Metlife, Inc. · NYSE:MET
Metlife — Keefe, Bruyette & Woods 2007 Insurance Conference
22 slides from Metlife's conference presentation, Sep 5, 2007
Slide 1: MetLife Investments
MetLife Investments Steve Kandarian, Chief Investment Officer Keefe, Bruyette & Woods 2007 Insurance Conference September 2007
Slide 2: Forward-looking statements
These materials contain statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the operations and financial results and the business and the products of MetLife, Inc. and its subsid
Slide 3: MetLife Investments Overview
Total Portfolio: $325 billion of managed assets Financial Strength: S&P Rating for MLIC ? AA* Liability Driven: Asset-liability management Team Investment Approach: 600+ investment and support professionals Risk Management: Part of our culture METLIFE INVESTMENTS | ORGANIZATION & CAPABILITIES * Fina
Slide 4: MetLife Investments Office Locations
Investments headquartered in Morristown, New Jersey 11 Real Estate Investment offices in the United States, London, Toronto and Mexico City 6 Agricultural Investments offices in the United States Regional offices in Hong Kong, Santiago and London; Affiliated offices in 15 countries outside the Unite
Slide 5: MetLife Investment Process
Investment Objective: Maximize the long-term economic value of assets over liabilities within defined risk constraints Key Drivers: Liability-driven strategy Balance income and economic value goals Market conditions drive tactics Diversification of issuers and asset classes Liability- Driven Investm
Slide 6: Risk Management Disciplined & Integrated
Dedicated Investments Risk Management team Risk management integrated throughout investment process Portfolio management Relative value and risk assessment drive asset allocations Use derivatives to reduce risk Limits system and measurement METLIFE INVESTMENTS | RISK MANAGEMENT Risk Management Disci
Slide 7: Risk Management Limits System and Exposure Management
Economic capital (VaR) limits Credit aggregation Aggregate exposures by Issuer and Issuer Family across all asset classes Stress testing Historical average Historical worst case Monte Carlo planned in 2008 Total Portfolio Risk Limit Sector Risk Limits Issuer Risk Limits Asset Class Risk Limits METLI
Slide 8: Asset-Liability Management How Does it Work?
Corporate Risk Management ALM Participants Financial Management Investments Lines of Business ALM is the management of the Company's assets and liabilities to optimize risk and net investment income ALM is governed by a formal structure to ensure a consistent process Individual Group Life and Health
Slide 9: Why Are Portfolios Different?
Short 0.1 to 3.5 Mostly Float Some Growing Total Control Account GICs Securities Lending Products Liability Profile Duration (years) Rate Guarantee Options Growth Intermediate 3.5 to 6.0 Fixed Many Stable Deferred Annuities Universal Life Long 6.0 to 15.0+ Fixed Few Stable/Growing Closeouts Structur
Slide 10: 2007 Target Asset Allocation
METLIFE INVESTMENTS | PORTFOLIO DEVELOPMENT 2007 Target Asset Allocation Asset-Liability Management Liabilities Drive Asset Allocation
Slide 11: Portfolio Allocation Trend
METLIFE INVESTMENTS | ASSET ALLOCATION Portfolio Allocation Trend
Slide 12: Corporate Credit Quality
METLIFE INVESTMENTS | CREDIT PORTFOLIO Corporate Credit Quality ($ Billions)
Slide 13: Below Investment Grade Defensive Strategy
METLIFE INVESTMENTS | BELOW INVESTMENT GRADE 9/30/2000 9/30/2001 9/30/2002 9/30/2003 9/30/2004 9/30/2005 9/30/2006 6/7/2007 % of Portfolio 0.066 0.058 0.057 0.061 0.053 0.053 0.052 0.054 2007 Projections Corp. Bonds Emg. Markets Bank Loans Other 0.47 0.15 0.31 0.07 Below Investment Grade Defensive S
Slide 14: Commercial and Agricultural Mortgages High Quality Portfolio
METLIFE INVESTMENTS | COMMERCIAL MORTGAGES Commercial and Agricultural Mortgages High Quality Portfolio (Book Value; $ Billions)
Slide 15: RMBS Good Value and Diversification
$59.2 billion 99.4% AAA Portfolio duration: 3.7 years Highly liquid and attractive relative value Volatility mitigated by: Matching assets with liabilities Structure / security underwriting Hedging with derivatives METLIFE INVESTMENTS | RMBS Residential Mortgage-Backed Securities Good Value and Dive
Slide 16: Alt-A RMBS Superior Structural Support
100% AAA 77% Super Senior Remaining 23% has seasoned collateral MetLife's average portfolio subordination level is 11% versus standard new issue AAA of about 5.5% 93% fixed rate; No option ARM's None backed by second liens Alt-A Residential Mortgage-Backed Securities Superior Structural Support METL
Slide 17: Sub-Prime Mortgages Started Managing Risk Early
2002 2003 2004 2005 2006 6/7/2007 AAA/AA 2635 2674 2820 3093 2420 2281 A and Below 685 578 426 321 117 51 Became concerned about underwriting in late-2004 Stopped purchasing 'A' and lower tranches Reduced total exposure 32% from year-end 2005 to 2Q 2007 Sub-Prime Mortgages Started Managing Risk Earl
Slide 18: Sub-Prime Mortgage Strategy
Sub-Prime Mortgage Strategy Recent Activity Focused on Highly Rated Securities As of 6/30/07 $1,094 $827 $309 $96 METLIFE INVESTMENTS | SUB-PRIME 47.0% 35.6% 13.3% 4.1% 59.6% 38.2% 1.5% 0.7% 0.7% of Managed Assets $52 million A/BBB all 2004 & prior vintages
Slide 19: Sub-Prime CDOs Limited, Highly Rated
Sub-Prime Collateralized Debt Obligations Limited, Highly Rated MetLife substantially avoided the ABS CDO market due to sub-prime mortgage concerns 0.03% of Managed Assets 95% AAA/AA Currently no Asset-Backed Commercial Paper holdings METLIFE INVESTMENTS | SUB-PRIME CDO'S ($ Millions) As of 6/30/07
Slide 20: Alt-A/Sub-Prime Mortgage Losses Will Likely Be Minimal
Alt-A/ Sub-Prime Mortgage Losses Will Likely Be Minimal Potential Losses are based on the low and high ends of the range for Moody's updated performance assumptions. High end of range approximates 2X the historic worst case scenario (2000 vintage). METLIFE INVESTMENTS | ALT-A , SUB-PRIME & SUB-PRIME
Slide 21: Summary
Providing well-integrated risk management and ALM Our primary goal => asset returns beat the liabilities Defensively managed portfolio METLIFE INVESTMENTS | SUMMARY Summary
Slide 22: MetLife
MetLife
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