Company Reports

MetLife provides a variety of insurance and financial services products, including life, dental, disability, vision, accident & health, stable value, and annuities in various countries. The company is a leader in the attractive group benefits business in the U.S. where products are sold through long-standing relationships with corporate employers. This business is relatively capital-light and entails lower risk because the company can reprice its products quickly based on experience. The company's recent acquisitions and its investments into new product segments (such as pet insurance, health savings accounts, and Versant Health) will enable it to offer a comprehensive suite of products in the group benefits segment and expand its market share.

No-moat-rated MetLife reported a middling set of numbers in the fourth quarter. Adjusted earnings came in at $1.44 billion, or $1.93 per share, up 14% compared with $1.26 billion, or $1.59 per share, last year. Annualized adjusted return on equity was 14.6% in the quarter. The results were marked by strong underwriting margins in group benefits and retirement and income solutions, as well as higher net recurring investment income. The company paid a dividend of $0.52 per share in the quarter, which represents a 3.2% yield at the current stock price. Adjusted book value per share, which removes the impact of accumulated other comprehensive income, was $54.30, up 1% from $53.80 in the fourth quarter of the previous year. We are maintaining our $63 fair value estimate after incorporating the results.

No-moat-rated MetLife reported a decent set of numbers for the third quarter. Adjusted earnings came in at $1.47 billion, or $1.95 per share, up 35% from $1.08 billion, or $1.36 per share, in the year-ago quarter. The company reported an annualized adjusted return on equity of 14.9%. The quarter was marked by strong underwriting results and materially higher interest income. MetLife paid a quarterly dividend of $0.52 per share, which represents a 3.5% dividend yield at the current stock price. Adjusted book value per share, which removes the impact of accumulated other comprehensive income, was reported at $53.00, up 2% from $52.40 in the third quarter last year. We are maintaining our $63 fair value estimate after incorporating third-quarter results.

Metlife provides a variety of insurance and financial services products, including life, dental, disability, vision, accident & health, stable value, and annuities in various countries. The company is a leader in the attractive group benefits business in the U.S. where products are sold through long-standing relationships with corporate employers. This business is relatively capital-light and entails lower risk because the company can reprice its products quickly based on experience. MetLife’s recent acquisitions and its investments into new product segments (such as pet insurance, health savings accounts, and Versant Health) will enable it to offer a comprehensive suite of products in the group benefits segment and expand its market share.

No-moat-rated MetLife's second-quarter results were largely in line with our expectations as the company reported adjusted earnings of $1.49 billion, or $1.94 per share in the second quarter, compared with $1.66 billion, or $2.04 per share in the second quarter of the previous year. The company paid a quarterly dividend of $0.52 per share in the second quarter, which represents a 3.2% dividend yield as of the current stock price. The adjusted book value per share, which removes the impact of accumulated other comprehensive income, was reported at $53.5 per share, up 2% compared with $52.3 per share in the second quarter of the previous year. We are maintaining our $63 fair value estimate for MetLife after incorporating the second-quarter results.

No-moat-rated MetLife’s first-quarter results were affected by a loss in variable interest income, which was partially offset by favorable underwriting margins, volume growth, and higher recurring investment income. The company reported adjusted earnings of $1.2 billion or $1.52 per share in the first quarter versus $1.7 billion or $2.04 per share in the first quarter of the previous year. The company announced a quarterly dividend of $0.52 per share starting from the second quarter of 2023, which represents a 3.8% dividend yield as per the current stock price. The shares of the company were down 8% after releasing its results, which we think is an overreaction by the market. We are maintaining our $63 fair value estimate for MetLife after incorporating the first-quarter results.

Metlife provides a variety of insurance and financial services products, including life, dental, disability, vision, accident & health, stable value, and annuities in various countries. The company is a market leader in the attractive group benefits business in the U.S. where products are sold through long-standing relationships with corporate employers. This business is relatively capital-light and entails lower risk because the company can reprice its products quickly based on experience. MetLife’s recent acquisitions and its investments into new product segments (such as pet insurance, health savings accounts, and Versant Health) will enable it to offer a comprehensive suite of products in the group benefits segment and expand its market share.

No-moat-rated MetLife reported lackluster fourth-quarter results with adjusted operating income (excluding notable items) of $1.55 per share, down 23% compared with $2.01 per share in the previous year. The fourth-quarter results were impacted by lower variable investment income, which was partially offset by favorable underwriting margins, especially in the U.S. group benefits business. The company posted variable investment income, or VII, of $24 million in the current quarter compared with $1.3 billion in the fourth quarter of the previous year. The average quarterly VII over the past eight quarters was around $900 million against a long-term expectation of a $450 million-$500 million quarterly gain. The variable investment income that primarily includes private equity has posted very strong results in 2021 but the weakness in private equity valuations has been impacting MetLife’s VII in the last three quarters. We note that VII is reported with a lag of one quarter therefore the VII reported in the current quarter reflects the valuation during the previous quarter. We are maintaining our $63 fair value estimate for MetLife after incorporating the fourth-quarter results.

No-moat-rated MetLife reported underwhelming third-quarter results with adjusted operating income of $1.21 per share, down 49% compared with $2.39 per share in the previous year. The third-quarter results were mainly impacted by negative variable investment income and higher COVID-19 claims in Japan, which was partially offset by lower COVID-19-related claims in Latin America and the U.S. The company posted variable investment income, or VII, losses of $53 million in the current quarter compared with a $1.78 billion gain in the third quarter of the previous year. The average quarterly VII over the past six quarters was around $1.2 billion against a long-term expectation of a $450 million-$500 million quarterly gain. The variable investment income that primarily includes private equity has been posting very strong results over the past six quarters, but the recent weakness in private equity valuations will impact MetLife’s VII in the upcoming quarters. We expect adjusted earnings to remain under pressure in the next two quarters given the fact that VII is reported with a lag.

We are relaunching MetLife Inc with a fair value estimate of $63 per share after taking a fresh look at it. Our fair value estimate implies that MetLife is currently fairly valued. MetLife provides a variety of insurance and financial services products, including life, dental, disability, vision, accident & health, stable value, and annuities in various countries. We assign a no-moat rating, a stable moat trend, and a standard capital allocation rating to the company.

MetLife provides a variety of insurance and financial services products, including life, dental, disability, vision, accident & health, stable value, and annuities in various countries. The company is a market leader in the attractive group benefits business in the U.S. where products are sold through long-standing relationships with corporate employers. This business is relatively capital-light and entails lower risk because the company can reprice its products quickly based on experience. MetLife’s recent acquisitions and its investments into new product segments (such as pet insurance, health savings accounts, and Versant Health) will enable it to offer a comprehensive suite of products in the group benefits segment and expand its market share.

MetLife, like other life insurers, has its financial results tied to interest rates. It’s unlikely that interest rates will return to pre-financial-crisis levels, and thus we expect MetLife to face this headwind for the foreseeable future. We expect returns of equity just shy of 10% over the next five years.

MetLife reported a solid second quarter. Adjusted EPS excluding notable items was $1.90, which beat the FactSet consensus of $1.45. Variable investment income, which consists largely of private equity returns, was $389 million. While variable investment was down from the $1.4 billion quarterly average seen in the preceding four quarters, we believe this quarter’s result was still larger than consensus expectations. As variable investment income is reported on a one-quarter lag, we expect further declines as the second quarter of 2022 was a tough quarter for public and private markets. We will maintain our fair value estimate of $56 on the no-moat firm. We are adjusting the Morningstar Uncertainty Rating to Medium from High as we believe that more accurately reflects the risk in MetLife’s shares.

MetLife, like other life insurers, has its financial results tied to interest rates. It’s unlikely that interest rates will return to pre-financial-crisis levels, and thus we expect MetLife to face this headwind for the foreseeable future. We expect returns of equity just shy of 10% over the next five years.

No-moat MetLife is off to a good start in 2022. Adjusted earnings per share in the first quarter came in at $2.08, well ahead of the FactSet consensus estimate of $1.65. Variable investment income continues to be elevated, though it was down year over year. Variable investment income is primarily private equity returns and is reported on a lag. As a result, we expect this to decline more meaningfully in the coming quarters as public and private company valuations have turned south. Overall, there was little in the press release that would alter our long-term view of MetLife, and we will maintain our fair value estimate of $56 per share.

MetLife, like other life insurers, has its financial results tied to interest rates. It’s unlikely that interest rates will return to pre-financial-crisis levels, and thus we expect MetLife to face this headwind for the foreseeable future. We expect returns of equity just shy of 10% over the next five years.

On Feb. 11, Reuters reported that MetLife is exploring divesting its U.S. variable annuity book, which is a subset of its $58 billion annuity book. This mirrors similar moves in the industry such as Prudential’s deal in September to sell a $31 billion book of variable annuities in a $2.2 billion transaction. While we appreciate the logic of selling the variable annuity book, which will free up capital to pursue growth opportunities, we believe it is important that the growth opportunities come at a reasonable price. We note that Prudential recently took a write-down on its acquisition of Assurance IQ. With no deal certainty and a deal likely to only be a fraction of the firm’s market capitalization, we are maintaining our no-moat rating and $52 fair value estimate for MetLife.

MetLife finished 2021 on a high note. Adjusted EPS excluding notable items of $2.01 easily topped the FactSet consensus of $1.47. We’d attribute the beat to higher variable investment income as private equity and venture capital returns continue to be strong. While these results are strong and we intend to tweak our $52 fair value estimate modestly higher, we don’t believe private equity returns will always be so strong and do not view the firm as having a moat. We also note that elevated mortality claims are weighing on the firm’s underwriting results.

MetLife, like other life insurers, has its financial results tied to interest rates. It’s unlikely that interest rates will return to pre-financial-crisis levels, and thus we expect MetLife to face this headwind for the foreseeable future. We expect returns of equity just shy of 10% over the next five years.

MetLife reported a big earnings beat in the third quarter with adjusted EPS of $2.39 easily topping the FactSet consensus of $1.74. Like its peer Prudential Financial, MetLife reported a big jump in variable investment income. Private equity returns were strong though we expect this to normalize. From an underwriting perspective, mortality was elevated in the Americas as death rates have risen. During its actuarial review, the firm lowered its earnings rate assumption in Japan. Overall, there was little in MetLife's financial results that would materially alter our long-term view of the no-moat firm, and we will maintain our $49 fair value estimate.