https:\/\/investor.metlife.com<\/a>).<\/p>\n\nMetLife\u2019s definitions of non-GAAP and other financial measures discussed in this news release may differ from those used by other companies:<\/p>\n
Adjusted earnings and related measures<\/i><\/b><\/p>\n\n- \nadjusted earnings;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, on a constant currency basis;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, excluding total notable items;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, excluding total notable items, on a constant currency basis;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders per diluted common share;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, on a constant currency basis per diluted common share;<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, excluding total notable items per diluted common share; and<\/p>\n<\/li>\n
- \nadjusted earnings available to common shareholders, excluding total notable items, on a constant currency basis per diluted common share.<\/p>\n<\/li>\n<\/ul>\n
\nAdjusted earnings is used by MetLife\u2019s chief operating decision maker, its chief executive officer, to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is MetLife\u2019s GAAP measure of segment performance. Adjusted earnings and related measures based on adjusted earnings are also the measures by which senior management\u2019s and many other employees\u2019 performance is evaluated for the purposes of determining their compensation under applicable compensation plans. Adjusted earnings and related measures based on adjusted earnings allow analysis of MetLife\u2019s performance relative to its business plan and facilitate comparisons to industry results.<\/p>\n
\nAdjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax. Adjusted earnings available to common shareholders is defined as adjusted earnings less preferred stock dividends.<\/p>\n
\nAdjusted earnings, along with the related adjusted revenues, adjusted expenses and adjusted premiums, fees and other revenues, focus on our primary businesses principally by excluding the impact of (i) market volatility which could distort trends, (ii) asymmetrical and non-economic accounting, (iii) revenues and costs related to divested businesses, and (iv) other adjustments. Also, adjusted earnings and related measures exclude results of discontinued operations under GAAP.<\/p>\n
\nMarket volatility can have a significant impact on MetLife\u2019s financial results. Adjusted earnings excludes net investment gains (losses), net derivative gains (losses), market risk benefit remeasurement gains (losses) and goodwill impairments. Further, net investment income is adjusted to exclude similar items relating to joint ventures accounted for under the equity method (\u201cJoint venture adjustments\u201d), and policyholder benefits and claims exclude (i) changes in the discount rate on certain annuitization guarantees accounted for as additional liabilities and (ii) market value adjustments.<\/p>\n
\nAsymmetrical and non-economic accounting adjustments are made in calculating adjusted earnings:<\/p>\n
\n- \nUniversal life and investment-type product policy fees exclude asymmetrical accounting associated with in-force reinsurance.<\/p>\n<\/li>\n
- \nNet investment income includes earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (\u201cInvestment hedge adjustments\u201d).<\/p>\n<\/li>\n
- \nOther revenues include settlements of foreign currency earnings hedges and exclude asymmetrical accounting associated with in-force reinsurance.<\/p>\n<\/li>\n
- \nPolicyholder benefits and claims excludes (i) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments, (ii) asymmetrical accounting associated with in-force reinsurance, and (iii) non-economic losses incurred at contract inception for certain single premium annuity business. These losses are amortized into adjusted earnings within policyholder benefits and claims over the estimated lives of the contracts.<\/p>\n<\/li>\n
- \nPolicyholder liability remeasurement gains (losses) excludes asymmetrical accounting associated with in-force reinsurance.<\/p>\n<\/li>\n
- \nInterest credited to policyholder account balances excludes amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments and asymmetrical accounting associated with in-force reinsurance.<\/p>\n<\/li>\n<\/ul>\n
\n\u201cDivested businesses\u201d are those that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP. Divested businesses also include the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP.<\/p>\n
\nOther adjustments are made in calculating adjusted earnings:<\/p>\n
\n- \nBeginning in the fourth quarter of 2025, net investment income excludes depreciation of wholly-owned real estate and real estate joint ventures.<\/p>\n<\/li>\n
- \nNet investment income and interest credited to policyholder account balances exclude certain amounts related to contractholder-directed equity securities (\u201cUnit-linked contract income\u201d and \u201cUnit-linked contract costs\u201d).<\/p>\n<\/li>\n
- \nNet investment income and other expenses exclude Reinsurance activity (as defined below).<\/p>\n<\/li>\n
- \nNet investment income and interest expense on debt exclude amounts related to collateralized financing entities that are consolidated variable interest entities (\u201cConsolidated collateralized financing entities\u201d).<\/p>\n<\/li>\n
- \nOther revenues and other expenses exclude asset management distribution fees on funds that are passed through to distribution partners.<\/p>\n<\/li>\n
- \nOther revenues include fee revenue on synthetic guaranteed interest contracts (\u201cGICs\u201d) accounted for as freestanding derivatives.<\/p>\n<\/li>\n
- \nOther expenses exclude (i) amortization and impairment of asset management intangible assets, (ii) implementation of new insurance regulatory requirements and other costs, and (iii) acquisition, integration and other related costs. Other expenses include (i) deductions for net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests, and (ii) benefits accrued on synthetic GICs accounted for as freestanding derivatives.<\/p>\n<\/li>\n
- \n\u201cReinsurance activity\u201d relates to amounts subject to ceded reinsurance arrangements with third parties and joint ventures, including (i) the related investment returns and expenses which are passed through to the reinsurers and (ii) the corresponding invested assets and cash and cash equivalents.<\/p>\n<\/li>\n<\/ul>\n
\nAdjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.<\/p>\n
\nThe tax impact of the adjustments mentioned above is calculated net of the U.S. or foreign statutory tax rate, which could differ from MetLife\u2019s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.<\/p>\n
\nIn addition, adjusted earnings available to common shareholders excludes the impact of preferred stock redemption premium, which is reported as a reduction to net income (loss) available to MetLife, Inc.\u2019s common shareholders.<\/p>\n
Investment portfolio gains (losses) and derivative gains (losses)<\/i><\/b><\/p>\n
\nThese are measures of investment and hedging activity. Investment portfolio gains (losses) principally excludes amounts that are reported within net investment gains (losses) but do not relate to the performance of the investment portfolio, such as gains (losses) on sales and divestitures of businesses, as well as investment portfolio gains (losses) of divested businesses. Derivative gains (losses) principally excludes earned income on derivatives and amortization of premium on derivatives, where such derivatives are either hedges of investments or are used to replicate certain investments, and where such derivatives do not qualify for hedge accounting. This earned income and amortization of premium is reported within adjusted earnings and not within derivative gains (losses).<\/p>\n
Return on equity and related measures<\/i><\/b><\/p>\n\n- Total MetLife, Inc.\u2019s adjusted common stockholders\u2019 equity<\/span>: total MetLife, Inc.\u2019s common stockholders\u2019 equity, excluding unrealized investment gains (losses), net of related offsets, deferred gains (losses) on derivatives, future policy benefits discount rate remeasurement gains (losses), market risk benefits instrument-specific credit risk remeasurement gains (losses), defined benefit plans adjustment components of accumulated other comprehensive income (loss) (\u201cAOCI\u201d) and the embedded derivatives related to funds withheld on ceded reinsurance (representing unrealized investment gains (losses) passed through to reinsurers), all net of income tax.\n<\/li>\n
- Total MetLife, Inc.\u2019s adjusted common stockholders\u2019 equity, excluding total notable items<\/span>: total MetLife, Inc.\u2019s common stockholders\u2019 equity, excluding unrealized investment gains (losses), net of related offsets, deferred gains (losses) on derivatives, future policy benefits discount rate remeasurement gains (losses), market risk benefits instrument-specific credit risk remeasurement gains (losses), defined benefit plans adjustment components of AOCI, the embedded derivatives related to funds withheld on ceded reinsurance (representing unrealized investment gains (losses) passed through to reinsurers) and total notable items, all net of income tax.\n<\/li>\n
- Return on MetLife, Inc.\u2019s common stockholders\u2019 equity<\/span>: net income (loss) available to MetLife, Inc.\u2019s common shareholders divided by MetLife, Inc.\u2019s average common stockholders\u2019 equity.\n<\/li>\n
- Adjusted return on MetLife, Inc.\u2019s common stockholders\u2019 equity<\/span>: adjusted earnings available to common shareholders divided by MetLife, Inc.\u2019s average adjusted common stockholders\u2019 equity.\n<\/li>\n
- Adjusted return on MetLife, Inc.\u2019s common stockholders\u2019 equity, excluding total notable items<\/span>: adjusted earnings available to common shareholders, excluding total notable items, divided by MetLife, Inc.\u2019s average adjusted common stockholders\u2019 equity, excluding total notable items.\n<\/li>\n<\/ul>\n
\nThe above measures represent a level of equity that excludes most components of AOCI, such as unrealized investment gains (losses), net of related offsets, and future policy benefits discount rate remeasurement gains (losses), as well as the impact of certain ceded reinsurance-related embedded derivatives, as these amounts are primarily driven by market volatility.<\/p>\n
Expense ratio, direct expense ratio, adjusted expense ratio and related measures<\/i><\/b><\/p>\n\n- Expense ratio<\/span>: other expenses, net of capitalization of DAC, divided by premiums, fees and other revenues.\n<\/li>\n
- Direct expense ratio<\/span>: direct expenses divided by adjusted premiums, fees and other revenues. Direct expenses are comprised of employee-related costs, third-party staffing costs, and general and administrative expenses.\n<\/li>\n
- Direct expense ratio, excluding total notable items related to direct expenses and PRT<\/span>: direct expenses, excluding total notable items related to direct expenses, divided by adjusted premiums, fees and other revenues, excluding PRT.\n<\/li>\n
- Adjusted expense ratio<\/span>: adjusted other expenses, net of adjusted capitalization of DAC, divided by adjusted premiums, fees and other revenues.\n<\/li>\n
- Adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT<\/span>: adjusted other expenses, net of adjusted capitalization of DAC, excluding total notable items related to adjusted other expenses, divided by adjusted premiums, fees and other revenues, excluding PRT.\n<\/li>\n<\/ul>\n
Assets Under Management (<\/i>\u201cAUM<\/i>\u201d)<\/i><\/b><\/p>\n\n- Total Assets Under Management (\u201cTotal AUM\u201d)<\/span> is comprised of MIM GA AUM plus Institutional Client AUM (each, as defined below).\n<\/li>\n
- MIM General Account AUM (\u201cMIM GA AUM\u201d)<\/span> is used by MetLife to describe the portion of GA AUM (as defined below) that MetLife Investment Management, LLC and certain of its affiliates (\u201cMIM\u201d) manages or advises.\n<\/li>\n
- General Account AUM (\u201cGA AUM\u201d)<\/span> is used by MetLife to describe assets in its general account (\u201cGA\u201d) investment portfolio. GA AUM is stated at estimated fair value and is comprised of GA total investments, the portion of the GA investment portfolio classified within assets held-for-sale, cash and cash equivalents, and accrued investment income on such assets, and excludes policy loans, certain contractholder-directed equity securities, fair value option securities, mortgage loans originated for third parties, assets subject to ceded reinsurance arrangements with third parties and joint ventures, and certain other invested assets. Mortgage loans and real estate and real estate joint ventures included in GA AUM (at net asset value, net of deduction for encumbering debt) have been adjusted from carrying value to estimated fair value. Classification of GA AUM by sector is based on the nature and characteristics of the underlying investments which can vary from how they are classified under GAAP. Accordingly, the underlying investments within certain real estate and real estate joint ventures that are primarily commercial mortgage loans (at net asset value, net of deduction for encumbering debt) have been reclassified to exclude them from real estate and real estate joint ventures and include them as commercial mortgage loans.\n<\/li>\n
- Institutional Client AUM<\/span> is comprised of SA AUM plus Reinsurance AUM plus TP AUM (each, as defined below). MIM manages or advises Institutional Client AUM in accordance with client guidelines contained in each investment advisory agreement.\n
\n- Separate Account AUM (\u201cSA AUM\u201d)<\/span> is comprised of separate account investment portfolios, which are managed or advised by MIM and included in MetLife, Inc.\u2019s consolidated financial statements at estimated fair value, as well as accrued investment income on such assets.\n<\/li>\n
- Reinsurance AUM<\/span> is comprised of GA assets subject to ceded reinsurance arrangements with third parties and joint ventures, which are managed or advised by MIM and are generally included in MetLife, Inc.\u2019s consolidated financial statements at estimated fair value, as well as accrued investment income on such assets.\n<\/li>\n
- Third-Party AUM (\u201cTP AUM\u201d)<\/span> is comprised of non-proprietary assets managed or advised by MIM on behalf of unaffiliated\/third-party clients, which are stated at estimated fair value, as well as accrued investment income on such assets. Such non-proprietary assets are owned by unaffiliated\/third-party clients and, accordingly, are generally not included in MetLife, Inc.\u2019s consolidated financial statements.\n<\/li>\n<\/ul>\n<\/li>\n
- Asia General Account AUM (\u201cAsia GA AUM\u201d)<\/span> is used by MetLife to describe assets in its Asia GA investment portfolio. Asia GA AUM is stated at estimated fair value and is comprised of Asia GA total investments, the portion of the Asia GA investment portfolio classified within assets held-for-sale, cash and cash equivalents, and accrued investment income on such assets, and excludes policy loans, certain contractholder-directed equity securities, fair value option securities, mortgage loans originated for third parties, assets subject to ceded reinsurance arrangements with third parties and joint ventures, and certain other invested assets. Mortgage loans and real estate and real estate joint ventures included in Asia GA AUM (at net asset value, net of deduction for encumbering debt) have been adjusted from carrying value to estimated fair value. At the segment level, intersegment balances (intercompany activity, primarily related to investments in subsidiaries that eliminate at the MetLife consolidated level) are excluded from Asia GA AUM.\n<\/li>\n<\/ul>\n