uploads///net income margin

Why MetLife’s Total Expenses Rose

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Dec. 13 2017, Updated 9:03 a.m. ET

Expenses rise

MetLife’s (MET) expenses comprise policyholder dividends and benefits, interest credited to policyholders’ accounts, and other expenses. The company incurred total expenses of $15.6 billion in 3Q17, compared with $14.6 billion in 3Q16. The rise in total expenses was mainly due to higher policyholder benefit and claim expenses, which rose to $10.6 billion in 3Q17 from $9.6 billion in 3Q16. The company’s US division incurred expenses of $8.2 billion.

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The company had interest of $1.3 billion in 3Q17, compared with $1.5 billion in 3Q16. Whereas MetLife’s last-12-month net income margin is -0.56%, peers (XLF) Arch Capital Group (ACGL), CNO Financial Group (CNO), and Reinsurance Group of America (RGA) have margins of 8.6%, 11.5%, and 6.4%, respectively.

Other components

MetLife’s policyholder dividends were flat between 3Q16 and 3Q17, at $302 million. MetLife’s other expenses, which include compensation expenses, rose from $3.2 billion to $3.3 billion. Its compensation expenses rose from $1.10 billion in 3Q16 to $1.11 billion in 3Q17.

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