Metlife, Inc. · NYSE:MET
Metlife — Investor Day (September 2006)
65 slides from Metlife's investor day presentation, Sep 12, 2006
Slide 1: MetLife
MetLife
Slide 2: Asia Investor Day September 13, 2006
Asia Investor Day September 13, 2006
Slide 3: Investor Relations Tracey Dedrick Vice President
Investor Relations Tracey Dedrick Vice President
Slide 4: Safe Harbor Statement
Safe Harbor Statement 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 MetLif
Slide 5: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information The historical and forward-looking financial information contained in this presentation include performance measures which are based on methodologies other than Generally Accepted Accounting Principles ("GAAP"). MetLife analyzes its performance usin
Slide 6: Explanatory Note on Non-GAAP Financial Information (Cont'd)
Explanatory Note on Non-GAAP Financial Information (Cont'd) For the historical periods presented, reconciliations of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures are included at the end of this presentation and are on the Investor Relations portion of
Slide 7: Agenda
Overview of MetLife International & MetLife in China Charles Symington Senior Vice President & Chief Financial Officer, MetLife International MetLife Korea Stuart Solomon Chief Executive Officer, MetLife Korea MSIMetLife Ichiro Miyake Co-Chief Executive Officer, MSIMetLife Wrap-Up Charles Symington
Slide 8: MetLife International
MetLife International Charles Symington, Senior Vice President & Chief Financial Officer, MetLife International
Slide 9: International: Contribution to MetLife
International Operating Earnings 0.93 0.068 International: Contribution to MetLife MetLife International 7% MetLife U.S. 93% Operating Earnings first half of 2006
Slide 10: International: Leadership
International: Leadership Distribution & Marketing Shailendra Ghorpade President Bill Toppeta Regional Operations Eugene Marks Administration & Customer Service John Rao Strategy & New Business Development Angelica Cantlon Product Management & Japan Operations Bill Hogan
Slide 11: International: Leading Market Positions
Mexico #1 Life and Group Life in-force1 Korea #4 Variable Universal Life sales2 Japan #2 Variable Annuity assets3 Australia #3 Immediate Annuity sales4 Chile #2 Life & Annuity market5 1EstadisticAMIS, as of 6/30/06. 2Korea Deposit Insurance Corporation, 4/20/06. 3Hoken Mainichi News, August 30, 2006
Slide 12: International: Key Strategies
International: Key Strategies Establish meaningful positions in growth markets with attractive margins Maximize distribution opportunities Leverage MetLife's core competencies and relationships Invest in growth, operating platforms and branding Make opportunistic acquisitions/JVs/alliances
Slide 13: International: Opportunities & Challenges
Balance investment in growth with current profitability Develop Citigroup relationship Optimize Joint Venture partnerships Build infrastructure to support growth International: Opportunities & Challenges
Slide 14: International: Operating Revenues
International: Operating Revenues 2001 2002 2003 2004 2005 1H2006 Premiums, Fees & Other Revenues 873 1642 1982 2062 2785 1693 Net Investment Income 266 459 500 585 844 473 ($ Millions) 2001-2005 CAGR 34%
Slide 15: International: Operating Earnings
International: Operating Earnings 2001 2002 2003 2004 2005 1H2006 35 97 206 165 233 137 Impact of significant one-time earnings ($ Millions) 2001-2005 CAGR 61% See appendix for GAAP/Non-GAAP reconciliations.
Slide 16: International: Operating ROE
2005 2006P 2008P Mexico, Korea, Japan, Chile, Australia, Taiwan, EU 17% - 19% 15% - 17% 16% - 18% <0% <0% 15% - 17% <0% <0% <0% Long-Term Contributors China, India International: Operating ROE Current Contributors Hong Kong, Brazil, Argentina/Uruguay Medium-Term Contributors See appendix for GAAP/No
Slide 17: International: 1H2006 Highlights
Record Operating Earnings $137 million, up 15% year over year Record sales $3.8 billion1, in excess of 400% year over year Significant progress in CitiInsurance integration Achieved leading positions in several markets Continued new product introductions International: 1H2006 Highlights 1Includes jo
Slide 18: International: 2006 Goals (Investor Day)
International: 2006 Goals (Investor Day) 1 Includes other revenues. Premiums & Fees exclude unconsolidated joint ventures in Japan, China and Hong Kong. 2 Sales excludes unconsolidated joint ventures in Japan, China and Hong Kong. ($ Millions)
Slide 19: MetLife Asia Operations
MetLife Asia Operations Operations in the three largest markets in Asia1 Japan, Korea, China 2 seasoned and profitable operations, 1 start-up Key support from JV partners in China and Japan Growing through innovative product design and distribution Strong risk management culture 1Swiss Re, Sigma No.
Slide 20: China: High Savings Create Opportunities
3rd largest life insurance market in Asia1 2% of world life premiums1 Under-penetrated market: premiums equal to 1.8% of 2005 GDP1 Primary distribution channel: agency Third-party distribution is developing Foreign life insurance companies generally have joint ventures with a maximum of 50% foreign
Slide 21: China: Under-Penetrated Market
China: Under-Penetrated Market Source: Swiss Re, Sigma No. 5/2006, World Insurance in 2005.
Slide 22: China: Domestic Companies Dominate the Market
China: Domestic Companies Dominate the Market "Big 3" domestic players: China Life, Ping An, Pacific Foreign "Big 3" Other Domestic 5 74 21 74% 21% 5% Other Domestic (16) "Big 3" Foreign Cos. Life Insurance Market Top three domestic companies account for 74% of the market1 Foreign companies have 5%
Slide 23: China: MetLife Operations
JV Partners Capital Airports Holding Company Shanghai Alliance Investments Limited (SAIL) Distribution Professional/traditional agency force Telemarketing and bancassurance Products Whole life Endowment Refundable Personal Accidental & Health China: MetLife Operations
Slide 24: China: MetLife Operations in 24% of the Market
SHENYANG TIANJIN FUZHOU XIAMEN SHENZHEN FOSHAN NANJING MetLife licenses 1Based on July 2006 YTD premiums. Source: CIRC. China: MetLife Operations in 24% of the Market1
Slide 25: China: Professional Agency Force a Differentiator
Well established system, good reputation in the market Continuously increasing quality, productivity of life planners Maintaining high ethical standard in sales practices Needs-based selling highly valued by consumers Viewed by regulators as a model for individual agency sales China: Professional Ag
Slide 26: China: Well-Positioned in Emerging Distribution Channels
Building telemarketing capability China consumer behavior is changing Telemarketing gaining acceptance Bancassurance Good business model and a solid sales team Institutional business start-up China: Well-Positioned in Emerging Distribution Channels
Slide 27: China: Important Takeaways
China: Important Takeaways Significant long term market opportunity A good reputation in the market Early success in only two years due to clear strategy and good execution Key support from JV partners Pro-Agency model revolutionizes agency distribution in China Leader in telemarketing
Slide 28: MetLife Korea
MetLife Korea Stuart Solomon Chief Executive Officer, MetLife Korea
Slide 29: Korea: Small Country, Big Life Insurance Market
2nd largest life insurance market in Asia1 3% of world life premiums1 Premiums 7.3% of 2005 GDP1 Predominantly career agency system Third party distribution growing Korea: Small Country, Big Life Insurance Market 1Swiss Re, Sigma No. 5/2006, World Insurance in 2005.
Slide 30: Korea: An Attractive Market
Korea: An Attractive Market Source: Swiss Re, Sigma No. 5/2006, World Insurance in 2005. * Fiscal year 4.1.05 - 3.31.06 7th largest life insurance market in the world 2nd largest life insurance market in Asia Asia Premium Income by Country ($ Billions) World Premium Income by Country ($ Billions)
Slide 31: Korea: Aging Society Creates Opportunity
Korea: Aging Society Creates Opportunity 1960 1970 1980 1990 2000 2005 2010 2020 2030 2050 0-14 0.423 0.425 0.34 0.256 0.211 0.191 0.163 0.126 0.112 0.09 15-64 0.548 0.544 0.622 0.693 0.717 0.718 0.728 0.71 0.647 0.537 65+ 0.029 0.031 0.038 0.051 0.072 0.091 0.109 0.15 0.241 0.373 Source: Korea Nati
Slide 32: Korea: Opportunity for Variable Products
Percentage of Households Owning Life Insurance Policies Variable CI Savings-type Annuity Accidental WL Health 1 3.6 14.9 22.5 41.2 43.7 70.4 Source: KIDI (Korea Insurance Development Institute): 2005 Insurance Consumer Survey. Korea: Opportunity for Variable Products 86% of households own at least o
Slide 33: Korea: Life Insurance Growth Trends
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 36.71937592 38.69125352 42.28531331 46.92770715 59.34202759 ($ Billions) 2001 - 2005 CAGR 12.4 % Korea: Life Insurance Growth Trends Source: Korea Life Insurance Association (KLIA). *Growth rate impacted by US$ conversion factor * Steady growth of life insuran
Slide 34: Korea: Foreign Insurers Gaining Market Share
Korea: Foreign Insurers Gaining Market Share Foreign Market Share FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 Foreign 3783 5140 6836 8850 11068 "Big 3" 36937 37202 36284 36838 40120 Other 6644 6725 7272 8062 9589 "Big 3" domestic players: Samsung Life, Daehan Life, Kyobo Life Foreign Big 3 Other Domesti
Slide 35: MetLife Korea: History
MetLife Korea: History 1989 MetLife and Kolon Group established a joint venture Kolon-Met Life Insurance Co. 1998 MetLife acquired remaining 49% partnership stake from Kolon Group, and renamed as MetLife Insurance Company of Korea 1998 Launched professional agency force 2002 Launched telemarketing 2
Slide 36: MetLife Korea: Business Operations
Distribution Professional agency distribution Telemarketing Bank distribution Direct marketing (TV) Products Individual life and annuity products First to introduce VUL, VA with GMWB riders #4 VUL writer1 MetLife Korea: Business Operations 1Korea Deposit Insurance Corporation, 4/20/06.
Slide 37: MetLife Korea: Success Story
Quadrupled Operating Earnings in 4 years Growth driven by: Development of professional agency system Excellent agent productivity Development of bancassurance and direct marketing channels Introduction of sophisticated products: VUL, VA with GMWB Development of strong management team MetLife Korea:
Slide 38: MetLife Korea: Financial Trends
2001 2002 2003 2004 2005 2006P Premium & Fees 193 287 384 486 604 725 30 2001 2002 2003 2004 2005 2006P Operating Earnings 14.687 11.758 18.189 37 60.888 100 Net Income 16.376 11.739 19.254 34.51 60.791 Premiums & Fees MetLife Korea: Financial Trends CAGR 33% Operating Earnings CAGR 42% ($ Million)
Slide 39: MetLife Korea: Strong Sales Trends
Sales by Channel Sales by Product 2003 2004 2005 2006P Agency 208 370.5 475 629.8 Telemarketing 21.7 25.2 39 51.6 Bancassurance 33.4 75 216 157.1 Institutional 0.4 56.3 2003 2004 2005 2006P Whole Life 89 65.7 17 171.6 Personal A&H 24.3 27.9 42 52 Annuities 69.3 83.8 242 187.9 VUL 80.3 293.1 365 426.
Slide 40: MetLife Korea: Sales Force Excellence
MetLife Korea: Sales Force Excellence 2002-2005 CAGR 90% Million Dollar Round Table Qualifiers
Slide 41: MetLife Korea: Important Takeaways
Strong growth, high profitability A highly trained, highly productive professional sales force selling high quality business Proven innovators of sophisticated and profitable products Access to mass market through bancassurance and telemarketing channels MetLife Korea: Important Takeaways
Slide 42: Japan
Japan Ichiro Miyake Co-Chief Executive Officer, MSIMetLife
Slide 43: Japan: Large & Transitioning Market
2nd largest insurance market in the world behind the U.S. 1 Premium equals to 8.3% of GDP versus 4.1% in the U.S.1 19% of world life premiums1 Annuity business is still growing Life distribution predominantly career agents Annuity sales predominantly 3rd party distribution (banks and broker dealers)
Slide 44: Japan: Strong Growth Through Bank Sales
CAGR 53% CAGR 36% Total New Annuity Sales in Japan1 (Japanese fiscal year) Japan: Strong Growth Through Bank Sales ($ Millions) Source: MSIMetLife market research: FX conversion: 115¥/US$ 1 Sales in Broker Dealers channel are not publicly disclosed and therefore not included in the graph above.
Slide 45: Japan: Deregulation Presents Distribution Opportunities
Japan: Deregulation Presents Distribution Opportunities Deregulation of annuity for broker dealers Dec 1998 Oct 2002 Deregulation of single premium whole life and single premium endowment for banks Dec 2007 Deregulation of annuity for banks Dec 2005 Expected final & full deregulation of all insuranc
Slide 46: Japan: Bank/Broker-Dealer Channel Growth Potential
Actual Projection Cumulative annuity sales through banks are expected to total $400 to $500 billion by 2010 Source: MSIMetLife market research and forecasts; FX conversion = 115¥/US$ Japan: Bank/Broker-Dealer Channel Growth Potential
Slide 47: Japan: Consumers Motivated to Buy Annuities
U.S. Japan 2000 0.1228 0.1988 2030 0.1918 0.2957 2050 0.1998 0.3565 U.S. Japan 2000 76.8 80.8 2050 82 85 Population Over Age 65 Increasing Dramatically Life Expectancy Growing Uncertainty in government pension program Attractive tax benefit offered by annuity products Consumer investment portfolio 2
Slide 48: Japan: Banks Motivated to Sell Annuities
Ratio of Domestic Service Revenue to Gross Operating Profit (FY 2003 - FY 2005) Decline of interest revenue from corporate loan portfolio due to slow economy Service revenue is a growing source of gross operating profits Japan: Banks Motivated to Sell Annuities Source: MSIMetLife market research
Slide 49: Japan: Annuity Growth Pattern has Changed
Japan: Annuity Growth Pattern has Changed Quarterly VA and FA Sales by Bank Channel ($ Billions, Japanese fiscal quarters) 2006 FA sales declined due to fluctuations in FX and interest rate changes 2006 VA sales flattened due to competition with investment trusts and increased FSA supervision on sal
Slide 50: MSIMetLife: Growing Market Share
MSIMetLife: Growing Market Share Bank sales down market wide Entirely foreign players losing to domestic life insurers MSIMetLife market share is up Annuity Sales By Bank Channels ($ Millions) Source: MSIMetLife market research 2Q 2005 2Q 2006 9,291 8,723
Slide 51: MSIMetLife: The Joint Venture
MSIMetLife: The Joint Venture We define our product as your "gift" for you and your family in the future. We define ourselves as policyholders' "No. 1 supporter" to realize a post-retirement pleasant life. JAPAN - New Company Brand Image
Slide 52: Mitsui Sumitomo Insurance: A Strong Partner
Mitsui Sumitomo Insurance: A Strong Partner 2nd largest non-life insurer in Japan1 Core member of Mitsui Sumitomo Financial Group Strong financial position (FY 2005) Net income: $558 million Total Assets: $64 billion Shareholders' Equity: $17 billion Credit Ratings Standard & Poor's: AA- Moody's: Aa
Slide 53: MSIMetLife: Value Added by Both Partners
Mitsui Sumitomo Insurance Strong relationship with financial institutions as distributors Mitsui Sumitomo brand recognition Market knowledge MetLife Experience in the US annuity market Product development Expertise in wholesaler model Risk hedging expertise MSIMetLife: Value Added by Both Partners
Slide 54: MSIMetLife: Diversified Product Portfolio
Variable Annuities GMDB : Death benefit steps up according to investment GMAB : Paid-in principal is guaranteed as source of annuity payouts GMWB : 105,110, 115 % of paid-in principal is guaranteed depending on investment period as total sum of annuity payouts GMWB for Life Fixed Annuities USD 52%,
Slide 55: MSIMetLife: Focused Product Innovation
GMWB for Life First and only supplier in Japan Product features Immediate annuity Life time guarantee Step up feature Amount guarantee Inflation hedge MSIMetLife: Focused Product Innovation
Slide 56: MSIMetLife: GMWB for Life Emerging Best Seller
($ Millions) MSIMetLife: GMWB for Life Emerging Best Seller FX conversion = 115¥/US$
Slide 57: MSIMetLife: Continues to Grow
MSIMetLife: Continues to Grow ($ Billion) * 3 months total FX conversion = 115¥/US$
Slide 58: MSIMetLife: Important Takeaways
Profitability is on track to meet Investor Day guidance of $30-40 million operating earnings in 2006 Growing market share Key support from joint venture partners Product innovation Excellent relationship with distributors Leveraging US wholesaling experience where applicable Increasing the number of
Slide 59: Wrap Up
Wrap Up Charles Symington, Senior Vice President & Chief Financial Officer, MetLife International
Slide 60: MetLife: Strong Risk Management Culture
Rider risks are managed through Product design Appropriate pricing and underwriting Reinsurance Hedging Hedging All rider risks are aggregated and managed globally All greeks and cross greeks are within scope MetLife: Strong Risk Management Culture
Slide 61: MetLife Asia Operations
MetLife Asia Operations Operations in the three largest markets in Asia1 Japan, Korea, China 2 seasoned and profitable operations, 1 start-up Key support from joint venture partners in China and Japan Growing through innovative product design and distribution Strong risk management culture 1Swiss Re
Slide 62: Q&A Session
ESET Q8A Session
Slide 63: Appendix
EE Appendix
Slide 64: Reconciliation of Net Income to Operating Earnings Available to Common Shareholders
Reconciliation of Net Income to Operating Earnings Available to Common Shareholders ($ Millions) ($ Millions)
Slide 65: MetLife
MetLife