Metlife, Inc. · NYSE:MET
Metlife — Investor Day (March 2015)
88 slides from Metlife's investor day presentation, Mar 11, 2015
Slide 1: Cautionary Statement on Forward-Looking Statements and Non-GAAP Financial Information
Cautionary Statement on Forward-Looking Statements and Non-GAAP Financial Information This presentation may contain or incorporate by reference forward-looking statements. Forward-looking statements give expectations or forecasts of future events and use words such as “anticipate,” “estimate,” “expe
Slide 2: Agenda
Agenda Importance of Latin America William J. Wheeler President, Americas Latin America: Overview Oscar A. Schmidt Executive Vice President, Latin America Latin America: Financial Overview Conor Murphy SVP, CFO, Latin America & U.S. Direct Marketing Latin America: Emerging Businesses Mario R. Traver
Slide 3: MetLife
MetLife
Slide 4: William J. Wheeler, President, Americas
William J. Wheeler President Americas March 11, 2015 LATIN AMERICA INVESTOR DAY 2015
Slide 5: MetLife's Franchise in Latin America is Unique
MetLife’s Franchise in Latin America is Unique Largest life insurance company in Latin America Diverse by product, channel and country – focused on relevant businesses in key markets Acquired big businesses and grew them organically Strong talent running our operations Business delivers high growth,
Slide 6: MetLife
MetLife
Slide 7: MetLife in Latin America Today
MetLife in Latin America Today Strong track record of double-digit growth in the last 10 years – Operating earnings growth of 20% in Latin America – Organic operating earnings growth of 12.5% in Mexico High-margin, capital-efficient products Present in seven countries and approximately 9,000 employe
Slide 8: Latin America Strategy
Latin America Strategy Drive growth through four strategic priorities: Agency, Direct Marketing, Employee Benefits and ProVida Achieve double-digit growth in operating PFOs and earnings Maintain historical strong cash flows and high operating ROEs Increasingly leverage regional and global capabiliti
Slide 9: Growth Strategy Aligned with Demographics
Agency Direct Marketing Employee Benefits ProVida Growth Strategy Aligned with Demographics Affluent class is growing Large emerging middle class High employment and companies are underserved Increasing retirement needs
Slide 10: Significant Footprint and Market Share
Mexico Chile Brazil Colombia Uruguay Ecuador Significant Footprint and Market Share Argentina #1 Life Insurer . Market Share 30.0% 7.7 Million Customers Population: 110 Million #1 Life Insurer . Market Share 7.3% 4.3 Million Customers Population: 41 Million #1 AFP . Market Share 67.4% 266 Thousand C
Slide 11: Focused on Key Markets
$1,327 (23%) $292 $1,043 (18%) 159 (27%) 110 (18%) $91 $57 17 3 16 Focused on Key Markets $5,854 GDP 2013 $2,190 (37%) Brazil Mexico Argentina Colombia Chile Ecuador Uruguay No footprint Total Latin America Gross Domestic Product (GDP) and Population by Country MetLife Footprint Population 2013 (34%
Slide 12: Latin America Real GDP Growth
Latin America Real GDP Growth Source: IMF website. Brazil Chile Mexico % % % % % % % % Latin America Real GDP (%)
Slide 13: MetLife is the Largest Life Insurer in the Region
MetLife is the Largest Life Insurer in the Region Top Latin America Life Insurer 2013 Gross Written Premiums (U.S. $ in millions) Source: AXCO Global Statistics (2013). $1,151 $1,342 $1,466 $1,799 $1,862 $2,094 $2,454 $2,714 $4,476 $5,633 A C B E D G F I H
Slide 14: MetLife Relevant in all Distribution Channels
Local Competitors International Agency Direct Marketing Employee Benefits MetLife Relevant in all Distribution Channels Joint venture. Source: MetLife internal analysis. GNP SURA Principal Zurich New York Life Prudential LA CAJA Itau Zurich/Santander ACE BSE Bradesco BNP Paribas Cardif AIG Assurant
Slide 15: Near-Term Opportunities and Challenges
Opportunities Challenges Regulatory & tax reforms Foreign exchange rates Near-Term Opportunities and Challenges Continue leveraging insurance market expansion Potential partnerships Disciplined approach to divestitures and acquisitions
Slide 16: Latin America Long-Term Outlook
Latin America Long-Term Outlook Anticipate low double-digit growth in operating PFOs, consistent with market Expect operating earnings growth in excess of growth in operating PFOs Operating earnings growth supported by agency expansion, employee benefits, direct marketing and ProVida Modest reinvest
Slide 17: Key Takeaways
Key Takeaways Largest life insurance company in Latin America¹ Significant presence in key Latin America markets Well diversified by product and distribution channel Track record of double-digit growth Strong cash flows and high operating ROEs Deep industry knowledge and experience Source: AXCO Glob
Slide 18: MetLife
MetLife
Slide 19: Introduction: Solid 2014 results
Solid 2014 results Positioned for profitable growth Focus on operating efficiency High operating ROE and cash generation Introduction See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 20: Latin America Financial Results by Distribution Channel
ProVida 27% WSM 33% Agency 14% EB 6% DM 5% Annuity Runoff 9% Mexico Public 6% ProVida 8% Worksite Marketing (WSM) 19% Agency 25% Employee Benefits (EB) 19% Direct Marketing (DM) 14% Mexico Public 15% Latin America Financial Results by Distribution Channel Country Operating Premiums, Fees & Other Rev
Slide 21: Strong Operating PFOs Growth by Distribution
Strong Operating PFOs Growth by Distribution See Appendix for non-GAAP financial information, definitions and/or reconciliations. Country Operating PFOs (U.S. $ in millions) $3,037 $3,340 $4,024 WSM Agency Mexico Public DM ProVida EB
Slide 22: Latin America Operating Earnings Walk
(U.S. $ in millions) 2012 2013 2014 Operating Earnings (as reported) $583 $574 $682 Country Operating Earnings $596 $630 $781 Country Operating Earnings (less interest on excess surplus) $529 $562 $679 Operating Earnings (as reported) $583 $574 $682 Operating Earnings (as adjusted) $523 $467 $571 La
Slide 23: Strong Operating Earnings Boosted by ProVida
Strong Operating Earnings Boosted by ProVida See Appendix for non-GAAP financial information, definitions and/or reconciliations. Country Operating Earnings ¹ (U.S. $ in millions) $529 $562 $679 Full year 2014 Country Operating Earnings of $781 million, less interest on excess surplus of $102 millio
Slide 24: Historical and Consensus Exchange Rates
Historical and Consensus Exchange Rates Source: Bloomberg consensus. Consensus ¹ Actual Change in Currency vs. U.S. Dollar (%) Brazilian Real (BRL) Chilean Peso (CLP) Mexican Peso (MXN) 55% 65% 75% 85% 95% 105%
Slide 25: Latin America vs. U.S. GDP Growth
Latin America vs. U.S. GDP Growth Source: IMF website. Latin America vs. U.S. GDP (%) Brazil Chile Mexico United States 0% 1% 2% 3% 4% 5% 6% 7%
Slide 26: Overview of Channel Growth
Worksite Marketing Mexico ProVida Chile Emerging Businesses 33% of Country Operating Earnings Projected Growth: 10-12%/yr 27% of Country Operating Earnings Projected Growth: 10-12%/yr 25% of Country Operating Earnings Projected Growth: 18-20%/yr Natural Inforce Growth Upsell New Markets Best Sales P
Slide 27: Core Products / Businesses
Core Products / Businesses 2014 Country Operating Earnings ¹ Expected 2014-2017 CAGR Main Operating Earnings Drivers High Margin Capital Efficient Products Individual Life 37% 11-15% Underwriting Margin & Fee Income Asset Management 29% 8-12% Fee Income (some Encaje Income) SPIA 7% 3-7% Interest Mar
Slide 28: Leverage Regional and Global Capabilities
Leverage Regional and Global Capabilities Manage one region vs. seven countries Operating expense growth less than operating PFOs growth Headcount control and expense save initiatives Regional service center Implementing global technology solutions See Appendix for non-GAAP financial information, de
Slide 29: High Operating ROE Businesses
High Operating ROE Businesses Operating ROE expected to exceed 15% Tangible ROE expected to exceed 20% New business continues to generate high returns Excludes accumulated other comprehensive income (loss), other than foreign currency translation adjustments. See Appendix for non-GAAP financial info
Slide 30: Strong Cash Remittances Despite High Growth
Strong Cash Remittances Despite High Growth Net Capital Distributions as a Percentage of Operating Earnings Highlights History of high payout ratio expected to continue Modest capital needs given product mix Additional capital of $700 million to be returned to MetLife, Inc. from 2014-2016 Subsidiary
Slide 31: Key Takeaways
Key Takeaways Solid 2014 results Positioned for profitable growth Focus on operating efficiency High operating ROE and cash generation See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 32: MetLife
MetLife
Slide 33: Mario R. Traverso, Senior Vice President
Mario R. Traverso Senior Vice President Business Development & Distribution Latin America March 11, 2015 LATIN AMERICA INVESTOR DAY 2015
Slide 34: Introduction
Introduction Emerging businesses expected to have strong growth Expanding our well-established agency distribution Innovating and growing in direct marketing Leader in employee benefits with opportunities for growth
Slide 35: Emerging Businesses are Positioned for Growth
32-36% 23-27% 28-32% 5-7% 4-6% 33% 27% 25% 6% 9% WSM ProVida Mexico Public Annuity Runoff Expected Emerging Businesses are Positioned for Growth Country Operating Earnings¹ Agency, direct marketing and employee benefits are the key components 25% of Country Operating Earnings¹ High expected growth r
Slide 36: Emerging Business Strategy Tied to Regional Trends
Grow by leveraging Global Employee Benefits (GEB) Strengthen and expand A key regional engine of growth Complete integration and grow Employee Benefits Agency Direct Marketing ProVida Preserve and continue to grow WSM Emerging Business Strategy Tied to Regional Trends High employment and small & med
Slide 37: Agency: Strengthen and Expand
Agency Agency is a combination of independent and career agents who sell face-to-face to the high and middle-income segments Agency: Strengthen and Expand Approximately 4,500 career & independent agents and growing Significant and increasing position in selected countries Approximately 55% of Emergi
Slide 38: Agency: Strengthen and Expand
Agency Agency is a combination of independent and career agents who sell face-to-face to the high and middle-income segments Agency: Strengthen and Expand Strong and proven know-how Increasing customer centricity culture Focus in high margin products (protection and retirement, plus a mix of savings
Slide 39: Direct Marketing: A Key Regional Engine of Growth
Direct Marketing Direct Marketing: A Key Regional Engine of Growth More than 100 sponsors Leverage relationships across the region and globe More than nine million customers and approximately four million policies sold Broad portfolio of Accident & Health, Life and other products and services Approx
Slide 40: Direct Marketing: A Key Regional Engine of Growth
Direct Marketing Direct Marketing: A Key Regional Engine of Growth Redefined organization and aligned talent mix to accelerate growth Strengthened our full service provider differentiator factor Strong local/regional expertise; leveraging global capabilities Investments to develop direct-to-consumer
Slide 41: Employee Benefits: Grow by Leveraging GEB
Employee Benefits Employee Benefits: Grow by Leveraging GEB Market leader in Employee Benefits in key countries Approximately 13,000 group customers; eight million insured Broad Life products across the region with Health and Dental in selected countries Approximately 23% of Emerging Businesses’ Cou
Slide 42: Employee Benefits: Grow by Leveraging GEB
Employee Benefits Employee Benefits: Grow by Leveraging GEB Leverage U.S. relationships with Fortune companies, multinational/multilatinas solutions and global network Segmented value proposition and smart underwriting Strong brand and reputation among brokers and human resource communities at a loc
Slide 43: Key Takeaways
Key Takeaways Emerging Businesses positioned to take advantage of regional trends and leadership in key markets Expanding our well-established agency distribution Innovating and growing in direct marketing Leader in employee benefits with opportunities for growth Approximately 25% of Country Operati
Slide 44: MetLife
MetLife
Slide 45: Sofia Belmar, Senior Vice President
Sofia Belmar Senior Vice President Business Development & Distribution Mexico March 11, 2015 LATIN AMERICA INVESTOR DAY 2015
Slide 46: Introduction
Introduction Long-term successful track record in Mexico Business model focused on mass market Differentiated distribution is key competitive advantage Market leader positioned for continued double-digit growth See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 47: Financial inclusion business in Mexico
Ni Zelenkso Lué , Zapoteco Dialect: We’re With You Long history of building strong financial inclusion business in Mexico Capability to reach 64,000 indigenous communities with over 350 dialects Provide financial security National Commission for Development of Indigenous People, based on the INEGI a
Slide 48: Successful Acquisition, Strong Organic Growth
(U.S. $ in millions) 2002³ 2014 Total Market Share (excluding pension) 12.2% 15.5% Statutory Gross Written Premiums² $1,004 $3,653 Statutory Earnings² $68 $495 Acquired Hidalgo for approximately $920 million in 2002 Operating earnings in first five years equivalent to purchase price Strong and consi
Slide 49: Capabilities Provide Competitive Advantage
Extensive access to government workers through collection slots Efficient operating model supports high volume business Nationwide presence provides broad reach for sales and service Comprehensive product well suited for customer needs Capabilities Provide Competitive Advantage
Slide 50: MetLife Mexico is the Market Leader
Company Total Market¹ (excluding Pensions) $23.5 Life & Major Medical Direct Premiums¹ $14.5 Worksite Marketing² (Individual Life) $1.3 MetLife Mexico is the Market Leader U.S. $1 = 14 Mexican Peso (December 2014). 15.5% 25.3% 79% Competitor 1 12.3% 14.5% 8% Competitor 2 9.0% 11.0% 2% Competitor 3 6
Slide 51: Proven and Successful Business Model
WSM Proven and Successful Business Model Providing insurance to the middle and low income population (nearly two million existing customers) Customers include employees of government entities Mainly payroll deduction, with significant business from new sales, up-sell/cross-sell Development of bankin
Slide 52: Unparalleled Distribution in Worksite Marketing
Unparalleled Distribution in Worksite Marketing Sales force comprised of 21 promotorias and over 3,300 agents in 223 offices Variable cost distribution model, independent agents with an exclusive contract with MetLife Over 35 years average experience with MetLife Nationwide presence with offices in
Slide 53: WSM is Efficient Distribution Model
WSM is Efficient Distribution Model Face-to-face sales at government entities Lack of scheduled appointments or referrals Prospecting generated from data analytics Simple and efficient sales process
Slide 54: Key Business Metrics for WSM
Business Metrics Key Business Metrics for WSM U.S. $1 = 14 Mexican Peso (December 2014). See Appendix for non-GAAP financial information, definitions and/or reconciliations. Sales $196 million Average annual premium per policy $600 Average face amount per policy $23,000 Persistency 90+%
Slide 55: Single Product with Multiple Riders to Meet Life Events
Single Product with Multiple Riders to Meet Life Events Simple universal life product sold through a single slot 18 riders for different life events Breakdown of sales: 45% new and 55% up-sell/cross-sell See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 56: Example of Up-Sell/Cross-Sell to Meet Life Events
Example of Up-Sell/Cross-Sell to Meet Life Events Death benefit and total or permanent disability Collective accidental death and savings premium Additional death benefit, life coverage for spouse benefit & cancer Educational benefit & personal accidents rider Funeral expenses for parent Mom Becomes
Slide 57: Bank Collection Opportunity
Bank Collection Opportunity Some payroll slots migrating to bank collection Market expansion through bank collection New business in markets without payroll deduction and sales in private market Persistency less than worksite, but attractive at approximately 80%
Slide 58: Substantial Untapped Market
Working where MetLife has slots 3.0M 0.6M Without MetLife slots 0.7M Non-permanent employees Total Government Employees As of December 2013. INEGI, Conociendo Mexico (2013). Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE), Anuario (2013). Substantial Untapped Mark
Slide 59: Personal Selling Supported by Strong Data Analytics
Market Understanding Opportunities Analysis Face-to-Face Selling Targeted Campaigns & Sales Support by Market Personal Selling Supported by Strong Data Analytics Information model in real-time by state, market, promoter, agent and client. Creates up-sell/cross-sell opportunities Visit the work site
Slide 60: Key Takeaways
Key Takeaways Long-term successful track record in Mexico Worksite Marketing is proven & successful business model Differentiated and unparalleled distribution a key competitive advantage to reach mass market Market leader positioned for continued double-digit growth See Appendix for non-GAAP financ
Slide 61: MetLife
MetLife
Slide 62: Ricardo Rodriguez Marengo, CEO, ProVida AFP
Ricardo Rodriguez Marengo Chief Executive Officer ProVida AFP March 11, 2015 LATIN AMERICA INVESTOR DAY 2015
Slide 63: Introduction
Introduction Chile has the most established pension market in Latin America ProVida is the market leader with significant scale, a diversified customer base, broad distribution and high customer loyalty Our growth is accelerating under MetLife’s ownership Superintendencia de Pensiones (September 201
Slide 64: Overview of Chilean Pension Funds Industry
Overview of Chilean Pension Funds Industry Private defined contribution pension system established in 1981 Administradoras de Fondos de Pensiones, or AFPs, are single purpose companies operating under this system Employee contributions are 10% of salary, plus option for voluntary savings Five invest
Slide 65: Fee Based Revenue Model
Fee Based Revenue Model Three sources of fees: Mandatory savings fee account for ~95% of industry income The AFP maintains 1% of each fund (encaje) – Mandatory savings: fees charged on workers salaries – Voluntary products: fees charged on assets under management (AUM) – Phased withdrawals: fees cha
Slide 66: Salaries and Contributors Drive Industry Growth
Salaries and Contributors Drive Industry Growth Salary pool growing double-digits Contributors growth averaging 3.2% National salary growth averaging 5.9% Highlights Contributor Growth ¹ (in millions) Salary Growth ² National Quarterly Average Income Index (Base 100, Dec 2011) 4.64 4.87 4.99 5.09 Su
Slide 67: A Successful System with Challenges Ahead
Fiscal Sustainability Income Adequacy India Netherlands Mexico U.S. Chile Brazil China Australia Russia Germany Australia Sweden Sweden UK Canada Chile Poland Canada Korea France U.S. Italy Switzerland Spain UK China Brazil Japan Japan India France Switzerland Netherlands Mexico Germany Russia Italy
Slide 68: ProVida Well Positioned as Market Leader
Funds Market Share Revenue Share Customer Portfolio ProVida Well Positioned as Market Leader Ranked #1 in mandatory savings, 28% market share Ranked #4 in voluntary savings, 14% market share Ranked #1 with 30% market share Ranked #1 amongst contributors, 33% market share Well diversified customer se
Slide 69: Segmented Value Proposition
Single Value Proposition Transactional Branches Mandatory Product Only Sales Oriented Segmented Value Proposition Distribution Channel Multi-product Advisory Focused Increasing Customer Loyalty and Profitability Mass Market Highlights
Slide 70: Major Growth and Competitive Advantage Drivers
Growth Model Major Growth and Competitive Advantage Drivers Scale Differentiated distribution model Diversified customer base Loyalty Salary pool New entrants Independent workers Voluntary savings Aging population entering retirement Major Growth Levers Value Generation Factors
Slide 71: ProVida Salary Growth Exceeds National Average
ProVida Salary Growth Exceeds National Average ProVida contributors’ salary growth is higher than national average Mass market is less competitive than high end market Salary Growth Highlights ProVida salaries: Superintendencia de Pensiones and MetLife internal analysis; National salaries: National
Slide 72: Largest Branch Network in the Industry
82 branches; nearest competitor has 39 24 new branches in 2014; 97% of customers within ~31 miles Largest Branch Network in the Industry North: Alto Hospicio, Tal Tal, Caldera, Vicuña, Salamanca Central-north: La Ligua, Casablanca, Limache, Rengo, San Vicente, Pichilemu Metropolitan area: La Florida
Slide 73: Enhanced Service Model
Enhanced Service Model Number of Complaints Highlights Complaints down 73% MetLife’s customer centric perspective Efficiency and effectiveness focus Automation and process decentralization MetLife internal analysis. 48,201 34,569 23,948 15,399 12,860
Slide 74: Loyalty Drives Low Turnover Rate
Loyalty Drives Low Turnover Rate Source: Superintendencia de Pensiones and MetLife internal analysis. Turnover Rate MetLife Acquisition 0% 5% 10% 15% 20% 25% 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 Oct-Nov ProVida Competitor 1 Competitor 2 Competitor 3 Low Cost Competitor 4
Slide 75: Net Positive Transfers Since MetLife Acquisition
Net Positive Transfers Since MetLife Acquisition Reflects the net number of contributors (active workers) who have transferred to/from ProVida and from/to other AFPs. Source: MetLife internal analysis. MetLife Acquisition Net Transfers¹ (3,463) (2,745) (2,708) 3,311 9,283 4,251 5,149 1Q 13 2Q 13 3Q
Slide 76: MetLife Acquisition Improving Voluntary Growth
MetLife Acquisition Improving Voluntary Growth Total Voluntary¹ Assets Under Management (CLP in millions) MetLife Acquisition Voluntary includes Ahorro Previsional Voluntario (voluntary pension savings), Cuenta 2 and Deposito Convenido; % Growth is absolute. Source: MetLife internal analysis. 402,64
Slide 77: Key Takeaways
Key Takeaways Chile has the most established pension market in Latin America Strong regulation has been a constant since 1981 ProVida is the market leader¹ with significant scale, a diversified customer base, broad distribution and high customer loyalty Our growth is accelerating under MetLife’s own
Slide 78: Slide 78
Slide 79: William J. Wheeler, President, Americas
©UFS William J. Wheeler President Americas March 11, 2015 LATIN AMERICA INVESTOR DAY 2015
Slide 80: Key Takeaways for the Day
Key Takeaways for the Day MetLife’s franchise in Latin America is unique Diverse by product, channel and country – focused on relevant businesses in key markets Business delivers high growth, high operating ROEs and great cash flows See Appendix for non-GAAP financial information, definitions and/or
Slide 81: MetLife
MetLife
Slide 82: Appendix
Appendix LATIN AMERICA INVESTOR DAY 2015
Slide 83: Definitions
Definitions LATIN AMERICA INVESTOR DAY
Slide 84: Definitions
Definitions . Sales (Latin America & GEB): • 10% of single-premium deposits (mainly from retirement products such as variable annuity, fixed annuity and pensions) and 20% of single-premium deposits from credit insurance. • 100% of annualized full year premiums and fees from recurring-premium policy
Slide 85: Reconciliations
Reconciliations LATIN AMERICA INVESTOR DAY
Slide 86: Reconciliation of Operating Earnings to Country Operating Earnings
2012 2013 2014 Reconciliation of Operating Earnings Available to Common Shareholders to Country Operating Earnings Available to Common Shareholders and Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders – Latin America ($ in millions) Operating earnings available to common shareholde
Slide 87: Reconciliation of Operating Premiums, Fees & Other Revenues
2012 2013 2014 Reconciliation of Operating Premiums, Fees & Other Revenues to Country Premiums, Fees & Other Revenues and Premiums, Fees & Other Revenues (GAAP) – Latin America ($ in millions) Operating premiums, fees & other revenues (as reported) 3,379 $ 3,838 $ 4,240 $ Noteworthy items: Impact of
Slide 88: MetLife
MetLife