Exhibit 99.1
Contacts: For Media: John Calagna
(212) 578-6252
For Investors: Tracey Dedrick
(212) 578-5140
METLIFE ANNOUNCES SECOND QUARTER 2004 RESULTS
REPORTS NET INCOME OF $1.11 PER SHARE, A 41% INCREASE
RAISES EARNINGS PER SHARE GUIDANCE FOR 2004
NEW YORK, July 28, 2004 - MetLife, Inc. (NYSE: MET) today reported second
quarter 2004 net income of $842 million, or $1.11 per diluted share, compared
with $580 million, or $0.79 per diluted share, for the second quarter of 2003.
SECOND QUARTER 2004 HIGHLIGHTS
- - Achieved record quarterly net income of $842 million
- - Earned total premiums and fees of $6.1 billion, a 7% increase over the
prior year period
- - Continued strong investment spreads
- - Achieved record Auto & Home quarterly net income of $68 million
Top-line revenue growth across all of MetLife's business segments, strong
interest spreads, favorable claims experience and an improvement in
investment-related gains and losses all contributed to the 45% increase in net
income in the second quarter of 2004, compared with the prior year period.
"MetLife had an outstanding quarter as we continued to generate strong top-line
growth among our core businesses," said Robert H. Benmosche, chairman and CEO of
MetLife, Inc. "Our competitive products, diversified distribution and
well-recognized brand continue to serve us well in both the retail and group
marketplaces. In addition to increases in premiums and fees, we also benefited
from strong investment spreads."
"We are increasingly confident in our ability to exceed our previously announced
2004 earnings target of $3.08 to $3.18 operating earnings per share. We now
expect 2004 operating earnings per share to be in the range of $3.22 to $3.30,"
added Benmosche.
Net income for the second quarter of 2004 includes after-tax net
investment-related gains of $174 million.
Second quarter 2003 net income includes after-tax net investment-related losses
of $40 million; a $64 million after-tax ($0.09 per diluted share) benefit from a
reduction of a previously established liability related to Metropolitan Life
Insurance Company's race conscious underwriting settlement; after-tax benefit of
$62 million ($0.08 per diluted share) from the merger of the company's Mexican
operations and a reduction in policyholder liabilities resulting from a change
in reserve methodology; and a $31 million after-tax ($0.05 per diluted share)
charge related to previously deferred expenses.
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MetLife analyzes its performance using non-GAAP measures called operating
earnings and operating earnings per diluted share. Operating earnings is defined
as GAAP net income, excluding certain after-tax net investment-related gains and
losses, and the after-tax impact from the cumulative effect of a change in
accounting. Scheduled 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-related 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.
In this release, MetLife provides guidance on its future earnings per share on
an operating, non-GAAP basis. A reconciliation of these measures to the most
directly comparable GAAP measures is not accessible on a forward-looking basis
because MetLife believes it is not possible to provide a reliable forecast of
net investment gains and losses, which can fluctuate significantly from period
to period and may have a significant impact on GAAP net income.
Operating earnings for the second quarter of 2004 were $668 million, or $0.88
per diluted share, compared with $620 million, or $0.84 per diluted share, for
the prior year period.
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 June 30,
-----------------------------------
2004 2003
---- ----
(Dollars in millions, except per share data)
Net income $ 842 $ 1.11 $ 580 $ 0.79
Net investment-related (gains) losses, net of
income taxes(1) (174) (0.23) 40 0.05
----- ------ ----- ------
Operating earnings $ 668 $ 0.88 $ 620 $ 0.84
===== ====== ===== ======
(1) Net investment-related (gains) losses, net of income taxes, include gains on
sales of real estate and real estate joint ventures related to discontinued
operations of $85 million and $0 million, respectively, for the three months
ended June 30, 2004 and 2003. In addition, net investment-related (gains)
losses, net of income taxes, exclude gains of $14 million and $8 million for the
three months ended June 30, 2004 and 2003, respectively, from scheduled
settlement payments on derivative instruments not qualifying for hedge
accounting.
SIX MONTH HIGHLIGHTS
- - Increased individual annuity deposits by 14% to $6.3 billion from the
prior year period
- - Increased total premiums and fees to $12.1 billion, up 9% from the prior
year period
- - Continued strong investment spreads
- - Grew equity book value, excluding other comprehensive income, nearly 13%
to $19.5 billion from the prior year period
2
SIX MONTH RESULTS
Net income for the first six months of 2004 is $1.37 billion, or $1.80 per
diluted share, compared with $942 million, or $1.29 per diluted share, for the
first six months of 2003. Net income for the first six months of 2004 includes
after-tax net investment gains of $259 million and an approximate $158 million
after-tax charge for the cumulative effect of a change in accounting resulting
from the required application of a new accounting standard (AICPA Statement of
Position 03-1). Net income for the first six months of 2003 includes after-tax
net investment losses of $124 million.
Operating earnings for the first six months of 2004 are $1.26 billion, or $1.66
per diluted share, compared with $1.07 billion, or $1.49 per diluted share, for
the comparable prior year period.
Net income and operating earnings for the first six months of 2003 also
benefited from the aforementioned items from the second quarter of 2003 (see
paragraph six).
A reconciliation of net income and net income per diluted share to operating
earnings and operating earnings per diluted share follows:
For the six months ended June 30,
---------------------------------
2004 2003
---- ----
(Dollars in millions, except per share data)
Net income $ 1,365 $ 1.80 $ 942 $ 1.29
Net investment-related (gains) losses, net of
income taxes(1) (259) (0.34) 124 0.17
Impact of conversion of securities -- -- -- 0.03
Cumulative effect of a change in accounting(2) 158 0.20 -- --
------- ------ ------- -------
Operating earnings $ 1,264 $ 1.66 $ 1,066 $ 1.49
======= ====== ======= =======
(1) Net investment-related (gains) losses, net of income taxes, include gains on
sales of real estate and real estate joint ventures related to discontinued
operations of $98 million and $57 million, respectively, for the six months
ended June 30, 2004 and 2003. In addition, net investment-related (gains)
losses, net of income taxes, exclude gains of $23 million and $13 million for
the six months ended June 30, 2004 and 2003, respectively, from scheduled
settlement payments on derivative instruments not qualifying for hedge
accounting.
(2) Cumulative effect of a change in accounting, net of income taxes, for the
three months ended March 31, 2004 relates to the adoption of AICPA Statement of
Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain
Non-Traditional Long-Duration Contracts and for Separate Accounts.
SECOND QUARTER SEGMENT OVERVIEW
Reconciliations of segment net income to operating earnings are provided in the
tables that accompany this release.
INSTITUTIONAL BUSINESS EARNINGS UP 22%
Institutional Business operating earnings for the second quarter of 2004 were
$317 million, compared with $260 million in the prior year period. Strong
interest spreads in Retirement and Savings, which are primarily attributable to
asset growth, contributed to the increase, while underwriting results in Group
Life remained favorable. This was partially offset by a decrease in non-medical
health operating earnings, due primarily to a decline in underwriting margins in
the
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dental and individual disability businesses. In addition, the current period
also benefited from a $31 million after-tax reduction to a previously
established premium tax liability.
During the quarter, Group Life premiums, fees and other revenues grew 8% over
the prior year period primarily due to strong sales and persistency and, in
part, to the late 2003 acquisition of John Hancock's group life insurance
business. Retirement and Savings net investment income grew 10% due to an
increase in the asset base as well as higher investment spreads. Non-medical
health insurance premiums, fees and other revenues increased 12% during the
quarter due to continued growth in both the Small Business Center and the
Long-Term Care business.
INDIVIDUAL BUSINESS EARNINGS UP 39%
Individual Business operating earnings were $210 million in the second quarter
of 2004, compared with $151 million in the prior year period. Results in
Individual Business were driven by higher earnings in the annuity product line
due to growth in separate account and strong interest spreads. Traditional Life
results benefited from favorable mortality while Variable Life/Universal Life
results reflected adverse mortality experience. Fees for the investment-type
products within the Annuity business increased by 64%, compared with the year
ago period. In addition, first year premiums and deposits for the Variable and
Universal Life business were up 36% from the prior year period, largely driven
by high initial premium Universal Life sales.
AUTO & HOME EARNINGS UP 69%
Auto & Home operating earnings were $71 million in the second quarter of 2004,
compared with $42 million in the prior year period. Results benefited from an
improved combined ratio (93.1%), driven by continued reductions in auto and
homeowners non-catastrophe frequencies, lower auto severities and higher average
earned premiums.
INTERNATIONAL
International operating earnings were $41 million in the second quarter of 2004,
compared with $102 million in the prior year period. Operating earnings for the
second quarter of 2003 includes $62 million of after-tax benefits related to the
merger of the company's Mexican operations and a reduction in policyholder
liabilities related to a change in reserve methodology.
ASSET MANAGEMENT
Asset Management operating earnings were $16 million in the second quarter of
2004, compared with $5 million in the prior year period. The increase was due to
higher performance fees earned on certain institutional products during the
quarter.
INVESTMENTS
During the 2004 quarter, the company completed the sale of Sears Tower, which
resulted in an after-tax gain of $85 million. Corporate joint venture income,
bond prepayment fees and commercial mortgage prepayments were at higher than
normal levels during the quarter and further improved the investment spreads
across all segments.
4
CORPORATE EVENTS
For the quarter ended June 30, 2004, the company repurchased through its share
repurchase program approximately 6.1 million shares of common stock at an
aggregate cost of approximately $210 million. At June 30, 2004, the company had
approximately $434 million remaining on its existing share repurchase
authorization.
During the second quarter, MetLife made a $32 million after-tax contribution to
MetLife Foundation, the company's non-profit organization. This item is recorded
in Corporate & Other in other expenses.
MetLife is currently under audit by the Internal Revenue Service for the years
1997-1999. Management anticipates that it may resolve all issues related to the
IRS's audit before filing its 10-Q for this quarter. If the audit is resolved in
the timeframe anticipated, the effect of the audit will be reflected in a
revision to the second quarter financial results disclosed in this release.
MetLife believes that if the audit is concluded as expected, second quarter 2004
consolidated financial results will be favorably impacted. Any earnings
adjustment will be reflected in the 10-Q.
MetLife will hold its second quarter 2004 earnings conference call and audio
Webcast on Thursday, July 29, 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 Thursday, July 29, 2004, until Thursday, August
5, 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 736301. 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 individuals in approximately 13 million
households 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
serve approximately 8 million customers through direct insurance operations in
Argentina, Brazil, Chile, China, Hong Kong, India, Indonesia, Mexico, South
Korea, Taiwan and Uruguay. For more information about MetLife, please visit the
company's Web site at www.metlife.com.
# # #
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
5
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 or other consequences
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.
6
MetLife, Inc.
Consolidated Statements of Income
Unaudited
(Dollar amounts in millions)
Three months ended June 30, Six months ended June 30,
-------------------------- ------------------------
2004 2003 2004 2003
---- ---- ---- ----
Premiums $ 5,331 $ 5,083 $ 10,698 $ 9,915
Universal life and investment-type product policy fees 728 603 1,404 1,175
Net investment income 3,117 2,864 6,092 5,737
Other revenues 356 355 709 653
Net investment-related gains (losses) (net of amounts allocated from
other accounts of ($111), $0, ($125) and ($38), respectively) 158 (42) 288 (256)
------- -------- --------- --------
Total revenues 9,690 8,863 19,191 17,224
------- -------- --------- --------
Policyholder benefits and claims (excludes amounts
directly related to net investment-related gains (losses) of
($117), $5, ($148) and ($23), respectively) 5,452 4,965 10,943 9,918
Interest credited to policyholder account balances 751 761 1,494 1,508
Policyholder dividends 471 507 913 1,010
Other expenses (excludes amounts directly related to
net investment-related gains (losses) of $6, ($5), $23 and ($15),
respectively) 1,932 1,846 3,796 3,595
------- -------- --------- --------
Total expenses 8,606 8,079 17,146 16,031
------- -------- --------- --------
Income from continuing operations before provision for income taxes 1,084 784 2,045 1,193
Provision for income taxes 337 212 640 327
------- -------- --------- --------
Income from continuing operations 747 572 1,405 866
Income from discontinued operations, net of income taxes 95 8 118 76
------- -------- --------- --------
Income before cumulative effect of change in accounting, net of income taxes 842 580 1,523 942
Cumulative effect of change in accounting, net of income taxes (4) - - (158) -
------- -------- --------- --------
Net income $ 842 $ 580 $ 1,365 $ 942
======= ======== ========= ========
OPERATING EARNINGS RECONCILIATION
Net income $ 842 $ 580 $ 1,365 $ 942
Net investment-related gains (losses) 157 (54) 280 (224)
Minority interest - net investment-related gains (losses) (8) (2) (16) 2
Adjustments to net investment-related gains (losses) (1) 111 - 125 38
Net investment-related gains (losses) tax benefit (provision) (86) 16 (130) 60
------- -------- --------- --------
Net investment-related gains (losses), net of income taxes (2) (3) 174 (40) 259 (124)
Cumulative effect of a change in accounting, net of income taxes (4) - - 158 -
------- -------- --------- --------
Operating earnings $ 668 $ 620 $ 1,264 $ 1,066
======= ======== ========= ========
(1) Adjustments to net investment-related gains (losses) include amortization
of deferred policy acquisition costs, changes in fair value of a reference
pool of assets relating to participating contracts and adjustments to the
policyholder dividend obligation resulting from investment-related gains
(losses).
(2) Net investment-related gains (losses), net of income taxes, include gains
on sales of real estate and real estate joint ventures related to
discontinued operations, of $85 million and $98 million, respectively, for
the three months and six months ended June 30, 2004 and $0 million and $57
million, respectively, for the three months and six months ended June 30,
2003.
(3) Net investment-related gains (losses), net of income taxes, exclude
scheduled settlement payments on derivative instruments not qualifying for
hedge accounting treatment, of $14 million and $23 million, respectively,
for the three months and six months ended June 30, 2004 and $8 million and
$13 million, respectively, for the three months and six months ended June
30, 2003.
(4) Cumulative effect of a change in accounting, net of income taxes, for the
three months ended March 31, 2004 is in accordance with Statement of
Position 03-1, Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts.
MetLife, Inc.
Financial Highlights
Unaudited
(Dollar amounts in million, except per share data or unless otherwise noted)
At or for At or for
the three months the six months
ended June 30, ended June 30,
------------------ ---------------------
2004 2003 2004 2003
---- ---- ---- ----
Other Financial Data:
Net income $ 842 $ 580 $ 1,365 $ 942
Operating earnings $ 668 $ 620 $ 1,264 $ 1,066
Total assets under management (billions) $ 365.3 $ 331.7 $ 365.3 $ 331.7
Individual Business Sales Data:
Total first year life premiums and deposits $ 273 $ 182 $ 476 $ 394
Variable and Universal life first year premiums and deposits
(including COLI/BOLI) $ 226 $ 133 $ 384 $ 292
Total annuity deposits $ 2,882 $ 2,993 $ 6,318 $ 5,544
Mutual fund sales $ 864 $ 858 $ 1,919 $ 1,649
Earnings per Share Calculation:
Weighted average common shares outstanding - diluted 758.0 731.3 759.1 715.9
Operating earnings per share - diluted $ 0.88 $ 0.84 $ 1.66 $ 1.49
Net income per share - diluted $ 1.11 $ 0.79 $ 1.80 $ 1.29(1)
(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
June 30, 2004 (Unaudited) and December 31, 2003
(Dollar amounts in millions)
At At
June 30, December 31,
2004 2003
----------- -----------
Balance Sheet Data:
General account assets $ 258,482 $ 251,085
Separate account assets 79,747 75,756
----------- -----------
Total assets $ 338,229 $ 326,841
=========== ===========
Policyholder liabilities (including amounts of closed
block) $ 185,131 $ 179,571
Short-term debt 3,218 3,642
Long-term debt 6,226 5,703
Other liabilities 42,696 41,020
Separate account liabilities 79,747 75,756
----------- -----------
Total liabilities 317,018 305,692
----------- -----------
Common stock, at par value 8 8
Capital in excess of par value 15,013 14,991
Retained earnings 5,558 4,193
Treasury stock (1,085) (835)
Accumulated other comprehensive income 1,717 2,792
----------- -----------
Total stockholders' equity 21,211 21,149
----------- -----------
Total liabilities and stockholders' equity $ 338,229 $ 326,841
=========== ===========
MetLife, Inc.
Reconciliations of Net Income to Operating Earnings - Product Level
Unaudited
(Dollar amounts in millions)
Three months ended June 30, Six months ended June 30,
-------------------------- -------------------------
2004 2003 2004 2003
---- ---- ---- ----
Institutional Operations
Group Life
Net income (loss) $ 126 $ 71 $ 220 $ 136
Net investment-related gains (losses), net of income taxes (4) (8) 13 (21)
------- ----- ------- ------
Operating earnings (loss) $ 130 $ 79 $ 207 $ 157
======= ===== ======= ======
Retirement & Savings
Net income (loss) $ 183 $ 122 $ 353 $ 179
Net investment-related gains (losses), net of income taxes 48 2 80 (23)
Cumulative effect of a change in accounting, net of income taxes - - (40) -
------- ----- ------- ------
Operating earnings (loss) $ 135 $ 120 $ 313 $ 202
======= ===== ======= ======
Non-Medical Health & Other
Net income (loss) $ 68 $ 61 114 114
Net investment-related gains (losses), net of income taxes 16 - 20 (6)
Cumulative effect of a change in accounting, net of income taxes - - (20) -
------- ----- ------- ------
Operating earnings (loss) $ 52 $ 61 $ 114 $ 120
======= ===== ======= ======
Individual Operations
Traditional Life
Net income (loss) $ 93 $ 62 164 144
Net investment-related gains (losses), net of income taxes 16 (13) 23 (7)
------- ----- ------- -------
Operating earnings (loss) $ 77 $ 75 $ 141 $ 151
======= ===== ======= ======
Variable & Universal Life
Net income (loss) $ 22 $ 13 $ (36) $ 31
Net investment-related gains (losses), net of income taxes (3) 7 (1) 2
Cumulative effect of a change in accounting, net of income taxes - - (81) -
------- ----- ------- ------
Operating earnings (loss) $ 25 $ 6 $ 46 $ 29
======= ===== ======= ======
Annuities
Net income (loss) $ 117 $ 55 $ 215 $ 90
Net investment-related gains (losses), net of income taxes 16 (1) 18 (16)
Cumulative effect of a change in accounting, net of income taxes - - 11 -
------ ----- ------- ------
Operating earnings (loss) $ 101 $ 56 $ 186 $ 106
====== ===== ======= ======
Other
Net income (loss) $ 7 $ 14 $ 12 $ 20
Net investment-related gains (losses), net of income taxes - - (9) (5)
------ ----- ------- ------
Operating earnings (loss) $ 7 $ 14 $ 21 $ 25
====== ===== ======= ======
Auto & Home
Auto
Net income (loss) $ 58 $ 21 $ 80 $ 15
Net investment-related gains (losses), net of income taxes (3) - (3) (2)
------ ----- ------- ------
Operating earnings (loss) $ 61 $ 21 $ 83 $ 17
====== ===== ======= ======
Homeowners
Net income (loss) $ 12 $ 19 $ 34 $ 50
Net investment-related gains (losses), net of income taxes - (1) - (2)
------ ----- ------- ------
Operating earnings (loss) $ 12 $ 20 $ 34 $ 52
====== ===== ======= ======
Other
Net income (loss) $ (2) $ 1 $ - $ 3
Net investment-related gains (losses), net of income taxes - - - -
------ ----- ------- ------
Operating earnings (loss) $ (2) $ 1 $ - $ 3
====== ===== ======= ======