MetLife Announces Full Year and Fourth Quarter 2020 Results
February 03, 2021 at 16:15 PM EST
MetLife, Inc. (NYSE: MET) today announced its full year and fourth quarter 2020 results.
Full Year Results Summary
Fourth Quarter Results Summary
“MetLife delivered a very strong fourth quarter of 2020, capping off a year in which the strength of our diversified businesses was on full display,” said MetLife President and CEO Michel Khalaf. “By most key value metrics – adjusted earnings per share, adjusted return on equity, and book value per share – MetLife's fourth quarter results were above expectations. For the full year, in the face of an extremely challenging environment, we demonstrated resilience to low interest rates, exceptional expense discipline, and strong cash generation and I am very proud of how our people lived our purpose and delivered for our customers. As we begin 2021, we remain committed to consistent execution and confident that our Next Horizon strategy will continue to create value for all of our stakeholders.”
Fourth Quarter and Full Year 2020 Summary
MetLife reported fourth quarter 2020 premiums, fees and other revenues of $15.8 billion, up 15 percent over the fourth quarter of 2019. Adjusted premiums, fees and other revenues were $15.7 billion, up 15 percent on both a reported and constant currency basis from the prior-year period.
Net investment income was $5.2 billion, up 13 percent from the fourth quarter of 2019. Adjusted net investment income was $4.9 billion, up 8 percent from the prior-year period. The increase in net investment income was primarily driven by higher variable investment income due to higher private equity returns.
Net derivative losses amounted to $1.6 billion, or $1.2 billion after tax during the quarter, driven by higher long-term interest rates and stronger equity markets.
Net income was $124 million, compared to net income of $536 million in the fourth quarter of 2019. On a per share basis, net income was $0.14, compared to net income of $0.58 in the prior-year period.
MetLife reported adjusted earnings of $1.8 billion, flat on a reported and constant currency basis, from the fourth quarter of 2019. On a per share basis, adjusted earnings were $2.03, up 3 percent from the prior-year period.
Information regarding the non-GAAP and other financial measures included in this news release and reconciliation of the non-GAAP financial measures to GAAP measures are in “Non-GAAP and Other Financial Disclosures” below and in the tables that accompany this news release.
Details about projected impacts of various developments to MetLife are available under the heading “Outlook” in MetLife’s fourth quarter 2020 supplemental slides, titled “4Q20 Supplemental Slides & Outlook,” which are available together with MetLife’s Quarterly Financial Supplement for this period on the MetLife Investor Relations website at www.metlife.com, and in the Form 8-K furnished by MetLife to the U.S. Securities and Exchange Commission in connection with this earnings release. Additionally, further information about projected impacts to MetLife is available under the heading “Consolidated Company Outlook” in Item 8.01 of the Form 8-K.
Adjusted Earnings by Segment Summary*
All comparisons of the results for the fourth quarter of 2020 in the business discussions that follow are with the fourth quarter of 2019, unless otherwise noted. The fourth quarter of 2020 notable items table follows the Business Discussions section of this release.
Retirement and Income Solutions
Property & Casualty
CORPORATE & OTHER
FOURTH QUARTER 2020 NOTABLE ITEMS
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (MetLife), is one of the world's leading financial services companies, providing insurance, annuities, employee benefits and asset management to help its individual and institutional customers navigate their changing world. Founded in 1868, MetLife has operations in more than 40 markets globally and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.
MetLife will hold its combined fourth quarter and full year 2020 earnings and outlook conference call and audio webcast on Thursday, February 4, 2021, from 9-10 a.m. (ET). The conference call will be available live via telephone and the internet. To listen via telephone, dial 877-692-8955 (U.S.) or 234-720-6979 (outside the U.S.). The participant access code is 2510803. To listen to the conference call via the internet, visit www.metlife.com through a link on the Investor Relations page. Those who want to listen to the call via telephone or the internet should dial in or go to the website at least 15 minutes prior to the call to register, and/or download and install any necessary audio software.
The conference call will be available for replay via telephone and the internet beginning at 11 a.m. (ET) on Thursday, February 4, 2021, until Thursday, February 11, 2021, at 11:59 p.m. (ET). To listen to a replay of the conference call via telephone, dial 866-207-1041 (U.S.) or 402-970-0847 (outside the U.S.). The access code for the replay is 1393262. To access the replay of the conference call over the internet, visit the above-mentioned website.
Non-GAAP and Other Financial Disclosures
In this news release, MetLife presents certain measures of its performance on a consolidated and segment basis that are not calculated in accordance with accounting principles generally accepted in the United States of America (GAAP). MetLife believes that these non-GAAP financial measures enhance the understanding for MetLife and its investors of MetLife's performance by highlighting the results of operations and the underlying profitability drivers of the business. Segment-specific financial measures are calculated using only the portion of consolidated results attributable to that specific segment.
The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period and applied to the comparable prior period.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this earnings news release and in this period’s quarterly financial supplement, which is available at www.metlife.com.
MetLife’s definitions of non-GAAP and other financial measures discussed in this news release may differ from those used by other companies:
Adjusted earnings and related measures
These measures are used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings and components of, or other financial measures based on, adjusted earnings are also MetLife’s GAAP measures of segment performance. Adjusted earnings and other financial measures based on adjusted earnings are also the measures by which MetLife senior management’s and many other employees’ performance is evaluated for the purposes of determining their compensation under applicable compensation plans. Adjusted earnings and other financial measures based on adjusted earnings allow analysis of MetLife's performance relative to its business plan and facilitate comparisons to industry results.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax. Adjusted loss is defined as negative adjusted earnings. Adjusted earnings available to common shareholders is defined as adjusted earnings less preferred stock dividends.
Adjusted revenues and adjusted expenses
These financial measures, along with the related adjusted premiums, fees and other revenues, focus on our primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also include the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP.
Adjusted revenues also excludes net investment gains (losses) (NIGL) and net derivative gains (losses) (NDGL). Adjusted expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses:
Adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from MetLife’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.
In addition, adjusted earnings available to common shareholders excludes the impact of preferred stock redemption premium, which is reported as a reduction to net income (loss) available to MetLife, Inc.’s common shareholders.
Investment portfolio gains (losses) and derivative gains (losses)
These are measures of investment and hedging activity. Investment portfolio gains (losses) principally excludes amounts that are reported within net investment gains (losses) but do not relate to the performance of the investment portfolio, such as gains (losses) on sales and divestitures of businesses and goodwill impairment, as well as investment portfolio gains (losses) of divested businesses. Derivative gains (losses) principally excludes earned income on derivatives and amortization of premium on derivatives, where such derivatives are either hedges of investments or are used to replicate certain investments, and where such derivatives do not qualify for hedge accounting. This earned income and amortization of premium is reported within adjusted earnings and not within derivative gains (losses).
Return on equity, allocated equity, tangible equity and related measures
The above measures represent a level of equity consistent with the view that, in the ordinary course of business, MetLife does not plan to sell most investments for the sole purpose of realizing gains or losses. Also, refer to the utilization of adjusted earnings and components of, or other financial measures based on, adjusted earnings mentioned above.
The above measures are, when considered in conjunction with regulatory capital ratios, a measure of capital adequacy.
Expense ratio, direct expense ratio, adjusted expense ratio and related measures
General account (GA) assets under management (GA AUM) and related measures
GA AUM is used by MetLife to describe assets in its GA investment portfolio which are actively managed and stated at estimated fair value. GA AUM is comprised of GA total investments and cash and cash equivalents, excluding policy loans, contractholder-directed equity securities, fair value option securities and certain other invested assets, as substantially all of these assets are not actively managed in MetLife’s GA investment portfolio. Mortgage loans (including commercial, agricultural and residential) and real estate and real estate joint ventures included in GA AUM (at net asset value, net of deduction for encumbering debt) have been adjusted from carrying value to estimated fair value. At the segment level, intersegment balances (intercompany activity, primarily related to investments in subsidiaries, that eliminate at the MetLife consolidated level) are excluded from GA AUM.
GA AUM (at amortized cost) excludes the following adjustments: (i) unrealized gain (loss) on investments carried at estimated fair value and (ii) adjustments from carrying value to estimated fair value on mortgage loans (including commercial, agricultural and residential) and real estate and real estate joint ventures. GA AUM (at amortized cost) is presented net of related allowance for credit loss.
Statistical sales information:
Sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.
The following additional information is relevant to an understanding of MetLife’s performance results and outlook:
This news release may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events and do not relate strictly to historical or current facts. They use words and terms such as “accretive,” "assume," "believe," “beyond,” "continue," "commit," “could,” “ensure,” "estimate," "expect," “forward,” “future,” “growth,” “guidance,” “maintain,” "long-term," “near-term,” “on course,” "on track," "outlook," “plan,” "position," “potential,” “preserve,” “project,” "remain," “sustainable,” "target," "well-positioned," "will," and other words and terms of similar meaning, in each of their forms of speech, or that are tied to future periods or future performance. They include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, future sales efforts, future expenses, the outcome of contingencies such as legal proceedings, and future trends in operations and financial results.
Many factors will determine the results of MetLife, Inc., its subsidiaries and affiliates, and they involve unpredictable risks and uncertainties. Our assumptions and current expectations, which may be inaccurate, and the current economic environment, which may change, underlie our forward-looking statements. MetLife, Inc. does not guarantee any future performance. Results could differ materially from those expressed or implied in forward-looking statements. The risks, uncertainties, and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission, and others, may cause such differences. These factors include:
MetLife, Inc. will not publicly correct or update any forward-looking statements if MetLife, Inc. believes it is not likely to achieve them or for any other reasons. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the U.S. Securities and Exchange Commission.