Metlife, Inc. · NYSE:MET
Metlife — Investor Presentation (December 2013)
71 slides from Metlife's investor presentation, Dec 12, 2013
Slide 1: Outlook Call 2013
Exhibit 99.1 Edward A. Spehar Senior Vice President & Head of Investor Relations December 12, 2013 OUTLOOK CALL 2013
Slide 2: 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 3: Agenda
Metalife Agenda Overview Steven A. Kandarian Chairman, President & Chief Executive Officer Americas William J. Wheeler President, Americas Asia Christopher Townsend President, Asia EMEA Michel Khalaf President, Europe, Middle East and Africa Financial Update John C.R. Hele Chief Financial Officer Cl
Slide 4: Steven A. Kandarian
Steven A. Kandarian Chairman, President & Chief Executive Officer December 12, 2013 OUTLOOK CALL 2013
Slide 5: Reiterate Strategy and Operating ROE Goal
Reiterate Strategy and Operating ROE Goal No change in strategy Continue to shift business mix and diversify risk profile Operating ROE of 12-14% in 2016 See Appendix for non-GAAP financial information, definitions and/or reconciliations. 5
Slide 6: Focus on Multi-Year Business and Financial Outlook
Focus on Multi-Year Business and Financial Outlook Multi-year performance is driver of sustained shareholder value Discuss near-term and long-term outlook – Near-term is one to three years, consistent with 2016 goals – Long-term is the secular growth trend from 2016 onward Understanding business mod
Slide 7: Key Near-Term Macro Assumptions
Key Near-Term Macro Assumptions 5% annual appreciation in S&P 500 U.S interest rates based on consensus – 10-year U.S. Treasury 2.88% at 12/31/13, 3.36% at 12/31/14, and 4.50% by end of 2016 Exchange rates at consensus – Yen/$ at 102 at 12/31/13; 106 average for 2014 – Mexican Peso/$ at 12.78 at 12/
Slide 8: Detailed Discussion of Business Segments
Detailed Discussion of Business Segments Operating earnings analysis Key sensitivities Near-term opportunities and challenges Near-term guidance on certain key items Long-term outlook See Appendix for non-GAAP financial information, definitions and/or reconciliations. 8
Slide 9: William J. Wheeler
William J. Wheeler President Americas December 12, 2013 OUTLOOK CALL 2013
Slide 10: Americas Overview
Americas Overview Near-Term Opportunities Key Strategies Long-Term Outlook and Challenges Accelerate growth in Group, Opportunities: Mid to high single digit Voluntary & Worksite Benefits growth in Group Improved Group underwriting (GVWB) results Upside in Corporate Benefit Expand in Latin America F
Slide 11: Group, Voluntary & Worksite Benefits Operating Earnings Analysis
Americas – Group, Voluntary & Worksite Benefits Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $898 Noteworthy Items: Variable investment income($5) P&C catastrophes above Plan $22 P&C prior year development($15) Group Life reserve adjustments($24) VOCRA write-do
Slide 12: Group, Voluntary & Worksite Benefits Key Sensitivities
Americas – Group, Voluntary & Worksite Benefits Key Sensitivities 1% change in Group Life mortality ratio translates to approximately $35 million of operating earnings 1% change in Non-Medical Health benefit ratio translates to approximately $40 million of operating earnings 1% change in P&C combine
Slide 13: Group, Voluntary & Worksite Benefits Factors Driving Near-Term Outlook
Americas – Group, Voluntary & Worksite Benefits Factors Driving Near-Term Outlook Opportunities Challenges Demand for voluntary Uncertainty due to health care products as responsibility reform shifts to employees Aggressive competitor pricing Emergence of private Continued slow growth in exchanges w
Slide 14: Group, Voluntary & Worksite Benefits Near-Term Guidance on Certain Key Items
Americas – Group, Voluntary & Worksite Benefits Near-Term Guidance on Certain Key Items Expect mid-single digit growth in PFOs1 in 2014, with acceleration in 2015-2016 Group Life mortality ratio of 88.2%2, expect closer to mid-point of the 85-90% targeted range Non-Medical Health benefit ratio of 90
Slide 15: Group, Voluntary & Worksite Benefits Long-Term Outlook
Americas – Group, Voluntary & Worksite Benefits Long-Term Outlook Target market growth for group insurance industry is 2-4%1 Expect growth in PFOs to be between 4-7%, while maintaining pricing discipline Operating earnings growth expected to be 6-8% 1 MetLife Group Insurance Markets Analysis (2013).
Slide 16: Corporate Benefit Funding Operating Earnings Analysis
Americas – Corporate Benefit Funding Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $1,254 Noteworthy Item: Variable investment income ($40) Baseline Operating Earnings $1,214 See Appendix for non-GAAP financial information, definitions and/or reconciliations. 16
Slide 17: Corporate Benefit Funding Key Sensitivities
Americas – Corporate Benefit Funding Key Sensitivities $1 billion of pension closeout sales translates to approximately $10 million of operating earnings 10 bps increase in LIBOR without any change in longer-term interest rates could reduce operating earnings by $3-$6 million See Appendix for non-GA
Slide 18: Corporate Benefit Funding Factors Driving Near-Term Outlook
Americas – Corporate Benefit Funding Factors Driving Near-Term Outlook Opportunities Challenges Pension funding levels Limited near-term growth in improving1 structured settlements market Continued demand for stable A flattening yield curve could value solutions put downward pressure on: – Investmen
Slide 19: Corporate Benefit Funding Near-Term Guidance on Certain Key Items
Americas – Corporate Benefit Funding Near-Term Guidance on Certain Key Items Moderate operating earnings growth expected Pension risk transfer market should be robust even without any jumbo deals Expect to maintain consistent spread levels in 2014 with some spread compression in 2015-2016 – Investme
Slide 20: Corporate Benefit Funding Long-Term Outlook
Americas – Corporate Benefit Funding Long-Term Outlook Pension risk transfer market likely to see significant and sustained growth – About 40% of plan sponsors with frozen plans under $1 billion expect to terminate in next 5 years1 Market share by product not expected to deviate from current positio
Slide 21: Retail Annuities Operating Earnings Analysis
Americas – Retail Annuities Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $1,624 Noteworthy Items: Variable investment income ($15) DAC and other unlockings ($203) Initial market impact ($92) Baseline Operating Earnings $1,314 See Appendix for non-GAAP financial
Slide 22: Retail Annuities Key Sensitivities
Americas – Retail Annuities Key Sensitivities 100 bps variance in separate account returns translates to approximately $3 million of operating earnings in current quarter, then approximately $10 million annually 10 bps move in the investment income spread translates to operating earnings of approxim
Slide 23: Retail Annuities Factors Affecting Near-Term Outlook
Americas – Retail Annuities Factors Affecting Near-Term Outlook Opportunities Challenges Growth in index-linked and Potential spread compression fixed annuity sales Continued negative variable More favorable equity annuity fund flows market returns Cost and resources required Potential for cost save
Slide 24: Retail Annuities Near-Term Guidance on Certain Key Items
Americas – Retail Annuities Near-Term Guidance on Certain Key Items Expect annuity sales to decrease 6-8% in 2014, then modest growth of 3-5%; expect shift from variable to fixed and index-linked annuities Forecast increase in net outflows in 2014 versus 2013 Variable investment income1 of $142 mill
Slide 25: Retail Annuities Long-Term Outlook
Americas – Retail Annuities Long-Term Outlook Retail annuity industry sales relatively flat through 2015, then growth MetLife’s market share should stabilize in 2014 Growth in PFOs and operating earnings of approximately 3% per year, very dependent on market environment See Appendix for non-GAAP fin
Slide 26: Retail Life & Other Operating Earnings Analysis
Americas – Retail Life & Other Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $875 Noteworthy Items: Variable investment income ($35) DAC and other unlockings $69 P&C catastrophes above Plan $50 P&C prior year development ($13) Baseline Operating Earnings $946 Se
Slide 27: Retail Life & Other Key Sensitivities
Americas – Retail Life & Other Key Sensitivities 1% change in mortality loss ratio translates to $10-$12 million of operating earnings 1% change in the P&C combined ratio1 translates to approximately $12 million of operating earnings 1 Including catastrophes. See Appendix for non-GAAP financial info
Slide 28: Retail Life & Other Factors Affecting Near-Term Outlook
Americas – Retail Life & Other Factors Affecting Near-Term Outlook Opportunities Challenges Improving sales growth with Expect Closed Block operating new product portfolio earnings to decline in 2015 anchored by whole life Lower derivative income Improved P&C top and due to expiration of floors bott
Slide 29: Retail Life & Other Near-Term Guidance on Certain Key Items
Americas – Retail Life & Other Near-Term Guidance on Certain Key Items Total life sales expected to be flat to down slightly in 2014 Variable investment income1 of $273 million2, expect $200-$300 million in 2014 Variable & universal life spread3 of 212 bps2, expect range of 190-220 bps in 2014, and
Slide 30: Retail Life & Other Long-Term Outlook
Americas – Retail Life & Other Long-Term Outlook Industry growth outlook for life insurance approximately 2-4%1 MetLife market share currently 4%, expected to be flat in near-term, then outperform industry Growth in PFOs and operating earnings expected to be approximately 3% 1 LIMRA (2Q13). See Appe
Slide 31: Latin America Operating Earnings Analysis
Americas – Latin America Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $549 Noteworthy Items: Tax rate change and other one-time tax benefits ($25) DAC and other unlockings ($7) Baseline Operating Earnings $517 See Appendix for non-GAAP financial information, de
Slide 32: Latin America Segment Key Sensitivities
Americas – Latin America Segment Key Sensitivities 1% change in Mexican Peso to U.S. Dollar exchange rate translates to approximately $5 million of operating earnings 1% change in Chilean Peso to U.S. Dollar exchange rate translates to approximately $3 million of operating earnings 1% change in the
Slide 33: Latin America Factors Driving Near-Term Outlook
Americas – Latin America Factors Driving Near-Term Outlook Opportunities Challenges Provida acquisition Mexico fiscal reform Growth in employee benefits Solvency II implementation in and worksite marketing Mexico Growth in direct marketing Large institutional renewals in Mexico
Slide 34: Latin America Near-Term Guidance on Certain Key Items
Americas – Latin America Near-Term Guidance on Certain Key Items Forecast Provida operating earnings of $190-$210 million in 2014, and then growing approximately 10% per year Expect low double-digit average annual growth in PFOs for 2014-2016, excluding Provida Operating earnings growth consistent w
Slide 35: Latin America Long-Term Outlook
Americas – Latin America Long-Term Outlook Anticipate low double digit growth in PFOs in the region, in line with market Operating earnings growth expected to be in excess of growth in PFOs as a result of: – Momentum in direct marketing – Expansion of employee benefits across the region – Further de
Slide 36: Christopher Townsend
Christopher Townsend President Asia December 12, 2013 OUTLOOK CALL 2013
Slide 37: Asia Overview
Asia Overview A leading multinational in Asia with operations across 9 markets Strong position in Japan; rapid growth in emerging markets Diversified across currencies, products and channels Expect high single to low double digit operating earnings growth over time See Appendix for non-GAAP financia
Slide 38: Asia Operating Earnings Analysis
Asia Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $1,118 Noteworthy Items: DAC and other unlockings $75 Australia—Reserve adjustment $57 Japan—Excess fixed annuity surrenders ($74) Japan—Investment income ($20) Baseline Operating Earnings $1,156 See Appendix fo
Slide 39: Asia: Operating Earnings Breakdown
Asia: Operating Earnings Breakdown 2013 2016 Japan 85-90% 75-80% Japanese Yen 45-55% U.S. Dollar 30-40% Australian Dollar 10-15% Korea 5-10% 10-15% Rest of Asia* < 2% 5-10% * Emerging markets less than 1% in 2013 and 3-6% in 2016. See Appendix for non-GAAP financial information, definitions and/or r
Slide 40: Asia Key Sensitivities
Asia Key Sensitivities Annual Impact on Operating Solvency Change Margin Ratio Earnings ($ millions) (%) Japanese Yen: U.S. Dollar (between 90-110) +/- 1 $4-$5 Korean Won: U.S. Dollar +/- 10 $1-$2 10-Year U.S. Government Bond Yield +/- 10 bps $2 10-15% 10-Year Japanese Government Bond Yield +/- 10 b
Slide 41: Asia Factors Driving Near-Term Outlook
Asia Factors Driving Near-Term Outlook Opportunities Challenges Distribution productivity and Continued strengthening of leverage best practices U.S. Dollar against Asian currencies Product portfolio optimization Regulatory tightening Employee benefits is a large untapped opportunity Managing distri
Slide 42: Asia Near-Term Guidance on Certain Key Items
Asia Near-Term Guidance on Certain Key Items Proportion of accident & health and group sales expected to grow from an estimated 30% of total sales in 2013 to approximately 35% in 2016 Growth in PFOs of 5-10% annually on a constant exchange rate basis, with 2014 expected to be at the lower end of the
Slide 43: Asia Long-Term Outlook
Asia Long-Term Outlook Market growth1 – Japan 2-3% – Korea 6-7% – Rest of Asia 10-12% Growth in MetLife Asia PFOs – Japan 5-7% – Korea 8-10% – Rest of Asia 12-15% Operating expenses grow at a slower rate than PFOs 1 Percentages based on direct written premium. Source: Swiss Re, The Japanese Insuranc
Slide 44: Asia Free Cash Flow in Japan
Asia Free Cash Flow in Japan Limited dividends in near term as a result of $1.6 billion capital distribution in 2012 Japan dividends estimated to be approximately 30% of operating earnings by 2016 Over the long term, Japan dividends more than half of operating earnings See Appendix for non-GAAP fina
Slide 45: Michel Khalaf
Michel Khalaf President Europe, Middle East and Africa December 12, 2013 OUTLOOK CALL 2013
Slide 46: EMEA Overview
EMEA Overview Leading position in several markets in the Middle East and Central & Eastern Europe Emerging markets expected to comprise 80% of operating earnings in 2013 Diversified across geography, product and channel Expect double digit growth in sales, PFOs and operating earnings over time See A
Slide 47: EMEA Operating Earnings Analysis
EMEA Operating Earnings Analysis ($ in millions) 4Q12 – 3Q13 Reported Operating Earnings $299 Noteworthy Items: Poland DAC / VOBA write-off $26 UK deferred tax asset write-off $30 APB 23 and other one-time tax benefits ($56) DAC and other unlockings ($8) Baseline Operating Earnings $291 See Appendix
Slide 48: EMEA Key Sensitivities
EMEA Key Sensitivities Largest operations are Poland, the Gulf and Russia, accounting for over half of emerging markets operating earnings within the region Turkey and Russia are two of the region’s fastest growing markets Operating earnings currency mix1 – 35% Euro – 21% U.S. Dollar – 15% Polish Zl
Slide 49: EMEA Factors Driving Near-Term Outlook
EMEA Factors Driving Near-Term Outlook Opportunities Challenges Bancassurance and direct- Poland pension reform to-consumer expansion Eurozone economic climate Employee benefits Building the MetLife brand development in focus countries Capital diversification and cash generation
Slide 50: EMEA Near-Term Guidance on Certain Key Items
EMEA Near-Term Guidance on Certain Key Items Sales growth of 15-20% while maintaining cash payout ratio in excess of 50% PFOs expected to grow in mid-single digits, moving to mid-teens Operating earnings reduced by $35-$40 million, primarily from Poland pension reform and investment in the brand Und
Slide 51: EMEA Long-Term Outlook
EMEA Long-Term Outlook Market growth – Developed 2-4% – Emerging markets 7-9%1 Growth in MetLife EMEA PFOs of 10-12% – Developed 4-6% – Emerging markets 12-15% Operating expense growth of mid to high single digits as more countries reach scale 1 Source: Munich Re Economic Research, Insurance Market
Slide 52: John C.R. Hele
John C.R. Hele Chief Financial Officer December 12, 2013 OUTLOOK CALL 2013
Slide 53: Financial Update
Financial Update Free cash flow Expense saves and reinvestment Corporate & Other and taxes
Slide 54: Free Cash Flow Outlook has Improved
Free Cash Flow Outlook has Improved Free Cash Flow as a % of Operating Earnings 45%—55% 35%—45% ~35% 2013 Investor Day Current Current 2014-2016 Target (1) 2014 Projection 2015-2016 Projection(1) (1)The bars represent mid-points of ranges. See Appendix for non-GAAP financial information, definitions
Slide 55: Free Cash Flow Near-Term Guidance on Certain Key Items
Free Cash Flow Near-Term Guidance on Certain Key Items Higher subsidiary dividend expectations driven by: – Refinement of four-way merger impact – Equity market performance – Impact from interest rate hedges Still some drag from assumed rise in interest rates, some possible offset from changes in he
Slide 56: Expense Saves Update
Expense Saves Update1 Gross expense saves on a cash basis expected to be $560-$590 million in 2013, increasing to $770-$800 million in 2014 Reinvestment on a cash basis expected to be $60-$80 million in 2013, increasing to $150-$180 million in 2014 Gross expense saves on a cash basis of $1 billion i
Slide 57: Guidance on Corporate & Other and Tax Rate
Guidance on Corporate & Other and Tax Rate Litigation reserve increase related to asbestos cases of $100-$120 million1 in 4Q13 Corporate & Other expected 2014 operating loss of $550-$750 million, including enterprise initiatives of $160-$200 million1 Effective tax rate expected to be 27.5% in 2014,
Slide 58: Steven A. Kandarian
Steven A. Kandarian Chairman, President & Chief Executive Officer December 12, 2013 OUTLOOK CALL 2013
Slide 59: Key Takeaways
Key Takeaways No change in strategy or operating ROE target Attractive portfolio of businesses Free cash flow outlook better than original forecast Commitment to transparency See Appendix for non-GAAP financial information, definitions and/or reconciliations. 59
Slide 60: MetLife
MetLife
Slide 61: Appendix
Appendix December 12, 2013 OUTLOOK CALL 2013
Slide 62: 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 63: Safe Harbor Statement (Continued)
Safe Harbor Statement (Continued) assumptions; (19) ineffectiveness of risk management policies and procedures; (20) catastrophe losses; (21) increasing cost and limited market capacity for statutory life insurance reserve financings; (22) heightened competition, including with respect to pricing, e
Slide 64: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information slide and this Appendix) to net income (loss), net income (loss) per share, operating earnings, operating earnings per share, book value per commo
Slide 65: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses: Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividen
Slide 66: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) MetLife believes the presentation of operating earnings and operating earnings available to common shareholders as MetLife measures it for management purposes enhances the understanding of the company’s performance by highlighting the re
Slide 67: Definitions
MetLife Definitions
Slide 68: Definitions
Definitions Sales (Retail): Life Sales: Statistical sales information for life insurance is calculated by MetLife using the LIMRA International, Inc. definition of sales for core direct sales, excluding company sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance,
Slide 69: Reconciliations
MetLife Reconciliations
Slide 70: Reconciliation of Operating Earnings Available to Common Shareholders to Net Income
Reconciliation of Operating Earnings Available to Common Shareholders to Net Income Available to MetLife, Inc.’s Common Shareholders Cumulative Results 4Q12—3Q13 Americas Group, Retail Voluntary Corporate Life & Retail & Worksite Benefit Latin Other Annuities Benefits Funding America Asia EMEA ($ in
Slide 71: MetLife
MetLife