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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
Form 10-Q
(Mark One)
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☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission file number: 001-15787
_____________________________________
MetLife, Inc.
(Exact name of registrant as specified in its charter)
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Delaware | | 13-4075851 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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200 Park Avenue, | New York, | NY | | 10166-0188 |
(Address of principal executive offices) | | (Zip Code) |
(212) 578-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 | MET | New York Stock Exchange |
Floating Rate Non-Cumulative Preferred Stock, Series A, par value $0.01 | MET PRA | New York Stock Exchange |
Depositary Shares, each representing a 1/1,000th interest in a share of 5.625% Non-Cumulative Preferred Stock, Series E | MET PRE | New York Stock Exchange |
Depositary Shares, each representing a 1/1,000th interest in a share of 4.75% Non-Cumulative Preferred Stock, Series F | MET PRF | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☑ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
At October 30, 2020, 899,948,513 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
Table of Contents
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Item 1. | Financial Statements (Unaudited) (at September 30, 2020 and December 31, 2019 and for the Three Months and Nine Months Ended September 30, 2020 and 2019) | |
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As used in this Form 10‑Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates.
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10‑Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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 and terms such as “anticipate,” “assume,” “become,” “believe,” “can,” “continue,” “could,” “emerging,” “estimate,” “evolve,” “expect,” “forecast,” “foresee,” “future,” “if,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “probable,” “project,” “propose,” “prospect,” “remain,” “risk,” “scheduled,” “should,” “target,” “ultimate,” “vary,” “when,” “will,” “would” and other words and terms of similar meaning, in each of their forms of speech, or that are tied to future periods, in connection with a discussion of future 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.
Many factors will be important in determining the results of MetLife, Inc., its subsidiaries and affiliates. Forward-looking statements are based on our assumptions and current expectations, which may be inaccurate, and on the current economic environment, which may change. These statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict. 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. These factors include: (1) the course of the COVID-19 pandemic and responses to it, which may also precipitate or exacerbate the remaining risks; (2) difficult economic conditions, including risks relating to interest rates, credit spreads, equity, real estate, obligors and counterparties, currency exchange rates, derivatives, and terrorism and security; (3) adverse global capital and credit market conditions, which may affect our ability to meet liquidity needs and access capital; (4) inability to access our credit facility; (5) downgrades in our claims paying ability, financial strength or credit ratings; (6) availability and effectiveness of reinsurance, hedging or indemnification arrangements; (7) increasing cost and limited market capacity for statutory life insurance reserve financings; (8) the impact on us of changes to and implementation of the wide variety of laws and regulations to which we are subject; (9) regulatory, legislative or tax changes relating to our operations that may affect the cost of, or demand for, our products or services; (10) adverse results or other consequences from litigation, arbitration or regulatory investigations; (11) shortcomings in meeting environment, social, and governance standards; (12) legal, regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (13) MetLife, Inc.’s primary reliance, as a holding company, on dividends from subsidiaries to meet free cash flow targets and debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (14) investment losses, defaults and volatility; (15) difficulty selling investment holdings and potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (16) requirements to pledge collateral or make payments related to derivatives transactions; (17) changes to securities and investment valuations, allowances and impairments taken on investments, and methodologies, estimates and assumptions; (18) differences between actual claims experience and underwriting and reserving assumptions; (19) political, legal, operational, economic and other risks relating to our global operations; (20) competitive pressures, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, and for personnel; (21) the impact of technological changes on our businesses; (22) catastrophe losses and climate-related regulation; (23) a deterioration in the experience of the closed block established in connection with the reorganization of Metropolitan Life Insurance Company; (24) impairment of goodwill or other long-lived assets, or the establishment of a valuation allowance against our deferred income tax asset; (25) changes in assumptions related to deferred policy acquisition costs, deferred sales inducements or value of business acquired; (26) exposure to losses related to guarantees in certain products; (27) ineffectiveness of risk management policies and procedures or models; (28) insufficient policies and procedures to protect against operational risks; (29) a failure in cybersecurity systems or other information security systems or disaster recovery plans; (30) any failure to protect the confidentiality of client information; (31) changes in accounting standards; (32) associates taking excessive risks; (33) difficulties in or complications from marketing and distributing products through our distribution channels; (34) increased expenses relating to pension and other postretirement benefit plans; (35) inability to protect our intellectual property rights or claims of infringement of others’ intellectual property rights; (36) difficulties, unforeseen liabilities, asset impairments, or rating agency actions arising from business acquisitions and dispositions, joint ventures, or other legal entity reorganizations; (37) unanticipated or adverse developments that could harm our expected operational or other benefits from the separation of Brighthouse Financial, Inc. and its subsidiaries; (38) the possibility that MetLife, Inc.’s Board of Directors
may influence the outcome of stockholder votes through the voting provisions of the MetLife Policyholder Trust; (39) provisions of laws and our incorporation documents that may delay, deter or prevent takeovers and corporate combinations involving MetLife; (40) LIBOR’s termination and the resulting uncertainties and transition to a new benchmark rate; and (41) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission.
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 U.S. Securities and Exchange Commission.
Corporate Information
We announce financial and other information about MetLife to our investors on our website (www.metlife.com) through the MetLife Investor Relations web page (https://investor.metlife.com), as well as in U.S. Securities and Exchange Commission filings, news releases, public conference calls and webcasts. MetLife encourages investors to visit the Investor Relations web page from time to time, as information is updated and new information is posted. The information found on our website is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the U.S. Securities and Exchange Commission, and any references to our website are intended to be inactive textual references only.
Note Regarding Reliance on Statements in Our Contracts
See “Exhibits — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.
Part I — Financial Information
Item 1. Financial Statements
MetLife, Inc.
Interim Condensed Consolidated Balance Sheets
September 30, 2020 and December 31, 2019 (Unaudited)
(In millions, except share and per share data)
| | | | | | | | | | | | | | |
| | September 30, 2020 | | December 31, 2019 |
Assets | | | | |
Investments: | | | | |
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $313,096 and $297,655, respectively; allowance for credit loss of $75 and $0, respectively) | | $ | 353,809 | | | $ | 327,820 | |
Equity securities, at estimated fair value | | 1,111 | | | 1,342 | |
Contractholder-directed equity securities and fair value option securities, at estimated fair value (includes $0 and $3, respectively, relating to variable interest entities) | | 12,276 | | | 13,102 | |
Mortgage loans (net of allowance for credit loss of $520 and $353, respectively; includes $176 and $188, respectively, under the fair value option and $0 and $59, respectively, of mortgage loans held-for-sale) | | 82,881 | | | 80,529 | |
Policy loans | | 9,580 | | | 9,680 | |
Real estate and real estate joint ventures (includes $147 and $127, respectively, under the fair value option) | | 11,643 | | | 10,741 | |
Other limited partnership interests | | 8,569 | | | 7,716 | |
Short-term investments, principally at estimated fair value | | 3,832 | | | 3,850 | |
Other invested assets (includes $2,114 and $2,299, respectively, of leveraged and direct financing leases and $299 and $290, respectively, relating to variable interest entities) | | 22,544 | | | 19,015 | |
Total investments | | 506,245 | | | 473,795 | |
Cash and cash equivalents, principally at estimated fair value (includes $28 and $12, respectively, relating to variable interest entities) | | 24,405 | | | 16,598 | |
Accrued investment income | | 3,424 | | | 3,523 | |
Premiums, reinsurance and other receivables (includes $5 and $4, respectively, relating to variable interest entities) | | 20,712 | | | 20,443 | |
Deferred policy acquisition costs and value of business acquired | | 16,179 | | | 17,833 | |
| | | | |
Goodwill | | 9,360 | | | 9,308 | |
| | | | |
Other assets (includes $2 and $2, respectively, relating to variable interest entities) | | 10,471 | | | 10,518 | |
Separate account assets | | 189,696 | | | 188,445 | |
Total assets | | $ | 780,492 | | | $ | 740,463 | |
Liabilities and Equity | | | | |
Liabilities | | | | |
Future policy benefits | | $ | 203,929 | | | $ | 194,909 | |
Policyholder account balances | | 201,072 | | | 192,627 | |
Other policy-related balances | | 16,883 | | | 17,171 | |
Policyholder dividends payable | | 595 | | | 681 | |
Policyholder dividend obligation | | 2,944 | | | 2,020 | |
Payables for collateral under securities loaned and other transactions | | 34,772 | | | 26,745 | |
Short-term debt | | 351 | | | 235 | |
Long-term debt (includes $5 and $5, respectively, at estimated fair value, relating to variable interest entities) | | 14,539 | | | 13,466 | |
Collateral financing arrangement | | 924 | | | 993 | |
Junior subordinated debt securities | | 3,152 | | | 3,150 | |
| | | | |
Current income tax payable | | 638 | | | 363 | |
Deferred income tax liability | | 10,839 | | | 9,097 | |
Other liabilities (includes $1 and $1, respectively, relating to variable interest entities) | | 26,589 | | | 24,179 | |
Separate account liabilities | | 189,696 | | | 188,445 | |
Total liabilities | | 706,923 | | | 674,081 | |
Contingencies, Commitments and Guarantees (Note 15) | | | | |
Equity | | | | |
MetLife, Inc.’s stockholders’ equity: | | | | |
Preferred stock, par value $0.01 per share; $4,405 and $3,405, respectively, aggregate liquidation preference | | — | | | — | |
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,180,720,494 and 1,177,680,299 shares issued, respectively; 905,571,829 and 915,338,098 shares outstanding, respectively | | 12 | | | 12 | |
Additional paid-in capital | | 33,744 | | | 32,680 | |
Retained earnings | | 36,782 | | | 33,078 | |
Treasury stock, at cost; 275,148,665 and 262,342,201 shares, respectively | | (13,258) | | | (12,678) | |
Accumulated other comprehensive income (loss) ("AOCI") | | 16,036 | | | 13,052 | |
Total MetLife, Inc.’s stockholders’ equity | | 73,316 | | | 66,144 | |
Noncontrolling interests | | 253 | | | 238 | |
Total equity | | 73,569 | | | 66,382 | |
Total liabilities and equity | | $ | 780,492 | | | $ | 740,463 | |
See accompanying notes to the interim condensed consolidated financial statements.
MetLife, Inc.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Three Months and Nine Months Ended September 30, 2020 and 2019 (Unaudited)
(In millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
Revenues | | | | | | | | |
Premiums | | $ | 9,935 | | | $ | 10,781 | | | $ | 28,137 | | | $ | 30,315 | |
Universal life and investment-type product policy fees | | 1,497 | | | 1,440 | | | 4,227 | | | 4,217 | |
Net investment income | | 4,729 | | | 4,623 | | | 11,877 | | | 14,224 | |
Other revenues | | 455 | | | 419 | | | 1,350 | | | 1,391 | |
Net investment gains (losses) | | (20) | | | 161 | | | (77) | | | 237 | |
Net derivative gains (losses) | | (581) | | | 1,254 | | | 2,910 | | | 2,093 | |
Total revenues | | 16,015 | | | 18,678 | | | 48,424 | | | 52,477 | |
Expenses | | | | | | | | |
Policyholder benefits and claims | | 10,000 | | | 10,648 | | | 27,689 | | | 29,713 | |
Interest credited to policyholder account balances | | 1,416 | | | 1,500 | | | 3,458 | | | 4,976 | |
Policyholder dividends | | 206 | | | 296 | | | 788 | | | 898 | |
Other expenses | | 3,470 | | | 3,443 | | | 9,726 | | | 10,058 | |
Total expenses | | 15,092 | | | 15,887 | | | 41,661 | | | 45,645 | |
Income (loss) before provision for income tax | | 923 | | | 2,791 | | | 6,763 | | | 6,832 | |
Provision for income tax expense (benefit) | | 214 | | | 601 | | | 1,503 | | | 1,511 | |
Net income (loss) | | 709 | | | 2,190 | | | 5,260 | | | 5,321 | |
Less: Net income (loss) attributable to noncontrolling interests | | 3 | | | 6 | | | 11 | | | 15 | |
Net income (loss) attributable to MetLife, Inc. | | 706 | | | 2,184 | | | 5,249 | | | 5,306 | |
Less: Preferred stock dividends | | 59 | | | 32 | | | 168 | | | 121 | |
Preferred stock redemption premium | | 14 | | | — | | | 14 | | | — | |
Net income (loss) available to MetLife, Inc.’s common shareholders | | $ | 633 | | | $ | 2,152 | | | $ | 5,067 | | | $ | 5,185 | |
Comprehensive income (loss) | | $ | (1,818) | | | $ | 5,759 | | | $ | 8,246 | | | $ | 18,780 | |
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax | | 3 | | | 9 | | | 13 | | | 20 | |
Comprehensive income (loss) attributable to MetLife, Inc. | | $ | (1,821) | | | $ | 5,750 | | | $ | 8,233 | | | $ | 18,760 | |