The paragraph begins with an introduction by the operator of the MetLife First Quarter 2025 Earnings Conference Call, indicating that the call is being recorded and will feature a question-and-answer session later. Participants are directed to review cautionary notes on forward-looking statements and risk factors in MetLife's SEC filings. John Hall, Global Head of Investor Relations, then introduces the call and refers attendees to important information on non-GAAP measures available on MetLife's website and in their earnings release. He introduces the speakers, Michel Khalaf (President and CEO) and John McCallion (CFO), along with other senior management members. The mention of supplemental slides released the previous night, which address the quarter and a recent risk transfer transaction, is highlighted. The Q&A session will conclude at the top of the hour, and attendees are reminded to limit their questions. Michel Khalaf then begins his remarks, referencing the recently introduced New Frontier strategy to guide MetLife over the next five years.

The paragraph discusses MetLife's resilience amidst economic volatility, highlighting its strategic diversification and all-weather business model. Despite recessionary concerns, equity market volatility, fluctuating interest rates, and a weakening U.S. dollar, MetLife remains confident in its recurring revenue model. The company's revenue mostly depends on renewal premiums and investment income. While growth in group benefits may slow, the Group Life product line is not economically sensitive, and higher long-term interest rates benefit its Retirement and Income Solutions and Investment Management businesses. Additionally, MetLife's international business could gain from a weaker dollar, and its conservative investment portfolio is positioned to handle economic stress. MetLife's strong track record supports its optimism.

The company reported a strong first quarter with adjusted earnings of $1.3 billion, or $1.96 per share, a 7% increase from the previous year. This growth was driven by favorable underwriting, volume growth, and improved variable investment income, though partially offset by unfavorable foreign exchange and interest margins. The Group Benefits segment saw a 29% rise in adjusted earnings due to favorable life underwriting margins. The Retirement and Income Solutions (RIS) segment recorded adjusted earnings of $401 million with strong sales in synthetic GICs and UK longevity reinsurance, and significant inflows from pension risk transfers. However, earnings in Asia declined by 12% due to lower underwriting margins and higher taxes, despite a 10% sales increase in Korea and China. The company's adjusted return on equity for the quarter was 14.4% with a 12% direct expense ratio.

Sales in Japan are improving, and a new U.S. dollar-denominated product in the banca channel is performing well. In Latin America, adjusted earnings were down 6% but increased 7% on a constant currency basis, with adjusted PFOs up 14% similarly. MetLife's "New Frontier" strategy is progressing, highlighted by a significant risk transfer deal with Talcott Resolution to reinsure $10 billion in U.S. retail variable annuity reserves, reducing enterprise risk. MetLife Investment Management is aiming for $1 trillion in total assets under management, recently acquiring teams from Mesirow and working on acquiring PineBridge. In the first quarter, MetLife returned $1.8 billion to shareholders through dividends and share repurchases.

The company paid $400 million in dividends and repurchased $1.4 billion of its shares, with a slower buyback pace expected in the coming quarters following a new $3 billion repurchase authorization. The Board increased dividends by 4.1%, and the company enhanced its financial flexibility by issuing $2.25 billion in debt securities, ending the quarter with $4.5 billion in liquid assets. Christian Mumenthaler will join the Board in May, bringing valuable experience. The company remains strong despite challenges by managing expenses and investing in strategic growth, adhering to its new Frontier strategy.

The paragraph highlights the confidence in the MetLife team, recognized for the third consecutive year as one of Fortune's 100 best companies to work for, attributing their success to their engagement and motivation in delivering the company's value proposition. John McCallion discusses the financial performance for the first quarter of 2025, noting net derivative gains driven by currency strengths, although offset by remeasurement losses due to market conditions. Adjusted earnings rose to $1.3 billion, a 1% increase, influenced by favorable underwriting, increased investment income, and business segment growth, despite a decrease in interest margins.

The paragraph discusses the company's financial performance, highlighting a 7% increase in adjusted earnings per share, or 11% on a constant currency basis, largely due to strong cash flow and capital management. Group Benefits adjusted earnings rose by 29%, driven by improved life underwriting margins and better mortality rates in the working-age population. The Group Life mortality ratio was favorable at 84.8%. Although mortality improvements benefited the bottom line, they somewhat masked top-line growth due to fluctuating premiums in participating life contracts. RIS adjusted earnings increased by 1%, with higher variable investment income and favorable underwriting, though offset by unfavorable interest margins. RIS total investment spreads improved slightly, and the segment saw strong business momentum, with adjusted PFOs of $2.4 billion influenced by U.S. PRT sales, while excluding PRTs, they grew by 14% due to U.K. growth.

The paragraph discusses the financial performance of various regions for a company during a specific quarter. It highlights a significant longevity reinsurance case with a $1 billion contract value. Liability exposure is up 8% from the previous year, with general account liabilities increasing by 7%. In Asia, adjusted earnings dropped by 12% (9% on a constant currency basis) due to less favorable underwriting margins and a deferred tax asset adjustment in Japan. Despite this, Asia saw a 5% increase in general account assets under management and a 10% rise in sales on a constant currency basis, with significant growth in Korea and China offsetting an 8% decline in Japan. Latin America's adjusted earnings decreased by 6% but rose 7% on a constant currency basis, driven by higher volume growth and favorable tax items, though impacted by poor underwriting margins and lower Chilean encaje returns. Currency weaknesses, especially the Mexican peso, affected reported growth. Adjusted premium fees and deposits (PFOs) in the region increased 1%, or 14% on a constant currency basis. In the EMEA region, adjusted earnings increased by 8% (14% on a constant currency basis) due to robust volume growth, tempered somewhat by higher expenses.

The paragraph discusses MetLife's financial performance, highlighting that EMEA's adjusted PFOs increased by 8%, and 12% on a constant currency basis, due to strong regional sales. MetLife Holdings reported $154 million in adjusted earnings, down 3% because of business runoff, and announced a reinsurance agreement with Talcott Resolution Life Insurance to cover $10 billion in U.S. retail variable annuity reserves. Corporate and other adjusted losses increased marginally from $241 million to $248 million, attributed to reduced net investment income partly offset by lower expenses. The effective tax rate was 23.2%, below the 2025 guidance range of 24% to 26%. Pre-tax variable investment income for 2024 and early 2025 was $327 million, below the $425 million quarterly run rate, with private equity and real estate returns at 1.6% and 2% respectively, reported on a one-quarter lag. Preliminary expectations for variable investment income for Q2 will be disclosed in early July. RIS, Asia, and MetLife Holdings have the largest portion of VII assets due to their long-term liabilities.

The paragraph discusses MetLife's financial performance and capital position. It highlights the company's direct expense ratio, noting a target of 12.1% for the full year 2024 and detailing quarterly figures for 2024 and 2025. The text emphasizes the importance of the full-year expense ratio for assessing performance due to quarterly fluctuations. MetLife is described as well-capitalized, having repurchased $1.4 billion in shares in the first quarter and $150 million in April. The Board has approved a $3 billion share repurchase program, reflecting confidence in MetLife's strategy and financial strength. As of March 31, cash and liquid assets at holding companies totaled $4.5 billion, exceeding the target buffer. Additionally, the paragraph mentions a $1 billion subordinated debt issuance and the redemption of $500 million in maturities. The 2024 combined NAIC RBC ratio for U.S. companies was 388%, exceeding the target of 360%. Preliminary first-quarter 2025 statutory operating earnings were around $600 million, with net income at approximately $500 million.

As of March 31, 2025, statutory adjusted capital was $16.4 billion, a 6% decrease from the end of 2024, mainly due to dividends paid. The Japan solvency margin ratio is projected to be around 725%. MetLife Holdings announced a risk transfer transaction with Talcott Resolution Life Insurance, covering about $10 billion in U.S. retail variable annuity reserves. This reduces MetLife's exposure to risk and is expected to generate $250 million in statutory value. The transaction will result in a $100 million annual decrease in adjusted earnings for MetLife Holdings, offset by $45 million in annual hedge cost savings for the enterprise.

The paragraph discusses MetLife's strategic initiatives, including securing investment management mandates with Talcott to manage $6 billion in assets, which aligns with their goal to increase third-party fee income. It highlights a decline in variable annuity (VA) balances, consistent with MetLife's strategy to reduce risk, showing a 26% drop from 2019 to 2024, and anticipates further reduction by March 2025. The remaining product mix will include traditional group retirement variable annuities totaling about $9 billion. Despite market uncertainties, MetLife is confident in maintaining strong performance due to its robust balance sheet and diversified business portfolio. The VA reinsurance transaction with Talcott is presented as evidence of MetLife's commitment to creating long-term value for stakeholders. The company expresses optimism in delivering sustainable growth and returns with reduced risk.

In the Q&A session, Jimmy Bhullar from JPMorgan asked about the decline in spreads in the RIS business, noting a decrease in base yield by about 11 basis points sequentially and 13 basis points year-over-year. John McCallion acknowledged the decline as a result of interest rate changes but offset by growth. Ramy Tadros highlighted growth momentum, mentioning significant wins, including $1.8 billion in PRT inflows from Fortune 500 companies and success in U.K. markets. The segment showed robust performance, especially in stable value transactions and capitalizing on market opportunities.

The paragraph discusses the company's financial performance, highlighting strong earnings momentum driven by investment spreads, underwriting, and fees. The liability balances have grown by 8%, and the company is expecting to reach the upper end of its projected 3% to 5% balance growth. John McCallion explains that there was a 7 basis point decline in the core spread, which was anticipated due to the roll-off of interest rate caps and lower-than-expected rates. Unexpected paydowns in higher-yielding structured securities also affected the company's ability to offset the cap roll-off. Despite these challenges, growth is exceeding expectations, and the situation is expected to stabilize, leaving earnings relatively flat.

The paragraph discusses the state of the commercial real estate (CRE) market and mortgage loan book. John McCallion notes that, while there is uncertainty, real estate activity and office leasing showed strong momentum late in the year and into Q1, with office leasing activity being the strongest since mid-2019 and investment activity increasing by about 10% year-over-year. Despite current uncertainties, McCallion believes the sector has likely hit a trough in values, reflected in loan-to-value (LTV) and debt service coverage ratios. However, they will need to monitor the market as they resolve past reserves, pointing out that real estate-related funds showed approximately a 2% return. The paragraph ends as the conversation turns to Tom Gallagher from Evercore ISI for a question about a risk transfer deal.

The paragraph discusses a financial deal from the perspective of Ramy Tadros, who emphasizes the strategic valuation approach taken as part of their "new Frontier strategy," specifically focusing on lower-risk opportunities. The discussion highlights the importance of the reinsurance partner, deal structure, and pricing considered from various perspectives. Although the deal involves sacrificing roughly $50 million in net income, it makes economic sense as it aligns with their valuation expectations, reduces substantial tail risk, and eliminates hedging costs. This strategic move aims to create value for stakeholders and manage potential capital requirements in a volatile market.

The paragraph is a segment from a Q&A session likely during a conference call. John McCallion discusses considerations around cash flow as the net result of certain financial decisions, highlighting the changing economic environment, such as rising equity markets and interest rates. This has allowed the company to capitalize on exit value opportunities and find suitable partners. Tom Gallagher asks about underwriting experiences in MetLife Holdings, focusing on mortality in life insurance and long-term care, to which Ramy Tadros responds that it was consistent this quarter. Ryan Krueger inquires about the influence of the current economic environment on company strategies, and Michel Khalaf starts to address the question.

The paragraph discusses the company's awareness of the current economic environment and the increasing possibility of a recession. The company describes its strategy as "all-weather," meaning it does not rely on optimistic economic conditions nor expect a deep recession. The company remains committed to its strategic pillars and reports no changes in its approach despite potential economic challenges. It highlights confidence in its financial standing through actions like a $3 billion authorization and a 4.1% increase in income and dividends per share. The focus is on controlling expenses while continuing to invest in strategic growth initiatives. The speaker, Ryan Krueger, then asks about the growth in group benefits, specifically noting that PFO growth was toward the lower end of the target, prompting Ramy Tadros to explain the factors driving the reported 2% growth.

The paragraph discusses positive outcomes in life insurance and dental coverage for the company in the first quarter. It highlights a significant decrease in mortality rates from participating life insurance contracts, leading to lower premiums and resulting in a 200 basis point increase in underlying PFO growth. In dental coverage, the company experienced higher-than-expected dental utilization and responded by implementing rate increases on the 1/1 renewal date, impacting persistency but aligning with target margins. As a result, these rate actions are expected to benefit earnings. Overall, the company anticipates annual growth in line with their guidance of 4% to 7%, with an additional 100 basis point growth excluding participating contracts.

The paragraph involves a discussion during an earnings call where Suneet Kamath from Jefferies inquires about the company's stock buyback activities. He notes that buyback was strong in the first quarter but modest in April and asks if any factors, such as a VA deal blackout, influenced this. Michel Khalaf responds that April's activity was in line with their plans and not affected by pending announcements. Despite their first-quarter aggressiveness due to fourth-quarter constraints, they will adopt a more measured buyback approach moving forward. Khalaf highlights their capital priorities: firstly funding organic growth, then seeking strategic inorganic opportunities like PineBridge, and finally, returning excess capital over time. Kamath shifts focus to Ramy, noting strong PRT sales in the first quarter.

The paragraph discusses how market volatility, particularly fluctuations in interest rates and equity markets, can impact pension plan sponsors, particularly in terms of timing and distractions related to asset-liability management (ALM). However, sponsors in the Pension Risk Transfer (PRT) space, especially those with jumbo plans, have been on a derisking journey for years, making them well-hedged against liabilities. As a result, they are less affected by market changes and have stable funding ratios, resulting in minimal impact on transaction pipelines. There's a potential temporary distraction, but no significant long-term changes are expected. Following the discussion, Wes Carmichael from Autonomous Research is invited to ask a question about variable investment income and future return guidance.

In the conversation, John McCallion responds to Wes's inquiry about market conditions impacting annual performance and insights into Q2. John reports that private equity delivered a 1.6% return in the quarter and highlights significant distributions exceeding earnings. Despite lower-than-expected real estate returns, they still surpassed the previous quarter. He acknowledges that while public equity markets performed well last year, private equity returns lagged due to various factors, making the current investment environment challenging to predict. To address this uncertainty, John mentions that preliminary information will be provided in early July regarding future projections.

The paragraph features a Q&A between John McCallion and Wilma Burdis. John confirms that despite previous discussions, he still feels confident about implementing the ESR in Japan, emphasizing operational readiness and alignment with their longstanding economic framework. He mentions that this transition will not affect their dividend policy or reinsurance strategy. Wilma then shifts the conversation to discuss portfolio yield and asks John to elaborate on the marketing of Net Interest Margin (NIM) and the prospects for organic growth.

The paragraph features a discussion led by John McCallion and Wilma Burdis. McCallion expresses optimism about the company's philosophy, stating that their client pipeline is strong and their product offerings are differentiated, providing long-term value. He mentions that there is a lot of business development activity and they are optimistic about their five-year strategy. Wilma Burdis inquires about the assets managed for Talcott, to which McCallion responds that they manage $6 billion in assets through an investment management mandate. These assets are primarily in public fixed income, with some being overseas. The conversation then moves to Joel Hurwitz, who asks about the increase in nonmedical health loss experience in the quarter, which he finds surprising despite the expected seasonality.

In the paragraph, Ramy Tadros discusses the performance of the dental business, noting it was in line with expectations, particularly due to higher utilization in Q1. He also mentions disciplined underwriting actions taken at the start of the year, anticipating a gradual decline in the nonmedical health ratio to the midpoint of the range. In the disability block, the performance is as expected, with strong recovery and closures, although there is a small impact from delays in social security administration approvals. Joel Hurwitz then shifts the focus to strong sales in Asia, with Lyndon Oliver reporting a 10% increase in first-quarter sales across the region, despite geopolitical tensions.

The company is on track to achieve its sales growth outlook for the year, with significant success in Japan and across Asia. In Japan, strong market share is noted across all distribution channels, despite a recent decline in FX products. A new single premium life product launched in April has been well received, contributing to positive momentum. In Asia, sales rose by 41% year-over-year, driven mainly by new bank partnerships in China and strong face-to-face channel performance in Korea. Joel Hurwitz and Nick Anido from Wells Fargo acknowledge these results. Ramy Tadros mentions the positive trend in Group Life, linking favorability to CDC data and noting consistent improvements over recent quarters.

In Paragraph 27 of the article, the speaker refrains from speculating on the continuation of favorability for the rest of the year, noting it's too early to determine. The speaker highlights their guidance position at the midpoint of the lower half of the range, about 85.5%, with expectations of heavier Q1 mortality. Given the favorable Q1, they anticipate the full-year outcome leaning towards the lower end of the range, around 84%. Nick Anido then inquires about updates regarding Chariot Re, to which Michel Khalaf responds, expressing satisfaction with the progress and the growth opportunities it presents. Khalaf emphasizes the long-term partnership between MetLife and Chariot Re, reiterating its role in enhancing capital flexibility, efficiency, and liability growth. Plans are on track to launch around midyear. The session ends with closing remarks from John Hall, and the conference call concludes.

The paragraph expresses gratitude for participation and informs that it is now possible to disconnect.

This summary was generated with AI and may contain some inaccuracies.