MetLife, Inc. (NYSE: MET) reported the following results for the fourth quarter and full year 2012:
Fourth Quarter Results
MetLife reported operating earnings* of $1.4 billion, or $1.25 per share, up 10% over the fourth quarter of 2011. Growth was driven by a 21% increase in operating earnings in the Americas and a 26% increase (34% when adjusted for the impact of foreign currency exchange rates) in the Europe, Middle East and Africa (EMEA) segment. Operating earnings in Asia were down 24% primarily due to the annual review of actuarial assumptions.
Fourth quarter 2012 operating earnings included the following items:
* variable investment income above the company’s 2012 quarterly plan range by $80 million, or $0.07 per share, after tax and the impact of deferred
policy acquisition costs (DAC);
* favorable claim development related to prior accident years in the company’s property & casualty business of $13 million, or $0.01 per share,
after tax;
* catastrophes of $70 million, or $0.06 per share, after tax, above the company’s quarterly plan provision;
* a $13 million, or $0.01 per share, after tax, negative impact from the annual global review of assumptions related to DAC, reserves and certain
intangibles; and
* certain reorganization costs of $23 million, or $0.02 per share, after tax.
On a GAAP basis, MetLife reported fourth quarter 2012 net income of $96 million, or $0.09 per share. Net income includes:
* a deferred tax benefit of $324 million related to the conversion of the company’s Japan branch to a subsidiary and
* a total after tax charge of $752 million associated with the global review of assumptions related to DAC, reserves and certain intangibles, of which $342 million, after tax, was reflected in the after tax total of $855 million in net derivative losses for the quarter. MetLife uses derivative 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.
Premiums, fees & other revenues* were $13.2 billion, up 15% over the fourth quarter of 2011. Excluding pension closeout sales (which often fluctuate significantly from quarter to quarter), total premiums, fees & other revenues grew 6%.
Net investment income* was $5.2 billion, up 6% over the fourth quarter of 2011, reflecting variable investment income above the 2012 quarterly plan range by $80 million, or $0.07 per share, after tax and the impact of DAC.
Book value, excluding accumulated other comprehensive income (AOCI), was $46.73 per share, up from $46.69 per share in the fourth quarter of 2011.
Full Year Results
For the full year 2012, MetLife reported operating earnings of $5.7 billion, or $5.28 per share, up 22% over 2011. The increase reflects operating earnings growth of 24% in the Americas, 18% in Asia and 8% in EMEA.
On a GAAP basis, MetLife reported full year 2012 net income of $1.2 billion, or $1.12 per share.
FOURTH QUARTER & FULL YEAR 2012 SUMMARY
($ in
millions,
except Three months ended December 31 Year ended December 31
per share
data)
2012 2011 Change 2012 2011 Change
Premiums,
fees & $ 13,184 $ 11,450 15% $ 47,879 $ 45,449 5%
other
revenues
Total
operating $ 18,359 $ 16,342 12% $ 68,351 $ 65,087 5%
revenues
Net
income $ 96 $ 959 (90)% $ 1,202 $ 6,155 (80)%
(loss)
Net
income $ 0.09 $ 0.90 (90)% $ 1.12 $ 5.76 (81)%
(loss)
per share
Operating $ 1,373 $ 1,244 10% $ 5,686 $ 4,677 22%
earnings
Operating
earnings $ 1.25 $ 1.17 7% $ 5.28 $ 4.38 21%
per share
Book
value per $ 57.17 $ 52.43 9%
share
Book
value per
share, $ 46.73 $ 46.69 –
excluding
AOCI
^*Information regarding the non-GAAP financial measures included in this press release and the reconciliation of the non-GAAP 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 release and/or the Fourth Quarter 2012 Financial Supplement.
“In 2012, we grew operating earnings 22% over 2011 and achieved an operating ROE of 11.3% in the face of several economic challenges,” said Steven A. Kandarian, chairman, president and chief executive officer of MetLife, Inc.
“We are executing on our strategy, including shifting our business mix toward less capital-intensive products. We’re also growing our presence in emerging markets with our recent agreement to acquire AFP Provida in Chile, as well as our expansion in Central Europe, Turkey and India. Moving ahead, we will continue to take actions that create value for MetLife’s shareholders.”
BUSINESS DISCUSSIONS
All comparisons of the results for the fourth quarter 2012 in the business discussions that follow are with the fourth quarter of 2011, unless otherwise noted. All comparisons on a constant currency basis are calculated using the average foreign currency exchange rates for the current period and are applied to the prior period. Reconciliations of segment net income to segment operating earnings are provided in the tables that accompany this release and in the Fourth Quarter 2012 Financial Supplement, which is available on the Investor Relations section of www.metlife.com.
THE AMERICAS
Total operating earnings for the Americas increased 21% to $1.3 billion, driven by Retail, Corporate Benefit Funding and Latin America. Results in the Americas were impacted by $70 million, or $0.06 per share, after tax, in catastrophe losses driven by Superstorm Sandy that were above the company’s quarterly plan provision. This was partially offset by favorable claim development related to prior accident years of $13 million, or $0.01 per share, after tax.
Premiums, fees & other revenues for the Americas were $9.9 billion, up 18% due to growth across the segments and the benefit of a conversion of a participating pension contract to a nonparticipating closeout during the quarter. Excluding pension closeouts, premiums, fees & other revenues for the Americas were up 5%.
Retail
Operating earnings for Retail were $633 million, up 43% as higher net investment income, an increase in fees, the positive impact from the annual review of DAC assumptions and lower expenses were slightly offset by higher catastrophe losses. Premiums, fees & other revenues for Retail were $3.2 billion, up 4% primarily due to an increase in separate account fees. Fourth quarter 2012 variable annuity sales were $3.6 billion, down 51%. For the full year 2012, variable annuity sales were $17.7 billion – in line with the company’s plan of $17.5 to $18.5 billion.
Group, Voluntary & Worksite Benefits
Operating earnings for Group, Voluntary & Worksite Benefits were $167 million, down 30% due to a write-down of an intangible asset in the dental business and higher catastrophe losses. Premiums, fees & other revenues for Group, Voluntary & Worksite Benefits were $4.0 billion, up 8% due to favorable sales and persistency across the business, particularly in dental.
Corporate Benefit Funding
Operating earnings for Corporate Benefit Funding were $305 million, up 35% mostly due to strong interest margins and lower expenses. Premiums, fees & other revenues for Corporate Benefit Funding were $1.9 billion, up from $834 million due to the previously-mentioned conversion of a participating pension contract to a nonparticipating closeout during the quarter, as well as an increase in pension closeout sales.
Latin America
Operating earnings for Latin America were $148 million, up 20% (18% on a constant currency basis) due to business growth in several countries and a one-time tax-related benefit. Premiums, fees & other revenues in Latin America were $839 million, up 6% (4% on a constant currency basis). Total sales for the region increased 26%, driven by growth in Mexico, Chile, Brazil and Argentina.
ASIA
Operating earnings for Asia were $198 million, down 24% as growth in the business, continued expense discipline and higher net investment income were offset by the negative impact of the annual review of actuarial assumptions. This annual review lowered operating earnings by $62 million, after tax, and mostly reflects changes in long-term lapse assumptions in Japan.
Premiums, fees & other revenues in Asia were $2.5 billion, up 11% (14% on a constant currency basis) due to strong revenue growth in Japan, Korea and Australia as well as improved persistency in Japan. Total sales for the region declined 4% as consistent sales in Japan and Korea were offset by declines in other countries.
EMEA
Operating earnings for EMEA were $59 million, up 26% (34% on a constant currency basis), reflecting business growth in several countries. EMEA premiums, fees & other revenues were $678 million, down 3% (1% on a constant currency basis) as growth in the Gulf and Turkey was offset by the company’s exit from fixed annuities in the U.K. Total sales for the region increased 14% due to growth in the Gulf, Turkey and Russia and despite the challenging economic environment in Western Europe.
INVESTMENTS
Net investment income was $5.2 billion, up 6%. Variable investment income was $376 million ($242 million, after tax and DAC), compared with $135 million ($88 million, after tax and DAC) in the fourth quarter of 2011.
Investment portfolio net losses were $2 million, after tax, compared with investment portfolio net losses of $213 million, after tax in the fourth quarter of 2011.
A change in variable annuity policyholder behavior assumptions, increases in interest rates, changes in foreign currencies and the impact of MetLife’s credit spreads during the quarter contributed to derivative net losses of $924 million, after tax and other adjustments. Derivative net gains in the fourth quarter of 2011 were $351 million, after tax and other adjustments. Derivative gains or losses related to MetLife’s credit spreads do not have an economic impact on the company.
CORPORATE & OTHER
Corporate & Other had an operating loss of $137 million, compared with an operating loss of $95 million. Results in the fourth quarter of 2012 reflect certain reorganization costs of $23 million, or $0.02 per share, after tax.
Conference Call
MetLife will hold its fourth quarter and full year 2012 earnings conference call and audio Webcast on Thursday, February 14, 2013, 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 (800) 230-1074 (U.S.) or (612) 288-0337 (outside the U.S.). 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 10:00 a.m. (ET) on Thursday, February 14, 2013, until Thursday, February 21, 2013 at 11:59 p.m. (ET). To listen to a replay of the conference call over the telephone, dial (320) 365-3844. The access code for the replay is 277722. To access the replay of the conference call over the Internet, visit the above-mentioned Web site.
About MetLife
MetLife, Inc. is a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.
Non-GAAP and Other Financial Disclosures
Any references in this press release (except in this section) to net income (loss), net income (loss) per share, operating earnings, operating earnings per share, book value per share, book value per share, excluding AOCI, premiums, fees and other revenues and operating ROE, should be read as net income (loss) available to MetLife, Inc.’s common shareholders, net income (loss) available to MetLife, Inc.’s common shareholders per diluted common share, operating earnings available to common shareholders, operating earnings available to common shareholders per diluted common share, book value per common share, book value per common share, excluding AOCI, premiums, fees and other revenues (operating) and operating return on MetLife, Inc.’s common equity, excluding AOCI, respectively.
Operating earnings is the measure of segment profit or loss that MetLife uses to evaluate segment performance and allocate resources. Consistent with accounting principles generally accepted in the United States of America (GAAP) accounting guidance for segment reporting, operating earnings is MetLife’s measure of segment performance. Operating earnings is also a measure by which MetLife senior management’s and many other employees’ performance is evaluated for the purposes of determining their compensation under applicable compensation plans.
Operating earnings is defined as operating revenues less operating expenses, both net of income tax. Operating earnings available to common shareholders is defined as operating earnings less preferred stock dividends.
Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by MetLife. Operating revenues also excludes net investment gains (losses) (NIGL) and net derivative gains (losses) (NDGL). Operating expenses also excludes goodwill impairments.
The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues:
* Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to NIGL and NDGL and certain variable annuity guaranteed minimum income benefits (GMIB) fees (GMIB fees);
* Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments but do not qualify for hedge accounting treatment,
(ii) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are variable interest entities (VIEs) consolidated under GAAP; and
* Other revenues are adjusted for settlements of foreign currency earnings hedges.
The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:
* Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to NIGL and NDGL, (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (iii) benefits and hedging costs related to GMIBs (GMIB costs), and (iv) market value adjustments associated with surrenders or terminations of contracts (Market value adjustments);
* Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder directed unit-linked investments;
* Amortization of DAC and value of business acquired (VOBA) excludes amounts related to: (i) NIGL and NDGL, (ii) GMIB fees and GMIB costs and (iii) Market value adjustments;
* Amortization of negative VOBA excludes amounts related to Market value adjustments;
* Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
* Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii) acquisition and integration costs.
MetLife believes the presentation of operating earnings and operating earnings available to common shareholders as MetLife measures it for management purposes enhances the understanding of the company’s performance by highlighting the results of operations and the underlying profitability drivers of the business. Operating revenues, operating expenses, operating earnings, operating earnings available to common shareholders, operating earnings available to common shareholders per diluted common share, book value per common share, excluding AOCI, book value per diluted common share, excluding AOCI, operating return on MetLife, Inc.’s common equity, operating return on MetLife, Inc.’s common equity, excluding AOCI, investment portfolio gains (losses) and derivative gains (losses) should not be viewed as substitutes for the following financial measures calculated in accordance with GAAP: GAAP revenues, GAAP expenses, GAAP income (loss) from continuing operations, net of income tax, GAAP net income (loss) available to MetLife, Inc.’s common shareholders, GAAP net income (loss) available to MetLife, Inc.’s common shareholders per diluted common share, book value per common share and book value per diluted common share, return on MetLife, Inc.’s common equity, return on MetLife, Inc.’s common equity, excluding AOCI, net investment gains (losses) and net derivative gains (losses), respectively. Reconciliations of these measures to the most directly comparable GAAP measures are included in the Fourth Quarter 2012 Financial Supplement and/or in the tables that accompany this earnings press release.
Operating return on MetLife, Inc.’s common equity is defined as operating earnings available to common shareholders divided by average GAAP common equity.
Operating expense ratio is calculated by dividing operating expenses (other expenses net of capitalization of DAC) by operating premiums, fees and other revenues.
Statistical sales information for life insurance is calculated by MetLife using the LIMRA International, Inc. definition of sales for core direct sales, excluding company sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life insurance. Individual annuities sales consists of statutory premiums direct and assumed, excluding company sponsored internal exchanges.
Forward-Looking Statements
This press release may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) concerns over U.S. fiscal policy and the “fiscal cliff” in the U.S., as well as rating agency downgrades of U.S. Treasury securities; (3) uncertainty about the effectiveness of governmental and regulatory actions to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (4) increased volatility and disruption of the capital and credit markets, which may affect our ability to seek financing or access our credit facilities; (5) impact of comprehensive financial services regulation reform on us; (6) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (7) exposure to financial and capital market risk, including as a result of the disruption in Europe and possible withdrawal of one or more countries from the Euro zone; (8) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect our ability to raise capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets; (9) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (10) investment losses and defaults, and changes to investment valuations; (11)
impairments of goodwill and realized losses or market value impairments to illiquid assets; (12) defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial institutions that could adversely affect us; (14) our ability to address unforeseen liabilities, asset impairments, or rating actions arising from acquisitions or dispositions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company (collectively, “ALICO”) and to successfully integrate and manage the growth of acquired businesses with minimal disruption; (15) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the acquisition of ALICO; (16) the dilutive impact on our stockholders resulting from the settlement of common equity units issued in connection with the acquisition of ALICO or otherwise; (17) regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (18) 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; (19) downgrades in our claims paying ability, financial strength or credit ratings; (20) ineffectiveness of risk management policies and procedures; (21) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (22) discrepancies between actual claims experience and assumptions used in setting prices for our products and establishing the liabilities for our obligations for future policy benefits and claims; (23) catastrophe losses; (24) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, distribution of amounts available under U.S. government programs, and for personnel; (25) unanticipated changes in industry trends; (26) changes in assumptions related to investment valuations, deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (27) changes in accounting standards, practices and/or policies; (28) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (29) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (30) deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (31) adverse results or other consequences from litigation, arbitration or regulatory investigations; (32) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (33) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (34) regulatory, legislative or tax changes relating to our insurance, banking, international, or other operations that may affect the cost of, or demand for, our products or services, or increase the cost or administrative burdens of providing benefits to employees; (35) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on our disaster recovery systems, cyber- or other information security systems and management continuity planning; (36) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (37) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.
MetLife, Inc.
Consolidated Statements of Operating Earnings Available to Common Shareholders
(Unaudited)
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
(In millions) (In millions)
OPERATING REVENUES
Premiums $ 10,585 $ 9,148 $ 37,911 $ 36,269
Universal life and
investment-type product 2,156 1,882 8,212 7,528
policy fees
Net investment income 5,175 4,892 20,472 19,638
Other revenues 443 420 1,756 1,652
Total operating 18,359 16,342 68,351 65,087
revenues
OPERATING EXPENSES
Policyholder benefits and
claims and policyholder 10,704 8,926 37,770 36,241
dividends
Interest credited to
policyholder account 1,589 1,536 6,242 6,057
balances
Capitalization of DAC (1,308 ) (1,398 ) (5,284 ) (5,549 )
Amortization of DAC and 946 1,060 4,177 4,355
VOBA
Amortization of negative (99 ) (143 ) (555 ) (619 )
VOBA
Interest expense on debt 292 326 1,190 1,304
Other expenses 4,266 4,257 16,680 16,620
Total operating 16,390 14,564 60,220 58,409
expenses
Operating earnings before 1,969 1,778 8,131 6,678
provision for income tax
Provision for income tax 565 503 2,323 1,879
expense (benefit)
Operating earnings 1,404 1,275 5,808 4,799
Preferred stock dividends 31 31 122 122
OPERATING EARNINGS
AVAILABLE TO COMMON $ 1,373 $ 1,244 $ 5,686 $ 4,677
SHAREHOLDERS
Reconciliation to Net
Income (Loss) and
Financial Statement Line
Item Adjustments from
GAAP
Operating earnings $ 1,404 $ 1,275 $ 5,808 $ 4,799
Adjustments from
operating earnings to
income (loss) from
continuing operations:
Net investment gains (200 ) (558 ) (352 ) (867 )
(losses)
Net derivative gains (1,315 ) 591 (1,919 ) 4,824
(losses)
Premiums 4 23 64 92
Universal life and
investment-type 94 68 344 278
product policy fees
Net investment income 373 35 1,512 (53 )
Other revenues 18 234 150 880
Policyholder benefits
and claims and (644 ) (485 ) (1,586 ) (676 )
policyholder
dividends
Interest credited to
policyholder account (459 ) 37 (1,487 ) 454
balances
Capitalization of DAC – 2 5 9
Amortization of DAC (52 ) 73 (22 ) (543 )
and VOBA
Amortization of 17 18 67 78
negative VOBA
Interest expense on (38 ) (43 ) (166 ) (325 )
debt
Other expenses (244 ) (498 ) (1,431 ) (1,645 )
Goodwill impairment – – (1,868 ) –
Provision for income
tax (expense) benefit 1,147 191 2,195 (914 )
(1)
Income (loss) from
continuing operations, 105 963 1,314 6,391
net of income tax
Income (loss) from
discontinued operations, 31 25 48 24
net of income tax
Net income (loss) 136 988 1,362 6,415
Less: Net income (loss)
attributable to 9 (2 ) 38 (8 )
noncontrolling interest
Net income (loss)
attributable to MetLife, 127 990 1,324 6,423
Inc.
Less: Preferred stock 31 31 122 122
dividends
Less: Preferred stock – – – 146
redemption premium
Net income (loss)
available to MetLife, $ 96 $ 959 $ 1,202 $ 6,155
Inc.’s common
shareholders
MetLife, Inc.
(Unaudited)
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
Earnings Earnings Earnings Earnings
Per Per Per Per
Weighted Weighted Weighted Weighted
Average Average Average Average
Common Common Common Common
Shares Shares Shares Shares
Diluted (2) Diluted (2) Diluted (2) Diluted
(In millions, except per share data) (In millions, except per share data)
Reconciliation
to Net Income
(Loss) Available
to MetLife,
Inc.’s Common
Shareholders
Operating
earnings
available to $ 1,373 $ 1.25 $ 1,244 $ 1.17 $ 5,686 $ 5.28 $ 4,677 $ 4.38
common
shareholders
Adjustments from
operating
earnings
available to
common
shareholders to
net income
(loss) available
to MetLife,
Inc.’s common
shareholders:
Add: Net
investment (200 ) (0.18 ) (558 ) (0.52 ) (352 ) (0.33 ) (867 ) (0.81 )
gains (losses)
Add: Net
derivative (1,315 ) (1.20 ) 591 0.55 (1,919 ) (1.78 ) 4,824 4.52
gains (losses)
Add: Goodwill – – – – (1,868 ) (1.73 ) – –
impairment
Add: Other
adjustments to (931 ) (0.85 ) (536 ) (0.50 ) (2,550 ) (2.36 ) (1,451 ) (1.36 )
continuing
operations
Add: Provision
for income tax 1,147 1.05 191 0.18 2,195 2.04 (914 ) (0.86 )
(expense)
benefit (1)
Add: Income
(loss) from
discontinued 31 0.03 25 0.02 48 0.04 24 0.02
operations,
net of income
tax
Less: Net
income (loss)
attributable 9 0.01 (2 ) – 38 0.04 (8 ) (0.01 )
to
noncontrolling
interests
Less:
Preferred
stock – – – – – – 146 0.14
redemption
premium
Net income
(loss) available
to MetLife, $ 96 $ 0.09 $ 959 $ 0.90 $ 1,202 $ 1.12 $ 6,155 $ 5.76
Inc.’s common
shareholders
Weighted average
common shares 1,097.5 1,066.3 1,076.8 1,068.1
outstanding –
diluted
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
(In millions) (In millions)
Reconciliation to
GAAP Premiums, Fees
and Other Revenues
Total operating
premiums, fees and $ 13,184 $ 11,450 $ 47,879 $ 45,449
other revenues
Add: Adjustments to
premiums, fees and 116 325 558 1,250
other revenues
Total premiums, fees $ 13,300 $ 11,775 $ 48,437 $ 46,699
and other revenues
Reconciliation to
GAAP Revenues and
GAAP Expenses
Total operating $ 18,359 $ 16,342 $ 68,351 $ 65,087
revenues
Add: Net investment (200 ) (558 ) (352 ) (867 )
gains (losses)
Add: Net derivative (1,315 ) 591 (1,919 ) 4,824
gains (losses)
Add: Adjustments
related to net
investment gains 5 – 15 14
(losses) and net
derivative gains
(losses)
Add: Other
adjustments to 484 360 2,055 1,183
revenues
Total revenues $ 17,333 $ 16,735 $ 68,150 $ 70,241
Total operating $ 16,390 $ 14,564 $ 60,220 $ 58,409
expenses
Add: Adjustments
related to net
investment gains (38 ) 16 41 526
(losses) and net
derivative gains
(losses)
Add: Goodwill – – 1,868 –
impairment
Add: Other
adjustments to 1,458 880 4,579 2,122
expenses
Total expenses $ 17,810 $ 15,460 $ 66,708 $ 61,057
December 31,
Book Value Per 2012 2011
Common Share (3)
Book value per common
share, excluding
accumulated other
comprehensive
income (loss) –
(actual common $ 46.73 $ 46.69
shares
outstanding)
Add: Accumulated
other comprehensive 10.44 5.74
income (loss) per
common share
Book value per
common share – $ 57.17 $ 52.43
(actual common
shares outstanding)
Common shares
outstanding, end of 1,091.7 1,058.0
period (in millions)
Return on MetLife, Year Ended Year Ended
Inc.’s Common Equity
December 31, December 31,
2012 2011
Operating return on
MetLife, Inc.’s
common equity, 11.3 % 10.1 %
excluding accumulated
other comprehensive
income (loss) (4)
Operating return on
MetLife, Inc.’s 9.6 % 9.3 %
common equity (4)
Return on MetLife,
Inc.’s common equity,
excluding accumulated 2.4 % 13.2 %
other comprehensive
income (loss) (5)
Return on MetLife,
Inc.’s common equity 2.0 % 12.2 %
(5)
MetLife, Inc.
Reconciliations to Net Income (Loss) Available to Common Shareholders
(Unaudited)
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
(In millions) (In millions)
Total Americas
Operations:
Operating
earnings
available to $ 1,253 $ 1,033 $ 4,769 $ 3,852
common
shareholders
Add: Net
investment gains 112 (57 ) 310 145
(losses)
Add: Net
derivative gains (649 ) 828 (20 ) 3,914
(losses)
Add: Goodwill – – (1,692 ) –
impairment
Add: Other
adjustments to (704 ) (415 ) (1,575 ) (1,107 )
continuing
operations
Add: Provision
for income tax 442 (128 ) 671 (1,082 )
(expense)
benefit
Add: Income
(loss) from
discontinued 29 (2 ) 46 64
operations, net
of income tax
Less: Net income
(loss)
attributable to 1 (6 ) 2 (3 )
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 482 $ 1,265 $ 2,507 $ 5,789
Inc.’s common
shareholders
Retail:
Operating
earnings
available to $ 633 $ 444 $ 2,002 $ 1,335
common
shareholders
Add: Net
investment gains 34 24 212 158
(losses)
Add: Net
derivative gains (475 ) 562 162 2,321
(losses)
Add: Goodwill – – (1,692 ) –
impairment
Add: Other
adjustments to (638 ) (392 ) (1,260 ) (709 )
continuing
operations
Add: Provision
for income tax 379 (69 ) 532 (619 )
(expense)
benefit
Add: Income
(loss) from
discontinued 23 (2 ) 33 35
operations, net
of income tax
Less: Net income
(loss)
attributable to – – – 1
noncontrolling
interest
Net income
(loss) available
to MetLife, $ (44 ) $ 567 $ (11 ) $ 2,520
Inc.’s common
shareholders
Group, Voluntary &
Worksite Benefits:
Operating
earnings
available to $ 167 $ 240 $ 960 $ 891
common
shareholders
Add: Net
investment gains (18 ) (10 ) (7 ) (26 )
(losses)
Add: Net
derivative gains (162 ) 114 (63 ) 1,203
(losses)
Add: Other
adjustments to (34 ) (36 ) (141 ) (137 )
continuing
operations
Add: Provision
for income tax 76 (23 ) 75 (363 )
(expense)
benefit
Add: Income
(loss) from
discontinued 2 – 2 2
operations, net
of income tax
Less: Net income
(loss)
attributable to – (1 ) – (1 )
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 31 $ 286 $ 826 $ 1,571
Inc.’s common
shareholders
Corporate Benefit
Funding:
Operating
earnings
available to $ 305 $ 226 $ 1,224 $ 1,112
common
shareholders
Add: Net
investment gains 86 (66 ) 107 19
(losses)
Add: Net
derivative gains (8 ) 146 (157 ) 426
(losses)
Add: Other
adjustments to 8 26 19 79
continuing
operations
Add: Provision
for income tax (30 ) (35 ) 11 (182 )
(expense)
benefit
Add: Income
(loss) from
discontinued 4 – 11 27
operations, net
of income tax
Less: Net income
(loss)
attributable to 1 (5 ) 1 (3 )
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 364 $ 302 $ 1,214 $ 1,484
Inc.’s common
shareholders
Latin America:
Operating
earnings
available to $ 148 $ 123 $ 583 $ 514
common
shareholders
Add: Net
investment gains 10 (5 ) (2 ) (6 )
(losses)
Add: Net
derivative gains (4 ) 6 38 (36 )
(losses)
Add: Other
adjustments to (40 ) (13 ) (193 ) (340 )
continuing
operations
Add: Provision
for income tax 17 (1 ) 53 82
(expense)
benefit
Add: Income
(loss) from
discontinued – – – –
operations, net
of income tax
Less: Net income
(loss)
attributable to – – 1 –
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 131 $ 110 $ 478 $ 214
Inc.’s common
shareholders
Asia:
Operating
earnings
available to $ 198 $ 259 $ 1,037 $ 880
common
shareholders
Add: Net
investment gains (174 ) (109 ) (342 ) (305 )
(losses)
Add: Net
derivative gains (159 ) (27 ) (170 ) 202
(losses)
Add: Other
adjustments to (21 ) 12 (32 ) 14
continuing
operations
Add: Provision
for income tax 424 58 483 44
(expense)
benefit (1)
Add: Income
(loss) from
discontinued – 27 – (44 )
operations, net
of income tax
Less: Net income
(loss)
attributable to 1 8 26 9
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 267 $ 212 $ 950 $ 782
Inc.’s common
shareholders
EMEA:
Operating
earnings
available to $ 59 $ 47 $ 271 $ 251
common
shareholders
Add: Net
investment gains (6 ) (221 ) 31 (525 )
(losses)
Add: Net
derivative gains 5 3 61 32
(losses)
Add: Other
adjustments to – (4 ) (22 ) (75 )
continuing
operations
Add: Provision
for income tax (30 ) 57 (48 ) 164
(expense)
benefit
Add: Income
(loss) from
discontinued – – – –
operations, net
of income tax
Less: Net income
(loss)
attributable to 3 (6 ) 9 (12 )
noncontrolling
interest
Net income
(loss) available
to MetLife, $ 25 $ (112 ) $ 284 $ (141 )
Inc.’s common
shareholders
Corporate & Other:
Operating
earnings
available to $ (137 ) $ (95 ) $ (391 ) $ (306 )
common
shareholders
Add: Net
investment gains (132 ) (171 ) (351 ) (182 )
(losses)
Add: Net
derivative gains (512 ) (213 ) (1,790 ) 676
(losses)
Add: Goodwill – – (176 ) –
impairment
Add: Other
adjustments to (206 ) (129 ) (921 ) (283 )
continuing
operations
Add: Provision
for income tax 311 204 1,089 (40 )
(expense)
benefit
Add: Income
(loss) from
discontinued 2 – 2 4
operations, net
of income tax
Less: Net income
(loss)
attributable to 4 2 1 (2 )
noncontrolling
interest
Less: Preferred
stock redemption – – – 146
premium
Net income
(loss) available
to MetLife, $ (678 ) $ (406 ) $ (2,539 ) $ (275 )
Inc.’s common
shareholders
MetLife, Inc.
GAAP Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended For the Years Ended
December 31, December 31,
2012 2011 2012 2011
(In millions)
Revenues
Premiums $ 10,589 $ 9,171 $ 37,975 $ 36,361
Universal life and
investment-type product 2,250 1,950 8,556 7,806
policy fees
Net investment income 5,548 4,927 21,984 19,585
Other revenues 461 654 1,906 2,532
Net investment gains
(losses):
Other-than-temporary
impairments on fixed (36 ) (399 ) (346 ) (924 )
maturity securities
Other-than-temporary
impairments on fixed
maturity securities
transferred to other
comprehensive income (10 ) (26 ) 29 (31 )
(loss)
Other net investment (154 ) (133 ) (35 ) 88
gains (losses)
Total net
investment gains (200 ) (558 ) (352 ) (867 )
(losses)
Net derivative gains (1,315 ) 591 (1,919 ) 4,824
(losses)
Total revenues 17,333 16,735 68,150 70,241
Expenses
Policyholder benefits and 11,029 9,095 37,987 35,471
claims
Interest credited to
policyholder account 2,048 1,499 7,729 5,603
balances
Policyholder dividends 319 316 1,369 1,446
Goodwill impairment – – 1,868 –
Other expenses 4,414 4,550 17,755 18,537
Total expenses 17,810 15,460 66,708 61,057
Income (loss) from
continuing operations (477 ) 1,275 1,442 9,184
before provision for
income tax
Provision for income tax (582 ) 312 128 2,793
expense (benefit) (1)
Income (loss) from
continuing operations, 105 963 1,314 6,391
net of income tax
Income (loss) from
discontinued operations, 31 25 48 24
net of income tax
Net income (loss) 136 988 1,362 6,415
Less: Net income (loss)
attributable to 9 (2 ) 38 (8 )
noncontrolling interests
Net income (loss)
attributable to MetLife, 127 990 1,324 6,423
Inc.
Less: Preferred stock 31 31 122 122
dividends
Preferred stock – – – 146
redemption premium
Net income (loss)
available to MetLife, $ 96 $ 959 $ 1,202 $ 6,155
Inc.’s common
shareholders
Includes deferred tax benefit of $324 million related to the conversion
(1) of the Japan branch to a subsidiary for both the three months and year ended December 31, 2012.
For the three months and year ended December 31, 2012, and for the three
(2) months ended December 31, 2011, all shares related to the assumed issuance of shares in settlement of the applicable purchase contracts of the common equity units have been excluded from the weighted average common shares outstanding – diluted, as these assumed shares would be anti-dilutive to operating earnings available to common shareholders per common share – diluted and net income available to MetLife, Inc.’s common shareholders per common share – diluted.
(3) Book value per common share and book value per common share, excluding accumulated other comprehensive income (loss) exclude $2,043 million of equity related to preferred stock.
Operating return on MetLife, Inc.’s common equity is defined as (4) operating earnings available to common shareholders divided by average GAAP common equity.
(5) Return on MetLife, Inc.’s common equity is defined as net income available to common shareholders divided by average GAAP common equity.
