Metlife, Inc. · NYSE:MET
Metlife — Investor Day (December 2010)
182 slides from Metlife's investor day presentation, Dec 6, 2010
Slide 1: Investor Day 2010
INVESTOR DAY 2 0 1 0 Conor Murphy Vice President Investor Relations
Slide 2: Forward-looking statements
These materials 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. These statements can b
Slide 3: Forward-looking statements (continued)
affiliates' claims paying ability, financial strength or credit ratings; (21) ineffectiveness of risk management policies and procedures; (22) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (23) discrepancies
Slide 4: Non-GAAP references
All references in these slides and in the presentations made at Investor Day to net income (loss), net income (loss) per share, operating earnings and operating earnings per share should be read as net income (loss) available to MetLife, Inc.'s common shareholders, net income (loss) available to Met
Slide 5: Non-GAAP definitions
In addition, operating revenues and operating expenses do not reflect the consolidation of certain securitization entities that are variable interest entities as required under GAAP. Operating return on common equity is calculated by dividing operating earnings available to common shareholders by av
Slide 6: Agenda
Agenda Overview Overview Overview C. Robert Henrikson Chairman, President & Chief Executive Officer Investments Investments Investments Steven A. Kandarian Executive Vice President & Chief Investment Officer Finance Finance Finance William J. Wheeler Executive Vice President & Chief Financial Office
Slide 7: MetLife
MetLife
Slide 8: Investor Day - C. Robert Henrikson
INVESTOR DAY 2 0 1 0 C. Robert Henrikson Chairman, President & Chief Executive Officer
Slide 9: Investor Day 2009 - Key Takeaways
Investor Day 2009 - Key Takeaways Disciplined Growth Margin Improvement ROE Expansion
Slide 10: Investor Day 2009 - Key Takeaways
Investor Day 2009 - Key Takeaways Margin Improvement ROE Expansion GLOBAL Disciplined Growth
Slide 11: Alico: A Unique and Compelling Transaction
Significantly accelerates the execution of MetLife's global growth strategy Highly complementary to MetLife's strategy Significantly improves long-term growth in revenues, earnings and ROE The opportunity to build an unparalleled franchise leveraging Alico's key strengths Alico: A Unique and Compell
Slide 12: MetLife Transformation: International Then & Now
MetLife Transformation: International Then & Now 2001 2005 2009 0.04 0.11 0.13 0.35 2001 2005 2009 0.04 0.07 0.2 0.41 40%+ 30%+ 1 1 International's Operating Earnings as a % of MetLife International's Premiums, Fees & Other Revenues as a % of MetLife 2011P 2011P 1As reported, unadjusted for subseque
Slide 13: MetLife: A Global Company
MetLife: A Global Company 2011P Operating Earnings by Product1 International: 41% U.S. Business: 59% Individual Life Accident & Health Group Insurance Retirement Individual Life Auto & Home Non-Medical Health Retirement Bank Group Life Corporate Benefit Funding 4% 5% 16% 11% 10% 6% 7% 3% 8% 14% 16%
Slide 14: MetLife's Strengths as a Global Company
MetLife's Strengths as a Global Company We are financially strong We are disciplined in our growth We are diversified in product, geography, and distribution We have a powerful brand We are a worldwide industry leader We are One Global MetLife
Slide 15: MetLife
MetLife
Slide 16: Investor Day - Steven A. Kandarian
INVESTOR DAY 2 0 1 0 Steven A. Kandarian Executive Vice President & Chief Investment Officer
Slide 17: Agenda
Agenda Economic Outlook Portfolio Overview Gains and Losses Low Interest Rate Environment Select Updates Summary
Slide 18: Economic Outlook
Economic Outlook
Slide 19: Economic Expectations
Economic Expectations U.S.: Below trend economic growth Interest rates remain low on absolute basis Credit markets stable and real estate improving Japan: Economic growth remains slow Disinflation / deflation will continue Yen weakens versus U.S. dollar
Slide 20: MetLife U.S. Interest Rate Outlook
MetLife U.S. Interest Rate Outlook
Slide 21: Portfolio Overview
Portfolio Overview
Slide 22: MetLife Investments
MetLife Investments Total Portfolio: Highly diversified Liability Driven: Asset-liability management Global Team Investment Approach: 650+ person investment team Risk Management: Part of our culture $443 Billion of Managed Assets1 Inv Grade Corp Bonds Structured Finance Mortgage Loans Foreign Govern
Slide 23: Investment Portfolio Summary
Investment Portfolio Summary US Treasury and Agency 9.7% 8.3% 7.5% Credit Investment Grade Credit 33.8% 35.5% 36.75% Foreign Government 4.2% 9.0% 9.0% Below Investment Grade Credit 4.4% 4.5% 5.0% Total Credit 42.4% 49.0% 50.75% Structured Finance Residential MBS 12.9% 10.7% 11.0% Commercial MBS 4.4%
Slide 24: Cash & Short-Term
Cash & Short-Term Post-Alico balance temporarily inflated Alico capital raise Long-term bonds reclassified under PGAAP Reinvestment factored into 2011 Company guidance
Slide 25: Alico-Related Activity
Alico-Related Activity Focus Actions Financial Institution Exposures Sovereign Exposure to Peripheral Europe Managed down MetLife exposures Credit default swaps (CDS) Sovereign CDS Opportunistic sales Japanese Commercial Mortgages Loss Sharing Agreement
Slide 26: Sovereign Exposure to Peripheral Europe
Sovereign Exposure to Peripheral Europe 1Combined stat book value: MetLife as of September 30, 2010; Alico as of November 1, 2010. 2Combined market value: MetLife market value as of September 30, 2010; Alico opening market value as of November 1, 2010. 3Portugal opening market value includes $10 mil
Slide 27: After-Tax Investment Portfolio Gains (Losses)
YTD 2009 2010E Total -1.921 -0.2 Economic 696 Other 456 After-Tax Investment Portfolio Gains (Losses) Impairments down year over year driven by Commercial mortgages Corporate credit Expected to remain modest in 2011 1Pre-Alico MetLife investment portfolio only, including impairments. ($ Billions) Ne
Slide 28: Pre-Tax Unrealized Gains (Losses)
Pre-Tax Unrealized Gains (Losses) URL 9/30/2009 9/30/2010 Loss -11838 Gross Gains 10228 19656 Net URG/(L) -1610 8/11/1940 Gross Losses -11838 -4822 ($ Billions) Unrealized1 Q3' 09 Q3' 10 Gross Gains Gross Losses Net URG / (L) 1Pre-Alico MetLife investment portfolio only.
Slide 29: Low Interest Rate Environment
Low Interest Rate Environment
Slide 30: Low Interest Rate Environment: Mitigants
Low Interest Rate Environment: Mitigants Product design and pricing ALM / duration management Derivative hedging Private asset origination
Slide 31: Current Protection: Pre-Tax Derivative Income (Rates Unchanged)
Low Interest Rate Environment: Current Protection Pre-Tax Derivative Income1 (Rates Unchanged) 0 100 200 300 400 500 600 700 800 ($ Millions) Over $39 billion notional to hedge against low rates $21 billion of swaps and swaptions $18 billion of interest rate floors Flat Total Derivatives (Swaps, Flo
Slide 32: Current Protection: Pre-Tax Derivative Income (-100bps)
($ Millions) Low Interest Rate Environment: Current Protection Pre-Tax Derivative Income1 (-100bps ) 0 100 200 300 400 500 600 700 800 Over $39 billion notional to hedge against low rates $21 billion of swaps and swaptions $18 billion of interest rate floors - - 100bps Flat Total Derivatives (Swaps,
Slide 33: Current Protection: Pre-Tax Derivative Income (+100bps)
($ Millions) Low Interest Rate Environment: Current Protection Pre-Tax Derivative Income1 (+100bps ) 0 100 200 300 400 500 600 700 800 +100bps Over $39 billion notional to hedge against low rates $21 billion of swaps and swaptions $18 billion of interest rate floors Total Derivatives (Swaps, Floors,
Slide 34: Private Asset Origination
Private Asset Origination Real Estate Investments Agricultural Mortgages Private Corporates
Slide 35: Adequately Positioned: Real Estate & Agricultural
Adequately Positioned Commercial Mortgages 0.64 Agricultural Mortgages 0.2 Real Estate Equity 0.16 Commercial Mortgages Agricultural Mortgages Real Estate Real Estate and Agricultural Portfolio 240 person team Real Estate portfolio focus on Class 'A' properties in primary markets Agricultural loan p
Slide 36: Commercial Mortgages: LTV/DSCR
Commercial Mortgages: LTV/DSCR Based on rolling four quarter valuation process. LTV and DSCR Matrix $37 Billion1 67% Loan to Value (LTV) 2.3x average Debt Service Coverage Ratio (DSCR) Commercial mortgage valuation allowance of $542 million Delinquency rate of 2 basis points 1Combined market value:
Slide 37: Private Securities Portfolio
Private Securities Portfolio Good downside protection via covenants and/or collateral Spread premium and lower losses versus public corporate bonds Adequately Positioned Private Corp. US 0.52 Private Corp. Non-US 0.38 Leasing and Tax Products 0.07 Project Finance 0.03 Leasing Project Finance Private
Slide 38: Select Updates
Select Updates
Slide 39: Regulatory Reform: Some Potential Impacts
Sectors Potential Impact Comment Alternatives Low + Increased General Partner accountability - - Evolving regulatory oversight Banks Low + Better capitalized - - Uncertainty of rights in liquidation Securitized Assets Low + Alignment of interests - - New issuance fails to recover Derivatives Moderat
Slide 40: Structured Finance Portfolio
Structured Finance Portfolio Collateral characteristics and tranche selection are critical 94% of combined portfolio remains investment grade 2Amounts presented are based on rating agency designations and equivalent ratings of the NAIC. Non-agency residential mortgage-backed securities and sub-prime
Slide 41: Municipal Bond Portfolio
Tax Exempt Taxable 3rd Qtr 4th Qtr East 0.42 0.58 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Municipal Bond Portfolio $9.6 Billion1 Taxable Tax-Exempt Long duration, asset-liability management MetLife underwrites all underlying credits High quality, favor larger issuers, diversified po
Slide 42: Outlook for Variable Investment Income
2010 Plan 2010E 2011P 4th Qtr 28 Outlook for Variable Investment Income $225-$325 Million per Quarter / $900 Million to $1.3 Billion FY Components: Alternative Investments: Private Equity Hedge Funds Real Estate Funds and Development Joint Ventures (DJVs) Prepayments: Corporate Bond Prepayments Comm
Slide 43: Alternative Investments and Real Estate Funds / DJVs
Alternative Investments and Real Estate Funds / DJVs LBO Funds Other Private Equity Hedge Funds Real Estate Funds & Development Joint Ventures MetLife 0.36 0.18 0.17 0.29 Private Equity driving performance in 2010 Real Estate Funds / DJVs projected to improve in 2011 Alternatives & Real Estate $9 Bi
Slide 44: Securities Lending
Securities Lending 2007 2008 2009 Q3'10 Total Loans Maturing 43 23 22 25 Average LTV 0.54 0.57 0.59 ($ Billions) Restructured program to minimize liquidity risk 91% of loaned assets are U.S. Treasuries & Agency-Backed Securities Program to remain below $30 billion in 2011 Securities Lending Balances
Slide 45: Summary
Lo) MetLife L Summary
Slide 46: Summary
Summary Material improvement in realized losses, substantial unrealized gain Have taken measures to protect against adverse interest rate and market environments, will continue to do so Opportunistically sourcing private assets Portfolio is healthy and well positioned
Slide 47: MetLife
MetLife
Slide 48: Investor Day - William J. Wheeler
INVESTOR DAY 2 0 1 0 William J. Wheeler Executive Vice President & Chief Financial Officer
Slide 49: Agenda
Agenda Review of 4th Quarter 2010 Estimated Results Review of Full Year 2010 Estimated Results MetLife Capital Position Review of 2011 Plan Interest Rate Review ROE Outlook
Slide 50: Observations
Observations We have had a meaningful earnings recovery in 2010 Low interest rates and continued weak economic environment putting a strain on results in the near term Alico acquisition expected to have significant accretive impact to 2011 results We are well positioned regardless of macro-economic
Slide 51: Fourth Quarter 2010 Estimate
Fourth Quarter 2010 Estimate ($ Millions, except per share data) See Appendix for non-GAAP financial information definitions and/or reconciliations. 1One month of Alico results included in quarter. Alico operating earnings are net of financing costs.
Slide 52: Fourth Quarter 2010 Normalization
Fourth Quarter 2010 Normalization See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 53: Fourth Quarter 2010 Estimate: Financial Performance
Fourth Quarter 2010 Estimate: Financial Performance Revenue slowed by economic trends Alico one month of results included in quarter (+) Annuities favorable market impact and net flows (+) Corporate Benefit Funding down from very favorable prior year (-) Group insurance impacted by market conditions
Slide 54: Full Year 2010 Estimate
Full Year 2010 Estimate ($ Millions, except per share data) See Appendix for non-GAAP financial information definitions and/or reconciliations. 1One month of Alico results included in year. Alico operating earnings are net of financing costs.
Slide 55: Premiums, Fees & Other Revenues Growth
Premiums, Fees & Other Revenues Growth 2010 growth rate impacted by: Solid growth in International (+17%) & Retirement Products (+21%) Lower pension closeout sales (-11%) Flat Group Insurance revenues (+1%) Market environment and pricing discipline $35.6 - $36.0 5.3%1 Premiums, Fees & Other Revenues
Slide 56: Total Assets
2009 2010E General Account & Other 390 447.5 Separate Account 149 172.5 Alico General Account & Other 110.5 Alico Separate Account 0.25 Total Assets Strong separate account investment performance General account valuations have increased Revenue growth and positive flows in many areas 35.9%1 $725 -
Slide 57: Operating Expense Ratio
2007 2008 2009 2010E Expense Ratio Excl. MetLife Bank and Pension/PRB 0.234 0.212 0.203 0.2 MetLife Bank 0.002 0.006 0.018 0.015 Pension/PRB 0.003 0.001 0.014 0.011 Operating Expense Ratio Operational Excellence: Achieved approximately $700 million vs. $600 million revised goal See Appendix for non-
Slide 58: Operating Expense Ratio: Operational Excellence
2007 2008 2009 2010E Expense Ratio Excl. MetLife Bank and Pension/PRB 0.234 0.212 0.203 0.2 MetLife Bank 0.002 0.006 0.018 0.015 Pension/PRB 0.003 0.001 0.014 0.011 Operating Expense Ratio Operational Excellence: Achieved approximately $700 million vs. $600 million revised goal 1Calculated using mid
Slide 59: Operating Earnings Per Share
Operating Earnings Per Share 2010 results reflect earnings recovery Improved investment results Continued disciplined expense management Improved underwriting margins 2009 2010E 2.87 4.31 1Calculated using mid-point of range. See Appendix for non-GAAP financial information definitions and/or reconci
Slide 60: Full Year 2010 Normalization
Full Year 2010 Normalization See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 61: MetLife Capital Position
MetLife Capital Position Combined 2010 RBC ratio estimated at 410 - 440 (excluding Alico) Estimated year-end 2010 Holding Company cash & liquid assets of $3.0 billion Estimated year-end 2010 Alico excess capital (including Japan) is $1.4 billion Moody's year-end 2010 revised debt leverage ratio esti
Slide 62: Estimated Excess Capital at Year-End 2010
Estimated Excess Capital at Year-End 2010 Target 2010E Excess Capital Holding Company $1.0 Cash & Liquid Assets $2.0 U.S. Insurance Companies 350% RBC $4.7 International (including Alico) Japan@600 SMR (new method) $1.8 Year-End Total $8.5 ($ Billions)
Slide 63: MetLife Bank Holding Company Ratios
MetLife Bank Holding Company Ratios1 1Basel I and Basel III ratios are not directly comparable due to expected changes to risk weightings, phase-ins of deductions from common equity and phase-outs of certain capital instruments. 2Capital ratios include 2.5% conservation buffer, excludes 0 - 2.5% cou
Slide 64: 2011 Plan
2011 Plan ($ Millions, except per share data) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 65: 2011 Plan Assumptions
2011 Plan Assumptions S&P - 5% annual growth U.S. interest rates Gradual increase through year-end 2011 consistent with consensus Exchange rates International regions at consensus exchange rates Yen/$ at 90, hedged 70% of Japan earnings for 2011 at 86 No stock buyback activity in 2011 Effective corp
Slide 66: 2011 Plan Presentation Assumptions
2011 Plan Presentation Assumptions Shift in capital allocation between product areas and business segments Lowered earned rate on allocated capital Change in expense allocations Reflects current market environment
Slide 67: 2011 Premiums, Fees & Other Revenues Growth
2011 Premiums, Fees & Other Revenues Growth ($ Millions) 1Calculated using mid-point of ranges. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 68: 2011 Operating Expense Ratio
2011 Operating Expense Ratio See Appendix for non-GAAP financial information definitions and/or reconciliations. Operating Expense Ratio1 2010E 2011P Expense Ratio Excl. MetLife Bank and Pension/PRB 0.2 0.214 MetLife Bank 0.015 0.015 Pension/PRB 0.011 0.009 23.5% - 24.1% 22.4% - 22.8% 1Operating exp
Slide 69: Operating Earnings Per Share
Operating Earnings Per Share Alico accretion drives growth Macro headwinds: Low interest rates Higher taxes Slow economic recovery 2010E 2011P 4.31 4.95 1Growth rate for normalized operating earnings per share 2010E to 2011P is 13.3%. See "Full Year 2010 Normalization" slide. Calculated using mid-po
Slide 70: Operating Earnings by Line of Business
Operating Earnings by Line of Business ($ Millions) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 71: 2010 Normalized to 2011 Plan
2010 Normalized to 2011 Plan .. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 72: Interest Rate Impact on Operating Earnings
Interest Rate Impact on Operating Earnings 10 Year Treasury Yield 2% 3% 4% 5% 2010 2011 2012 2013 $0.05 in 2012 $0.20 in 2011 Flat Rate Assumption 2011 Plan June Projection Actual $0.15 in 2011
Slide 73: Interest Rate Impact in 2011 - 2012
Interest Rate Impact in 2011 - 2012 Low interest rates are a headwind, but we have "shock absorbers" We have $18 billion notional interest rate floors Natural hedges in certain businesses (e.g. MetLife Bank) Possible DAC adjustments and reserve strengthening (GAAP & STAT) Shouldn't be significant
Slide 74: 2011 Operating ROE
2011 Operating ROE Alico acquisition accretive to operating ROE Continue to hold significant excess capital Weak economic environment having adverse impact Still not reflective of "back to normal" potential 2010E 2011P 0.1 0.11 10.6% - 11.4% 9.9% - 10.1% See Appendix for non-GAAP financial informati
Slide 75: Underlying 2011 Operating ROE
Underlying 2011 Operating ROE 2011P ROE 10.6% - 11.4% See Appendix for non-GAAP financial information definitions and/or reconciliations. "Business" ROE 11.5% - 12.3% $5 billion of excess capital
Slide 76: Longer Term Outlook for Operating ROE
Longer Term Outlook for Operating ROE Effective capital management across our businesses International growth and recovery of U.S. growth Higher long-term interest rates Excess capital deployment Expense reductions Lower pension plan expenses Recovery of certain product margins ROE Target of 13% - 1
Slide 77: Key Takeaways
Key Takeaways 2010 was a great year - despite the environment 2011 represents significant improvements in operating EPS and operating ROE Our capital position is strong and we are well positioned to deal with low interest rates Our true earnings power is not reflected due to the macro- economic envi
Slide 78: MetLife
MetLife
Slide 79: Investor Day - William J. Mullaney
INVESTOR DAY 2 0 1 0 William J. Mullaney President U.S. Business
Slide 80: U.S. Business 2009 Investor Day Scorecard
2 U.S. Business 2009 Investor Day Scorecard Slow growth and high unemployment will continue to impact Group Insurance Competitors will price aggressively to increase share Pricing actions in dental will reduce the loss ratio Auto & Home will grow in 2H10 Remain top three variable annuity provider Sl
Slide 81: 2011 Market Environment
3 2011 Market Environment Unemployment continues to pressure top line Low interest rates impact spreads and business growth Uneven competitor approach Consumers are underinsured and undersaved Consistency and quality are driving distributors to narrower field of manufacturers Financial strength stil
Slide 82: U.S. Business Financial Results
4 U.S. Business Financial Results 4 See Appendix for non-GAAP financial information definitions and/or reconciliations. 1Calculated using mid-point of range. ($ Millions)
Slide 83: U.S. Business Story
5 U.S. Business Story Growing with discipline through the economic downturn Quality earnings growth Investing in the business Distribution is about Solutions Leadership U.S. Business loves the Alico deal 5
Slide 84: U.S. Business Premiums, Fees & Other Revenues
6 2008 2009 2010E 2011P Premiums, Fees and Other Revenues 28 28.6 29 29.7 6 U.S. Business Premiums, Fees & Other Revenues ($ Billions) Top-Line Growth 2.7%1 CAGR ('08 -'10E) 1.4%1 See Appendix for non-GAAP financial information definitions and/or reconciliations. 1Calculated using mid-point of range
Slide 85: Group Insurance: YTD Q3 '10 vs. YTD Q3 '09 Financial Performance
MetLife A B C D E F G 0.373 -0.43 -0.443 -0.124 0.02 -0.366 0.13 -0.098 7 MetLife A B C D E F G Japan 0.023 0.065 0.019 -0.002 -0.007 -0.014 -0.019 -0.029 West 38.6 34.6 31.6 North 46.9 45 43.9 Group Insurance: YTD Q3 '10 vs. YTD Q3 '09 Financial Performance Source: Companies' statistical supplement
Slide 86: Auto & Home: A Return to Growth
8 Auto & Home: A Return to Growth 8 Balanced growth across Direct and Retail channels Multi-line product solutions drive policy sales Customer retention continues to improve 2008 2009 2010E 2011P 2949 2.898 2.954 3.064 ($ Billions) Written Premium CAGR ('09-'11P) 3%1 1Calculated using mid-point of r
Slide 87: Growth in Variable Annuity Assets
9 Growth in Variable Annuity Assets 9 1Calculated using mid-point of range. Recognized brand Flight to quality Distribution reach Strong net flows 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2008 2009 2010E 2011P 20389 87 103 112.5 ($ Billi
Slide 88: Growth in Stable Value Separate Account Assets
10 Growth in Stable Value Separate Account Assets 10 Demand for guarantees Weakened competitors Tightened underwriting guidelines Higher fees on new and existing business 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2008 2009 2010E 2011P 203
Slide 89: The Power of Diversification: 2011 Plan
11 The Power of Diversification: 2011 Plan Faster Growth Group Life Slower Growth Group Disability Structured Settlements Fixed Annuities Dental Variable Annuities Stable Value Home Pension Closeouts 11 Universal Life
Slide 90: U.S. Business Story
12 U.S. Business Story Growing with discipline through the economic downturn Quality earnings growth Investing in the business Distribution is about Solutions Leadership U.S. Business loves the Alico deal 12
Slide 91: Excellent Underwriting Results
13 2006 2007 2008 2009 2010E Individual Mortality (Gross of Reinsurance) 0.849 0.847 0.869 0.892 0.888 NMH Benefit Ratio Excellent Underwriting Results 2006 2007 2008 2009 2010E Individual Mortality (Gross of Reinsurance) 0.851 0.864 0.875 0.825 0.85 Individual Life Mortality 2006 2007 2008 2009 201
Slide 92: Actions to Improve Dental Earnings
14 Actions to Improve Dental Earnings 14 Targeted renewal pricing strategy New business discipline Leveraging network contracting to improve competitive position 2008 2009 2010E 2011P Dental Benefit Ratio 0.817 0.838 0.832 0.826 Dental Benefit Ratio1 1Dental benefit ratio is calculated by dividing d
Slide 93: Margin Expansion through Efficiencies
Margin Expansion through Efficiencies Common manufacturing Holistic distribution and marketing Shared services / Centers of expertise See Appendix for non-GAAP financial information definitions and/or reconciliations. 2007 2008 2009 2010E 2011P USB Expense Ratio ex. Pension/PRB 0.206 0.183 0.175 0.1
Slide 94: Solid VA Sales with Risk Management Discipline
16 Solid VA Sales with Risk Management Discipline 20% of sales have no living benefit rider Almost 10% of sales from simplified, lower cost, de-risked product Lowering GMIB guaranteed annuitization rates Modifying GMIB no-lapse guarantees 2011 Sales Plan $18.3 - $18.7 billion, 4%1 higher than 2010E
Slide 95: Long-Term Care Actions Reduce Risk
17 Long-Term Care Actions Reduce Risk Announced decision to exit new business Demonstrated extended history of disciplined approach to risk management Prudent reserving approach Raised prices for certain individual policies 17
Slide 96: U.S. Business Story
18 U.S. Business Story Growing with discipline through the economic downturn Quality earnings growth Investing in the business Distribution is about Solutions Leadership U.S. Business loves the Alico deal 18
Slide 97: Investing for the Future
19 Investing for the Future Enhanced distribution capabilities Product redesigns Expanded customer knowledge Data management and analytics Technology infrastructure 19
Slide 98: Shift in Mix of Retail Life Sales
20 2007 2008 2009 2010E 2011P Whole Life 0.206 0.16 0.24 0.25 0.27 Term Life 0.004 0.22 0.28 0.29 0.35 Variable Life 0.17 0.09 0.08 0.08 Universal Life 0.45 0.39 0.38 0.3 Shift in Mix of Retail Life Sales 20 See Appendix for non-GAAP financial information definitions and/or reconciliations. 2008 - 2
Slide 99: New Individual Life Insurance Platform
21 New Individual Life Insurance Platform Speed to market Lower cost Enhanced customer experience 21 Traditional whole life design New Product Offering Competitive guaranteed premiums Innovative feature to provide alternative to ULSG
Slide 100: Insuring the Middle Market
22 Insuring the Middle Market 22 Three major components Develop new tools to educate and empower consumers Open new distribution channels (phone, click to call, chat, web) Re-engineer underwriting to be faster, easier and cheaper Single session, driven by eUnderwriting, plus an online experience is
Slide 101: U.S. Business Story
23 U.S. Business Story Growing with discipline through the economic downturn Quality earnings growth Investing in the business Distribution is about Solutions Leadership U.S. Business loves the Alico deal 23
Slide 102: U.S. Business Is a Distribution Powerhouse
24 U.S. Business Is a Distribution Powerhouse 24 As of September 30, 2010. Retail Retail MetLife 5,208 New England Financial 2,112 MetLife Resources 563 Total 7,883 Wholesaling Wholesaling Wholesalers (Life & Annuities) 379 Employee Benefits Sales Reps 369 Total 748 Third Party (Independent and Brok
Slide 103: Holistic Distribution Approach
25 Holistic Distribution Approach Maximizing our affiliated distribution Leveraging group and retail distribution together PlanSmart 25
Slide 104: Maximizing Our Affiliated Distribution
2009 2010E 2011P MetLife/NEF Agents 7,994 7,200 - 7,400 7,200 - 7,400 % Change1 (9)% 0% Agent Productivity $96K $103K - $107K $110K - $118K % Change1 9% 9% 26 Maximizing Our Affiliated Distribution Deliver incremental top-line growth Maximize the value of the sales force asset 26 Strengthen firms in
Slide 105: Group Benefits through Retail Channels
27 Group Benefits through Retail Channels Address complexity of small business owners' personal and business insurance needs Align marketing, sales and service efforts in group and retail space 27 Solid Business Relationships Business Solutions Growth for MetLife Increased sales Expand in 2011 beyon
Slide 106: PlanSmart Opportunity
28 PlanSmart Opportunity 28 Leverages strengths of Employee Benefits and Retail distribution channels Brings together new and existing educational programs with one face to the customer Competitive differentiator Highly valued service to employers Recruiting and retention in individual distribution
Slide 107: U.S. Business Story
29 U.S. Business Story Growing with discipline through the economic downturn Quality earnings growth Investing in the business Distribution is about Solutions Leadership U.S. Business loves the Alico deal 29
Slide 108: Alico Brings Opportunities for U.S. Business
30 Alico Brings Opportunities for U.S. Business Multinational solutions Two-way product and capability transfer Pension closeout expertise Accident & Health Direct marketing Increased name recognition with U.S. customers born outside the U.S. 30
Slide 109: Summary
31 Summary Continued growth through the crisis Deep knowledge of our markets driving growth strategy Consumers need what we manufacture and want to buy from MetLife Broad array of solutions for businesses of all sizes Alico creates long-term growth opportunities for U.S. Business Proven track record
Slide 110: MetLife
MetLife
Slide 111: Investor Day - William J. Toppeta
INVESTOR DAY 2 0 1 0 William J. Toppeta President International
Slide 112: Highlights
Highlights 2010 record revenues and earnings Integration delivering deal value 2011 significant growth momentum Five strategic themes drive future growth Growing shareholder value
Slide 113: 2010 Record Revenues and Earnings
2010 Record Revenues and Earnings 1Excludes Alico. 2Excludes Alico and Japan JV. Sales presented based on pre-Alico definition. See Appendix for non-GAAP financial information definitions and/or reconciliations. 2010 Plan 2010E Premiums, Fees & Other Revenues1 $4,900 - $5,100 $4,950 - $5,050 Operati
Slide 114: Very Smooth Day
Very Smooth Day 1 Businesses operating well and without disruption Expect to complete integration by 2013 Capturing strategic and financial deal value MetLife ownership matters New and powerful brand Combination creates a premier international business
Slide 115: Expect to Complete Integration by 2013
Expect to Complete Integration by 2013 Re-branding Rationalize overlap operations Strengthen risk and control capabilities Close-out Transition Service Agreements Restructure Alico corporate entities 2011 2013 2012 ~ $500 million one-time costs ~ $100 million annual expense synergies
Slide 116: Capturing Strategic and Financial Deal Value
Capturing Strategic and Financial Deal Value Substantial value from inforce business Concentrating on key geographies Substantially risk and protection products Primarily focused on face-to-face distribution
Slide 117: Surrenders and Lapses Better than Pre-Crisis Levels
Capturing Strategic and Financial Deal Value Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Total 3855 3399 3485 10681 3088 2155 1648 1553 1437 3085 1622 ($ Millions) Surrenders and Lapses Alico data only. Surrenders and Lapses Better than Pre-Crisis Levels
Slide 118: Sales Trending Toward Pre-Crisis Levels
Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Total 586 797 656 525 533 428 506 531 495 680 641 Capturing Strategic and Financial Deal Value See Appendix for non-GAAP financial information definitions and/or reconciliations. Sales Trending Toward Pre-Crisis Levels Alic
Slide 119: Japan: Capturing Strategic and Financial Deal Value
Japan: Capturing Strategic and Financial Deal Value Career Agents Banks Direct Marketing Sponsors 1Pre-crisis as of August 2008. Current as of October 2010. Alico data only. 4,641 75 220 4,900 70 196 Pre-Crisis1 Current1 Independent Agencies 10,055 10,514
Slide 120: MetLife Ownership Matters
MetLife Ownership Matters Consumers more likely to buy from the combined company MetLife brand drives "favorability" for the combined company: 12% points - Financial strength to always pay claims (Japan) 27% points - Poised for growth (Poland) 39% points - Company I can trust (Chile) Vast majority o
Slide 121: New and Powerful Brand
"Today the world is waking up to a more secure tomorrow" Key idea: Starting today, MetLife and Alico have joined together to become the global insurer better able to help more people protect themselves and their families. New and Powerful Brand
Slide 122: Combination Creates a Premier International Business
Agency DM Banks Brokers East 0.64 0.17 0.14 0.06 Life A&H Retirement Group East 0.38 0.34 0.2 0.08 Combination Creates a Premier International Business 1Percentages calculated using mid-point of range. Excludes impact of PGAAP as allocation to product is not currently finalized. 2011P Product & Dist
Slide 123: Strong Growth Momentum in 2011
Premiums, Fees & Other Revenues Operating Earnings Sales Strong Growth Momentum in 2011 22% 8% 16% See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 124: 2011 Consolidated Financial Results
2011 Consolidated Financial Results ($ Millions) 2011P Growth1 Rate Sales $5,800 - $6,200 22% Premiums, Fees & Other Revenues $15,400 - $16,000 8% Operating Earnings $2,230 - $2,470 16% 1Calculated using mid-point of range based on the proforma financial statements for the nine months ended Septembe
Slide 125: Balanced Between Markets of Today and Tomorrow
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.41 0.59 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.54 0.46 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.31 0.69 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 4
Slide 126: Japan: 2011 Solid Growth Momentum
Japan: 2011 Solid Growth Momentum Increasing sales 20% Growing top-line: Increased customer penetration Improved persistency Expanding hybrid distribution Gaining sales share See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 127: Japan: 2011 Financial Results
Japan: 2011 Financial Results ($ Millions) 2011P Sales $1,800 - $1,950 Premiums, Fees & Other Revenues $6,350 - $6,650 Operating Earnings $1,200 - $1,340 See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 128: Japan Distribution: Diverse, Deep and Growing
Japan Distribution: Diverse, Deep and Growing 2010 Estimate 2011 Plan 4th Qtr Career 472 518 31.6 Independent 516 572 43.9 Direct Marketing 186 255 Bancassurance 316 499 ($ Millions) Sales1 See Appendix for non-GAAP financial information definitions and/or reconciliations. Career Independent Direct
Slide 129: OIR: 2011 Double-Digit Growth Across All Regions
OIR: 2011 Double-Digit Growth Across All Regions Double-digit agency and third-party sales growth Solid Life and A&H PFO growth Strong operating earnings driven by: Top-line growth Disciplined underwriting Expense management See Appendix for non-GAAP financial information definitions and/or reconcil
Slide 130: OIR: 2011 Financial Results
OIR: 2011 Financial Results ($ Millions) 2011P Sales $4,000 - $4,250 Premiums, Fees & Other Revenues $9,050 - $9,350 Operating Earnings $1,030 - $1,130 See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 131: OIR: Strong Sales Growth Across All Regions
OIR: Strong Sales Growth Across All Regions 2010 Estimate 2011 Plan 4th Qtr APAC 1071 1329 31.6 Europe 848 1140 43.9 MEASA 241 293 LATAM 1261 1392 ($ Millions) Sales1 See Appendix for non-GAAP financial information definitions and/or reconciliations. APAC Europe MEASA LATAM 2010E 2011P 2010E 2011P 2
Slide 132: OIR 2011: Geographic Diversification
Asia Europe MEASA LatAm East 0.23 0.3 0.08 0.39 Asia Europe MEASA LatAm East 0.18 0.3 0.1 0.42 OIR 2011: Geographic Diversification Europe 30% LATAM 39% MEASA 8% APAC 23% Europe 30% LATAM 42% MEASA 10% APAC 18% See Appendix for non-GAAP financial information definitions and/or reconciliations. Premi
Slide 133: Global Opportunities: Positioned To Win
Global Opportunities: Positioned To Win 890 million retirees and pre- retirees outside the U.S. 380 million middle class households in the developing world 40 million FORTUNE GLOBAL 500(r) employees outside of the U.S. Aging populations and migration Large, growing middle class Multinational corpora
Slide 134: And the Future is Even Brighter
And the Future is Even Brighter Maximizing face-to-face distribution Nearer Term Longer Term Leveraging Accident & Health Globalizing corporate relationships Expanding direct-to- consumer Becoming Retirement solutions provider of choice Strategic Growth Themes
Slide 135: Starting in 2011: Maximizing Face-to-Face Distribution
Starting in 2011 Maximizing face-to-face distribution Grow face-to-face distribution channels Expand face-to-face distribution platform Broaden reach of worksite marketing Japan Poland Mexico
Slide 136: Starting in 2011: Leveraging Accident & Health
Starting in 2011 Leveraging Accident & Health Broader packaging of A&H products through career agency distribution Packaging A&H through face-to-face distribution channels Enhancing A&H through current distribution channels Korea Mexico Brazil
Slide 137: Key Takeaways
2010 record revenues and earnings Integration delivering deal value 2011 significant growth momentum Five strategic themes drive future growth Growing shareholder value Key Takeaways
Slide 138: Strong Growth Momentum in 2011
Premiums, Fees & Other Revenues Operating Earnings Sales Strong Growth Momentum in 2011 22% 8% 16% See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 139: MetLife
MetLife
Slide 140: How We Will Achieve Industry Leading Performance
How We Will Achieve Industry Leading Performance Disciplined Global Growth Margin Improvement ROE Expansion
Slide 141: Appendix
Appendix INVESTOR DAY | 2010
Slide 142: Non-GAAP references
All references in these slides and in the presentations made at Investor Day to net income (loss), net income (loss) per share, operating earnings and operating earnings per share should be read as net income (loss) available to MetLife, Inc.'s common shareholders, net income (loss) available to Met
Slide 143: Non-GAAP definitions
In addition, operating revenues and operating expenses do not reflect the consolidation of certain securitization entities that are variable interest entities as required under GAAP. Operating return on common equity is calculated by dividing operating earnings available to common shareholders by av
Slide 144: Table of Contents
Table of Contents Table of Contents
Slide 145: Definitions
©) MetLife L Definitions
Slide 146: Definitions
Definitions Sales (Total Company): Variable annuity sales are on a VARDS basis. Sales (U.S. Business): Variable annuity sales are on a VARDS basis. Fixed annuity and life sales are on a LIMRA basis. Sales (International): Variable annuity, fixed annuity, pensions and life insurance sales count for 1
Slide 147: Reconciliations
MetLife Reconciliations
Slide 148: Reconciliation: Total Company
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders and Premiums, Fees & Other Revenues - Total Company Available to Common Shareholders and Premiums, Fees & Other Revenues - Total Company Available to Common Sha
Slide 149: Reconciliation: Total U.S. Business
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders and Premiums, Fees & Other Revenues - Total U.S. Business Available to Common Shareholders and Premiums, Fees & Other Revenues - Total U.S. Business Available t
Slide 150: Reconciliation: Total Insurance Products
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders and Premiums, Fees & Other Revenues - Total Insurance Products Available to Common Shareholders and Premiums, Fees & Other Revenues - Total Insurance Products A
Slide 151: Reconciliation: Group Life
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Total Insurance Products - Group Life Operating Earnings Available to Common Shareholders - Total Insurance Products - Group Life Operating Earnings Available
Slide 152: Reconciliation: Individual Life
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders and Premiums, Fees & Other Revenues - Total Insurance Products - Individual Life to Common Shareholders and Premiums, Fees & Other Revenues - Total Insurance Pr
Slide 153: Reconciliation: Non-Medical Health
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Total Insurance Products - Non-Medical Health Operating Earnings Available to Common Shareholders - Total Insurance Products - Non-Medical Health Operating Ea
Slide 154: Reconciliation: Retirement Products
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Retirement Products Operating Earnings Available to Common Shareholders - Retirement Products Operating Earnings Available to Common Shareholders - Retirement
Slide 155: Reconciliation: Corporate Benefit Funding
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Corporate Benefit Funding Operating Earnings Available to Common Shareholders - Corporate Benefit Funding Operating Earnings Available to Common Shareholders
Slide 156: Reconciliation: Auto & Home
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Auto & Home Operating Earnings Available to Common Shareholders - Auto & Home Operating Earnings Available to Common Shareholders - Auto & Home
Slide 157: Reconciliation: International
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - International Operating Earnings Available to Common Shareholders - International Operating Earnings Available to Common Shareholders - International
Slide 158: Reconciliation: Banking, Corporate & Other
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Banking, Corporate & Other Operating Earnings Available to Common Shareholders - Banking, Corporate & Other Operating Earnings Available to Common Shareholder
Slide 159: Reconciliation: Banking
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Banking, Corporate & Other - Banking Operating Earnings Available to Common Shareholders - Banking, Corporate & Other - Banking Operating Earnings Available t
Slide 160: Reconciliation: Total Company and International
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - Total Company and International 1As reported, unadjusted for subsequent events, including acquisitions, dispositions and discontinued operations. 1As reported
Slide 161: Reconciliation of Premiums, Fees & Other Revenues
Reconciliation of Premiums, Fees & Other Revenues - Total Company and International 1As reported, unadjusted for subsequent events, including acquisitions, dispositions and discontinued operations. 1As reported, unadjusted for subsequent events, including acquisitions, dispositions and discontinued
Slide 162: Reconciliation of Operating Expenses - Total Company
Reconciliation of Operating Expenses and Operating Expense Ratio - Total Company 1Operating Expense Ratio is calculated by dividing operating expenses (other expenses net of capitalization of DAC), by premiums, fees & other revenues, as presented. revenues, as presented. revenues, as presented.
Slide 163: Reconciliation of Operating Expenses - U.S. Business
Reconciliation of Operating Expenses and Operating Expense Ratio - Total U.S. Business 1Operating Expense Ratio is calculated by dividing operating expenses (other expenses net of capitalization of DAC), by premiums, fees & other revenues, as presented. revenues, as presented. revenues, as presented
Slide 164: Reconciliation of Total Investments to Managed Assets
Reconciliation of Total Investments to Managed Assets MetLife (Pre-Alico) 9/30/10 Alico 11/1/10 Combined Post-Alico ($ Billions) MetLife (Pre-Alico) 9/30/10 Alico 11/1/10 Combined Post-Alico Total Investments $378.7 $98.1 $476.8 Plus Cash and Cash Equivalents 14.5 5.0 19.5 Plus Fair Value Adjustment
Slide 165: U.S. Business Metrics
MetLife ¢ U.S. Business Metrics
Slide 166: U.S. Business: 2010 - 2011 Targets
U.S. Business: 2010 - 2011 Targets U.S. Business: 2010 - 2011 Targets
Slide 167: Insurance Products Metrics
Insurance Products Metrics
Slide 168: Insurance Products: 2010 - 2011 Targets
Insurance Products: 2010 - 2011 Targets Insurance Products: 2010 - 2011 Targets
Slide 169: Group Life: Key Metrics
Group Life: Key Metrics Group Life: Key Metrics 1Calculated using mid-point of range.
Slide 170: Individual Life: Key Metrics
Individual Life: Key Metrics Individual Life: Key Metrics 1Calculated using mid-point of range.
Slide 171: Non-Medical Health: Key Metrics
Non-Medical Health: Key Metrics Non-Medical Health: Key Metrics
Slide 172: Retirement Products
MetLife Retirement Products
Slide 173: Retirement Products: 2010 - 2011 Targets
Retirement Products: 2010 - 2011 Targets Retirement Products: 2010 - 2011 Targets
Slide 174: Corporate Benefit Funding
MetLife Corporate Benefit Funding
Slide 175: Corporate Benefit Funding: 2010 - 2011 Target
Corporate Benefit Funding: 2010 - 2011 Target Corporate Benefit Funding: 2010 - 2011 Target
Slide 176: Auto & Home Metrics
Auto & Home Metrics
Slide 177: Auto & Home: 2010 - 2011 Targets
Auto & Home: 2010 - 2011 Targets Auto & Home: 2010 - 2011 Targets
Slide 178: International Metrics
MetLife International Metrics
Slide 179: International: 2010 - 2011 Targets
International: 2010 - 2011 Targets International: 2010 - 2011 Targets 2 1Calculated using mid-point of range. 2Excludes Japan JV. See "Definitions" section included elsewhere in this Appendix for the definitions of Sales (International) and Sales (Pre-Alico International).
Slide 180: MetLife Bank Metrics
MetLife MetLife Bank Metrics
Slide 181: MetLife Bank: 2010 - 2011 Targets
MetLife Bank: 2010 - 2011 Targets MetLife Bank: 2010 - 2011 Targets
Slide 182: MetLife
MetLife