10-Q: MetLife Q3 2025: Adjusted Earnings Rise Amid Market Volatility

MetLife reports a decline in GAAP net income for Q3 and 9M 2025, primarily due to market volatility, while adjusted earnings show growth for the quarter.

Summary

• Net income available to common shareholders decreased to $818 million for the three months ended September 30, 2025, down from $1.3 billion in the prior year period.
• Net income available to common shareholders for the nine months ended September 30, 2025, was $2.4 billion, a decrease from $3.0 billion in the same period last year.
• Adjusted earnings available to common shareholders increased to $1.6 billion for the three months ended September 30, 2025, up from $1.4 billion in the prior year period.
• Adjusted earnings available to common shareholders for the nine months ended September 30, 2025, were $4.3 billion, a slight decrease from $4.3 billion in the same period last year.
• Total revenues for the three months ended September 30, 2025, were $17.4 billion, down from $18.4 billion in the prior year period.
• Total revenues for the nine months ended September 30, 2025, were $53.3 billion, up from $52.3 billion in the prior year period.
• Total assets increased to $719.7 billion at September 30, 2025, from $677.5 billion at December 31, 2024.
• Total equity increased to $29.2 billion at September 30, 2025, from $27.7 billion at December 31, 2024.
• The company repurchased 29,852,023 shares of common stock for $2.4 billion during the nine months ended September 30, 2025.

Sentiment

Score: 6

Explanation: While GAAP net income declined significantly due to market volatility, the company's core business performance, as reflected in adjusted earnings, showed growth for the quarter. Strategic initiatives, capital management, and strong subsequent pension mandates indicate resilience and positive operational momentum despite external headwinds.

Positives

• Adjusted earnings available to common shareholders increased by $209 million for the three months ended September 30, 2025, driven by favorable market factors and volume growth.
• Market factors increased adjusted earnings by $203 million for the quarter, primarily due to higher returns on private equity funds.
• Volume growth contributed an additional $66 million to adjusted earnings for the quarter, reflecting higher average invested assets and business growth in EMEA.
• Group Benefits segment adjusted earnings increased by $82 million for the quarter, driven by growth in core and voluntary products and favorable morbidity results.
• Asia segment adjusted earnings increased by $237 million for the quarter, benefiting from higher returns on private equity funds and business growth.
• EMEA segment adjusted earnings increased by $18 million for the quarter, due to growth in corporate solutions, credit life, and accident & health businesses.
• MetLife Holdings segment adjusted earnings increased by $21 million for the quarter, supported by higher returns on private equity funds.
• Total assets increased to $719.7 billion at September 30, 2025, from $677.5 billion at December 31, 2024, indicating balance sheet growth.
• Total equity increased to $29.2 billion at September 30, 2025, from $27.7 billion at December 31, 2024, reflecting improved financial position.
• Accumulated Other Comprehensive Income (Loss) improved to a loss of $17.6 billion at September 30, 2025, from $21.2 billion at December 31, 2024.
• Gross unrealized losses on fixed maturity securities available-for-sale decreased by $3.9 billion to $27.2 billion for the nine months ended September 30, 2025, primarily due to a decrease in interest rates.
• Secured pension risk transfer mandates totaling approximately $12 billion were obtained in the fourth quarter of 2025, indicating strong business momentum.

Negatives

• Net income available to common shareholders decreased by $457 million for the three months ended September 30, 2025, primarily due to unfavorable net investment gains (losses) and net derivative gains (losses).
• Net investment gains (losses) showed an unfavorable change of $248 million for the quarter, driven by losses on foreign currency transactions and lower gains on real estate sales.
• Net derivative gains (losses) experienced an unfavorable change of $1.7 billion for the quarter, impacted by the strengthening U.S. dollar against the Japanese yen and increases in U.S. and Japan long-term swap rates.
• Adjusted earnings available to common shareholders decreased by $42 million for the nine months ended September 30, 2025, primarily due to foreign currency fluctuations and unfavorable underwriting results.
• Latin America segment adjusted earnings decreased by $74 million for the quarter, impacted by lower recurring investment income and notable tax adjustments in Mexico.
• RIS segment adjusted earnings decreased by $36 million for the quarter, mainly due to less favorable mortality in pension risk transfer and risk solution businesses.
• Corporate & Other adjusted earnings available to common shareholders showed a larger loss of $288 million for the quarter, compared to $249 million in the prior period, due to higher market-related employee costs and corporate expenses.
• Allowance for credit loss for fixed maturity securities available-for-sale increased to $248 million at September 30, 2025, from $160 million at December 31, 2024.
• Allowance for credit loss for mortgage loans increased to $1,261 million at September 30, 2025, from $800 million at December 31, 2024.

Risks

• Economic condition difficulties, including risks relating to interest rates, credit spreads, declining equity or debt markets, real estate, currency exchange rates, derivatives, climate change, public health, terrorism and security.
• Global capital and credit market adversity, and credit facility inaccessibility.
• Financial strength or credit ratings downgrades.
• Unavailability, unaffordability, or inadequate reinsurance, including risks from reinsurers' credit risk.
• Statutory life insurance reserve financing costs or limited market capacity.
• Legal, regulatory, and supervisory and enforcement policy changes, including changes in tax rates, tax laws or interpretations.
• Litigation and regulatory investigations, such as asbestos-related claims and false unclaimed property reports.
• Unsuccessful efforts to meet all environmental, social, and governance standards or to enhance sustainability.
• Investment defaults, downgrades, or volatility, and investment sales or lending difficulties.
• Claims or other results that differ from estimates, assumptions, or models.
• Global political, legal, or operational risks and business competition.
• Technological changes, catastrophes, and climate changes or responses to it.
• Deficiencies in the closed block, goodwill or other asset impairment, or deferred income tax asset allowance.
• Product guarantee volatility, costs, and counterparty risks, and risk management failures.
• Insufficient protection from operational risks, and failure to protect confidentiality, integrity or availability of systems or data or other cybersecurity or disaster recovery failures.
• Accounting standards changes and excessive risk-taking.
• Marketing and distribution difficulties, and pension and other postretirement benefit assumption changes.
• Inability to protect intellectual property or avoid infringement claims.
• Acquisition, integration, growth, disposition, or reorganization difficulties.
• Brighthouse Financial, Inc. separation risks.
• MetLife, Inc.'s Board of Directors' influence over stockholder votes through the MetLife Policyholder Trust.
• Legaland corporate governance-related effects on business combinations.

Future Outlook

The company is evaluating the impact of new NAIC principle-based reserving (PBR) framework for non-variable annuities, effective January 1, 2026, and the ultimate financial impact is uncertain. A revised tax law in Mexico, effective October 2025, is expected to reduce Latin America's adjusted earnings by $50 million to $60 million in 2026, with little to no impact beyond 2027. The impact of Chile's pension reform bill, enacted in March 2025, on the Chilean pension business is still being evaluated, pending specific regulations expected over the next two years. SEC rules requiring clearing of U.S. Treasury securities transactions will affect certain company transactions, with cash transactions clearing by December 31, 2026, and repo transactions by June 30, 2027, though the rules' potential effect on markets is uncertain. The company does not undertake any obligation to publicly correct or update any forward-looking statement.

Management Comments

• Management continues to evaluate the company's segment performance and allocated resources and may adjust related measurements in the future to better reflect segment profitability.
• We continue to believe we have access to ample liquidity to meet business requirements under current market conditions and reasonably possible stress scenarios.
• We continuously monitor and adjust our liquidity and capital plans for MetLife, Inc. and its subsidiaries in light of market conditions, as well as changing needs and opportunities.
• We manage our capital position to maintain our financial strength and credit ratings.
• We view our capital ratios, credit quality, stable and diverse earnings streams, diversity of liquidity sources and our liquidity monitoring procedures as critical to retaining such credit ratings.

Industry Context

The global financial and economic environment continues to impact the insurance industry, with market interest rates, global inflation, supply chain disruptions, and geopolitical events causing volatility in equity, credit, and real estate markets. Regulatory changes, such as the NAIC's PBR framework for annuities and the SEC's Treasury clearing rules, are shaping the operational landscape. Tax law revisions in Mexico and pension reforms in Chile highlight evolving regional regulatory pressures. The SEC's decision to end its defense of climate-related disclosure rules indicates ongoing uncertainty in ESG reporting requirements.

Comparison to Industry Standards

• The NAIC's interim statutory accounting guidance for negative IMR, extended until December 31, 2026, permits an insurer with a company action level RBC ratio greater than 150% (or an authorized control level RBC ratio greater than 300%) to admit negative IMR for an amount up to 10% of its general account capital and surplus. The company states these interim changes had an immaterial impact on its RBC, suggesting it maintains a strong RBC ratio relative to this standard.
• The NAIC's adoption of a principle-based reserving (PBR) framework for non-variable annuities (VM-22), effective January 1, 2026, aligns with industry efforts to standardize reserving practices, similar to VM-20 for life insurance and VM-21 for variable annuities. The company is evaluating the ultimate financial impact, indicating a need to adapt to evolving industry valuation standards.
• The company's average Loan-To-Value (LTV) ratio for net commercial mortgage loans was 69% at September 30, 2025, and its average Debt Service Coverage Ratio (DSCR) was 2.1x. For net agricultural mortgage loans, the average LTV ratio was 45%. These metrics suggest a conservative lending approach compared to general industry practices, where higher LTVs and lower DSCRs might indicate higher risk.

Corporate Governance

Legal Proceedings

• The company is a defendant in a large number of asbestos-related suits, primarily in state courts, alleging personal injury from asbestos exposure and seeking damages. MLIC received approximately 2,013 new asbestos-related claims for the nine months ended September 30, 2025.
• Total Asset Recovery Services, LLC. v. MetLife, Inc., et al. is an action under the New York False Claims Act, alleging the company filed false unclaimed property reports from 1986 to 2017. The trial court denied the defendants' motion to dismiss on October 13, 2024, and the company intends to defend vigorously.
• The aggregate range of reasonably possible losses in excess of amounts accrued for certain litigation matters is estimated to be $0 to $125 million as of September 30, 2025.

Related Party Transactions

• MetLife Investment Management, LLC and an affiliate of General Atlantic Partners, L.P. have entered into investment advisory agreements with Chariot Reinsurance, Ltd. to serve as exclusive providers of global asset management services to Chariot Re, following an initial reinsurance transaction on July 1, 2025.

Stakeholder Impact

• Shareholders: Common stock repurchases of $2.4 billion and a new $3.0 billion authorization demonstrate a commitment to returning capital. Preferred stock redemption of $1.0 billion also impacts preferred shareholders. Dividends on common stock remained stable at $1.1 billion.
• Employees: Performance Shares and Performance Units from the 2015 Stock Plan were settled in Q1 2025, and awards are now granted under the new 2025 Stock and Incentive Compensation Plan, impacting employee compensation and incentives.
• Customers: New pension risk transfer mandates and growth in various insurance products (e.g., corporate solutions, credit life, accident & health) indicate continued service and expansion of offerings. Regulatory changes like Chile's pension reform and Mexico's tax law could affect product structures and costs for customers in those regions.
• Creditors: Issuance of $1.0 billion in subordinated debt and $612 million in senior notes, along with a $1.25 billion senior debt facility, impacts the company's debt structure and leverage. The company states it was in compliance with all applicable financial covenants.
• Regulators: Ongoing engagement with NAIC on IMR and PBR frameworks, and with the SEC on climate disclosures and Treasury clearing rules, highlights the company's need to adapt to evolving regulatory landscapes.

Next Steps

• Close the pending acquisition of PineBridge Investments by the end of 2025, subject to regulatory approvals and customary closing conditions.
• Close the pending reinsurance transaction with Talcott Resolution Life Insurance Company by the end of 2025, subject to regulatory approvals and customary closing conditions.
• Evaluate the impact of Chile's pension reform bill, with specific regulations expected to be issued during the next two years.
• Implement NAIC's principle-based reserving (PBR) framework for non-variable annuities, which applies to new issues for valuation dates on or after January 1, 2026, with a three-year optional implementation period.
• Comply with SEC rules requiring clearing of eligible cash transactions in U.S. Treasury securities by December 31, 2026.
• Comply with SEC rules requiring clearing of eligible repurchase and reverse repurchase transactions in U.S. Treasury securities by June 30, 2027.
• Include applicable enhanced disclosures in the 2025 annual consolidated financial statements for ASU 2023-09 (Income Taxes).
• Evaluate the impact of ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2025-06 (Internal-Use Software) for their effective dates in 2027 and 2028, respectively.

Key Dates

Recommendation

While GAAP net income declined significantly due to market volatility impacting investment and derivative results, MetLife's adjusted earnings, which management uses for performance evaluation, showed a positive increase for the quarter. The company continues to execute its capital management strategy through substantial share repurchases and a preferred stock redemption. Strategic reinsurance transactions and strong subsequent pension risk transfer mandates indicate ongoing business development. However, the decline in GAAP net income and the slight decrease in nine-month adjusted earnings, coupled with ongoing regulatory uncertainties and increased credit loss allowances, suggest a mixed financial picture. A 'hold' recommendation is appropriate for a seasoned investor, acknowledging the company's operational resilience and strategic execution while remaining cautious about external market and regulatory headwinds impacting reported earnings.

Keywords

Insurance, Annuities, Employee Benefits, Asset Management, SEC Filing, Financial Results, Adjusted Earnings, Net Income, Investments, Derivatives, Capital Management, Reinsurance, Pension Risk Transfer, Share Repurchase, Debt Issuance, Regulatory Compliance, Market Risk, Corporate Governance, Litigation, MetLife