MetLife, Inc. (MET Quick QuoteMET - Free Report) reported second-quarter 2024 adjusted operating earnings of $2.28 per share, which surpassed the Zacks Consensus Estimate by 7%. The bottom line advanced 18% year over year.

Adjusted operating revenues of $18.7 billion inched up 0.3% year over year. The top line beat the consensus mark by 2.7%.

Favorable underwriting results, particularly in Group Benefits and Asia, along with higher net investment income, due to rising rates, contributed positively to the quarterly results. However, the upside was partly offset by an elevated expense level and segment-specific challenges like declining earnings in RIS due to lower recurring interest margins.

Behind the Headlines

Adjusted premiums, fees and other revenues (PFOs), excluding pension risk transfer (“PRT”), grew 2% year over year to $11.8 billion. 

Adjusted net investment income of $5.2 billion increased 2% year over year on the back of rising rates and improved variable investment income.

Total expenses were $16.6 billion, up 2.6% year over year due to higher interest credited to policyholder account balances. However, the adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, remained stable year over year at 20.6%.

Net income more than doubled year over year to $912 million. Adjusted return on equity, excluding accumulated other comprehensive income (loss) other than foreign currency translation adjustments, of 17.3% improved 270 bps year over year.

Inside MetLife’s Segments

Group Benefits: The segment recorded adjusted earnings of $533 million, which surged 43% year over year and outpaced the Zacks Consensus Estimate of $413.9 million. Favorable underwriting results in life drove the metric. Adjusted PFOs advanced 3% year over year to $6.2 billion. 

RIS: Adjusted earnings in the segment slipped 2% year over year to $410 million, which missed the consensus mark of $435.2 million. The metric was hurt by a decline in recurring interest margins. However, adjusted PFOs, excluding PRT, rose 4% year over year to $830 million on the back of improved institutional annuity sales and growing U.K. longevity reinsurance.

Asia: The unit’s adjusted earnings were $449 million, which grew 4% year over year and beat the Zacks Consensus estimate of $402.7 million. The metric was aided by favorable underwriting and improved variable investment income. However, adjusted PFOs of $1.7 billion fell 3% year over year.

Latin America: The segment reported adjusted earnings of $226 million, which increased 3% year over year on the back of expanding volumes and favorable underwriting results. The figure outpaced the consensus mark of $223.1 million. Adjusted PFOs improved 9% year over year to $1.5 billion, attributable to solid sales and persistency rates.

EMEA: In the second quarter, adjusted earnings of the segment advanced 10% year over year to $77 million, higher than the Zacks Consensus Estimate of $64.4 million. The growth resulted from solid volumes and increased recurring interest margins.  Adjusted PFOs of $621 million grew 7% year over year on the back of growing sales across the region.

MetLife Holdings: The segment’s adjusted earnings plunged 27% year over year to $153 million and fell short of the consensus mark of $183.4 million. The decrease was due to a reinsurance transaction closed in 2023. Adjusted PFOs were $823 million, which slid 12% year over year.

Corporate & Other: The unit incurred an adjusted loss of $220 million, narrower than the prior-year quarter’s loss of $228 million.

Financial Update (as of Jun 30, 2024)

MetLife exited the second quarter with cash and cash equivalents of $20.8 billion, which inched up 0.7% from the 2023-end level. Total assets of $675.7 billion fell 1.7% from the figure at 2023-end.

Long-term debt totaled $14.8 billion, which declined 4.8% from the figure as of Dec 31, 2023. Short-term debt amounted to $390 million.  

Total equity of $27.5 billion tumbled 9% from the 2023-end level.

Book value per share was $33.30 as of Jun 30, 2024, down 5% year over year.

Capital Deployment Update

MetLife bought back shares worth around $0.9 billion during the second quarter. It pursued additional repurchases of roughly $270 million in July 2024.

2024 Outlook

Earlier, management estimated variable investment income to be around $1.5 billion for 2024. Corporate & Other adjusted losses are anticipated to be between $750 million and $850 million. The effective tax rate is projected to be within 24-26%.

MetLife Holdings’ adjusted PFOs are expected to witness year-over-year decline of 13-15%. The unit’s adjusted earnings are forecasted to be within $700-$900 million.

Adjusted earnings in the Asia segment are anticipated to record growth of around 20%. Adjusted earnings in the EMEA unit are likely to remain within $60-$65 million for the remaining quarters 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 in 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 the band of 84-89%.

MetLife aims to achieve an adjusted return on equity within the band of 13-15%. It expects 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.

Performance of Other Insurers

Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Arch Capital Group Ltd. (ACGL Quick QuoteACGL - Free Report) , The Hartford Financial Services Group, Inc. (HIG Quick QuoteHIG - Free Report) and CNO Financial Group, Inc. (CNO Quick QuoteCNO - Free Report) beat the respective Zacks Consensus Estimate.

Arch Capital reported second-quarter 2024 operating income of $2.57 per share, which beat the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.8% year over year. Gross premiums written improved 11.1% year over year to $5.3 billion. Net premiums written climbed 10.3% year over year to $3.7 billion.  Pre-tax net investment income increased 50.4% year over year to $364 million. Operating revenues of $3.9 billion rose 22.6% year over year. The metric beat the consensus estimate by 0.6%.

Arch Capital’s underwriting income increased 25.7% year over year to $762 million. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 110 bps to 78.7. In the Insurance segment, gross premiums written increased 7.5% year over year to $2.1 billion. Net premiums written climbed 7.2% year over year to $1.5 billion. The Reinsurance unit’s net premiums written rose 13.9% year over year to $1.9 billion. Underwriting income was $366 million, up 49.4% year over year.

Hartford Financial’s second-quarter adjusted operating earnings of $2.50 per share beat the Zacks Consensus Estimate by 10.6%. The bottom line climbed 33% year over year. Operating revenues of HIG amounted to $4.46 billion, which improved 9.4% year over year. However, the top line missed the consensus mark of $4.49 billion. Earned premiums rose 6.9% year over year to $5.6 billion. Pre-tax net investment income of $602 million grew 11.5% year over year. Pretax income of $912 million increased 35.7% year over year.

The Commercial Lines segment’s revenues amounted to $3.5 billion, which rose 8.5% year over year. Core earnings of $551 million climbed 11.8% year over year. Meanwhile, the Personal Lines unit recorded revenues of $924 million, which improved 12.7% year over year. The underlying combined ratio of 96.7% improved 500 bps year over year. The Group Benefits segment’s revenues grew 2.6% year over year to $1.8 billion. 

CNO Financial reported second-quarter adjusted earnings per share of $1.05, which beat the Zacks Consensus Estimate by 45.8%. Moreover, the bottom line rose 94.4% year over year. Total revenues increased 4.2% year over year to $1.07 billion. The top line beat the consensus mark by 16.4%. Total insurance policy income of $641.5 million improved 2.1% year over year. CNO’s net investment income increased 2.4% year over year to $409.1 million.

General account assets grew 8.3% year over year to $351.7 million and beat the consensus mark by 14.1%. However, the policyholder and other special-purpose portfolios declined 37.3% year over year to $57.4 million. Annuity collected premiums of $439.1 million increased 9.3% year over year. New annualized premiums for health and life products improved 4.3% year over year to $102.9 million. Annuity, Health and Life products accounted for 27.7%, 49.4% and 22.9%, respectively, of CNO’s insurance margin.