MetLife Q4 2024 Earnings Report

MetLife EPS Results

• Actual EPS: $2.08
• Consensus EPS: $2.13
• Beat/Miss: Missed by -$0.05
• One Year Ago EPS: N/A

MetLife Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $19.49 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

MetLife Announcement Details

• Quarter: Q4 2024
• Date: 2/5/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 6, 2025
• Conference Call Time: 9:00AM ET

MetLife (NYSE:MET), a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. It operates through six segments: Retirement and Income Solutions; Group Benefits; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans; administrative services-only arrangements to employers; and general and separate account, and synthetic guaranteed interest contracts, as well as private floating rate funding agreements. It also provides pension risk transfers, institutional income annuities, structured settlements, and capital markets investment products; and other products and services, such as life insurance products and funding agreements for funding postretirement benefits, as well as company, bank, or trust-owned life insurance used to finance nonqualified benefit programs for executives. In addition, it provides fixed, indexed-linked, and variable annuities; pension products; regular savings products; whole and term life, endowments, universal and variable life, and group life products; longevity reinsurance solutions; credit insurance products; and protection against long-term health care services. MetLife, Inc. was incorporated in 1999 and is based in New York, New York.

MetLife Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Fourth Quarter and Full Year twenty twenty four Earnings and Outlook Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a Q and A question and answer session. Instructions will be given at that time.

[Operator]

As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward looking statements in yesterday's earnings release and to risk factors discussed in MetSlic's SEC filings. With that, I will turn the call over to John Hall, Global Head of Investor Relations.

[John Hall, Global Head, IR at MetLife]

Thank you, operator. Good morning, everyone. We appreciate you joining us for MetLife's fourth quarter twenty twenty four earnings and near term outlook call. Before we begin, I point you to the information on non GAAP measures on the Investor Relations portion of metlife.com, in our earnings release and in our quarterly financial supplements, which you should review. On the call this morning are Michelle Halaf, President and Chief Executive Officer and John McCallion, Chief Financial Officer and Head of MetLife Investment Management.

[John Hall, Global Head, IR at MetLife]

Also participating in the discussion are other members of senior management. Last night, we released a set of supplemental slides which address the quarter as well as our near term outlook. They are available on our website. John McCallion will speak to those supplemental slides in his prepared remarks. An appendix to the slides features outlook sensitivities, disclosures, gap reconciliations, and other information, which you should also review.

[John Hall, Global Head, IR at MetLife]

After prepared remarks, we will have a Q and A session, which will end promptly at the top of the hour. As a reminder, please limit yourself to one question and one follow-up. With that, over to Michel.

[Michel Khalaf, President & CEO at MetLife]

Thank you, John, and good morning, everyone. Last night, MetLife reported fourth quarter and full year results that underscore the strength and resilience of our market leading portfolio of businesses in the face of constant change. While unemployment in The U. S. Has stayed at low levels and economic growth appears healthy, the path and pace of anticipated interest rate cuts remain in question due to concerns about persistent inflation.

[Michel Khalaf, President & CEO at MetLife]

MetLife's capacity to execute across changing environments has been a hallmark of our success. This past year 2024 brought to a close the five year period associated with our next horizon strategy. Despite the global pandemic, a short lived banking crisis and volatile interest rates, we delivered on all our next horizon financial commitments, return on equity, free cash flow and operating leverage. The market has recognized our strong fundamental performance as MetLife's stock outperformed the Standard and Port 500 index in 2024. MetLife did not go quietly into the end of the year and we do not rest on our laurels.

[Michel Khalaf, President & CEO at MetLife]

In December, we hosted a well received investor day to roll out our new frontier strategy along with a refreshed set of financial commitments. While the basic tenets of next horizon focus, simplify and differentiate aren't going anywhere, MetLife is at a different place than it was five years ago. We are more front footed and more able to play offense. Our new frontier strategy is more oriented towards growth and by that I mean responsible growth. To build on this, we have identified four strategic priorities as part of New Frontier.

[Michel Khalaf, President & CEO at MetLife]

Together, they drive nearly 80% of adjusted earnings today and will fuel strong growth through the five year New Frontier strategy. The first is further extending our leadership in group benefits. The second is capitalizing on our unique retirement platform. The third is accelerating growth in asset management, while the fourth is expanding in high growth international markets. Again, here at MetLife, we do not stand still.

[Michel Khalaf, President & CEO at MetLife]

Along with the rollout of our new frontier strategy, we announced several important transactions that activate across our new strategic priorities and which we believe will drive shareholder value for years to come. In December, MetLife and General Atlantic announced the formation of Cherry Tree, which will be a Bermuda based life and annuity reinsurance company. We anticipate a combined equity investment of over $1,000,000,000 and that Chubb will join us as an anchor investor. Chariot Re will serve the growing demand for life and retirement solutions around the world. The strategic use of reinsurance allows us to position MetLife to capture the growth in these trends and add to enterprise value.

[Michel Khalaf, President & CEO at MetLife]

Charity Tree will also leverage MetLife's deep insurance and investing expertise as well as the investment capabilities of General Atlantic. Also in December, we announced an agreement to acquire Pine Bridge Investments, a leading global asset manager with approximately $100,000,000,000 in assets under management. Pine Bridge will substantially add to MetLife investment management by expanding its public and private credit offerings, especially on an international basis. Finally, MIM signed an agreement to acquire the high yield and bank loan, the strategic fixed income and the small cap equity teams from Mesirow Financial with about $6,000,000,000 of assets managed by those teams. Our new frontier strategy is more than just words on a page.

[Michel Khalaf, President & CEO at MetLife]

To measure our progress and hold ourselves accountable, we have established new five year commitments. We have introduced adjusted earnings per share as a new metric for MetLife. We are committed to achieving double digit adjusted EPS growth over the course of the new frontier period with 60% driven by business and margin growth and the balance from disciplined capital management. We have increased our adjusted return on equity target range to 15% to 17%, up from our previous target range of 13% to 15%. We have also committed to cut another 100 basis points from our prior direct expense ratio target of 12.3% during the five year period.

[Michel Khalaf, President & CEO at MetLife]

And finally, we have committed to $25,000,000,000 of free cash flow over the five year period, up from our prior five year twenty billion dollars commitment. You'll see when John discusses our 2025 outlook, these commitments are in alignment with our expectation for the near term. Now turning to our fourth quarter twenty twenty four results. Last night, we reported adjusted earnings of $1,500,000,000 or 2.09 per share, up 14% from the prior year period. Excluding notable items in both periods, we reported adjusted earnings of $2.08 per share, up 8%.

[Michel Khalaf, President & CEO at MetLife]

Variable investment income or VII was higher in the quarter due to improved private equity fund performance and we saw good momentum across most of our businesses. Shifting to the full year 2024, we generated adjusted earnings excluding notable items of $5,800,000,000 Strong volume growth and favorable underwriting along with market factors helped drive our results. Pointing to our capital efficiency, MetLife posted an adjusted ROE of 15.2% for the year above our target range and our direct expense ratio was 12.1%, beating our next horizon target range. Our Group Benefits business continues to demonstrate its leadership position in what I believe to be the most attractive segment of U. S.

[Michel Khalaf, President & CEO at MetLife]

Life insurance. Group Benefits generated adjusted earnings excluding notable items of $1,700,000,000 in 2024. Full year sales were up 8% on strong growth in national accounts. This is a business where we believe that scale technology and discipline will carry the day. We believe MetLife has the capacity to continue to grow faster than the market driven by the many scale benefits associated with our size.

[Michel Khalaf, President & CEO at MetLife]

In the new frontier, our formula for group benefits growth is simple, more employers, more products and more employee participation and we are actively driving each of these elements. Moving to Retirement and Income Solutions or RIS, adjusted earnings excluding notables totaled $1,600,000,000 in the year. RIS continued to demonstrate the strength and breadth of its liability generation capabilities in 2024. Our liability exposures grew 3.4% in the year above the midpoint of our prior outlook range with strong contributions from structured settlements, UK longevity and funded reinsurance and U. S.

[Michel Khalaf, President & CEO at MetLife]

Pension risk transfer. Shifting to our international businesses, Asia posted adjusted earnings excluding notables of $1,700,000,000 in 2024, up 21% on the rebound in VII. General account AUM grew 5% on a constant currency basis. It was also a historic year for our Latin America business, which saw record adjusted earnings excluding notables of $877,000,000 despite substantial currency headwinds. Our expanded product portfolio in the region and our investments in digital distribution place us in the pole position to further grow in this important region.

[Michel Khalaf, President & CEO at MetLife]

When I look across our business results for the year, what stands out is the balance of our adjusted earnings across segments. Our three largest segments, Group Benefits, RIS and Asia, all posted adjusted earnings in the neighborhood of $1,700,000,000 I have framed MacLeay's balance and diversification as being our superpower, something that has enabled us to generate the type of all weather performance achieved in 2024. Moving to capital management, in the fourth quarter, our buyback activity was restricted due to pending announcements. In total, we still repurchased nearly $400,000,000 of our common stock in the fourth quarter. We have started the new year strong having repurchased roughly $470,000,000 of our common stock in January.

[Michel Khalaf, President & CEO at MetLife]

For the full year 2024, we returned approximately $4,700,000,000 to shareholders through $3,200,000,000 of our common stock repurchases and $1,500,000,000 of common stock dividends. In closing, 2024 marks the end of next horizon and the beginning of new frontier where we are starting from a position of strength and with a greater emphasis on responsible growth. MetLife operates in highly attractive markets with deep competitive moats that we've constructed carefully over time and we are poised to capitalize on the many global tailwinds which have informed our new frontier strategy. Met is well positioned to deliver strong responsible growth, attractive returns and with lower risk, not one or the other, but all three. And that is MetLife's unique value proposition.

[Michel Khalaf, President & CEO at MetLife]

Now, I'll turn it over to John to cover our performance and outlook in greater detail.

[John McCallion, EVP & CFO at MetLife]

Thank you, Michelle, and good morning, everyone. I will start with the 4Q24 supplemental slides, which covers highlights of our financial performance, including an update on our liquidity and capital position. In addition, I will discuss our near term outlook. Starting on Page three, we provide a comparison of net income to adjusted earnings in the fourth quarter and full year of 2024. Net income was $1,200,000,000 and $4,200,000,000 for the fourth quarter and full year of 2024, respectively.

[John McCallion, EVP & CFO at MetLife]

The difference between net income and adjusted earnings is attributable to net derivative losses, primarily due to the rise in long term interest rates and the strengthening of the U. S. Dollar. That said, derivative losses were partially offset by market risk benefit or MRB remeasurement gains due to higher interest rates. In addition, net investment losses were largely the result of normal trading activity on the portfolio in a rising interest rate environment and credit remains stable.

[John McCallion, EVP & CFO at MetLife]

As highlighted on the bottom of the page, we had two notable items in the current quarter that net to a positive impact to adjusted earnings of $10,000,000 This was primarily due to interest associated with a tax refund, partially offset by higher asbestos litigation reserves in the quarter. On Page four, we provide a year over year comparison of fourth quarter adjusted earnings by segment, excluding total notable items in both periods. Adjusted earnings, excluding total notable items, were $1,400,000,000 up 13% on a constant currency basis. The increase was primarily driven by higher variable investment income and solid volume growth, which were partially offset by less favorable recurring interest and expense margins compared to the previous year. Adjusted earnings per share excluding total notable items were $2.08 up 810% on a constant currency basis.

[John McCallion, EVP & CFO at MetLife]

Moving to the businesses. Group Benefits adjusted earnings were $416,000,000 down 11% from the prior year quarter. The key driver was less favorable non medical health underwriting margins compared to the prior year. The non medical health interest adjusted benefit ratio was 71.8%, although above prior year, was in line with expectations and within our annual target range of 69 to seventy four percent. The group life mortality ratio was eighty three point two percent for the quarter.

[John McCallion, EVP & CFO at MetLife]

For the full year, the ratio was eighty four point five percent at the bottom end of our 2024 target range of eighty four percent to eighty nine percent. Turning to the top line, group benefits adjusted PFOs on a full year basis were up 4% year over year. Taking participating contracts into account, which dampened growth by roughly 100 basis points, the underlying PFOs were up approximately 5% year over year within our twenty twenty four target growth range of 4% to 6%. RIS adjusted earnings were $386,000,000 in 4Q of twenty twenty four, down 8% year over year. The primary drivers were lower recurring interest margins and less favorable underwriting, partially offset by higher variable investment income.

[John McCallion, EVP & CFO at MetLife]

Solid volume growth also contributed to the year over year results. RES total investment spreads were 112 basis points in the fourth quarter, up six basis points sequentially, mainly due to higher variable investment income as our core spread remained flat at 108 basis points consistent with expectations. RES adjusted PFOs were up 26%, primarily driven by growth across several products, most notably PRT, including UK funded reinsurance. As we highlighted at Investor Day, we completed our inaugural funded reinsurance transaction for approximately $300,000,000 demonstrating the successful relationships that we have built with leading UK insurers. This brings our total PRT inflows for both The U.

[John McCallion, EVP & CFO at MetLife]

S. And UK combined to approximately $6,700,000,000 for 2024. Moving to Asia, adjusted earnings were $443,000,000 up fifty percent and fifty two percent on a constant currency basis, primarily due to higher variable investment income and favorable underwriting margins, which included positive reserve refinements that benefited adjusted earnings by roughly $30,000,000 For Asia's full year 2024 key growth metrics, general account assets under management on an amortized cost basis were up 5% year over year on a constant currency basis and sales were down 5% on a constant currency basis versus 2023. Lower Japan sales were partially offset by other Asia markets, which were up 21%, most notably due to solid growth in Korea, India and China. In Japan, sales were down 18% year over year, primarily due to the impact of yen volatility on foreign currency products.

[John McCallion, EVP & CFO at MetLife]

Latin America adjusted earnings were $2.00 $1,000,000 down 3%, but up 10% on a constant currency basis, primarily due to higher volume growth across the region, partially offset by lower Chilean and CAE returns versus a strong Q4 'twenty three. Latin America's top line continues to perform well, although reported growth rates are being masked by recent currency headwinds. Adjusted PFOs were down 3%, but up nine percent on a constant currency basis, driven by strong growth and solid persistency across the region. EMEA adjusted earnings were $59,000,000 up 2631% on a constant currency basis, primarily driven by solid volume growth and lower tax charges in the quarter. This was partially offset by less favorable expense margins and underwriting margins year over year.

[John McCallion, EVP & CFO at MetLife]

EMEA adjusted PFOs were up 1013% on a constant currency basis, reflecting strong sales across the region. MetLife Holdings adjusted earnings were $153,000,000 down two percent, largely driven by foregone earnings as a result of the reinsurance transaction that closed in November of twenty twenty three. Favorable life underwriting was a partial offset. Corporate and other adjusted loss was $2.00 $9,000,000 versus an adjusted loss of $156,000,000 in the prior year. Higher expenses and taxes were partially offset by higher variable investment income year over year.

[John McCallion, EVP & CFO at MetLife]

The company's effective tax rate on adjusted earnings in the quarter was 23.5%, modestly below our 2024 guidance range of 24% to 26%. On Page five, this chart reflects our pretax variable investment income for the four quarters and full year of 2024. Variable investment income was $293,000,000 in Q4, driven by the private equity portfolio, which had an average return of 1.8 in the quarter. Our real estate and other funds had an average return of essentially zero in the quarter. As a reminder, PE and real estate and other funds are reported on a one quarter lag and accounted for on a mark to market basis.

[John McCallion, EVP & CFO at MetLife]

For the full year, variable investment income or VII was $1,000,000,000 below our 2024 target of approximately $1,500,000,000 but well ahead of the prior year. Real estate and other funds accounted for most of the shortfall, while PE returns were largely in line with our annual 2024 expected returns. On Page six, we provide VII post tax by segment and corporate and other for the four quarters and full year 2024. As reflected in the chart, Asia RES and MetLife Holdings continue to hold the largest proportion of VII assets given their long dated liability profiles. However, as a reminder, each business has its own discrete portfolio aligned and matched to its liabilities.

[John McCallion, EVP & CFO at MetLife]

Asia's VII portfolio outperformed in the quarter, generating more than 50% of the total. Turning to Page seven, this chart shows a comparison of our direct expense ratio over eight quarters and full year 2023 and 2024. Our direct expense ratio in 4Q of '20 '20 '4 was elevated at 13.1%, reflecting the impact from seasonal enrollment costs and group benefits as well as higher employee related costs and technology initiatives. That said, as we've highlighted previously, we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results. For the full year of 2024, our direct expense ratio was 12.1%, below our 2024 target of 12.3%.

[John McCallion, EVP & CFO at MetLife]

We believe this result once again demonstrates our consistent execution and focus on a sustained efficiency mindset. I will now discuss our cash and capital positions on Page eight. Overall, MetLife is well capitalized with more than ample liquidity. We had share repurchases of roughly $400,000,000 in the fourth quarter and have repurchased shares totaling $470,000,000 in January. In terms of statutory capital for our U.

[John McCallion, EVP & CFO at MetLife]

S. Companies, preliminary 2024 statutory operating earnings were approximately $4,000,000,000 while net income was approximately $2,900,000,000 Statutory operating earnings decreased by approximately $500,000,000 year over year, primarily driven by impacts of the reinsurance transaction in November of twenty twenty three and lower net investment income partially offset by favorable underwriting. On Page nine, this chart shows the final tally in beating our five year financial commitments under Next Horizon. Our full year 2024 adjusted ROE of 15.2% was above our original 12% to 14% commitment made in 2019 and above our 13% to 15% guidance for 2024. For the years 2020 through 2024, we generated distributable cash of $20,700,000,000 above our $20,000,000,000 commitment and created $1,200,000,000 of additional operating leverage capacity to accelerate growth above our $1,000,000,000 commitment.

[John McCallion, EVP & CFO at MetLife]

Now let's turn to Page 11 for further details on our near term outlook starting with the overview. Based on the forward currency curve, the U. S. Dollar is expected to further strengthen, which creates a headwind to adjusted earnings growth of approximately $150,000,000

[John McCallion, EVP & CFO at MetLife]

to $175,000,000

[John McCallion, EVP & CFO at MetLife]

in 2025. This impact is embedded in the non U. S. Segment outlooks that I will discuss in a moment. The forward interest rate curve projects long term interest rates to be stable and the yield curve to steepen, a positive development.

[John McCallion, EVP & CFO at MetLife]

And we use an assumption of 5% annual return for the S and P 500. For our near term targets, these are consistent with our new frontier commitments that we announced at Investor Day. We expect to achieve double digit adjusted EPS growth. We expect adjusted ROE to be in the range of 15% to 17%. We expect to maintain our two year average free cash flow ratio of 65% to 75% of adjusted earnings, which supports our five year commitment to generate $25,000,000,000 plus of free cash flow.

[John McCallion, EVP & CFO at MetLife]

Also given our continued focus on expense discipline, we target reducing our expense ratio down 100 basis points to 11.3% by 2029. And therefore, for 2025, we are lowering our direct expense ratio guidance to 12.1%, down from 12.3% in 2024. Specifically for 2025, variable investment income is expected to be approximately $1,700,000,000 pretax. Our corporate and other adjusted loss is expected to be between $850,000,000 to $950,000,000 after tax. And we're maintaining our expected effective tax rate range of 24% to 26%.

[John McCallion, EVP & CFO at MetLife]

At the bottom of the page, you'll see certain interest rate sensitivities relative to our base case, reflecting a relatively modest impact on adjusted earnings over the near term. Further sensitivities are in the appendix to these slides. On Page 12, the chart reflects our expectation of VII average asset balances to be stable in 2025. We are increasing our near term expected annual returns for private equity to be between 9% to 11%, and we are also increasing our expected returns for real estate and other funds to be in a range of 7% to 9% over the near term. In 2025, we expect both PE and real estate and other funds to be toward the lower end of their respective ranges before trending higher in 2026 and 2027.

[John McCallion, EVP & CFO at MetLife]

Finally, as a reminder, we include prepayment fees on fixed maturities and mortgage loans in VII. So now I will discuss our near term outlook for our business segments. Let's start with The U. S. On Page 13.

[John McCallion, EVP & CFO at MetLife]

For group benefits, we are increasing our adjusted PFO growth target to 4% to 7% annually over the near term. We are maintaining our near term underwriting guidance ranges: group life mortality ratio of eighty four percent to eighty nine percent and group non medical health interest adjusted benefit ratio of sixty nine percent to seventy four percent. Please keep in mind, these are annual ratios and both typically skew to the higher end of the ranges in the first quarter given the seasonality of the business. However, for Group Life, if the positive trend we have seen in the last couple of quarters persist into the first half of the year, we expect the full year ratio be in the bottom half of the guidance range in 2025. Lastly, we expect Group Benefits adjusted earnings to benefit from factors outside of underwriting, largely from continued change in our product mix, greater operating efficiencies and higher investment income.

[John McCallion, EVP & CFO at MetLife]

This will add an incremental 5% to 10% to adjusted earnings in 2025. For RIS, we've talked about the business being comprised primarily of spread and fee earnings. To that end, we provide a long term balance growth range for total liabilities, which can be used to project our future spread and fee balances. And in light of the opportunity we see under New Frontier, we are now increasing our total liability annual growth guidance to 3% to 5%. The total spread guidance range for the upcoming year can be applied to our projected general account balances to get a good proxy for our pretax spread income before expenses.

[John McCallion, EVP & CFO at MetLife]

We expect twenty twenty five total general account investment spread to be 110 to 135 basis points, assuming the forward curve holds and based on our VII estimate for 2025. We anticipate our core spread to stabilize from 2025 forward now that all remaining interest rate caps have matured. Beyond spread earnings, total fee and underwriting income, net of expenses, adds an incremental 5% to RIS adjusted earnings. For MetLife Holdings, we are expecting adjusted PFOs to decline approximately 4% to 6% in 2025, and we are lowering the adjusted earnings guidance range to $650,000,000 to $800,000,000 in 2025. The business run up accelerated in 2024 to roughly 9% of adjusted earnings as life and variable annuity lapses were higher during the year.

[John McCallion, EVP & CFO at MetLife]

Now let's look at the near term guidance for our segments outside The U. S. On Page 14. For Asia, we expect sales to grow mid to high single digits on a constant currency basis over the near term. In addition, we expect general account AUM on a constant currency basis to maintain mid single digit growth.

[John McCallion, EVP & CFO at MetLife]

Asia adjusted earnings in 2025 are expected to grow mid single digits on a constant currency basis and low single digits on a reported basis given the yen weakness assumed in the forward curve. For 2026 and 2027, adjusted earnings are expected to grow mid single digits on both a reported and constant currency basis. For Latin America, we expect both adjusted PFOs and adjusted earnings in 2025 to grow high single digits on a constant currency basis and flat on a reported basis given the forward currency rates, which assumes Mexican and Chilean pesos weaken in 2025. For 2026 and 2027, we expect adjusted PFOs and adjusted earnings to grow high single digits on both a reported and constant currency basis. Finally, for EMEA, we are expecting adjusted PFOs to grow mid to high single digits on a reported basis.

[John McCallion, EVP & CFO at MetLife]

For adjusted earnings, we expect EMEA's new quarterly run rate to be $70,000,000 to $75,000,000 in 2025 and then grow mid single digits in 2026 and 2027. Let me conclude by saying that MetLife delivered a solid quarter to close out another strong year. Our fourth quarter and full year results reflected the strong underlying fundamentals across our portfolio of businesses. We continue to move forward from a position of strength with a strong balance sheet, recurring free cash flow generation and a diversified set of market leading businesses. As we complete the final leg of our next horizon journey, we are pleased to have exceeded all the commitments that we made.

[John McCallion, EVP & CFO at MetLife]

Now as we forge our way into the new frontier, our strategic priorities position us well to deliver on our unique value proposition of accelerating responsible growth and generating attractive returns with lower risk. And with that, I'll turn the call back to the operator for your questions.

[Operator]

Thank you. The floor is now open for questions. Your first question comes from the line of Ryan Krueger with KBW. Please go ahead.

[Ryan Krueger, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hey, thanks. Good morning. My first question was for Rami on group. Can you give some additional details and color on oneone renewals, what you saw in terms of competition pricing and any other factors you'd highlight?

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Sure, Ryan. Good morning. So I would say, we're off to a really good start in oneone. We've had renewals and persistency within our kind of expectations. We're particularly pleased with the renewal actions on the dental business, which we've talked about before in terms of getting our targeted rate actions, as well as maintaining a very strong persistency.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

So off to a really strong start in oneone. And, you know, that's part of the reason why we really also feel good about taking our PFO guidance range from 4% to 7%, which is a one point increase from where we were last year.

[Ryan Krueger, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks. And then a question on the, I guess, somewhat broader question on the PRT market. There were a number of lawsuits targeted against one specific provider and plan sponsors that shows them it's gotten expanded to a couple more. MET has not been involved at this point. But I guess just curious, are you starting to see any level of lean in that market as planned sponsors might be more concerned about this lawsuit activity?

[Ryan Krueger, Managing Director at Keefe, Bruyette & Woods (KBW)]

Or is it not really having much of an impact for you guys at this point?

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Hey, Ryan. It's Rami here again. Look, it's very hard to forecast like what and if any impact this is going to have on the market. What may be helpful is just to share with you what we're seeing as of now, right? So one, this is a very well established market.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

It does operate within the rules and regulations which govern plan sponsors' responsibilities and a very robust solvency regulation which govern insurance companies. And within that context, the PRT products offer really valuable solution to plan sponsors and retirees. So in the here and now, we finished last year with a 6 point $400,000,000 of inflows for PRTs and the healthy REs and, we're off to a really good start in 'twenty five. We had a six forty million dollars plan, that we wrote in the first part of 'twenty five. And the factors that we talked about that will continue to drive this market in terms of the funded status, the financial and industrial logic will persist.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

And this is also reflective of the pipeline. So we still see a pipeline, we still see interest here, and we haven't really seen any material impact on the market. And just to step back outside of PRT and think about our RIS liability origination in general, inclusive of all the pieces we talked about on our Investor Day, as well as the adjacencies that we talked about, we still here feel really good that we will deliver the 3% to 5% balanced growth over the near term, which is also a point up from where we were last year. So in aggregate, we still feel really good about that range sitting here today.

[Ryan Krueger, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thank you.

[Operator]

Your next question comes from the line of Tom Gallagher with Evercore. Please go ahead.

[Thomas Gallagher, Analyst at Evercore]

Good morning. First question for Rami as well. Some peers have called out elevated voluntary benefit loss ratios this quarter. Did you also see that? And when I consider that impact plus the benefits you expect to get from dental repricing, would you say non medical health loss ratio is going to be better or worse in 2025 versus 2024?

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Hey, good morning, Tom. I would say for accident and health, we aren't seeing any material deviations outside of what you would call normal range of expectations. And we look at this on a product by product basis. Remember, it's not one single product. So I wouldn't say we've seen any material deviations here and we continue to see very much growth here with really solid margins.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

If you think about next year versus this year, we did finish 24, about less than a point above the midpoint of our range. We haven't changed the range for next year. So a good starting point for '25 is to go back to the midpoint of that range on the non medical health ratio, which does factor in some of the improvements around dental that you mentioned as well.

[Thomas Gallagher, Analyst at Evercore]

Got you. So like a point better is a reasonable base case?

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Midpoint of the range is where we point to. So I think that's where I would start, yes.

[Thomas Gallagher, Analyst at Evercore]

Good. And just for a follow-up, John, just on raising alternative return assumptions for '25, what's the thought process there? Is it just general market performance? Do you have some line of visibility into Q1? Because obviously you haven't met any of the lower quarterly expectations for 2024.

[Thomas Gallagher, Analyst at Evercore]

So curious why raise

[Thomas Gallagher, Analyst at Evercore]

it now?

[John McCallion, EVP & CFO at MetLife]

Yes. Good morning, Tom. Yes. So there's two components there in VII. We have our private equity LP investments and then we have some real estate and other funds.

[John McCallion, EVP & CFO at MetLife]

So I think on the and the private equity, obviously, is a much bigger proportion as you saw on the slide in terms of average assets. So we have a few things going on. Obviously, there's been a tailwind with public equity markets. That has been the case. It hasn't really shown itself in the private markets yet, but we think that that is still beneficial.

[John McCallion, EVP & CFO at MetLife]

Our sense is that the underlying operating companies are benefiting from that. You're starting to sense an increase in exit activity beginning. So like the backlog is starting to remove, or get better. I think there's probably a more accommodating regulatory and and business friendly environment ahead of us. So I think there's a number of positive backdrops that lead you to kind of our view for private equity.

[John McCallion, EVP & CFO at MetLife]

The private equity returns for the year, they actually weren't far off. If not, they might have been actually on target relative to the guidance we gave last year. So we're really just kind of moving it up a point. So that takes the big, I'll say the majority of the VII balance. Then you're left with real estate and other.

[John McCallion, EVP & CFO at MetLife]

And that, asset class probably underperformed our expectation last year. But, we're starting to see and you're hearing there's some bit of optimism beginning in the real estate market. It's showing signs of stabilizing. And so our view is that we're going to start to see recovery in values in 2025. So those the combined factors there give us a view that next year will be better than this year.

[John McCallion, EVP & CFO at MetLife]

We still think that there will be a gradual improvement throughout the year. So we don't think you get in the first quarter to call it the run rate or divide 1.7 by four. We think it's still lower, but we think we're above where we were here in the fourth quarter. So hopefully that gives you a sense of our thinking.

[Thomas Gallagher, Analyst at Evercore]

That does. Thank you.

[Operator]

Your next question comes from the line of Suneet Kamath with Jefferies. Please go ahead.

[Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc]

Great. Thanks. I wanted to go to the RIS spread guidance. If I look at the $110,000,000 to $135,000,000 it looks like that might be five basis points below what you originally guided to for 2024. And but you've taken your VII up and I thought you said core spreads were supposed to be stable.

[Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc]

So I'm just trying to understand what would explain that delta if I'm remembering correctly.

[John McCallion, EVP & CFO at MetLife]

Hey, good morning, Suneet. It's John. So, let me try to let me give you my maybe way of thinking about it and I'll come back to your specific question of the relative to the last year's guidance. So we ended this fourth quarter at 112, which was up six basis points sequentially. We were flat on the core spread at 108.

[John McCallion, EVP & CFO at MetLife]

And then as we look ahead, our view is that we expect twenty twenty five total spread to be, as we said, $110,000,000 to $135,000,000. If you take the midpoint of that, it's actually above the $2,024,000,000 dollars actual spread that we ended with, right? So what's doing that? So you see a bit of recovery in VII being forecasted coupled with stabilizing core spreads in 'twenty five. So all of the interest rate caps have rolled off.

[John McCallion, EVP & CFO at MetLife]

That is one of the things that started to depress core spreads during the course of 2024. Those hedges performed as intended, which was to protect us from a sharp rise of interest rates in an inverted curve. And so now we think of course spread stabilizing into twenty five percent and quite honestly, for the near term. And we typically are pretty hesitant about talking about more than one year. But I think we're starting to see, I think steepening the curve will be positive eventually.

[John McCallion, EVP & CFO at MetLife]

It could have a little pressure on us in the near term as we reposition some of the portfolio, but it also gives us the ability to implement other tools that we have. So maybe there's a few points of one or two point pressure in '25 relative to the 01/2008, but we think quickly kind of reverts back to that. So you think of like the 106 to 108 over the near term is a pretty good sense of what our core spread. You're going to see a lot more stability in the spread as we go forward. And especially as we put on new business, they tend to be accretive now to spread as well.

[John McCallion, EVP & CFO at MetLife]

So again, I think it's a very positive backdrop, but that maybe helps try to reconcile. I think relative to last year, I think the biggest probably delta is just the roll off of the interest rate caps relative to this year.

[Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc]

Okay. That makes sense. And then on Chariot, can you just talk about what sort of blocks of business you'd be interested in using that vehicle for? Is it TRT? Is it sort of retail annuities?

[Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc]

Can you use it domestically and internationally? Just some color about the scope of what you're thinking there would be helpful. Thanks.

[Michel Khalaf, President & CEO at MetLife]

Sure. Good morning, Suneet. It's Michel. So just taking a step back, let me just say we're very pleased with the progress we're making here and really excited about the growth opportunities that Chariotri will allow us to capture. And, you know, keep in mind, we've been, at work on this with, with our partner General Atlantic for less than a year.

[Michel Khalaf, President & CEO at MetLife]

So we're continuing to move at pace to fully capitalize and operationalize the company. And again, the intention here is to create a long term strategic partnership with Cherrytree. As we mentioned at Investor Day, really this is intended to enhance our capital flexibility and to allow us to generate additional liability growth beyond our balance sheet capacity if need be.

[Michel Khalaf, President & CEO at MetLife]

So,

[Michel Khalaf, President & CEO at MetLife]

and the other aspect to this is that it will allow us to convert this additional growth into high value earnings for MEM as well. I think we said also that the intention here is that for the first few years, the liabilities will be sourced through MetLife. And, but the possibility does exist that down the road Charity Tree may reinsure liabilities from third parties as well. And the liabilities sourced through MetLife include sort of PRT and other liabilities sourced by RIS as well as potentially Japan liabilities. So hopefully this gives you a bit of color.

[Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc]

Okay. Thanks.

[Operator]

Your next question comes from the line of Alex Scott with Barclays. Please go ahead.

[Alex Scott, Insurance Research Analyst at Barclays]

Hey, good morning. First one I had for you is actually on MetLife Investment Management. I'm sure you saw there was a news article suggesting that maybe Bright House Financial would potentially look to sell itself. And I'm not asking you to opine on that, but what I'm more interested in is if you could frame for us what kind of impact you could potentially have in MetLife Investment Management if an asset manager, one of these private equity backed companies engaged there and were interested in managing general account. How would that affect potentially your positioning?

[Alex Scott, Insurance Research Analyst at Barclays]

Like how much money do you make up their general account management, etcetera?

[John McCallion, EVP & CFO at MetLife]

Hey, Alex, good morning. It's John. I think first thing is we don't comment on specific client P and Ls. So, you probably won't get that out of me today. But, look, they're an excellent customer and client of ours.

[John McCallion, EVP & CFO at MetLife]

We take pride in the fact that we have them as a customer and particularly given our historical relationship and the historical personal relationships we all have. I think it's a prize client for us and we really value it. We've read the papers as well and heard that as well. And so, look, we've had other situations over time occur. We think we'd offer a unique value proposition and provide some unique capabilities.

[John McCallion, EVP & CFO at MetLife]

That's what we've been building here in MetLife Investment Management. We continue to do that. We're looking to grow our capabilities and you saw that most recently in some of the announcement that we made. So we think we have a unique offering. Having said that, we recognize that things can change over time and we think we're well diversified client base and we'll have to manage things as they come, but we are pretty excited about the things that we have to offer.

[Alex Scott, Insurance Research Analyst at Barclays]

Got it. Totally understand. Second one maybe on capital deployment, HoldCo cash in a really strong spot. Would be interested too though if you could comment at all about how much capital is behind statutory capital is behind the holdings business at this point and how to think about if you did find opportunities there, how that could add to the capital flexibility you have? And then ultimately, are there areas that you look to add to in terms of inorganic activity?

[John McCallion, EVP & CFO at MetLife]

Hey, Alex, it's John. It's probably a little bit of a too broad of a question for us to answer. I think as we've talked about, we are very effective at managing MetLife Holdings. At the same time, we take a very we have a third party view and talk to third parties to see if there's an opportunity for kind of something that makes sense, that's accretive to our firm from a risk adjusted basis. There's a lot of different variables and factors that go into, the outcomes or the items that drive value creation.

[John McCallion, EVP & CFO at MetLife]

So, it's probably a little hard to kind of give that broad answer. Also, you have to just diversification benefits we have to consider as well and things like that. So at the end of the day, it's been performing very well for us. When we think there's an opportunity, you've seen us take action. If not, there's no burning platform for us and we're happy to manage this effectively ourselves.

[John McCallion, EVP & CFO at MetLife]

We think we have the unique capabilities to do that.

[Alex Scott, Insurance Research Analyst at Barclays]

Got it. Thank you.

[Operator]

Your next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead.

[Wes Carmichael, Senior Analyst at Autonomous Research]

Hey, good morning. Thank you. And maybe just following up on the last question and maybe a little bit less broad, but particularly on long term care and haven't gotten a lot of attention lately. But I think last quarter you made some comments on the risk transfer market that seems somewhat constructive. And I'm just curious if there's any further developments there in terms of pricing or bid ask?

[Wes Carmichael, Senior Analyst at Autonomous Research]

And just maybe if I think about that block in particular, how does long term care kind of flow into the free cash flow conversion ratio for the company? Because I know a lot of the runoff in holdings has pretty high cash flow profile.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Hey, good morning. It's Rami here. Look, like we talked about last quarter, we are seeing more activity in that risk transfer market. And when deals get announced, it means you're getting more convergence between cedents and reinsurers, and that's encouraging. Having said that, these are always complex transactions to execute.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

They take time. Our objective for any risk transfer deal is always the same. We want to maximize shareholder value and continuing to serve our customers. And from the former price matters for these deals and so does structure. But in the interim specific to our book, I would say it's well capitalized, well reserved recall we are under the New York DFS reserving standards.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

We're held to a higher bar here. The book is well managed, it's performing in line with our expectations, and we continue to have a really successful rate action program that's allowing us to kind of obtain the necessary premium increases and continuing to provide coverage. So that's kind of a bit of an update in terms of where we stand. And I'll let John talk about the free cash flow piece of it.

[John McCallion, EVP & CFO at MetLife]

Yes, sure. It is a block of business that is growing its liabilities over time still, so it has not reached peak. So at the end of the day, it's actually not providing much in the way of cash flow these days. If any thing, it continues to strain just given you have to grow you're continuing to grow liabilities to the peak. So hopefully that helps.

[Wes Carmichael, Senior Analyst at Autonomous Research]

No, it does. Thank you very much. And my second question was just on the positive trends in group life that you mentioned that may persist through 2025. Can you provide a little bit more color on what you're seeing recently? And could this be something that persists a little bit longer term?

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

Hey, good morning. It's Ram here. Look, if you look at the public data and the recent trends in the CDC population data in particular for the working age population, do you see favorability in that data year over year? And, given our size and diversification, that favorability in the population data is working its way into our, into our ratios here. And that's probably the major driver as to why we came below the lower end of our kind of range for 2024.

[Ramy Tadros, President of U.S. Business & Head of MetLife Holdings at MetLife]

We're still watching it. I think I would say if the positive trends that we have seen in terms of population mortality continue, and continuing to say the first half of twenty twenty five, you know, we would expect that for the full year, we would be in the bottom half of our guidance range on the mortality ratio as John alluded to. So very much, population data driven and that favorability working into our numbers.

[Wes Carmichael, Senior Analyst at Autonomous Research]

Thank you.

[Operator]

Your next question comes from the line of Jimmy Bhullar with JPMorgan. Please go ahead.

[Jimmy Bhullar, Equity Research Analyst at JP Morgan]

Hey, good morning. I just had a couple of questions. The first one is on commercial real estate. And if we look at your portfolio, your metrics are fairly stable, although they've been getting slightly worse over the last few quarters, both on the coverage ratio and on loan to value, but not materially. So how should we think about losses coming in from that over the course of this year and has the market stabilized or do you think there's more pain to go through as you go through this year?

[Jimmy Bhullar, Equity Research Analyst at JP Morgan]

And then secondly, on pension reform in Latin America, there's been a lot of concern about, the Chilean market and it comes and goes. But I think recently there have been even some reports about potential nationalization of some of the EFP businesses. So just wondering if you have any insights on what is going on there?

[John McCallion, EVP & CFO at MetLife]

Yes. Thanks, Jimmy. It's John. Good morning. On the commercial mortgage front and the market, as you we all know there's been some recent pressure over the last few years.

[John McCallion, EVP & CFO at MetLife]

And but I think there's the backdrop is starting to build some kind of optimism for the going forward. Obviously, there's been strong economic growth, that continues to remain healthy. And you start to see some even some real estate fundamentals beginning. Even in office, it's showing signs of bottoming. It's still probably not quite there yet, but it's showing signs.

[John McCallion, EVP & CFO at MetLife]

Office vacancies likely peaked most in 2024. You see the remote work starting to reverse. You see lease signings have been increasing. And so, all in all and then couple that with like a low construction pipeline. All of that starts to give itself the ability to start to make a shift in terms of where things are.

[John McCallion, EVP & CFO at MetLife]

I think even vacancy rates across other properties are at historical averages, if not below. And then last thing I'd highlight is you're beginning to see signs of transaction volumes pick up. Even us, I think we had $80,000,000 level of or $90,000,000 of gains this quarter on sales. So you're starting to see transactions. So look, as we look forward, we think we've we're approaching the peak of the cycle or trough, whichever you want to put it.

[John McCallion, EVP & CFO at MetLife]

And so we think from an LTV perspective, we probably have hit our point. Maybe there's a little more change, but I think we've kind of hit it in terms of LTVs. And looking forward, in terms of losses, we've pretty I would say we've effectively reserved for the most part, if not all, for losses. So right now, it's just kind of getting to the kind of the end of letting the dust settle. Probably the best way to think about what's left is we probably we might have a point or two of RBC.

[John McCallion, EVP & CFO at MetLife]

That's maybe a better way to kind of size what this means as opposed to maybe charge offs or losses because we probably have been fully reserved now and, all else equal, obviously. And so once all the dust settled, maybe there's another point or two on average in terms of the impact of the cycle. That's how I maybe put it.

[Jimmy Bhullar, Equity Research Analyst at JP Morgan]

Is that Derek?

[Eric Clurfain, Regional President, Latin America at MetLife]

Hi, Jimmy. Regarding the Chile pension reform, so yes, you're right. After almost a decade of debate, a pension reform was approved last week by the Chilean Congress. So now with this recent development, basically, we have more clarity on what's next.

[Eric Clurfain, Regional President, Latin America at MetLife]

And, in a nutshell, the key takeaways from this reform are threefold. One, the private pension system continues in its current structure with a few adjustments. The second is that employer contributions will be gradually increased over time. And the third is in terms of implementation, the reform will be gradual and take several years. So some elements of the law will require us to adapt our operations over time and we don't foresee any material impact to our business that we wouldn't be able to mitigate.

[Eric Clurfain, Regional President, Latin America at MetLife]

And we continue to remain very much committed to providing high quality pension management services to our customers as we navigate these changes over time.

[Jimmy Bhullar, Equity Research Analyst at JP Morgan]

Thank you.

[Operator]

Due to time constraints, our last question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Hi, thanks. Good morning. My first question is on NIM. I know that's included within corporate. And Don, I know in December you told us you guys would start breaking it out right this year.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Could you give us a sense of how much earnings NIM contributed in 2024 and the growth that you're expecting in NIM in 2025 within your guide?

[John McCallion, EVP & CFO at MetLife]

Good morning, Elyse. Look, we'll do all that when we start to break out the segment. The way I and the reason why I hesitate to start doing that now is what we tried to do today was, is provide you the outlook based on our current state. And as you just said, MIMS Incorporated, in that. So it but it's spread out.

[John McCallion, EVP & CFO at MetLife]

So we, I'm reluctant to kind of throw out a number that then creates other confusion. So I think for modeling purposes, I would stick to kind of the segmentation that we have today. As we said at Investor Day, we expect to report MIM as a segment in 'twenty five. But in light of the recent announcement with Pine of Pine Bridge, we are now aiming to do that in to coincide with the closing of the transaction. And I can also thank John Hall.

[John McCallion, EVP & CFO at MetLife]

He said that you worked very hard, all of you, and that we wanted to make it easier for you to do all your model changes. So that was, you can thank him, in due time. So we expect the timing of the close to be in the second half of 'twenty five. We have a number of regulatory approvals that we have to, get done, but the team is working intensely to get those completed. So that would be our timing of when we give more info on MIP.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

And then one last quick one. It sounds like you guys are using the fuller curve, right, for some of the currency assumptions within the guide. I'm just trying to get a sense like if there is upside or even downside risk to some of the international earnings, as currency moves during 2025.

[John McCallion, EVP & CFO at MetLife]

Yes. That's correct, Elyse. We tend to just lock in on the twelvethirty one forward curves. And I think the places where we're seeing the most change over the last three months is primarily Latin America. You saw that mostly throughout the fourth quarter happen.

[John McCallion, EVP & CFO at MetLife]

So the average for the year is really kind of pressured there. I think from here, we see maybe a little more weakening from the spot rate. So I think at the end of twenty twenty five, it's somewhere a little above '21 where we're maybe hovering in the 20s today. And then, and then also Asia as well. So we use a forward curve.

[John McCallion, EVP & CFO at MetLife]

I think we're in like the yen today is in the 154 range or so, something like that. And we're I think the forward curve says spot rate will be one low 50s, somewhere around there. So there's a I think on average, there's a little pressure if you take the average for the year. So it's a little bit of a headwind, as well as some of the other Asian currencies. So hopefully, that helps.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Thank

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

you.

[Operator]

This concludes our question and answer session. I will now turn the call back over to John Hall for closing remarks.

[John Hall, Global Head, IR at MetLife]

Thanks everyone for joining us. Have a great day.

[Operator]

This concludes today's call. You may now disconnect.

Participants

Executives

• John Hall, Global Head, IR
• Michel Khalaf, President & CEO
• John McCallion, EVP & CFO
• Ramy Tadros, President of U.S. Business & Head of MetLife Holdings
• Eric Clurfain, Regional President, Latin America

Analysts

• Ryan Krueger, Managing Director at Keefe, Bruyette & Woods (KBW)
• Thomas Gallagher, Analyst at Evercore
• Suneet Kamath, Senior Research Analyst at Jefferies & Company Inc
• Alex Scott, Insurance Research Analyst at Barclays
• Wes Carmichael, Senior Analyst at Autonomous Research
• Jimmy Bhullar, Equity Research Analyst at JP Morgan
• Elyse Greenspan, Managing Director at Wells Fargo Securities