Metlife ((MET)) has held its Q4 earnings call. Read on for the main highlights of the call.
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MetLife’s recent earnings call strikes a generally positive tone, highlighting robust growth strategies, strategic partnerships, and strong financial performance. However, the company acknowledges challenges in specific segments, such as group benefits and Retirement and Income Solutions (RIS), along with currency headwinds affecting its international operations.
Outperformance of Stock
MetLife, Inc.’s stock has outperformed the Standard and Poor’s 500 index in 2024, highlighting strong market recognition of the company’s performance. This outperformance underscores investor confidence in MetLife’s strategic direction and financial health.
Introduction of New Frontier Strategy
MetLife has introduced its New Frontier strategy, focusing on growth across four strategic priorities. These include extending leadership in group benefits, capitalizing on the retirement platform, accelerating growth in asset management, and expanding in high-growth international markets, indicating a comprehensive approach to sustaining long-term growth.
Significant Transactions and Partnerships
In significant strategic moves, MetLife announced the formation of Cherry Tree, a Bermuda-based life and annuity reinsurance company, in collaboration with General Atlantic and Chubb as anchor investors. Additionally, MetLife expanded its portfolio through the acquisition of PineBridge Investments and specific teams from Mesero Financial.
Strong Financial Metrics and Goals
MetLife is targeting double-digit adjusted EPS growth and has increased its adjusted return on equity range to 15%-17%. The company is committed to generating $25 billion in free cash flow over five years, an increase from the previous $20 billion target.
Fourth Quarter and Full Year Results
MetLife reported fourth-quarter adjusted earnings of $1.5 billion or $2.09 per share, which is a 14% increase from the previous year. The full-year adjusted earnings totaled $5.8 billion, showcasing the company’s robust financial performance.
Group Benefits and International Growth
The group benefits business reported adjusted earnings of $1.7 billion in 2024, with full-year sales up 8%. Furthermore, Asia and Latin America demonstrated strong performance with significant earnings growth, highlighting MetLife’s successful international operations.
Group Benefits Earnings Decrease
Despite overall growth, the group benefits adjusted earnings for Q4 2024 were $416 million, marking an 11% decrease from the prior year. This decline was attributed to less favorable nonmedical health underwriting margins.
RIS Earnings Decline
Retirement and Income Solutions (RIS) adjusted earnings for Q4 2024 were $386 million, down 8% year-over-year. The decrease was due to lower recurring interest margins and less favorable underwriting.
Challenges in Asia Sales
MetLife faced challenges in Asia, where sales were down 5% in 2024 on a constant currency basis, primarily due to lower Japan sales affected by yen volatility.
Corporate and Other Adjusted Loss
The corporate and other adjusted loss amounted to $209 million, compared to a loss of $156 million in the previous year. This increase was due to higher expenses and taxes.
Alternative Return Assumptions
The private equity and real estate returns in 2024 were lower than expected, prompting MetLife to increase its alternative return assumptions for 2025.
Forward-Looking Guidance
Looking ahead, MetLife has set a comprehensive guidance for the near term. The company aims for double-digit adjusted EPS growth, with 60% driven by business and margin growth. MetLife plans to reduce its direct expense ratio by 100 basis points to 11.3% by 2029 and generate $25 billion in free cash flow over five years. The company also set specific targets for 2025, including a corporate and other adjusted loss range of $850 to $950 million after tax and maintaining an effective tax rate of 24% to 26%, while focusing on expanding leadership in its strategic priorities.
In summary, MetLife’s earnings call reflects a positive sentiment with strong growth strategies and financial performance. Despite certain challenges, the company’s strategic initiatives and forward-looking guidance highlight a confident path towards sustained growth and strengthening market position.
