MetLife, Inc. (MET-PE) is a global powerhouse in the insurance and financial services industry, boasting a rich history that spans over a century. Incorporated in 1999, the company has grown to become one of the world's leading providers of insurance, annuities, employee benefits, and asset management solutions, serving customers in more than 40 countries worldwide.
Business Overview MetLife's origins can be traced back to 1868, when it was founded as the National Union Life and Limb Insurance Company in New York City, initially focusing on providing life insurance policies to Civil War veterans. In 1879, the company changed its name to Metropolitan Life Insurance Company, or MetLife for short, and began expanding its offerings beyond just life insurance.
The company's growth and diversification continued throughout the 20th century. MetLife entered the group life insurance market in 1922 and began offering health insurance in 1923. International expansion also began early, with the company opening its first overseas office in London in 1880.
MetLife faced significant challenges in the 1970s, struggling with high inflation and interest rates that put pressure on its investment portfolio. This led the company to further diversify, moving into new business areas like annuities and mutual funds. In 2000, MetLife underwent a demutualization process, converting from a mutual insurance company to a publicly traded stock corporation.
The company's growth strategy has included both organic expansion and strategic acquisitions. A key milestone was the acquisition of Travelers Life & Annuity in 2005, which significantly expanded MetLife's retirement and income solutions business. More recently, in 2017, MetLife spun off its U.S. retail business to create Brighthouse Financial, further refining its business focus.
Today, MetLife operates through six core business segments: Group Benefits, Retirement and Income Solutions (RIS), Asia, Latin America, Europe, the Middle East, and Africa (EMEA), and MetLife Holdings.
Group Benefits This segment offers a broad range of products to corporations and their respective employees, other institutions and their respective members, as well as individuals. Products include term, variable and universal life insurance, dental, group and individual disability, vision, and accident and health insurance.
Retirement and Income Solutions (RIS) The RIS segment provides a diverse array of life and annuity-based insurance and investment products to corporations, institutions, and individuals. These include stable value and pension risk transfer products, institutional income annuities, structured settlements, longevity reinsurance solutions, benefit funding solutions, and capital markets investment products.
Asia This segment serves customers in the Asian region with life insurance, retirement and savings, and accident and health insurance offerings.
Latin America The Latin America segment provides life insurance, retirement and savings, accident and health insurance, and credit insurance to individuals and corporations in the region.
EMEA (Europe, the Middle East, and Africa) This segment offers life insurance, retirement and savings, accident and health insurance, and credit insurance to customers in the EMEA region.
MetLife Holdings This segment manages the company's legacy products and businesses that are no longer actively marketed in the U.S., including variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-term care insurance. It also includes an in-force block of assumed variable annuity guarantees from a third party.
Financial Performance and Resilience MetLife's financial performance has demonstrated remarkable resilience, despite navigating challenging market conditions and global uncertainties. In the most recent quarter, the company reported revenue of $18.44 billion and net income of $1.34 billion. Its strong balance sheet and liquidity position are evidenced by an operating cash flow of $4.17 billion for the quarter.
One of the key strengths of MetLife's business model is its diversification, both geographically and across product lines. This diversification has helped the company weather various economic and market cycles, minimizing the impact of localized challenges. Additionally, MetLife's disciplined approach to risk management and prudent capital allocation have contributed to its long-term financial stability and resilience.
The company's financial performance varies across its business segments. For the nine months ended September 30, 2024, the Group Benefits segment had total adjusted revenues of $19.62 billion, adjusted earnings of $1.19 billion, and adjusted premiums, fees and other revenues of $18.69 billion. The RIS segment reported total adjusted revenues of $11.31 billion, adjusted earnings of $1.28 billion, and adjusted premiums, fees and other revenues of $4.97 billion. The Asia segment generated total adjusted revenues of $8.53 billion, adjusted earnings of $1.18 billion, and adjusted premiums, fees and other revenues of $5.12 billion. The Latin America segment had total adjusted revenues of $5.72 billion, adjusted earnings of $680 million, and adjusted premiums, fees and other revenues of $4.50 billion. The EMEA segment reported total adjusted revenues of $2.06 billion, adjusted earnings of $224 million, and adjusted premiums, fees and other revenues of $1.90 billion. Lastly, the MetLife Holdings segment had total adjusted revenues of $5.46 billion, adjusted earnings of $494 million, and adjusted premiums, fees and other revenues of $2.46 billion.
In terms of recent performance, MetLife reported adjusted earnings per share of $1.93 in Q3 2024, down 1% from the prior year quarter on a reported basis but up 1% on a constant currency basis. The company's adjusted return on equity was 14.6% in Q3 2024, which is on track to exceed their 13-15% target range for the full year 2024. MetLife's direct expense ratio was 11.7% in Q3 2024, an improvement year-over-year and below their annual target of 12.3%.
Looking ahead, MetLife expects their full year 2024 direct expense ratio to be higher in Q4 2024, consistent with the seasonal nature of their business, but they are positioned to beat their full year 2024 target of 12.3%. The company also expects their 4Q 2024 RIS total investment spreads, excluding variable investment income, to stabilize and be flat to up 1-2 basis points.
MetLife has also provided an updated outlook on their value of new business (VNB) metrics, stating they generated a 19% internal rate of return on $3.6 billion of capital deployed in 2023, creating $2.6 billion in VNB with a payback period of about 5 years. This demonstrates the company's disciplined approach to capital deployment and its ability to generate value for shareholders.
Navigating Evolving Landscapes As the insurance and financial services industry continues to evolve, MetLife has demonstrated its ability to adapt and capitalize on emerging trends. The company has made strategic investments in technology and digital capabilities to enhance customer experiences and operational efficiencies. For instance, the introduction of the Upwise platform in the Group Benefits segment has simplified the benefits selection process for employees, fostering higher engagement and productivity.
Moreover, MetLife has been proactive in addressing regulatory changes and evolving consumer preferences. The company has navigated the shifting landscape of fiduciary standards and environmental, social, and governance (ESG) considerations, maintaining its commitment to compliance and sustainability.
Amidst the ongoing global pandemic, MetLife has effectively managed the challenges posed by the COVID-19 crisis. The company has adapted its operations, leveraging remote work capabilities and digital solutions to ensure seamless service delivery to its customers. Furthermore, MetLife has implemented prudent risk management practices, such as strengthening its capital position and maintaining a diversified investment portfolio, to mitigate the potential impacts of the pandemic.
Looking Ahead As MetLife navigates the evolving industry landscape, the company remains focused on delivering sustainable growth and value for its shareholders. The company's strategic priorities include accelerating organic growth, improving operational efficiency, and optimizing capital allocation. These initiatives are aimed at enhancing MetLife's competitive positioning, improving profitability, and generating strong cash flows.
In recent years, MetLife has demonstrated its ability to adapt and thrive in the face of market disruptions and regulatory changes. The company's diversified business model, technological advancements, and disciplined risk management have positioned it well to capitalize on emerging opportunities and continue its legacy of success.
Conclusion MetLife, Inc. (MET-PE) is a well-established and respected player in the global insurance and financial services industry. With over a century of experience, the company has demonstrated its ability to navigate complex and ever-changing market conditions, delivering consistent financial performance and shareholder value. By leveraging its diversified business model, technological innovations, and prudent risk management practices, MetLife is well-positioned to continue its growth trajectory and solidify its position as a leading provider of insurance and financial solutions worldwide.