Contacts: For Media: John Calagna
(212) 578-6252
For Investors: Kevin Helmintoller
(212) 578-5140
METLIFE ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2003 RESULTS
FOURTH QUARTER NET INCOME UP 25% TO $701 MILLION FROM THE 2002 PERIOD
FULL-YEAR NET INCOME UP 38% TO $2.22 BILLION FROM THE PRIOR YEAR
FULL-YEAR STATUTORY ANNUITY DEPOSITS UP 42% TO $11.2 BILLION FROM THE PRIOR YEAR
NEW YORK, February 10, 2004 - MetLife, Inc. (NYSE: MET) today reported fourth
quarter 2003 net income of $701 million, or $0.92 per diluted share, compared
with $561 million, or $0.78 per diluted share, for the fourth quarter of 2002.
FOURTH QUARTER 2003 HIGHLIGHTS
o Total premiums and fees rose 10% to $6.4 billion from the 2002 period
o Statutory annuity deposits up 21% to $2.8 billion from the 2002 period
o Company repurchased three million common shares
Strong top-line growth, robust earnings performance and high investment income
during the fourth quarter of 2003 were partially offset by expenses related to
certain efficiency initiatives, as well as an increase in pension and other
post-retirement benefit costs. These additional expenses stem from a number of
consolidation activities including office closings, lease terminations, fixed
asset write-offs, as well as staff reductions. Including the impact of these
expenses, the company achieved its fourth quarter and full-year objectives.
Further, these initiatives will assist the company's ability to meet or exceed
its growth objectives in 2004 while enhancing overall efficiency.
Commenting on the fourth quarter results, chairman and chief executive officer
Robert H. Benmosche said, "We're pleased with our performance and continue to
actively manage all aspects of our business for the long-term. While the credit
markets have continued to improve, we're rapidly growing assets under
management, as well as premiums and fees. We are also appropriately managing our
crediting rates to support our spreads while providing customers a competitive
return. The combination of these strategies is producing earnings in line with
our stated objectives, and at the same time giving us further confidence in our
ability to achieve long-term objectives."
Net income for the fourth quarter of 2003 includes after-tax net investment
gains of $162 million, and an after-tax charge for the cumulative effect of an
accounting change of $26 million resulting from the required application of a
new accounting standard. Fourth quarter 2002 net income included after-tax net
investment gains of $223 million, a $169 million after-tax charge related to the
company's asbestos-related litigation, a $20 million after-tax benefit from the
release of a previously established liability for the company's 2001 business
realignment initiatives, and a $17 million after-tax benefit from the release of
a previously established liability for disability insurance-related losses from
the September 11, 2001 tragedies.
MetLife analyzes its performance using non-GAAP measures called operating
earnings and operating earnings per diluted share. Operating earnings is defined
as net income, excluding certain after-tax net investment gains and losses, and
the after-tax impact from the cumulative effect of a change in accounting.
Settlement payments on derivative instruments not qualifying for hedge
accounting treatment are included in operating earnings. Operating earnings per
diluted share is calculated by dividing operating earnings as defined above by
the number of weighted average diluted shares outstanding for the period
indicated. MetLife believes these measures enhance the understanding and
comparability of its performance by excluding the net effect of certain
investment gains and losses, which can fluctuate significantly from period to
period, and the after-tax impact of the cumulative effect of accounting changes,
thereby highlighting the results from operations and the underlying
profitability drivers of the business. Operating earnings and operating earnings
per diluted share should not be viewed as substitutes for GAAP net income and
GAAP net income per diluted share, respectively.
Operating earnings for the fourth quarter of 2003 were $565 million, or $0.74
per diluted share, compared with $338 million, or $0.47 per diluted share, for
the prior year period. Operating earnings for the fourth quarter 2002 included
the previously mentioned items in the net income discussion above.
A reconciliation of net income and net income per diluted share to operating
earnings and operating earnings per diluted share follows:
For the three months ended December 31,
----------------------------------------------------
2003 2002
-------------------------- ------------------------
(Dollars in millions, except per share data)
Net income $701 $0.92 $561 $0.78
After-tax net investment (gains)1 (162) (0.21) (223) (0.31)
Cumulative effect of change in accounting2 26 0.03 -- --
-------------------------- ------------------------
Operating earnings $565 $0.74 $338 $0.47
========================== ========================
(1.) After-tax net investment gains exclude $17 million and $7 million for the
three months ended December 31, 2003 and 2002, respectively, of settlement
payments on derivative instruments not qualifying for hedge accounting.
(2.) After-tax cumulative effect of a change in accounting for the three months
ended December 31, 2003 is in accordance with FASB Statement 133 Implementation
Issue B36 ("Issue B36").
FULL-YEAR RESULTS
Net income for 2003 was $2.22 billion, or $2.94 per diluted share. For 2002, net
income was $1.61 billion, or $2.20 per diluted share. For 2003, net income
includes after-tax net investment losses of $4 million. Net income for 2002
included after-tax net investment losses of $139 million.
FULL YEAR HIGHLIGHTS:
o Increased statutory annuity deposits by 42% to $11.2 billion from the prior
year
o Increased total premiums and fees to $23.17 billion, up 9% from the prior year
o Expanded assets under management by 17% to $350.2 billion from the prior year
o Continued strong investment spreads
o Grew book value, excluding other comprehensive income, nearly 19% to $18.4
billion from the prior year
Operating earnings for 2003 were $2.25 billion, or $3.01 per diluted share,
compared with $1.74 billion, or $2.39 per diluted share, in 2002.
Full-year 2003 net income and operating earnings also include after-tax benefits
totaling $92 million from a reduction of a previously established liability
related to Metropolitan Life Insurance Company's race conscious underwriting
settlement, as well as an after-tax benefit of $62 million in the International
segment from the merger of the company's Mexican operations and a reduction in
Mexico of policyholder liabilities resulting from a change in reserve
methodology. Full year net income and operating earnings also include a $36
million benefit from a revision of the estimate of income taxes for 2002 and a
$31 million after-tax charge resulting from certain improperly deferred expenses
at its affiliate, New England Financial, part of MetLife's Individual Business
segment.
Full-year 2002 net income and operating earnings also included the previously
mentioned items in the fourth quarter 2002 net income discussion above, as well
as a $48 million after-tax charge related to settlement provisions for General
American Life Insurance Company's former Medicare business, and a $30 million
after-tax benefit from a reduction of the company's previously established
liability for death benefits related to its sales practices class action
settlement, recorded in 1999.
"In addition to further strengthening our financial position in 2003, we laid
the groundwork for strong future performance. Specifically, we strengthened the
management of our distribution systems and took aggressive action in
consolidating office space and reducing redundancies while continuing to invest
heavily in infrastructure," said Benmosche. "Moving ahead in 2004, we will
continue to deliver on our promises to customers and investors by providing
competitive products and innovative solutions backed by a financially strong
enterprise."
A reconciliation of net income and net income per diluted share to operating
earnings and operating earnings per diluted share follows:
For the year ended December 31,
----------------------------------------------------
2003 2002
-------------------------- ------------------------
(Dollars in millions, except per share data)
Net income $2,217 $2.94 $1,605 $2.20
After-tax net investment losses1 4 0.01 139 0.19
Cumulative effect of change in accounting2 26 0.03 -- --
Impact of conversion of securities -- 0.03 -- --
-------------------------- ------------------------
Operating earnings $2,247 $3.01 $1,744 $2.39
========================== ========================
(1.) After-tax net investment losses exclude $53 million and $21 million for the
years ended December 31, 2003 and 2002, respectively, of settlement payments on
derivative instruments not qualifying for hedge accounting.
(2.) After-tax cumulative effect of a change in accounting for the year ended
December 31, 2003 is in accordance with Issue B36.
FOURTH QUARTER INVESTMENTS AND SEGMENT OVERVIEW
Reconciliations of segment operating earnings to net income are provided in the
tables that accompany this release.
INVESTMENTS
The company completed several opportunistic sales of high profile real estate
properties in the fourth quarter, including 11 Madison Avenue in New York City
and 1 California Plaza in Los Angeles. The pre-tax gain on the sale of these two
properties in the fourth quarter was $329 million, leaving the company with an
estimated $3.6 billion of unrealized gains in the real estate portfolio. As
expected, corporate joint venture income returned to more normal levels in the
quarter while bond prepayment fees and commercial mortgage prepayments were at a
higher than normal level. Finally, the company also reduced several equity
positions, which resulted in gains, and reinvested the proceeds in income
producing securities, which will help enhance operating earnings in the future.
INSTITUTIONAL BUSINESS
Institutional Business operating earnings for the fourth quarter were $277
million compared with $262 million in 2002. The fourth quarter 2002 included the
impact of the aforementioned $20 million and $17 million reserve reductions,
both net of taxes. The 2003 results reflect most of the impact of the higher
investment income discussed in the investments section, as can be seen in higher
than expected spreads in all product lines, and a $4 million after-tax favorable
impact of the change in method of allocating capital. This was offset by costs
associated with the aforementioned office closures and other consolidations, as
well as higher pension and post-retirement benefit costs. Underwriting results
continued to be strong in the Group Life product line while premium growth in
the Dental, Long-Term Care and the Small Business Center product lines was 15%
compared with the prior year quarter, and premiums in the Non Medical Health
product line overall grew by 11%, compared with the prior year quarter.
INDIVIDUAL BUSINESS
Individual Business operating earnings were $173 million in the fourth quarter
of 2003 compared with $174 million in 2002. Traditional Life results were in
line with expectations while Variable Life/Universal Life results reflected
higher mortality experience and the impact of recapturing previously reinsured
business. Annuity results were strong at $85 million for the quarter reflecting
substantial deposit growth, strong market performance and higher investment
spreads. Individual Business results, across all product lines, were impacted
more than the other business segments by the efficiency initiatives taken in the
fourth quarter while benefiting somewhat less from the higher investment income.
The 2003 fourth quarter results were also unfavorably impacted by $6 million
after-tax as a result of the change in method of allocating capital.
OTHER SEGMENTS
The Auto & Home segment produced operating earnings in line with expectations at
$53 million compared with $48 million in 2002. Results continue to benefit from
rate increases across the book of business and disciplined underwriting and
claims practices, as well as the broader volatility management program, and a $4
million after-tax unfavorable impact of the change in method of allocating
capital.
The International segment produced operating earnings of $34 million, compared
with $38 million in the 2002 quarter. The 2003 results were unfavorably impacted
by $5 million after-tax as a result of the change in method of allocating
capital. The previously announced $19 million after-tax charge in Taiwan related
to loss recognition due to low interest rates was offset by a $12 million tax
benefit in Chile and an $8 million benefit related to reinsurance treaties.
CORPORATE EVENTS
Share Repurchase
- ----------------
For the quarter ended December 31, 2003, the company repurchased through its
share repurchase program approximately three million shares of common stock at
an aggregate cost of approximately $97 million. At December 31, 2003, the
company had approximately $709 million remaining on its existing share
repurchase authorization.
Earnings Conference Call
- ------------------------
MetLife will hold its fourth quarter and full year 2003 earnings conference call
and audio Webcast on Wednesday, February 11, 2004, from 8:00 to 9:00 a.m. (ET).
The conference call will be available live via telephone and the Internet. To
listen over the telephone, dial (612) 326-1003 (domestic and international
callers). To listen to the conference call over the Internet, visit
www.metlife.com (through a link on the Investor Relations page). Those who want
to listen to the call on the telephone or via the Internet should dial in or go
to the Web site at least fifteen 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 11:30 a.m. (ET) on Wednesday, February 11, 2004, until Wednesday,
February 18, 2004, at 11:59 p.m. (ET). To listen to a replay of the conference
call over the telephone, dial (320) 365-3844 (domestic and international
callers). The access code for the replay is 717366. To access the replay of the
conference call over the Internet, visit the above-mentioned Web site.
MetLife, Inc., through its subsidiaries and affiliates, is a leading provider of
insurance and other financial services to individual and institutional
customers. The MetLife companies serve approximately 12 million individuals in
the U.S. and provide benefits to 37 million employees and family members through
their plan sponsors. Outside the U.S., the MetLife companies have insurance
operations in 10 countries serving approximately 8 million customers.
o o o
This release contains statements which constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including statements relating to trends in the company's operations and
financial results and the business and the products of the company and its
subsidiaries, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend" and other similar expressions.
Forward-looking statements are made based upon management's current expectations
and beliefs concerning future developments and their potential effects on the
company. Such forward-looking statements are not guarantees of future
performance.
Actual results may differ materially from those included in the forward-looking
statements as a result of risks and uncertainties including, but not limited to
the following: (i) changes in general economic conditions, including the
performance of financial markets and interest rates; (ii) heightened
competition, including with respect to pricing, entry of new competitors and the
development of new products by new and existing competitors; (iii) unanticipated
changes in industry trends; (iv) the company's primary reliance, as a holding
company, on dividends from its subsidiaries to meet debt payment obligations and
the applicable regulatory restrictions on the ability of the subsidiaries to pay
such dividends; (v) deterioration in the experience of the "closed block"
established in connection with the reorganization of Metropolitan Life Insurance
Company; (vi) catastrophe losses; (vii) adverse results from litigation,
arbitration or regulatory
investigations; (viii) regulatory, accounting or tax changes that may affect the
cost of, or demand for, the company's products or services; (ix) downgrades in
the company's and its affiliates' claims paying ability, financial strength or
credit ratings; (x) changes in rating agency policies or practices; (xi)
discrepancies between actual claims experience and assumptions used in setting
prices for the company's products and establishing the liabilities for the
company's obligations for future policy benefits and claims; (xii) discrepancies
between actual experience and assumptions used in establishing liabilities
related to other contingencies or obligations; (xiii) the effects of business
disruption or economic contraction due to terrorism or other hostilities; (xiv)
the company's ability to identify and consummate on successful terms any future
acquisitions, and to successfully integrate acquired businesses with minimal
disruption; and (xv) other risks and uncertainties described from time to time
in the company's filings with the Securities and Exchange Commission, including
its S-1 and S-3 registration statements. The company specifically disclaims any
obligation to update or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
For a copy of MetLife's Quarterly Financial Supplement, please visit
www.metlife.com.
MetLife, Inc.
Consolidated Statements of Income
Unaudited
(Dollar amounts in millions)
Three months ended
December 31, Year ended December 31,
---------------------- ------------------------
2003 2002 2003 2002
-------- -------- -------- --------
Premiums $ 5,679 $ 5,222 $ 20,673 $ 19,077
Universal life and investment-type product policy fees 698 586 2,496 2,147
Net investment income 3,031 2,920 11,636 11,261
Other revenues 354 302 1,342 1,332
Net investment losses (net of amounts allocated from
other accounts of ($138), ($43), ($215) and ($145), respectively) (16) (227) (358) (751)
-------- -------- -------- --------
Total revenues 9,746 8,803 35,789 33,066
-------- -------- -------- --------
Policyholder benefits and claims (excludes amounts
directly related to net investment losses of
($132), ($74), ($184) and ($150), respectively) 5,752 5,284 20,848 19,523
Interest credited to policyholder account balances 760 773 3,035 2,950
Policyholder dividends 492 453 1,975 1,942
Other expenses (excludes amounts directly related to
net investment losses of ($6), $31, ($31) and $5, respectively) 2,015 2,083 7,301 7,015
-------- -------- -------- --------
Total expenses 9,019 8,593 33,159 31,430
-------- -------- -------- --------
Income from continuing operations before provision for income taxes 727 210 2,630 1,636
Provision for income taxes 211 46 687 502
-------- -------- -------- --------
Income from continuing operations 516 164 1,943 1,134
Income from discontinued operations, net of income taxes 211 397 300 471
-------- -------- -------- --------
Income before after-tax cumulative effect of a change in accounting 727 561 2,243 1,605
After-tax cumulative effect of a change in accounting (4) (26) -- (26) --
-------- -------- -------- --------
Net income $ 701 $ 561 $ 2,217 $ 1,605
======== ======== ======== ========
Operating Earnings Reconciliation
- ---------------------------------
Net income $ 701 $ 561 $ 2,217 $ 1,605
Net investment gains (losses) (1) (2) 139 310 (236) (347)
Minority interest - net investment (losses) gains (9) 2 (9) 6
Adjustments to net investments losses (3) 138 43 215 145
Net investment gains (losses) tax benefit (provision) (106) (132) 26 57
-------- -------- -------- --------
After-tax net investment gains (losses) 162 223 (4) (139)
After-tax cumulative effect of a change in accounting (4) (26) -- (26) --
-------- -------- -------- --------
Operating earnings $ 565 $ 338 $ 2,247 $ 1,744
======== ======== ======== ========
(1) After-tax net investment gains and losses include gains on sales of real
estate and real estate joint ventures related to discontinued operations
in accordance with the Statement of Financial Accounting Standards
("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, of $205 million and $375 million, respectively, for the three
months ended December 31, 2003 and 2002 and $267 million and $369 million,
respectively, for the years ended December 31, 2003 and 2002.
(2) After-tax net investment gains and losses exclude settlement payments on
derivative instruments not qualifying for hedge accounting treatment in
accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, of $17 million and $7 million, respectively, for the
three months ended December 31, 2003 and 2002 and $53 million and $21
million, respectively, for the years ended December 31, 2003 and 2002.
(3) Adjustments to investment losses include amortization of deferred policy
acquisition costs, charges and credits to participating contracts, and
adjustments to the policyholder dividend obligation resulting from
investment gains and losses.
(4) After-tax cumulative effect of a change in accounting for the three months
ended and the year ended December 31, 2003 is in accordance with FASB
Statement 133 Implementation Issue B36.
MetLife, Inc.
Financial Highlights
Unaudited
(Dollar amounts in millions, except per share data or unless otherwise noted)
At or for the three months At or for the year
ended December 31, ended December 31,
-------------------------- -------------------------
2003 2002 2003 2002
-------- ------- ------- --------
Other Financial Data:
Net income $ 701 $ 561 $ 2,217 $ 1,605
Operating earnings $ 565 $ 338 $ 2,247 $ 1,744
Total assets under management (billions) $ 350.2 $ 299.2 $ 350.2 $ 299.2
Individual Business Sales Data:
Total first year life premiums and deposits $ 224 $ 235 $ 854 $ 912
Variable and Universal life first year premiums and deposits $ 171 $ 175 $ 649 $ 698
Total annuity deposits $ 2,844 $ 2,352 $11,231 $ 7,893
Mutual fund sales $ 1,255 $ 761 $ 3,689 $ 3,489
Earnings per Share Calculation:
Weighted average common shares outstanding - diluted 761.3 720.9 746.8 729.2
Operating earnings per share - diluted $ 0.74 $ 0.47 $ 3.01 $ 2.39
Net income per share - diluted $ 0.92 $ 0.78 $ 2.94 (1) $ 2.20
(1) Accounting standards require gains or losses resulting from the redemption
of a subsidiary's redeemable preferred stock to be recorded in additional
paid-in capital. However, such gains or losses are included in the
calculation of net income per share. During the first quarter of 2003, net
income per share includes a $21 million ($0.03 per diluted share) charge
associated with the company's conversion of company-obligated mandatorily
redeemable securities issued by MetLife Capital Trust I into long-term
debt.
MetLife, Inc.
Balance Sheet Data
December 31, 2003 (Unaudited) and December 31, 2002 (Unaudited)
(Dollar amounts in millions)
At At
December 31, December 31,
2003 2002
--------- ---------
Balance Sheet Data:
General account assets $ 251,085 $ 217,733
Separate account assets 75,756 59,693
--------- ---------
Total assets $ 326,841 $ 277,426
========= =========
Policyholder liabilities (including amounts in closed block) $ 179,571 $ 165,242
Short-term debt 3,642 1,161
Long-term debt 5,703 4,425
Other liabilities 41,020 28,255
Separate account liabilities 75,756 59,693
--------- ---------
Total liabilities 305,692 258,776
--------- ---------
Company-obligated mandatorily redeemable capital securities -- 1,265
--------- ---------
Common stock, at par value 8 8
Capital in excess of par value 14,991 14,968
Retained earnings 4,193 2,807
Treasury stock (835) (2,405)
Accumulated other comprehensive income 2,792 2,007
--------- ---------
Total stockholders' equity 21,149 17,385
--------- ---------
Total liabilities and stockholders' equity $ 326,841 $ 277,426
========= =========
MetLife, Inc.
Reconciliations of Net Income to Operating Earnings - Product Level
Unaudited
(Dollar amounts in millions)
Three months ended
December 31, Year ended December 31,
--------------------- -----------------------
2003 2002 2003 2002
----- ----- ----- -----
Institutional Operations
Group Life
Net income $ 46 $ 67 $ 279 $ 169
After-tax net investment losses (53) (15) (71) (139)
----- ----- ----- -----
Operating earnings $ 99 $ 82 $ 350 $ 308
===== ===== ===== =====
Retirement & Savings
Net income $ 99 $ 172 $ 334 $ 421
After-tax net investment gains (losses) -- 52 (71) (51)
After-tax cumulative effect of a change in accounting (26) -- (26) --
----- ----- ----- -----
Operating earnings $ 125 $ 120 $ 431 $ 472
===== ===== ===== =====
Non-Medical Health & Other
Net income $ 47 $ 48 $ 236 $ 169
After-tax net investment losses (6) (12) (3) (32)
----- ----- ----- -----
Operating earnings $ 53 $ 60 $ 239 $ 201
===== ===== ===== =====
Individual Operations
Traditional Life
Net income $ 82 $ 270 $ 297 $ 685
After-tax net investment gains 14 178 12 271
----- ----- ----- -----
Operating earnings $ 68 $ 92 $ 285 $ 414
===== ===== ===== =====
Variable & Universal Life
Net income $ 11 $ 1 $ 64 $ 100
After-tax net investment losses (4) (22) (10) (24)
----- ----- ----- -----
Operating earnings $ 15 $ 23 $ 74 $ 124
===== ===== ===== =====
Annuities
Net income $ 61 $ 27 $ 204 $ 17
After-tax net investment losses (24) (20) (54) (164)
----- ----- ----- -----
Operating earnings $ 85 $ 47 $ 258 $ 181
===== ===== ===== =====
Other
Net income $ 8 $ 2 $ 36 $ 24
After-tax net investment gains (losses) 3 (10) (2) (27)
----- ----- ----- -----
Operating earnings $ 5 $ 12 $ 38 $ 51
===== ===== ===== =====
Auto & Home
Auto
Net income $ 14 $ 18 $ 52 $ 72
After-tax net investment losses (5) (3) (7) (22)
----- ----- ----- -----
Operating earnings $ 19 $ 21 $ 59 $ 94
===== ===== ===== =====
Homeowners
Net income $ 32 $ 29 $ 102 $ 55
After-tax net investment losses (2) (1) (3) (7)
----- ----- ----- -----
Operating earnings $ 34 $ 30 $ 105 $ 62
===== ===== ===== =====
Other
Net income $ -- $ (3) $ 3 $ 5
After-tax net investment losses -- -- -- (1)
----- ----- ----- -----
Operating earnings $ -- $ (3) $ 3 $ 6
===== ===== ===== =====