Earnings call transcript: MetLife Q3 2025 sees earnings beat but revenue miss

MetLife Inc. reported its Q3 2025 earnings, surpassing earnings per share (EPS) forecasts but missing revenue expectations. The company posted an EPS of $2.34 against a forecast of $2.31, representing a 1.3% surprise. However, revenue fell short at 17.36 billion dollars compared to the anticipated 18.77 billion dollars, resulting in a 7.51% miss. In response, MetLife’s stock dropped 3.96% in after-hours trading, closing at $78.68. According to InvestingPro data, MetLife trades at a P/E ratio of 12.75, significantly below what its growth rate would suggest, with a PEG ratio of just 0.21.

Key Takeaways

• MetLife’s EPS exceeded expectations, showing a 21% year-over-year increase.
• Revenue fell short of forecasts by 7.51%, impacting investor sentiment.
• Stock price decreased by 3.96% in after-hours trading.
• Strong performance in Asia with a 34% sales increase.
• Launched new products and platforms, including Chariot Re and MetIQ.

Company Performance

MetLife demonstrated robust earnings growth in Q3 2025, with adjusted earnings reaching 1.6 billion dollars, a 22% increase from the previous year. The company reported a 16.7% adjusted return on equity. However, the revenue miss was notable, reflecting challenges in meeting market expectations despite the overall positive performance indicators.

Financial Highlights

• Revenue: 17.36 billion dollars, down from the forecast of 18.77 billion dollars.
• Earnings per share: $2.34, up 21% year-over-year.
• Variable investment income: 483 million dollars, exceeding the 425 million dollar guidance.
• Direct expense ratio: 11.6%, below the target of 12.1%.

Earnings vs. Forecast

MetLife’s EPS of $2.34 surpassed the forecast of $2.31, marking a 1.3% positive surprise. Despite this, the revenue fell short by 7.51%, which is significant compared to previous quarters where MetLife typically met or exceeded revenue expectations.

Market Reaction

Following the earnings report, MetLife’s stock declined by 3.96% in after-hours trading, reflecting investor concerns over the revenue miss. The stock’s current price of $78.68 is notably below its 52-week high of $89.05, indicating market apprehension despite the earnings beat.

Outlook & Guidance

Looking forward, MetLife anticipates continued sales growth in Asia and expects a record quarter for Pension Risk Transfer transactions. The company is transitioning to an ESR capital framework in Japan and plans to report MetLife Investment Management as a separate segment. Full-year expense ratio is targeted to remain below 12.1%.

Executive Commentary

CEO Michelle Khalaf stated, "We are working hard toward the successful closing of two strategic transactions," emphasizing the company’s focus on execution and steady capital management. CFO John McCallion highlighted growth prospects, saying, "We see more growth in the retirement business."

Risks and Challenges

• Revenue shortfall: Continued revenue misses could affect investor confidence.
• Market saturation: Increasing competition in key markets may pressure growth.
• Macroeconomic pressures: Global economic uncertainties could impact performance.
• Regulatory changes: New tax laws in Mexico and other regions may affect operations.
• Credit environment: Tight credit spreads require a disciplined investment approach.

Q&A

During the Q&A session, analysts probed into the impact of Mexico’s tax law changes and the strategy behind Chariot Re. Executives also provided insights into the competitive landscape of group benefits and detailed their approach to private credit investments.

Full transcript - Metlife (MET) Q3 2025:

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Third Quarter 2025 Earnings Conference Call. At this time, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday’s earnings release and to risk factors discussed in MetLife’s SEC filings. With that, I will turn the call over to John Hall, Global Head of Investor Relations. Please go ahead.

John Hall, Global Head of Investor Relations, MetLife: Thank you, Operator, and good morning, everyone. We appreciate you being with us today for MetLife’s Third Quarter 2025 Earnings Call. Before we begin, I direct you to the information on non-GAAP measures on the investor relations portion of MetLife.com in our earnings release and in our quarterly financial supplements, which you should review. On the call this morning are Michelle Khalaf, President and Chief Executive Officer, and John McCallion, Chief Financial Officer and Head of MetLife Investment Management. Other members of senior management are also available to participate in today’s discussion. Last night, we released a set of quarterly supplemental slides, and they’re available on our website. John McCallion will speak to these slides in his prepared remarks. An appendix to the slides features additional disclosures, GAAP reconciliations, and other information, which you should also review.

After the prepared remarks, we will have a Q&A session, which will close at the top of the hour. As a reminder, please limit yourself to one question and one follow-up. With that, over to Michelle.

Michelle Khalaf, President and Chief Executive Officer, MetLife: Thank you, John, and welcome everyone to this morning’s call. Last night, MetLife reported strong third-quarter results, showcasing the earnings power of our diversified set of market-leading businesses and shining a spotlight on the positive impact of our new frontier strategy. The expectations we outlined in the second quarter emerged in the third quarter as anticipated. Most notably, underwriting results bounced back in our flagship group benefits business on normal disability experience and seasonally better dental profitability. Variable investment income posted its highest recent contribution to adjusted earnings as capital markets activity accelerated, unlocking value in private equity. Our global retirement liability origination platform is in high gear with growth in the U.S. and the U.K., as well as in Japan, where our efficient capital structure is supporting stellar sales growth.

In Latin America, our innovative digital platform for embedded insurance, Accelerator, continues to attract and win over new strategic partners. Turning to our quarterly results, we reported adjusted earnings of $1.6 billion, or $2.37 per share, up 22% per share from the prior year period. Notable items totaled $18 million, or $0.03 per share, and included our annual actuarial assumption review and a tax adjustment in Mexico. Excluding notable items, adjusted earnings totaled $1.6 billion, or $2.34 per share, a 21% increase from a year ago. The greatest driver of our outperformance in the quarter was strong investment margins led by variable investment income, as well as volume growth across several business segments. We reported variable investment income of $483 million, above our implied quarterly outlook of $425 million, on higher private equity returns, which reached 3% for the quarter.

With the rebound in variable investment income, MetLife generated an adjusted return on equity, excluding notables, of 16.7%. A level more on par with the company’s earnings power and near the top of our target of 15%-17%. We delivered a direct expense ratio of 11.6% in the third quarter. We are well ahead of schedule with this ratio relative to our new frontier commitment, with the force multiplier effect of AI and other emerging technologies accelerating our productivity and efficiency gains. Moving to MetLife’s businesses, group benefits adjusted earnings, excluding notable items, totaled $457 million, up 6% from a year ago, reflecting solid underwriting results. Disability results returned to normal, and dental profitability ramped up in the quarter, consistent with its seasonal profit pattern.

As a result, we saw a 230 basis point sequential improvement in our non-medical health loss ratio, providing further confidence in achieving a combined 400 basis points of improvement across the third and fourth quarters. In retirement and income solutions, adjusted earnings, excluding notable items, totaled $423 million, up 15% from the prior year quarter, reflecting higher variable investment income. Chariot Re officially launched in the third quarter with an initial reinsurance transaction of roughly $10 billion. This strategic partnership helps expand MetLife’s retirement liability origination capacity in a capital-efficient manner while also generating institutional assets for MetLife Investment Management. Total liability balances in RIS were up 3%. The solid result was driven by strong general account balance growth, including structured settlement production, a record quarter for us, in fact, and volume growth in U.K. longevity reinsurance.

We did not report any new pension risk transfer deals in the third quarter. However, the fourth quarter is shaping up to be a record quarter as we’ve already written $12 billion of PRT transactions, demonstrating the trust the market places in MetLife. Our long-term outlook for the PRT business is positive. A few weeks ago, we released the results of our annual poll of pension plan sponsors. The survey found that 94% of those sponsors planning to de-risk their portfolios expect to fully divest in the next five years. This is the highest percentage we’ve recorded since we initiated the survey 10 years ago. Shifting to Asia, adjusted earnings, excluding notable items, were $473 million, a 36% increase on a reported basis from the prior year quarter. Sales surged 34% on a constant currency basis, driven by an outstanding 31% increase in Japan.

Our competitive Japanese product portfolio, which includes both foreign currency and yen-denominated retirement products, has gained excellent traction across our multi-pronged distribution in the country. More than keeping pace, constant currency sales in other Asia markets jumped 39%, led by Korea, China, and India. In Latin America, adjusted earnings, excluding notable items, were $222 million, up 2%. Adjusted PFOs for the region totaled $1.7 billion, up 11% on both a reported and constant currency basis, indicative of continued business momentum across the region, most notably in Mexico, Chile, and Brazil. We recently added e-commerce leader Mercado Libre as a partner on our Accelerator digital platform in Mexico and Brazil. We now have more than 20 partners across Latin America, and the Accelerator platform has generated more than $340 million of annualized premiums since its launch, another powerful example of new frontier in action.

Finally, EMEA posted another strong quarter with adjusted earnings, excluding notable items, of $89 million, up 19% on a reported basis, primarily due to volume growth. As we do each third quarter, we published our 2024 Value of New Business, or VNB, results. It is hard to overstate VNB’s importance as a tool for MetLife in maintaining capital and pricing discipline around the globe. Over time, the principled use of VNB has powered our transformation into a more capital-like business with consistent improvement demonstrated year after year. Again, the results for the past year are impressive. In 2024, we deployed $3.4 billion of capital to support new business origination. This is the highest order use of our precious capital. The capital deployed in 2024 was put to use at an average internal rate of return of 19% and a payback period of five years.

Our success with VNB does not occur in isolation. Achieving high internal rates of return on new business with short payback periods feeds directly into our ability to produce a high return on equity and generate strong free cash flow. To that end, we continue to manage capital with discipline, protecting liquidity and balance sheet strength while returning excess capital to shareholders. Our track record is well established. We have returned almost $24 billion to shareholders through buybacks and common dividends in the past five years. The third quarter was no exception. We returned about $875 million to shareholders through common stock dividends and share repurchases. We paid roughly $375 million of common stock dividends and repurchased around $500 million of our common stock. With approximately $150 million of repurchases in October, our total year-to-date share buyback is now roughly $2.6 billion.

We ended the quarter with cash and liquid assets at our holding companies of roughly $4.9 billion, which includes about $700 million earmarked for near-term debt maturities and is above our target cash buffer of $3-4 billion. There is no doubt capital deployment and capital management have been integral to our past success and will continue to be as we push forward with the execution of our new frontier strategy. We are working hard toward the successful closing of two strategic transactions, the acquisition of PineBridge and the sale of a legacy block of variable annuities to Talcott Resolution Life. In both cases, we are fully engaged and on track to close in the fourth quarter. As we execute across our new frontier strategic priorities, we are extending our leadership in the places we have the right to win.

Underpinning our strategic priorities is our investment portfolio and our time-tested approach to credit and our unwavering commitment to risk management. For 157 years, MetLife has navigated complex and evolving credit markets, delivering consistent investment results even through periods of significant volatility. Today, while the credit environment is reasonably stable and credit fundamentals resilient, we recognize spreads are historically tight and, in some ways, priced for perfection. We maintain an up-and-quality bias across our portfolio, supported by active surveillance and disciplined underwriting. Our diversified, high-quality portfolio and active risk management position us well to navigate a wide range of economic outcomes, ensuring we deliver regardless of the market environment. In closing, our third-quarter results illustrate MetLife’s ability to create exceptional value for shareholders and stakeholders alike and the power of the new frontier as a growth engine.

As we do each year, we just completed the annual pressure testing of our strategy with our board of directors and came away confident we have the right strategy for the right time. Our focus on consistent execution, steady capital management, and expense discipline will continue to strengthen and differentiate our market leadership while fueling our superior value proposition comprised of strong growth and attractive returns with lower risk. Now, I’ll turn it over to John to cover the quarter in more detail. Thank you, Michelle, and good morning, everyone. I’ll walk through our third-quarter results and refer to the 3Q25 supplemental slides, which covers highlights of our financial performance, including details of our annual global actuarial assumption review. In addition, I’ll provide updates on our value of new business metrics and our liquidity and capital position.

Beginning on page three, we provide a comparison of net income and adjusted earnings for the third quarter. We have introduced a new line item, net activity attributable to seated reinsurance arrangements, which captures the net income impact from the growing use of seated reinsurance. Following the launch of Chariot Re in Q3 of 2025. Much of the offsetting amounts are captured in accumulated other comprehensive income, or AOCI, and primarily represent the change in unrealized gains or losses on the reinsured portfolio seated to the reinsured. Therefore, we believe most of the accounting for this item to be asymmetric or non-economic in nature. Additionally, the main factors contributing to the difference between net income and adjusted earnings this quarter were net derivative losses resulting from stronger equity markets, rising long-term interest rates, and strengthening of the US dollar. The net investment losses were generally in line with recent quarters.

Overall, we continue to believe we are operating in a relatively stable credit environment. Moving to the bottom of the table, we recorded two notable items that mostly offset each other, resulting in a net increase to adjusted earnings of $18 million, or $0.03 per share. The first item relates to the resolution of an industry-wide tax matter in Mexico regarding the value-added tax deduction of certain health insurance claims expenses. This resolution and related change in tax law resulted in an after-tax charge of $71 million in Q3 of 2025 in Latin America. We anticipate an additional after-tax charge of $20-$25 million in Q4. For 2026, we estimate a reduction in Latin America adjusted earnings of roughly $50-$60 million as we recalibrate our underlying rate assumptions in Mexico, with little to no impact in 2027 and beyond.

The second item relates to our annual actuarial assumption review, which increased adjusted earnings by $89 million. Turning to page four, we provide additional details of these effects on adjusted earnings and net income by segment. The overall impact from the annual review was modest. In retirement income solutions, or RIS, our payout annuity business benefited from higher mortality. Within Asia, we recognize more favorable experience in Japan due to lower morbidity in accident and health products and favorable lapse experience in life insurance. In MetLife Holdings, we had favorable mortality in life insurance and favorable lapse rates in variable annuities. Next, let’s look at adjusted earnings by segment on page five. This shows third quarter year-over-year comparison of adjusted earnings, excluding notable items by segment and corporate and other. All my comments related to this slide will be made on an ex-notables basis.

Adjusted earnings were $1.6 billion, representing a 15% increase year-over-year. This was primarily driven by higher variable investment income and strong volume growth. These were partially offset by less favorable underwriting and lower recurring interest margins when compared to the prior year. Adjusted earnings per share were $2.34, up 21%. Growth was supported by disciplined capital management. Moving to the businesses, group benefits results showed steady growth and improved margins. Adjusted earnings were $457 million, up 6%. The key drivers were favorable expense margins and volume growth. This was partially offset by less favorable life underwriting. The group life mortality ratio, excluding the assumption review, was 83.3% for the quarter, which is below the bottom end of our 2025 target range of 84-89%, but less favorable than the 82.4% on the same basis in the prior year.

The non-medical health interest adjusted benefit ratio was 72.5%, modestly above the midpoint of our annual target range of 69-74%, and essentially flat to Q3 of 2024 at 72.4%. This result represented an improvement of 230 basis points sequentially from the second quarter, primarily due to the anticipated dental seasonality and an expected recovery in disability. We continue to expect our non-medical health ratio to improve further in Q4 due to typical lower seasonal utilization in dental. Turning to the top line, group benefits adjusted PFOs were up 3%, which was dampened by approximately one percentage point due to the impact on premiums from participating life contracts. In addition, sales were up 5% year-to-date due to growth across most products. RIS maintained a strong momentum coupled with higher investment income. Adjusted earnings were $423 million, up 15% year-over-year. The primary driver was higher variable investment income, or VII.

RIS investment spreads were 131 basis points, up 29 basis points sequentially due to higher variable investment income. RIS spreads excluding VII were up 1 basis point sequentially at 102 basis points. In addition, the transfer of approximately $10 billion of RIS liabilities to Chariot Re in Q3 of 2025 resulted in a reduction in adjusted earnings, which was in line with our prior guidance of $15 million-$20 million per quarter. RIS continues to achieve strong business momentum. Adjusted PFOs, excluding PRTs, were up 14%, primarily driven by higher structured settlements and U.K. longevity reinsurance sales. In addition, our spread earning general account liabilities grew 4% year-over-year, while total liability exposures grew 3%. As Michelle mentioned, we have already secured a record level of new PRT mandates so far in Q4. Turning to Asia, the segment displayed strong performance across all key metrics.

Adjusted earnings were $473 million, up 36%, and up 37% on a constant currency basis. The primary drivers were higher variable investment income and volume growth. Additionally, results were positively impacted by a $30 million after-tax benefit from a model refinement applied to accident and health products in Japan. General account assets under management at amortized cost were up 6% year-over-year on a constant currency basis, and sales were up 34% on a constant currency basis. Sales in Japan, our largest market in the region, were up 31% on a constant currency basis, driven by product launches and enhancements earlier in the year. Other Asia markets also contributed meaningfully, with sales up 39% year-over-year on a constant currency basis led by Korea and China. Latin America had solid top-line growth and resilient earnings.

Adjusted earnings were $222 million, up 2% on both a reported and constant currency basis, primarily due to volume growth across the region. In addition, a favorable Chile and Chilean return of 6% contributed to LatAm’s solid performance, although it was below the 8% earned in Q3 of 2024. Latin America’s top line continues to perform well. Adjusted PFOs were up 11% on both a reported and constant currency basis, and sales were up 15% on a constant currency basis, with strong growth across the region, most notably in Mexico, Chile, and Brazil. AMEA had broad-based volume growth, driving a double-digit adjusted earnings increase. Adjusted earnings were $89 million, up 19%, and 17% on a constant currency basis. AMEA adjusted PFOs were up 11% and up 9% on a constant currency basis, and sales were up 24% on a constant currency basis.

Reflecting strength across most markets led by Turkey, Gulf, and the U.K. MetLife Holdings delivered adjusted earnings of $190 million, up 12%, primarily reflecting higher variable investment income. Corporate and other reported an adjusted loss of $288 million for 3Q of 2025, compared to a loss of $249 million in the same period last year. This increase was primarily driven by market-related employee costs as well as higher interest payments on outstanding debt. The company’s effective tax rate on adjusted earnings in the quarter was approximately 24%, which is at the bottom end of our 2025 guidance range of 24%-26%. On page six, this chart reflects our pre-tax variable investment income for the past five quarters, including the third quarter of 2025, which was $483 million, above our implied quarterly guidance of $425 million.

Private equity returns of 3% in the quarter drove the outperformance, while our real estate and other funds yielded an average return of approximately 50 basis points. As a reminder, PE and real estate and other funds are reported on a one-quarter lag and accounted for on a mark-to-market basis. Page seven presents post-tax variable investment income by segment and corporate and other, covering the last five quarters. Each business segment maintains a distinct investment portfolio, carefully matching its liability profile. The majority of VII assets are concentrated in Asia, RIS, and MetLife Holdings, reflecting the long-term nature of these obligations. As of September 30, 2025, total VII assets stood at approximately $19 billion. Asia represented over 40% of these assets, while RIS and MetLife Holdings accounted for about 30% and 20%, respectively.

This distribution underscores our strategic approach to asset allocation, ensuring that the investment portfolios are aligned with the duration and risk characteristics of each segment’s liabilities. Turning to expenses, page eight illustrates our direct expense ratio trends over time. For the third quarter of 2025, our direct expense ratio was 11.6%. An improvement from 11.7% in Q3 of 2024 and notably below our full-year target of 12.1%. We continue to emphasize that the full-year direct expense ratio offers the most meaningful measure of our expense management, given the inherent variability in quarterly results. However, this quarter’s outcome further demonstrates our continued commitment to disciplined expense control and operational efficiency while maintaining responsible growth across our businesses. Turning to page nine, the chart highlights MetLife’s value of new business, or VNB, metrics across our major segments, which we report annually, and highlight the past five years.

During 2024, we allocated $3.4 billion in capital to support new business initiatives, achieving an average unlevered internal rate of return of approximately 19% and a payback period of five years. This disciplined capital deployment generated about $2.6 billion in new business value. The 2024 VNB results underscore our ongoing commitment to investing in opportunities that deliver responsible growth and attractive returns. We view annual VNB as a key indicator of our ability to expand our ROE and accelerate free cash flow generation over time. Let me now review our cash and capital position as detailed on page 10. MetLife remains strongly capitalized, maintaining robust liquidity well above our internal targets. As of September 30, cash and liquid assets at the holding companies totaled $4.9 billion, exceeding our target cash buffer of $3-$4 billion.

We continue to prioritize returning excess capital to our shareholders, with total cash returns in the third quarter reaching approximately $875 million, comprised of roughly $500 million in share repurchases and approximately $375 million in common stock dividends. In addition to these returns, holding company cash reflects the net impact of subsidiary dividends, debt issuances, operating expenses, and other cash flows. For our U.S. entities, preliminary statutory operating earnings for the first nine months of 2025 were approximately $2.1 billion, with net income of $1.3 billion. Our estimated U.S. statutory adjusted capital on an NAIC basis stood at approximately $17.1 billion as of September 30, essentially unchanged from the prior quarter. We anticipate the Japan solvency margin ratio to be around 740% as of September 30, pending the final statutory filings in the coming weeks.

Looking ahead, we are pleased with our progress toward the transition in Japan to ESR, a capital framework that closely aligns to the economic capital model we use to manage our business. Based on our initial work, we expect to report an economic solvency ratio within a range of 170-190% from March 2026. This ratio reflects the strong capitalization of MetLife Japan, as evidenced by its standalone AA- rating from S&P, as well as our capital management efficiency. We have yielded cash dividends from Japan, totaling more than $4 billion over the past five years. Before I wrap up, I’d like to note that starting in the fourth quarter, we plan to report MetLife Investment Management, or MIM, as its own business segment. In addition, we plan to eliminate MetLife Holdings as a standalone segment by consolidating it into Corporate and Other.

This new reporting structure aligns with our new frontier strategy. As part of this resegmentation, we will disclose recasted historical financial results in early January, which should allow enough time to update your models prior to our fourth quarter earnings call. In summary, MetLife delivered a strong quarter, underpinned by sustained momentum and solid fundamentals across our diverse set of market-leading businesses. We achieved robust top-line growth, maintained disciplined underwriting, and exercised prudent expense management, all while benefiting from higher private equity returns. Our value of new business metrics highlight our strategic and disciplined approach to allocating capital. Backed by a strong balance sheet and reliable free cash flow generation, we are well-positioned to achieve responsible growth and deliver attractive returns with lower risk, creating sustainable value for both our customers and shareholders. I will turn the call back to the operator for your questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Please limit yourself to one question and one follow-up. Thank you. We’ll take our first question from Ryan Krueger at KBW. Hey, thanks. Good morning. My first question was on Asia sales. Can you provide some additional color on the strength that you saw? What were the key drivers, and what do you think we’ll get into what extent can this momentum continue going forward? Hey, Ryan, it’s Lyndon here. Look, we’re really pleased with the strong quarter we’ve had in Asia. We’ve seen a 34% increase in the overall Asia market.

Let me give you some more color here. Let’s start with Japan. Sales were up 31% year over year. We’ve launched a couple of new products. We’ve got a new single premium FX Life product that we launched in April, and this product continues to do very well. In addition, we launched a new Yen Variable Life product in August, and this too has been received very well by the market. We’ve also made some product enhancements. We’ve enhanced our single premium FX Annuity product earlier this year, and this continues to do well when we compare to the prior year. If you take all the product launches we put in place, as well as the product enhancements, combine it with our distribution strength, that’s really what’s driving the strong growth that we see in both our channels, bank assurance as well as the face-to-face channel in Japan.

Now, when we looked at the rest of Asia, sales there were up 39% year over year, and we’re really seeing strong performance in Korea and China here. China sales were higher in the bank assurance channel, and that’s really been driven by the fact that we’ve launched some new key bank partners as well as been able to penetrate existing bank partners. In Korea, we continue to deliver consistently strong performance, and here we are showing strength in our US dollar product sales as well as our yen variable life product and in the face-to-face channels. Good results overall. Now, looking ahead, we expect this momentum to continue going into the fourth quarter, and we expect to see full-year sales guidance for 2025. I hope that helps. Yes, great. Thank you. Just a quick one on expense seasonality.

I think you typically do have some expense seasonality in the fourth quarter. Can you give us any rough magnitude of what to expect there? Yeah. Hey, Ryan, it’s Michelle. Yeah, look, we’re really pleased with our direct expense ratio coming in well below the 12.1 target that we had set during the outlook. There is some seasonality, fourth quarter being somewhat higher than the first three quarters, but I would say that our expectation is that we will come in below the 12.1, I would say even well below the 12.1 at year-end. Two factors contributing to this, I would say. One is early this year, we had asked our teams, given the uncertain environment, to tighten our belts and to see how we can manage expenses to a greater extent without sacrificing any of the investments we’re making in growth and strategic initiatives.

The reaction has been really great, really pleased with it. We have also asked the team to make sure that we carry some of those savings into next year and beyond. The other factor here is technology-related. Over the last five years, we have invested over $3 billion to simplify and modernize our technology ecosystem. This really has laid the foundation for us to integrate emerging technologies, including AI, into our core processes, products, and services. We have also developed a proprietary AI platform, which we call MetLife MetIQ. This platform blends generative, agentic, and classical AI capabilities that support responsible solutioning across business domains. Think about app development and customer service, for example. We have also provided tools for our employees, our associates, as well as increased training. This is all leading to both productivity gains as well as driving further efficiencies.

This is also contributing to the lower direct expense ratio that you’re seeing here. Thank you. We’ll move next to Tom Gallagher at Evercore. Good morning. First question, just on the $12 billion of PRTs that you’ve won so far in Q4. Is that a few large deals, several smaller ones? Can you just comment on what’s happening competitively in that market to allow you to have so many wins? Thank you, Tom. It’s Rami here. We’re really pleased with our 2025 performance in PRT. To date, we have written more than $14 billion. As Michelle mentioned, there’s $12 billion of that coming in the fourth quarter, which is making it a record for us. It’s a few large deals. As you know, we focus on the jumbo end of the market versus the small end of the market.

Think of those as jumbos, not small deals. Maybe three other points just to think about and put this kind of record quarter in context for us. One is that we have distinct competitive advantages in that jumbo end of the market. It is our balance sheet size, our investment capabilities. Look, Tom, at the jumbo end of the market, financial strength, disciplined risk management, and established track record are all very important factors for plan sponsors and their advisors. We are extremely pleased that we are winning the trust of the marketplace here and having a record quarter. The two other points I would make here as well is to also reiterate our disciplined approach to these deals. We do take an M&A lens to our capital deployment here and evaluate the risk and return of each deal. The focus on value is very much there.

You see us also disclosing our VNB metrics, which really also encapsulates that. For PRT, we continue to achieve ROEs in this business, which are supportive of our enterprise ROE targets. Maybe the last point, just to put this in context, this is also a quarter where this win is a great illustration of us deploying our retirement platform and our capital strategies that we talked about at our invest today. We are bringing the strength of our liability origination, our RIS platform. We are using our own balance sheet, but we are also using third-party capital here to enhance financial flexibility. Think about those deals driving spread earnings for RIS, as well as additional growth and fee revenue for MetLife Investment Management. It really ticks a lot of the boxes that we talked about back at invest today with respect to our strategy here.

That’s good color. Appreciate it, Rami. I guess my follow-up would be for you as well. Can you just comment on what’s happening underneath non-medical health on your improvement? I guess several peers have seen some volatility in group disability this quarter. Can you comment on the split between dental and disability, what you saw in Q3, and then why you’re still confident that you can continue to improve into Q4? Thanks, Tom. We’re also very pleased with our underwriting results here in group. You saw us print a non-medical health ratio that’s 230 basis points down sequentially, which is slightly above where we indicated last quarter. Just to split that out for you in terms of disability in particular and then dental, I would say the two drivers behind the sequential improvement, one is the favorable seasonal utilization pattern in dental.

We did talk about that in the last quarter, and that’s materialized here in the third quarter. We also have the benefits of our pricing actions continuing to flow through our bottom line. I would remind you that this seasonality also exists in the fourth quarter, which is why we expect to see a further improvement in this ratio come Q4. Disability is performing well for us. It’s very much in line with our expectations. Incidents and claim severity are in line. We’re seeing very strong recoveries. I would say that’s an outcome of investments we’ve made in various capabilities and disability over a number of years. This is coming through as well in very strong recoveries. All in all, consistent with what we talked about in the last quarter. Think about that 400 basis points improvement that we talked about.

This 230 gets us more than halfway through in that direction of the overall 400. Hope that helps. That does. Thank you. We’ll go next to Sunny Thomas at Jefferies. Great. Thanks. Good morning. Just on PRT. Is any of the $14 billion that you are planning to write this year going into Chariot Re? And how do we think about the difference in earnings impact if it goes in Chariot Re or if it stays on your balance sheet? Hey, good morning, Sunny. It’s John. Let’s just start with we launched Chariot Re on July 1. We transferred just under $10 billion of liabilities to Chariot Re and did all that launching in a little less than or just over a year. So we’re very pleased with the progress we’ve made. Look, I think this comes back to our strategic.

Approach and something we laid out in investor day and that Michelle kind of articulated around just how we think about complementing our own capital with third-party capital. We see more growth in the retirement business. It is hard to kind of pinpoint, is this Chariot or is it? Chariot’s kind of ongoing. We are always working with them. That is kind of the process. That will be part of how we accelerate growth on our retirement platforms. It is not necessarily always so perfectly aligned, and things do not always line up. I would say, yes, to your answer. I think you could argue that we will look more holistically at just our total asset growth and then use third-party capital to augment that. I think the comments we gave back a quarter ago in terms of the.

Temporary impact on earnings is somewhere between 15%-20% on a $10 billion deal. That’s kind of a rough justice of an earnings impact in any one quarter. Just so you have a sensitivity. We would expect that to be temporary in nature while we then refund that with other growth. Okay. That’s helpful. I guess, Michelle, in your prepared remarks, you referenced this efficient capital structure in Japan. I was hoping you could unpack that a little bit. Is that unique to Met? Relatedly, on the ESR, the 170-190, are there any adjustments that you’re making to the rules that come from the FSA? Thanks. Yeah. Hey, it’s John again. Maybe I’ll just touch on that given the collective components of that question.

When we talk about the efficient structure, obviously, we’re referencing we have a pretty big presence in Bermuda. We’ve leveraged Bermuda for certain products, and that has helped us get to a more economic regime. We’ve continued to build our presence and size in Bermuda, both our affiliate and, as well as, obviously, the launch of Chariot Re. We’ve leveraged that framework. And then your question was on ESR, was it just how that relates to ESR? Is that was your question? Just want to make sure I got it correct. Yeah. No, it’s the 170-190. Some companies have talked about company-specific adjustments that are made when they work with those ratios. That’s what I was going to say. Okay. Okay. Yeah. This has no adjustments. This is just prescribed. We’re following the prescribed rules here. So that’s the 170-190. And look, as.

We’ve operated under an economic framework, we’ve always used both to kind of think about our products and how we run that business. I referenced in my remarks about we’ve been consistently dividending, including this year out of Japan. We’ve had $4 billion of distributions up to the whole CO over the last five years. This is just the general range that we would expect to run this company. Okay. Thank you. We’ll move next to Alex Scott at Barclays. Hey, thanks for taking the question. First one on going back to group benefits. Can you talk a bit about just what you’re seeing in the competitive environment, pricing environment, and what you think that could lead to in terms of growth? Do you feel like at this point you can get back to a more long-term growth outlook for 2026? Thanks, Alex. I would say.

We continue to see a market that’s competitive, but a market that’s rationally priced, which means we kind of always find opportunities to grow, and we grow that business while maintaining discipline in terms of underwriting and achieving our target returns. You hear us talk about that, but I think just keep in mind two specific attributes here that have sustained this competitive yet rational environment. The first is the fact that these are short-term products, so underwriting results emerge fairly quickly. This acts as a natural check, if you will, on the competitive dynamics. The other is, look, customers here are looking for real solutions to help them deliver their overall talent strategies and drive business outcomes. Yes, price matters, but they’re also looking for solutions that give their employees good experiences, enhances their productivity.

In many instances, they’re looking to transfer administrative burden in terms of leave and absence. They want to do that with a carrier that’s tightly integrated with them and is easy to do business with. They want to do more with fewer. They’re looking for bundled solutions across the entire range of products. Look, we are a leader in this industry, and we bring all of the above and more to the table, which allows us to drive good growth. That comes through good retention, good renewal pricing, and also we can do that while maintaining discipline. I would say all of these things are really good attributes that the market has. We have a 4% growth rate in this quarter once you kind of net out the impact of the PAR contracts.

4% on top of $25 billion in absolute terms is a pretty significant number. We’re really pleased with the momentum that we have in this business. Thanks for all that. Second one I have for you is just if you could give us your views on some of the comments that have been made around private credit investing and insurance recently. I think some of the comments were focusing on private letter ratings and this idea that maybe there’s ratings inflation out there. If there’s any kind of stats you can give us about your private credit book and the way that you go about applying ratings and so forth, that’d be helpful too. Yeah. Good morning, Alex. It’s John. I’ll start here, and maybe I’ll ask my partner here to even add some color. Let me just give you some broad themes.

Michelle referenced before. First, let’s just—we are constructive on the credit environment right now. There are strong fundamentals. Corporate profits are strong. As you heard from Michelle, spreads are tight. You need to be very mindful and disciplined around value and risk right now. For us, that generally means up in quality. Even in higher-yielding strategies, we are up in quality. I did see the same referenced article that you had. They were pretty generic comments. Hard to kind of unpack that and would not try to even do that here. I think for us, if I look at just us, we are a top-tier private asset private credit manager. We have been doing this for decades. Importantly, having done this through credit cycles, right? Not everyone has done that. These assets give us many, many benefits. I will ask Chuck. Chuck is our Chief Investment Officer.

He can give us a little color on some of the specifics and how we think about underwriting. Good morning, Alex. How are you? I mean, I think John’s first point is spot on in that we’ve been a major investor in this sector for a long period of time. I think it’s important when you—when we hear all the comments out there to understand that. MIM does our own underwriting. Our primary source of credit underwriting is the own work we do. It’s not rating agencies. It’s not a rating letter. It’s our specific underwriting. The vast majority of our corporate bonds are investment grade, 95%. The exposure that we have to below investment grade is mostly up in quality. I think all those factors—good underwriting, good experience, focus up in quality—put the portfolio in a pretty good position. Yeah.

Thanks for all that. We will move next to Wes Carmichael at Autonomous Research. Hey, good morning. Thank you. The first question I had for you was on RIS and just kind of your outlook for the base spread from here. I think, John, you mentioned it improved a basis point. As we look forward, how are you thinking about the base spread? Yeah. Good morning, Wes. As you said, we had 131 basis points in spreads, about 29 basis points of that was VII. We came in at 102. That was actually up a basis point from Q2. Better than our guidance we had given. We had expected some seasonality and some real estate that was not as severe as we thought. There were also a few other smaller favorable items that helped us maintain consistency. As you think about Q4.

All else equal, we’d expect kind of a steady spread level from Q3. The one headwind we’ll have to just think about or be mindful of is with the large amount of PRT mandates that we’ve won during this quarter, that can cause a temporary quarter headwind as you reposition assets. And that could be a couple of basis points, if any. I think putting it all together, we see relatively flat, I think, would be kind of our viewpoint at this point. Thanks, John. Helpful. Second, I guess there’s a press release out this morning from Bright House. The company is expected to be acquired by Aquarian. I believe MIM manages a portion of assets for Bright House. I just wanted to see if there’s any other potential impacts to MetLife. I don’t think it should be AUME managed.

Are there any other impacts that we should be thinking about from here? Yeah. No, we saw the reports as well. I think congratulations to the team. Obviously, all this was rumors until it is not. To the extent that it is not a rumor, you know then that there was a lot of hard work that went into something like this. We are certainly happy and congratulate the team for all the hard work they went through. Look, for us, we have a great relationship with Bright House. We obviously have a long history with them. We have kind of a fond place in our hearts for that relationship. At the same time, we have some very unique asset management capabilities that we think help them achieve their strategic objectives.

The key relationship right now, to your question, is our asset management relationship. We look forward to leveraging the partnership and working with them to help them with their strategic outcomes. Thanks, John. Next, we’ll go to Joel Hurwitz at Dally. Hey, good morning. On MIM, any color on the performance of the business this year and how third-party flows have been. Hey, Joel. Yeah. It’s been a good year. To be honest, if we had to kind of unpack the first and second half of the year, the first half, just given the market volatility, was a little muted. Also, the announcement of PineBridge probably put a little bit of a slowness on things in the beginning of the year. The teams worked tremendously hard to kind of educate the external environment. We saw we had a strong second half.

I think we’re just above on total assets under management of just over $630 billion of AUM, above $200 billion on third-party assets. The flows in the second half of the year have been very strong. We are very excited about what’s ahead for MIM. Obviously, it’s one of our strategic initiatives to accelerate the growth of MIM. The team’s been working very hard and excited to become our own segment come next year. Got it. A couple on LTC. First, any material changes to the assumption set there? We’ve seen a couple of players have some adverse incidents trends. Not sure how that’s trending for you guys. Just any update on what you’re seeing in the risk transfer market for that business? Yeah, sure.

I’ll start, and then I’ll hand it over to Rami to give some thoughts on the market. Broadly, you saw our actuarial assumption review, pretty modest, slight positive overall. Some slight positive in RIS with some higher mortality benefiting there. In Asia, some favorable experience, some morbidity in lapse rates. In holdings, we actually had some favorable life experience as well, some favorable lapse experience on VA. A very, very modest LTC number of $2 million post-tax change. I think the block continues to perform well. The ADE is in line with what we would typically expect. I’ll turn it over to Rami to give some color on just what he’s seen in the market. Thanks, John. As we’ve said before, we have and continue to look at risk transfer opportunities here. Clearly.

Very much seeing the recent risk transfer activity that’s taken place. We are engaged and continue to look at that. Having said that, though, we will be very disciplined here as we explore these opportunities. We have a very well-managed book of business. It’s well-capitalized and well-reserved. We continue to have a successful rate action program that’s allowing us to obtain the necessary premium increases that the book needs. As we look at any potential transaction, price is going to really matter here. Ultimately, any transaction needs to be accretive for us from a shareholder value perspective. Got it. Thank you. We’ll take our next question from Wilma Burdis at Raymond James. Hey, good morning. Could you just discuss the forward timing of the impact of the Mexico tax law change? Thank you. Yes. Hi, good morning, Wilma. This is Eric.

As John mentioned, this quarter, we took a notable charge related to the change law and the tax law in Mexico. First, let me start by giving you a little bit of background on this item. In the past few years, the Mexican tax authorities have been challenging the VAT deduction of certain insurance claims-related expenses. Although the discussions were ongoing for several years, there was really little to no progress until the past few weeks when the government and the industry reached an agreement making the change effective for 2025 and beyond. This revision to the tax law just passed the legislature last week. For MetLife, this industry-wide insurance change only affects our health product offering. The change to the VAT deductions results in notable impacts in 2025, with lesser impact in 2026.

As we transition to the new rule, there will be little to no impact in earnings by 2027. We are already working to adjust our underlying rate assumptions for this annually renewable product, along with other management actions, which will help mitigate the impact of this transition. From our experience, this market has been very resilient and rational, which gives us confidence that we will work through this quickly. Our business in Mexico is strong. We have a large and very well-diversified franchise. We are confident in our ability to continue to deliver on that strong performance. In summary, this impact to the VAT change is isolated in nature, and it is temporary. We expect we will be back to our run rate and growth trajectory for the region by 2027. Hope this helps. Okay. Thank you.

And then you had some positive assumption updates in Asia. Is any of that potentially ongoing? Thanks. Yeah. Hi, Wilma, John. No, those are all generally one-time in nature. Thank you. That concludes our Q&A session. I will now turn the conference back over to John Hall for closing remarks. Great. Thank you, everybody, for joining us this morning. We look forward to engaging as the quarter goes on. This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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