Analyst Note| Rajiv Bhatia, CFA |
MetLife reported a solid second quarter, with adjusted EPS of $2.37 easily topping the FactSet consensus of $1.55. We attribute the bulk of the beat to higher-than-expected variable investment income from private equity funds. Pretax variable investment income was $1.20 billion, up from a loss of $555 million in the year-ago period. Though another strong quarter or two is certainly possible in our view as private equity returns are reported on a lag, we expect variable investment income to revert to more normal levels. We will maintain our no-moat rating and $49 fair value estimate for MetLife.