Executive Summary / Key Takeaways

• MetLife's "New Frontier" strategy, launched in December 2024, is actively transforming the company into a more growth-oriented and capital-efficient enterprise, building on its 156-year history of resilience and market leadership.
• Strategic transactions, including the PineBridge Investments acquisition, the formation of Chariot Re, and the Talcott VA risk transfer, are reshaping MetLife's portfolio for higher returns and reduced risk, while expanding its asset management capabilities.
• Technological differentiation through platforms like Upwise and Accelerator, alongside significant investments in AI, is enhancing operational efficiency, improving customer experience, and driving market expansion across key segments.
• Despite some variable investment income (VII) headwinds in Q2 2025, MetLife demonstrated underlying financial strength with robust PFO growth in international markets and Group Benefits, disciplined expense management, and strong capital returns to shareholders.
• Management's 2025 outlook projects double-digit adjusted EPS growth and an adjusted ROE of 15%-17%, supported by stabilizing core investment spreads and continued strategic execution.

A Global Financial Powerhouse's Evolution

MetLife, Inc. stands as a global leader in financial services, providing a comprehensive suite of insurance, annuities, employee benefits, and investment management solutions across diverse international markets. Its 156-year journey, marked by the pivotal 2000 demutualization from a mutual to a stock company, has forged a resilient enterprise capable of adapting to profound market shifts. The recently concluded "Next Horizon" strategy (2019-2024) successfully navigated global pandemics, banking crises, and interest rate volatility, exceeding targets for return on equity, free cash flow, and operating leverage.

Building on this foundation, MetLife unveiled its "New Frontier" strategy in December 2024, signaling a more proactive, "offense-oriented" approach centered on "responsible growth." This strategy rests on four pillars: extending leadership in Group Benefits, capitalizing on its unique Retirement and Income Solutions (RIS) platform, accelerating growth in MetLife Investment Management (MIM), and expanding in high-growth international markets. The current macroeconomic backdrop, characterized by low U.S. unemployment, controlled inflation, and a steepening yield curve, generally favors MetLife's core businesses. Internationally, tailwinds such as Japan's savings incentives, Mexico's near-shoring activities, and Brazil's digital adoption present significant growth opportunities, even as geopolitical conditions remain a factor.

In the competitive landscape, MetLife's global scale and diversified offerings position it as a formidable player against peers like Prudential Financial (PRU), American International Group (AIG), Lincoln National (LNC), and Principal Financial Group (PFG). MetLife's comprehensive employee benefits and integrated asset management solutions provide a competitive edge, particularly in international markets where its broader presence and economies of scale can lead to superior margins and cash flow stability compared to more domestically focused competitors like LNC or those with fragmented strategies like AIG. While MetLife excels in operational execution and strategic adaptability, it remains vigilant against potential lags in niche innovation, where some competitors may demonstrate faster product development.

Technological Edge: Fueling Efficiency and Market Expansion

MetLife's strategic evolution is deeply intertwined with its commitment to technological differentiation and innovation. The company has embarked on a multi-year journey to modernize its legacy systems, enhance data quality, and reengineer core processes, creating a robust infrastructure for advanced technologies. This foundational work positions MetLife as an early adopter of artificial intelligence (AI) and generative AI (GenAI), which are being deployed as force multipliers across various operational and growth initiatives.

Specific applications of AI and GenAI are already yielding tangible benefits in areas such as programming, application development, call centers, and claims processing. These deployments are driving both productivity and efficiency gains, while also enhancing the customer experience. MetLife leverages partnerships with both established technology giants and specialized players to integrate plug-and-play solutions, accelerating its innovation roadmap.

Two prominent examples of MetLife's technological prowess are its proprietary platforms:

• Upwise: This benefits experience platform, designed for the Group Benefits segment, simplifies the employee enrollment process through custom recommendations based on individual needs. A strategic partnership with Workday (WDAY), announced in June 2025, further expands Upwise's reach to more employers. Surveys indicate that two-thirds of employees find Upwise makes benefits selection easier, leading to greater participation in voluntary products. This directly translates into increased PFOs and enhanced customer loyalty, strengthening MetLife's competitive moat in employee benefits.
• Accelerator: Launched in November 2023 in Latin America, Accelerator is an integrated, fully end-to-end digital platform for embedded insurance. It enables partnerships with banks, retailers, and other companies to offer seamless, frictionless insurance experiences to customers. With 21 partners already integrated, Accelerator has generated approximately $300 million in PFO and serves 5 million customers across the region. This platform is a critical driver of MetLife's expansion in high-growth international markets, democratizing access to financial protection and capturing new market share.

Further underscoring its commitment to innovation, MetLife was recognized as a 2025 CIO 100 Award Winner for "My Leave Navigator," highlighting its strategic and operational excellence in IT. These technological advancements contribute directly to MetLife's competitive advantage by lowering operating costs, expanding distribution channels, and enhancing its value proposition to customers and partners, thereby supporting its long-term growth strategy and financial performance.

Strategic Initiatives: Reshaping the Portfolio for Value

MetLife's "New Frontier" strategy is being actively executed through a series of bold strategic initiatives designed to optimize its business portfolio, accelerate growth, and reduce risk. These moves underscore a proactive approach to capital allocation and market positioning.

A cornerstone of this strategy is the aggressive expansion of MetLife Investment Management (MIM). MIM is on an aspirational path to $1 trillion in total assets under management. In December 2024, MetLife agreed to acquire PineBridge Investments, a global asset manager with approximately $100 billion in AUM, a transaction expected to close by the end of 2025. This acquisition will significantly broaden MIM's public and private credit offerings, particularly on an international scale. Complementing this, MIM integrated teams from Mesirow Financial in Q1 2025, adding about $6 billion in managed assets. These moves, coupled with recent leadership appointments like Brian Funk as President and Geert Henckens as Global Head of Private Fixed Income, signal a clear intent to accelerate MIM's growth and fee income generation.

Another key initiative is the formation of Chariot Reinsurance, Ltd. In December 2024, MetLife partnered with General Atlantic, with Chubb (CB) as an anchor investor, to create this Bermuda-based life and annuity reinsurer. On July 1, 2025, Chariot Re launched with an initial $10 billion reinsurance transaction from MetLife, covering structured settlement annuity and group annuity contracts. This strategic partnership is designed to enhance MetLife's capital flexibility, enabling it to pursue liability growth opportunities that might otherwise exceed its balance sheet capacity. While this transaction will initially result in a "few pennies" impact on enterprise earnings and a short-term headwind of $15 million to $20 million for the RIS segment, management expects it to become accretive once the freed-up capital is redeployed and MIM generates fees from managing Chariot Re's assets.

Further optimizing its legacy portfolio, MetLife entered into an agreement with Talcott Resolution Life Insurance Company in April 2025 to reinsure approximately $10 billion of U.S. retail variable annuity and rider reserves from its MetLife Holdings segment. This transaction, anticipated to close in the second half of 2025, is a critical step in accelerating the runoff of legacy business, substantially reducing MetLife's enterprise risk, and lowering retail variable annuity tail risk by approximately 40% of account values. The deal is expected to deliver about $250 million in statutory value through a ceding commission and capital release over time. Importantly, MIM secured mandates to manage approximately $6 billion of assets for Talcott, further bolstering its third-party fee income strategy.

Financial Performance: Resilience Amidst Evolution

MetLife's recent financial performance reflects a resilient business model executing its strategic priorities, even while absorbing market volatility. For the second quarter of 2025, MetLife reported adjusted earnings of $1.4 billion, a 16% decrease year-over-year (15% on a constant currency basis). This was primarily attributed to less favorable underwriting and lower investment margins, partially offset by volume growth and strong expense management. The adjusted return on equity (ROE) stood at 14.6%, nearing the company's mid-teen target, while the direct expense ratio of 11.7% remained below the annual target of 12.1%, demonstrating ongoing efficiency.

Revenue and Growth:
Adjusted Premiums, Fees, and Other Revenues (PFOs) showed varied trends across segments. Group Benefits saw a 4% increase in PFOs in Q2 2025, driven by growth in core and voluntary products. Latin America's PFOs surged 8% (18% on a constant currency basis), fueled by strong sales and persistency. EMEA also posted robust PFO growth of 16% (14% constant currency). Asia's sales were up 9% on a constant currency basis, with Japan and Korea experiencing significant jumps of 29% and 36% respectively, following new product launches. RIS adjusted PFOs declined year-over-year due to strong U.S. pension risk transfer (PRT) sales in Q2 2024, but excluding PRTs, PFOs were up 24%, largely from U.K. longevity reinsurance. MetLife Holdings, consistent with its runoff strategy, saw PFOs decline.

Profitability and Margins:
Segment-level adjusted earnings in Q2 2025 were impacted by specific factors. Group Benefits earnings were down 25% from a record prior year, with the Group Life mortality ratio at 83% (below target but less favorable than prior year) and the non-medical health interest-adjusted benefit ratio at 74.8% (modestly above target), influenced by multiple small, non-macro-related claims. RIS earnings decreased 10% due to lower recurring interest margins, as prior-year benefits from matured interest rate caps dissipated, leading to investment spreads of 102 basis points. Asia's earnings fell 22% (reported and constant currency) due to less favorable investment and underwriting margins. Conversely, Latin America's earnings matched an all-time quarterly high at $233 million, boosted by volume growth and favorable Chilean encaje returns. EMEA's earnings rose 30% (reported and constant currency) on strong volume growth. MetLife Holdings earnings declined 6% due to lower variable investment income and business runoff.

Variable Investment Income (VII):
Variable Investment Income (VII) was a notable factor, coming in at $195 million in Q2 2025, below the implied quarterly guidance of $425 million but within the pre-disclosed range of $175 million to $225 million. Private equity returns were 0.9%, contrasting with a negative 4.6% return for the S&P 500 in the comparable period. Real estate and other funds yielded approximately 1%. For the full year 2024, VII was $1 billion, falling short of the $1.5 billion target, primarily due to real estate and other funds.

Credit Quality:
MetLife's investment portfolio demonstrates strong credit quality. The mortgage loan portfolio remains robust, with 98% classified as performing as of June 30, 2025. An uptick in commercial mortgage reserves, exceeding $200 million in Q2 2025, was an anticipated part of an "orderly resolution of loans," signaling market stabilization rather than a systemic issue, with minimal impact on statutory capital. The real estate investment portfolio also holds a substantial $3.8 billion in unrealized gains.

Liquidity, Capital, and Shareholder Returns

MetLife maintains a robust liquidity and capital position, providing a strong foundation for its strategic initiatives and shareholder returns. As of June 30, 2025, cash and liquid assets at the holding companies stood at $5.2 billion, comfortably above the target buffer range of $3 billion to $4 billion. This includes $1.5 billion prefunded for second-half preferred stock redemptions and debt maturities, demonstrating proactive financial management.

The company actively manages its debt profile. In June 2025, MetLife issued $612 million in fixed-rate senior notes through a private placement, with maturities extending from 2032 to 2055. This followed a $1 billion issuance of 6.35% subordinated debentures due March 2055 in March 2025. Additionally, a 30-year facility agreement with a Delaware trust, established in March 2025, provides access to up to $1.25 billion in senior notes, further enhancing funding flexibility.

Shareholder returns remain a key component of MetLife's capital allocation strategy. In Q2 2025, the company returned approximately $900 million to shareholders, comprising $500 million in share repurchases and $400 million in common stock dividends. Year-to-date, share repurchases exceeded $2 billion, and since 2021, MetLife has repurchased nearly $16 billion of its common stock, reducing the share count by over 240 million shares. The Board of Directors authorized a new $3 billion common stock repurchase program in April 2025, bringing total authorization to $3.4 billion, and increased the common stock dividend by 4.1%. This consistent return of capital, alongside investments in organic and strategic inorganic growth, underscores management's confidence in MetLife's financial strength and future cash flow generation.

Outlook and Risks: Charting the New Frontier

MetLife's outlook for 2025, guided by the "New Frontier" strategy, projects strong financial performance and continued strategic execution. The company targets double-digit adjusted EPS growth, with 60% driven by business and margin expansion, and the remainder from disciplined capital management. The adjusted ROE is expected to be in the range of 15%-17%, supported by a targeted direct expense ratio of 12.1% for 2025, part of a longer-term goal to reach 11.3% by 2029. A two-year average free cash flow ratio of 65%-75% of adjusted earnings is anticipated, contributing to over $25 billion in free cash flow over the five-year strategy period.

Key assumptions include a stable long-term interest rate environment with a steepening yield curve, which is generally favorable. However, an expected strengthening of the U.S. dollar is projected to create a $150 million to $175 million headwind for non-U.S. segments in 2025. Variable Investment Income (VII) is forecast at approximately $1.7 billion pretax, with private equity and real estate/other funds expected to return 9%-11% and 7%-9% respectively, trending higher in 2026-2027 after a softer 2025.

Segment-specific guidance reinforces the growth narrative:

• Group Benefits: Adjusted PFO growth is targeted at 4%-7% annually. The Group Life mortality ratio is expected to remain in the bottom half of the 84%-89% annual range, benefiting from favorable population mortality trends. The non-medical health ratio is forecast to improve by 200 basis points in Q3 2025 and a further 200 basis points in Q4, driven by dental repricing and a normalization of Q2's elevated claims.
• RIS: Total liability annual growth is projected at 3%-5%, with core investment spreads expected to stabilize from 2025 onwards as interest rate caps have matured.
• International: Asia's sales and general account AUM are expected to grow mid-to-high single digits (constant currency), with earnings following suit, though reported earnings will be impacted by yen weakness in 2025. Latin America and EMEA are also poised for high single-digit and mid-to-high single-digit growth in PFOs and earnings, respectively, on a constant currency basis.

Despite this optimistic outlook, MetLife faces pertinent risks. Geopolitical conditions and market volatility, particularly in forecasting VII, remain concerns. The ongoing asbestos litigation, with 1,337 new claims in H1 2025, presents an uncertain liability, though management believes adequate provisions have been made. Regulatory inquiries stemming from a 2018 material weakness in group annuity benefit reserves could lead to further actions. In Chile, pension reform introduces structural changes, including mandatory bidding of pension fund administrator portfolios from 2028, requiring MetLife to adapt its operations. However, MetLife's diversified portfolio and proactive risk management strategies are designed to mitigate these challenges.

Conclusion

MetLife is executing a profound transformation, leveraging its deep historical roots and diversified global platform to chart a course for sustainable outperformance under its "New Frontier" strategy. The company's strategic initiatives, including the expansion of MetLife Investment Management through acquisitions like PineBridge, the innovative Chariot Re partnership, and the decisive Talcott VA risk transfer, are systematically reshaping its business mix towards higher-growth, lower-risk segments. These actions, coupled with a relentless focus on technological differentiation through platforms like Upwise and Accelerator, are enhancing operational efficiency, expanding market reach, and strengthening MetLife's competitive advantages in a dynamic financial landscape.

While recent financial performance has seen some variable investment income headwinds, the underlying fundamentals remain robust, characterized by solid PFO growth in key international markets and Group Benefits, stringent expense management, and a consistent commitment to shareholder returns. The outlook for double-digit adjusted EPS growth and a 15%-17% adjusted ROE underscores management's confidence in its strategic blueprint. MetLife's ability to capitalize on global growth trends, optimize its portfolio, and leverage technological leadership positions it favorably against competitors, promising a future of attractive, lower-risk returns for discerning investors.