MetLife Announces Third Quarter 2016 Results

MetLife, Inc. (NYSE:MET) today announced the following results for the third quarter of 2016:

Third Quarter Results

On a GAAP basis, MetLife reported third quarter 2016 net income of $571 million, down 52 percent from the third quarter of 2015. On a per share basis, net income was $0.51, also down 52 percent from the prior-year period.

Net income includes $683 million, after tax, in net derivative losses reflecting changes in interest rates, equity markets and foreign currencies, compared to $315 million, after tax, in net derivative gains in the third quarter of 2015. MetLife uses derivatives as part of its broader asset-liability management strategy to hedge certain risks, such as movements in interest rates 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.

Net income for the third quarter of 2016 also includes a goodwill impairment of $223 million, after tax, related to the new Brighthouse Financial segment.

MetLife reported operating earnings* of $1.4 billion, up 102 percent from the third quarter of 2015, and 98 percent on a constant currency basis*. On a per share basis, operating earnings were $1.28, up 106 percent from the prior-year quarter.

Third quarter 2016 operating earnings included the following notable items:
  • re-segmentation of MetLife's businesses that included the establishment of a Brighthouse Financial segment; as previously announced, this resulted in the loss of an aggregation benefit associated with the GAAP reserve testing of variable and universal life policies, which decreased operating earnings by $254 million, or $0.23 per share, after tax
  • results of the annual actuarial assumption review completed in the third quarter, and other insurance adjustments, which decreased operating earnings by $65 million, or $0.06 per share, after tax
  • variable investment income above the company's 2016 quarterly plan range by $22 million, or $0.02 per share, after tax, and the impact of deferred acquisition costs (DAC)
  • favorable catastrophe experience and prior year development, which increased operating earnings by $16 million, or $0.01 per share, after tax

Adjusting for all notable items in both the third quarter of 2015 and the third quarter of 2016, operating earnings were up 11 percent in the third quarter of 2016, and 10 percent on a constant currency basis. On a per share basis, operating earnings were $1.53, up 13 percent from $1.36 in the third quarter of 2015, and 12 percent on a constant currency basis.

If you liked this article you might like

Goldman Sachs Could Be Another Negative Tell; Takeaways: Doug Kass' Views

5 Stocks That Look Good Short

Sears Is Facing a Colossal Problem That Might Ignite a Bear Raid

MetLife Asks for Changes to Protect Interest Payments, Dividends

Now You're Hearing Apple Roar: Market Recon