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MetLife (MET) Earnings and Revenues Beat Estimates in Q3

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MetLife, Inc.’s (MET - Free Report) third-quarter 2020 adjusted operating earnings of $1.73 per share outpaced the Zacks Consensus Estimate by 4.9%. The bottom line also improved 36% year over year.

The company’s results benefited from strong underwriting results, rebounding of variable investment income and stringent cost-control initiatives, partly offset by decline in revenues.

Behind the Headlines

The company’s adjusted operating revenues of $16.5 billion were down 2% year over year. However, the top line surpassed the Zacks Consensus Estimate by 3.7%.

Adjusted premiums, fees and other revenues excluding pension risk transfer (PRT) inched up 2% year over year to $11.3 billion.

Net investment income (adjusted) of $4.7 billion improved 5% year over year attributable to increased private equity returns.

Total expenses of $15.1 billion were down 5% year over year, due to lower policyholder benefits and claims, interest credited to policyholder account balances, policyholder dividends and other expenses.

Adjusted expense ratio, excluding total notable items related to other expenses and PRT, came in at 18.8%, reflecting an improvement of 110 basis points (bps) year over year.

Adjusted book value per share was $53.10, which grew 9% year over year.

Adjusted return on equity was 13.2%, up 250 bps year over year.

MetLife, Inc. Price, Consensus and EPS Surprise

MetLife, Inc. Price, Consensus and EPS Surprise

MetLife, Inc. price-consensus-eps-surprise-chart | MetLife, Inc. Quote

Quarterly Segment Details

United States

Adjusted earnings in this segment improved 27% year over year to $900 million driven by volume growth and higher variable investment income.

Adjusted premiums, fees and other revenues were $6.8 billion, down 8% year over year due to weak contributions from Property & Casualty and Retirement and Income Solution sub-segments.

Asia

Adjusted earnings of $465 million climbed 33% year over year courtesy of volume growth, higher variable investment income, strong underwriting results and sound expense margins.

Adjusted premiums, fees & other revenues were $2.3 billion, which improved 8% year over year.

Latin America

Adjusted earnings of $39 million plunged 75% year over year to $39 million, due to weaker underwriting results stemming from the COVID-19 pandemic.

Adjusted premiums, fees & other revenues were $761 million, down 21% due to softer single-premium income annuity sales in Chile.

EMEA

Adjusted earnings from EMEA slid 2% year over year to $52 million. Nonetheless, adjusted earnings on a constant currency basis inched up 2% year over year attributable to volume growth, and sound underwriting results and expense margins.

Adjusted premiums, fees & other revenues of $680 million improved 4% year over year to $680 million.

MetLife Holdings

Adjusted earnings from MetLife Holdings totaled $253 million, which soared 70% year over year, courtesy of improved variable investment income and sound long-term care underwriting.

Adjusted premiums, fees & other revenues were $1.2 billion, down 4% year over year.

Corporate & Other

The segment’s adjusted loss of $131 million in the third quarter was narrower than the adjusted loss of $223 million in the prior-year quarter.

Financial Update

As of Sep 30, 2020, shareholders’ equity was $73.3 billion, which increased 10.8% from the level at 2019 end.

Long-term debt as of the third-quarter end was $14.5 billion, which increased 8% from the level at 2019 end.

Cash and cash equivalents of $24.4 billion as of Sep 30, 2020 were up 47% from the level at 2019 end.

Share Repurchase Update

The company had halted share repurchases in first-quarter 2020 amid the market volatilities induced by the COVID-19 pandemic. Nonetheless, the company has announced recommencement of share buybacks in the third quarter.

Zacks Rank

MetLife currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers in the Same Space

Of the multiline insurance industry players, which have reported third-quarter results so far, earnings of Old Republic International Corporation (ORI - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and James River Group Holdings, Ltd. (JRVR - Free Report) beat the respective Zacks Consensus Estimate.

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