MetLife, Inc. Q2 FY2025 earnings call

• MetLife continued to navigate an evolving economic environment while executing its New Frontier growth strategy, demonstrating all-weather performance and strong sales in many markets. - Adjusted earnings for the second quarter were $1.4 billion or $2.02 per share, reflecting less favorable underwriting and investment margins. - Key performance metrics included a quarterly adjusted return on equity of 14.6%. - Group Benefits adjusted earnings were $400 million, with sales up 9% YTD and underwriting less favorable but outperforming the 2025 outlook. - RIS adjusted earnings were $368 million, with liability exposures up 6% and lower recurring interest margins. - Asia saw strong sales growth on a constant currency basis, particularly in Japan and Korea. - Latin America had adjusted earnings at an all-time quarterly high due to volume growth and Chilean encaje returns. - EMEA had near-record earnings driven by volume and sales growth. - Strategic transactions included the acquisition of PineBridge Investments, formation of Chariot Re, and a risk transfer deal with Talcott Financial Group.

Group Benefits: Adjusted earnings were $400 million, down from the prior year's record quarter, largely due to less favorable life and non-medical health underwriting. Year-to-date, Group Benefit sales are up 9%. Retirement and Income Solutions (RIS): Adjusted earnings were $368 million, mainly due to lower recurring interest margins. Total liability exposures were up 6% from a year ago. Asia: Adjusted earnings were $350 million on less favorable investment and underwriting margins, but business momentum was strong with sales rising 9% on a constant currency basis. Latin America: Adjusted earnings totaled $233 million, matching the segment's all-time quarterly high results, with adjusted earnings up 3% and 15% on a constant currency basis from the same period a year ago. EMEA: Posted near-record adjusted earnings of $100 million, up 30% on both a reported and constant currency basis, primarily due to volume and sales growth across the region.

• Expect Group Life mortality ratio to continue a positive trend in Q3 and be at or slightly below the bottom end of its annual target range. - Non-medical health interest-adjusted benefit ratio expected to show an approximate 200 basis point improvement from Q2 levels in Q3. - Preliminary information regarding Q3 expectations for VII to be disclosed toward the end of September. - EMEA's quarterly run rate expected to continue to run above its 2025 quarterly guidance of $70 million to $75 million for the remainder of the year.

• Elevated experience in some non-medical health products, though generally within normal quarterly fluctuations and expected to normalize in outer quarters. - Small number of large disability claims occurred during the quarter, but not believed to be a trend. - CECL reserves taken for commercial mortgage loans, but within excess capital and not impacting capital management or dividend activity.

Q: Elevated claims in non-medical health?

A: Ramy Tadros stated that while there was pressure in some non-medical health products, it was part of normal fluctuation, with no macro impacts expected to trend over time and products expected to normalize in outer quarters.

Q: Chariot Re outlook?

A: Michel Abbas Khalaf said Chariot Re is a vehicle to enable growth, with more MetLife-originated liabilities expected to come in the future, starting with the $10 billion transaction and more to follow.

Q: Japan surrender activity?

A: Lyndon Oliver explained that a strengthening yen is driving lower surrenders, impacting earnings short-term but aiding sales and AUM, with surrenders expected to return to expectations.

Q: GenAI implementation?

A: Michel Abbas Khalaf mentioned MetLife has been modernizing systems, reengineering processes, and is an early adopter of GenAI, seeing benefits in productivity, efficiency, and growth across various business parts