MetLife (MET) Q1 Earnings Meet, Rise Y/Y on Lower Expenses

Core Insights - MetLife, Inc. reported first-quarter 2024 adjusted operating earnings of $1.83 per share, matching the Zacks Consensus Estimate, with a year-over-year improvement of 20.4% [1] - Adjusted operating revenues increased by 5.5% year over year to $17 billion, although this figure missed the consensus mark by 3.8% [1] Financial Performance - Adjusted premiums, fees, and other revenues (PFOs), excluding pension risk transfer (PRT), were $12 billion, reflecting a 4% year-over-year increase [2] - Adjusted net investment income rose by 10% year over year to $5.1 billion, driven by rising rates and improved variable investment income [2] - Total expenses decreased by 0.8% year over year to $15 billion, attributed to lower policyholder dividends, but the adjusted expense ratio worsened by 40 basis points to 20.4% [2] - Net income surged to $800 million from $14 million in the prior year, with adjusted return on equity improving by 250 basis points to 13.8% [2] Segment Performance - Group Benefits segment's adjusted earnings fell by 7% year over year to $284 million, below the consensus estimate, despite a 5% increase in adjusted PFOs to $6.3 billion [3] - The RIS segment reported adjusted earnings of $399 million, a slight decline of 0.3% year over year, but exceeded the consensus estimate, with adjusted PFOs surging 25% to $813 million [3] - Asia segment's adjusted earnings improved by 51% year over year to $423 million, surpassing the consensus estimate, although adjusted PFOs dipped by 3% to $1.7 billion [4] - Latin America segment's adjusted earnings rose by 8% year over year to $233 million, beating the consensus estimate, with adjusted PFOs increasing by 9% to $1.5 billion [4] - EMEA segment's adjusted earnings surged by 28% year over year to $77 million, exceeding the consensus estimate, with adjusted PFOs growing by 7% to $620 million [5] - MetLife Holdings segment's adjusted earnings rose by 1% year over year to $159 million but fell short of the consensus estimate, with adjusted PFOs declining by 12% to $841 million [5] - Corporate & Other segment incurred an adjusted loss of $241 million, wider than the previous year's loss [5] Financial Position - As of March 31, 2024, MetLife had cash and cash equivalents of $19.8 billion, down 3.9% from the end of 2023, with total assets decreasing by 1.5% to $677.6 billion [6] - Long-term debt increased by 2.7% to $16 billion, while total equity declined by 4.8% to $28.8 billion, with book value per share at $34.54, down 6% year over year [6] Capital Deployment - MetLife repurchased shares worth approximately $1.2 billion in the first quarter and an additional $330 million in April 2024, announcing a new share repurchase plan of $3 billion [7] 2024 Outlook - Management anticipates variable investment income to be around $1.5 billion for 2024, with adjusted losses in Corporate & Other estimated between $750 million and $850 million [8] - Adjusted earnings in the Asia segment are expected to grow by around 20%, while EMEA unit earnings are projected to remain within $60-$65 million per quarter [8] Near-Term Targets - Over the next three years, MetLife projects adjusted PFOs in the Group Benefits business to rise by 4-6%, with similar growth expected in MetLife Holdings [9] - The company aims for an adjusted return on equity within 13-15% and a free cash flow ratio of 65-75% of adjusted earnings [9]