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MetLife's Revenues Surge, but Plunging Net Income Sinks Shares
AInvestWednesday, Jan 31, 2024 9:23 pm ET
1min read
MET --

MetLife, the global insurance giant, has unveiled its financial performance for the fourth quarter (Dec), showcasing impressive results in revenue generation. While the reported earnings of $1.93 per share may not align directly with analyst estimates of $1.88, the company's total revenue experienced a substantial 23.1% year-over-year increase, reaching $19.21 billion—surpassing estimates of $18.46 billion.

Bolstering this robust foundation, MetLife has outlined ambitious targets for key financial metrics in its guidance slides. The company aims for an adjusted return on equity (ROE) between 13-15%, a free cash flow (FCF) ratio of 65-75% of adjusted earnings, and a direct expense ratio target of 12.3%.

In navigating the uncertain macroeconomic landscape, MetLife has based its assumptions on current trends. These include ongoing macroeconomic uncertainty, with inflation and unemployment remaining significant concerns. The U.S. dollar is anticipated to remain relatively stable until 2023, while long-term interest rates are predicted to stay flat until December 31, 2023, with a steepening yield curve. The expected annual return for the S&P 500 is set at 5%.

MetLife's regional growth targets are equally ambitious. The Asia region aims for mid-single-digit sales growth, with a substantial increase in adjusted earnings, projected to grow by approximately 20% year over year. In Latin America, the company targets high single-digit growth in adjusted PFOs (Persistency, Fulfillment, and Other) and adjusted earnings. In the EMEA (Europe, Middle East, and Africa) region, sales growth is targeted in the mid-to-high single-digits, with adjusted PFOs growth in the mid-single-digits and adjusted earnings growth in the mid-single-digits for the years 2025-2026.

The reported net income of $607 million, or 77 cents per share attributable to common shareholders, represents a sharp decrease from the same quarter last year. However, adjusted earnings attributable to common shareholders were $1.83 per share, just below analyst estimates of $1.88 per share.

Premiums, fees, and other revenue witnessed a significant boost, climbing 26% to $13.69 billion from the previous year's quarter. Despite net investment losses, MetLife's CEO, Michel Khalaf, expressed confidence in the company's position, stating that they have exited 2023 with an even stronger foundation, boasting excellent capital and liquidity.

Shares reacted to the downside in after hours trade.


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