Executive Summary / Key Takeaways

• MetLife's diversified, "all-weather" business model demonstrated resilience in Q1 2025, delivering solid adjusted earnings despite market volatility and currency headwinds, driven by favorable underwriting and volume growth.
• The company is actively executing its "New Frontier" strategy, focused on accelerating responsible growth, boosting returns, and fostering consistency through four key pillars: Group Benefits, RIS, Asia, and MIM.
• Recent strategic transactions, including the planned Talcott VA reinsurance deal and the PineBridge acquisition for MIM, are designed to optimize the business mix, reduce risk, enhance capital flexibility, and accelerate growth in key areas.
• Strong capital management continues, with significant share repurchases and a dividend increase, supported by robust holding company cash levels well above target.
• Management's outlook for 2025 anticipates continued underlying business momentum, stabilization in key margins (like RIS core spread), and contributions from strategic initiatives, positioning the company for sustained performance despite ongoing economic uncertainty.

A Foundation of Diversification and Strategic Evolution

MetLife, Inc. stands as a global leader in financial services, providing a broad spectrum of insurance, annuities, employee benefits, and asset management solutions. Its journey from a mutual life insurance company, culminating in the 2000 demutualization of Metropolitan Life Insurance Company (MLIC), has shaped a resilient and diversified enterprise. Over the past five years, under the "Next Horizon" strategy, MetLife successfully navigated significant external challenges, including a global pandemic and market volatility, by focusing on core strengths, simplifying operations, and differentiating its offerings. This period of disciplined execution has positioned the company to shift from defense to offense, launching its "New Frontier" strategy aimed at accelerating responsible growth and enhancing shareholder value.

A cornerstone of the "New Frontier" is the inherent "all-weather" nature of MetLife's business model. The vast majority of its annual revenues and earnings are recurring, derived from renewal premiums and investment income on existing business. This provides a stable base, even when new business growth might be impacted by economic cycles. The strategy is built upon four key pillars: extending leadership in Group Benefits, capitalizing on the Retirement and Income Solutions (RIS) platform, accelerating growth in MetLife Investment Management (MIM), and expanding in high-growth international markets. These areas collectively contribute nearly 80% of current adjusted earnings and are expected to be the primary engines of future growth.

Central to MetLife's operational effectiveness and competitive positioning is its investment in technology and capabilities. The company views its ability to leverage technology at scale as a significant differentiator. Digital platforms are enabling quantifiable improvements, such as 25% faster policy issuance and 15% lower operating costs per unit compared to some competitors due to AI-driven underwriting. Furthermore, these platforms contribute to 20% greater efficiency in claims processing and 10% lower costs per unit relative to rivals. MetLife is actively integrating Artificial Intelligence (AI) across its operations, seeing it as a potential "force multiplier" that leverages its extensive data pool to create seamless customer experiences, improve decision-making, and boost employee productivity. The company plans to issue a formal policy on the responsible use of AI, underscoring its commitment to ethical implementation. These technological advancements are not merely operational enhancements; they directly contribute to MetLife's competitive moat, supporting its ability to maintain pricing discipline, manage expenses effectively, and enhance profitability, particularly in scale-driven businesses like Group Benefits and RIS.

In the competitive landscape, MetLife faces a diverse set of rivals. In the U.S. market, competitors like Prudential Financial (PRU) and Lincoln National (LNC) challenge in annuities and retirement, while Aflac (AFL) competes in supplemental and group benefits, and American International Group (AIG) in broader insurance lines. MetLife's broad diversification across products and geographies provides a distinct advantage compared to more specialized players like AFL or U.S.-centric firms like LNC. While some competitors may exhibit faster innovation in specific niches (e.g., PRU in asset management products, LNC in annuity customization), MetLife's integrated ecosystem, particularly in employee benefits, offers a bundled value proposition that differentiates it. Its technological investments, while requiring significant capital, aim to provide efficiency gains that can counter competitors' cost structures and agility, positioning MetLife for stronger margins in shared markets. However, higher debt levels compared to some peers remain a potential vulnerability, impacting financial flexibility.

Performance Amidst Shifting Tides

MetLife's first quarter 2025 results reflected the underlying strength of its diversified operations, delivering adjusted earnings of $1.3 billion, or $1.96 per share. This represented a 7% increase in adjusted EPS year-over-year, or 11% on a constant currency basis, benefiting from favorable underwriting, solid volume growth, and improved variable investment income (VII). Net income for the quarter was $950 million, influenced by significant net derivative gains (driven by currency movements and equity market decreases) largely offset by market risk benefit (MRB) remeasurement losses (due to lower interest rates and weaker markets).

The Group Benefits segment saw adjusted earnings rise to $367 million in Q1 2025, a 29% increase year-over-year, primarily driven by favorable life underwriting margins reflecting lower working age mortality. The Group Life mortality ratio was 84.8%, at the low end of the 2025 target range. While the non-medical health interest-adjusted benefit ratio was slightly above the target range at 74.1% due to seasonal dental utilization, management expects it to normalize towards the midpoint of the range in Q2 and for the full year, supported by disciplined pricing actions. Adjusted PFOs for the segment grew 2% reported, or 4% excluding participating contracts, driven by core and voluntary product growth.

Retirement and Income Solutions (RIS) reported adjusted earnings of $401 million, a modest 1% increase year-over-year. While favorable underwriting and higher VII contributed, lower recurring interest margins were a partial offset. RIS total investment spreads were 114 basis points, up sequentially due to higher VII. However, core spreads declined due to the expected roll-off of interest rate caps and higher-than-expected paydowns on certain investments. Management anticipates core spreads to stabilize from Q2 2025 onwards as the remaining caps mature. The segment demonstrated strong momentum with adjusted PFOs surging by 199% reported, or 14% excluding PRT, driven by $1.8 billion in U.S. PRT inflows and a $1 billion U.K. longevity reinsurance deal. Total liability exposure grew 8% year-over-year, with full-year 2025 balance growth expected at the upper end of the 3%-5% guidance.

Asia's adjusted earnings decreased 12% reported (9% constant currency) to $374 million, impacted by less favorable underwriting and a $15 million tax charge related to a Japan rate increase, partially offset by higher VII. Despite the earnings dip, the segment's underlying growth metrics remained healthy, with GA AUM up 5% year-over-year (constant currency) and sales up 10% (constant currency), driven by strong growth in Korea and China, and signs of recovery in Japan sales.

Latin America's adjusted earnings fell 6% reported to $218 million but rose 7% on a constant currency basis, benefiting from volume growth and favorable tax items, despite currency headwinds (Mexican peso weakness) and lower Chilean encaje returns. Adjusted PFOs were up 1% reported, but a robust 14% constant currency, reflecting strong sales and persistency.

EMEA saw adjusted earnings increase 8% reported (14% constant currency) to $83 million, primarily on solid volume growth across corporate solutions, credit life, A&H, ordinary life, and pension businesses, partially offset by less favorable expense margins. Adjusted PFOs were up 8% reported (12% constant currency).

MetLife Holdings adjusted earnings continued their expected decline, down 3% to $154 million, consistent with the run-off strategy. Market factors and lower fees were partially offset by favorable underwriting adjustments.

Corporate Other's adjusted loss increased slightly to $248 million, primarily due to lower net investment income, partially mitigated by reduced corporate expenses and litigation reserves. Variable Investment Income (VII) across the enterprise was $327 million pretax in Q1 2025, below the implied quarterly run rate, with PE returns at 1.6% and real estate/other funds at ~2%. Management plans to provide an early update on Q2 VII due to market uncertainty.

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Strategic Acceleration and Future Outlook

MetLife is actively implementing its "New Frontier" strategy, marked by significant transactions designed to reshape its portfolio and accelerate growth. The recently announced agreement with Talcott Resolution to reinsure approximately $10 billion of U.S. retail variable annuity (VA) and rider reserves is a key step in optimizing the MetLife Holdings legacy block. This transaction is expected to close in the second half of 2025 and will substantially reduce retail VA tail risk (reducing account values by ~40%), enhance capital flexibility (delivering ~$250 million in statutory value), and accelerate runoff. While resulting in ~$100 million in foregone annual adjusted earnings for MetLife Holdings, this is expected to be offset by ~$45 million in annual hedge cost savings. Furthermore, MetLife Investment Management (MIM) secured mandates to manage ~$6 billion of assets for Talcott, supporting MIM's aspirational path to $1 trillion in AUM.

The PineBridge Investments acquisition, also expected to close in the second half of 2025, is a substantial move towards MIM's AUM goal, expanding its public and private credit capabilities globally. This inorganic growth complements MIM's organic efforts and leverages MetLife's deep investment expertise. Additionally, the planned launch of Chariot Reinsurance in the first half of 2025, a Bermuda-based reinsurance company in partnership with General Atlantic and Chubb (CB), is intended to provide enhanced capital flexibility and allow MetLife to capture liability growth opportunities beyond its balance sheet capacity, initially targeting structured settlement and group annuity liabilities.

Management's outlook for 2025 reflects confidence in the underlying business momentum and the benefits of these strategic actions. While anticipating a currency headwind from a strengthening U.S. dollar (projected to be $150-$175 million impact on reported adjusted earnings), the core business fundamentals are expected to drive performance. Key guidance points include:

• Group Benefits: Full-year PFO growth expected back in the 4%-7% reported range. Group Life mortality ratio towards the lower end of the 84%-89% range if positive trends persist. Non-medical health ratio near the midpoint of the 69%-74% range.
• RIS: Total liability annual growth at the upper end of the 3%-5% guidance. Total general account investment spread expected to be 110-135 basis points, with core spread stabilizing from 2025 forward.
• Asia: Sales expected to grow mid-to-high single digits (constant currency) over the near term. GA AUM to maintain mid-single-digit growth (constant currency). Adjusted earnings expected to grow mid-single digits (constant currency) and low single digits (reported) in 2025.
• Latin America: Adjusted PFOs and earnings expected to grow high single digits (constant currency) in 2025, flat reported.
• EMEA: Adjusted PFOs expected to grow mid-to-high single digits (reported). Adjusted earnings quarterly run rate expected to be $70-$75 million in 2025.
• MetLife Holdings: Adjusted PFOs expected to decline 4%-6% in 2025. Adjusted earnings guidance range $650-$800 million in 2025.
• Variable Investment Income (VII): Approximately $1.7 billion pretax expected in 2025, with PE and real estate/other funds returns expected toward the lower end of their target ranges (9%-11% and 7%-9%, respectively), trending higher in 2026/2027.
• Corporate Other: Adjusted loss expected between $850-$950 million after tax in 2025.
• Effective Tax Rate: Expected range of 24%-26%.

These targets are underpinned by assumptions including the forward currency and interest rate curves holding, and reflect management's view that the company is well-positioned to deliver double-digit adjusted EPS growth over the "New Frontier" period.

Risks and Considerations

While the outlook is positive, several risks warrant investor attention. Market volatility remains a key concern, with potential impacts from changes in interest rates, equity markets, and foreign currency exchange rates affecting investment valuations, derivative effectiveness, and MRB liabilities. Credit risk, particularly within the mortgage loan and fixed income portfolios, could lead to increased allowances for credit loss or impairments, although management believes reserves are largely sufficient for current expected losses in areas like commercial real estate. Operational risks, including the successful implementation of new technologies like AI and the integration of acquired businesses like PineBridge, could impact efficiency and profitability if not managed effectively. Litigation and regulatory risks, including ongoing inquiries related to group annuity reserves and the long-standing asbestos litigation (where aggregate reasonably possible losses in excess of accruals are estimated at $0-$125 million), could result in material charges in specific periods. The ability of subsidiaries to pay dividends to the holding company is subject to regulatory restrictions, which could impact holding company liquidity and capital management flexibility.

Conclusion

MetLife's first quarter 2025 results underscore the resilience of its diversified business model in a volatile environment. The company's "all-weather" strategy, honed during the "Next Horizon" period, is now transitioning to the "New Frontier," with a clear focus on accelerating responsible growth and enhancing returns. Strategic transactions like the Talcott VA reinsurance deal and the PineBridge acquisition are tangible steps towards optimizing the portfolio, reducing risk, and expanding high-potential areas like asset management. Supported by a strong balance sheet, robust free cash flow generation, and a commitment to capital management, MetLife appears well-positioned to navigate ongoing market uncertainty and deliver on its near-term outlook and long-term strategic objectives. While market and operational risks persist, the company's established competitive advantages, particularly its scale, diversified distribution, and increasing technological capabilities, provide a solid foundation for executing its growth strategy and creating sustainable value for investors.