Metlife, Inc. · NYSE:MET
Metlife — Investor Day (2019)
136 slides from Metlife's investor day presentation, 2019
Slide 1: Introduction
Introduction John Hall Senior Vice President, Global Head of Investor Relations
Slide 2: Agenda for today
Agenda for today Next Horizon Steve Goulart Michel Khalaf Investments Chief Investment Officer Strategy President and Chief Executive Officer President, MetLife Investment Management Kishore Ponnavolu Ramy Tadros President, Asia President, U.S. Business Asia Rebecca Tadikonda Group Todd Katz Executi
Slide 3: ties
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Slide 4: Next Horizon Strategy
Next Horizon Strategy Michel Khalaf President and Chief Executive Officer
Slide 5: Always with you, building a more confident future
Our Customers Always with you, building a more Our Shareholders confident future. Our People 5
Slide 6: Key Messages
Key Messages Embarking on our Next Horizon Strategy from a position of strength Three strategic pillars: Focus, Simplify, Differentiate Driving value from our globally diversified, market-leading businesses Accretive Strong Positive Operating Returns Free Cash Flow Leverage Deliver 12–14% Generate ~
Slide 7: Embarking on our Next Horizon from a position of strength
Embarking on our Next Horizon from a position of strength Built balance Improved asset Increased liquidity Spun-off U.S. sheet and liability risk and capital Retail Business profile resilience resilience Improved Returned Improved core ~$15.7B1 in Adjusted ROE by Delivered ~25%3 Adjusted EPS operati
Slide 8: Delivering attractive returns while driving down our cost of capital
Delivering attractive returns while driving down our cost of capital Adjusted ROE1 Beta4 2.00 12-14% 12.8% 13.1% near-term ~500 bps 1.75 target2 -0.8 1.50 9.6% 1.25 8.2% 1.00 0.75 0.50 2016 2017 2018 3Q19 YTD 09/16 03/17 09/17 03/18 09/18 03/19 09/19 Yield3 1.8% 2.3% 2.9% 2.3% MetLife Peer Median5 1
Slide 9: Improving our risk profile…
Improving our risk profile… Variable Annuity (VA) Group Benefits Account Balances1 Adjusted Earnings ($ in billions) ($ in millions) -69% +99% $167 $1,019 $513 $51 12/31/2015 9/30/2019 3Q16 YTD 3Q19 YTD 1 Represents MetLife Holdings and former U.S. retail segment. 9
Slide 10: … and our business mix
… and our business mix Adjusted Earnings1 Value of New Business2 Property & Property & Casualty Casualty Long-term Long-term 4% 5% Protection3 Protection3 26% Group, 19% Accident & 36% Health (A&H) Group, A&H and Fee 63% 14% and Fee Investment / 33% Spread Investment / Spread 1 3Q19 YTD. Excluding C
Slide 11: Delivering outstanding VNB growth
Delivering outstanding VNB growth Value of New Business1 Key Drivers CAGR $2.1B • Volume growth + 45% $1.3B • Mix shift to Group and A&H $1.0B • U.S. tax reform • Expense savings 2016 2017 2018 Capital Deployed $2.9B $3.1B $3.8B IRR 14% 14% 15% Payback 7 Years 7 Years 7 Years 1 Excludes MetLife Hold
Slide 12: Focus, Simplify, Differentiate to drive superior value
Focus, Simplify, Differentiate to drive superior value Focus Simplify Differentiate Generate strong free Simplify our business Drive competitive cash flow by deploying to deliver operational advantage through our capital and resources to efficiency and an brand, scale, talent, and the highest value
Slide 13: Generating strong and sustainable free cash flow
Generating strong and sustainable free cash flow Our Capital Management Philosophy Our Commitments Disciplined assessment of capital Maintain a 65%-75% free cash deployment opportunities flow ratio1 Maintain strong liquidity and Retain $3-4 billion cash buffer capital position Excess capital belongs
Slide 14: Operating leverage creates $1B+ additional capacity
Operating leverage creates $1B+ additional capacity to accelerate growth over 5 years Key Accomplishments Commitments ~$900M pre-tax expense margin improvement by 2020 • Shift from serial expense programs ~$675M Captured to date 1 • Manage to ~12.3% direct 14.3% expense ratio3 ~200 bps 13.3% 13.3% •
Slide 15: Continue to differentiate and build on our competitive advantages
Continue to differentiate and build on our competitive advantages Iconic World-Class Brand Talent Technology & Scale Innovation 15
Slide 16: Diversified portfolio of global businesses
Diversified portfolio of global businesses Adjusted Earnings1 by Region Highlights • Globally diversified covering 80% of world GWP EMEA: 5% • Complementary mix of mature and high-growth markets U.S.: 64% • Recognized and trusted by Asia: 22% ~100M customers worldwide Latin America: 9% • Serving 90+
Slide 17: Complementary portfolio of businesses to generate sustained free cash flow
Complementary portfolio of businesses to generate sustained free cash flow Steady sources of cash in ~50% of MetLife FCF1 Holdings mature markets RIS Japan #1 ~30% of MetLife FCF1 Growth drivers from market #1 Group #1 leaders2 ~40% VNB growth (2016-18) Chile Mexico #2 ~18% ROE and FCF accretive in
Slide 18: Our Next Horizon
Our Next Horizon Simpler & Great Set of Strong Free More Focused Businesses Cash Flow 18
Slide 19: Group Benefits
Group Benefits Ramy Tadros President, U.S. Business
Slide 20: Key Messages
Key Messages • Market leader in a highly attractive business • Positioned to win in a rapidly evolving marketplace • Product mix and pricing drives resilience across economic cycles • Focused strategies to outpace market top and bottom line growth 20
Slide 21: Diverse product set and market mix enables balanced growth
Diverse product set and market mix enables balanced growth Adjusted PFO by Product1 Adjusted PFO by Market1 Sales by Market2 A&H/Legal Small Small 5% Business Business Disability National National Regional 6% 14% Accounts Accounts 12% Market 19% 57% Life 75% 46% 26% 40% Dental/ Regional Vision Marke
Slide 22: Market trends create significant opportunity
Market trends create significant opportunity 17th Annual Employee Benefit Trend Study Market Trends • Benefits are a strategic business enabler • Shift to voluntary benefits favors carriers with a distinct value proposition • Evolving third party ecosystem • Increased carrier consolidation 22
Slide 23: Market trends create significant opportunity
Market trends create significant opportunity Group Benefits Ecosystem Market Trends Benefits Communication • Benefits are a strategic business enabler & Enrollment • Shift to voluntary benefits favors carriers with a distinct value proposition Human Capital • Evolving third party ecosystem Broker /
Slide 24: Topline growth driving operating leverage
Topline growth driving operating leverage Adjusted PFO Highlights ($ in billions) • #1 player with a 16% market share3 CAGR +5% $17.4 +5% • Growing faster than the market4 $15.7 $16.5 $13.1 $13.7 • Investing ~$100 million per year in new technology capabilities • Driving down expense ratio 1 1 2016
Slide 25: Proven track record delivering strong bottom line growth
Proven track record delivering strong bottom line growth Adjusted Earnings Highlights ($ in millions) CAGR $1,079 +20% • Strong business fundamentals +25% $1,019 $868 $849 • Economic and tax reform tailwinds $687 • Competitive advantages drive voluntary 2016 2017 2018 3Q18 YTD 3Q19 YTD Group Life Mo
Slide 26: Group Benefits
Group Benefits Todd Katz Executive Vice President, Group Benefits
Slide 27: Our approach to outpace market growth
Our approach to outpace market growth • Maximize the core • Invest in underpenetrated segments • Grow voluntary • Expand the product set 27
Slide 28: National Accounts – Extending our lead
National Accounts – Extending our lead Market Share Over 5,000 Employees Growth Opportunities • 96%+ persistency3 • Add ~100 new customers each year3 Market Size1: MetLife #1 • Underpenetrated verticals $52B 28% Estimated Market Growth: 1–2% MetLife growth2: 5% 1 Based on 2016 annual premium and equ
Slide 29: Regional Market – Focused distribution strategy
Regional Market – Focused distribution strategy Market Share 100 - 5,000 Employees Growth Opportunities • Expect to double market growth rate while preserving margins • Top brokers taking share Market Size1: MetLife #3 $52B 7% • Only 25% of employers offer voluntary benefits3 Estimated Market Growth
Slide 30: Small Business – Innovating to disrupt
Small Business – Innovating to disrupt Market Share Under 100 Employees Piloting Digital Operating Model • Industry-first quote-to-claim platform • Simplified customer administration Market Size1: MetLife #8 • Greater voluntary reach $20B 4% • Full roll out in 2020 Estimated Market Growth: 4-6% MetL
Slide 31: MetLife small business solutions
| MetLife small business solutions
Slide 32: Voluntary opportunity is compelling
Voluntary opportunity is compelling Voluntary1 Adjusted PFO Adjusted PFO Year-over-year ($ in millions) ($ in millions) 3Q19 YTD Growth CAGR $694 +37% $706 Group Benefits $13,721 5% +30% $526 $514 Employee-paid $5,395 9% $411 Voluntary1 $706 37% Voluntary Products Opportunity • Only 25% of our emplo
Slide 33: Why we win in voluntary benefits
Why we win in voluntary benefits • Ability to leverage size and strength of relationships • Broadest product portfolio in the industry • Leading employee engagement capabilities • High-tech, high-touch service delivery model • Trusted brand builds loyalty 33
Slide 34: Group Benefits
Group Benefits Esther Lee Executive Vice President, Global Chief Marketing Officer
Slide 35: Winning in voluntary requires customer focus
Winning in voluntary requires customer focus Deep insights Relevant positionings Engaging experience • Employee Benefit Trends • Tailored by product and Study stakeholder • Not: Trigger Enroll • Consumer/employee • Address needs, not just • But: Right tool at right time segmentation features 35
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36
Slide 37: Newlywed
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Slide 38: Customer focus helps us win with employees
Customer focus helps us win with employees Enrollment Rate1 Perceptions2 25% +25% Interest in enrolling 20% 15% +16% Understands benefits 10% +32% Value of benefits 5% 0% +35% Better opinion of MetLife Accident Critical Illness +14% Better opinion of Employer Basic Conditions Enhanced Conditions Opt
Slide 39: Customer focus extends beyond acquisition to retention
Customer focus extends beyond acquisition to retention Modern Website Mobile Designed SMS/Text Servicing Highlights • Built for customers’ growing expectations • Intuitive, integrated customer experience • 10 million registered users and counting 39
Slide 40: Group Benefits
Group Benefits Todd Katz Executive Vice President, Group Benefits
Slide 41: Leverage competitive advantages into new adjacencies
Leverage competitive advantages into new adjacencies Health Savings Digital Estate Pet Insurance Accounts Planning Approach Partnership Acquisition Acquisition Market $61.7B1 assets $1.3B2 Size 26M accounts 57% of Americans currently Market don’t have wills3 Growth ~20%1 21.4%2 Robust pipeline of ad
Slide 42: Legal wills made easy
ae Wiing Legal wills made easy
Slide 43: Group Benefits
Group Benefits Ramy Tadros President, U.S. Business
Slide 44: Key Takeaways
Key Takeaways • Clear leader in highly attractive business • Resilient across cycles • Positioned to outgrow the market 44
Slide 45: Retirement and Income Solutions
Retirement and Income Solutions Ramy Tadros President, U.S. Business
Slide 46: Key Messages
Key Messages • Leading institutional retirement player • Diversified business with distinct competitive advantages • Strong free cash flow and attractive return on equity • Disciplined execution subject to strict return hurdles 46
Slide 47: Retirement and Income Solutions
Retirement and Income Solutions Graham Cox Executive Vice President, Retirement and Income Solutions
Slide 48: Broad set of market leading businesses
Broad set of market leading businesses Earnings Market Product Driver(s) Position1 Spreads, Pensions Defined benefit risk transfer underwriting #2 Defined contribution plan Fees, Stable Value investment option spreads #1 Structured Settlements (SS) Spreads #3 Life & Income Spreads, Funding Solutions
Slide 49: Diversified product mix drives strong results
Diversified product mix drives strong results Total Liabilities1 Contribution Last 12 Months • $1.3 billion of adjusted earnings CMIP Pensions 23% 22% • Attractive 20%+ adjusted ROE2 • 75%+ cash3 generation $225B 24% 31% Stable Value LIFS 1As of September 30, 2019. Total liabilities include Future P
Slide 50: Value creation driven by defensible competitive advantage
Value creation driven by defensible competitive advantage Large Differentiated Strong Distribution Scale and Balance Investment Ratings Relationships Efficiency Sheet Capabilities ~$400B balance $22B private asset AA-2 ~100 year history Low fixed costs sheet1 origination3 1 Statutory balance sheet a
Slide 51: Rigorous risk management
Rigorous risk management Robust Strong Credit Defined Risk Asset-Liability Underwriting Appetite Management 51
Slide 52: Disciplined pricing, growing responsibly
Disciplined pricing, growing responsibly LTM Value of New Business1 Highlights • New business written above return targets IRR Above Hurdle Rate • Average payback period 5 years • Target business we can duration match Capital Deployed • Larger deals, under-penetrated segments 1 Last twelve months (L
Slide 53: Key Takeaways
Key Takeaways • Leading player • Disciplined execution • Strong FCF and ROE 53
Slide 54: Investments
Investments Steven J. Goulart Chief Investment Officer President, MetLife Investment Management
Slide 55: Key Messages
Key Messages • Large, diversified global portfolio with strong private asset capabilities • Consistent investment process and performance • General account (GA) portfolio well-positioned • Strong third-party investment management growth opportunities 55
Slide 56: MetLife Investment Management (MIM) overview
MetLife Investment Management (MIM) overview Total AUM1 by Core Capabilities Highlights Real Estate • Manages MetLife general account and Agriculture ‒ $456 billion GA AUM 19% ‒ Disciplined asset-liability management ‒ Prudent underwriting and risk management $596B 58% Public • Leverage capabilities
Slide 57: Global investment portfolio: think global, act local
Global investment portfolio: think global, act local General Account AUM1 Highlights Alternatives and Cash and Short-Term2 U.S.: $300 billion7 GA AUM Equity6 5% 5% • Benefits from diversification and private assets Structured Products Public Credit3 Asia: $131 billion GA AUM 12% 25% • Significant US
Slide 58: Strong private asset capabilities
Strong private asset capabilities GA AUM allocation since 1/1/2016 Highlights 11.6% 11.3% • Strong origination platforms provide 10.2% competitive advantage 8.9% • Private assets represent ~30% of GA AUM • $22 billion of GA originations through 3.0% 3.5% 3.1% 3Q19 YTD 2.5% Commercial Private Credit
Slide 59: Strong returns from private equity
Strong returns from private equity Private Equity Returns Highlights • $7.2 billion1, diversified across strategy, 15.8% geography and managers 14.4% 12.8% 12.6% • No manager greater than 4%; no fund greater than 2% • Attractive fit for long-tailed liabilities • High returns with lower volatility th
Slide 60: Consistent investment performance
Consistent investment performance Net Investment Income1 Roll Off vs. Reinvestment ($ in billions) 6% $17.4 $16.4 $16.5 5% $13.0 $13.3 4% $16.4 3% $15.6 $15.5 $12.3 $12.5 2% 1% 0% 2016 2017 2018 3Q18 3Q19 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 YTD YTD New Money Yield Roll Off 10-Year Yield Recurrin
Slide 61: Favorable loss history over time
Favorable loss history over time Impairment and Charge-Off Rates1 Highlights 0.8% Since 2008: Fixed Maturity Securities Commercial Mortgage Loans • Fixed maturity securities: average annual 0.6% Agricultural Mortgage Loans impairment rate of 0.16% • Commercial mortgage loans: average annual 0.4% cha
Slide 62: Proactive portfolio positioning
Proactive portfolio positioning Below Investment Syndicated Grade (BIG) Credit Bank Loans Highlights $17.7B; 4.6%1 • Early repositioning is critical $5.3B; 1.4%1 $14.8B; 3.2%1 12% $4.6B; 1.0%1 • Reduced allocation to below investment grade 22% 72% 59% • Reduced bank loans and increased quality 73% 5
Slide 63: MIM: Institutional. But far from typical.
MIM: Institutional. But far from typical. 63
Slide 64: Strong growth opportunities for MIM
Strong growth opportunities for MIM Diversified Institutional Client Base Highlights Commingled Funds2 Other 1% 3 • Strong growth in Institutional Client AUM and adjusted earnings Public 5% 7% • Solid track record of risk-adjusted returns Corporate • Growing global footprint 16% Insurance $140B1 50%
Slide 65: Key Takeaways
Key Takeaways • Consistent process and performance • General account well-positioned • Growth opportunity in institutional client asset management 65
Slide 66: Asia
Asia Kishore Ponnavolu President, Asia
Slide 67: Key Messages
Key Messages • Well-positioned in an attractive region • Realizing the benefits of Accelerating Value • Differentiated strategies across markets 67
Slide 68: Complementary businesses across mature and secular growth markets
Complementary businesses across mature and secular growth markets Adjusted Earnings1 by Country Value of New Business2 Japan 78% Rest of Japan 53% Rest of 22% 47% Asia Asia 1 3Q19 YTD. 2 2018 Value of New Business is the present value of future profits net the cost of capital and time value of guara
Slide 69: Realizing the benefits of Accelerating Value
Realizing the benefits of Accelerating Value GA Assets Under Management1 Adjusted Earnings2 and Cash ($ in billions) ($ in millions) CAGR +12% -2% CAGR $122 $1,363 +10% +12% $112 +7% $109 $1,311 $100 $1,222 +7% $92 $1,083 $1,014 2016 2017 2018 3Q18 3Q19 2016 2017 2018 3Q18 3Q19 YTD YTD Cash3 47% 60%
Slide 70: Differentiated strategies across markets
Differentiated strategies across markets Japan China India Bangladesh • Drive continuous • Scale up professional • Maximize value from • Market leader operational agency Banca partnerships improvement • Scale up professional • Provide customer • Drive disciplined agency • Optimize portfolio to centr
Slide 71: Opportunity in Health and Retirement in Japan
Opportunity in Health and Retirement in Japan Sales1 by Distribution Japan Market Large Agency • #3 global life market2 19% • Super-aging society • Growing Health and Retirement needs Career Agency 24% 33% Bancassurance MetLife Japan • #6 life insurer3 • Distribution strength 24% • Deep product expe
Slide 72: Strategy to enhance earnings and cash in Japan
Strategy to enhance earnings and cash in Japan Drive continuous Optimize portfolio Leverage operational to manage risk distribution improvement and capital strength 72
Slide 73: China
China Rebecca Tadikonda Executive Vice President Head of Strategic Growth Markets, Asia
Slide 74: Agency led growth model in China
Agency led growth model in China Sales1 by Distribution China Market Bancassurance • #2 global life market2 10% • Fast growing mass affluent • Low life insurance penetration of 2.3%2,3 48% Career MetLife China Agency • Footprint in 11 provinces covering 42% 54% of China GDP4 Telemarketing • Focused
Slide 75: Accelerating growth in China
Accelerating growth in China Agency Headcount Delivering Best in Class Agency +100% • Customer acquisition • Hiring and training • Performance management • Servicing and customer engagement 15,000 6,500 3,000 2014 2016 2019 E 2024 E Market Ranking1 #6 #3 1 Source: Insurance Association of China, Sep
Slide 76: Asia
Asia Kishore Ponnavolu President, Asia
Slide 77: Key Takeaways
Key Takeaways • Strong position in attractive region • Value actions paying off • Differentiated market strategies to drive growth and value 77
Slide 78: Latin America
Latin America Oscar Schmidt President, Latin America
Slide 79: Key Messages
Key Messages • #1 life insurer in Latin America • High margin protection products with diversified distribution • Solid underlying growth • Large value pools in core businesses in Mexico and Chile • Long-term growth in Brazil 79
Slide 80: Well-established footprint
Well-established footprint Adjusted Earnings1 by Country Highlights Other • #1 life insurer in Mexico with 21% share2 4% • #1 life insurer and #1 pension provider in Chile3 • Emerging presence in Brazil Chile 40% 56% Mexico 1 3Q19 YTD. 2 Source: Asociacion Mexicana de Instituciones de Seguros, in gr
Slide 81: Protection products with diversified distribution
Protection products with diversified distribution Adjusted PFO Product Mix1 Adjusted PFO Distribution Mix1 Bancassurance Fee Worksite 13% 9% Government 18% Investment / 22% 69% Protection 40% Agency Spread Group 29% Benefits 1 3Q19 YTD. 81
Slide 82: Solid underlying growth
Solid underlying growth Adjusted Earnings1 Highlights Reported CAGR ($ in millions) +1% $571 $564 +3% • Growth driven by Mexico and Chile $551 $427 $438 • Dividends to holding companies 80%+ of adjusted earnings 2016 2017 2018 3Q18 3Q19 • Adjusted return on allocated equity 18%+ Constant Currency CA
Slide 83: Strategic focus on three key markets
Strategic focus on three key markets Mexico Chile Brazil • Drive value in worksite • Continue to grow agency • Scale employee benefits government • Expand bancassurance • Grow bancassurance • Accelerate diversification into • Protect value in ProVida • Accelerate agency private sector 83
Slide 84: MetLife Mexico
MetLife Mexico Sofia Belmar Senior Vice President, General Manager, Mexico
Slide 85: Mexico Overview
Mexico Overview Adjusted PFO Distribution Mix1 Mexico Market Agency Other • 126 million population, 87% under age 602 8% • Large and growing middle class 12% • 2.1% insurance penetration3 42% Group Benefits MetLife Mexico 38% • #1 life insurer4 Worksite Government • Leader in worksite and group bene
Slide 86: Strategic focus in Mexico
Strategic focus in Mexico • Drive value in worksite government • Accelerating growth in the private sector ‒ Tap voluntary private market ‒ Grow private sector agency 86
Slide 87: Drive value in worksite government
Drive value in worksite government • Financial inclusion for low to mid income government employees • Payroll deduction drives high persistency • Flexible product that protects different life events • Agency network with national reach • Deepening customer relationships and retention through digital
Slide 88: Accelerating growth in the private sector
Accelerating growth in the private sector Untapped opportunity in low-mid segment • Large underserved low to mid income segment Worksite • Leverage government value proposition and product • Scale existing B2B capabilities • Build dedicated worksite distribution channel Outperforming peers in afflue
Slide 89: Latin America
Latin America Oscar Schmidt President, Latin America
Slide 90: Key Takeaways
Key Takeaways • Largest life insurer in Latin America with solid underlying growth • High margins and diversified distribution • Well positioned to protect and grow value 90
Slide 91: MetLife Holdings
MetLife Holdings John McCallion Executive Vice President and Chief Financial Officer
Slide 92: Key Messages
Key Messages • Large, stable in-force business • Diversified set of liabilities and performance drivers • Steadily improving risk profile • Reliable source of cash and adjusted earnings 92
Slide 93: Large, stable in-force business
Large, stable in-force business Total Liabilities1 Highlights Long-Term • Diversified set of insurance liabilities Care Variable • Conservative policy provisions Annuities 9% with Living • Large participating, closed block of life Benefits insurance 19% Life • Strong asset-liability management $145B
Slide 94: Diversified set of liabilities and drivers
Diversified set of liabilities and drivers 2018 Key 2018 Total Product Adjusted Performance Adjusted Liabilities1 ($ in billions) PFOs Drivers Earnings2 Variable Annuities – Living Benefits $27 $0.8 Equity market Variable Annuities – No Living Benefits 24 ~55% Fixed Annuities 0.1 8 Interest rates Tr
Slide 95: Meet customer commitments while optimizing value levers
Meet customer commitments while optimizing value levers Contractual Operational Behavioral Financial 95
Slide 96: Continued expense management
Continued expense management Adjusted Expense Ratio Direct Expense Ratio -280 bps -20 bps 22.3% -240 bps -200 bps 13.7% 13.5% 13.6% 19.5% 19.9% 17.5% 11.6% 2017 2018 3Q18 YTD 3Q19 YTD 2017 2018 3Q18 YTD 3Q19 YTD 96
Slide 97: Steadily improving risk profile
Steadily improving risk profile VA Policies VA Account Values (in thousands) ($ in billions) -23% -14% 936 $59 $51 323 717 $34 240 $27 613 477 $25 $24 3/31/2016 9/30/2019 3/31/2016 9/30/2019 Living Benefits Non-Living Benefits 97
Slide 98: Earnings now, cash now
Earnings now, cash now MetLife Holdings Adjusted Earnings1 Highlights ($ in millions) • Over $1 billion in adjusted earnings +14% -9% $1,217 • Strong cash generation $1,071 $994 $903 • Double-digit ROE and steadily improving • Delivering 1-2% annual EPS accretion 2017 2018 3Q18 YTD 3Q19 YTD Cash2 13
Slide 99: Key Takeaways
Key Takeaways • Large and stable in-force • Improving risk profile • Steady earnings and cash 99
Slide 100: Outlook
Outlook John McCallion Executive Vice President and Chief Financial Officer
Slide 101: Key Messages
Key Messages • Delivering another strong year of financial performance in 2019 • Maintaining ROE and free cash flow targets • Exceeding expense commitment • Returning excess capital to shareholders remains a top priority 101
Slide 102: Overview
Overview Mixed macro environment in 2020: • U.S. growth still solid, led by consumer Macro Assumptions • Continued headwinds from low interest rates • U.S. dollar remains strong Near-term1 targets: • Adjusted return on equity2 of 12-14% • Free cash flow ratio of 65-75% of adjusted earnings Near-Term
Slide 103: Group Benefits
Group Benefits ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $1,249 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 - Baseline Adjusted Earnings $1,249 • Adjusted premiums, fees and other revenues (PFOs) expected to grow 4-6% Near-Term Guidance on • G
Slide 104: Retirement and Income Solutions (RIS)
Retirement and Income Solutions (RIS) ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $1,276 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 - Baseline Adjusted Earnings $1,276 • Both spread based and fee based liability exposures2 expected to grow 2-4%
Slide 105: Property & Casualty
Property & Casualty ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $323 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 - Baseline Adjusted Earnings $323 • Adjusted PFO growth of 1-3% in 2020 and 4-6% in 2021-2022 Near-Term Guidance on • Overall P&C co
Slide 106: Asia
Asia ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $1,345 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 19 Baseline Adjusted Earnings2 $1,364 • Mid single-digit sales growth on a constant currency basis in 2020, moving higher in 2021-2022, double-di
Slide 107: Latin America
Latin America ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $585 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 (10) Baseline Adjusted Earnings $575 • Mid single-digit adjusted earnings growth on a constant currency basis in 2020, moving to high sing
Slide 108: EMEA
EMEA ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $271 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 13 Baseline Adjusted Earnings $284 • Sales and adjusted PFO growth of mid-to-high single-digits on a constant Near-Term Guidance on currency basis
Slide 109: MetLife Holdings
MetLife Holdings ($ in millions) 4Q18 - 3Q19 Reported Adjusted Earnings $988 Adjusted Earnings Analysis Actuarial assumption review and other insurance adjustments1 138 Baseline Adjusted Earnings $1,126 • Adjusted PFOs expected to decline approximately 5% per year Near-Term Guidance on • Adjusted ea
Slide 110: Key Takeaways
Key Takeaways • Delivering another strong year of financial performance in 2019 • Maintaining ROE and free cash flow targets • Exceeding expense commitment • Returning excess capital to shareholders remains a top priority 110
Slide 111: Closing Remarks
Closing Remarks Michel Khalaf President and Chief Executive Officer
Slide 112: Our Next Horizon
Our Next Horizon Simpler & Great Set of Strong Free More Focused Businesses Cash Flow 112
Slide 113: Appendix
Appendix Wl MetLife
Slide 114: Interest Rates: Base vs. Stress Scenario
Interest Rates: Base vs. Stress Scenario 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Base Stress Base Stress Base Stress Base Stress 3-Month LIBOR1 1.90% 1.90% 1.45% 1.00% 1.36% 1.00% 1.38% 1.00% 2-Year Treasury1 1.58% 1.58% 1.47% 1.00% 1.49% 1.00% 1.56% 1.00% 10-Year Treasury1 1.69% 1.69% 1.76% 1.0
Slide 115: Safe Harbor Statement
Safe Harbor Statement This presentation may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events
Slide 116: Explanatory Note on Non-GAAP Financial Information and Reconciliations
Explanatory Note on Non-GAAP Financial Information and Reconciliations
Slide 117: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Should be read as, respectively: Information and Reconciliations) to: (i) adjusted earnings; (i) adjusted earnings available to common shareholders; (ii) adju
Slide 118: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) (xv) other expenses, net of capitalization of DAC, as reported on an adjusted basis; (xv) other expenses, net of capitalization of DAC; (xvi) other expenses, net of capitalization of DAC, excluding total notable items related to other (x
Slide 119: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) MetLife’s definitions of non-GAAP and other financial measures discussed in this presentation may differ from those used by other companies: Adjusted earnings and related measures • adjusted earnings; • adjusted earnings available to com
Slide 120: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP 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 related to N
Slide 121: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) • Adjusted return on MetLife, Inc.'s common stockholders' equity: adjusted earnings available to common shareholders divided by MetLife, Inc.'s average common stockholders' equity. • Adjusted return on MetLife, Inc.'s common stockholders
Slide 122: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) GA AUM (excluding Fair Value Adjustment (FVA)) excludes the following FVA: (i) unrealized gain (loss) on investments carried at estimated fair value and (ii) adjustments from carrying value to estimated fair value on mortgage loans and r
Slide 123: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Statistical sales information: • U.S.: • Group Benefits: calculated using 10% of single premium deposits and 100% of annualized full-year premiums and fees from recurring premium policy sales of all products. • Retirement and Income Solu
Slide 124: Reconciliation of Net Income to Adjusted Earnings
Reconciliation of Net Income (Loss) available to MetLife, Inc.’s Common Shareholders to Adjusted Earnings Available to Common Shareholders 3Q 2019 YTD (In millions) Net income (loss) available to MetLife, Inc.'s common shareholders $ 5,185 Adjustments from net income (loss) available to MetLife, Inc
Slide 125: Equity Details and Return on Equity
Equity Details and Return on Equity MetLife, Inc.’s Common Stockholders’ Equity December 31, 2016 December 31, 2017 December 31, 2018 September 30, 2019 (In millions) Total MetLife, Inc.'s stockholders' equity $ 67,531 $ 58,676 $ 52,741 $ 68,368 Less: Preferred stock 2,066 2,066 3,340 3,340 MetLife,
Slide 126: Expense Detail and Ratios
Expense Detail and Ratios (In millions, except ratio data) 2015 2016 2017 2018 3Q 2019 YTD Reconciliation of Capitalization of DAC to Capitalization of DAC, as reported on an adjusted basis Capitalization of DAC $ (3,319) $ (3,152) $ (3,002) $ (3,254) $ (2,531) Less: Divested businesses and lag elim
Slide 127: Reconciliation of Adjusted Earnings, Excluding Total Notable Items
Reconciliation of Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items (In millions) 3Q 2019 YTD U.S. Asia Latin America EMEA MetLife Holdings Adjusted earnings available to common shareholders $ 2,163 $ 1,064 $ 448 $ 216 $ 765 Less: Total notable items - (19) 10 (13) (1
Slide 128: Reconciliation of Adjusted Earnings, Excluding Total Notable Items (Continued)
Reconciliation of Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items (Continued) (In millions) 2018 U.S. Asia Latin America EMEA MetLife Holdings Adjusted earnings available to common shareholders $ 2,804 $ 1,237 $ 592 $ 277 $ 1,255 Less: Total notable items 37 (86) 28
Slide 129: Expense Detail and Ratios – Group Benefits
Expense Detail and Ratios – Group Benefits (In millions, except ratio data) 2016 2017 2018 3Q 2018 YTD 3Q 2019 YTD Direct and allocated expenses $ 1,294 $ 1,251 $ 1,267 $ 948 $ 940 Less: One large dental contract cancellation 36 19 - - - Direct and allocated expenses, excluding one large dental cont
Slide 130: Reconciliation of Total Investments to GA AUM and Total AUM
Reconciliation of Total Investments to GA AUM and Total AUM (In billions) September 30, 2019 December 31, 2015 1 U.S. Asia Latin America EMEA Total Total Total Investments $ 308 $ 131 $ 18 $ 15 $ 472 $ 413 Add: Cash and cash equivalents 14 3 1 1 19 11 FVA - mortgage loans 3 - - - 3 5 FVA - real esta
Slide 131: Private Equity Returns
Private Equity Returns (In millions, except yield data) 2016 2017 2018 3Q 2019 YTD Private equity net investment income $ 505 $ 731 $ 728 $ 591 Less: Certain partnership distributions - - (61) (10) Less: Divested Business (2) - - - Adjusted private equity net investment income $ 507 $ 731 $ 789 $ 60
Slide 132: Below Investment Grade and Syndicated Bank Loans in Credit Portfolio
Below Investment Grade and Syndicated Bank Loans in Credit Portfolio (In billions, except ratios) December 31, 2015 September 30, 2019 Below Investment Grade (BIG) Credit in Credit Portfolio1 BIG Credit $ 17.7 $ 14.8 Total investments 413 472 GA AUM 387 456 Percentage of total investments 4.3% 3.1%
Slide 133: Reconciliation of Net Investment Income, Adjusted Basis
Reconciliation of Net Investment Income to Net Investment Income, As Reported on an Adjusted Basis (In millions) 2016 2017 2018 3Q 2018 YTD 3Q 2019 YTD Net investment income $ 16,790 $ 17,363 $ 16,166 $ 12,704 $ 14,224 Less: Adjustments to net investment income: Investment hedge adjustments (580) (4
Slide 134: Reconciliation of Total Investments to GA AUM - Asia
Reconciliation of Total Investments to GA AUM - Asia (In billions) December 31, 2016 December 31, 2017 December 31, 2018 September 30, 2018 September 30, 2019 Total Investments $ 93 $ 107 $ 115 $ 112 $ 131 Add: Cash and cash equivalents 2 2 3 3 3 FVA - mortgage loans - - - - - FVA - real estate and
Slide 135: Adjusted Earnings and Cash - Asia
Adjusted Earnings and Cash - Asia (In millions, except ratios ) 2016 2017 2018 Cash paid to MetLife Holding Company $ 615 $ 735 $ 761 Adjusted earnings available to common shareholders $ 1,224 $ 1,229 $ 1,237 Less: Total notable items (91) 5 (86) Adjusted earnings available to common shareholders, e
Slide 136: MetLife
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