MetLife

This is our first report on insurance behemoth, MetLife. The company’s business has been negatively impacted by various macroeconomic trends such as the equity market falling, the interest rate rise, and the rising probability of a recession. However, MetLife continued to execute its Next Horizon Strategy which helps show some resilience in uncertainty. The company surpassed the revenue expectations of Wall Street and PGOs on a constant-rate basis were quite strong. The recurring investment rates rose, Covid losses moderated and the expenses discipline held firm. However, net income in the quarter was down driven by derivative losses from the hedges that the company holds to protect its balance sheet and investment losses from the standard investment activity which resulted in an earnings miss. Strong growth was seen in the U.S. Group Benefits. This represents a favorable environment for underwriting as a result of the substantial decline in the Covid life insurance claims as well as strong growth in volume. Execution across the company’s voluntary and enrollment strategy is going quite well and it is also responsible for driving the double-digit PFO growth over its voluntary suite of products. The sales in Latin America continue to be strong as well. We initiate coverage on the stock of MetLife with a ‘Hold’ rating.