What To Expect From Metlife’s Q2 Results

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MetLife (NYSE:MET) is scheduled to report its second quarter earnings results on Wednesday, August 3. In the first quarter, MetLife’s total operating revenues fell 2.5% year-over-year (y-o-y) to $16.6 billion and operating earnings declined 19% to $1.3 billion driven by an unfavorable catastrophe experience and a sharp fall in its Variable Investment Income. Variable Investment Income is driven by returns of alternative asset classes including hedge funds and private equity.

Interest rates have remained low since then, and economic uncertainty due to the U.K.’s Brexit vote has pushed government bond yields to extremely low levels. This is likely to have adversely impacted Metlife’s investment income in the second quarter as well. However, we expect the company’s results to be positively impacted by a stronger Japanese Yen, considering Japan contributes 85-90% of the company’s operating earnings in Asia, about half of which is earned in Yen. Asia contributed about 16% of Metlife’s revenues and 23% of its operating income in the first quarter this year. met-1pru-2In the upcoming Q2 results, we expect Metlife’s revenues to remain flat but earnings to decline by around 13-14%, in line with consensus estimates compiled by Reuters.met-2


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