MetLife, Inc. (NYSE:MET.PRA) Q3 2016 Earnings Conference Call Transcript
Nov 03, 2016 • 08:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the MetLife Third Quarter 2016 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. Before we get started, I would like to read the following statement on behalf of MetLife.
(Forward-Looking Cautionary Statements)
With that, I would like to turn the call over to John Hall, Head of Investor Relations.
Thank you, Greg. Good morning, everyone, and welcome to MetLife's third quarter 2016 earnings call. I'm John Hall, MetLife's Head of Investor Relations. On this call, we will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so-called non-GAAP measures. Reconciliations of these non-GAAP measures and related definitions to the most directly comparable GAAP measures may be found on the Investor Relations portion of metlife.com, in our earnings release, and our quarterly financial supplements.
A reconciliation of forward-looking financial information to the most directly comparable GAAP measures is not accessible because MetLife believes it's not possible to provide a reliable forecast of net investment and net derivative gains and losses, which can fluctuate from period to period and may have a significant impact on GAAP net income.
Now, joining me this morning on the call are Steve Kandarian, Chairman, President and Chief Executive Officer; and John Hele, Chief Financial Officer. Also here with us today to participate in the discussions are other members of senior management. After prepared remarks, we will have a Q&A session. In fairness to all participants, please limit yourself to one question and one follow-up.
And finally, given the busy insurance earnings calendar this morning, we will end the call promptly at the top of the hour.
With that, I'd like to turn the call over to Steve.
Thank you, John, and good morning, everyone. Last night, we reported third quarter operating earnings per share of $1.28. The quarter was characterized by a rebound in variable investment income and solid expense control. Adjusting for notable items, operating earnings were $1.53 per share, which compares to $1.36 per share on the same basis in the prior year period. Two actions account for most of the notable items: the re-segmentation of our business and our annual actuarial assumption review.
First, following re-segmentation, the Brighthouse segment will no longer receive an aggregation benefit associated with GAAP reserve testing of its variable and universal life policies. This previously-announced charge lowered operating earnings by $254 million. Second, we completed our annual actuarial assumption review in the third quarter. This review covered all of our global businesses with the exception of variable annuities, which we updated last quarter.
The actuarial assumption review lowered operating earnings by $65 million. Compared to a year ago, equity markets, which were up 3.3% in the quarter as measured by the S&P 500, had a favorable impact of $80 million, while most other market factors had little