MetLife, Inc. (NYSE:MET) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 09:00 am ET


MetLife, Inc. (NYSE:MET) Q4 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Fourth Quarter 2018 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 refer you to the cautionary note on the forward-looking statements in yesterday's earnings release.

With that, I will turn the call over to John Hall, Head of Investor Relations.

John Hall

Thank you, operator. Good morning, everyone and welcome to MetLife fourth quarter 2018 earnings call. Before starting, I refer you to the information on non-GAAP measures on the Investor Relations portion of in our earnings release and in our quarterly financial supplements, which you should review. Now joining me this morning on the call are Steve Kandarian, Chairman, President and Chief Executive Officer; and John McCallion, Chief Financial Officer, also here with us today to participate in discussions are other members of senior management.

Last night we released an expanded set of supplemental slides, they are available on our website. John McCallion will speak to those supplemental slides in his prepared remarks if you wish to follow along. The content for the slides begins following the romanette pages that feature a number of GAAP reconciliations. After prepared remarks, we will have a Q&A session that given the busy earnings call scheduled this morning, we'll extend no longer than the top of the hour. So in fairness to all participants, please limit yourself to one question and one follow-up.

With that, I will turn the call over to Steve.

Steven A. Kandarian

Thank you, John and good morning, everyone. Last night we reported fourth quarter earnings to close at a very strong 2018. Quarterly adjusted earnings totaled $1.3 billion or $1.35 per share, up from $0.64 per share a year ago. Adjusted earnings benefited from a tax settlement that more than offset weaker capital markets, weaker underwriting and refinement to the estimated impact of US tax reform.

Net income was $2 billion or $2.04 per share, down from $2.14 per share a year ago. Falling interest rates, falling equity markets and a strengthening dollar drove substantial gains in the derivatives we hold to protect our balance sheet. These gains reversed much of the non-economic derivative losses incurred earlier in the year.

For the full year 2018, MetLife generated adjusted earnings of $5.5 billion or $5.39 per share, an increase of 37%. Net income for the year was $5 billion or $4.91 per share. Overall, 2018 was an excellent year, driven by solid underwriting, good volume growth, disciplined expense management and tax reform. These positive fundamentals were enhanced by the impact of significant and consistent capital management. Reflecting the strong full year results, adjusted return on equity in 2018 was 12.6%.

Turning to total Company investments. Our investment portfolio continues to benefit from higher investment rates. Our new money rate rose from 3.23% a year ago to 4.24% in the