MET Q2 2025: Asia sales jump ~30%, LATAM digital premiums surge
- Robust Sales Growth in Asia and LATAM: Q&A participants highlighted strong year-to-date sales momentum in Asia—with Japan sales up around 29% and Korea up 36%—and noted the LATAM platform's impressive performance with high double-digit growth driven by its digital embedded insurance strategy, which positions the company well for regional expansion.
- Attractive Risk Transfer and PRT Opportunities: Management underscored a solid performance in the PRT segment and a well‐established FABN program issuing between $6–8 billion annually. They emphasized disciplined pricing and the anticipation of further jumbo deal activity in the second half, reinforcing confidence in the growing risk transfer market.
- Strategic Adoption of Gen AI and Technological Modernization: Executives detailed ongoing initiatives in modernizing legacy systems and integrating Gen AI solutions into key business functions, which is expected to drive both operational efficiencies and future growth, enhancing overall competitiveness.
- Underwriting and claims volatility: Elevated non-medical health ratios, with specialty disability claims and lower group benefits underwriting margins, indicate potential ongoing volatility in claims that could pressure future profits.
- Weak variable investment income in Asia: Lower returns, compounded by unfavorable surrender activity (e.g., due to a strengthening yen), contributed to depressed earnings in the Asia segment and might signal continued headwinds.
- Growing credit-related reserves: An uptick in CECL reserves for commercial mortgages (over $200 million) suggests potential credit quality issues that could impact capital and earnings, even if currently manageable.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Direct Expense Ratio | FY 2025 | Full‑year target: 12.1% | Full‑year target: 12.1% | no change |
Group Life Mortality Ratio | FY 2025 | Midpoint around 85.5% with expectation trending toward ≈84% | Annual target range: 84% to 89%; Q3 expectation “at or slightly below the bottom end” | no change |
Non‑Medical Health Interest Adjusted Benefit Ratio | FY 2025 | Target range: 69% to 74% | Annual target range: 69% to 74% | no change |
Effective Tax Rate | FY 2025 | Guidance range: 24% to 26% | Guidance range: 24% to 26% | no change |
EMEA Quarterly Run Rate | FY 2025 | no prior guidance | Expected to run above its 2025 quarterly guidance of $70 million to $75 million | no prior guidance |
Asia Sales | FY 2025 | no prior guidance | Expected to be at the top end of the guidance range | no prior guidance |
Variable Investment Income (VII) | FY 2025 | Implied quarterly run rate: $425 million | Preliminary Q3 expectations will be disclosed in September | no change |
Japan Solvency Margin Ratio | FY 2025 | Approximately 725% as of March 31, 2025 | Approximately 710% as of June 30, 2025 | lowered |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Pension Risk Transfer | Q4 2024: Robust inflows of $6.4B and discussion of emerging legal challenges. Q1 2025: Strong inflows of $1.8B with a significant risk transfer deal for legacy business runoff. | Q2 2025: Lighter quarter for PRT activity with $2.2B year‐to‐date; legal challenges were not mentioned. | Consistent focus on PRT with stable fundamentals; emerging legal challenges discussed in Q4 2024 are no longer emphasized in Q2 2025. |
Asia Market Sales Growth and Regional Performance Dynamics | Q4 2024: Noted high adjusted earnings and a 50% increase in Asia driven by strong performance in Korea, India, and China. Q1 2025: Highlighted 10% constant currency growth overall with strong performance outside Japan, particularly in China and Korea. | Q2 2025: Positive sales growth with Japan up 10%, Korea up 41%, and robust contributions from China and rest of Asia; regional U.S. growth also supported overall sales. | Consistent strong performance in Asia and regional dynamics; outlook remains positive across periods with similar strategic emphasis on multiple markets. |
Underwriting Performance and Claims Volatility with Shifting Sentiment | Q4 2024: Mixed underwriting margins with no explicit discussion on claims volatility. Q1 2025: Strong Group Benefits performance with favorable mortality trends and robust underwriting metrics. | Q2 2025: Underwriting in Group Benefits weakened with lower adjusted earnings, a group life mortality ratio below target, and notable claims volatility especially in non-medical health products. | While earlier periods reported favorable underwriting and minimal volatility, Q2 2025 shows a shift toward weaker underwriting margins and increased claims volatility, reflecting a more cautious sentiment. |
Investment Income Challenges, Declining Spreads, and Credit Quality Concerns | Q4 2024: Challenges included VII shortfalls and declining spreads with stable credit quality. Q1 2025: Faced VII challenges with subdued returns and some pressure on spreads though credit quality remained stable. | Q2 2025: Reported much lower VII than guidance, further declining investment spreads in RIS and increased reserves for commercial mortgage loans while maintaining stable credit quality. | Persistent challenges in investment income and declining spreads across periods, with a slight deterioration in current sentiment in Q2 2025 compared to earlier periods. |
Commercial Real Estate Portfolio Risks and Market Stabilization Uncertainty | Q4 2024: Indicated market stabilization with stable portfolio metrics and increasing transaction activity. Q1 2025: Noted signs of market trough with improvements in leasing activity and moderated uncertainty. | Q2 2025: Highlighted an uptick in CECL reserves (over $200M) with expectations of upcoming charge-offs, yet suggesting market stabilization at price clearing levels. | Consistent focus on CRE risks with evolving sentiment—from cautious optimism in Q4 2024 and Q1 2025 to a more defensive stance in Q2 2025, as early indicators of stabilization are emerging alongside rising reserve levels. |
Group Benefits and Group Life Business Performance | Q4 2024: Reported mixed performance with adjusted earnings down 11% and favorable mortality trends helping offset challenges. Q1 2025: Demonstrated strong performance with a 29% increase in adjusted earnings and favorable Group Life mortality trends. | Q2 2025: Adjusted earnings in Group Benefits fell by 25% compared to the prior record quarter; Group Life experienced a mortality ratio of 83%, below target, with some increases in claims noted across products. | Although Group Benefits and Group Life have been core areas, performance appears volatile—with a strong quarter in Q1 2025 now followed by a downturn in Q2 2025. The shift raises caution for future earnings and margin improvements. |
Technological Modernization and Gen AI Integration | Not mentioned in Q4 2024 or Q1 2025. | Q2 2025: CEO Michel Khalaf emphasized significant investments in legacy modernization, data quality enhancements, and Gen AI integration as key enablers of the New Frontier strategy; several AI initiatives are in production driving improvements in productivity and customer experience. | New topic emerging in Q2 2025 that could have a large impact on future operations; strategic importance is highlighted with active partnerships and early results, marking a shift toward technology-driven growth. |
Digital Embedded Insurance Strategy in LATAM | Not mentioned in Q4 2024 or Q1 2025. | Q2 2025: Introduced a fully digital Accelerator platform in LATAM that has integrated 21 partners, issued about €300M in premiums and revenues, and serves 5 million customers, leveraging digital banks and e-commerce channels. | Newly introduced topic with promising metrics in Q2 2025; signals a strong strategic focus on digital distribution in LATAM that could drive significant future growth. |
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PRT Market
Q: What is the outlook for PRT deals in H2?
A: Management stated that despite a lighter Q2, YTD PRT reached $2.2B with expectations of jumbo cases in Q3 and Q4, and noted that in the U.S. they are transacting primary deals while in the U.K. they participate as a reinsurer with longevity swaps amounting to around $30B in balances. -
Nonmedical Claims
Q: Are elevated nonmedical claims a concerning trend?
A: Management explained that the elevated nonmedical claims this quarter are due to normal fluctuations, with an expected improvement of about 2 points in both Q3 and Q4 as seasonal effects normalize. -
Asia Earnings
Q: How did Asia perform despite strong sales?
A: Although sales were robust, Asia’s earnings were under pressure due to lower variable investment income and less favorable underwriting margins from a stronger yen, though the underlying business remains solid. -
CECL Reserves Impact
Q: Do the CECL reserves on commercial mortgages affect capital?
A: Management noted that the $200M+ increase in CECL reserves on commercial mortgages is anticipated and has only a minimal impact on statutory capital, remaining well within their existing capital buffers. -
Japan Surrenders & FX
Q: How are surrenders and yen rates affecting Japan?
A: Surrenders have normalized due to a stronger yen, which, while reducing surrender income in the short term, enhances product economics and makes yen- and FX-denominated products more attractive for future growth. -
FABN Outlook
Q: What is the outlook for the FABN program?
A: The FABN program is well established, representing about 10% of general account liabilities with annual issuances between $6B and $8B, supported by favorable funding costs and overall industry growth. -
Gen AI Strategy
Q: How is Gen AI being deployed in the business?
A: Management is leveraging Gen AI by modernizing legacy systems and enhancing data governance, integrating the technology in key processes to boost efficiency and drive growth, with early production gains already in place. -
LTC Holdings & Disposals
Q: Will there be disposals in LTC or other holdings?
A: Discussions continue on complex LTC transactions and other risk-transfer opportunities, including closing the Talcott deal in H2, as management focuses on optimizing structure and price to maximize shareholder value. -
Regional & LATAM Growth
Q: What is driving regional and LATAM growth?
A: Management highlighted that strong broker relationships and capabilities drove a 9% YTD increase in regional sales, while LATAM benefits from double-digit premium growth on a constant currency basis, powered by a diversified franchise and digital channel expansion.
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