This article first appeared on GuruFocus .
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Adjusted Earnings:$1.8 billion, up 17% year over year (including $46 million of notable items, primarily from annual actuarial assumption review).
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Adjusted EPS:$2.78 including notable items; $2.85 excluding notable items, up 22% year over year MetLife's highest adjusted EPS quarter ever.
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Net Income:$2.4 billion, or $3.67 per share; exceeded adjusted earnings by ~$570 million, mainly due to a non-economic accounting gain from rising interest rates.
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Adjusted ROE:19.6% excluding notable items, above the full-year 15%17% target range; year-to-date above 17%.
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Adjusted Book Value Per Share:$59.41, up 5% year over year.
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Direct Expense Ratio:11.9% (vs. 11.6% a year ago); year-to-date 12%, on track to beat the 12.1% full-year target despite ~50 bps from Pinebridge.
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Variable Investment Income (VII):$720 million pre-tax, well above ~$400 million implied quarterly guidance; private equity returns of 4.2% (vs. 3% a year ago); year-to-date ~$1.5 billion, on course to exceed ~$1.6 billion full-year guidance.
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Group Benefits Adjusted Earnings:$523 million, up 14%; group life mortality ratio 79.5% (below 83%88% target); non-medical health ratio 72.3% (within 70%75% target); adjusted PFOs up 3% (5% excluding participating contracts); year-to-date sales up 12%.
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RIS Adjusted Earnings:$478 million, up 12%; total investment spread 130 bps (above 100120 bps guidance); core spread 99 bps; adjusted PFOs excluding PRT up 33%; retained liability balances up 7%; full-year outlook slightly above midpoint of $1.6$1.8 billion range.
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Asia Adjusted Earnings:$550 million, up 17% (21% constant currency); adjusted PFOs up 5% constant currency; sales down 6% constant currency (year-to-date up 10%).
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Latin America Adjusted Earnings:$229 million, up 3% (down 5% constant currency); negative encaje return of 3% vs. positive 6% prior year (~$30 million headwind); adjusted PFOs up 22% (14% constant currency); sales up 6% constant currency.
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EMEA Adjusted Earnings:$114 million, up 30% (37% constant currency), above $90$100 million quarterly run rate; adjusted PFOs up 14% (17% constant currency); sales up 16% constant currency.
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MIM Adjusted Earnings:$63 million, up 9% (19% year-to-date); total AUM $723 billion, up 14%; institutional client AUM $308 billion, up 45%; on track for $240$280 million full-year target.
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Corporate & Other Adjusted Loss:$131 million vs. $159 million loss a year ago.
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Effective Tax Rate:23% on adjusted earnings, modestly below 24%26% guidance.
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Value of New Business (VNB):$2.8 billion in 2025, up 8%; $3.8 billion capital deployed at 19% IRR and five-year payback; VNB up 50% since 2021.
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Capital Return:~$1 billion returned in Q3 ($380 million dividends, $650 million buybacks); additional $265 million repurchased in October; year-to-date buybacks through October $2.4 billion; total year-to-date capital return ~$3.5 billion.
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Liquidity:Holding company cash and liquid assets of $3.4 billion, within $3$4 billion target buffer.
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Statutory Capital:~$17 billion NAIC-adjusted for US companies, up 3% from June 30; Japan ESR 192%.
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AI Infrastructure Exposure:$4.1 billion combined ($1.6 billion hyperscaler, $2.5 billion data centers); each under 1% of general account; no delinquencies or impairments.
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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MetLife Inc ( NYSE:MET ) delivered its highest-ever adjusted EPS quarter, with adjusted EPS up 22% year over year, driven by broad-based growth across all segments.
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Adjusted ROE excluding notable items was 19.6%, well above the full-year target range of 15-17%, demonstrating strong profitability.
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Variable investment income (VII) was a significant contributor at $720 million pre-tax, with private equity returns exceeding 4%, showcasing the value of the company's diversified investment portfolio.
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The company maintains strong expense discipline, with a direct expense ratio of 11.9%, on track to beat the 12.1% full-year target despite absorbing Pinebridge and higher employee costs.
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MetLife Inc ( NYSE:MET ) has a disciplined capital allocation strategy, deploying $3.8 billion at a 19% IRR with a five-year payback in 2025, and returning $3.5 billion to shareholders year-to-date through buybacks and dividends.
Negative Points
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Group Benefits adjusted earnings growth of 14% was partly offset by higher expenses, including increased employee-related costs and stock compensation, which impacted the expense ratio by a point or two.
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Latin America adjusted earnings were pressured by negative encaje returns in Chile, creating a $30 million year-over-year headwind, and adjusted earnings declined 5% on a constant currency basis.
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Asia sales declined 6% on a constant currency basis in the quarter, reflecting a strong prior-year comparison, though year-to-date sales were still up 10%.
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US pension risk transfer (PRT) activity was lighter year-to-date, and while management views it as timing, the lumpy nature of the jumbo market creates uncertainty in near-term volume.
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MetLife Investment Management (MIM) experienced net outflows in public fixed income, partly offset by private mandates wins, but the outflows highlight challenges in asset gathering amid market volatility.
Q & A Highlights
Q: On Group Life, working-age mortality has been a tailwind for the industry. Has this favorability run its course, and when does it get factored into pricing? A: Ramy Tadros, Regional President - U.S. Business and Head of MetLife Holdings, said it is hard to predict the drivers, but in a competitive market he would expect favorability to gradually normalize over time. Because MetLife is largely national accounts skewed with a three-to-five-year renewal cycle, that normalization should play out over years rather than quarters. Near term, he expects a seasonal uptick in Q4 and Q1 from normal flu seasonality.
Q: Can you unpack the non-medical health loss ratio between disability and dental, given weaker disability results across the industry? A: Ramy Tadros said the non-medical health ratio of 72.3% was in the middle of the guidance range. Disability saw a slight increase in severity, offset by strong claim recoveries, while incidents remained broadly in line with expectations, including an increase in mental nervous claims. He noted disability is about 15% of premiums and that diversification, pricing and network growth in dental are benefiting results.
Q: What have been the drivers of the roughly 500 basis point improvement in new business IRR over the past decade, and how sustainable is the current level? A: CFO John McCallion said the biggest driver has been putting value-based tools in the hands of leaders to make holistic decisions on product design and expense management, with interest rates also a component. He called the improvement sustainable, citing a growing mix of capital-light, higher-ROE businesses and the accelerated runoff of the lower-ROE legacy retail business.
Q: How do you see disability pricing playing out given elevated competitor claims, and could this harden the market? A: Ramy Tadros described the industry as competitive but rationally priced, with the short-tail nature of the business enabling repricing back to target margins. He said MetLife baked an expected uptick in incidents into its 2026 plan and is planning for further trend in 2027, reflected in pricing and rate actions. He added that bundled account-level economics help secure needed rate increases.
Q: Where does MetLife stand on potential risk transfer deals for MetLife Holdings and reinsurance with Chariot Re? A: John McCallion said nothing has broadly changed. On Chariot, another deal closed at the end of the quarter, and MetLife continues to view it as a strategic growth opportunity that leverages third-party capital and generates additional MIM fees. On risk transfer, MetLife continues to talk with third parties but has no burning platform to act, though it would take advantage of good opportunities as markets evolve.
Q: How are you thinking about RIS base spread from here given recent rate volatility? A: John McCallion said total spread was 130 basis points in the quarter, above the 100-to-120-basis-point guidance range, driven by VII, while core spread of 99 basis points was in line with the 95-to-100 range. He expects core spread stability to continue in Q4 and, assuming a normal $400 million VII run rate, total RIS spread to return within the 100-to-120 range.
Q: Is the direction of free cash flow conversion changing, or are you investing more into organic growth? A: John McCallion said MetLife remains comfortable with its 65% to 75% free cash flow conversion range. He noted growth is incrementally stronger across the firm with less runoff business, so capital generation is likely stronger, but higher growth is being supported while still maintaining the 65% to 75% ratio.
Q: How do you see the expense ratio progressing into 2027, given continued outperformance? A: CEO Michel Khalaf said MetLife is absorbing about 50 basis points from the higher-expense Pinebridge business yet still expects to come in below the 12.1% target this year. He cited technology and AI as a force multiplier on both efficiency and growth, and said there is good inertia to keep driving the ratio down, while sticking with the 11.3% ratio targeted for 2029 at Investor Day.
Q: Can you break down stock fund returns between private equity and venture capital, and give an indication for Q4 VII? A: John McCallion said private equity is a long-term allocation across roughly 700 funds and 200 managers, with VC about 25% of the PE portfolio. VC returns exceeded 8% in the quarter, and the overall portfolio returned over 4%. Year-to-date VII is about $1.5 billion, and he expects to exceed the roughly $1.6 billion full-year guide, assuming a normal $400 million Q4 run rate.
Q: Within the VC and PE portfolios, how much of recent performance came from realized exits versus marks, and what is the AI exposure? A: John McCallion said marks drive results and realizations within the quarter realize those marks. He noted more realizations this quarter than in any other quarter, alongside a higher level of mark-to-market, and said the portfolio has exposure to several newsworthy AI names across about 10 managers, which benefited the quarter.
Q: Did the actuarial assumption review change RIS run-rate earnings, and has lower mortality changed return hurdles or pricing on longevity business? A: John McCallion said nothing from the assumption review would change ongoing run rate, pointing to the full-year guidance as indicative. Ramy Tadros added that the RIS review was a modest true-up of baseline assumptions, with the net impact over the last four years favorable in aggregate, and that long-term mortality improvement assumptions, hurdle rates and pricing philosophy are unchanged.
Q: What are the drivers of MIM net flows and the outlook for the pipeline and margin mix? A: John McCallion said integration is progressing well, with the One MIM brand launched over the summer, earnings up 19% year to date, sequential margin expansion and a more profitable mix with higher revenue yields. He said MetLife won more private mandates than it had outflows in the quarter, with outflows concentrated in public fixed income, and he remains confident in hitting 2027 growth targets.
Q: On pension risk transfer timing, are deals deferred to Q4
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
