MetLife, Inc. (MET) Q4 2025 Earnings Call Prepared Remarks Transcript

2026-02-06 18:54:20 ET

MetLife, Inc. (MET) Q4 2025 Earnings Call February 3, 2026 7:00 PM EST

Company Participants

John McCallion - Executive VP, CFO & Head of Investment Management

Presentation

John McCallion
Executive VP, CFO & Head of Investment Management ...

Hello, and thank you for joining, as I discuss MetLife's results for the fourth quarter and the full year of 2025. The fourth quarter provided a strong close to the year, reflecting the earnings power of the firm through our diversified set of market-leading businesses. We executed on key priorities under the New Frontier strategy, further positioning MetLife to generate responsible growth and attractive returns with lower risk.

Also, you'll notice that MetLife Investment Management is now a stand-alone business segment, reflecting the strategic importance of our asset management business, and we have combined the former MetLife Holdings segment largely into Corporate & Other.

Now let me start with the full year 2025. Net income was $3.2 billion. Our full year adjusted earnings were $5.9 billion. The primary difference between net income and adjusted earnings relates to net losses on derivatives, which are used to hedge certain economic exposures and generally have an economic offset elsewhere in the financial statements. On a per share basis, adjusted earnings excluding notable items, rose 10% to $8.89.

A few additional highlights for the full year. We saw strong volume growth across our businesses. This included recording $14.2 billion in pension risk transfer or PRT transactions in 2025. Expense discipline remained a key focus with the full year direct expense ratio of 11.7% beating our 2025 target of 12.1%, which excludes notable items and PRT transactions. Our free cash flow exceeded our 2-year average target ratio of 65% to 75% of adjusted earnings. And our full year adjusted return on equity was 15.9% within our target range of 15% to 17%.

Now let's turn to our fourth quarter results. Fourth quarter net income was $778 million compared to $1.2 billion in the fourth quarter of 2024. Net derivative losses were the primary driver, partially offset by higher adjusted earnings. Adjusted earnings were $1.6 billion, up 13% from the prior year period, driven by higher variable investment income, strong volume growth and improved expense margins. On a per share basis, adjusted earnings were $2.49. Excluding notable items, earnings per share were $2.58, up 24% from the prior year period.

Now let's turn to our business segments, and I'll focus on quarterly results unless otherwise stated. Group Benefits adjusted earnings were $465 million, up 12%, largely due to favorable life underwriting. Adjusted premiums, fees and other revenues, or PFOs, were $6.3 billion, up 2% with overall growth partially offset by the impact of favorable mortality on participating life contracts. PFOs from participating life contracts can fluctuate with claims experience.

Retirement and Income Solutions adjusted earnings were $454 million, an 18% increase, largely driven by favorable variable investment income. Record PRT sales were achieved in both the fourth quarter and the full year with annual sales up 56%. Asia adjusted earnings were $444 million, essentially flat on a reported basis and up 1% on a constant currency basis. Volume growth and favorable expenses were offset by less favorable underwriting.

Regional sales reached $598 million, an 18% constant currency increase driven mainly by Japan and Korea. Moving to Latin America. Adjusted earnings, excluding notable items, were $227 million, up 13% on a reported basis and 4% on a constant currency basis, reflecting strong volume growth across the region, and favorable Chilean encaje returns. Adjusted PFOs were $1.8 billion, up 25% on a reported basis and 16% on a constant currency basis due to strong growth across the region, sales increased 26%, driven by growth across the region.

In EMEA, adjusted earnings were $97 million, up 64% on a reported and constant currency basis, primarily driven by strong volume growth across the region and favorable underwriting. Adjusted PFOs were up 21% on a reported basis and 17% on a constant currency basis due to strong sales across the region. And finally, in MetLife Investment Management, adjusted earnings were $60 million.

We're excited to begin sharing the results of MetLife Investment Management, a top 25 global asset manager based on assets under management. Total assets under management stand at $742 billion as of year-end, a 27% increase over the prior year, primarily reflecting the recent closing of the acquisition of PineBridge Investments. Further details regarding the performance of our business segments can be found in our earnings release dated February 4.

Here are some key enterprise metrics. MetLife's adjusted return on equity was 17.6% for the fourth quarter. Adjusted book value per common share was $57.07. Turning to cash and capital management. Cash and liquid assets at the holding companies amounted to $3.6 billion at the end of 2025, which is within our target cash buffer of $3 billion to $4 billion. In the fourth quarter, we bought back approximately $430 million of our common shares and paid approximately $370 million in common stock dividends. And for the full year, we returned approximately $4.4 billion to shareholders through common stock dividends and share repurchases.

In summary, MetLife's strong fourth quarter and full year results demonstrate our ability to execute our all-weather New Frontier strategy and drive performance, all while maintaining a robust capital position and returning cash to shareholders. We are confident that the foundation we've built in 2025 will help us achieve our financial commitments and deliver on our unique value proposition of responsible growth and attractive returns with lower risk.

Thank you for watching.

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