Q4 2024 Earnings Summary
- MetLife is experiencing strong growth in Pension Risk Transfer (PRT) inflows, finishing 2024 with $6.4 billion in PRT inflows and starting 2025 with a $640 million PRT plan, leading to confidence in delivering 3% to 5% balance growth over the near term, which is an increase from prior guidance.
- MetLife's Group Benefits business is performing well, with no significant deviations in Accident & Health loss ratios, and continues to see growth with solid margins, indicating resilience and strong execution in this segment.
- MetLife has increased its Premiums, Fees, and Other Revenues (PFO) growth guidance for Group Benefits to 4% to 7%, up from the previous range, due to strong renewals and persistency, particularly in the dental business, demonstrating strong demand and confidence in future growth.
- Deterioration in Commercial Real Estate Portfolio Metrics: MetLife's commercial real estate portfolio has experienced slightly worse coverage ratios and loan-to-value ratios over the last few quarters, indicating potential for increased losses in the future.
- Uncertainty in Commercial Real Estate Market Stabilization: The commercial real estate market, particularly the office sector, has not fully stabilized. An executive acknowledged it's "still probably not quite there yet," suggesting ongoing risks to MetLife's investment portfolio.
- Legal Challenges in the Pension Risk Transfer (PRT) Market: The PRT market is facing lawsuits targeting multiple providers. While MetLife has not been involved yet, the expansion of these lawsuits could impact the PRT market and MetLife's future business.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | ~–2% (from $19.028B to $18.666B) | Total revenue declined slightly due to a combination of factors including shifts in revenue quality across business lines. While previous periods benefited from healthier figures, the current period saw material challenges—such as negative performance in key segments—that likely contributed to the minor dip. |
Net Income | +107% (from $614M to $1.275B) | Net income more than doubled as improvements in profitability outpaced the slight revenue decline. The substantial jump suggests that underlying operating efficiency, favorable financial adjustments, or potentially beneficial derivative or investment gains (as seen in prior quarters) had a significant impact compared to the previous period's challenges, effectively offsetting underperforming revenue components. |
Segment Performance | Group Benefits: negative (–$13.441M); RIS: negative (–$7.693M) | Both Group Benefits and RIS shifted from positive figures in prior quarters to negative revenue in Q4 2024. This material change points to unfavorable shifts in claims experience, changes in actuarial assumptions, and lower recurring premiums compared to earlier periods that had seen volume growth and fee-based income, signaling a strategic or market-driven setback in these segments. |
Geographic Revenue | Asia: –$1.847M; Latin America: –$1M; EMEA: $454M | Revenue performance by region deteriorated sharply in key markets. In Q4 2024, weaker premium growth in Asia and Latin America alongside modest EMEA figures contrast with more buoyant performances in the past. The shifts are likely attributable to external market pressures including currency and economic fluctuations that were favorable in previous periods but have reversed in the current quarter. |
Share Repurchases | Total of $6.008B executed | Met aggressively repurchased $6.008B in common shares in Q4 2024, an increase relative to prior periods. This reflects a continuation—and slight acceleration—of its capital return strategy bolstered by strong liquidity (with cash and liquid assets exceeding the target buffer) and confidence in its financial positioning. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted Return on Equity (ROE) | FY 2025 | no prior guidance | 15% to 17% | no prior guidance |
Adjusted EPS Growth | FY 2025 | no prior guidance | Double-digit growth | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | 65%–75% of adjusted earnings; targeting $25B+ over 5 years | no prior guidance |
Direct Expense Ratio | FY 2025 | no prior guidance | 12.1% (down from 12.3% in 2024) | no prior guidance |
Effective Tax Rate | FY 2025 | no prior guidance | 24%–26% | no prior guidance |
VII (Private Equity returns) | FY 2025 | no prior guidance | 9%–11% | no prior guidance |
VII (Real Estate & other funds) | FY 2025 | no prior guidance | 7%–9% | no prior guidance |
Group Benefits Adjusted PFO Growth | FY 2025 | no prior guidance | 4%–7% annually | no prior guidance |
Group Life Mortality Ratio | FY 2025 | no prior guidance | 84%–89% | no prior guidance |
Group Nonmedical Health Interest-Adjusted Benefit | FY 2025 | no prior guidance | 69%–74% | no prior guidance |
RIS Total General Account Investment Spread | FY 2025 | no prior guidance | 110–135 basis points | no prior guidance |
MetLife Holdings Adjusted Earnings | FY 2025 | no prior guidance | $650M–$800M | no prior guidance |
Asia Adjusted Earnings Growth | FY 2025 | no prior guidance | Mid-single digits (constant currency), low single digits (reported) | no prior guidance |
Latin America Adjusted PFOs & Earnings Growth | FY 2025 | no prior guidance | High single digits (constant currency), flat (reported) | no prior guidance |
EMEA Adjusted PFOs Growth | FY 2025 | no prior guidance | Mid- to high single digits (reported) | no prior guidance |
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Commercial Real Estate Exposure
Q: How will CRE losses impact earnings this year?
A: John McCallion explained that while there's been pressure in commercial real estate over the past few years, they're starting to see signs of optimism. Economic growth remains strong, real estate fundamentals are improving, and office vacancies may have peaked in 2024. Lease signings are increasing, and with a low construction pipeline, they believe they've approached the peak of the cycle. They've effectively reserved for potential losses and expect minimal additional impact on capital—perhaps another point of RBC. -
Chile Pension Reform Impact
Q: What is the effect of Chile's pension reform on your business?
A: Eric Clurfain noted that the Chilean Congress approved pension reform after a decade of debate. The private pension system continues with adjustments, employer contributions will gradually increase, and implementation will be gradual over several years. They don't foresee any material impact they can't mitigate and remain committed to serving customers. -
Long-Term Care Risk Transfer
Q: Any updates on LTC block risk transfer possibilities?
A: Ramy Tadros mentioned increased activity in the risk transfer market, with more convergence between cedents and reinsurers, which is encouraging. Their objective is to maximize shareholder value while serving customers; price and structure matter. Their LTC block is well-capitalized and reserved under New York standards and performing in line with expectations. Currently, it's not generating much cash flow but continues to grow liabilities over time. -
Group Life Mortality Trends
Q: Will favorable group life mortality trends persist?
A: Ramy Tadros stated that favorable trends in CDC population data are positively impacting their ratios. If these positive trends continue into the first half of 2025, they expect to be in the bottom half of their guidance range on the mortality ratio for the full year. -
Private Equity Return Assumptions
Q: Why are you raising alternative return assumptions for 2025?
A: Michel Khalaf explained that they see tailwinds from public equity markets benefiting private equity investments. They're sensing increased exit activity and believe operating companies are benefiting. Asset classes underperformed expectations last year, but they expect recovery in 2025 and have accordingly increased return assumptions by a point. They anticipate gradual improvement throughout the year. -
MetLife Holdings Strategy
Q: Any plans to unlock capital from MetLife Holdings?
A: John McCallion said they manage MetLife Holdings effectively and consider opportunities that are accretive on a risk-adjusted basis. There’s no urgent need to take action, and they're comfortable managing it themselves, leveraging their unique capabilities. -
MIM Segment Reporting
Q: When will you report MIM as a separate segment?
A: John McCallion indicated they plan to report MetLife Investment Management as a separate segment to coincide with the closing of the PineBridge transaction, expected in the second half of 2025, pending regulatory approvals. -
Currency Impact on Earnings
Q: How might currency moves affect international earnings in 2025?
A: John McCallion explained they use the 12/31 forward curves for currency assumptions. They see potential headwinds in Latin America and Asia due to currency pressures. For example, the yen is expected to be in the low 150s, which could create a slight headwind to earnings if currencies weaken further. -
Group Renewals and PFO Guidance
Q: How are 1/1 group renewals and PFO guidance shaping up?
A: Ramy Tadros reported a strong start to 1/1 renewals, with persistency within expectations. They're particularly pleased with the dental business, achieving targeted rate actions and strong persistency. This performance contributes to increasing their PFO guidance range to 4%–7%, a one-point increase from last year. -
PRT Market and Lawsuit Impact
Q: Are lawsuits affecting the PRT market and your outlook?
A: Ramy Tadros noted it's hard to forecast, but PRT products offer valuable solutions. They finished last year with $6.4 billion in PRT inflows and healthy ROEs, and started 2025 with a $640 million plan. They feel confident about delivering 3%–5% balance growth near term, up one point from last year, and overall feel good about the range despite the lawsuits affecting others. -
Non-Medical Health Loss Ratios
Q: Did you experience elevated voluntary benefit loss ratios?
A: Ramy Tadros stated they're not seeing material deviations outside normal expectations in Accident & Health. They continue to see growth with solid margins, above the midpoint of their range. They've not changed the range for next year and expect loss ratios to be around the midpoint.