Metlife, Inc. · NYSE:MET
Metlife — Q4 2023 Earnings Presentation
35 slides from Metlife's earnings presentation, Feb 1, 2024
Slide 1: 4Q23 Supplemental Slides and Outlook
1 4Q23 Supplemental Slides and Outlook John McCallion Chief Financial Officer 1 These slides highlight information in MetLife, Inc.'s earnings release, quarterly financial supplement and other prior public disclosures. Financial results in this presentation reflect LDTI accounting, pursuant to Finan
Slide 2: Table of contents
Table of contents Topic Page No. Net income (loss) to adjusted earnings 3 Adjusted earnings, ex. total notable items, by segment 4 Variable investment income (VII) 5 Investments 7 Direct expense ratio 9 Cash & capital 10 Outlook 11 Appendix 16 2
Slide 3: Net income (loss) to adjusted earnings
Net income (loss) to adjusted earnings 4Q23 FY23 (post-tax) $ in millions $ per share1 $ in millions $ per share1 Net Income (Loss) $574 $0.77 $1,380 $1.81 Less: Global Atlantic Assets2 73 0.10 (982) (1.29) Net Investment Gains (Losses)2 (210) (0.28) (1,248) (1.64) Net Derivative Gains (Losses)3 118
Slide 4: Adjusted earnings, ex. total notable items, by segment
Adjusted earnings, ex. total notable items, by segment % Change Key Drivers1 ($ in millions - except per share data) 4Q23 4Q22 % Change (Constant Rate) Favorable Unfavorable Underwriting Margins; Group Benefits2 $466 $392 19% Volume Growth Investment Margins; Retirement and Income Solutions2 421 381
Slide 5: 2023 VII below guidance driven by lower private equity returns
2023 VII below guidance1 driven by lower private equity returns ($ in millions - pre-tax) $419 $221 $179 $63 $0 ($44) 1Q23 2Q23 3Q23 4Q23 FY23 Private Equity Other 1 Quarterly target VII range of $500 million, based on full year 2023 guidance range of ~ $2.0 billion. 5
Slide 6: VII by segment
VII by segment ($ in millions - post-tax1) 1Q23 2Q23 3Q23 4Q23 FY23 Group Benefits $— $4 $1 $1 $6 Retirement and Income Solutions (3) 29 35 23 84 Asia (25) 84 37 10 106 Latin America (2) 4 5 4 11 EMEA — — — — — MetLife Holdings 2 41 35 23 101 Corporate & Other (7) 13 28 (11) 23 Total Variable Invest
Slide 7: Strong recurring income supported by higher interest rates and asset growth
Strong recurring income supported by higher interest rates and asset growth Net Investment Income1 Roll Off vs. Reinvestment ($ in billions) 7% 6.67% $21.3 6% $19.7 $18.2 $0.4 5.25% $5.7 5% $1.5 4% 3.88% 3% $19.3 $16.7 $15.6 2% $5.0 $4.5 1% 0% 20 21 21 22 22 23 23 FY21 FY22 FY23 4Q22 4Q23 4Q 2Q 4Q 2
Slide 8: High quality commercial mortgage loan (CML) portfolio
High quality commercial mortgage loan (CML) portfolio1 • Concentrated in high-quality assets and in larger, primary markets LTV and DSCR Matrix $52.1 Billion • 64% average Loan-to-Value (LTV) Ratio and 2.3x average Debt LTV >1.2x 1.0-1.2x <1.0x Total Service Coverage Ratio (DSCR) <65% 48.6% 2.1% 1.2
Slide 9: 2023 direct expense ratio of 12.2% beats 12.6% annual target
2023 direct expense ratio1 of 12.2% beats 12.6% annual target 13.5% 12.6% Annual 12.5% Target 12.4% 12.4% 12.3% 12.2% 12.2% 12.2% 12.0% 11.9% 1Q22 1Q23 2Q22 2Q23 3Q22 3Q23 4Q22 4Q23 FY22 FY23 1 Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers
Slide 10: Cash & capital
Cash & capital Holding Company Cash1 Capital ($ in billions) • Share repurchases of $0.9 billion in 4Q23 and $3.1 billion in FY23 – ~$500 million shares repurchased in January 2024 $5.4 $5.2 $4.9 • Average 2022 - 2023 free cash flow ratio2 of 74% $4.2 $4.2 • 2023 Combined NAIC Risk-Based Capital (RB
Slide 11: Outlook
Outlook Wi MetLife
Slide 12: Overview
Overview • Continued uncertainty in macro environment (inflation & unemployment) • U.S. dollar relatively stable to 2023 Macro Assumptions • Long-term interest rates flat to 12/31/23 with yield curve steepening • S&P 500 annual return of 5% Near-term1 targets: • Adjusted return on equity2 of 13-15%
Slide 13: VII average asset balances and key drivers
VII average asset balances and key drivers Average Asset Balance Key Drivers ($ in billions) • Near-term annual return assumptions: $18.0 $18.9 $19.7 – Private equity: 7-10% – Real estate and other funds: 5-7% $14.5 $14.5 • Private equity and real estate and other funds $14.0 remain pressured in 1Q2
Slide 14: Near-Term Guidance
Near-Term Guidance • Adjusted premiums, fees and other revenues (PFOs) expected to grow 4-6%1 Group Benefits • Group Life mortality ratio of 85.7% in 2023; target of 84-89% • Group Non-Medical Health interest adjusted benefit ratio of 71.6% in 2023; target of 69-74% Retirement and Income • Liability
Slide 15: Near-Term Guidance
Near-Term Guidance1 • Mid single-digit sales growth • General account assets under management2 to grow at mid single-digits Asia • Adjusted earnings expected to grow ~20% in 2024 and mid single-digit growth in outer years • High single-digit growth in adjusted PFOs Latin America • Adjusted earnings
Slide 16: Appendix
Appendix Wi MetLife
Slide 17: Value of new business
Value of new business1 ($ in billions) $3.8 $3.8 $3.7 $3.2 $2.8 $2.3 $2.1 $1.8 $1.9 $1.9 2018 2019 2020 2021 2022 Capital Deployed Value of New Business Internal Rate of Return 15% 15% 17% 17% 17% Payback Period 7 Years 7 Years 6 Years 6 Years 6 Years 1 Excludes MetLife Holdings; Value of New Busine
Slide 18: Interest Rates: Base vs. Declining Rate Scenario
Interest Rates: Base vs. Declining Rate Scenario 12/31/23 12/31/24 12/31/25 12/31/26 Declining Declining Declining Declining Base Rate Base Rate Base Rate Base Rate SOFR1 5.38% 5.38% 3.99% 3.49% 3.08% 2.58% 3.03% 2.53% 10-Year U.S. Treasury1 3.88% 3.88% 3.84% 3.34% 3.93% 3.43% 4.04% 3.54% 30-Year U.
Slide 19: Interest Rates: Base vs. Rising Rate Scenario
Interest Rates: Base vs. Rising Rate Scenario 12/31/23 12/31/24 12/31/25 12/31/26 Rising Rising Rising Rising Base Rate Base Rate Base Rate Base Rate SOFR1 5.38% 5.38% 3.99% 4.49% 3.08% 3.58% 3.03% 3.53% 10-Year U.S. Treasury1 3.88% 3.88% 3.84% 4.34% 3.93% 4.43% 4.04% 4.54% 30-Year U.S. Treasury1 4.
Slide 20: Key Sensitivities
Key Sensitivities • 1% change in Group Life mortality ratio translates to ~$75 million of adjusted earnings1 Group Benefits • 1% change in Group Non-Medical Health interest adjusted benefit ratio translates to ~$90 million of adjusted earnings1 Impact on $ in millions Change Adjusted Earnings1 +10 b
Slide 21: Key Sensitivities
Key Sensitivities Annual Impact on Regulatory $ in millions Change Adjusted Earnings Ratios (%) Parallel shift in yield curve: Asia Japan - UST1 +/-10 bps $1-2 10-15% Japan - JPY1 +/-10 bps $1-2 5-10% Korea2 +/-10 bps $0-1 0-5% Annual Impact on $ in millions Change Adjusted Earnings Latin America Me
Slide 22: Cautionary Statement on Forward-Looking Statements
Cautionary Statement on Forward-Looking Statements The forward-looking statements in this presentation, using words such as “anticipate,” “are confident,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “if,” “intend,” “likely,” “may,” “plan,” “potential,” “project,” “should,” “will,
Slide 23: Explanatory Note on Non-GAAP and Other Financial Information
Explanatory Note on Non-GAAP and Other Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information and Reconciliations) to: Should be read as, respectively: (i) net income (loss); (i) net income (loss) available to MetLife, Inc.’s comm
Slide 24: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period
Slide 25: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Asymmetrical and non-economic accounting adjustments are made to the line items indicated in calculating adjusted earnings: • Net investment income includes earned income on derivatives and amortization of premium on derivative
Slide 26: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Return on equity and related measures • Total MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA: Total MetLife, Inc.’s common stockholders’ equity, excluding the net unrealized investment gains (losses
Slide 27: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Statistical sales information: • 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 So
Slide 28: Reconciliation of Net Income to Adjusted Earnings Available to Common Shareholders
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Adjusted Earnings Available to Common Shareholders FY23 4Q23 4Q22 Earnings Per Earnings Per Earnings Per Weighted Weighted Weighted Average Average Average Common Common Common Share Diluted1 Share Diluted1 Share
Slide 29: Reconciliation to Adjusted Earnings, Excluding Total Notable Items
Reconciliation to Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items 4Q23 Retirement Group & Income Latin MetLife Corporate Benefits1 Solutions1 Asia America EMEA Holdings1 & Other1 (In millions) Adjusted earnings available to common shareholders $ 466 $ 421 $ 296 $ 20
Slide 30: Reconciliation of Net Investment Income to Adjusted Net Investment Income
Reconciliation of Net Investment Income to Adjusted Net Investment Income FY21 FY22 FY23 4Q22 4Q23 (In millions) Net investment income $ 21,395 $ 15,916 $ 19,908 $ 4,464 $ 5,366 Less: Adjustments to net investment income Investment hedge adjustments (895) (976) (1,012) (277) (253) Unit-linked contra
Slide 31: Reconciliation of Premiums, Fees and Other Revenues to Adjusted
Reconciliation of Premiums, Fees and Other Revenues to Adjusted Premiums, Fees and Other Revenues 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 (In millions) Premiums, fees and other revenues $ 12,589 $ 13,543 $ 19,335 $ 10,898 $ 56,365 $ 11,517 $ 13,587 $ 13,170 $ 13,687 $ 51,961 Less: Adjustme
Slide 32: Expense Detail and Ratios
Expense Detail and Ratios 1Q23 2Q23 3Q23 4Q23 FY23 (In millions, except ratio data) Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (718) $ (729) $ (742) $ (728) $ (2,917) Less: Divested businesses — — — — — Adjusted capitalization of DAC $ (718) $ (
Slide 33: Expense Detail and Ratios
Expense Detail and Ratios 1Q22 2Q22 3Q22 4Q22 FY22 (In millions, except ratio data) Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (652) $ (637) $ (626) $ (699) $ (2,614) Less: Divested businesses (11) — — — (11) Adjusted capitalization of DAC $ (64
Slide 34: Condensed Reconciliation of Operating Cash Flow to Free Cash Flow
Condensed Reconciliation of Net Cash Provided by Operating Activities of MetLife, Inc. to Free Cash Flow of All Holding Companies FY23 FY22 (In billions, except ratios) MetLife, Inc. (parent company only) net cash provided by operating activities $ 4.2 $ 4.4 Adjustments from net cash provided by ope
Slide 35: MetLife
iy’ MetLife