OREANDA-NEWS. MetLife, Inc. (NYSE:MET) today announced the following results for the fourth quarter and full year 2015:

Fourth Quarter Results

MetLife reported operating earnings* of $1.4 billion, down 13 percent from the fourth quarter of 2014, and 10 percent on a constant currency basis*. On a per share basis, operating earnings were $1.23, down 11 percent from the prior year quarter. Operating earnings in the Americas decreased 16 percent, and 14 percent on a constant currency basis. Operating earnings in Asia decreased 15 percent, and 9 percent on a constant currency basis. Operating earnings in Europe, the Middle East and Africa (EMEA) decreased 16 percent, and 2 percent on a constant currency basis.

Fourth quarter 2015 operating earnings included the following items:

  • variable investment income below the company’s 2015 quarterly plan range by $137 million, or $0.12per share, after tax and the impact of deferred acquisition costs (DAC)
  • unfavorable catastrophe experience, partially offset by favorable prior year development, which in total decreased operating earnings by $9 million, or $0.01 per share, after tax
  • a one-time tax item in Argentina, which increased operating earnings by $31 million, or $0.03 per share, after tax

MetLife’s operating return on equity (ROE), excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustments (FCTA)*, was 9.7 percent for the fourth quarter of 2015, and the company’s tangible operating ROE* was 11.9 percent.

On a GAAP basis, MetLife reported fourth quarter 2015 net income of $785 million, or $0.70 per share. Net income includes $231 million, after tax, in net derivative losses, reflecting changes in interest rates, equity markets and foreign currencies. MetLife uses derivatives as part of its broader asset-liability management strategy to hedge certain risks, such as movements in interest rates, equity markets and foreign currencies. This hedging activity often generates derivative gains or losses and creates fluctuations in net income because the risk being hedged may not have the same GAAP accounting treatment.

The fourth quarter variance between operating earnings and net income reflects an unfavorable impact of$305 million, after-tax, related to asymmetrical and non-economic accounting.

Premiums, fees & other revenues* were $12.3 billion, down 6 percent, and 3 percent on a constant currency basis over the fourth quarter of 2014.

Book value, excluding AOCI other than FCTA*, was $51.15 per share, up 3 percent from $49.53 atDecember 31, 2014.

Full Year Results

For the full year 2015, MetLife reported operating earnings of $5.5 billion, down 16 percent over 2014, and 12 percent on a constant currency basis. This decrease reflects a strong U.S. dollar, lower variable investment income and a previously announced third quarter 2015 non-cash charge of $792 million related to the tax treatment of a wholly-owned U.K. investment subsidiary of Metropolitan Life Insurance Company(MLIC). Adjusting for total notable items in both years, including the previously announced third quarter$792 million non-cash charge in 2015, full year operating earnings were $6.4 billion, down 1 percent over 2014, but up 3 percent on a constant currency basis. On a per share basis, 2015 operating earnings were$4.86, down 15 percent over 2014.

Operating earnings in the Americas decreased 7 percent, and 5 percent on a constant currency basis. Operating earnings in Asia were up 6 percent, and 16 percent on a constant currency basis. Operating earnings in EMEA decreased 16 percent, but increased 10 percent on a constant currency basis.

MetLife’s ROE, excluding AOCI other than FCTA, was 9.7 percent for full year 2015, and the company’s tangible operating ROE was 11.9 percent. Adjusting for total notable items, including the previously announced third quarter $792 million non-cash charge, MetLife’s operating ROE, excluding AOCI other than FCTA, was 11.3 percent for full year 2015, and the company’s tangible operating ROE was 13.8 percent.

MetLife reported full year 2015 net income of $5.2 billion, or $4.57 per share.

“Operating earnings per share in the fourth quarter were down from the prior year as a result of lower variable investment income, which can be volatile, as well as a strong U.S. dollar,” said Steven A. Kandarian, chairman, president and chief executive officer, MetLife, Inc. “While 2015 was a challenging year overall, our plan to separate a substantial portion of the U.S. Retail business demonstrates our willingness to take bold steps to maximize shareholder value.”

BUSINESS DISCUSSIONS

All comparisons of the results for the fourth quarter of 2015 in the business discussions that follow are with the fourth quarter of 2014, unless otherwise noted.

THE AMERICAS

Total operating earnings for the Americas were $1.2 billion, down 16 percent, and 14 percent on a constant currency basis, due to lower investment and underwriting margins. Operating return on allocated equity* was 12.6 percent, and operating return on allocated tangible equity* was 14.2 percent. Premiums, fees & other revenues were $9.6 billion, down 5 percent, and 3 percent on a constant currency basis. Excluding pension risk transfers, premiums, fees & other revenues were up 2 percent, and 4 percent on a constant currency basis.

Retail

Operating earnings for Retail were $582 million, down 19 percent, impacted by lower underwriting margins, primarily in the property & casualty auto business, and lower variable investment income. Premiums, fees & other revenues were $3.4 billion, down 1 percent. Retail life sales* were up 9 percent, and Retail annuity sales were up 23 percent.

Group, Voluntary & Worksite Benefits

Operating earnings for Group, Voluntary & Worksite Benefits were $214 million, down 10 percent, due to lower underwriting margins, primarily in the property & casualty auto business, and lower investment margins. Premiums, fees & other revenues were $4.3 billion, up 3 percent, due to both group and voluntary products.

Corporate Benefit Funding

Operating earnings for Corporate Benefit Funding were $286 million, down 21 percent, due to lower investment and underwriting margins. Premiums, fees & other revenues were $886 million, down 39 percent. Excluding pension risk transfers, premiums, fees & other revenues were up 39 percent.

Latin America

Operating earnings for Latin America were $150 million, down 1 percent, but up 24 percent on a constant currency basis. Excluding notable items in both periods, and on a constant currency basis, operating earnings were up 14 percent, due to business growth. Premiums, fees & other revenues were $1.0 billion, down 2 percent, but up 17 percent on a constant currency basis. Total sales for the region increased 3 percent on a constant currency basis, primarily due to direct marketing sales across the region.

ASIA

Operating earnings for Asia were $290 million, down 15 percent, and 9 percent on a constant currency basis, largely due to lower variable investment income in the quarter and a prior year one-time benefit from actuarial items. Adjusting for these items in both periods, operating earnings increased 6 percent on a constant currency basis. Operating return on allocated equity was 10.1 percent, and operating return on allocated tangible equity was 17.4 percent. Premiums, fees & other revenues in Asia were $2.0 billion, down 11 percent, and 3 percent on a constant currency basis, but up 2 percent on a constant currency basis when adjusted for the withdrawal of certain Yen products in Japan that do not meet our hurdle rates in the current interest rate environment. Total sales for the region were down 1 percent on a constant currency basis, representing the net impact of management actions taken across the product portfolio to improve value creation and growth in targeted segments.

EMEA

Operating earnings for EMEA were $54 million, down 16 percent, and 2 percent on a constant currency basis. Excluding the impact of a one-time tax benefit in the fourth quarter of 2014, operating earnings were up 32 percent on a constant currency basis. Operating return on allocated equity was 6.5 percent, and operating return on allocated tangible equity was 12.2 percent. Premiums, fees & other revenues were $625 million, down 7 percent, but up 3 percent on a constant currency basis. Excluding the impact from the conversion of certain operations to calendar-year reporting in the fourth quarter of 2014, premiums, fees & other revenues were up 10 percent. Total sales for the region decreased 11 percent on a constant currency basis. Fourth quarter 2014 included strong employee benefit sales in the Middle East and the conversion of certain operations to calendar-year reporting.

INVESTMENTS

Net investment income was $4.8 billion, down 7 percent. Variable investment income was $109 million ($71 million, after tax and DAC), compared with $325 million ($211 million, after tax and DAC) in the fourth quarter of 2014, due to weak private equity and hedge fund performance.

Higher interest rates drove derivative net losses of $375 million, after tax and other adjustments. Derivative net losses in the fourth quarter of 2014 were $40 million, after tax and other adjustments.

CORPORATE & OTHER

Corporate & Other had an operating loss of $200 million compared with an operating loss of $289 million in the fourth quarter of 2014.

About MetLife

MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East.