Contacts: For Media: John Calagna
(212) 578-6252
For Investors: Tracey Dedrick
(212) 578-5140
METLIFE ANNOUNCES THIRD QUARTER 2006 RESULTS
- REPORTS NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
OF $1.29 PER DILUTED COMMON SHARE, A 33% INCREASE -
- REPORTS OPERATING EARNINGS AVAILABLE TO COMMON SHAREHOLDERS
OF $1.24 PER DILUTED COMMON SHARE, A 23% INCREASE -
NEW YORK, October 30, 2006 - MetLife, Inc. (NYSE: MET) today reported third
quarter 2006 net income available to common shareholders of $999 million, or
$1.29 per diluted common share, compared with $742 million, or $0.97 per diluted
common share, for the third quarter of 2005.
For the three months
ended September 30,
--------------------------
2006 2005
------ ------
(in millions, except per
diluted common share data)
Net income available to common shareholders $ 999 $ 742
Net income available to common shareholders per
diluted common share $ 1.29 $ 0.97
Operating earnings available to common
shareholders(1) $ 958 $ 780
Operating earnings available to common shareholders
per diluted common share(1) $ 1.24 $ 1.01
Book value per diluted common share $38.22 $34.75
Book value per diluted common share, excluding
accumulated other comprehensive income(1) $35.78 $32.32
(1) Operating earnings available to common shareholders, operating earnings
available to common shareholders per diluted common share and book value
per diluted common share (excluding accumulated other comprehensive income)
are not calculated based on generally accepted accounting principles
("GAAP"). Information regarding non-GAAP financial measures in this press
release and the reconciliation of them to GAAP measures are provided in the
Non-GAAP and Other Financial Disclosures section below, as well as in the
tables that accompany this release.
1
HIGHLIGHTS
- - Earned record total premiums, fees and other revenues of $8.1 billion
- - Reached $516.2 billion in total assets
- - Announced the sale of Peter Cooper Village and Stuyvesant Town
Operating earnings available to common shareholders for the third quarter of
2006 were $958 million, or $1.24 per diluted common share, compared with $780
million, or $1.01 per diluted common share, for the prior year period.
"MetLife continued to benefit from our diverse businesses in the third quarter
with strong underlying fundamentals in all segments and record quarterly results
in Auto & Home," said C. Robert Henrikson, chairman of the board, president and
chief executive officer of MetLife, Inc. "We are pleased to continue providing
value to our shareholders with the recently announced 13% increase in the annual
common stock dividend. In addition, we plan to resume our share repurchase
program and remain focused on continuing our strong momentum to achieve our
objectives for 2006."
THIRD QUARTER SEGMENT OVERVIEW
Reconciliations of segment net income available to common shareholders to
segment operating earnings available to common shareholders are provided in the
tables that accompany this release.
INSTITUTIONAL BUSINESS EARNINGS REMAIN STRONG
Institutional Business operating earnings available to common shareholders in
the third quarter of 2006 remained strong at $390 million, compared with $386
million in the prior year period. During the quarter, solid growth in
non-medical health & other earnings was partially offset by the impact of lower
interest spreads in the retirement & savings business.
Non-medical health & other earnings increased 29% due to growth in the business
and favorable underwriting results across the major product lines. Non-medical
health & other premiums, fees and other revenues were up 9% over the prior year
period, reflecting growth across all product lines, especially in dental and
disability.
Retirement & savings earnings, while benefiting from certain lower expenses,
were down 7% compared with the third quarter of 2005, primarily due to the
impact of lower interest spreads, driven by the inverted yield curve, and lower
variable net investment income. During the quarter, the general and separate
account assets for retirement & savings reached a combined record of $114.6
billion.
Group life earnings of $101 million were relatively flat compared with the prior
year period. Underlying growth in the business, lower expenses and favorable
underwriting results were offset by the impact of lower interest spreads.
2
INDIVIDUAL BUSINESS EARNINGS UP 11%
Individual Business operating earnings available to common shareholders were
$367 million in the third quarter of 2006, compared with $330 million in the
prior year period. This increase was due, in part, to growth in the business and
favorable underwriting results, partially offset by lower variable net
investment income.
Total life earnings increased 11% over the prior year period as the business
benefited from good mortality and a $12 million benefit from a specific reserve
reduction. A strong increase in variable & universal life earnings was partially
offset by a decline in traditional life results, which was primarily driven by
lower variable net investment income and higher expenses. Total life first year
premiums and deposits, as expected, were down compared to the prior year period
due to a decline in sales in the independent channel.
Annuity earnings increased 11% over the prior year period as results benefited
from growth in the business. While variable net investment income decreased from
unusually high levels in the prior year period, annuity spreads remained strong.
During the quarter, total annuity deposits were $3.5 billion and fees for
separate account investment-type products within the annuity business increased
15% compared with the prior year period.
AUTO & HOME EARNINGS REACH NEW RECORD
Auto & Home operating earnings available to common shareholders were a record
$107 million in the third quarter of 2006, compared with an operating loss of
$26 million in the prior year period. Auto & Home's strong performance in the
quarter was due in part to significantly lower catastrophes compared with the
prior year period. In addition, the non-catastrophe combined ratio improved to
81.2%, reflecting $27 million, net of income taxes, in favorable claim
development related to prior accident years and good claim frequencies in both
the auto and homeowners businesses.
INTERNATIONAL EARNINGS UP 9%
International operating earnings available to common shareholders were $72
million in the third quarter of 2006, compared with $66 million in the prior
year period. Earnings in the segment benefited from solid performance in Asia
Pacific and Latin America. In Japan, MSI MetLife continued its strong
performance with sales of $1.5 billion, up 12% over the prior year period on a
yen basis.
INVESTMENTS
MetLife's investment portfolio continued to deliver strong results as the net
investment income yield increased to 6.32% in the third quarter of 2006,
compared with 6.17% in the prior year period. Variable net investment income,
while on plan, was lower than the prior year period.
On October 17, 2006, MetLife announced the sale of its Peter Cooper Village and
Stuyvesant Town properties for $5.4 billion. The sale is expected to result in a
gain of approximately $3 billion, net of income taxes. It is anticipated that
the sale will close in the fourth quarter of 2006, subject to customary closing
conditions.
3
CORPORATE EVENTS
Share Repurchase
- ----------------
MetLife announced today that it intends to resume its share repurchase program
in the fourth quarter of 2006. The company currently has $716 million remaining
on its existing share repurchase authorization.
Earnings Conference Call
- ------------------------
MetLife will hold its third quarter 2006 earnings conference call and audio
Webcast on Tuesday, October 31, 2006, 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. 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 Tuesday, October 31, 2006, until Tuesday,
November 7, 2006, at 11:59 p.m. (ET). To listen to a replay of the conference
call over the telephone, dial (320) 365-3844. The access code for the replay is
843183. To access the replay of the conference call over the Internet, visit the
above-mentioned Web site.
Non-GAAP and Other Financial Disclosures
- ----------------------------------------
MetLife analyzes its performance using so-called non-GAAP measures, including
operating earnings available to common shareholders and operating earnings
available to common shareholders per diluted common share. Operating earnings
available to common shareholders is defined as GAAP net income, excluding net
investment gains and losses, net of income taxes, adjustments related to net
investment gains and losses, net of income taxes, and discontinued operations
other than discontinued real estate, net of income taxes, less preferred stock
dividends which are recorded in Corporate & Other. Scheduled settlement payments
on derivative instruments not qualifying for hedge accounting treatment are
included in operating earnings available to common shareholders. Operating
earnings available to common shareholders per diluted common share is calculated
by dividing operating earnings available to common shareholders by the number of
weighted average diluted common shares outstanding for the period indicated.
MetLife believes these measures enhance the understanding and comparability of
its performance by excluding net investment gains and losses, net of income
taxes, and adjustments related to net investment gains and losses, net of income
taxes, both of which can fluctuate significantly from period to period, and
discontinued operations other than discontinued real estate, net of income
taxes, thereby highlighting the results from operations and the underlying
profitability drivers of the business. Operating earnings available to common
shareholders and operating earnings available to common shareholders per diluted
common share should not be viewed as substitutes for GAAP net income available
to common shareholders and GAAP net income available to common shareholders per
diluted common share, respectively.
4
For the three months
ended September 30,
---------------------------------
2006 2005
--------------- ---------------
(in millions, except per
diluted common share data)
Net income available to common shareholders $ 999 $ 1.29 $ 742 $ 0.97
Net investment (gains) losses, net of income taxes(1) (162) (0.21) 15 0.02
Adjustments related to net investment
(gains) losses, net of income taxes(2) 121 0.16 30 0.03
Discontinued operations, net of income taxes(3) -- -- (7) (0.01)
------ ------ ------ ------
Operating earnings available to common shareholders $ 958 $ 1.24 $ 780 $ 1.01
====== ====== ====== ======
Book value per diluted common share $38.22 $34.75
Accumulated other comprehensive (income) loss
per diluted common share (2.44) (2.43)
------ ------
Book value per diluted common share, excluding
accumulated other comprehensive income/loss $35.78 $32.32
====== ======
(1) Net investment (gains) losses, net of income taxes, includes (gains) losses
on sales of real estate and real estate joint ventures related to
discontinued operations of $(63) million and $(30) million for the three
months ended September 30, 2006 and 2005, respectively, and excludes
(gains) losses of $(61) million and $(17) million for the three months
ended September 30, 2006 and 2005, 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 unearned revenue and deferred policy acquisition
costs, adjustments to the policyholder dividend obligation and amounts
allocable to certain participating contracts.
(3) Discontinued operations, net of income taxes, excludes (gains) losses from
discontinued operations related to real estate and real estate joint
ventures.
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 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
5
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.
MetLife, Inc. is a leading provider of insurance and financial services with
operations throughout the United States and the Latin America, Europe and Asia
Pacific regions. Through its domestic and international subsidiaries and
affiliates, MetLife, Inc. reaches more than 70 million customers around the
world and MetLife is the largest life insurer in the United States (based on
life insurance in-force). The MetLife companies offer life insurance, annuities,
auto and home insurance, retail banking and other financial services to
individuals, as well as group insurance, reinsurance and retirement & savings
products and services to corporations and other institutions. For more
information, please visit www.metlife.com.
For a copy of MetLife's Quarterly Financial Supplement, please visit
www.metlife.com.
# # #
6
MetLife, Inc.
Consolidated Statements of Income
Unaudited
(In millions)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2006 2005 2006 2005
------- ------- ------- -------
Premiums $ 6,577 $ 6,514 $19,433 $18,514
Universal life and investment-type product policy fees 1,188 1,112 3,548 2,716
Net investment income 4,193 4,064 12,594 10,713
Other revenues 339 348 1,002 948
Net investment gains (losses) 254 (50) (1,074) 268
------- ------- ------- -------
Total revenues 12,551 11,988 35,503 33,159
------- ------- ------- -------
Policyholder benefits and claims 6,712 6,837 19,448 19,018
Interest credited to policyholder account balances 1,352 1,149 3,839 2,764
Policyholder dividends 422 426 1,268 1,261
Other expenses 2,751 2,615 7,794 6,591
------- ------- ------- -------
Total expenses 11,237 11,027 32,349 29,634
------- ------- ------- -------
Income from continuing operations before provision for income taxes 1,314 961 3,154 3,525
Provision for income taxes 357 238 855 1,025
------- ------- ------- -------
Income from continuing operations 957 723 2,299 2,500
Income from discontinued operations, net of income taxes 76 50 131 1,505
------- ------- ------- -------
Net income 1,033 773 2,430 4,005
Preferred stock dividends 34 31 100 31
------- ------- ------- -------
Net income available to common shareholders $ 999 $ 742 $ 2,330 $ 3,974
======= ======= ======= =======
OPERATING EARNINGS AVAILABLE TO COMMON SHAREHOLDERS RECONCILIATION
- ------------------------------------------------------------------
Net income available to common shareholders $ 999 $ 742 $ 2,330 $ 3,974
Net investment gains (losses) 254 (23) (1,187) 2,181
Minority interest - net investment gains (losses) -- (1) 2 (12)
Net investment gains (losses) tax provision (92) 9 417 (766)
------- ------- ------- -------
Net investment gains (losses), net of income taxes (1)(2) 162 (15) (768) 1,403
Adjustments related to universal life and investment-type product policy fees 3 -- (9) --
Adjustments related to policyholder benefits and dividends (204) (55) (12) (71)
Adjustments related to other expenses 14 7 182 (17)
Adjustments related to tax benefit (provision) 66 18 (58) 31
------- ------- ------- -------
Adjustments related to net investment gains (losses), net of income taxes (3) (121) (30) 103 (57)
Discontinued operations, net of income taxes (4) -- 7 30 156
------- ------- ------- -------
Operating earnings available to common shareholders $ 958 $ 780 $ 2,965 $ 2,472
======= ======= ======= =======
(1) Net investment gains (losses), net of income taxes, from real estate and
real estate joint ventures includes discontinued operations of $63 million
and $30 million for the three months ended September 30, 2006 and 2005,
respectively, and $58 million and $1,269 million for the nine months ended
September 30, 2006 and 2005, respectively.
(2) Net investment gains (losses), net of income taxes, excludes scheduled
periodic settlement payments on derivative instruments not qualifying for
hedge accounting treatment of $61 million and $17 million for the three
months ended September 30, 2006 and 2005, respectively, and $130 million
and $41 million for the nine months ended September 30, 2006 and 2005,
respectively.
(3) Adjustments related to net investment gains (losses), net of income taxes,
includes amortization of unearned revenue and deferred policy acquisition
costs, adjustments to the policyholder dividend obligation and amounts
allocable to certain participating contracts.
(4) Discontinued operations, net of income taxes, excludes gains (losses) from
discontinued operations related to real estate and real estate joint
ventures.
MetLife, Inc.
Financial Highlights
Unaudited
(In millions, except per common share data or unless otherwise noted)
At or for the At or for
three months the nine months
ended September 30, ended September 30,
------------------- -------------------
2006 2005 2006 2005
------ ------ ------- ------
Other Financial Data:
Net income available to common shareholders $ 999 $ 742 $ 2,330 $3,974
Operating earnings available to common shareholders $ 958 $ 780 $ 2,965 $2,472
Total assets (billions) $516.2 $482.9 $ 516.2 $482.9
Individual Business Sales Data:
Total first year life premiums and deposits $ 244 $ 357 $ 841 $ 777
Variable and Universal life first year premiums and
deposits (including COLI/BOLI) $ 198 $ 305 $ 695 $ 626
Total annuity deposits $3,531 $3,624 $11,603 $8,660
Earnings Per Common Share Calculation:
Weighted average common shares outstanding -
diluted 773.7 768.7 769.9 753.1
Operating earnings available to common shareholders
per common share - diluted $ 1.24 $ 1.01 $ 3.85 $ 3.28
Net income available to common shareholders per
common share - diluted $ 1.29 $ 0.97 $ 3.03 $ 5.28
MetLife, Inc.
Balance Sheet Data
September 30, 2006 (Unaudited) and December 31, 2005 (Audited)
(In millions)
At September At December
30, 2006 31, 2005
------------ -----------
Balance Sheet Data:
General account assets $378,912 $353,776
Separate account assets 137,274 127,869
-------- --------
Total assets $516,186 $481,645
======== ========
Policyholder liabilities (including amounts
in closed block) $268,693 $262,371
Short-term debt 1,706 1,414
Long-term debt 10,711 9,888
Junior subordinated debt securities
underlying common equity units 2,134 2,134
Shares subject to mandatory redemption 278 278
Other liabilities 63,780 48,590
Separate account liabilities 137,274 127,869
-------- --------
Total liabilities 484,576 452,544
-------- --------
Preferred stock, at par value 1 1
Common stock, at par value 8 8
Additional paid-in capital 17,397 17,274
Retained earnings 13,195 10,865
Treasury stock (878) (959)
Accumulated other comprehensive income (loss) 1,887 1,912
-------- --------
Total stockholders' equity 31,610 29,101
-------- --------
Total liabilities and stockholders' equity $516,186 $481,645
======== ========
MetLife, Inc.
Reconciliations of Net Income Available to Common Shareholders to Operating
Earnings Available to Common Shareholders
Unaudited
(In millions)
Three months Nine months
ended ended
September 30, September 30,
------------- ---------------
2006 2005 2006 2005
---- ---- ------ ------
Total Institutional Operations
Net income available to common shareholders $486 $343 $ 908 $1,282
Net investment gains (losses), net of income taxes 150 (61) (352) 209
Adjustments related to net investment gains (losses), net of income taxes (54) 18 1 17
---- ---- ------ ------
Operating earnings available to common shareholders $390 $386 $1,259 $1,056
==== ==== ====== ======
Institutional Operations
Group Life
Net income available to common shareholders $ 91 $113 $ 276 $ 283
Net investment gains (losses), net of income taxes (10) 7 (59) (3)
Adjustments related to net investment gains (losses), net of income taxes -- 4 4 4
---- ---- ------ ------
Operating earnings available to common shareholders $101 $102 $ 331 $ 282
==== ==== ====== ======
Retirement & Savings
Net income available to common shareholders $290 $178 $ 420 $ 796
Net investment gains (losses), net of income taxes 105 (45) (250) 198
Adjustments related to net investment gains (losses), net of income taxes (16) 7 (13) 8
---- ---- ------ ------
Operating earnings available to common shareholders $201 $216 $ 683 $ 590
==== ==== ====== ======
Non-Medical Health & Other
Net income available to common shareholders $105 $ 52 $ 212 $ 203
Net investment gains (losses), net of income taxes 55 (23) (43) 14
Adjustments related to net investment gains (losses), net of income taxes (38) 7 10 5
---- ---- ------ ------
Operating earnings available to common shareholders $ 88 $ 68 $ 245 $ 184
==== ==== ====== ======
Total Individual Operations
Net income available to common shareholders $401 $313 $ 913 $1,262
Net investment gains (losses), net of income taxes 53 (6) (316) 353
Adjustments related to net investment gains (losses), net of income taxes (19) (11) 101 (31)
---- ---- ------ ------
Operating earnings available to common shareholders $367 $330 $1,128 $ 940
==== ==== ====== ======
Individual Operations
Traditional Life
Net income available to common shareholders $ 55 $108 $ 217 $ 548
Net investment gains (losses), net of income taxes (14) 31 (106) 300
Adjustments related to net investment gains (losses), net of income taxes (4) (22) 55 (29)
---- ---- ------ ------
Operating earnings available to common shareholders $ 73 $ 99 $ 268 $ 277
==== ==== ====== ======
Variable & Universal Life
Net income available to common shareholders $105 $ 46 $ 176 $ 133
Net investment gains (losses), net of income taxes 14 (12) (47) (11)
Adjustments related to net investment gains (losses), net of income taxes (3) 7 12 3
---- ---- ------ ------
Operating earnings available to common shareholders $ 94 $ 51 $ 211 $ 141
==== ==== ====== ======
Annuities
Net income available to common shareholders $236 $148 $ 507 $ 556
Net investment gains (losses), net of income taxes 56 (29) (151) 66
Adjustments related to net investment gains (losses), net of income taxes (12) 4 34 (5)
---- ---- ------ ------
Operating earnings available to common shareholders $192 $173 $ 624 $ 495
==== ==== ====== ======
Other
Net income (loss) available to common shareholders $ 5 $ 11 $ 13 $ 25
Net investment gains (losses), net of income taxes (3) 4 (12) (2)
---- ---- ------ ------
Operating earnings (losses) available to common shareholders $ 8 $ 7 $ 25 $ 27
==== ==== ====== ======
Total Auto & Home
Net income available to common shareholders $106 $(29) $ 296 $ 145
Net investment gains (losses), net of income taxes (1) (3) (3) (6)
---- ---- ------ ------
Operating earnings available to common shareholders $107 $(26) $ 299 $ 151
==== ==== ====== ======
Auto & Home
Auto
Net income available to common shareholders $ 87 $ 63 $ 219 $ 171
Net investment gains (losses), net of income taxes (1) (2) (2) (4)
---- ---- ------ ------
Operating earnings available to common shareholders $ 88 $ 65 $ 221 $ 175
==== ==== ====== ======
Homeowners & Other
Net income available to common shareholders $ 19 $(92) $ 77 $ (26)
Net investment gains (losses), net of income taxes -- (1) (1) (2)
---- ---- ------ ------
Operating earnings available to common shareholders $ 19 $(91) $ 78 $ (24)
==== ==== ====== ======
Three months Nine months
ended ended
September 30, September 30,
------------- ---------------
2006 2005 2006 2005
---- ---- ------ ------
International
Net income available to common shareholders $ 11 $ 41 $ 216 $ 162
Net investment gains (losses), net of income taxes (13) 3 9 8
Adjustments related to net investment gains (losses), net of income taxes (48) (35) (2) (36)
Discontinued operations, net of income taxes -- 7 -- 5
---- ---- ------ ------
Operating earnings available to common shareholders $ 72 $ 66 $ 209 $ 185
==== ==== ====== ======
Reinsurance
Net income available to common shareholders $ 30 $ 28 $ 83 $ 64
Net investment gains (losses), net of income taxes 1 4 (2) 16
Adjustments related to net investment gains (losses), net of income taxes -- (2) 3 (7)
---- ---- ------ ------
Operating earnings available to common shareholders $ 29 $ 26 $ 82 $ 55
==== ==== ====== ======