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MI

METLIFE INC (MET)·Q3 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $2.37, up 22% YoY and above consensus by ~$0.05; GAAP revenue came in below consensus given market-related derivative losses and hedging dynamics . EPS consensus: $2.32; revenue consensus: $18.69B; actuals: $2.37 and $17.36B respectively (EPS beat, revenue miss)*.
  • Variable investment income surged to $483M on stronger private equity returns, driving adjusted ROE to 16.9% (ex-notables 16.7%), while direct expense ratio improved to 11.6% .
  • Asia delivered standout growth: adjusted earnings ex-notables up 36%, sales +34% constant currency, with Japan +31% and Other Asia +39% constant currency .
  • Strategic momentum into Q4: secured $12B of PRT mandates quarter-to-date and launched Chariot Re (initial ~$10B reinsurance), supporting retirement origination capacity .
  • Temporary LatAm headwind from Mexico VAT change: Q3 after-tax charge $71M; expecting additional $20–$25M in Q4 and ~$50–$60M lower 2026 adjusted earnings in LatAm before normalizing by 2027 .

What Went Well and What Went Wrong

What Went Well

  • Variable investment income strength: “Variable investment income was $483 million, primarily reflecting higher private equity returns” and VII exceeded implied outlook ($425M), lifting ROE and spreads .
  • Asia acceleration: “Sales were $786 million, up 34% on a constant currency basis…Japan up 31%; Other Asia up 39%” with adjusted earnings ex-notables +36% YoY .
  • Group Benefits underwriting rebound: non-medical health interest adjusted benefit ratio improved 230 bps sequentially; management expects further improvement in Q4 due to seasonal utilization patterns .

What Went Wrong

  • Revenue below consensus and GAAP net income down 36% YoY, driven by net derivative losses ($929M) and investment losses ($325M) amid stronger equities, higher rates, and USD strength .
  • Latin America notable charge: “recorded a $71 million after-tax charge…Mexico VAT deduction,” reducing segment adjusted earnings to $147M (down 33%) despite 11% PFO growth .
  • Corporate & Other loss widened to $(288)M on elevated market-related employee costs and higher interest on debt .

Financial Results

Consolidated performance (sequential trend)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Billions)$18.569 $17.340 $17.361
Premiums, Fees & Other Revenues ($USD Billions)$13.639 $12.748 $12.526
Adjusted Premiums, Fees & Other Revenues ($USD Billions)$13.614 $12.719 $12.461
Adjusted EPS ($)$1.96 $2.02 $2.37
Adjusted EPS ex-notables ($)$1.96 $2.02 $2.34
Net Income ($USD Billions)$0.879 $0.698 $0.818
Direct Expense Ratio (%)10.7% 11.4% 11.6%
Adjusted ROE (%)14.4% 14.6% 16.9%

Year-over-year highlight (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025YoY Change
Total Revenues ($USD Billions)$18.440 $17.361 (5.9)%
Adjusted EPS ($)$1.95 $2.37 +21.5%
Adjusted EPS ex-notables ($)$1.93 $2.34 +21.2%
Adjusted ROE (%)14.6% 16.9% +230 bps
Book Value per Share ($)$39.02 $39.52 +1.3%
Adjusted Book Value per Share ($)$54.72 $56.57 +3.4%

Segment adjusted earnings

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Group Benefits$367 $400 $455
RIS$401 $368 $436
Asia$374 $350 $543
Latin America$218 $233 $147
EMEA$83 $100 $88
MetLife Holdings$154 $144 $203
Corporate & Other$(248) $(233) $(288)

Segment PFOs (adjusted)

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Group Benefits$6,430 $6,446 $6,306
RIS$1,355 (Adj PFOs) $1,355 $1,186
RIS ex-PRT$954 $1,027 $1,196
Asia$1,681 $1,699 $1,717
Latin America$1,513 $1,634 $1,663
EMEA$668 $719 $727
MetLife Holdings$780 $740 $729

KPIs and operating ratios

KPIQ1 2025Q2 2025Q3 2025
Variable Investment Income ($USD Millions)$327 $195 $483
Holding Co. Cash & Liquid Assets ($USD Billions)$4.5 $5.2 $4.9
Group Life Mortality Ratio (%)84.8% 83.0% 83.4%
Group Non-Medical Health IAB Ratio (%)74.1% 74.8% 72.5%
Book Value per Share ($)$35.16 $35.79 $39.52
Adjusted Book Value per Share ($)$55.01 $56.23 $56.57

Estimates comparison (Q3 2025)

MetricConsensusActualSurprise
EPS ($)2.320*2.37 +$0.05 (Beat)
Revenue ($USD Billions)18.690*17.361 −$1.329 (Miss)
EPS – # of Estimates15*——
Revenue – # of Estimates6*——
Target Price Consensus ($)92.47*92.47*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Direct Expense RatioFY 2025Target ~12.1% “Below 12.1%, well below by year-end” Raised (better)
Variable Investment IncomeQuarterlyImplied outlook ~$425M Q3 actual $483M; PE ~3% returns Outperformed
RIS Base SpreadQ4 2025Expect seasonal headwinds“Relatively flat from Q3; temporary headwind of a few bps possible from large Q4 PRT asset repositioning” Maintained/clarified
Mexico VAT chargeQ4 2025N/AAdditional after-tax charge $20–$25M New headwind
Mexico VAT impactFY 2026N/ALatAm adjusted earnings −$50–$60M; little-to-no impact from 2027 New headwind
PRT MandatesQ4 2025N/A~$12B secured to-date; focus on jumbo deals Stronger pipeline
Japan ESR RatioMar 2026N/AESR expected 170–190% (prescribed rules) Disclosure
Reporting SegmentsQ4 2025 onwardCurrent structureMIM to be standalone; MetLife Holdings consolidated into Corporate & Other (recast to be provided in early Jan) Structural change
DividendQ4 2025$0.5675 declared$0.5675 payable Dec 9, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/Technology & ExpensesCost discipline; no explicit AI detail Proprietary MetIQ AI platform cited as a “force multiplier” in productivity; direct expense ratio 11.6% with expectation below 12.1% FY More explicit tech-driven efficiency
Retirement & PRTQ1: U.S. PRT drove top line ; Q2: origination strong ex-PRT Q4-to-date ~$12B PRT mandates; jumbo deals; Chariot Re ~$10B launched, temporary earnings drag of 15–20% on $10B, strategic use of third-party capital Accelerating pipeline, capital-efficient growth
Asia salesQ1: Sales +10% cc (Korea/China) ; Q2: Sales +9% cc Sales +34% cc; Japan +31%; Other Asia +39% cc; new product launches (FX Life, Yen Variable Life) Strong acceleration
Group underwritingQ2: weaker underwriting Sequential improvement; dental seasonality and disability recoveries; aiming for cumulative ~400 bps improvement across Q3–Q4 Improving
Regulatory/legal—Mexico VAT change: $71M Q3, $20–$25M Q4, $50–$60M 2026 impact; mitigation via pricing actions Temporary headwind
Macro/creditStable credit; tight spreads “Spreads historically tight; priced for perfection; up-in-quality bias” and in-house private credit underwriting Cautious on valuation; disciplined underwriting

Management Commentary

  • CEO: “MetLife delivered an excellent third quarter…Adjusted EPS, excluding total notable items, grew 21% year-over-year, driven by strong variable investment income, broad-based volume growth, and diligent expense management.”
  • CEO on Group Benefits: “Disability results returned to normal, and dental profitability ramped up…230 basis point sequential improvement in our non-medical health loss ratio.”
  • CEO/CFO on Retirement: “We’ve already written $12 billion of PRT transactions…Chariot Re officially launched…initial reinsurance transaction of roughly $10 billion.”
  • CFO on Mexico VAT: “After-tax charge of $71M in Q3…anticipate additional $20–$25M in Q4…estimate a reduction in 2026 LatAm adjusted earnings of ~$50–$60M; little to no impact in 2027 and beyond.”
  • CFO on VII: “Q3 VII $483M above implied quarterly guidance of $425M; PE returns ~3%.”

Q&A Highlights

  • Asia growth drivers: Product launches (single premium FX Life in April; Yen Variable Life in August), enhancements, distribution strength (bank and face-to-face), momentum expected to continue .
  • Expense seasonality and AI: Despite typical Q4 seasonality, management expects FY direct expense ratio below 12.1%; multi-year tech investment and MetIQ platform driving productivity gains .
  • PRT dynamics: Focus on jumbo transactions; competitive advantages (balance sheet, investment capabilities); disciplined ROE lens; partnerships and third-party capital enhance flexibility .
  • RIS spreads: Expect relatively flat spreads in Q4; large PRT wins may create temporary asset repositioning headwind of a few bps .
  • LTC: Block well-managed; modest assumption changes; exploring risk transfer opportunities with discipline .
  • Mexico VAT timing and impact: Change effective 2025; mitigation through pricing and management actions; normalization by 2027 .

Estimates Context

  • EPS beat: Actual $2.37 vs consensus $2.32*; driven by stronger VII, Asia volume, and expense control .
  • Revenue miss: Actual $17.36B vs consensus $18.69B*, reflecting GAAP impacts from derivative and investment losses; analysts typically anchor on adjusted EPS for insurers .
  • Coverage depth: EPS estimates count 15*; revenue estimates count 6*; Target price consensus ~$92.47*.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings power intact: Strong VII and Asia growth propelled ROE to near the top of the 15–17% target range; continued focus on expenses suggests further operating leverage .
  • Retirement flywheel: Record Q4 PRT mandates and Chariot Re expand origination capacity and fee/AUM for MIM; temporary earnings drag from reinsurance should be offset by pipeline growth .
  • LatAm VAT headwind is transitory: Quantified charges in Q4 and 2026 with normalization expected by 2027; management indicates pricing actions to mitigate .
  • Group Benefits underwriting normalized: Sequential NM health ratio improvement; guidance for further Q4 improvement supports segment margin trajectory .
  • Capital strength and cash returns: Holding company cash $4.9B; continued buybacks and dividends; Q4 dividend declared $0.5675 per share .
  • Risk posture: Tight spreads warrant discipline; up-in-quality underwriting across private credit; in-house capabilities emphasized .
  • Near-term trading lens: Positive EPS beat and Q4 PRT momentum are offsets to GAAP revenue miss and Mexico VAT charges; watch VII sustainability and Q4 spread stability .

Citations: Press release/8-K and tables ; Q3 call ; Other releases ; Prior quarters .