MetLife Earnings: Rebound in Group Benefits Underwriting Margin Delivers a Strong Quarter

No-moat-rated MetLife reported a good set of numbers in the second quarter, driven by robust underwriting margins in the group benefits segment and higher interest rates. The firm reported adjusted earnings of $1.63 billion, or $2.28 per share, up 17.5% compared with $1.49 billion, or $1.94 per share, in the second quarter of the previous year. The company reported annualized adjusted return on equity of 17.3% during the quarter, which was higher than management’s target of 13% to 15%. The second-quarter results benefited from favorable underwriting margins in most business segments and higher recurring net investment income leading to favorable investment margins. The company paid a quarterly dividend of $0.545 per share in the second quarter, which represents a 2.8% dividend yield as of the current stock price. The adjusted book value per share, which removes the impact of accumulated other comprehensive income, was reported at $53.10 per share, down 1% compared with $53.60 per share in the second quarter of the previous year. We do not plan on materially changing our $66 per share fair value estimate for MetLife after incorporating the second-quarter results.