MetLife Has Decent Second Quarter, Lower Mortality Boosts Underwriting Results

MetLife reported a solid second quarter. Adjusted EPS excluding notable items was $1.90, which beat the FactSet consensus of $1.45. Variable investment income, which consists largely of private equity returns, was $389 million. While variable investment was down from the $1.4 billion quarterly average seen in the preceding four quarters, we believe this quarter’s result was still larger than consensus expectations. As variable investment income is reported on a one-quarter lag, we expect further declines as the second quarter of 2022 was a tough quarter for public and private markets. We will maintain our fair value estimate of $56 on the no-moat firm. We are adjusting the Morningstar Uncertainty Rating to Medium from High as we believe that more accurately reflects the risk in MetLife’s shares.