MetLife (MET)

Global insurance giant MetLife (NYSE:MET) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 1.4% year on year to $17.36 billion. Its non-GAAP profit of $2.37 per share was 2.2% above analysts’ consensus estimates.

Company Overview

Founded in 1863 by a group of New York businessmen during the Civil War era, MetLife (NYSE:MET) is a global financial services company that provides insurance, annuities, employee benefits, and asset management services to individuals and businesses worldwide.

Life insurance companies collect premiums from policyholders in exchange for providing a future death benefit or retirement income stream. Interest rates matter for the sector (and make it cyclical), with higher rates allowing insurers to reinvest their fixed-income portfolios at more attractive yields and vice versa. Additionally, favorable demographic shifts, such as an aging population, are driving strong demand for retirement products while AI and data analytics offer significant opportunities to improve underwriting accuracy and operational efficiency. Conversely, the industry faces headwinds from persistent competition from agile insurtechs that threaten traditional distribution models.

MetLife's primary competitors include other major insurance and financial services companies such as Prudential Financial (NYSE:PRU), New York Life Insurance Company (private), Allianz SE (ETR:ALV), AIG (NYSE:AIG), and Manulife Financial (NYSE:MFC).

Big picture, insurers generate revenue from three key sources. The first is the core business of underwriting policies. The second source is income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Regrettably, MetLife’s revenue grew at a sluggish 2.9% compounded annual growth rate over the last five years. This was below our standards and is a tough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. MetLife’s annualized revenue growth of 3.9% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, MetLife missed Wall Street’s estimates and reported a rather uninspiring 1.4% year-on-year revenue decline, generating $17.36 billion of revenue.

Net premiums earned made up 69.1% of the company’s total revenue during the last five years, meaning insurance operations are MetLife’s largest source of revenue.

Net premiums earned commands greater market attention due to its reliability and consistency, whereas investment and fee income are often seen as more volatile revenue streams that fluctuate with market conditions.

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

MetLife’s net premiums earned has grown at a 1.9% annualized rate over the last five years, much worse than the broader insurance industry and in line with its total revenue.

When analyzing MetLife’s net premiums earned over the last two years, we can paint a similar picture as it recorded an annual growth rate of 2.9%. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. These additional streams do play a key role in the bottom line, but their impact can vary. While some firms have excelled in consistently investing their float, sudden shifts in the fixed income and equity markets can heavily sway short-term performance.

This quarter, MetLife’s net premiums earned was $10.56 billion, down 11.1% year on year and short of Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

The economics of insurers are driven by their balance sheets, where assets (investing the float + premiums receivable) and liabilities (claims to pay) define the fundamentals. Interest income and expense should therefore be factored into the definition of profit but taxes - which are largely out of a company’s control - should not.

Over the last four years, MetLife’s pre-tax profit margin has risen by 3.2 percentage points, going from 9.9% to 6.7%. Luckily, it seems the company has recently taken steps to address its expense base as its pre-tax profit margin expanded by 1.9 percentage points on a two-year basis.

MetLife’s pre-tax profit margin came in at 7% this quarter. This result was 4.4 percentage points worse than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

MetLife’s EPS grew at an unimpressive 6.6% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its pre-tax profit margin didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For MetLife, its two-year annual EPS growth of 10% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, MetLife reported adjusted EPS of $2.37, up from $1.95 in the same quarter last year. This print beat analysts’ estimates by 2.2%. Over the next 12 months, Wall Street expects MetLife’s full-year EPS of $8.44 to grow 16.3%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

MetLife’s BVPS declined at a 13.4% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 7.1% annually over the last two years from $34.47 to $39.52 per share.

Over the next 12 months, Consensus estimates call for MetLife’s BVPS to grow by 60% to $57.64, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

MetLife has no debt, so leverage is not an issue here.

Return on equity, or ROE, represents the ultimate measure of an insurer's effectiveness, quantifying how well it transforms shareholder investments into profits. Over the long term, insurance companies with robust ROE metrics typically deliver superior shareholder returns through a balanced approach to capital management.

Over the last five years, MetLife has averaged an ROE of 11%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

We struggled to find many positives in these results. Its revenue missed and its net premiums earned fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1.2% to $77.75 immediately following the results.

Updated: December 4, 2025 at 11:13 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in MetLife.

We cheer for all companies serving everyday consumers, but in the case of MetLife, we’ll be cheering from the sidelines. For starters, its revenue growth was weak over the last five years. And while its estimated BVPS growth for the next 12 months is great, the downside is its BVPS has declined over the last five years. On top of that, its net premiums earned growth was weak over the last five years.

MetLife’s P/B ratio based on the next 12 months is 2x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $92.64 on the company (compared to the current share price of $78.03).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.