Metlife, Inc. · NYSE:MET
Metlife — Investor Day (November 2016)
69 slides from Metlife's investor day presentation, Nov 10, 2016
Slide 1: MetLife 2016 Investor Day
MetLife 2016 Investor Day November 10, 2016 Exhibit 99.1
Slide 2: Introduction
Introduction John A. Hall Senior Vice President, Investor Relations
Slide 3: Cautionary Statement on Forward-Looking Statements and Non-GAAP Financial Information
Cautionary Statement on Forward-Looking Statements and Non-GAAP Financial Information
Slide 4: 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 5: Safe Harbor Statement (Continued)
Safe Harbor Statement (Continued) Insurance Company; (19) availability and effectiveness of reinsurance, hedging, or indemnification arrangements, as well as any default or failure of counterparties to perform; (20) differences between actual claims experience and underwriting and reserving assumpti
Slide 6: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information In this presentation, MetLife, Inc. presents certain measures of its performance that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). MetLife believes that these non-GAAP finan
Slide 7: Non-GAAP financial measures and comparable GAAP measures
3 (v) Non-GAAP financial measures: Comparable GAAP financial measures: (i) operating revenues; (i) revenues; (ii) operating expenses; (ii) expenses; (iii) operating earnings; (iii) income (loss) from continuing operations, net of income tax; (iv) operating earnings available to common shareholders;
Slide 8: Operating earnings and related measures
Operating earnings and related measures: operating earnings; and operating earnings available to common shareholders These measures are used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is also MetLife’s GAAP me
Slide 9: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information(Continued) The following additional adjustments are made to expenses, in the line items indicated, in calculating operating expenses: Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obli
Slide 10: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information(Continued) Operating return on MetLife, Inc.'s common stockholders' equity: operating earnings available to common shareholders divided by MetLife, Inc.'s average common stockholders' equity. Allocated equity: portion of MetLife, Inc.’s common stock
Slide 11: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information(Continued) For the historical periods presented, reconciliations of non-GAAP measures used in this presentation to the most directly comparable GAAP measures may be included in this Cautionary Statement on Forward Looking Statements and Non-GAAP Fin
Slide 12: Reconciliations
Reconciliations Il MetLife
Slide 13: Return on Allocated Equity
Return on Allocated Equity 1 3 (xi) 1The Brighthouse Financial segment results are not indicative of Brighthouse Financial, Inc. and related companies on a combined basis; therefore, return on equity calculations and allocated equity for the Brighthouse Financial segment are not presented. 2Total no
Slide 14: Return on Allocated Equity
Return on Allocated Equity 1, 2 3 (xii) 1Annualized using year-to-date results. 2The Brighthouse Financial segment results are not indicative of Brighthouse Financial, Inc. and related companies on a combined basis; therefore, return on equity calculations and allocated equity for the Brighthouse Fi
Slide 15: Agenda
4 Agenda Introduction John A. Hall, Senior Vice President, Investor Relations A Changing Company for a Changing World Steven A. Kandarian, Chairman, President & Chief Executive Officer The Course to Value Creation John C.R. Hele, Chief Financial Officer Q&A Closing Remarks Steven A. Kandarian, Chair
Slide 16: Full video available at investor.metlife.com
5 The full video is available at http://investor.metlife.com. All other information contained on MetLife’s website is not a part of this presentation.
Slide 17: A Changing Company for a Changing World
A Changing Company for a Changing World Steven A. Kandarian Chairman, President & Chief Executive Officer
Slide 18: Our Brand has Always Evolved with Our Business
Our Brand has Always Evolved with Our Business 1967 – 100th Anniversary 1985 Up to 1960s – Tower icon Early 1980s 1997 – present 7
Slide 19: Navigating life together
i MetLife Navigating life together
Slide 20: A Track Record of Bold Moves
9 A Track Record of Bold Moves Globalization Hidalgo (Mexico) – 2002 Travelers – 2005 Alico – 2010 ProVida (Chile) – 2013 Innovation Group insurance – 1917 Group auto & home – 1975 Separate account guaranteed investment contract – 1989 U.S. medical insurance exit – 1995 Plan to pursue separation of
Slide 21: MetLife Enterprise Strategy (2012)
10 MetLife Enterprise Strategy (2012) Drive Toward Customer Centricity and a Global Brand Grow Emerging Markets Build Global Employee Benefits Business Refocus the U.S. Business Global * World-Class * Scale One
Slide 22: A Changing External Environment
11 A Changing External Environment Lower for longer interest rates Regulatory environment Changing customer expectations
Slide 23: Cs of Value Creation
3 Cs of Value Creation Customer Delivering differential value throughout customer lifecycle Competitors & Markets Deciding where to play based on competitors and pools of value Cash Measuring and managing for cash generation 12
Slide 24: Accelerating Value
Accelerating Value Strategic Decisions Decisions 13 RIS Capital budgeting; product re-pricing; mix shift Japan Refocused; reduce costs; stopped Yen whole life Mexico Public market to private market Investments General account invested asset remix U.S. Retail Pursue plan of separation
Slide 25: Refreshed MetLife Enterprise Strategy (2016)
Deliver the right solutions for the right customers Strengthen distribution advantage Optimize value and risk Drive operational excellence Refreshed MetLife Enterprise Strategy (2016) 14
Slide 26: Optimize value and risk
15 Optimize value and risk Focus on in-force and new business opportunities using Accelerating Value analysis to optimize cash and value, while balancing risk across MetLife
Slide 27: Drive operational excellence
16 Drive operational excellence Drive operational excellence into everything we do to become a more efficient, high performance organization focused on the customer with a disciplined approach to unit cost improvement
Slide 28: Strengthen distribution advantage
17 Strengthen distribution advantage Transform our distribution channels to drive productivity and efficiency through digital enablement, improved customer persistency and deeper customer relationships
Slide 29: Full video available at investor.metlife.com
18 The full video is available at http://investor.metlife.com. All other information contained on MetLife’s website is not a part of this presentation.
Slide 30: Deliver the right solutions for the right customers
19 Deliver the right solutions for the right customers Use customer insights from targeted segments to deliver differentiated value propositions – products, services and experiences – to win customers and earn their loyalty
Slide 31: Optimize Value and Risk
Optimize Value and Risk Il MetLife
Slide 32: Optimize Value and Risk: Clusters Emerged
21 Optimize Value and Risk: 5 Clusters Emerged Financial performance Risk profile Strategic position Materiality Growth engine Balance cash and growth Scale Longer-term play Optimize 1 2 3 4 5 Criteria Clusters
Slide 33: Growth Engine cluster
76_84 Strong growth and economics Limited risk Attractive market and advantaged position Key Characteristics Businesses Chile – Life Group Benefits Gulf MetLife Investment Management Mexico Property & Casualty 1 Growth Engine 22
Slide 34: Full video available at investor.metlife.com
23 The full video is available at http://investor.metlife.com. All other information contained on MetLife’s website is not a part of this presentation.
Slide 35: Full video available at investor.metlife.com
24 The full video is available at http://investor.metlife.com. All other information contained on MetLife’s website is not a part of this presentation.
Slide 36: Balance Cash and Growth cluster
1 Accident & Health, foreign currency denominated products. 76_84 Modest growth with good economics 1-2 challenges (e.g. risk) Key Characteristics Businesses Capital Markets Investment Products Japan (A&H, FX)1 Korea MetLife Europe ProVida (Chile) Retirement and Income Solutions 2 Balance Cash and G
Slide 37: Scale cluster
76_84 Growth and improving cash Medium risk Attractive market, developing position Key Characteristics Businesses Argentina China Turkey 26 Scale 3
Slide 38: Longer-Term Play cluster
76_84 Path to growth is slower More uncertainty (e.g. political, execution risk) Key Characteristics Businesses Brazil Russia 27 Longer-Term Play 4
Slide 39: Optimize cluster
1 Variable annuities. 76_84 Businesses with unclear path to growth Sizable in-force blocks Key Characteristics Businesses MetLife Holdings Other sizable in-force blocks Japan Yen Life U.K. VAs1 28 Optimize 5
Slide 40: MetLife Post-Separation Characteristics
MetLife Post-Separation Characteristics Better free cash flow Average free cash flow ratio of 65-75%1 for 2017 and 2018 More predictable Less interest rate sensitivity Greater proportion of international operating earnings 29 1 Excludes anticipated impact of separation of U.S. retail business. This
Slide 41: Greater Proportion of International Operating Earnings
1 Excludes Corporate & Other; for 3Q16 YTD, also excludes Brighthouse Financial segment. 2 Historical reported results have not been modified for current period events, such as the adoption of new accounting pronouncements, and subsequent events, including acquisitions and dispositions, discontinued
Slide 42: Capital Management
Capital Management Established $3 billion share repurchase authorization Common dividend declared for 4Q16 of $0.40 per share Mergers and acquisitions Strategic deals that clear a risk-adjusted hurdle rate 31
Slide 43: Separation Timeline
Separation Timeline 32 First Half 2016 Second Half 2016 First Half 2017 Announced Separation Filed Form 10 Launch Spin-off Completed Sale of MPCG Announced Brighthouse Financial Name Announced Sale of MPCG To Mass Mutual
Slide 44: Regulatory Update
Regulatory Update Oral arguments heard October 24, 2016 Decision anticipated in 2017 Capital buffer for range of outcomes 33
Slide 45: Navigating life together
i MetLife Navigating life together
Slide 46: The Course to Value Creation
The Course to Value Creation John C.R. Hele Chief Financial Officer
Slide 47: Cash and Capital Philosophy
Cash and Capital Philosophy Belongs to the house Request capital for new business Up to holding companies as soon as practical For deployment 36
Slide 48: MetLife Free Cash Flow Components
MetLife Free Cash Flow Components 37 For further information, see “MetLife, Inc. and Other MetLife Holding Companies Sources and Uses of Liquid Assets and Sources and Uses of Liquid Assets included in Free Cash Flow” included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December
Slide 49: The Balance of IRR & Capital to Create Value
1 IRR = Internal rate of return. Hypothetical Example. For Illustrative Purposes Only. 38 The Balance of IRR1 & Capital to Create Value Hurdle Rate IRR–Hurdle Rate Opportunity C Opportunity B Opportunity A Capital Invested 4 years 7 years 12 years Payback $100M $400M $500M Capital
Slide 50: Not All IRRs are Created Equal
Not All IRRs are Created Equal Same IRR of 12% 7 Years 15 Years 39 Hypothetical Example. For Illustrative Purposes Only.
Slide 51: The Timing of Cash Flows is Key
The Timing of Cash Flows is Key 5 Year Payback 40 Hypothetical Example. For Illustrative Purposes Only.
Slide 52: MetLife New Business Embedded Value
41 MetLife New Business Embedded Value1 Capital Deployed ($B) Value Added ($B) IRR Payback (Years) Level Rate Scenario New Business (2015) $2.9 $0.65 12% 8 Segments: U.S., Asia, Latin America, and EMEA 1 New Business Embedded Value is the present value of future profits from new sales.
Slide 53: 60% of 2015 Capital Deployed Above Hurdle Rate
60% of our 2015 Capital Deployed Above Hurdle Rate 42 IRR below hurdle rate IRR above hurdle rate (0-4%) IRR above hurdle rate (4+%) 2015 New Business Business Units Level Interest Rate Scenario Segments: U.S., Asia, Latin America, and EMEA %
Slide 54: Capital Intensity
1 Excludes AOCI, other than FCTA, adjusted for total notable items, as defined in MetLife Inc.’s Third Quarter Financial Supplement, September 30, 2016. 2 Annualized using year-to-date results. 3 These are pro-forma results based on MetLife’s anticipated separation of a substantial portion of its fo
Slide 55: MetLife Holdings Overview
MetLife Holdings Overview Inforce block of business declining No new sales Long-term cash flows Stranded overhead located here 44 $154B of Insurance Liabilities1 1 Future policy benefits, policyholder account liabilities and separate account liabilities as of 3Q16. 2 Long-Term Care and Japan reinsur
Slide 56: MetLife Holdings Business Objectives
MetLife Holdings Business Objectives Maximize profitability and distributable cash flow Accelerate release of capital and reserves Reduce risk and volatility 45
Slide 57: MetLife Holdings Enhancement Levers
46 MetLife Holdings Enhancement Levers Contractual Operational Financial Behavioral
Slide 58: $800 Million Net Savings by 2020
$800 Million Net Savings by 2020 47 Stranded Overhead Savings Composition Unit Cost Improvement Gross Net $800M
Slide 59: Expense Initiative
48 Expense Initiative ($B) 2016 2017 2018 2019 2020 + Savings $0.2 $0.4 $0.7 $0.9 $1.1 Cost ($0.1) ($0.3) ($0.3) ($0.2) Stranded Overhead ($0.2) ($0.2) ($0.3) ($0.3) Net $0.1 ($0.1) $0.2 $0.4 $0.8 Targeting $1.1 Billion of Pre-tax Savings by 2020 See Cautionary Statement on Forward-Looking Statement
Slide 60: Return on Equity Considerations
Return on Equity Considerations Recurring investment income Variable investment income Stranded overhead from separation Earn-in of expense savings Capital management 49
Slide 61: Operating ROE Spread over 10-Year Treasury
50 Operating ROE1 Spread over 10-Year TSY2,3 Avg. Spread 8.4% 4 1 Excludes AOCI, other than FCTA. 2 Historical reported results have not been modified for current period events, such as the adoption of new accounting pronouncements, and subsequent events, including acquisitions and dispositions, dis
Slide 62: Low Interest Rate Balance Sheet Sensitivity
Low Interest Rate Balance Sheet Sensitivity 51 MetLife Post Separation 10-Year Treasury Forever at 1.5% GAAP1 <$1.0B Statutory2 <$0.2B 1GAAP charge on a present value basis. 2Statutory capital.
Slide 63: Brighthouse Financial
Brighthouse Financial Pro-rata distribution of 80.1% Facilitate valuation of Brighthouse Enable pursuit of retail business model Transparency 52
Slide 64: Recent 8-K Disclosures
Recent 8-K Disclosures1 $3.3 billion to $3.8 billion dividend $1.0 billion to $2.0 billion debt pay down over 2017–2018 2016 free cash flow ratio at or above 55–65% Average 2017–2018 free cash flow ratio of 65–75% $3.0 billion to $4.0 billion liquidity buffer at the holding companies 53 1 For furthe
Slide 65: Navigating life together
i MetLife Navigating life together
Slide 66: Q&A
Q&A Il MetLife
Slide 67: Closing Remarks
Closing Remarks Steven A. Kandarian Chairman, President & Chief Executive Officer
Slide 68: Key Takeaways
See Cautionary Statement on Forward-Looking Statements and Non-GAAP Financial Information for non-GAAP financial information, definitions and/or reconciliations. Key Takeaways Transforming MetLife Driving free cash flow Resumption of share repurchases 57
Slide 69: Navigating life together
i MetLife Navigating life together