MetLife(US:MET)2024-08-01 20:31Part I - Financial Information Item 1. Financial Statements (Unaudited) This section presents MetLife, Inc.'s unaudited interim condensed consolidated financial statements as of June 30, 2024, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes Interim Condensed Consolidated Balance Sheets MetLife's total assets decreased to $675.7 billion by June 30, 2024, from $687.6 billion at year-end 2023, driven by reduced investments, with total liabilities and equity also declining Consolidated Balance Sheet Highlights (in millions USD) | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $675,745 | $687,584 | | Total Investments | $436,829 | $446,137 | | Total Liabilities | $648,205 | $657,331 | | Future policy benefits | $190,993 | $196,406 | | Policyholder account balances | $219,543 | $219,269 | | Total Equity | $27,540 | $30,253 | | Retained Earnings | $40,873 | $40,146 | | Treasury Stock | $(26,637) | $(24,591) | Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) MetLife's net income available to common shareholders significantly increased to $912 million in Q2 2024 and $1.71 billion for H1 2024, primarily due to reduced net investment and derivative losses Key Performance Indicators (in millions USD, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $17,823 | $16,623 | $33,880 | $32,011 | | Net Income (Loss) | $953 | $408 | $1,828 | $493 | | Net Income Available to Common Shareholders | $912 | $370 | $1,712 | $384 | | Diluted EPS | $1.28 | $0.48 | $2.37 | $0.50 | Interim Condensed Consolidated Statements of Equity Total MetLife, Inc. stockholders' equity decreased from $30.0 billion at year-end 2023 to $27.3 billion at June 30, 2024, influenced by treasury stock repurchases and negative AOCI changes, partially offset by net income Changes in Stockholders' Equity (Six Months Ended June 30, 2024, in millions USD) | Item | Amount | | :--- | :--- | | Balance at Dec 31, 2023 | $30,015 | | Net Income (loss) | $1,813 | | Other comprehensive income (loss) | $(1,494) | | Treasury stock acquired | $(2,046) | | Dividends on common stock | $(766) | | Dividends on preferred stock | $(101) | | Balance at June 30, 2024 | $27,252 | Interim Condensed Consolidated Statements of Cash Flows For the first six months of 2024, net cash provided by operating activities increased to $5.8 billion, while net cash used in investing activities decreased to $4.0 billion, and financing activities used $1.5 billion Cash Flow Summary (Six Months Ended June 30, in millions USD) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,818 | $5,064 | | Net cash provided by (used in) investing activities | $(3,967) | $(7,850) | | Net cash provided by (used in) financing activities | $(1,466) | $(1,916) | | Effect of foreign currency exchange rates | $(238) | $(76) | | Change in cash and cash equivalents | $147 | $(4,778) | Notes to the Interim Condensed Consolidated Financial Statements This section details the accounting policies and methodologies for the financial statements, covering segment information, dispositions, liabilities, investments, derivatives, fair value measurements, debt, equity, and contingencies - The company is organized into six segments: Group Benefits, Retirement and Income Solutions (RIS), Asia, Latin America, Europe, the Middle East and Africa (EMEA), and MetLife Holdings28 - The adoption of ASU 2023-02 regarding investments in tax credit structures resulted in a decrease to retained earnings of $219 million, net of income tax, as of January 1, 202435 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses MetLife's financial condition and results of operations, providing context for the financial statements, including industry trends, accounting estimates, segment performance, investments, and capital resources - Net income available to common shareholders increased to $912 million in Q2 2024 from $370 million in Q2 2023, primarily due to favorable changes in net investment gains (losses) and net derivative gains (losses)463466 - Adjusted earnings available to common shareholders increased to $1.6 billion in Q2 2024 from $1.5 billion in Q2 2023, driven by favorable underwriting results and volume growth, partially offset by market factors463482 Industry Trends MetLife's performance is materially affected by global financial conditions and geopolitical events, with increasing regulatory focus on AI in underwriting and the DOL's new fiduciary rule - The company is closely monitoring political and economic conditions, including global inflation, supply chain disruptions, and acts of war, which could impact its business and investment portfolio448 - Regulatory focus on AI and consumer data is increasing, with New York issuing a final circular letter in July 2024 and the EU AI Act entering into force in August 2024454 - The DOL's new fiduciary rule, which could impact sales of insurance and annuity products to retirement investors, has been stayed by two federal district courts as of July 2024455 Results of Operations Consolidated and segment-level financial performance for Q2 2024 shows a $542 million increase in net income available to common shareholders, driven by favorable investment and derivative changes, while adjusted earnings rose by $136 million due to strong underwriting Adjusted Earnings by Segment (in millions USD) | Segment | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Group Benefits | $533 | $372 | $817 | $679 | | RIS | $410 | $417 | $809 | $817 | | Asia | $449 | $431 | $872 | $711 | | Latin America | $226 | $219 | $459 | $434 | | EMEA | $77 | $70 | $154 | $130 | | MetLife Holdings | $153 | $211 | $312 | $369 | | Total Adjusted Earnings | $1,662 | $1,524 | $3,063 | $2,774 | Investments MetLife maintains a diversified global general account investment portfolio, primarily in fixed income, with $277.7 billion in fixed maturity securities AFS and $82.8 billion in net mortgage loans as of June 30, 2024 Fixed Maturity Securities AFS by Credit Quality (Amortized Cost, net of ACL) | NRSRO Rating | June 30, 2024 (in millions) | % of Total | | :--- | :--- | :--- | | Investment grade (Aaa/Aa/A/Baa) | $289,653 | 95.4% | | Below investment grade (Ba and lower) | $13,417 | 4.6% | | Total | $303,070 | 100.0% | - The commercial mortgage loan portfolio's average Loan-to-Value (LTV) ratio was 66% and the average Debt Service Coverage Ratio (DSCR) was 2.2x as of June 30, 2024550 Liquidity and Capital Resources MetLife maintains a strong liquidity position with $4.4 billion in holding company liquid assets as of June 30, 2024, supported by subsidiary dividends and capital markets access, with $2.7 billion unused on its revolving credit facility - MetLife holding companies held $4.4 billion in liquid assets as of June 30, 2024, down from $5.2 billion at year-end 2023588 - The company's primary U.S. insurance subsidiaries have the capacity to pay $3.48 billion in dividends in 2024 without prior regulatory approval, of which $2.0 billion was paid by MLIC in the first six months591592 Non-GAAP and Other Financial Disclosures This section defines non-GAAP financial measures like adjusted earnings and adjusted premiums, fees, and other revenues, which management uses to evaluate performance and highlight underlying profitability drivers - The company uses non-GAAP measures like 'adjusted earnings' and 'adjusted premiums, fees and other revenues' to evaluate performance and allocate resources, as they are believed to better reflect the underlying profitability of the business598602 Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to MetLife's market risk exposures, including interest rate, equity market price, and foreign currency exchange rate risks, since the 2023 Annual Report on Form 10-K - There have been no material changes to the company's market risk exposures related to interest rates, equity markets, and foreign currency exchange rates since the 2023 Annual Report609 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that MetLife's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO have concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period611 Part II - Other Information Item 1. Legal Proceedings This section refers to Note 19 of the financial statements for information regarding MetLife's legal proceedings - For details on legal proceedings, the report directs readers to Note 19 of the financial statements613 Item 1A. Risk Factors There have been no material changes to MetLife's risk factors since those disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since the filing of the 2023 Annual Report614 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds MetLife repurchased approximately 12.0 million common shares in Q2 2024, with the Board authorizing an additional $3.0 billion for repurchases, leaving $3.1 billion available as of June 30, 2024 Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 4,560,454 | $71.92 | | May 2024 | 3,357,900 | $72.35 | | June 2024 | 4,056,400 | $70.10 | | Total | 11,974,754 | N/A | - In May 2024, the Board of Directors authorized an additional $3.0 billion for common stock repurchases, with $3.1 billion remaining under authorizations as of June 30, 2024615 Item 5. Other Information No Section 16 officers or directors adopted or terminated any Rule 10b5-1 trading plans or arrangements during the three months ended June 30, 2024 - No Section 16 officers or directors adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2024618 Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files621626