NEW YORK, Feb. 1 -- MetLife, a provider of insurance, annuities and employee benefit programs, issued the following news release:
MetLife, Inc. (NYSE: MET) today announced the following results for the fourth quarter and full year 2016:
Fourth Quarter Results
On a GAAP basis, MetLife reported a fourth quarter 2016 net loss of $2.1 billion, compared to net income of $785 million in the fourth quarter of 2015. On a per share basis, the net loss was $1.94, compared to net income of $0.70 per share in the prioryear period.
The net loss includes $3.2 billion, after tax, in net derivative losses reflecting changes in interest rates, foreign currencies and equity markets, compared to $231 million, after tax, in net derivative losses in the fourth 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. Approximately 94 percent of the net derivative losses in the quarter were attributable to asymmetrical and non-economic accounting. Excluding asymmetrical and non-economic accounting impacts, fourth quarter 2016 net income was $768 million.
MetLife reported operating earnings* of $1.4 billion, up 3 percent from the fourth quarter of 2015, and 4 percent on a constant currency basis*. On a per share basis, operating earnings were $1.28, up 4 percent from the prior-year quarter.
Fourth quarter 2016 operating earnings included the following notable items:
* changes in deferred policy acquisitions costs (DAC) associated with the annual fourth quarter approval of the dividend scale for traditional life insurance policies, and other insurance adjustments, decreased operating earnings by $58 million, or $0.05 per share, after tax
* expenses related to the company's previously announced unit cost initiative, which decreased operating earnings by $28 million, or $0.03 per share, after tax
Operating earnings in the U.S. segment increased 19 percent year over year. Operating earnings in Asia increased 22 percent, and 17 percent on a constant currency basis.
Operating earnings in Latin America decreased 22 percent, and 9 percent on a constant currency basis. Operating earnings in Europe, the Middle East and Africa (EMEA) increased 33 percent, and 44 percent on a constant currency basis. Operating earnings in MetLife Holdings decreased 25 percent. Operating earnings in Brighthouse Financial decreased 15 percent, including $35 million related to separation activities which increased operating earnings in Brighthouse Financial, but was completely offset in MetLife Holdings.
The fourth quarter variance between operating earnings and net income reflects an unfavorable impact of $2.9 billion, after tax, related to asymmetrical and non-economic accounting.
Premiums, fees & other revenues were $12.4 billion, down 1 percent over the fourth quarter of 2015. Operating premiums, fees & other revenues* were $12.3 billion, down 1 percent on both a reported and constant currency basis.
Full Year Results
For the full year 2016, MetLife reported net income of $697 million, down 86 percent. On a per share basis, net income was $0.63, down 86 percent from full year 2015. Net derivative losses negatively impacted full year net income.
Full year 2016 operating earnings were $5.1 billion, down 7 percent. On a per share basis, 2016 operating earnings were $4.59, down 6 percent over 2015. Excluding notable items in both years, operating earnings were down 5 percent. Operating results excluding notable items varied by segment as shown in the table below.
FULL YEAR 2016 CHANGE IN OPERATING EARNINGS FROM FULL YEAR 2015
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"While rising interest rates are good for MetLife's businesses, they reduced the carrying value of our derivatives book and produced a quarterly net loss on a GAAP basis," said Steven A. Kandarian, chairman, president and CEO, MetLife, Inc. "For full-year 2016 excluding notable items, market factors and underwriting reduced earnings while management actions to control expenses and generate volume growth were positive.
Share repurchases had a positive impact on earnings per share, and underlying free cash flow improved significantly as a result of our value-creation efforts. The prospect of higher interest rates and a more favorable regulatory environment, together with our new enterprise strategy, capital management and expense discipline, position us for value creation for both our customers and shareholders."
FOURTH QUARTER & FULL YEAR 2016 SUMMARY
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*Information regarding the non-GAAP and other financial measures included in this news release and the reconciliation of the nonGAAP financial measures to GAAP measures is provided in the Non-GAAP and Other Financial Disclosures discussion below, as well as in the tables that accompany this news release and/or the Fourth Quarter 2016 Financial Supplement (which is available on the MetLife Investor Relations web page at www.metlife.com).
Book value, excluding AOCI other than FCTA*, was $49.83 per share, down 3 percent from $51.15 at Dec. 31, 2015.
MetLife's fourth quarter 2016 operating ROE, excluding AOCI other than FCTA*, was 10.0 percent for the fourth quarter of 2016, and the company's operating tangible ROE* was 12.2 percent.
MetLife's full year 2016 operating ROE, excluding AOCI other than FCTA, was 8.9 percent for full year 2016, and the company's operating tangible ROE was 10.8 percent.
BUSINESS DISCUSSIONS
All comparisons of the results for the fourth quarter of 2016 in the business discussions that follow are with the fourth quarter of 2015, unless otherwise noted. Re-segmented results for certain prior periods were reported by MetLife, Inc. in a Form 8-K furnished to the U.S. Securities and Exchange Commission (SEC) on Oct. 20, 2016.
U.S.
Total operating earnings for the U.S. were $516 million, up 19 percent. Operating return on allocated equity was 19.1 percent, and operating return on allocated tangible equity was 21.0 percent. Operating premiums, fees & other revenues were $5.8 billion, up 4 percent. Excluding pension risk transfers, operating premiums, fees & other revenues were up 2 percent.
Group Benefits
Operating earnings for Group Benefits were $174 million, up 14 percent, due to favorable expense margins and volume growth. Operating premiums, fees & other revenues were $4.0 billion, up 5 percent, driven by growth across all markets. Full year 2016 Group Benefits sales were up 24 percent over the prior year.
Retirement and Income Solutions
Operating earnings for Retirement and Income Solutions were $299 million, up 27 percent, due to higher investment margins and favorable underwriting. Operating premiums, fees & other revenues were $895 million, up 5 percent. Excluding pension risk transfers, operating premiums, fees & other revenues were down 19 percent.
Property & Casualty
Operating earnings for Property & Casualty were $43 million, down 2 percent, due to less favorable auto results. Operating premiums, fees & other revenues were $887 million, up 1 percent. Property & Casualty sales overall were down 9 percent.
ASIA
Operating earnings for Asia were $354 million, up 22 percent, and 17 percent on a constant currency basis. Excluding all notable items from the prior-year period, operating earnings were up 13 percent, and 8 percent on a constant currency basis. Operating earnings benefitted from volume growth, favorable markets and a tax-related item in Japan. Operating return on allocated equity was 12.8 percent, and operating return on allocated tangible equity was 22.1 percent.
Operating premiums, fees & other revenues in Asia were $2.1 billion, up 5 percent, but down 2 percent on a constant currency basis. Excluding the impact of the 2016 deconsolidation of the company's India operations, operating premiums, fees & other revenues in Asia were up 2 percent on a constant currency basis. Total sales for the region were essentially unchanged on a constant currency basis, representing the impact of management's actions to improve value in targeted markets. Sales in emerging markets were up 13 percent.
LATIN AMERICA
Operating earnings for Latin America were $122 million, down 22 percent, and 9 percent on a constant currency basis, due to a one-time tax benefit in the prior-year quarter and higher expenses in the fourth quarter of 2016. Excluding all notable items from the prior-year period, operating earnings were down 5 percent, but up 5 percent on constant currency basis. Operating return on allocated equity was 15.9 percent, and operating return on allocated tangible equity was 25.2 percent.
Operating premiums, fees & other revenues were $913 million, down 2 percent, but up 5 percent on a constant currency basis. Total sales for the region were essentially unchanged on a constant currency basis.
EMEA
Operating earnings for EMEA were $72 million, up 33 percent, and 44 percent on a constant currency basis, driven by unit cost improvement, a claims reserve release in the Gulf, and volume growth. Operating return on allocated equity was 8.9 percent, and operating return on allocated tangible equity was 15.6 percent.
Operating premiums, fees & other revenues were $622 million, essentially unchanged, and up 4 percent on a constant currency basis, driven by growth in employee benefits and accident & health. Total sales for the region increased 5 percent on a constant currency basis.
METLIFE HOLDINGS
Operating earnings for MetLife Holdings were $199 million, down 25 percent, primarily due to unfavorable underwriting and certain insurance adjustments, including $35 million related to separation activities which was completely offset in Brighthouse Financial. These adjustments were partially offset by lower expenses, including those related to the sale of the MetLife Premier Client Group in 2016. Operating return on allocated equity was 7.2 percent, and operating return on allocated tangible equity was 7.7 percent. Operating premiums, fees & other revenues were $1.6 billion, down 9 percent, mostly due to the sale of the MetLife Premier Client Group, which included the company's affiliated broker-dealer unit.
CORPORATE & OTHER
Corporate & Other had an operating loss of $178 million, compared to an operating loss of $210 million in the fourth quarter of 2015. This loss includes the previously mentioned $28 million in expenses related to the company's unit cost initiative.
BRIGHTHOUSE FINANCIAL
Brighthouse Financial reported operating earnings of $330 million, down 15 percent, primarily due to life reserve changes and lower separate account fees. As noted above, operating earnings included a $35 million benefit related to separation activities which was completely offset in MetLife Holdings. Operating premiums, fees & other revenues were $1.3 billion, compared to $1.6 billion in the fourth quarter of 2015, driven by lower single premium income annuity sales. Overall Life and Annuity sales were down 36 percent, but sales of the company's variable indexed product, Shield Level SelectorSM, for the fourth quarter of 2016 were $457 million, up 45 percent year over year and 17 percent from the third quarter of 2016.
INVESTMENTS
Net investment income was $5.0 billion, up 4 percent. Variable investment income was $301 million ($196 million, after tax and DAC), as compared to $109 million ($71 million, after tax and DAC) in the fourth quarter of 2015, driven by strong private equity performance.
Changes in interest rates, foreign currencies and equity markets drove derivative net losses of $3.4 billion, after tax and other adjustments. Derivative net losses in the fourth quarter of 2015 were $375 million, after tax and other adjustments.
Conference Call
MetLife will hold its fourth quarter and full year 2016 earnings conference call and audio webcast on Thursday, Feb. 2, 2017, from 8-9 a.m. (EST). The conference call will be available live via telephone and the internet. To listen via telephone, dial 800-288-8975 (U.S.) or 612-288-0337 (outside the U.S.). To listen to the conference call via the internet, visit www.metlife.com through a link on the Investor Relations page. Those who want to listen to the call via telephone or the internet should dial in or go to the website at least 15 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 10 a.m. (EST) on Thursday, Feb. 2, 2017, until Thursday, Feb. 9, 2017, at 11:59 p.m. (EST). To listen to a replay of the conference call via telephone, dial 800-475-6701 (U.S.) or 320-365-3844 (outside the U.S.). The access code for the replay is 407063. To access the replay of the conference call over the internet, visit the above-mentioned website.
Supplemental slides related to the company's derivative losses and tax rate for the fourth quarter and full year 2016, titled "4Q16 Supplemental Slides," are available on the MetLife Investor Relations website at www.metlife.com in the Conferences & Presentations section, and in the Form 8-K furnished by MetLife to the SEC on Feb. 1, 2017.
A brief video of CFO John Hele discussing fourth quarter and full year 2016 results can be viewed shortly after the conclusion of MetLife's fourth quarter and full year 2016 earnings conference call and audio webcast on Thursday, Feb. 2, at http://ift.tt/1QGMXx3.
Click here to view the table: http://ift.tt/2k4w5b2
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