MetLife Posts 1Q 2015 Results
May 12, 2015 by Proquest LLC
MetLife reported the following results for the first quarter of 2015:
In a release on May 6, the Company noted that it reported operating earnings of $1.6 billion, up 5 percent over the first quarter of 2014, and up 10 percent on a constant currency basis. On a per share basis, operating earnings were $1.44, up 5 percent over the prior year quarter. Operating earnings in the Americas grew 4 percent on a reported basis and 6 percent on a constant currency basis. Operating earnings in Asia decreased 2 percent on a reported basis, but were up 8 percent on a constant currency basis. Operating earnings in Europe, the Middle East and Africa (EMEA) decreased 1 percent on a reported basis, but increased 35 percent on a constant currency basis.
First quarter 2015 operating earnings included the following item:
-Unfavorable catastrophe experience partially offset by favorable prior year development, which resulted in a decrease in operating earnings of $16 million, or $0.01 per share, after tax
MetLife’s operating return on equity (ROE), excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustments (FCTA), was 11.7 percent for the first quarter of 2015 and the company’s tangible operating ROE was 14.4 percent.
On a GAAP basis, MetLife reported first quarter 2015 net income of $2.1 billion, or $1.87 per share. Net income includes $534 million, after tax, in net derivative gains, reflecting the weakening of foreign currencies against the dollar and lower interest rates. MetLife uses derivatives as part of its broader asset-liability management strategy to hedge certain risks, such as movements in interest rates and foreign currencies. This hedging activity often generates derivative gains or losses and creates fluctuations in net income because the risk being hedged may not have the same GAAP accounting treatment.
Premiums, fees & other revenues were $12.1 billion, essentially unchanged from the first quarter of 2014 (up 4 percent on a constant currency basis).
Book value, excluding AOCI other than FCTA, was $50.45 per share, up 6 percent from $47.70 per share at March 31, 2014.
“MetLife had a good first quarter,” said Steven A. Kandarian, chairman, president and chief executive officer of MetLife, Inc. “While the continued strengthening of the U.S. dollar impacted reported earnings, our businesses had solid underlying growth. We are pleased with the success of our strategy to grow capital efficient, protection oriented products. For example, accident and health sales outside of the U.S. increased 24 percent and voluntary product sales in the U.S. grew 57 percent.”
BUSINESS DISCUSSIONS
All comparisons of the results for the first quarter of 2015 in the business discussions that follow are with the first quarter of 2014, unless otherwise noted.
THE AMERICAS
Total operating earnings for the Americas were $1.4 billion, up 4 percent (6 percent on a constant currency basis), driven by underwriting and business growth. Operating return on allocated equity was 14.1 percent for the first quarter and operating return on allocated tangible equity was 15.9 percent. Premiums, fees & other revenues for the Americas were $9.2 billion, up 3 percent, and excluding pension closeouts, up 2 percent.
Retail
Operating earnings for Retail were $653 million, up 3 percent, driven by separate account performance. Premiums, fees & other revenues for Retail were $3.2 billion, up 1 percent, due to an increase in life and disability sales.
Group, Voluntary & Worksite Benefits
Operating earnings for Group, Voluntary & Worksite Benefits were $228 million, up 20 percent, driven by favorable underwriting. Premiums, fees & other revenues for Group, Voluntary & Worksite Benefits were $4.4 billion, up 3 percent, due to higher sales and persistency.
Corporate Benefit Funding
Operating earnings for Corporate Benefit Funding were $369 million, up 9 percent, due to favorable underwriting and business growth. Premiums, fees & other revenues for Corporate Benefit Funding were $543 million, up 27 percent, due to pension closeouts and structured settlements.
Latin America
Operating earnings for Latin America were $131 million, down 17 percent and down 3 percent on a constant currency basis, as business growth and underwriting improvement were offset by lower inflation, higher taxes and U.S. Direct expenses. Premiums, fees & other revenues in Latin America were $1.0 billion, essentially unchanged from the prior year quarter, but up 13 percent on a constant currency basis. Total sales for the region increased 11 percent on a constant currency basis, driven by Brazil, Mexico and U.S. Direct.
ASIA
Operating earnings for Asia were $327 million, down 2 percent, but up 8 percent on a constant currency basis, driven by business growth. Operating return on allocated equity was 11.4 percent for the first quarter and operating return on allocated tangible equity was 19.6 percent. Premiums, fees & other revenues in Asia were $2.2 billion, down 6 percent on a reported basis, but up 6 percent on a constant currency basis, driven by business growth and solid persistency in all core markets. Total sales for the region increased 4 percent on a constant currency basis, driven by a 32 percent increase in accident and health sales in Japan, partially offset by a decline in retirement product sales across the region.
EMEA
Operating earnings for EMEA were $70 million, down 1 percent, but up 35 percent on a constant currency basis, driven by business growth, favorable underwriting and lower expenses. Operating return on allocated equity was 8.4 percent for the first quarter and operating return on allocated tangible equity was 15.4 percent. Premiums, fees & other revenues were $620 million, down 14 percent, but up 2 percent on a constant currency basis. Total sales for the region increased 14 percent on a constant currency basis, due to strong growth in employee benefit and accident and health sales.
INVESTMENTS
Net investment income was $5.0 billion, down 2 percent. Variable investment income was $371 million ($241 million, after tax and deferred acquisition costs (DAC)), compared with $429 million ($274 million, after tax and DAC) in the first quarter of 2014.
Changes in foreign currencies and long-term interest rates contributed to derivative net gains of $394 million, after tax and other adjustments. Derivative net gains in the first quarter of 2014 were $78 million, after tax and other adjustments.
CORPORATE & OTHER
Corporate & Other reported an operating loss of $140 million, compared to an operating loss of $166 million in the first quarter of 2014.
MetLife, through its subsidiaries and affiliates, is a life insurance company.
More information:
www.metlife.com
