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MetLife (MET) Q1 Earnings Meet, Rise Y/Y on Lower Expenses
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MetLife, Inc. (MET - Free Report) reported first-quarter 2024 adjusted operating earnings of $1.83 per share, which matched the Zacks Consensus Estimate. The bottom line improved 20.4% year over year.
Adjusted operating revenues of MET climbed 5.5% year over year to $17 billion in the quarter under review. However, the top line missed the consensus mark by 3.8%.
The quarterly earnings benefited from declining expenses and strong growth in the Asia, EMEA and Latin America segments. Strong variable investment income also added to the upside. However, the feeble contribution from the Group Benefits segment acted as a partial offset.
Adjusted premiums, fees and other revenues (PFOs), excluding pension risk transfer (PRT), were $12 billion. The figure rose 4% year over year.
Adjusted net investment income of $5.1 billion grew 10% year over year in the first quarter on the back of rising rates and improved variable investment income.
Total expenses declined 0.8% year over year to $15 billion due to lower policyholder dividends. However, the adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, deteriorated 40 basis points (bps) year over year to 20.4% in the quarter under review.
Net income of $800 million skyrocketed from $14 million in the year-ago period. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, improved 250 bps year over year to 13.8%.
Inside MetLife’s Segments
Group Benefits: The segment’s adjusted earnings declined 7% year over year to $284 million in the first quarter, lower than the Zacks Consensus Estimate of $384 million. The metric was impacted by reduced underwriting margins in non-medical health. However, adjusted PFOs of $6.3 billion grew 5% year over year.
RIS: The segment recorded adjusted earnings of $399 million, which fell 0.3% year over year but outpaced the consensus mark of $383 million. Reduced recurring interest margin coupled with less favorable underwriting impacted the unit’s quarterly performance. Adjusted PFOs, excluding PRT, surged 25% year over year to $813 million on the back of structured settlement sales and growing U.K. longevity reinsurance.
Asia: Adjusted earnings in the segment were $423 million,which improved 51% year over year and beat the Zacks Consensus estimate of $352 million. The metric was aided by favorable underwriting and improved variable investment income. Adjusted PFOs dipped 3% year over year to $1.7 billion in the quarter under review.
Latin America: The segment recorded adjusted earnings of $233 million in the first quarter,which advanced 8% year over year on the back of increased volumes and an increase in Chilean encaje returns. The figure beat the consensus mark of $225 million. Adjusted PFOs rose 9% year over year to $1.5 billion, attributable to solid sales and persistency rates.
EMEA: Adjusted earnings of the segment surged 28% year over year to $77 million in the quarter under review, higher than the Zacks Consensus Estimate of $61 million. The increase was due to the incidence of favorable underwriting, higher recurring interest margins and growth in volumes. Adjusted PFOs of $620 million grew 7% year over year on the back of growing sales across the region.
MetLife Holdings: The segment’s adjusted earnings were $159 million, which rose 1% year over year in the first quarter but lagged the consensus mark of $164 million. The increase was due to higher variable investment income offset by foregone earnings due to reinsurance transactions. Adjusted PFOs slipped 12% year over year to $841 million.
Corporate & Other: The unit incurred an adjusted loss of $241 million in the quarter under review, wider than the prior-year quarter’s loss of $236 million.
Financial Update (as of Mar 31, 2024)
MetLife exited the first quarter with cash and cash equivalents of $19.8 billion, which declined 3.9% from the 2023-end level. Total assets of $677.6 billion decreased 1.5% from the figure at 2023-end.
Long-term debt totaled $16 billion, up 2.7% from the figure as of Dec 31, 2023. Short-term debt amounted to $127 million.
Total equity of $28.8 billion declined 4.8% from the 2023-end level.
Book value per share was $34.54 as of Mar 31, 2024, which declined 6% year over year.
Capital Deployment Update
MetLife bought back shares worth around $1.2 billion during the first quarter. It conducted additional repurchases of roughly $330 million in April 2024. The company announced a new share repurchase plan of $3 billion, incremental to the existing $600 million remaining in April 2024.
2024 Outlook
Management earlier anticipated variable investment income to be around $1.5 billion for 2024. Corporate & Other adjusted losses are estimated to be between $750 million and $850 million. The effective tax rate is projected within 24-26%. MetLife Holdings’ adjusted PFOs are expected to witness year-over-year decline of 13-15% in 2024. The unit’s adjusted earnings are forecasted within $700-$900 million in 2024.
Adjusted earnings in the Asia segment are anticipated to record growth of around 20%, while the same in the EMEA unit is likely to remain within $60-$65 million for each quarter of 2024.
Near-Term Targets
Over the next three years, MetLife projects adjusted PFOs in the Group Benefits business to rise in the range of 4-6%. Adjusted PFOs of the MetLife Holdings segment are anticipated to increase within 4-6% per year, while the same in the Latin America and EMEA units are forecasted to witness high-single-digit and mid-single-digit growth, respectively. The Group Life mortality ratio is likely to stay within 84-89%.
MetLife aims to achieve an adjusted return on equity within 13-15%. It is expected to keep the free cash flow ratio within the 65-75% range of adjusted earnings. The direct expense ratio is targeted to be 12.3%.
The Travelers Companies (TRV - Free Report) reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
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MetLife (MET) Q1 Earnings Meet, Rise Y/Y on Lower Expenses
MetLife, Inc. (MET - Free Report) reported first-quarter 2024 adjusted operating earnings of $1.83 per share, which matched the Zacks Consensus Estimate. The bottom line improved 20.4% year over year.
Adjusted operating revenues of MET climbed 5.5% year over year to $17 billion in the quarter under review. However, the top line missed the consensus mark by 3.8%.
The quarterly earnings benefited from declining expenses and strong growth in the Asia, EMEA and Latin America segments. Strong variable investment income also added to the upside. However, the feeble contribution from the Group Benefits segment acted as a partial offset.
MetLife, Inc. Price, Consensus and EPS Surprise
MetLife, Inc. price-consensus-eps-surprise-chart | MetLife, Inc. Quote
Behind the Headlines
Adjusted premiums, fees and other revenues (PFOs), excluding pension risk transfer (PRT), were $12 billion. The figure rose 4% year over year.
Adjusted net investment income of $5.1 billion grew 10% year over year in the first quarter on the back of rising rates and improved variable investment income.
Total expenses declined 0.8% year over year to $15 billion due to lower policyholder dividends. However, the adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, deteriorated 40 basis points (bps) year over year to 20.4% in the quarter under review.
Net income of $800 million skyrocketed from $14 million in the year-ago period. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, improved 250 bps year over year to 13.8%.
Inside MetLife’s Segments
Group Benefits: The segment’s adjusted earnings declined 7% year over year to $284 million in the first quarter, lower than the Zacks Consensus Estimate of $384 million. The metric was impacted by reduced underwriting margins in non-medical health. However, adjusted PFOs of $6.3 billion grew 5% year over year.
RIS: The segment recorded adjusted earnings of $399 million, which fell 0.3% year over year but outpaced the consensus mark of $383 million. Reduced recurring interest margin coupled with less favorable underwriting impacted the unit’s quarterly performance. Adjusted PFOs, excluding PRT, surged 25% year over year to $813 million on the back of structured settlement sales and growing U.K. longevity reinsurance.
Asia: Adjusted earnings in the segment were $423 million,which improved 51% year over year and beat the Zacks Consensus estimate of $352 million. The metric was aided by favorable underwriting and improved variable investment income. Adjusted PFOs dipped 3% year over year to $1.7 billion in the quarter under review.
Latin America: The segment recorded adjusted earnings of $233 million in the first quarter,which advanced 8% year over year on the back of increased volumes and an increase in Chilean encaje returns. The figure beat the consensus mark of $225 million. Adjusted PFOs rose 9% year over year to $1.5 billion, attributable to solid sales and persistency rates.
EMEA: Adjusted earnings of the segment surged 28% year over year to $77 million in the quarter under review, higher than the Zacks Consensus Estimate of $61 million. The increase was due to the incidence of favorable underwriting, higher recurring interest margins and growth in volumes. Adjusted PFOs of $620 million grew 7% year over year on the back of growing sales across the region.
MetLife Holdings: The segment’s adjusted earnings were $159 million, which rose 1% year over year in the first quarter but lagged the consensus mark of $164 million. The increase was due to higher variable investment income offset by foregone earnings due to reinsurance transactions. Adjusted PFOs slipped 12% year over year to $841 million.
Corporate & Other: The unit incurred an adjusted loss of $241 million in the quarter under review, wider than the prior-year quarter’s loss of $236 million.
Financial Update (as of Mar 31, 2024)
MetLife exited the first quarter with cash and cash equivalents of $19.8 billion, which declined 3.9% from the 2023-end level. Total assets of $677.6 billion decreased 1.5% from the figure at 2023-end.
Long-term debt totaled $16 billion, up 2.7% from the figure as of Dec 31, 2023. Short-term debt amounted to $127 million.
Total equity of $28.8 billion declined 4.8% from the 2023-end level.
Book value per share was $34.54 as of Mar 31, 2024, which declined 6% year over year.
Capital Deployment Update
MetLife bought back shares worth around $1.2 billion during the first quarter. It conducted additional repurchases of roughly $330 million in April 2024. The company announced a new share repurchase plan of $3 billion, incremental to the existing $600 million remaining in April 2024.
2024 Outlook
Management earlier anticipated variable investment income to be around $1.5 billion for 2024. Corporate & Other adjusted losses are estimated to be between $750 million and $850 million. The effective tax rate is projected within 24-26%. MetLife Holdings’ adjusted PFOs are expected to witness year-over-year decline of 13-15% in 2024. The unit’s adjusted earnings are forecasted within $700-$900 million in 2024.
Adjusted earnings in the Asia segment are anticipated to record growth of around 20%, while the same in the EMEA unit is likely to remain within $60-$65 million for each quarter of 2024.
Near-Term Targets
Over the next three years, MetLife projects adjusted PFOs in the Group Benefits business to rise in the range of 4-6%. Adjusted PFOs of the MetLife Holdings segment are anticipated to increase within 4-6% per year, while the same in the Latin America and EMEA units are forecasted to witness high-single-digit and mid-single-digit growth, respectively. The Group Life mortality ratio is likely to stay within 84-89%.
MetLife aims to achieve an adjusted return on equity within 13-15%. It is expected to keep the free cash flow ratio within the 65-75% range of adjusted earnings. The direct expense ratio is targeted to be 12.3%.
Zacks Rank
MetLife currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Insurers
The Travelers Companies (TRV - Free Report) reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.