[METLIFE LETTERHEAD]
Contacts: For Media: John Calagna
(212) 578-6252
For Investors: Tracey Dedrick
(212) 578-5140
METLIFE ANNOUNCES THIRD QUARTER 2004 RESULTS
REPORTS NET INCOME OF $0.92 PER SHARE, A 23% INCREASE
NEW YORK, October 27, 2004 - MetLife, Inc. (NYSE: MET) today reported third
quarter 2004 net income of $695 million, or $0.92 per diluted share, compared
with $574 million, or $0.75 per diluted share, for the third quarter of 2003.
THIRD QUARTER 2004 HIGHLIGHTS
- - Achieved quarterly net income of $695 million
- - Earned total premiums, fees and other revenues of $6.8 billion, a 13%
increase over the prior year period
Top-line revenue growth in all of MetLife's business segments, strong interest
spreads and an improvement in net investment gains all contributed to the 21%
increase in net income in the third quarter of 2004, compared with the prior
year period.
"During the quarter, MetLife continued to deliver positive results across all of
its business segments. Premiums, fees and other revenues increased by 13% and we
continued to benefit from strong investment spreads, notwithstanding flat equity
market performance and the continued low interest rate environment," said Robert
H. Benmosche, chairman and chief executive officer, MetLife, Inc.
"At the same time, we continued to make effective use of our excess capital to
deliver value for our shareholders," continued Benmosche. "We doubled our annual
dividend to $0.46 per share and, in the fourth quarter, we plan to repurchase up
to $200 million of common stock in addition to our previously announced intent
to repurchase $500 million in 2004. And, in another sign of our commitment to
increasing shareholder value, MetLife's board has authorized a new $1 billion
common stock repurchase plan."
1
"At MetLife, we are focused on offering and introducing competitive, innovative
financial solutions that not only build financial freedom for our customers, but
also enable us to generate top-line growth in our businesses," added Benmosche.
Net income for the third quarter of 2004 includes net investment gains, net of
income taxes, of $118 million, partially offset by charges directly related to
net investment gains and losses, net of income taxes, of $44 million. In
addition, net income for the third quarter of 2004 includes a $9 million ($0.01
per diluted share) benefit from a revision of the estimate of income taxes for
2003.
Net income for the third quarter of 2003 includes net investment losses, net of
income taxes, of $68 million, partially offset by credits directly related to
net investment gains and losses, net of income taxes, of $26 million. In
addition, net income for the third quarter of 2003 includes a $28 million
benefit, net of income taxes, from a reduction of a previously established
liability related to Metropolitan Life Insurance Company's race conscious
underwriting settlement, as well as a $36 million benefit from a revision of the
estimate of income taxes for 2002. (These items combined are $0.08 per diluted
share.)
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 net investment gains and losses and directly
related charges or credits, net of income taxes, and the impact from the
cumulative effect of a change in accounting, net of income taxes. 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 investment gains
and losses and directly related charges or credits, which can fluctuate
significantly from period to period, and the impact of the cumulative effect of
accounting changes, net of income taxes, 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 third quarter of 2004 were $621 million, or $0.82 per
diluted share, compared with $616 million, or $0.81 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:
2
For the three months ended September 30,
----------------------------------------
2004 2003
---------------- ----------------
(Dollars in millions,
except per share data)
Net income $ 695 $0.92 $ 574 $0.75
Net investment (gains) losses, net of
income taxes(1) (118) (0.16) 68 0.09
Adjustments related to net investment (gains)
losses, net of income taxes (2) 44 0.06 (26) (0.03)
----- ----- ----- -----
Operating earnings $ 621 $0.82 $ 616 $0.81
===== ===== ===== =====
(1) Net investment gains (losses), net of income taxes, include gains (losses)
on sales of real estate and real estate joint ventures related to discontinued
operations of $(10)million and $4 million, respectively, for the three months
ended September 30, 2004 and 2003. In addition, net investment gains (losses),
net of income taxes, exclude gains of $8 million and $22 million for the three
months ended September 30, 2004 and 2003, respectively, from scheduled
settlement payments on derivative instruments not qualifying for hedge
accounting treatment.
(2) Adjustments related to net investment gains (losses), net of income taxes,
include amortization of deferred policy acquisition costs, adjustments related
to the policyholder dividend obligation and amounts allocable to certain
participating contracts.
NINE MONTH HIGHLIGHTS
- - Increased total premiums, fees and other revenues to $19.6 billion, up 10%
from the prior year period
- - Continued strong investment spreads
- - Grew equity book value, excluding other comprehensive income, nearly 13%
to $20.2 billion from the prior year period
NINE MONTH RESULTS
Net income for the first nine months of 2004 is $2.25 billion, or $2.97 per
diluted share, compared with $1.52 billion, or $2.04 per diluted share, for the
first nine months of 2003. Net income for the first nine months of 2004 includes
net investment gains, net of income taxes, of $296 million; charges directly
related to net investment gains and losses, net of income taxes, of $37 million;
a $105 million benefit ($0.14 per diluted share) from the resolution of an IRS
audit in the second quarter of 2004; and an approximate $86 million charge, net
of income taxes, ($0.11 per diluted share) in the first quarter of 2004 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).
The cumulative effect of a change in accounting was recorded in the first
quarter of 2004 in the amount of $158 million, net of income taxes. As a result
of additional guidance provided by the AICPA that relates to the definition of
policy assessments in determining benefit liabilities, this charge was reduced
by $72 million, net of income taxes, to $86 million, net of income taxes, in the
third quarter of 2004. This new guidance, which the company was required to
apply retroactively to January 1, 2004, resulted in a $75 million, net of income
taxes, increase to first quarter 2004 net income (including the $72 million
adjustment to the cumulative effect of a change in accounting) and a $7 million,
net of income taxes, increase to second quarter 2004 net income from amounts
previously reported.
3
Net income for the first nine months of 2003 includes net investment losses, net
of income taxes, of $217 million, partially offset by credits directly related
to net investment gains and losses, net of income taxes, of $51 million.
Operating earnings for the first nine months of 2004 were $2 billion, or $2.64
per diluted share, compared with $1.68 billion, or $2.30 per diluted share, for
the comparable prior year period.
For the first nine months of 2004, operating earnings benefited from the
aforementioned resolution of an IRS audit.
Net income and operating earnings for the first nine months of 2003 also
benefited from the aforementioned items from the third quarter of 2003. In
addition, for the first nine months of 2003, net income and operating earnings
include a $64 million benefit, net of income taxes, ($0.09 per diluted share)
from a second quarter 2003 reduction of a previously established liability
related to Metropolitan Life Insurance Company's race conscious underwriting
settlement; earnings of $62 million, net of income taxes, ($0.08 per diluted
share) in the International segment 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 charge, net of income taxes, ($0.05
per diluted share) related to previously deferred expenses.
A reconciliation of net income and net income per diluted share to operating
earnings and operating earnings per diluted share follows:
For the nine months ended September 30,
--------------------------------------------
2004 2003
-------------------- --------------------
(Dollars in millions, except per share data)
Net income $ 2,247 $ 2.97 $ 1,516 $ 2.04
Net investment (gains) losses, net of
income taxes (1) (296) (0.39) 217 0.30
Adjustments related to net investment (gains)
losses, net of income taxes (2) (37) (0.05) (51) (0.07)
Impact of conversion of securities -- -- -- 0.03
Cumulative effect of a change in accounting (3) 86 0.11 -- --
------- ------- ------- -------
Operating earnings $ 2,000 $ 2.64 $ 1,682 $ 2.30
======= ======= ======= =======
(1) Net investment gains (losses), net of income taxes, include gains on sales
of real estate and real estate joint ventures related to discontinued operations
of $88 million and $61 million, respectively, for the nine months ended
September 30, 2004 and 2003. In addition, net investment gains (losses), net of
income taxes, exclude gains of $31 million and $35 million for the nine months
ended September 30, 2004 and 2003, respectively, from scheduled settlement
payments on derivative instruments not qualifying for hedge accounting
treatment.
(2) Adjustments related to net investment gains (losses), net of income taxes,
include amortization of deferred policy acquisition costs, adjustments related
to the policyholder dividend obligation and amounts allocable to certain
participating contracts.
(3) Cumulative effect of a change in accounting, net of income taxes, for the
nine months ended September 30, 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.
4
THIRD QUARTER SEGMENT OVERVIEW
Reconciliations of segment net income to operating earnings are provided in the
tables that accompany this release.
INSTITUTIONAL BUSINESS EARNINGS UP 11%
Institutional Business operating earnings for the third quarter of 2004 were
$294 million, compared with $264 million in the prior year period. Growth in the
segment was due to strong interest spreads and continued growth in the asset
base for Retirement and Savings. In addition, underwriting results in Group Life
remained favorable. This was partially offset by a decrease in non-medical
health operating earnings, due to a decline in underwriting margins in the
dental and accidental death and dismemberment businesses along with higher
expenses, including costs associated with the closing of one of the company's
disability claims centers.
During the quarter, Group Life premiums, fees and other revenues grew 8% over
the prior year period primarily due to strong term life sales and persistency
and, in part, to the acquisition of John Hancock's group life insurance business
in 2003. Retirement and Savings net investment income grew 15% due to an
increase in the asset base driven by strong guaranteed investment contracts and
structured settlement sales and slightly higher investment yields. Non-medical
health insurance premiums, fees and other revenues increased 16% during the
quarter due to continued growth in the Small Business Center and Long-Term Care
business. Growth in Long-Term Care was due, in part, to the early 2004
acquisition of TIAA-CREF's long-term care insurance business.
INDIVIDUAL BUSINESS EARNINGS UP 18%
Individual Business operating earnings were $201 million in the third quarter of
2004, compared with $171 million in the prior year period. Results in Individual
Business were driven by higher earnings in the annuity product line due to
overall growth in this product segment, as well as strong interest spreads.
Variable Life/Universal Life results benefited from favorable mortality while
Traditional Life results reflected adverse mortality experience and the
continuing decline in revenues from the company's closed block business. Fees
for the investment-type products within the Annuity business increased by 47%,
compared with the year ago period. In addition, first year premiums and deposits
for the Universal Life business were up 52% from the prior year period, largely
driven by high initial premium sales, while Variable Life sales continue to be
depressed due to market conditions.
AUTO & HOME EARNINGS
Auto & Home operating earnings were $34 million in the third quarter of 2004,
compared with $42 million in the prior year period. Auto & Home results were
negatively impacted by an increase of $58 million, net of income taxes, in
catastrophe losses, due primarily to hurricanes in the southeast. This was
partially offset by a $50 million, net of income taxes, improvement in the
combined ratio, excluding catastrophes (84.8%), driven by continued reductions
in auto and homeowners non-catastrophe frequencies, lower auto severities and
higher average earned premiums.
5
INTERNATIONAL EARNINGS UP 22%
International operating earnings were $45 million in the third quarter of 2004,
compared with $37 million in the prior year period. International's results were
driven by unusually strong earnings from the company's operations in Mexico and
solid earnings growth in South Korea. Segment earnings were partially offset by
continuing investments in growth initiatives, such as start-up operations and
re-engineering projects.
INVESTMENTS
During the quarter, corporate bond prepayment fees and commercial mortgage
prepayments were at a slightly higher than normal level, which contributed to
strong investment spreads.
OTHER SEGMENTS
Reinsurance operating earnings were $14 million in the third quarter of 2004,
compared with $18 million in the prior year period. Reinsurance operations are
conducted primarily through Reinsurance Group of America, Incorporated (NYSE:
RGA), of which MetLife beneficially owns approximately 52%. The decrease was
primarily due to a negotiated claim settlement in RGA's discontinued accident
and health business and was partially offset by favorable mortality in its North
American operations.
Asset Management operating earnings were $7 million in the third quarter of
2004, compared with $4 million in the prior year period. As previously reported,
the company entered into an agreement in the third quarter of 2004 to sell its
wholly-owned subsidiary, SSRM Holdings, Inc., to a third party which is expected
to close in early 2005. Accordingly, the results of this segment will be
reported as discontinued operations in the company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2004. The company's remaining Asset
Management business will be reported as a component of Corporate & Other.
CORPORATE EVENTS
For the quarter ended September 30, 2004, the company repurchased through its
share repurchase program approximately 6 million shares of common stock at an
aggregate cost of approximately $221 million. For the first nine months of 2004,
the company repurchased approximately 14 million shares at an aggregate cost of
approximately $496 million. At September 30, 2004, the company had approximately
$213 million remaining on its existing share repurchase authorization. On
October 26, 2004, MetLife's board of directors authorized an additional $1
billion common stock repurchase program. This program will begin after the
completion of the current $1 billion program that was announced on February 19,
2002.
MetLife will hold its third quarter 2004 earnings conference call and audio
Webcast on Thursday, October 28, 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, October 28, 2004, until Thursday,
November 4, 2004, at 11:59 p.m.
6
(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 747769. 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 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
7
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.
8
MetLife, Inc.
Consolidated Statements of Income
Unaudited
(Dollar amounts in millions)
Three months ended Nine months ended
September 30, September 30,
-------------------- ---------------------
2004 2003 2004 2003
-------- -------- -------- ---------
Premiums $ 5,736 $ 5,079 $ 16,434 $ 14,994
Universal life and investment-type product policy fees 738 623 2,143 1,798
Net investment income 3,076 2,846 9,126 8,555
Other revenues 292 299 889 886
Net investment gains (losses) 206 (126) 369 (428)
-------- -------- -------- ---------
Total revenues 10,048 8,721 28,961 25,805
-------- -------- -------- ---------
Policyholder benefits and claims 5,933 5,149 16,713 15,044
Interest credited to policyholder account balances 739 767 2,220 2,275
Policyholder dividends 456 473 1,369 1,483
Other expenses 1,920 1,638 5,606 5,133
-------- -------- -------- ---------
Total expenses 9,048 8,027 25,908 23,935
-------- -------- -------- ---------
Income from continuing operations before provision for income taxes 1,000 694 3,053 1,870
Provision for income taxes 301 143 851 463
-------- -------- -------- ---------
Income from continuing operations 699 551 2,202 1,407
Income (Loss) from discontinued operations, net of income taxes (4) 23 131 109
-------- -------- -------- ---------
Income before cumulative effect of change in accounting, net of income taxes 695 574 2,333 1,516
Cumulative effect of change in accounting, net of income taxes (4) - - (86) -
-------- -------- -------- ---------
Net income $ 695 $ 574 $ 2,247 $ 1,516
======== ======== ======== =========
OPERATING EARNINGS RECONCILIATION
Net income $ 695 $ 574 $ 2,247 $ 1,516
Net investment gains (losses) 178 (151) 458 (375)
Minority interest - net investment gains (losses) 2 (2) (14) -
Net investment gains (losses) tax benefit (provision) (62) 85 (148) 158
-------- -------- -------- ---------
Net investment gains (losses), net of income taxes (1) (2) 118 (68) 296 (217)
Adjustments related to policyholder benefits and dividends (73) 30 75 53
Adjustments related to other expenses 5 9 (18) 24
Adjustments related to tax benefit (provision) 24 (13) (20) (26)
-------- -------- -------- ---------
Adjustments related to net investment gains (losses), net of income taxes (3) (44) 26 37 51
Cumulative effect of a change in accounting, net of income taxes (4) - - (86) -
-------- -------- -------- ---------
Operating earnings $ 621 $ 616 $ 2,000 $ 1,682
======== ======== ======== =========
(1) Net investment gains (losses), net of income taxes, include gains (losses)
on sales of real estate and real estate joint ventures related to
discontinued operations, of ($10) million and $88 million, respectively, for
the three months and nine months ended September 30, 2004 and $4 million and
$61 million, respectively, for the three months and nine months ended
September 30, 2003.
(2) Net investment gains (losses), net of income taxes, exclude scheduled
settlement payments on derivative instruments not qualifying for hedge
accounting treatment, of $8 million and $31 million, respectively, for the
three months and nine months ended September 30, 2004 and $22 million and
$35 million, respectively, for the three months and nine months ended
September 30, 2003.
(3) Adjustments related to net investment gains (losses) include amortization of
deferred policy acquisition costs, adjustments related to the policyholder
dividend obligation and amounts allocable to certain participating
contracts.
(4) Cumulative effect of a change in accounting, net of income taxes, for the
nine months ended September 30, 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 millions, except per share data or unless otherwise noted)
At or for the three months At or for the nine months
ended September 30, ended September 30,
---------------------- --------------------
2004 2003 2004 2003
--------- -------- --------- ---------
Other Financial Data:
Net income $ 695 $ 574 $2,247 $1,516
Operating earnings $ 621 $ 616 $2,000 $1,682
Total assets under management (billions) $373.5 $336.6 $373.5 $336.6
Individual Business Sales Data:
Total first year life premiums and deposits $ 240 $ 236 $ 716 $ 630
Variable and Universal life first year premiums and deposits (including COLI/BOLI) $ 196 $ 186 $ 580 $ 478
Total annuity deposits $2,410 $2,843 $8,728 $8,387
Mutual fund sales $ 689 $ 769 $2,598 $2,418
Earnings per Share Calculation:
Weighted average common shares outstanding - diluted 753.4 760.9 757.1 731.3
Operating earnings per share - diluted $ 0.82 $ 0.81 $ 2.64 $ 2.30
Net income per share - diluted $ 0.92 $ 0.75 $ 2.97 $ 2.04 (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
September 30, 2004 (Unaudited) and December 31, 2003
(Dollar amounts in millions)
At At
September 30, December 31,
2004 2003
------------ ------------
Balance Sheet Data:
General account assets $ 264,998 $ 251,085
Separate account assets 81,181 75,756
------------ ------------
Total assets $ 346,179 $ 326,841
============ ============
Policyholder liabilities (including amounts of closed block) $ 190,093 $ 179,571
Short-term debt 1,566 3,642
Long-term debt 6,695 5,703
Other liabilities 43,669 41,020
Separate account liabilities 81,181 75,756
------------ ------------
Total liabilities 323,204 305,692
------------ ------------
Common stock, at par value 8 8
Capital in excess of par value 15,027 14,991
Retained earnings 6,440 4,193
Treasury stock (1,294) (835)
Accumulated other comprehensive income 2,794 2,792
------------ ------------
Total stockholders' equity 22,975 21,149
------------ ------------
Total liabilities and stockholders' equity $ 346,179 $ 326,841
============ ============
MetLife, Inc.
Reconciliations of Net Income to Operating Earnings
Unaudited
(Dollar amounts in millions)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
------- ------- ------ ------
Institutional Operations
Group Life
Net income (loss) $ 104 $ 97 $ 324 $ 233
Net investment gains (losses), net of income taxes 4 3 17 (18)
------- ------- ------ ------
Operating earnings (loss) $ 100 $ 94 $ 307 $ 251
======= ======= ====== ======
Retirement & Savings
Net income (loss) $ 190 $ 56 $ 543 $ 235
Net investment gains (losses), net of income taxes 49 (48) 109 (71)
Adjustments related to net investment gains (losses), net of income taxes (3) - 17 -
Cumulative effect of a change in accounting, net of income taxes - - (40) -
------- ------- ------ ------
Operating earnings (loss) $ 144 $ 104 $ 457 $ 306
======= ======= ====== ======
Non-Medical Health & Other
Net income (loss) $ 48 $ 75 $ 162 $ 189
Net investment gains (losses), net of income taxes 19 9 19 3
Adjustments related to net investment gains (losses), net of income taxes (21) - (1) -
Cumulative effect of a change in accounting, net of income taxes - - (20) -
------- ------- ------ ------
Operating earnings (loss) $ 50 $ 66 $ 164 $ 186
======= ======= ====== ======
Individual Operations
Traditional Life
Net income (loss) $ 97 $ 71 $ 261 $ 215
Net investment gains (losses), net of income taxes 60 (20) 65 (46)
Adjustments related to net investment gains (losses), net of income taxes (18) 25 - 44
------- ------- ------ ------
Operating earnings (loss) $ 55 $ 66 $ 196 $ 217
======= ======= ====== ======
Variable & Universal Life
Net income (loss) $ 42 $ 22 $ 86 $ 53
Net investment gains (losses), net of income taxes 5 (8) 3 (6)
Adjustments related to net investment gains (losses), net of income taxes (2) - (1) -
Cumulative effect of a change in accounting, net of income taxes - - (11) -
------- ------- ------ ------
Operating earnings (loss) $ 39 $ 30 $ 95 $ 59
======= ======= ====== ======
Annuities
Net income (loss) $ 106 $ 53 $ 321 $ 143
Net investment gains (losses), net of income taxes 9 (15) 28 (36)
Adjustments related to net investment gains (losses), net of income taxes (1) 1 (2) 6
Cumulative effect of a change in accounting, net of income taxes - - 11 -
------- ------- ------ ------
Operating earnings (loss) $ 98 $ 67 $ 284 $ 173
======= ======= ====== ======
Other
Net income (loss) $ 3 $ 8 $ 15 $ 28
Net investment gains (losses), net of income taxes (6) 1 (15) (5)
Adjustments related to net investment gains (losses), net of income taxes - (1) - -
------- ------- ------ ------
Operating earnings (loss) $ 9 $ 8 $ 30 $ 33
======= ======= ====== ======
Auto & Home
Auto
Net income (loss) $ 51 $ 23 $ 131 $ 38
Net investment gains (losses), net of income taxes (1) - (4) (2)
------- ------- ------ ------
Operating earnings (loss) $ 52 $ 23 $ 135 $ 40
======= ======= ====== ======
Homeowners
Net income (loss) $ (18) $ 20 $ 16 $ 70
Net investment gains (losses), net of income taxes - 1 - (1)
------- ------- ------ ------
Operating earnings (loss) $ (18) $ 19 $ 16 $ 71
======= ======= ====== ======
Other
Net income (loss) $ - $ - $ - $ 3
Net investment gains (losses), net of income taxes - - - -
------- ------- ------ ------
Operating earnings (loss) $ - $ - $ - $ 3
======= ======= ====== ======
International
Net income (loss) $ 38 $ 51 $ 144 $ 177
Net investment gains (losses), net of income taxes 2 14 19 10
Adjustments related to net investment gains (losses), net of income taxes (9) - 25 -
Cumulative effect of a change in accounting, net of income taxes - - (30) -
------- ------- ------ ------
Operating earnings (loss) $ 45 $ 37 $ 130 $ 167
======= ======= ====== ======
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
------- ------- ------ ------
Reinsurance
Net income (loss) $ 14 $ 19 $ 73 $ 61
Net investment gains (losses), net of income taxes (9) 1 15 4
Adjustments related to net investment gains (losses), net of income taxes 9 - (2) -
Cumulative effect of a change in accounting, net of income taxes - - 5 -
------- ------- ------ ------
Operating earnings (loss) $ 14 $ 18 $ 55 $ 57
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Asset Management (1)
Net income (loss) $ 7 $ 6 $ 28 $ 17
Net investment gains (losses), net of income taxes - 2 - 7
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Operating earnings (loss) $ 7 $ 4 $ 28 $ 10
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(1) As previously reported, the company entered into an agreement in the third
quarter of 2004 to sell its wholly-owned subsidiary SSRM Holdings, Inc. to a
third party which is expected to close in early 2005. Accordingly, the
results of this segment will be reported as discontinued operations in the
company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2004.