MetLife Announces First Quarter 2007 Results

MetLife, Inc. (NYSE: MET) today reported first quarter 2007 net income1 of $983 million, or $1.28 per diluted common share, compared with $714 million, or $0.93 per diluted common share, for the first quarter of 2006. For the three months ended March 31, 2007  2006  (In millions, except per diluted common share data) Net income available to common shareholders $983  $714  Net income available to common shareholders per diluted common share $1.28  $0.93  Operating earnings available to common shareholders2 $1,082  $1,026  Operating earnings available to common shareholders per diluted common share2 $1.41  $1.33  Book value per diluted common share $41.64  $34.50  Book value per diluted common share, excluding accumulated other comprehensive income2   $39.82    $33.73    1 All references in this press release (other than in any of the tables and in the Non-GAAP and Other Financial Disclosures discussion below) to net income, net income per diluted common share, operating earnings and operating earnings per diluted common share should be read as net income available to common shareholders, net income available to common shareholders per diluted common share, operating earnings available to common shareholders and operating earnings available to common shareholders per diluted common share, respectively.   2 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 discussion below, as well as in the tables that accompany this release. First Quarter Highlights Achieved record operating earnings of $1.41 per diluted common share Earned total premiums, fees and other revenues of $8.4 billion, up 6% from the prior year period Reached a record $537.8 billion in total assets Operating earnings for the first quarter of 2007 were a record $1,082 million, or $1.41 per diluted common share, compared with $1,026 million, or $1.33 per diluted common share, for the prior year period. "In addition to delivering record operating earnings in the first quarter, MetLife also achieved top-line growth and increased total assets in a challenging interest rate environment,” said C. Robert Henrikson, chairman of the board, president and chief executive officer of MetLife, Inc. "MetLife continues to benefit from its diverse businesses, enabling us to focus on multiple opportunities to leverage our strong brand name and expand our leading positions in several markets. Our competitive products and high quality distribution channels will serve us well as we continue to provide financial solutions that meet the asset and income protection needs of individuals around the world.” First Quarter Segment Overview Reconciliations of segment net income to segment operating earnings are provided in the tables that accompany this release. Institutional Business Earnings of $452 Million, up 9% Institutional Business operating earnings for the first quarter of 2007 were $452 million, compared with $416 million in the prior year period. During the quarter, the segment benefited from favorable underwriting results across all product lines, higher net investment income and top line growth. The earnings increase was partially offset by an increase in amortization of deferred policy acquisition costs of approximately $18 million, net of income tax, due to a change in accounting rules required under AICPA Statement of Position (SOP) 05-1. This increased amortization impacted both group life and non-medical health & other results. Group life earnings increased 18% over the prior year period to $107 million. Underlying growth in the business and favorable underwriting results were somewhat offset by the previously mentioned accounting change. Retirement & savings earnings were $266 million in the first quarter of 2007, compared with $261 million in the prior year period. Strong net investment income and lower expenses drove the higher results. Retirement & savings total assets reached a combined record of $119.3 billion. Non-medical health & other earnings increased 23% over the prior year period to $79 million due primarily to growth in the dental and disability businesses and favorable underwriting results. This was partially offset by the previously mentioned accounting change. Non-medical health & other premiums, fees and other revenues were up 11% over the prior year period, reflecting growth across all product lines, especially in dental and disability. Individual Business Earnings of $319 Million Individual Business operating earnings were $319 million in the first quarter of 2007, compared with $408 million in the prior year period. Underlying growth in the business was partially offset by a revision to the amortization of deferred policy acquisition costs of $40 million, net of income tax, in both the life and annuity businesses, as well as $22 million, net of income tax, in asset write-offs. Total life earnings were down compared with the prior year period, reflecting the impact of a revision to the amortization of deferred policy acquisition costs and higher expenses. Total life first year statutory premiums and deposits were down compared with the prior year period. Sales in the agency channel were up 6% and were more than offset by a decline in universal life sales in the independent channel. Annuity earnings declined from the first quarter of 2006 due to the impact of a revision to the amortization of deferred policy acquisition costs and higher expenses, which were partially offset by growth in the business. Total fees for separate account investment-type products within the annuity business increased 15% compared with the first quarter of 2006 to reach a record level. Total annuity statutory premiums and deposits were $3.7 billion in the first quarter of 2007. Variable annuity sales in the agency channel were up 4% over the prior year period and total annuity assets reached a record $128.3 billion. Auto & Home Earnings of $106 Million, up 14% Auto & Home operating earnings were $106 million in the first quarter of 2007, compared with $93 million in the prior year period. During the quarter, the segment benefited from favorable claim development related to prior accident years of $30 million, net of income tax, as well as lower catastrophes compared with the prior year period. In addition, non-catastrophe claim frequencies returned to more normal levels compared to the favorable levels in the prior year period, when weather conditions were relatively mild. International Earnings a Record $124 Million, up 63% International operating earnings were a record $124 million in the first quarter of 2007, compared with $76 million in the prior year period. International’s strong performance during the quarter was due primarily to business growth in the Latin America and Asia Pacific regions. In addition, expense management positively impacted results along with $17 million, net of income tax, in one-time benefits related to tax benefits and experience premium reserve reductions. During the quarter, International premiums, fees and other revenues grew 18% over the prior year period. In Japan, MSI MetLife achieved annuity sales of $1.6 billion, up 36% over the prior year period on a Yen basis. Investments MetLife’s investment portfolio continued to deliver strong results in the first quarter of 2007. Before income tax and the impact of deferred policy acquisition costs, variable investment income was approximately $120 million higher than planned, driven primarily by strong corporate joint venture income. Corporate Events Share Repurchase For the quarter ended March 31, 2007, MetLife repurchased, through its share repurchase program, 11.9 million shares of common stock at an aggregate cost of $750 million under an accelerated share repurchase arrangement. At March 31, 2007, MetLife had $458 million remaining on its existing share repurchase authorization. Adoption of New Accounting Pronouncements During the first quarter of 2007, MetLife adopted AICPA SOP 05-1, which provides guidance on accounting by insurance enterprises for deferred policy acquisition costs associated with the replacement or significant modification of an insurance policy or annuity contract. The adoption resulted in a reduction in deferred policy acquisition costs of $292 million, net of income tax, and was recorded as a reduction to retained earnings. The adoption also resulted in an increase in amortization of deferred policy acquisition costs of approximately $18 million, net of income tax, to operating earnings in the first quarter. In addition, during the quarter, MetLife adopted FASB Interpretation No. 48, which clarifies the accounting for uncertainty in income tax recognized in a company’s financial statements. This adoption decreased retained earnings by $37 million, net of minority interest. Earnings Conference Call MetLife will hold its first quarter 2007 earnings conference call and audio Webcast on Wednesday, May 2, 2007, 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 (domestic and international callers). 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 Wednesday, May 2, 2007, until Wednesday, May 9, 2007, at 11:59 p.m. (ET). To listen to a replay of the conference call over the telephone, dial (320) 365-3844 (domestic and international callers). The access code for the replay is 867011. 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 tax, adjustments related to net investment gains and losses, net of income tax, and discontinued operations other than discontinued real estate, net of income tax, less preferred stock dividends which are recorded in Corporate & Other. Scheduled periodic 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 tax, and adjustments related to net investment gains and losses, net of income tax, both of which can fluctuate significantly from period to period, and discontinued operations other than discontinued real estate, net of income tax, 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. For the three months ended March 31, 2007  2006  (In millions, except per diluted common share data) Net income available to common shareholders $983  $1.28  $714  $0.93  Net investment (gains) losses, net of income tax1 58  0.08  415  0.54  Adjustments related to net investment (gains) losses, net of income tax2 26  0.03  (95) (0.13) Discontinued operations, net of income tax3 15  0.02  (8) (0.01) Operating earnings available to common shareholders $1,082  $1.41  $1,026  $1.33    Book value per diluted common share $41.64  $34.50  Accumulated other comprehensive (income) loss per diluted common share (1.82) (0.77) Book value per diluted common share, excluding accumulated other comprehensive income/loss $39.82  $33.73    (1) Net investment (gains) losses, net of income tax, includes (gains) losses on sales of real estate and real estate joint ventures related to discontinued operations of $(3) million and $3 million for the three months ended March 31, 2007 and 2006, respectively, and excludes (gains) losses of $(38) million and $(25) million for the three months ended March 31, 2007 and 2006, respectively, from scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting treatment.   (2) Adjustments related to net investment (gains) losses, net of income tax, 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 tax, excludes (gains) losses from discontinued operations related to real estate and real estate joint ventures. Net income available to common shareholders and net income available to common shareholders per diluted common share are defined as net income and net income per diluted common share less preferred stock dividends, respectively. 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, the development of new products by new and existing competitors and for personnel; (iii) investment losses and defaults; (iv) unanticipated changes in industry trends; (v) catastrophe losses; (vi) ineffectiveness of risk management policies and procedures; (vii) changes in accounting standards, practices and/or policies; (viii) changes in assumptions related to deferred policy acquisition costs, value of business acquired or goodwill; (ix) 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; (x) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (xi) adverse results or other consequences from litigation, arbitration or regulatory investigations; (xii) downgrades in the company’s and its affiliates’ claims paying ability, financial strength or credit ratings; (xiii) regulatory, legislative or tax changes that may affect the cost of, or demand for, the company’s products or services; (xiv) MetLife, Inc.’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; (xv) deterioration in the experience of the "closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (xvi) economic, political, currency and other risks relating to the company’s international operations; (xvii) the effects of business disruption or economic contraction due to terrorism or other hostilities; (xviii) the company’s ability to identify and consummate on successful terms any future acquisitions, and to successfully integrate acquired businesses with minimal disruption; and (xix) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission. 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. MetLife, Inc.Consolidated Statements of IncomeUnaudited(In millions)     Three Months Ended March 31, 2007  2006    Premiums $ 6,765  $ 6,428  Universal life and investment-type product policy fees 1,280  1,175  Net investment income 4,521  4,195  Other revenues 384  328  Net investment gains (losses)   (38)   (594) Total revenues   12,912    11,532    Policyholder benefits and claims 6,773  6,405  Interest credited to policyholder account balances 1,376  1,197  Policyholder dividends 424  421  Other expenses   2,896    2,495  Total expenses   11,469    10,518    Income from continuing operations before provision for income tax 1,443  1,014  Provision for income tax   416    284  Income from continuing operations 1,027  730  Income from discontinued operations, net of income tax   (10)   17  Net income 1,017  747  Preferred stock dividends   34    33  Net income available to common shareholders $ 983  $ 714      Operating Earnings Available to Common Shareholders Reconciliation Net income available to common shareholders $ 983  $ 714  Net investment gains (losses) (95) (633) Minority interest - net investment gains (losses) 4  (2) Net investment gains (losses) tax provision   33    220  Net investment gains (losses), net of income tax (1) (2) (58) (415) Adjustments related to universal life and investment-type product policy fees -  (3) Adjustments related to policyholder benefits and dividends (65) 108  Adjustments related to other expenses 25  42  Adjustments related to tax benefit (provision)   14    (52) Adjustments related to net investment gains (losses), net of income tax (3) (26) 95  Discontinued operations, net of income tax (4)   (15)   8  Operating earnings available to common shareholders $ 1,082  $ 1,026        (1) Net investment gains (losses), net of income tax, excludes scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting treatment of $38 million and $25 million for the three months ended March 31, 2007 and 2006, respectively.   (2) Net investment gains (losses), net of income tax, from real estate and real estate joint ventures includes discontinued operations of $(3) million and $3 million for the three months ended March 31, 2007 and 2006, respectively.   (3) Adjustments related to net investment gains (losses), net of income tax, include 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 tax, excludes gains (losses) from discontinued operations related to real estate and real estate joint ventures. MetLife, Inc.Financial HighlightsUnaudited(In millions, except per common share data or unless otherwise noted)     For the Three MonthsEnded March 31, 2007  2006  Other Financial Data: Net income available to common shareholders $ 983  $ 714  Operating earnings available to common shareholders $ 1,082  $ 1,026  Total assets (billions) $ 537.8  $ 499.1    Individual Business Sales Data: Total first year life premiums and deposits $ 230  $ 309  Variable and Universal life first year premiums and deposits (including COLI/BOLI) $ 178  $ 259  Total annuity deposits $ 3,682  $ 3,847    Earnings Per Common Share Calculation: Weighted average common shares outstanding - diluted 769.1  768.8  Operating earnings available to common shareholders per common share - diluted $ 1.41  $ 1.33  Net income available to common shareholders per common share - diluted $ 1.28  $ 0.93  MetLife, Inc. Balance Sheet Data March 31, 2007 (Unaudited) and December 31, 2006 (Audited) (In millions)     March 31, December 31, 2007  2006  Balance Sheet Data: General account assets $ 390,497  $ 383,350  Separate account assets   147,312    144,365  Total assets $ 537,809  $ 527,715    Policyholder liabilities (including amounts in closed block) $ 272,260  $ 270,599  Short-term debt 3,375  1,449  Long-term debt 10,338  9,979  Junior subordinated debt securities 3,780  3,780  Shares subject to mandatory redemption 278  278  Other liabilities 66,397  63,467  Separate account liabilities   147,312    144,365  Total liabilities   503,740    493,917    Preferred stock, at par value 1  1  Common stock, at par value 8  8  Additional paid-in capital 17,503  17,454  Retained earnings 17,228  16,574  Treasury stock (2,073) (1,357) Accumulated other comprehensive income   1,402    1,118  Total stockholders' equity   34,069    33,798  Total liabilities and stockholders' equity $ 537,809  $ 527,715  MetLife, Inc.Reconciliations of Net Income Available to Common Shareholders to Operating Earnings Available to Common ShareholdersUnaudited(In millions)     Three MonthsEnded March 31, 2007  2006    Total Institutional Operations Net income available to common shareholders $ 356  $ 213  Net investment gains (losses), net of income tax (88) (219) Adjustments related to net investment gains (losses), net of income tax   (8)   16  Operating earnings available to common shareholders $ 452  $ 416    Institutional Operations Group Life Net income available to common shareholders $ 103  $ 90  Net investment gains (losses), net of income tax (4) (2) Adjustments related to net investment gains (losses), net of income tax   -    1  Operating earnings available to common shareholders $ 107  $ 91    Retirement & Savings Net income available to common shareholders $ 181  $ 86  Net investment gains (losses), net of income tax (81) (168) Adjustments related to net investment gains (losses), net of income tax   (4)   (7) Operating earnings available to common shareholders $ 266  $ 261    Non-Medical Health & Other Net income available to common shareholders $ 72  $ 37  Net investment gains (losses), net of income tax (3) (49) Adjustments related to net investment gains (losses), net of income tax   (4)   22  Operating earnings available to common shareholders $ 79  $ 64    Total Individual Operations Net income available to common shareholders $ 315  $ 304  Net investment gains (losses), net of income tax 3  (170) Adjustments related to net investment gains (losses), net of income tax   (7)   66  Operating earnings available to common shareholders $ 319  $ 408    Individual Operations Traditional Life Net income available to common shareholders $ 56  $ 94  Net investment gains (losses), net of income tax 6  (44) Adjustments related to net investment gains (losses), net of income tax   (12)   40  Operating earnings available to common shareholders $ 62  $ 98    Variable & Universal Life Net income available to common shareholders $ 48  $ 58  Net investment gains (losses), net of income tax (7) (25) Adjustments related to net investment gains (losses), net of income tax   2    9  Operating earnings available to common shareholders $ 53  $ 74    Annuities Net income available to common shareholders $ 221  $ 141  Net investment gains (losses), net of income tax 8  (102) Adjustments related to net investment gains (losses), net of income tax   3    17  Operating earnings available to common shareholders $ 210  $ 226    Other Net income (loss) available to common shareholders $ (10) $ 11  Net investment gains (losses), net of income tax   (4)   1  Operating earnings (losses) available to common shareholders $ (6) $ 10    Total Auto & Home Net income available to common shareholders $ 113  $ 91  Net investment gains (losses), net of income tax   7    (2) Operating earnings available to common shareholders $ 106  $ 93    Auto & Home Auto Net income available to common shareholders $ 81  $ 64  Net investment gains (losses), net of income tax   6    (1) Operating earnings available to common shareholders $ 75  $ 65    Homeowners & Other Net income available to common shareholders $ 32  $ 27  Net investment gains (losses), net of income tax   1    (1) Operating earnings available to common shareholders $ 31  $ 28    International Net income available to common shareholders $ 100  $ 104  Net investment gains (losses), net of income tax 18  5  Adjustments related to net investment gains (losses), net of income tax (11) 15  Discontinued operations, net of income tax   (31)   8  Operating earnings available to common shareholders $ 124  $ 76    Reinsurance Net income available to common shareholders $ 34  $ 26  Net investment gains (losses), net of income tax (2) 4  Adjustments related to net investment gains (losses), net of income tax   -    (2) Operating earnings available to common shareholders $ 36  $ 24