MetLife Q1 Earnings Lag Estimates on High Expenses, Soft Asia Unit

Core Viewpoint - MetLife, Inc. reported first-quarter 2025 adjusted operating earnings per share (EPS) of $1.96, missing the Zacks Consensus Estimate by 1.5%, but showing a 7% year-over-year increase. Adjusted operating revenues rose 10.6% year over year to$ 18.8 billion, surpassing the consensus mark by 3.4% [1][2]. Financial Performance - The quarterly results were impacted by elevated expenses, weaker performance in Asia due to tax changes and lower surrenders, and declining earnings in Latin America and MetLife Holdings. However, improved variable investment income and strong EMEA sales partially offset these declines [2]. - Total expenses increased 14.7% year over year to $17.2 billion, driven by higher policyholder benefits and claims. The adjusted expense ratio deteriorated by 20 basis points year over year to 20.6% [4]. - Net income rose 10% year over year to$ 879 million, with an adjusted return on equity improving by 60 basis points to 14.4% [4]. Segment Performance - Group Benefits segment adjusted earnings increased 29% year over year to $367 million, exceeding the Zacks Consensus Estimate of$ 343.1 million, supported by favorable life underwriting results [5]. - RIS segment adjusted earnings totaled $401 million, a 1% year-over-year increase, but fell short of the consensus mark. Adjusted PFOs, excluding pension risk transfer, advanced 14% year over year to$ 954 million [6]. - Asia unit adjusted earnings decreased 12% year over year to $374 million, below the consensus estimate, affected by lower surrenders and a tax rate change. Adjusted PFOs slipped 4% year over year to$ 1.7 billion [7]. - Latin America adjusted earnings fell 6% year over year to $218 million, lower than the consensus mark, while adjusted PFOs inched up 1% year over year to$ 1.5 billion [8]. - EMEA segment adjusted earnings increased 8% year over year to $83 million, surpassing the consensus estimate, with adjusted PFOs rising 8% year over year to$ 668 million [9]. - MetLife Holdings adjusted earnings decreased 3% year over year to $154 million, falling short of the consensus mark, with adjusted PFOs at$ 780 million, down 7% year over year [10]. - Corporate & Other unit incurred an adjusted loss of $248 million, wider than the prior-year quarter's loss [11]. Financial Position - As of March 31, 2025, MetLife had cash and cash equivalents of$ 21.3 billion, a 6.3% increase from the end of 2024. Total assets rose 1.6% to $688.3 billion, while long-term debt decreased by 2.6% to$ 14.7 billion [12]. - Book value per share was $35.16, reflecting a 2% year-over-year growth [13]. Capital Deployment - MetLife repurchased shares worth approximately$ 1.4 billion in the first quarter and authorized a new share buyback program of $3 billion in April 2025 [14]. 2025 Outlook - Management expects variable investment income of around$ 1.7 billion for 2025, with adjusted losses in Corporate & Other anticipated between $850 million and$ 950 million. The effective tax rate is projected to be 24-26% [15]. - Over the next three years, adjusted PFOs in Group Benefits are expected to rise by 4-7% annually, while declines of 4-6% are anticipated in MetLife Holdings [16]. - MetLife aims for an adjusted return on equity in the range of 15-17% and expects double-digit adjusted EPS growth in the near term [17].