MetLife, Inc. (MET) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong performance and strategic advancements, such as the successful Chariot Re launch and favorable financial ratios. The Q&A session reveals management's confidence in overcoming challenges, with positive updates on nonmedical health and MIM's growth. Despite some unclear responses, the overall sentiment is positive due to strategic initiatives like the PineBridge acquisition and efficient capital structures in Japan. The stock price is likely to experience a positive movement, within the 2% to 8% range, as the company demonstrates resilience and growth potential.
Key Financial Performance
Adjusted Earnings $1.6 billion or $2.37 per share, up 22% per share from the prior year period. The increase was driven by strong investment margins, volume growth across several business segments, and higher private equity returns.
Variable Investment Income $483 million, above the implied quarterly outlook of $425 million. This was due to higher private equity returns, which reached 3% for the quarter.
Adjusted Return on Equity (excluding notables) 16.7%, near the top of the company's target range of 15% to 17%. This was supported by the rebound in variable investment income.
Direct Expense Ratio 11.6% in the third quarter, an improvement from the prior year and below the full-year target of 12.1%. This was achieved through productivity and efficiency gains driven by AI and other emerging technologies.
Group Benefits Adjusted Earnings (excluding notable items) $457 million, up 6% from a year ago. This was due to solid underwriting results, normal disability results, and seasonally better dental profitability.
Retirement and Income Solutions Adjusted Earnings (excluding notable items) $423 million, up 15% from the prior year quarter. This was driven by higher variable investment income and strong general account balance growth.
Asia Adjusted Earnings (excluding notable items) $473 million, a 36% increase from the prior year quarter. This was driven by higher variable investment income, volume growth, and a $30 million after-tax benefit from a model refinement in Japan.
Latin America Adjusted Earnings (excluding notable items) $222 million, up 2% from the prior year. This was supported by volume growth and a favorable Chilean encaje return, although it was slightly below the prior year.
EMEA Adjusted Earnings (excluding notable items) $89 million, up 19% from the prior year. This was primarily due to volume growth.
MetLife Holdings Adjusted Earnings $190 million, up 12% from the prior year. This was primarily due to higher variable investment income.
Shareholder Returns Approximately $875 million returned to shareholders in the third quarter through $500 million in share repurchases and $375 million in common stock dividends.
Holding Company Cash and Liquid Assets $4.9 billion as of September 30, above the target cash buffer of $3 billion to $4 billion.
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Operating Highlights
New Frontier strategy: MetLife's diversified set of market-leading businesses showcased strong earnings power. The strategy has been instrumental in driving growth and operational efficiency.
Chariot Re: Launched in Q3 2025 with an initial reinsurance transaction of roughly $10 billion, expanding retirement liability origination capacity in a capital-efficient manner.
Accelerator digital platform: Innovative platform for embedded insurance in Latin America, attracting over 20 strategic partners and generating $340 million in annualized premiums.
Global retirement liability origination: Growth observed in the U.S., U.K., and Japan, supported by an efficient capital structure.
Asia market expansion: Sales surged 34% on a constant currency basis, with a 31% increase in Japan and 39% growth in other Asia markets like Korea, China, and India.
Latin America partnerships: Added MercadoLibre as a partner on the Accelerator platform in Mexico and Brazil, enhancing market presence.
Adjusted earnings: Reported $1.6 billion or $2.37 per share, a 22% increase per share from the prior year.
Variable investment income: Posted $483 million, exceeding the quarterly outlook of $425 million, driven by higher private equity returns.
Direct expense ratio: Improved to 11.6%, below the full-year target of 12.1%, showcasing disciplined expense management.
PineBridge acquisition and Talcott Resolution Life sale: On track to close in Q4 2025, aligning with the New Frontier strategy.
Capital deployment: Returned $875 million to shareholders in Q3 2025 through dividends and share repurchases, with a total of $24 billion returned over the past 5 years.
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Risk or Challenges
Regulatory Changes in Mexico: The resolution of an industry-wide tax matter in Mexico regarding the value-added tax deduction of certain health insurance claims expenses resulted in an after-tax charge of $71 million in Q3 2025. An additional after-tax charge of $20 million to $25 million is anticipated in Q4, and a reduction in Latin America adjusted earnings of roughly $50 million to $60 million is expected in 2026.
Credit Market Conditions: While the credit environment is currently stable, spreads are historically tight and in some ways priced for perfection. This could pose risks to investment returns and portfolio performance.
Chariot Re Reinsurance Impact: The transfer of approximately $10 billion of RIS liabilities to Chariot Re in Q3 2025 resulted in a reduction in adjusted earnings, which is expected to continue at $15 million to $20 million per quarter.
Japan Solvency Margin Transition: The transition in Japan to the Economic Solvency Ratio (ESR) framework by March 2026 could introduce uncertainties in capital management and regulatory compliance.
Higher Interest Payments on Debt: Corporate and Other reported an increased adjusted loss due to higher interest payments on outstanding debt, which could impact overall profitability.
Tax Adjustments in Mexico: The tax adjustment in Mexico is expected to recalibrate underlying rate assumptions, leading to a reduction in adjusted earnings in 2026.
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Guidance & Outlook
Pension Risk Transfer (PRT) Business: The fourth quarter is shaping up to be a record quarter with $12 billion of PRT transactions already written. The long-term outlook for the PRT business is positive, with 94% of pension plan sponsors planning to fully divest in the next 5 years.
Asia Market Growth: Sales in Japan surged 31% on a constant currency basis, driven by a competitive product portfolio. Other Asia markets saw a 39% increase in sales, led by Korea, China, and India.
Latin America Digital Platform Expansion: The Accelerator digital platform has generated more than $340 million of annualized premiums since its launch. The company recently added MercadoLibre as a partner in Mexico and Brazil.
Capital Deployment and Shareholder Returns: MetLife has returned almost $24 billion to shareholders through buybacks and dividends over the past 5 years. In the third quarter, $875 million was returned to shareholders, and year-to-date share buybacks total $2.6 billion.
Japan Solvency Margin Ratio Transition: The transition to the Economic Solvency Ratio (ESR) framework in Japan is expected by March 2026, with an anticipated ratio range of 170% to 190%.
MetLife Investment Management (MIM) Reporting: Starting in the fourth quarter, MIM will be reported as its own business segment, aligning with the New Frontier strategy.
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Shareholder Return Plan
Common Stock Dividends Paid: Approximately $375 million of common stock dividends were paid in the third quarter of 2025.
Total Dividends in 5 Years: Almost $24 billion returned to shareholders through common dividends and buybacks over the past 5 years.
Share Repurchases in Q3 2025: Around $500 million of common stock was repurchased in the third quarter of 2025.
Total Share Buybacks in 2025: Year-to-date share buybacks totaled approximately $2.6 billion as of October 2025.
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Key Q&A
Q:Can you provide additional color on the strength of Asia sales and the key drivers?
A:Asia sales saw a 34% increase overall. In Japan, sales were up 31% year-over-year due to new product launches like the single premium FX Life product and yen variable life product, as well as product enhancements. In the rest of Asia, sales were up 39%, driven by strong performance in Korea and China, with new bank partnerships and strong U.S. dollar product sales contributing. The momentum is expected to continue into Q4, exceeding full-year sales guidance for 2025.
Q:Can you provide details on expense seasonality in the fourth quarter?
A:The direct expense ratio is expected to remain well below the 12.1% target. Factors contributing include tightened expense management and technology investments, such as the MetIQ AI platform, which have driven productivity gains and efficiencies. While there is some seasonality in Q4, the ratio is expected to stay below the target.
Q:Is the $12 billion of PRTs won in Q4 from a few large deals or several smaller ones?
A:The $12 billion in Q4 PRTs comes from a few large deals, as the company focuses on the jumbo end of the market. Competitive advantages include balance sheet size, investment capabilities, and disciplined risk management. The deals align with the company's retirement platform and capital strategies, driving spread earnings and fee revenue.
Q:Can you comment on the improvement in nonmedical health and the split between dental and disability?
A:The nonmedical health ratio improved by 230 basis points sequentially, driven by favorable seasonal utilization in dental and pricing actions. Disability performance is in line with expectations, with strong recoveries due to investments in capabilities. Further improvement is expected in Q4.
Q:Is any of the $14 billion in PRTs planned for this year going into Chariot Re?
A:Chariot Re, launched on July 1, transferred just under $10 billion of liabilities. The company uses third-party capital to complement its own, accelerating growth in the retirement business. The earnings impact of such transfers is temporary, estimated at $15-$20 million for the $10 billion deal.
Q:Can you elaborate on the efficient capital structure in Japan and the ESR range of $170-$190 million?
A:The efficient structure leverages Bermuda for certain products, optimizing the economic regime. The ESR range of $170-$190 million follows prescribed rules with no adjustments. The company has consistently distributed dividends from Japan, totaling $4 billion over the last five years.
Q:What are your views on the competitive and pricing environment in Group Benefits?
A:The market remains competitive but rationally priced, allowing for growth while maintaining underwriting discipline. Customers seek bundled solutions and administrative ease, which the company provides as a market leader. The business achieved a 4% growth rate this quarter, net of contract impacts.
Q:Can you address concerns about private credit investing and ratings inflation?
A:The company relies on its own underwriting rather than rating agencies, with 95% of corporate bonds being investment grade. Exposure to below-investment-grade assets is focused on higher quality. The company has decades of experience in private credit, including through credit cycles.
Q:What is the outlook for the base spread in RIS?
A:The base spread improved by 1 basis point in Q3 and is expected to remain steady in Q4. Temporary headwinds from PRT mandates may cause slight fluctuations, but overall, the spread is expected to stay relatively flat.
Q:Are there any potential impacts from Brighthouse's acquisition by Aquarian?
A:The primary relationship with Brighthouse is through asset management. The company looks forward to continuing the partnership to help Brighthouse achieve its strategic objectives.
Q:How has MIM performed this year, and what are the trends in third-party flows?
A:MIM had a strong second half of the year, with total AUM exceeding $630 billion and third-party AUM above $200 billion. Flows improved significantly in the second half, and the business is poised for growth as a standalone segment next year.
Q:Are there any material changes to LTC assumptions or updates on the risk transfer market?
A:LTC assumptions remain stable, with a modest $2 million post-tax change. The company continues to explore risk transfer opportunities but remains disciplined, ensuring any transaction is accretive to shareholder value.
Q:What is the forward timing of the impact of the Mexico tax law change?
A:The change affects health products, with notable impacts in 2025 and lesser impacts in 2026. By 2027, there will be little to no impact on earnings. The company is adjusting rate assumptions and expects the market to remain resilient.
Q:Are the positive assumption updates in Asia ongoing?
A:No, the positive assumption updates in Asia are generally one-time in nature.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the specific allocation of the $14 billion in PRTs to Chariot Re, stating that the process is ongoing and not always perfectly aligned. Additionally, the response to the question about private credit investing and ratings inflation was generic, focusing on the company's internal underwriting process without addressing the broader industry concerns raised in the referenced article.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Accelerator partner
Accelerator platform
America Accelerator
America item
America platform
Benefits disability
Brazil commerce
Brazil partner
Chariot reinsurance
Chile Brazil
Directors focus
Disability result
EMEA item
Group Benefits
MetLife Investment
Mexico
VNB
buyback
closing
commitment
item share
liability origination
payback period
point improvement
power
priority
profitability
quality
rate return
retirement liability
return payback
sponsor
success
survey
track
underwriting result
use
MET Transcript
MetLife, Inc. (MET) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call highlights strong performance and strategic advancements, such as the successful Chariot Re launch and favorable financial ratios. The Q&A session reveals management's confidence in overcoming challenges, with positive updates on nonmedical health and MIM's growth. Despite some unclear responses, the overall sentiment is positive due to strategic initiatives like the PineBridge acquisition and efficient capital structures in Japan. The stock price is likely to experience a positive movement, within the 2% to 8% range, as the company demonstrates resilience and growth potential.
MetLife, Inc. (MET) Presents At KBW Insurance Conference 2025 Transcript
Neutral9-3
MetLife, Inc. (MET) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call revealed strong financial performance with a 7% increase in adjusted earnings and a $3 billion share repurchase authorization. Despite some challenges, such as lower Asia earnings and CECL reserves, management's optimistic guidance, strategic partnerships, and ongoing AI integration are positive indicators. The increased dividend and robust shareholder return plan further enhance sentiment. The Q&A section highlighted stable retirement spreads and growth in regional markets, reinforcing a positive outlook. Overall, these factors suggest a positive stock price movement over the next two weeks.
MetLife, Inc. (MET) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed picture: strong group benefits earnings and share repurchases are positives, but declines in Asia and Latin America earnings, along with uncertainty in spreads and market volatility, are concerns. The Q&A highlights management's cautious outlook, especially regarding RIS spreads and variable investment income. The positive impact of share repurchases and dividend increase balances against the negative aspects, leading to a neutral sentiment. Without a market cap, the prediction is neutral as the positives and negatives seem to offset each other.
MET Slides
MET Report
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
