MetLife(MET) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - MetLife, Inc. reported adjusted earnings of $1.5 billion or$ 2.09 per share for Q4 2024, up 14% from the prior year period, and adjusted earnings excluding notable items were $2.08 per share, up 8% [19][20] - For the full year 2024, adjusted earnings excluding notable items totaled$ 5.8 billion, driven by strong volume growth and favorable underwriting [20] - The company posted an adjusted return on equity (ROE) of 15.2% for the year, above the target range of 13% to 15% [21][52] Business Line Data and Key Metrics Changes - Group benefits generated adjusted earnings excluding notable items of $1.7 billion in 2024, with full-year sales up 8% [21][22] - Retirement and income solutions (RIS) adjusted earnings totaled$ 1.6 billion, with liability exposures growing 3.4% [23][24] - Asia's adjusted earnings were $1.7 billion, up 21%, while Latin America posted record adjusted earnings of$ 877 million despite currency headwinds [24][25] Market Data and Key Metrics Changes - General account assets under management in Asia grew 5% on a constant currency basis, while sales were down 5% [40] - Latin America adjusted PFOs were down 3%, but up 9% on a constant currency basis, driven by strong growth across the region [41] - EMEA adjusted earnings were $59 million, up 26% on a constant currency basis, reflecting strong sales across the region [42] Company Strategy and Development Direction - The company is transitioning from the Next Horizon strategy to the New Frontier strategy, focusing on responsible growth [10][11] - Four strategic priorities identified under the New Frontier include extending leadership in group benefits, capitalizing on the retirement platform, accelerating growth in asset management, and expanding in high-growth international markets [12][13] - MetLife announced the formation of Cherry Tree, a Bermuda-based life and annuity reinsurance company, and the acquisition of PineBridge Investments to enhance its asset management capabilities [14][16] Management's Comments on Operating Environment and Future Outlook - Management noted that while the US economy remains healthy, the pace of anticipated interest rate cuts is uncertain due to persistent inflation [8] - The company expects to achieve double-digit adjusted EPS growth and has increased its adjusted ROE target range to 15% to 17% [17][54] - Management highlighted the importance of maintaining a disciplined expense ratio and targeting a reduction to 11.3% by 2029 [55] Other Important Information - MetLife returned approximately$ 4.7 billion to shareholders in 2024 through stock repurchases and dividends [28] - The company has committed to generating $25 billion of free cash flow over the next five years, up from a previous commitment of$ 20 billion [18][52] Q&A Session Summary Question: Can you provide details on one-one renewals and competition? - Management indicated a strong start in one-one renewals, particularly in the dental business, leading to an increase in PFO guidance from 4% to 7% [72] Question: Are there impacts from lawsuits in the PRT market? - Management noted no material impact from lawsuits on the PRT market, with continued strong inflows and a healthy pipeline [77] Question: What are the expectations for nonmedical health loss ratios in 2025? - Management expects nonmedical health loss ratios to be at the midpoint of the guidance range, with no significant deviations observed [84] Question: Why raise alternative return assumptions for 2025? - Management cited positive market conditions and expectations of recovery in private equity and real estate as reasons for raising return assumptions [90][92] Question: Can you elaborate on the Cherry Tree initiative? - Management explained that Cherry Tree aims to enhance capital flexibility and generate additional liability growth, initially sourcing liabilities through MetLife [106] Question: What is the outlook for long-term care and its cash flow impact? - Management indicated that long-term care is well-capitalized and performing as expected, but it currently does not contribute significantly to cash flow due to growing liabilities [127]