MetLife Reports Third-Quarter Results

(Reuters) – MetLife (NYSE:MET) reported a decline in third-quarter adjusted profit on Wednesday, attributed to weak performance in the insurer's group benefits business, resulting in a 5.5% drop in shares after hours.

Group Benefits Business

Adjusted earnings from MetLife's group benefits business — which includes dental, disability, vision, accident, health, and life insurance — fell 27% to $373 million year-over-year.

The company noted that this decline was mainly due to the effects of its annual actuarial assumption review and weaker non-medical health underwriting.

Understanding Actuarial Assumptions

Insurers utilize actuarial assumptions when projecting the life expectancy of individuals applying for life insurance. An actuarial assumption serves as an estimate of uncertain events to help determine insurance premiums.

Investment Income

On a positive note, adjusted net investment income increased by 8% to $5.3 billion during the quarter, benefiting from higher interest rates. Risk-averse insurers typically have investment portfolios that lean heavily towards bonds, which offer better yields in a high interest rate environment.

Earnings per Share

Adjusted earnings available to common shareholders decreased to $1.38 billion, or $1.95 per share, in the three months ending September 30, down from $1.49 billion, or $1.97 per share, a year earlier.

Year-to-Date Performance

Despite the recent decline, MetLife shares have increased by 26% this year, compared to a 22% rise in the benchmark S&P 500 index.