MetLife, Inc. · NYSE:MET
MetLife — Q4 2022 Earnings Presentation
33 slides from MetLife's earnings presentation, February 2023
Slide 1: 4Q22 Supplemental Slides and Outlook
1 4Q22 Supplemental Slides and Outlook John McCallion Chief Financial Officer 1 These slides highlight information in MetLife, Inc.'s earnings release, quarterly financial supplement and other prior public disclosures.
Slide 2: Table of contents
Table of contents Topic Page No. Net income (loss) to adjusted earnings 3 Adjusted earnings, ex. total notable items, by segment 4 Variable investment income (VII) 5 Direct expense ratio 7 Cash & capital 8 Outlook 9 Appendix 14 2
Slide 3: Net income (loss) to adjusted earnings
Net income (loss) to adjusted earnings 4Q22 FY22 (post-tax) $ in millions $ per share1 $ in millions $ per share1 Net Income (Loss) $1,314 $1.66 $2,354 $2.91 Less: Net Investment Gains (Losses) 280 0.35 (997) (1.23) Net Derivative Gains (Losses)2 128 0.16 (1,601) (1.98) Investment Hedge Adjustments
Slide 4: Adjusted earnings, ex. total notable items, by segment
Adjusted earnings, ex. total notable items, by segment % Change Key Drivers1 ($ in millions - post-tax) 4Q22 4Q21 % Change (Constant Rate) Favorable Unfavorable Underwriting Margins; Group Benefits $400 $20 NM2 Expense Margins Volume Growth Retirement and Income Solutions 371 620 (40%) Investment Ma
Slide 5: 2022 VII below guidance driven by lower private equity returns
2022 VII below guidance1 driven by lower private equity returns ($ in millions - pre-tax) $1,545 $1,185 $389 $24 $0 ($53) 1Q22 2Q22 3Q22 4Q22 FY22 Private Equity Other 1 Quarterly VII range of $450 million - $500 million, based on full year 2022 guidance range of $1.8 - $2.0 billion. 5
Slide 6: VII by segment
VII by segment ($ in millions - post-tax1) 1Q22 2Q22 3Q22 4Q22 FY22 Group Benefits $12 $7 $(1) $3 $21 Retirement and Income Solutions 277 75 (35) 5 322 U.S. 289 82 (36) 8 343 Asia 288 101 (18) 4 375 Latin America 16 16 — (3) 29 EMEA — — — — — MetLife Holdings 208 85 (21) 12 284 Corporate & Other 135
Slide 7: FY22 direct expense ratio of 12.2% achieving target
FY22 direct expense ratio1 of 12.2% achieving target 13.1% 12.9% 12.3% 12.3% 11.9% 12.2% Target 11.7% 11.6% 11.4% 11.1% 11.0% 1Q21 1Q22 2Q21 2Q22 3Q21 3Q22 4Q21 4Q22 FY21 FY22 1 Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers (PRT). 7
Slide 8: Cash & capital
Cash & capital Holding Company Cash1 Capital ($ in billions) • Share repurchases of $0.6 billion in 4Q22 and $3.3 billion in FY22 • ~ $250 million shares repurchased in January 2023 $5.4 $5.2 $5.4 • Average 2021-2022 free cash flow ratio2 of 68% $4.5 $4.2 • 2022 Combined NAIC Risk-Based Capital rati
Slide 9: Outlook
Outlook 2023-2025 outlook is reflected on an LDTI1 basis while 2022 actuals shown on a pre-LDTI basis 1 Long-duration targeted improvements.
Slide 10: Overview
Overview • COVID-19 assumed endemic • Continued uncertainty around inflation / recession Macro Assumptions • Interest rates expected to remain elevated relative to 12/31/22 • S&P 500 annual return of 5%; private equity annual return of 12% Near-term1 targets: • Adjusted return on equity2 of 13-15% •
Slide 11: VII average asset balances and key drivers
VII average asset balances and key drivers Average Asset Balance Key Drivers ($ in billions) $18.5 $19.0 • Long-term annual return assumptions: $14.7 – Private equity: 12% – Real estate and other funds: 7% $14.0 $13.6 • VII includes prepayment fees on fixed maturity $11.5 securities and mortgage loa
Slide 12: Near-Term Guidance
Near-Term Guidance1 • Adjusted premiums, fees and other revenues (PFOs) expected to grow 4-6%2 annually Group Benefits • Group Life mortality ratio of 90.8% in 2022; target of 85-90% • Group Non-Medical Health interest adjusted benefit ratio of 71.5% in 2022; target of 70-75% Retirement and Income •
Slide 13: Near-Term Guidance
Near-Term Guidance1,2 • Mid-to-high single-digit sales growth Asia • General account assets under management3 to grow at mid single-digits • Mid-single-digit adjusted earnings growth in 2023 - 2025, excluding COVID-19 claims4 • Low double-digit growth in adjusted PFOs Latin America • 2022 adjusted e
Slide 14: Appendix
Appendix Wi MetLife
Slide 15: Value of new business
Value of new business1 ($ in billions) $3.8 $3.8 $3.1 $3.2 $2.8 $2.1 $1.8 $1.9 $1.9 $1.3 2017 2018 2019 2020 2021 Capital Deployed Value of New Business Internal Rate of Return 14% 15% 15% 17% 17% Payback Period 7 Years 7 Years 7 Years 6 Years 6 Years 1 Excludes MetLife Holdings; Value of New Busine
Slide 16: Interest Rates: Base vs. Declining Rate Scenario
Interest Rates: Base vs. Declining Rate Scenario 12/31/22 12/31/23 12/31/24 12/31/25 Declining Declining Declining Declining Base Rate Base Rate Base Rate Base Rate 3-Month 4.77% 4.77% 4.74% 4.24% 3.52% 3.02% 3.41% 2.91% LIBOR1 10-Year U.S. Treasury1 3.88% 3.88% 3.84% 3.34% 3.86% 3.36% 3.93% 3.43% 3
Slide 17: Interest Rates: Base vs. Rising Rate Scenario
Interest Rates: Base vs. Rising Rate Scenario 12/31/22 12/31/23 12/31/24 12/31/25 Rising Rising Rising Rising Base Rate Base Rate Base Rate Base Rate 3-Month 4.77% 4.77% 4.74% 5.24% 3.52% 4.02% 3.41% 3.91% LIBOR1 10-Year U.S. Treasury1 3.88% 3.88% 3.84% 4.34% 3.86% 4.36% 3.93% 4.43% 30-Year U.S. Tre
Slide 18: Key Sensitivities
Key Sensitivities • 1% change in Group Life mortality ratio translates to ~$70 million of adjusted earnings1 Group Benefits • 1% change in Group Non-Medical Health interest adjusted benefit ratio translates to ~$80 million of adjusted earnings1 Impact on $ in millions Change Adjusted Earnings1 +10 b
Slide 19: Key Sensitivities
Key Sensitivities Annual Impact on Regulatory $ in millions Change Adjusted Earnings Ratios (%) Parallel shift in yield curve: Asia Japan - UST1 +/-10 bps $1-2 15-20% Japan - JPY1 +/-10 bps $1-2 5-10% Korea2 +/-10 bps $0-1 0-5% Annual Impact on $ in millions Change Adjusted Earnings Latin America Me
Slide 20: Cautionary Statement on Forward-Looking Statements
Cautionary Statement on Forward-Looking Statements The forward-looking statements in this presentation, using words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “grow,” “guidance,” “if,” “intend,” “likely,” “long-term,” “may,” “near-term,” “ongoing,” “outlook
Slide 21: Explanatory Note on Non-GAAP and Other Financial Information
Explanatory Note on Non-GAAP and Other Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information and Reconciliations) to: Should be read as, respectively: (i) net income (loss); (i) net income (loss) available to MetLife, Inc.’s comm
Slide 22: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP: Non-GAAP financial measures: Comparable GAAP financial measur
Slide 23: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period
Slide 24: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues: • Universal life and investment-type product policy fees excludes the amortization of unearned revenue re
Slide 25: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Asia General account (GA) assets under management (GA AUM) and related measures Asia GA AUM is used by MetLife to describe assets in its Asia GA investment portfolio which are actively managed and stated at estimated fair value
Slide 26: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) The following additional information is relevant to an understanding of MetLife’s performance results and outlook (continued): • We refer to observable forward yield curves as of a particular date in connection with making our
Slide 27: Reconciliation of Net Income to Adjusted Earnings Available to Common Shareholders
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Adjusted Earnings Available to Common Shareholders 2022 4Q22 4Q21 Earnings Per Earnings Per Earnings Per Weighted Weighted Weighted Average Average Average Common Common Common Share Share Share Diluted1 Diluted1
Slide 28: Reconciliation to Adjusted Earnings, Excluding Total Notable Items
Reconciliation to Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items 4Q22 Retirement Group & Income Latin MetLife Corporate U.S.1 Benefits1 Solutions1 Asia America EMEA Holdings1 & Other1 (In millions) Adjusted earnings available to common shareholders $ 771 $ 400 $ 37
Slide 29: Expense Detail and Ratios
Expense Detail and Ratios (In millions, except ratio data) 1Q21 2Q21 3Q21 4Q21 2021 Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (775) $ (642) $ (635) $ (666) $ (2,718) Less: Divested businesses (89) — (15) (15) (119) Adjusted capitalization of DA
Slide 30: Expense Detail and Ratios
Expense Detail and Ratios (In millions, except ratio data) 1Q22 2Q22 3Q22 4Q22 2022 Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (650) $ (622) $ (615) $ (671) $ (2,558) Less: Divested businesses (11) — — — (11) Adjusted capitalization of DAC $ (63
Slide 31: Premiums, Fees and Other Revenues
Premiums, Fees and Other Revenues 1Q21 2Q21 3Q21 4Q21 2021 1Q22 2Q22 3Q22 4Q22 2022 Total Company - Premiums, Fees and Other Revenues (In millions) Premiums, fees and other revenues $ 12,349 $ 11,218 $ 11,639 $ 15,178 $ 50,384 $ 12,849 $ 13,853 $ 19,579 $ 11,335 $ 57,616 Less: Unearned revenue adjus
Slide 32: Condensed Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Condensed Reconciliation of Net Cash Provided by Operating Activities of MetLife, Inc. to Free Cash Flow of All Holding Companies 2022 2021 (In billions, except ratios) MetLife, Inc. (parent company only) net cash provided by operating activities $ 4.4 $ 3.8 Adjustments from net cash provided by ope
Slide 33: MetLife - Navigating life together
iy’ MetLife Navigating life together Wi MetLife