Metlife, Inc. · NYSE:MET
Metlife — Q3 2011 Earnings Presentation
40 slides from Metlife's earnings presentation, Oct 28, 2011
Slide 1: Management Update: 3Q Earnings Call Supplement
MANAGEMENT UPDATE 2 0 1 1 3Q Earnings Call Supplement
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: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information All references in this presentation to net income (loss), net income (loss) per share, operating earnings, operating earnings per share and book value per share should be read as net income (loss) available to MetLife, Inc.'s common shareholders, ne
Slide 4: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) MetLife believes the presentation of operating earnings and operating earnings available to common shareholders as MetLife measures it for management purposes enhances the understanding of the company's performance by highlighting the re
Slide 5: Agenda
Agenda Overview Overview Overview Steven A. Kandarian President & Chief Executive Officer Impact of Interest Rate Stress Scenario in U.S. Impact of Interest Rate Stress Scenario in U.S. Impact of Interest Rate Stress Scenario in U.S. William J. Wheeler Executive Vice President & Chief Financial Offi
Slide 6: MetLife - What Sets Us Apart
MetLife - What Sets Us Apart Our diversification is a competitive advantage Risk management - part of our culture Product design Asset liability management (ALM) Use of derivatives Focus on managing for the long term
Slide 7: MetLife: A Diverse, Global Company
MetLife: A Diverse, Global Company Q3 2011 YTD Operating Earnings by Segment1 1Excludes the Corporate & Other component of Banking, Corporate & Other. See Appendix for non-GAAP financial information definitions and/or reconciliations. Group Life Non-Medical Health Individual Life Retirement Corporat
Slide 8: MetLife: A Diverse, Global Company - Interest Rate Sensitivity
MetLife: A Diverse, Global Company Q3 2011 YTD Operating Earnings by Segment1 Group Life Non-Medical Health Individual Life Retirement Corporate Benefit Funding Auto & Home Bank Japan Other International Regions Operating Earnings 0.08 0.08 0.1 0.12 0.21 0.01 0.02 0.2 0.19 21% 12% 10% 8% 7% 19% 20%
Slide 9: U.S. Business Spread Trend
U.S Business Spread Trend QFS Spreads & Market Rates 2000 to 3Q 2011 bps 100 200 300 400 500 600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 5 / 10 Yr Moving Average1 Average3 QFS Average Spread2 0 2011 1"5 / 10 Yr Moving Average" defines the four quarter moving average of the simple aver
Slide 10: Assumptions in Interest Rate Stress Scenario
Assumptions in Interest Rate Stress Scenario Interest Rates Sept 2011 U.S. Treasury rates held constant through 2016 10-Yr Treasury at 2% Impact measured relative to base case - June 2011 forward curve Equity Market S&P 500 growth rate of 5% Economic Activity GDP growth remains slow No material chan
Slide 11: Summary of Impact
Summary of Impact Operating Earnings Overall earnings grow but at a slower rate US Business earnings remain relatively flat Offset by limited impact on International's earnings STAT Capital No reserve strengthening required, but modest actions expected GAAP Balance Sheet No loss recognition expected
Slide 12: Impact of Interest Rate Stress Scenario
MANAGEMENT UPDATE 2 0 1 1 Impact of Interest Rate Stress Scenario
Slide 13: Interest Rate Impact on Operating Earnings
Interest Rate Impact on Operating Earnings 10 Year Treasury Yield 1% 2% 3% 4% 5% 2011 2012 2013 $0.21 in 2012 Flat Rate Assumption June Forward Rates Actual Additional $0.21 in 2013 Total of $0.42 in 2013 Initial $0.21 in 2012
Slide 14: If U.S. Treasury Rates Remain Flat for Years...
If U.S. Treasury Rates Remain Flat for 5 Years... U.S. Business spreads narrow, earnings remain level Assumed international growth rate unaffected Overall earnings grow, but at a slower rate Operating Earnings Scenario1 ($0.5) ($0.7) 1For illustrative purposes only. ($ Billions) 2This hypothetical s
Slide 15: Drivers of USB Spread Compression in 2016
Drivers of USB Spread Compression in 2016 ($ Millions) $540 of Spread Compression
Slide 16: Balance Sheet Analysis
Balance Sheet Analysis Statutory Reserves Cash Flow testing GAAP Reserves Cash Flow testing DAC balance unlocking Goodwill impairment testing
Slide 17: Balance Sheet Analysis Results
Balance Sheet Analysis Results DAC & Related Items ~$425M after-tax impact in outer years Mostly occurring in 2016 Universal Life & Annuities GAAP Loss Recognition No GAAP loss recognition in U.S. Goodwill Potential pressure on Retirement Products Retirement Products Goodwill: $1.7B STAT Cash Flow T
Slide 18: Mitigating Actions - Investments
MANAGEMENT UPDATE 2 0 1 1 Mitigating Actions - Investments Actions
Slide 19: Strong Investment Discipline
Strong Investment Discipline Sound and consistent ALM practices Added significant low rate protection (beginning in 2004) Expanded investment capabilities and asset classes to enhance income Continuous focus on risk management
Slide 20: Modest Reinvestment Risk for CBF Long-Term
Modest Reinvestment Risk for CBF Long-Term ($ Billions) Corporate Benefit Funding Long-Term $2.6 $45.4 $0.3
Slide 21: Modest Reinvestment Risk for Deferred Annuities
Modest Reinvestment Risk for Deferred Annuities Deferred Annuities ($ Billions) $24.6 $0.6 $1.0 $1.1
Slide 22: Modest Reinvestment Risk for Long-Term Care
Modest Reinvestment Risk for Long-Term Care Long-Term Care ($ Billions) $0.4 $0.5 $6.8
Slide 23: Meaningful Low Rate Protection
Meaningful Low Rate Protection Approximately $47 billion notional1 to hedge against low rates $24 billion of swaps $18 billion of interest rate floors $5 billion of swaptions 1MetLife investment portfolio (excluding International and VA hedging program and MetLife Bank) as of August 31, 2011. 2Estim
Slide 24: Going Forward
Going Forward Broaden asset mix of international portfolio Continue to increase private asset origination Opportunistically deploy derivative strategies Maintain disciplined ALM and risk management - What we have always done!
Slide 25: Mitigating Actions - Business
MANAGEMENT UPDATE 2 0 1 1 Mitigating Actions - Business Actions
Slide 26: Additional Business Actions Available
Additional Business Actions Available Add Protected Growth Strategies to in-force (VA) Increase Living Benefit fees upon step-up (VA) Maintain pricing discipline, managing to appropriate product ROIs Reduce minimum interest rate guarantees on new products Shift sales focus to less interest rate sens
Slide 27: Summary
MANAGEMENT UPDATE 2 0 1 1 Summary
Slide 28: Impact of Low Interest Rate Environment
Impact of Low Interest Rate Environment Overall earnings grow, but at a slower rate Modest GAAP balance sheet impact Manageable STAT reserve strengthening Management actions can and will be taken if necessary
Slide 29: Summary
Summary Diversification provides for strong and stable earnings power Positioned for growth even through a protracted low rate environment Risk management part of our culture We manage for the long-term
Slide 30: Appendix
MANAGEMENT UPDATE 2 0 1 1 Appendix
Slide 31: Appendix - European Exposures
MANAGEMENT UPDATE 2 0 1 1 Appendix - European Exposures
Slide 32: European Exposure - By Country
European Exposure - By Country Notes: The exposures presented above exclude European Supranationals with a US GAAP BV and Market Value of $2,038 million and $2,076 million, respectively. US GAAP BV MARKET VALUE ($ Millions) As of 9/30/11
Slide 33: Peripheral European Sovereign Exposure
Peripheral European Sovereign Exposure US GAAP BV $1,649 $571 $934 Market Value $1,565 $629 $761 ($ Millions) ($ Millions)
Slide 34: European Exposure
European Exposure Over 90% of European holdings are investment grade Hold $6.9 billion mostly in better capitalized banks Have sold $3.5 billion of Euro banks since early 2010 Peripheral sovereign exposure no longer an issue Note: All numbers are GAAP BV. Holdings are as of 9/30/11.
Slide 35: Appendix - Reconciliations
MANAGEMENT UPDATE 2 0 1 1 Appendix - Reconciliations
Slide 36: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information All references in this presentation to net income (loss), net income (loss) per share, operating earnings, operating earnings per share and book value per share should be read as net income (loss) available to MetLife, Inc.'s common shareholders, ne
Slide 37: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) MetLife believes the presentation of operating earnings and operating earnings available to common shareholders as MetLife measures it for management purposes enhances the understanding of the company's performance by highlighting the re
Slide 38: Reconciliation of Net Income to Operating Earnings
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders Operating Earnings Available to Common Shareholders Operating Earnings Available to Common Shareholders
Slide 39: Reconciliation of Net Income to Operating Earnings (continued)
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to Common Shareholders - (continued) Operating Earnings Available to Common Shareholders - (continued) Operating Earnings Available to Common Shareholders - (continued)
Slide 40: MetLife
MetLife