EX-99.1 3 y86103exv99w1.txt PRESS RELEASE Exhibit 99.1 Contacts: For Media: John Calagna (212) 578-6252 For Investors: Kevin Helmintoller (212) 578-5140 METLIFE ANNOUNCES FIRST QUARTER 2003 RESULTS NEW YORK, May 5, 2003 - MetLife, Inc. (NYSE: MET) today reported first quarter 2003 net income of $362 million, or $0.47 per diluted share, compared with $329 million, or $0.44 per diluted share, for the first quarter of 2002. Net income for the first quarter of 2003 includes after-tax net investment losses of $84 million. First quarter 2002 net income includes after-tax net investment losses of $76 million and income of $5 million from the cumulative effect of a change in accounting for goodwill. As a result of the conversion of MetLife Capital Trust I's company-obligated mandatorily redeemable securities into long-term debt, $21 million ($0.03 per diluted share) was charged to additional paid-in capital in the first quarter of 2003 and is included in the calculation of net income per share. See "Corporate Events" within this release for additional information related to MetLife Capital Trust I. MetLife analyzes its performance using a non-GAAP measure called operating earnings. Operating earnings is defined as net income, excluding after-tax net investment gains and losses, and the after-tax impact from the cumulative effect of accounting changes. MetLife believes this measure enhances the understanding and comparability of its performance by excluding the net effect of investment gains and losses, which can fluctuate significantly from period to period, thereby highlighting the results from operations and the underlying profitability drivers of the business. Operating earnings for the first quarter of 2003 were $446 million, or $0.62 per diluted share, compared with $400 million, or $0.54 per diluted share, for the prior year period. Total premiums and fees for the first quarter of 2003 were $5.40 billion, up 9% from the prior year period. Total assets under management grew 8% to $307.7 billion at March 31, 2003, compared with $284.9 billion at March 31, 2002, and up 3% from $299.2 billion at December 31, 2002. "We are pleased with our results this quarter, especially considering the difficult environment in which we are operating. At MetLife, we are beginning to see the positive effects of what has now become a very real flight to quality. This trend, coupled with the power of the MetLife brand and the strength of our people, is enhancing the top-line growth across our businesses," said Robert H. Benmosche, chairman of the board and chief executive officer. "Although the equity market performance in the first quarter was disappointing, we are encouraged by the performance thus far in the second quarter," added Mr. Benmosche. "And, the credit environment, although still challenging, has improved significantly from 2002. Our results reflect this improvement, as well as our continued prudent stance on impairments last year, with a 46% reduction in gross investment losses and a 21% reduction in the balance of gross unrealized investment losses versus the fourth quarter of 2002." "The diversification of our businesses and investment portfolio positions us to deliver even stronger results as the economy improves," continued Mr. Benmosche. A reconciliation from net income and net income per share to operating earnings and operating earnings per share follows:
For the three months ended March 31, ----------------------------------- 2003 2002 -------------- -------------- (Dollars in millions, except per share data) Net income $362 $0.47 $329 $0.44 After-tax net investment losses (84) (0.12) (76) (0.10) Impact of conversion of securities -- (0.03) -- -- Cumulative effect of change in accounting -- -- 5 -- ---- ----- ---- ----- Operating earnings $446 $0.62 $400 $0.54 ==== ===== ==== =====
After-tax net investment losses of $84 million in the first quarter of 2003 includes $221 million of pre-tax gross investment gains, offset by $357 million of pre-tax gross investment losses (including $268 million of writedowns and $89 million of losses related to sales of available-for-sale securities) and $34 million of losses on derivatives. After-tax net investment losses of $76 million in the first quarter of 2002 includes $545 million of pre-tax gross investment gains, offset by $621 million of pre-tax gross investment losses (including $338 million of writedowns and $283 million of losses related to sales of available-for-sale securities) and $29 million of losses on derivatives. In 2003, MetLife changed its method of measuring and allocating capital to its operating segments from a risk based capital method to one based on economic capital. While this change impacts the earnings and returns on allocated equity of the company's business segments, it has no impact on MetLife's consolidated results. The company believes that economic capital is a more rigorous model for measuring the risks inherent in its diverse businesses. MetLife did not change its method retrospectively. The impact of this change is quantified in each of the segments below. FIRST QUARTER SEGMENT RESULTS For each of the segments, the company provides below a reconciliation from net income to operating earnings. Reconciliations from net income to operating earnings for the product lines within each segment are provided in the financial tables accompanying this release. The discussions for each segment are based on operating earnings. Institutional Business
For the three months ended March 31, ------------------------------------ 2003 2002 ---- ---- (Dollars in millions) Net income $175 $177 After-tax net investment losses (44) (58) ---- ---- Operating earnings $219 $235 ==== ====
Lower investment spreads and a $14 million after-tax increase in pension and other post-retirement benefit costs were partially offset by improved underwriting results in several product lines and an $5 million after-tax increase in earnings on allocated capital. Institutional Business, which consists of Group Life, Retirement & Savings, and Non-Medical Health & Other product lines, also reports the following highlights (all comparisons are with the quarter ended March 31, 2002, unless otherwise noted): - Strong top-line growth, with total premiums, fees and other revenues up 12% to $2.44 billion. - Group Life operating earnings up $10 million to $78 million, due primarily to improved underwriting results. - Group Life premiums, fees and other revenues up 7% to $1.34 billion. - Retirement & Savings operating earnings down $32 million to $82 million, primarily as a result of lower investment spreads and reduced underwriting results, compared with more favorable underwriting results in the year-ago period. - Premiums, fees and other revenues from Retirement & Savings up 30% to $219 million. - Retirement & Savings general account liabilities up 9% to $36.2 billion, and up 2% versus December 31, 2002. - Non-Medical Health & Other operating earnings up $6 million to $59 million, due to improved underwriting results and higher earnings from allocated capital. - Premiums, fees and other revenues for Non-Medical Health & Other up 15% to $880 million due to continuing growth in Group Long-Term Care, Group Disability and Group Dental. - Group Disability premiums, fees and other revenues increased 22% to $241 million. - Group Disability incurred loss ratio was 96.5%, down from 97.2%. Individual Business
For the three months ended March 31, ------------------------------------ 2003 2002 ---- ---- (Dollars in millions) Net income $141 $176 After-tax net investment gains (losses) (19) 2 ---- ---- Operating earnings $160 $174 ==== ====
Individual Business continues to focus on achieving greater efficiencies of scale through expanded distribution, product innovations and expense reductions. After-tax expense savings of approximately $15 million, coupled with improved investment spreads, were more than offset by the continuing effects of lower equity markets on this segment's variable products, an $8 million after-tax increase in pension and other post-retirement benefit costs, and a $6 million after-tax reduction in earnings on allocated capital. Individual Business, which is comprised of Traditional Life, Variable & Universal Life, Annuities and Other product lines, also reports the following highlights (all comparisons are with the quarter ended March 31, 2002, unless otherwise noted): - Total life insurance and annuity statutory premiums and deposits up 23% to $4.56 billion. - Traditional Life operating earnings down $22 million to $76 million, due to strong underwriting results in the prior year period, higher pension and other post-retirement benefit costs, and lower earnings on allocated capital. - Traditional Life insurance first year statutory premiums and deposits up 4% to $53 million. - Variable & Universal Life operating earnings down $2 million to $23 million resulting from increased pension and other post-retirement benefit costs and lower earnings on allocated capital, partially offset by improved investment spreads and expense savings. - Variable Life first year statutory premiums and deposits down 19% to $91 million. - Universal Life first year statutory premiums and deposits up 57% to $55 million. - Annuities operating earnings up $10 million to $50 million due to higher investment spreads and growth in the overall business partially offset by higher guaranteed minimum death benefit claims and lower earnings on allocated capital. - Annuity statutory deposits up 53% to $2.61 billion, driven by increases in production by MetLife Investors Group, up 106%; MetLife Financial Services, up 17%; New England Financial, up 28%; and MetLife Resources, up 6%. - Fixed annuity statutory deposits up 58% to $424 million, and down 9% from the fourth quarter 2002. - Variable annuity statutory deposits up 52% to $2.19 billion, and up 16% from the fourth quarter 2002. - Operating earnings from the Other product line remained unchanged at $11 million. Auto & Home
For the three months ended March 31, ----------------------------------- 2003 2002 ---- ---- (Dollars in millions) Net income $27 $21 After-tax net investment losses (3) (9) ---- ---- Operating earnings $30 $30 ==== ====
Auto and Home's earnings continued to benefit from rate increases, as well as expense efficiencies resulting from the completion of the St. Paul personal lines integration. This was partially offset by a $4 million after-tax reduction in earnings on allocated capital. Also, a return to more typical winter weather versus 2002's mild winter was expected, and did suppress earnings growth period over period. Additional highlights include: - Favorable homeowners claims frequencies, which contributed to a reduction in the Property loss ratio to 50.2%, from 63.2% in the year ago period; - A $7 million income tax benefit associated with this segment's tax-preferred municipal bond portfolio; - Higher Auto claims frequencies in the Northeast from winter weather; and - An Auto loss reserve strengthening related to older accident years of $30 million after-tax. International
For the three months ended March 31, ----------------------------------- 2003 2002 ---- ---- (Dollars in millions) Net income (loss) $28 $(4) After-tax net investment losses -- (23) Cumulative effect of change in accounting -- 5 --- --- Operating earnings $28 $14 === ===
International's first quarter 2003 operating earnings benefited $20 million after-tax from the June 2002 acquisition in Mexico of Aseguradora Hidalgo, S.A. This increase was partially offset by a $6 million after-tax reduction in earnings on allocated capital. Reinsurance
For the three months ended March 31, ----------------------------------- 2003 2002 ---- ---- (Dollars in millions) Net income $20 $24 After-tax net investment gains -- 2 --- --- Operating earnings $20 $22 === ===
Reinsurance operations are conducted primarily through Reinsurance Group of America, Incorporated (NYSE: RGA), of which MetLife beneficially owns approximately 59%. Business growth and favorable mortality in RGA's U.S. operations were offset by a $6 million after-tax reduction in earnings resulting from the aforementioned change in MetLife's capital allocation methodology. Asset Management
For the three months ended March 31, ----------------------------------- 2003 2002 ---- ---- (Dollars in millions) Net income (loss) $6 $(1) After-tax net investment gains (losses) 5 (2) -- -- Operating earnings $1 $1 == ==
A 14% decline in assets under management resulted in lower revenues. A reduction in operating expenses, including staff reductions during 2002, as well as a $2 million after-tax increase in earnings on allocated capital, offset the decline in revenues. Corporate and Other
For the three months ended March 31, ------------------------------------ 2003 2002 ---- ---- (Dollars in millions) Net loss $(35) $(64) After-tax net investment gains (losses) (23) 12 ---- ---- Operating loss $(12) $(76) ==== ====
The current period benefited from higher investment income resulting primarily from joint venture earnings (up $18 million after-tax) and earnings related to allocated capital (up $15 million after-tax) partially offset by lower yields on invested assets. In addition, the year-ago period includes a $48 million after-tax settlement provision for General American Life Insurance Company's former Medicare business. CORPORATE EVENTS Stock Options Expensed First quarter 2003 net income and operating earnings reflect a $3 million after-tax expense from MetLife's adoption of the fair-value recognition method of accounting for employee stock options on a prospective basis. MetLife Capital Trust I On May 15, 2003, the purchase contracts associated with the MetLife Capital Trust I equity security units will be settled. The company expects the settlement rate to be 2.97 shares of MetLife common stock per purchase contract, which will result in the issuance of approximately 59.8 million common shares on that date. The company will receive approximately $1.0 billion in proceeds from this issuance, which is expected to be used for general corporate purposes. The weighted average common shares outstanding on a diluted basis used in the calculation of net income and operating earnings per diluted share for the first quarter of 2003 totaled 722.4 million shares. Included in this amount was 22.1 million shares related to the above-mentioned stock issuance, which is determined using the treasury method. As a result of the settlement of the purchase contracts and the issuance of the common shares, the company expects weighted average common shares outstanding on a diluted basis to total approximately 730 million shares in the quarter ending June 30, 2003 and approximately 760 million shares for periods thereafter, assuming no share repurchases or issuances. Earnings Conference Call MetLife will hold its first quarter 2003 earnings conference call and audio Webcast on Tuesday, May 6, 2003, from 8:00 to 9:00 a.m. (ET). The conference call will be available live via telephone and Internet. To listen over the telephone, dial (612) 326-1003 (domestic and international callers). 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 Internet beginning at 11:30 a.m. (ET) on Tuesday, May 6, 2003, until Tuesday, May 13, 2003, at 11:59 p.m. (ET). To listen to a replay of the conference call over the telephone, dial (320) 365-3844 (domestic and international callers). The access code for the replay is 680861. To access the replay of the conference call over the Internet, visit the above-mentioned Web site. MetLife, Inc., through its subsidiaries and affiliates, is a leading provider of insurance and other financial services to individual and institutional customers. The MetLife companies serve approximately 12 million individuals in the U.S. and companies and institutions with 37 million employees and members. It also has international insurance operations in 12 countries. # # # This release contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the company's operations and financial results and the business and the products of the company and its subsidiaries, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend" and other similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning future developments and their potential effects on the company. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those included in the forward-looking statements as a result of risks and uncertainties including, but not limited to the following: (i) changes in general economic conditions, including the performance of financial markets and interest rates; (ii) heightened competition, including with respect to pricing, entry of new competitors and the development of new products by new and existing competitors; (iii) unanticipated changes in industry trends; (iv) the company'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; (v) deterioration in the experience of the "closed block" established in connection with the reorganization of Metropolitan Life Insurance Company; (vi) catastrophe losses; (vii) adverse litigation or arbitration results; (viii) regulatory, accounting or tax changes that may affect the cost of, or demand for, the company's products or services; (ix) downgrades in the company's and its affiliates' claims paying ability, financial strength or debt ratings; (x) changes in rating agency policies or practices; (xi) discrepancies between actual claims experience and assumptions used in setting prices for the company's products and establishing the liabilities for the company's obligations for future policy benefits and claims; (xii) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (xiii) the effects of business disruption or economic contraction due to terrorism or other hostilities; and (xiv) other risks and uncertainties described from time to time in the company's filings with the Securities and Exchange Commission, including its S-1 and S-3 registration statements. The company specifically disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. For a copy of MetLife's Quarterly Financial Supplement, please visit www.metlife.com. MetLife, Inc. Consolidated Statements of Income Unaudited (Dollar amounts in millions)
Three months ended March 31, ---------------------------- 2003 2002 ---- ---- Premiums $ 4,838 $ 4,481 Universal life and investment-type product policy fees 566 457 Net investment income 2,897 2,762 Other revenues 298 367 Net investment losses (net of amounts allocable from other accounts of ($38) and ($13), respectively (222) (92) ------- ------- Total revenues 8,377 7,975 ------- ------- Policyholder benefits and claims (excludes amounts directly related to net investment losses of ($28) and ($7), respectively) 4,953 4,618 Interest credited to policyholder account balances 747 714 Policyholder dividends 503 497 Other expenses (excludes amounts directly related to net investment losses of ($10) and ($6), respectively) 1,749 1,653 ------- ------- Total expenses 7,952 7,482 ------- ------- Income from continuing operations before provision for income taxes 425 493 Provision for income taxes 121 186 ------- ------- Income from continuing operations 304 307 Income from discontinued operations, net of income taxes 58 17 ------- ------- Income before cumulative effect of change in accounting 362 324 Cumulative effect of change in accounting -- 5 ------- ------- Net income $ 362 $ 329 ======= ======= RECONCILIATION OF NET INCOME TO OPERATING EARNINGS Net income $ 362 $ 329 Net investment losses (1) (170) (105) Minority interest - net investment losses 4 1 Adjustments to net investments losses (2) 38 13 Net investment losses tax benefit 44 15 ------- ------- After-tax net investment losses (84) (76) Cumulative effect of accounting change for SFAS 142 -- 5 ------- ------- Operating earnings $ 446 $ 400 ======= =======
(1) In accordance with the Statement of Financial Accounting Standards No. 144 ("SFAS 144"), a recently issued accounting standard pertaining to long-lived assets, income related to the company's real estate sold and held for sale is classified as discontinued operations. Included in net investment losses for the three months ended March 31, 2003 and 2002 are investment gains of $90 million and zero, respectively. This presentation differs from the presentation required by SFAS 144. (2) Adjustments to investment losses include amortization of deferred policy acquisition costs, charges and credits to participating contracts, and adjustments to the policyholder dividend obligation resulting from net investment gains and losses. MetLife, Inc. Financial Highlights Unaudited (Dollar amounts in millions, except per share data or unless otherwise noted)
At or for the three months ended March 31, --------------- 2003 2002 ---- ---- Other Financial Data: Net income $ 362 $ 329 Operating earnings $ 446 $ 400 Total assets under management (billions) $ 308 $ 285 Individual Business Sales Data: Total first year statutory life premiums and deposits $ 212 $ 200 Variable and Universal life first year statutory premiums and deposits $ 159 $ 149 Total annuity statutory deposits $2,611 $1,704 Mutual fund sales $ 797 $ 997 Earnings per Share Calculation: Weighted average common shares outstanding - diluted 722.4 739.5 Operating earnings per share - diluted $ 0.62 $ 0.54 Net income per share - diluted $ 0.47 (3) $ 0.44
(3) Accounting standards require gains or losses resulting from the redemption of a subsidiary's redeemable preferred stock to be recorded in additional paid-in capital. However, such gains or losses are included in the calculation of net income per share. During the first quarter of 2003, net income per share includes a $21 million ($0.03 per diluted share) charge associated with the Company's conversion of company-obligated manditorily redeemable securities issued by MetLife Capital Trust I into long-term debt. MetLife, Inc. Balance Sheet Data Unaudited (Dollar amounts in millions)
March 31, December 31, 2003 2002 ---- ---- Balance Sheet Data: General account assets $ 226,238 $ 217,692 Separate account assets 60,620 59,693 --------- --------- Total assets $ 286,858 $ 277,385 ========= ========= Policyholder liabilities (including amounts of closed block) $ 168,929 $ 165,242 Short-term debt 2,441 1,161 Long-term debt 5,481 4,425 Other liabilities 31,071 28,214 Separate account liabilities 60,620 59,693 --------- --------- Total liabilities 268,542 258,735 --------- --------- Company-obligated mandatorily redeemable capital securities 277 1,265 --------- --------- Common stock, at par value 8 8 Additional paid-in capital 14,952 14,968 Retained earnings 3,169 2,807 Treasury stock (2,402) (2,405) Accumulated other comprehensive income 2,312 2,007 --------- --------- Total stockholders' equity 18,039 17,385 --------- --------- Total liabilities and stockholders' equity $ 286,858 $ 277,385 ========= =========
MetLife, Inc. Operating Earnings Unaudited (Dollar amounts in millions)
Three months ended March 31, ---------------------------------------------- 2003 2002 2002 As Reported As Reported Pro Forma(4) ----------- ----------- ------------ Institutional Operations Group Life $ 78 $ 68 $ 70 Retirement & Savings 82 114 118 Non-Medical Health & Other 59 53 58 ----- ----- ----- Total Institutional Operations 219 235 246 ----- ----- ----- Individual Operations Traditional Life 76 98 92 Variable & Universal Life 23 25 20 Annuities 50 40 35 Other 11 11 12 ----- ----- ----- Total Individual Operations 160 174 159 ----- ----- ----- Auto & Home Auto (4) 15 12 Property 32 11 12 Other 2 4 4 ----- ----- ----- Total Auto & Home 30 30 28 ----- ----- ----- International Operations 28 14 8 Reinsurance 20 22 16 Asset Management 1 1 3 Corporate, Other & Eliminations (12) (76) (60) ----- ----- ----- Total Operating Earnings $ 446 $ 400 $400 ===== ===== =====
(4) The amounts shown as pro forma for the three months ended March 31, 2002 reflect operating earnings that would have been reported had the Company allocated capital based on economic capital rather than on the basis of risk-based capital. MetLife, Inc. Reconciliations of Net Income to Operating Earnings - Product Level Unaudited (Dollar amounts in millions)
Three months ended March 31, ---------------------------- 2003 2002 ---- ---- Institutional Operations Group Life Net income $ 65 $ 46 After-tax net investment losses (13) (22) ---- ----- Operating earnings $ 78 $ 68 ==== ===== Retirement & Savings Net income $ 57 $ 70 After-tax net investment losses (25) (44) ---- ----- Operating earnings $ 82 $ 114 ==== ===== Non-Medical Health & Other Net income $ 53 $ 61 After-tax net investment gains (losses) (6) 8 ---- ----- Operating earnings $ 59 $ 53 ==== ===== Individual Operations Traditional Life Net income $ 82 $ 125 After-tax net investment gains 6 27 ---- ----- Operating earnings $ 76 $ 98 ==== ===== Variable & Universal Life Net income $ 18 $ 27 After-tax net investment gains (losses) (5) 2 ---- ----- Operating earnings $ 23 $ 25 ==== ===== Annuities Net income $ 35 $ 9 After-tax net investment losses (15) (31) ---- ----- Operating earnings $ 50 $ 40 ==== ===== Other Net income $ 6 $ 15 After-tax net investment gains (losses) (5) 4 ---- ----- Operating earnings $ 11 $ 11 ==== ===== Auto & Home Auto Net income $ (6) $ 8 After-tax net investment gains (losses) (2) (7) ---- ----- Operating earnings $ (4) $ 15 ==== ===== Property Net income $ 31 $ 9 After-tax net investment gains (losses) (1) (2) ---- ----- Operating earnings $ 32 $ 11 ==== ===== Other Net income $ 2 $ 4 After-tax net investment gains (losses) -- -- ---- ----- Operating earnings $ 2 $ 4 ==== =====