Metlife (MET) 1 Aug 24 2024 Q2 Earnings call transcript

MetLife's recent earnings call for the second quarter of 2024 provided a comprehensive overview of the company's financial performance, strategic initiatives, and future outlook. Here are some key takeaways from the call, highlighting the company's strengths, challenges, and opportunities.

Financial Performance

MetLife reported adjusted earnings of $1.6 billion or $2.28 per share, up 18% from the prior year. This strong result was driven by favorable underwriting, good volume growth, and higher variable investment income. The company's net income was $912 million, significantly higher than $370 million in the prior year period. MetLife's adjusted return on equity was 17.3%, well above its target range of 13% to 15%, demonstrating its ability to efficiently deploy capital and generate profitable growth for shareholders.

Strategic Focus

MetLife's strategy, known as Next Horizon, is centered around three pillars: focus, simplify, and differentiate. The company has achieved high-teen internal rates of return on new business and strong enterprise-wide returns, reflecting its focus on strategic investments. The simplification pillar is evident in the improving expense ratio, which is below the target of 12.3%. The differentiation pillar is being funded by the success achieved through focus and simplify, allowing MetLife to invest in technology and expand its capabilities in areas like artificial intelligence (AI) and other digital solutions.

Business Segments

MetLife's Group Benefits business reported all-time quarterly record earnings of $533 million, driven by favorable underwriting and strong volume growth. The Retirement and Income Solutions (RIS) segment also showed solid performance, with notable wins in pension risk transfer deals and strong growth in structured settlements. MetLife's international business, particularly in Asia, also performed well, with sales up 60% in the rest of the region and assets under management growing 5% on a constant currency basis.

Competitive Landscape

During the call, executives discussed the competitive landscape, acknowledging that it is competitive but rational. While new entrants have emerged, MetLife's scale, capabilities, and experience position it well to compete on a range of factors beyond just price. The company has maintained its market position in Japan despite the weaker yen impacting sales of foreign currency products.

Challenges and Opportunities

One challenge mentioned during the call was the impact of the weaker yen on foreign currency products in Japan. However, MetLife is mitigating this by diversifying its product mix between yen and US dollars and introducing new products like variable life and cancer insurance. The company also sees opportunities in areas like private credit, where it has a long-term approach and unique capabilities, and is exploring opportunities to leverage its large data pool to drive greater profitability, revenue growth, and efficiency.

Conclusion

MetLife's second-quarter earnings call provided a positive outlook, with strong financial performance and strategic initiatives positioning the company for continued growth. The company's focus on its three pillars of Next Horizon, along with its ability to navigate market challenges and capitalize on opportunities, is a testament to its robust business model and competitive edge. As MetLife moves forward with its Next Horizon strategy, investors and stakeholders can look forward to a company that is well-positioned for sustainable growth and long-term value creation.