MetLife (MET) Q2 EPS Falls 11%

Core Insights - MetLife reported Q2 2025 results that fell short of Wall Street expectations, with non-GAAP earnings per share at $2.02 compared to the anticipated $2.15, and GAAP revenue at $17.34 billion versus the expected $18.53 billion [1][5] - The company experienced a decline in net income, which dropped to $698 million from $912 million in Q2 2024, reflecting a 23.4% year-over-year decrease [2][5] - Despite profitability pressures, book value per share increased by 7% to $35.79, and adjusted book value per share rose by 6% to $56.23, indicating strength in capital management [1][13] Financial Performance - Non-GAAP EPS was $2.02, missing estimates by 6%, while revenue of $17.34 billion was 2.7% lower than the previous year [2][5] - Net income (GAAP) decreased by 23.4% year-over-year, highlighting challenges in profitability [2][5] - The overall expense ratio increased to 19.8% from 17.9% in the previous year, although the direct expense ratio remained steady at 11.7% [11] Segment Analysis - Group Benefits segment saw adjusted earnings drop 25% to $400 million due to unfavorable underwriting conditions, despite a 4% growth in premium and fee revenue [6] - Retirement and Income Solutions segment's adjusted earnings fell 10% to $368 million, attributed to lower recurring interest margins, although premium revenue excluding pension risk transfer rose by 24% [7] - International operations showed mixed results, with Asia's adjusted earnings declining 22% to $350 million, while Latin America and EMEA segments reported gains of 3% and 30% respectively [8] Strategic Initiatives - MetLife's strategic focus includes international expansion, risk transfer arrangements, and technology investments, with the "New Frontier" strategy aimed at enhancing group benefits and asset management operations [4] - The company entered an agreement with Talcott Financial Group to reinsure variable annuity reserves, reducing market risk exposure [12] - Shareholder returns remained strong, with $900 million returned through buybacks and dividends, reflecting confidence in the company's financial health [12][15] Outlook - Management did not provide explicit financial guidance for the remainder of fiscal 2025 but expressed confidence in the company's strategic direction [14] - Key areas for investors to monitor include trends in variable investment income, underwriting results in core segments, and the success of the New Frontier strategic plan [15]