.'s common stockholders' equity, excluding net equity of
assets and liabilities of disposed subsidiary (excludes AOCI other
than FCTA);
(xxi) MetLife, Inc.'s stockholders' equity;
(xxii) Adjusted return on allocated tangible equity - adjusted earnings
available to common shareholders, excluding amortization of VODA and
VOCRA, net of income tax, divided by allocated tangible equity;
(xxii) return on equity;
(xxiii) free cash flow of all holding companies; (xxiii) MetLife, Inc.'s net cash provided by (used in) operating activities;
(xxiv) adjusted expense ratio; (xxiv) expense ratio;
(xxv) adjusted expense ratio, excluding total notable items related to
other expenses and PRT;
(xxv) expense ratio;
(xxvi) direct expense ratio; and (xxvi) expense ratio; and
(xxvii) direct expense ratio, excluding total notable items related to
direct expenses and PRT.
(xxvii) expense ratio.

Reconciliations of these non-GAAP measures to the most directly
comparable GAAP measures are included in this earnings news release and
in this period's quarterly financial supplement, which is available at www.metlife.com.

MetLife's definitions of the various non-GAAP and other financial
measures discussed in this news release may differ from those used by
other companies:

Adjusted earnings and related measures

  • adjusted earnings;
  • adjusted earnings available to common shareholders;
  • adjusted earnings available to common shareholders on a constant
    currency basis;
  • adjusted earnings available to common shareholders, excluding total
    notable items;
  • adjusted earnings available to common shareholders, excluding total
    notable items, on a constant currency basis;
  • adjusted earnings available to common shareholders per diluted common
    share;
  • adjusted earnings available to common shareholders, excluding total
    notable items per diluted common share; and
  • adjusted earnings available to common shareholders, excluding total
    notable items, on a constant currency basis per diluted common share.

These measures are used by management to evaluate performance and
allocate resources. Consistent with GAAP guidance for segment reporting,
adjusted earnings is also MetLife's GAAP measure of segment performance.
Adjusted earnings and other financial measures based on adjusted
earnings are also the measures by which MetLife senior management's and
many other employees' performance is evaluated for the purposes of
determining their compensation under applicable compensation plans.
Adjusted earnings and other financial measures based on adjusted
earnings allow analysis of MetLife's performance relative to its
business plan and facilitate comparisons to industry results.

Adjusted earnings is defined as adjusted revenues less adjusted
expenses, both net of income tax. Adjusted loss is defined as negative
adjusted earnings. Adjusted earnings available to common shareholders is
defined as adjusted earnings less preferred stock dividends.

Adjusted revenues and adjusted expenses

These financial measures, along with the related adjusted premiums, fees
and other revenues, focus on our primary businesses principally by
excluding the impact of market volatility, which could distort trends,
and revenues and costs related to non-core products and certain entities
required to be consolidated under GAAP. Also, these measures exclude
results of discontinued operations under GAAP and other businesses that
have been or will be sold or exited by MetLife but do not meet the
discontinued operations criteria under GAAP and are referred to as
divested businesses. Divested businesses also includes the net impact of
transactions with exited businesses that have been eliminated in
consolidation under GAAP and costs relating to businesses that have been
or will be sold or exited by MetLife that do not meet the criteria to be
included in results of discontinued operations under GAAP.

Adjusted revenues also excludes net investment gains (losses) (NIGL) and
net derivative gains (losses) (NDGL). Adjusted expenses also excludes
goodwill impairments.

The following additional adjustments are made to revenues, in the line
items indicated, in calculating adjusted 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 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) excludes post-tax adjusted
    earnings adjustments relating to insurance joint ventures accounted
    for under the equity method, (iii) excludes certain amounts related to
    contractholder-directed unit-linked investments, (iv) excludes certain
    amounts related to securitization entities that are variable interest
    entities (VIEs) consolidated under GAAP; and (v) includes
    distributions of profits from certain other limited partnership
    interests that were previously accounted for under the cost method,
    but are now accounted for at estimated fair value, where the change in
    estimated fair value is recognized in NIGL for GAAP; and
  • Other revenues is adjusted for settlements of foreign currency
    earnings hedges and excludes fees received in association with
    services provided under transition service agreements (TSA Fees).

The following additional adjustments are made to expenses, in the line
items indicated, in calculating adjusted 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.
    Other expenses includes TSA Fees.

Adjusted 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.

The tax impact of the adjustments mentioned above are calculated net of
the U.S. or foreign statutory tax rate, which could differ from the
MetLife's effective tax rate. Additionally, the provision for income tax
(expense) benefit also includes the impact related to the timing of
certain tax credits, as well as certain tax reforms.

Investment portfolio gains (losses) and derivative gains (losses)

These are measures of investment and hedging activity. Investment
portfolio gains (losses) principally excludes amounts that are reported
within net investment gains (losses) but do not relate to the
performance of the investment portfolio, such as gains (losses) on sales
and divestitures of businesses, goodwill impairment or changes in
estimated fair value. Derivative gains (losses) principally excludes
earned income on derivatives and amortization of premium on derivatives,
where such derivatives are either hedges of investments or are used to
replicate certain investments, and where such derivatives do not qualify
for hedge accounting. This earned income and amortization of premium is
reported within adjusted earnings and not within derivative gains
(losses).

Return on equity, allocated equity, tangible equity and related
measures

  • 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.
  • MetLife, Inc.'s common stockholders' equity, excluding total notable
    items (excludes AOCI other than FCTA): MetLife, Inc.'s common
    stockholders' equity, excluding the net unrealized investment gains
    (losses), defined benefit plans adjustment components of AOCI and
    total notable items, net of income tax.
  • 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.
  • 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.
  • Adjusted return on MetLife, Inc.'s common stockholders' equity:
    adjusted earnings available to common shareholders divided by MetLife,
    Inc.'s average common stockholders' equity.
  • Adjusted return on MetLife, Inc.'s common stockholders' equity,
    excluding AOCI other than FCTA: adjusted earnings available to common
    shareholders divided by MetLife, Inc.'s average common stockholders'
    equity, excluding AOCI other than FCTA.
  • Adjusted return on MetLife, Inc.'s common stockholders' equity,
    excluding net equity of assets and liabilities of disposed subsidiary
    (excludes AOCI other than FCTA): adjusted earnings available to common
    shareholders divided by MetLife, Inc.'s average common stockholders'
    equity, excluding net assets and liabilities of disposed subsidiary
    (excludes AOCI other than FCTA).
  • 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.
  • Return on allocated equity: net income (loss) available to MetLife,
    Inc.'s common shareholders divided by allocated equity.
  • Adjusted return on allocated equity: adjusted earnings available to
    common shareholders divided by allocated equity.

The above measures represent a level of equity consistent with the view
that, in the ordinary course of business, MetLife does not plan to sell
most investments for the sole purpose of realizing gains or losses. Also
refer to the utilization of adjusted earnings and other financial
measures based on adjusted earnings mentioned above.

  • MetLife, Inc.'s tangible common shareholders' equity or tangible
    equity: MetLife, Inc.'s common stockholders' equity, excluding AOCI
    other than FCTA, 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 tangible common stockholders' equity, adjusted for
    total notable items: MetLife, Inc.'s common stockholders' equity,
    excluding AOCI other than FCTA, reduced by the impact of goodwill,
    value of distribution agreements (VODA), value of customer
    relationships acquired (VOCRA) and total notable items, all net of
    income tax.
  • Return on MetLife, Inc.'s tangible common stockholders' equity: net
    income (loss) available to MetLife, Inc.'s common shareholders,
    excluding amortization of VODA and VOCRA, net of income tax, divided
    by MetLife, Inc.'s average tangible common stockholders' equity.
  • Adjusted return on MetLife, Inc.'s tangible common stockholders'
    equity: adjusted 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.
  • 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.
  • Adjusted return on allocated tangible equity: adjusted earnings
    available to common shareholders, excluding amortization of VODA and
    VOCRA, net of income tax, divided by allocated tangible equity.

The above measures are, when considered in conjunction with regulatory
capital ratios, a measure of capital adequacy.

Expense ratio, direct expense ratio, adjusted expense ratio and
related measures

  • Expense ratio: other expenses, net of capitalization of DAC, divided
    by total premiums, fees and other revenues.
  • Direct expense ratio: direct expenses, on an adjusted basis, divided
    by total adjusted premiums, fees and other revenues.
  • Direct expense ratio, excluding total notable items and PRT: direct
    expenses, on an adjusted basis, excluding total notable items related
    to direct expenses, divided by total adjusted premiums, fees and other
    revenues, excluding PRT.
  • Adjusted expense ratio: other expenses, net of capitalization of DAC,
    both on an adjusted basis, divided by total adjusted premiums, fees
    and other revenues.
  • Adjusted expense ratio, excluding total notable items and PRT: other
    expenses, net of capitalization of DAC, both on an adjusted basis,
    excluding total notable items related to other expenses, divided by
    total adjusted premiums, fees and other revenues, excluding PRT.

The following additional information is relevant to an
understanding of MetLife's performance results:

  • Statistical sales information for U.S. Group Benefits: calculated
    using 10% of single premium deposits and 100% of annualized full-year
    premiums and fees from recurring premium policy sales of all products.
    Sales statistics do not correspond to revenues under GAAP, but are
    used as relevant measures of business activity.
  • Statistical sales information for U.S. Property & Casualty: calculated
    based on first year direct written premium net of cancellation and
    endorsement activity. 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 adjusted earnings available to
    common shareholders attributable to adjusted 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 refers 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 believes that excluding the impact of asymmetrical and
    non-economic accounting from total GAAP results enhances investor
    understanding of MetLife's performance by disclosing how these
    accounting practices affect reported GAAP results.
  • 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 non-mandatory 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 (including capital
    contributions to subsidiaries), and net contributions from debt to be
    at or below target leverage ratios. This measure of free cash flow is
    prior to capital actions, such as 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
    adjusted earnings available to common shareholders.
  • Notable items represent a positive (negative) impact to adjusted
    earnings available to common shareholders. Notable items reflect the
    unexpected impact of events that affect MetLife's results, but that
    were unknown and that MetLife could not anticipate when it devised its
    Business Plan. Notable items also include certain items regardless of
    the extent anticipated in the Business Plan, to help investors have a
    better understanding of MetLife's results and to evaluate and forecast
    those results.

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 and terms
such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "will," and other words and terms of similar meaning, or are
tied to future periods, in connection with a discussion of future
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.

Many factors will be important in determining the results of MetLife,
Inc., its subsidiaries and affiliates. Forward-looking statements are
based on our assumptions and current expectations, which may be
inaccurate, and on the current economic environment, which may change.
These statements are not guarantees of future performance. They involve
a number of risks and uncertainties that are difficult to predict.
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. These factors include: (1) adverse effects
which may arise in connection with the material weaknesses in our
internal control over financial reporting or our failure to promptly
remediate them; (2) difficult conditions in the global capital markets;
(3) 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; (4) exposure to global financial and
capital market risks, including as a result of the United Kingdom's
notice of withdrawal from the European Union or other disruption in
global political, security or economic conditions; (5) impact on us of
comprehensive financial services regulation reform; (6) 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; (7) 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; (8) adverse results or other consequences from litigation,
arbitration or regulatory investigations; (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, hedging 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 any adjustment for nonperformance risk; (25) 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, including failure to achieve projected operational benefit
from such transactions and any restrictions, liabilities, losses or
indemnification obligations arising from any transitional services or
tax arrangements related to the separation of any business, or from the
failure of such a separation to qualify for any intended tax-free
treatment, (c) entry into joint ventures, or (d) legal entity
reorganizations; (26) unanticipated or adverse developments that could
adversely affect our achieving expected operational or other benefits
from the separation of Brighthouse Financial, Inc. and its subsidiaries
("Brighthouse"); (27) liabilities, losses or indemnification obligations
arising from our transitional services, investment management or tax
arrangements or other agreements with Brighthouse; (28) failure of the
separation of Brighthouse to qualify for intended tax-free treatment;
(29) legal, regulatory and other restrictions affecting MetLife, Inc.'s
ability to pay dividends and repurchase common stock; (30) MetLife,
Inc.'s and its subsidiary holding companies' primary reliance, as
holding companies, on dividends from subsidiaries to meet free cash flow
targets and debt payment obligations and the applicable regulatory
restrictions on the ability of the subsidiaries to pay such dividends;
(31) 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; (32) changes in accounting standards,
practices and/or policies; (33) increased expenses relating to pension
and postretirement benefit plans, as well as health care and other
employee benefits; (34) inability to protect our intellectual property
rights or claims of infringement of the intellectual property rights of
others; (35) difficulties in marketing and distributing products through
our distribution channels; (36) provisions of laws and our incorporation
documents that may delay, deter or prevent takeovers and corporate
combinations involving MetLife; (37) 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; (38) any failure to protect the
confidentiality of client information; (39) the effectiveness of our
programs and practices in avoiding giving our associates incentives to
take excessive risks; (40) the impact of technological changes on our
businesses; and (41) other risks and uncertainties described from time
to time in MetLife, Inc.'s filings with the U.S. Securities and Exchange
Commission.

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 U.S. Securities and Exchange Commission.

 
MetLife, Inc.
GAAP Interim Condensed Consolidated Statements of Operations
(Unaudited)
(In millions)
       
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenues
Premiums $ 15,153 $ 9,580 $ 24,331 $ 18,545
Universal life and investment-type product policy fees 1,370 1,364 2,762 2,724
Net investment income 4,473 4,193 8,218 8,614
Other revenues 475 292 949 634
Net investment gains (losses) (227 ) 104 (560 ) 192
Net derivative gains (losses) (59 ) (200 ) 290   (412 )
Total revenues 21,185   15,333   35,990   30,297  
.
Expenses
Policyholder benefits and claims 14,866 9,427 23,584 18,290
Interest credited to policyholder account balances 1,424 1,292 2,193 2,743
Policyholder dividends 309 313 606 623
Capitalization of DAC (834 ) (744 ) (1,630 ) (1,457 )
Amortization of DAC and VOBA 707 656 1,400 1,319
Amortization of negative VOBA (16 ) (38 ) (38 ) (81 )
Interest expense on debt 309 284 595 567
Other expenses 3,319   3,125   6,523   6,203  
Total expenses 20,084   14,315   33,233   28,207  
 
Income (loss) from continuing operations before provision for income
tax
1,101 1,018 2,757 2,090
Provision for income tax expense (benefit) 207   162   606   282  
Income (loss) from continuing operations, net of income tax 894 856 2,151 1,808
Income (loss) from discontinued operations, net of income tax   58     (18 )
Net income (loss) 894 914 2,151 1,790
Less: Net income (loss) attributable to noncontrolling interests 3   3   7   6  
Net income (loss) attributable to MetLife, Inc. 891 911 2,144 1,784
Less: Preferred stock dividends 46   46   52   52  
Net income (loss) available to MetLife, Inc.'s common shareholders $ 845   $ 865   $ 2,092   $ 1,732  
 
See footnotes on last page.
 
 
MetLife, Inc.
(Unaudited)
(In millions, except per share data)
   
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Reconciliation to Adjusted Earnings Available to Common
Shareholders
 

Earnings Per
Weighted
Average
Common Share
Diluted
(1)

 

Earnings Per
Weighted
Average
Common Share
Diluted
(1)

 

Earnings Per
Weighted
Average
Common Share
Diluted
(1)

 

Earnings Per
Weighted
Average
Common Share
Diluted
(1)

Net income (loss) available to MetLife, Inc.'s common shareholders $ 845 $ 0.83 $ 865 $ 0.80 $ 2,092 $ 2.02 $ 1,732 $ 1.59
 
Adjustments from net income (loss) available to common shareholders
to adjusted earnings available to common shareholders:
Less: Net investment gains (losses) (227 ) (0.22 ) 104 0.10 (560 ) (0.54 ) 192 0.18
Net derivative gains (losses) (59 ) (0.06 ) (200 ) (0.19 ) 290 0.28 (412 ) (0.38 )
Premiums (136 ) (0.13 ) (310 ) (0.28 )
Universal life and investment-type product policy fees 26 0.03 26 0.02 58 0.06 38 0.03
Net investment income 146 0.14 80 0.07 (328 ) (0.32 ) 329 0.30
Other revenues 83 0.08 (52 ) (0.05 ) 166 0.16 (105 ) (0.10 )
Policyholder benefits and claims and policyholder dividends (50 ) (0.05 ) (22 ) (0.02 ) (97 ) (0.09 ) 24 0.02
Interest credited to policyholder account balances (267 ) (0.26 ) (226 ) (0.20 ) 81 0.08 (641 ) (0.58 )
Capitalization of DAC (14 ) (0.01 ) 1 (30 ) (0.03 )
Amortization of DAC and VOBA 1 51 0.05 5 33 0.03
Amortization of negative VOBA 3 1 6 0.01
Interest expense on debt (30 ) (0.03 ) 4 (30 ) (0.03 ) 16 0.01
Other expenses (142 ) (0.14 ) (55 ) (0.05 ) (236 ) (0.23 ) (192 ) (0.18 )
Goodwill impairment
Provision for income tax (expense) benefit 41 0.04 126 0.12 (1 ) 366 0.35
Income (loss) from discontinued operations, net of income tax 58 0.05 (18 ) (0.02 )
Add: Net income (loss) attributable to noncontrolling interests 3     3     7   0.01   6   0.01  
Adjusted earnings available to common shareholders 1,326 1.30 1,121 1.04 2,749 2.66 2,442 2.24
Less: Total notable items (2) (62 ) (0.06 ) (59 ) (0.05 ) (34 ) (0.03 ) (55 ) (0.05 )
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 1,388   $ 1.36   $ 1,180   $ 1.09   $ 2,783   $ 2.69   $ 2,497   $ 2.29  
 
Adjusted earnings available to common shareholders on a constant
currency basis
$ 1,326 $ 1.30 $ 1,124 $ 1.04 $ 2,749 $ 2.66 $ 2,480 $ 2.27
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2)
$ 1,388 $ 1.36 $ 1,183 $ 1.09 $ 2,783 $ 2.69 $ 2,535 $ 2.32
 
Weighted average common shares outstanding - diluted 1,023.8 1,082.1 1,034.0 1,090.4
 
See footnotes on last page.
 
 
MetLife, Inc.
(Unaudited)
(In millions)
       
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Premiums, Fees and Other Revenues
Total premiums, fees and other revenues $ 16,998 $ 11,236 $ 28,042 $ 21,903
Less: Unearned revenue adjustments (5 ) 9 (10 ) 10
GMIB fees 31 31 61 62
Settlement of foreign currency earnings hedges 5 5 9 11
TSA fees 78 157
Divested businesses   (207 ) 7   (460 )
Total adjusted premiums, fees and other revenues $ 16,889   $ 11,398   $ 27,818   $ 22,280  
 
Net Investment Income
Net investment income $ 4,473 $ 4,193 $ 8,218 $ 8,614
Less: Investment hedge adjustments (119 ) (114 ) (229 ) (253 )
Operating joint venture adjustments 1 1
Unit-linked contract income 286 214 (67 ) 630
Securitization entities income
Certain partnership distributions (21 ) (33 )
Divested businesses   (21 )   (48 )
Net investment income, as reported on an adjusted basis $ 4,327   $ 4,113   $ 8,546   $ 8,285  
 
Revenues and Expenses
Total revenues $ 21,185 $ 15,333 $ 35,990 $ 30,297
Less: Net investment gains (losses) (227 ) 104 (560 ) 192
Less: Net derivative gains (losses) (59 ) (200 ) 290 (412 )
Less: Adjustments related to net investment gains (losses) and net
derivative gains (losses)
(5 ) 9 (10 ) 10
Less: Other adjustments to revenues:
GMIB fees 31 31 61 62
Investment hedge adjustments (119 ) (114 ) (229 ) (253 )
Operating joint venture adjustments 1 1
Unit-linked contract income 286 214 (67 ) 630
Securitization entities income
Settlement of foreign currency earnings hedges 5 5 9 11
Certain partnership distributions (21 ) (33 )
TSA fees 78 157
Divested businesses   (228 ) 7   (508 )
Total adjusted revenues $ 21,216   $ 15,511   $ 36,364   $ 30,565  
 
Total expenses $ 20,084 $ 14,315 $ 33,233 $ 28,207
Less: Adjustments related to net investment (gains) losses and net
derivative (gains) losses
(10 ) (28 ) (24 ) (30 )
Less: Goodwill impairment
Less: Other adjustments to expenses:
Inflation and pass-through adjustments 53 41 74
GMIB costs and amortization of DAC and VOBA related to GMIB fees and
GMIB costs
60 61 75 121
Market value adjustments and amortization of DAC, VOBA and negative
VOBA related to market value adjustments
(1 ) 2 (1 ) 5
PAB hedge adjustments (1 ) (1 ) (2 ) (2 )
Unit-linked contract costs 268 213 (79 ) 615
Securitization entities debt expense
Noncontrolling interest (5 ) (3 ) (12 ) (7 )
Regulatory implementation costs 2 3
Acquisition, integration and other costs 14 14 25 22
TSA fees 78 157
Divested businesses 83   (52 ) 92   (14 )
Total adjusted expenses $ 19,596   $ 14,056   $ 32,958   $ 27,423  
 
See footnotes on last page.
 
MetLife, Inc.
(Unaudited)
(In millions, except per share and ratio data)
  June 30,
Book Value (3)   2018   2017
 
Book value per common share $ 50.28 $ 63.63
Less: Net unrealized investment gains (losses), net of income tax 9.70 14.15
Defined benefit plans adjustment, net of income tax (2.18 ) (1.81 )
Book value per common share, excluding AOCI other than FCTA 42.76 51.29
Less: Goodwill, net of income tax 9.20 8.68
VODA and VOCRA, net of income tax 0.34   0.35  
Book value per common share - tangible common stockholders' equity $ 33.22   $ 42.26  
 
Book value per common share $ 50.28 $ 63.63
Less: Net unrealized investment gains (losses), net of income tax 9.70 14.15
Defined benefit plans adjustment, net of income tax (2.18 ) (1.81 )
Book value per common share, excluding AOCI other than FCTA 42.76 51.29
Less: Net equity of assets and liabilities of disposed subsidiary,
excluding AOCI other than FCTA
  13.77  
Book value per common share - common stockholders' equity, excluding
net equity of assets and liabilities of disposed subsidiary
(excludes AOCI other than FCTA)
$ 42.76   $ 37.52  
 
Common shares outstanding, end of period 1,000.2 1,063.5
 
 
For the Three Months Ended
June 30,
Expense Detail and Ratios   2018 2017
 
Reconciliation of Capitalization of DAC to Capitalization of DAC,
as reported on an adjusted basis.
Capitalization of DAC $ (834 ) $ (744 )
Less: Divested businesses   14  
Capitalization of DAC, as reported on an adjusted basis $ (834 ) $ (758 )
 

Reconciliation of Other Expenses to Other Expenses, as reported
on an adjusted basis

Other expenses $ 3,319 $ 3,125
Less: Noncontrolling interest (5 ) (3 )
Less: Regulatory implementation costs 2
Less: Acquisition, integration and other costs 14 14
Less: TSA fees 78
Less: Divested businesses 53   44  
Other expenses, as reported on an adjusted basis $ 3,177   $ 3,070  
 
Other detail and ratios
Other expenses $ 3,319 $ 3,125
Capitalization of DAC (834 ) (744 )
Other expenses, net of capitalization of DAC $ 2,485   $ 2,381  
 
Total premiums, fees and other revenues $ 16,998 $ 11,236
 
Expense ratio 14.6 % 21.2 %
 
Direct expenses $ 1,500 $ 1,459
Less: Total notable items related to direct expenses 78   88  
Direct expenses, excluding total notable items related to direct
expenses
$ 1,422   $ 1,371  
 
Other expenses, as reported on an adjusted basis $ 3,177 $ 3,070
Capitalization of DAC, as reported on an adjusted basis (834 ) (758 )
Other expenses, net of capitalization of DAC, as reported on an
adjusted basis
2,343 2,312
Less: Total notable items related to other expenses, as reported on
an adjusted basis
78   137  
Other expenses, net of capitalization of DAC, excluding total
notable items related to other expenses, as reported on an adjusted
basis
$ 2,265   $ 2,175  
 
Total adjusted premiums, fees and other revenues $ 16,889 $ 11,398
Less: Pension risk transfer ("PRT") 5,952   809  
Total adjusted premiums, fees and other revenues, excluding PRT $ 10,937   $ 10,589  
 
Direct expense ratio 8.9 % 12.8 %
Direct expense ratio, excluding total notable items related to
direct expenses and PRT
13.0 % 12.9 %
Adjusted expense ratio 13.9 % 20.3 %
Adjusted expense ratio, excluding total notable items related to
other expenses and PRT
20.7 % 20.5 %
 
See footnotes on last page.
 
 
MetLife, Inc.
(Unaudited)
  For the Three Months Ended
June 30, (4)
Return on Equity   2018   2017
Return on MetLife, Inc.'s:  
Common stockholders' equity 6.5% 5.2%
Common stockholders' equity, excluding AOCI other than FCTA 7.8% 6.3%
Tangible common stockholders' equity 10.1% 7.8%
 
Adjusted return on MetLife, Inc.'s:
Common stockholders' equity 10.2% 6.7%
Common stockholders' equity, excluding AOCI other than FCTA 12.2% 8.2%
Common stockholders' equity, excluding total notable items (excludes
AOCI other than FCTA) (2)
12.7% 8.6%
Common stockholders' equity, excluding net equity of assets and
liabilities of disposed subsidiary (excludes AOCI other than FCTA)
12.2% 11.4%
Tangible common stockholders' equity 15.8% 10.0%
Tangible common stockholders' equity, excluding total notable items
(2)
16.5% 10.5%
 
Return on Allocated Equity:
U.S. 28.8% 21.2%
Asia 6.6% 6.5%
Latin America 6.6% 13.0%
EMEA 8.2% 8.3%
MetLife Holdings 8.1% 2.8%
 
Return on Allocated Tangible Equity:
U.S. 33.4% 24.7%
Asia 10.0% 10.3%
Latin America 11.1% 22.3%
EMEA 13.4% 13.7%
MetLife Holdings 9.3% 3.2%
 
Adjusted Return on Allocated Equity:
U.S. 24.7% 19.3%
Asia 10.2% 9.9%
Latin America 18.5% 21.0%
EMEA 9.9% 9.0%
MetLife Holdings 11.1% 8.4%
 
Adjusted Return on Allocated Tangible Equity:
U.S. 28.6% 22.5%
Asia 15.4% 15.8%
Latin America 30.9% 36.2%
EMEA 16.2% 14.7%
MetLife Holdings 12.6% 9.5%
 
See footnotes on last page.
 
MetLife, Inc.
Adjusted Earnings Available to Common Shareholders
(Unaudited)
(In millions)
         
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2018 2017 2018 2017
U.S.:
Adjusted earnings available to common shareholders $ 671 $ 493 $ 1,324 $ 990
Less: Total notable items (2)       (23 )
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 671   $ 493   $ 1,324   $ 1,013  
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ 671 $ 493 $ 1,324 $ 990
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ 671 $ 493 $ 1,324 $ 1,013
Group Benefits:
Adjusted earnings available to common shareholders $ 261 $ 203 $ 479 $ 397
Less: Total notable items (2)       3  
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 261   $ 203   $ 479   $ 394  
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ 261 $ 203 $ 479 $ 397
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ 261 $ 203 $ 479 $ 394
Retirement & Income Solutions:
Adjusted earnings available to common shareholders $ 347 $ 262 $ 686 $ 536
Less: Total notable items (2)       17  
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 347   $ 262   $ 686   $ 519  
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ 347 $ 262 $ 686 $ 536
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ 347 $ 262 $ 686 $ 519
Property & Casualty:
Adjusted earnings available to common shareholders $ 63 $ 28 $ 159 $ 57
Less: Total notable items (2)       (43 )
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 63   $ 28   $ 159   $ 100  
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ 63 $ 28 $ 159 $ 57
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ 63 $ 28 $ 159 $ 100
Asia:
Adjusted earnings available to common shareholders $ 363 $ 310 $ 690 $ 605
Less: Total notable items (2)   12     9  
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 363   $ 298   $ 690   $ 596  
 
Adjusted earnings available to common shareholders on a constant
currency basis
$ 363 $ 314 $ 690 $ 620
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2)
$ 363 $ 302 $ 690 $ 611
Latin America:
Adjusted earnings available to common shareholders $ 145 $ 154 $ 285 $ 297
Less: Total notable items (2)       (1 )
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 145   $ 154   $ 285   $ 298  
 
Adjusted earnings available to common shareholders on a constant
currency basis
$ 145 $ 150 $ 285 $ 307
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2)
$ 145 $ 150 $ 285 $ 308
EMEA:
Adjusted earnings available to common shareholders $ 86 $ 72 $ 167 $ 147
Less: Total notable items (2)        
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 86   $ 72   $ 167   $ 147  
 
Adjusted earnings available to common shareholders on a constant
currency basis
$ 86 $ 75 $ 167 $ 160
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2)
$ 86 $ 75 $ 167 $ 160
MetLife Holdings:
Adjusted earnings available to common shareholders $ 280 $ 237 $ 705 $ 624
Less: Total notable items (2)   (40 ) 62   37  
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ 280   $ 277   $ 643   $ 587  
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ 280 $ 237 $ 705 $ 624
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ 280 $ 277 $ 643 $ 587
Corporate & Other:
Adjusted earnings available to common shareholders $ (219 ) $ (145 ) $ (422 ) $ (221 )
Less: Total notable items (2) (62 ) (31 ) (96 ) (77 )
Adjusted earnings available to common shareholders, excluding total
notable items (2)
$ (157 ) $ (114 ) $ (326 ) $ (144 )
 
Adjusted earnings available to common shareholders on a constant
currency basis (5)
$ (219 ) $ (145 ) $ (422 ) $ (221 )
Adjusted earnings available to common shareholders, excluding total
notable items, on a constant currency basis (2), (5)
$ (157 ) $ (114 ) $ (326 ) $ (144 )
 
See footnotes on last page.
 
 
MetLife, Inc.
(Unaudited)
 
(1) Adjusted earnings available to common shareholders is calculated on
a standalone basis and may not equal the sum of (i) adjusted
earnings available to common shareholders, excluding total notable
items and (ii) total notable items.
 
(2) Notable items reflect the unexpected impact of events that affect
MetLife's results, but that were unknown and that MetLife could not
anticipate when it devised its Business Plan. Notable items also
include certain items regardless of the extent anticipated in the
Business Plan to help investors have a better understanding of
MetLife's results and to evaluate and forecast those results.
Notable items can affect MetLife's results either positively or
negatively.
 
(3) Book values exclude $3,340 and $2,066 million of equity related to
preferred stock at June 30, 2018 and 2017, respectively.
 
(4) Annualized using quarter-to-date results.
 
(5) Amounts on a reported basis, as constant currency impact is not
significant.
 

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