The New York company's net income increased to $1.18 billion, up from $124 million the previous year, when results were hampered by mark-to-market losses on financial hedges designed to protect against falling interest rates. MetLife's adjusted earnings, which analysts use to gauge recurring profitability, remained unchanged at $1.84 billion.
Another well-known insurer, Allstate Corp., reported a 70% drop in net income to $790 million and a 50% drop in adjusted net income to $796 million, primarily due to lower car-insurance underwriting income. Accidents increased as roads became more congested, and inflation drove up repair costs.
The costs of a natural disaster were also higher. Property insurers in the United States ended the year with two high-profile disasters: deadly tornadoes in and around Kentucky and a devastating wildfire between Denver and Boulder, Colorado.
Allstate, one of the country's largest auto and home insurers by market share, faced a difficult comparison with the previous quarter, when pandemic-related business shutdowns and work-from-home arrangements contributed to a steep drop in miles driven. This, in turn, resulted in a significant decrease in traffic accidents and lower profit margins.
Drivers began returning to U.S. roads in large numbers in early 2021, with miles driven returning "to pre-pandemic levels," according to Allstate. As the number of wrecks has increased, so has the cost of repairing them. In December, the United States experienced its fastest rate of inflation in nearly four decades.
Higher costs for used cars, vehicle parts, and labor, as well as medical inflation and increased attorney representation in claims, were cited by Allstate as factors putting pressure on its car-insurance profit margins. It also noted higher costs for materials and labor on the company's homeowners side.
All of this added up to a 92 percent drop in fourth-quarter underwriting income for the core property-liability unit, to $113 million from $1.42 billion a year earlier, despite a 20 percent increase in premiums written to $10.3 billion. Last year's growth was driven by market share expansion and an acquisition.
"Obviously, we're not pleased," Allstate Chief Executive Tom Wilson said of the latest results. "As a result, beginning in the third quarter, we began to raise prices quite aggressively." And I expect this trend to continue into next year. We do not believe the inflationary effects are transitory."
MetLife's adjusted earnings in its large U.S. group-benefits unit fell 95 percent to $20 million from $383 million, according to the carrier. The previous quarter's results for its dental policies were favorable, as lockdowns and people's fear of the pandemic resulted in postponed appointments.
MetLife stated that the Delta variant, which also impacted its third-quarter group-benefits results, claimed more younger people—defined as those under the age of 65—than previous variants, but that "a lower percentage of Covid-19 deaths under the age of 65" occurred in the fourth quarter compared to the third.
Younger victims are more likely to be working and have employer-sponsored insurance. These typically provide a death benefit equal to the employee's annual salary.
MetLife paid out $1.06 for every $1 of premium collected in its group-life insurance business in the fourth quarter. In the fourth quarter of 2020, it paid out 96.3 cents.
The higher payouts were more than offset by another quarter of astronomical gains in the company's massive investment portfolio, thanks to a tiny portion held in private-equity funds. Investment income was roughly flat at $5.23 billion compared to the prior year, which also saw strong private-equity returns, as have some other recent quarters.
Life insurers invest their customers' premiums until they are needed to pay claims, which can take decades, and they invest the majority of their money in high-quality bonds. MetLife and others invest relatively small sums in private-equity funds to boost returns.
MetLife CEO Michel Khalaf stated that the company's 2021 results benefited from "strategic decisions and consistent execution," such as investing in private equity funds and cutting expenses.
Allstate and MetLife's earnings reports followed Chubb Ltd.'s earnings report on Tuesday afternoon. Chubb Chief Executive Evan Greenberg reported double-digit percentage premium growth across many product lines at the global property-casualty insurer during an earnings call on Wednesday, reflecting market-share gains and premium-rate increases.
Mr. Greenberg cited an 11% increase in the cost of repairing and rebuilding homes in Chubb's high-net-worth homeowners business. On Wednesday, Chubb's stock rose 3.8 percent.