Insurance Daily News

MetLife Reports Record Adjusted EPS on Strong Group Benefits

MetLife achieved record quarterly adjusted earnings per share of $2.85 in the third quarter of 2026, excluding notable items. The company reported adjusted earnings of $1.8 billion, a 12% increase, while net income rose to $2.4 billion, up from $818 million in the same period last year. This net income increase was largely attributed to derivative accounting shifts related to US interest rates on embedded derivatives tied to ceded reinsurance.

The group benefits segment was a primary driver of performance, posting $523 million in adjusted earnings, a 15% year-over-year increase. This growth resulted from favorable underwriting across both disability and life insurance lines. For three consecutive quarters, the segment has demonstrated a combination of volume expansion and improved underwriting margins. This performance has kept the Group Life mortality ratio below the company’s 83% to 88% target range for the entire year.

Sales in the group benefits segment are up 12% year-to-date, with growth across both regional business and national accounts. This volume increase includes core and voluntary products such as supplemental health, dental, disability, and life insurance. Ramy Tadros, MetLife’s regional president of US business, noted in October that the company is experiencing new business momentum alongside strong persistency. Additionally, Tadros indicated that employers are increasingly seeking benefits consultative expertise as they evaluate broker value and benefits design amid healthcare cost pressures.

MetLife’s retirement and income solutions segment also saw a recovery in the third quarter, supported by variable investment income of $720 million pre-tax. While the segment's reported earnings of $413 million were down 6% due to a $65 million charge from an annual actuarial assumption review, adjusted earnings excluding notable items rose 12% to $478 million.

The company’s financial position remains stable, with adjusted book value per share increasing 5% to $59.41. Statutory adjusted capital reached approximately $17 billion, a 3% increase from the previous quarter. MetLife’s full-year guidance for 4% to 7% PFO growth appears conservative given the segment's performance over the first three quarters.

Why it matters

MetLife's ability to simultaneously expand volume and improve underwriting margins in group benefits suggests a competitive advantage that could pressure pricing and distribution strategies across the sector.

FAQ

What drove the significant increase in MetLife's net income?
The increase was primarily driven by derivative accounting, specifically a $698 million gain in Q3 2026 compared to a $929 million loss in Q3 2025, reflecting US interest rate movements on embedded derivatives tied to ceded reinsurance.

How has the group benefits segment performed regarding underwriting targets?
The segment has maintained a Group Life mortality ratio below the company's 83% to 88% target range for the entire year and has achieved improving underwriting margins alongside volume expansion for three consecutive quarters.

What is the status of MetLife's adjusted book value?
Adjusted book value per share rose 5% to $59.41, while GAAP book value per share declined 22% due to the fair value treatment of future policy benefits in a higher-rate environment.

Source: Insurance Business America. See the original source for full details.