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Why Is MetLife (MET) Up 1.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MetLife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MetLife Q1 Earnings Meet, Rise Y/Y on Lower Expenses
MetLife 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 MetLife 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.
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%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, MetLife has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MetLife is part of the Zacks Insurance - Multi line industry. Over the past month, Everest Group (EG - Free Report) , a stock from the same industry, has gained 4.4%. The company reported its results for the quarter ended March 2024 more than a month ago.
Everest Group reported revenues of $4.13 billion in the last reported quarter, representing a year-over-year change of +26%. EPS of $16.32 for the same period compares with $11.31 a year ago.
Everest Group is expected to post earnings of $17.21 per share for the current quarter, representing a year-over-year change of +13.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Everest Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is MetLife (MET) Up 1.2% Since Last Earnings Report?
A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MetLife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MetLife Q1 Earnings Meet, Rise Y/Y on Lower Expenses
MetLife 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 MetLife 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.
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%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, MetLife has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MetLife is part of the Zacks Insurance - Multi line industry. Over the past month, Everest Group (EG - Free Report) , a stock from the same industry, has gained 4.4%. The company reported its results for the quarter ended March 2024 more than a month ago.
Everest Group reported revenues of $4.13 billion in the last reported quarter, representing a year-over-year change of +26%. EPS of $16.32 for the same period compares with $11.31 a year ago.
Everest Group is expected to post earnings of $17.21 per share for the current quarter, representing a year-over-year change of +13.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Everest Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.