Metlife, Inc. · NYSE:MET
Metlife — Investor Day (December 2015)
76 slides from Metlife's investor day presentation, Dec 11, 2015
Slide 1: Outlook Call 2015
Edward A. Spehar Senior Vice President & Head of Investor Relations OUTLOOK CALL 2 0 1 5 December 11, 2015 Exhibit 99.1
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
Agenda Overview Steven A. Kandarian Chairman, President & Chief Executive Officer U.S. Business Eric Steigerwalt Executive Vice President, U.S. Business Latin America Oscar Schmidt Executive Vice President, Latin America Asia Christopher Townsend President, Asia EMEA Michel Khalaf President, Europe,
Slide 4: Steven A. Kandarian, Chairman, President & CEO
Steven A. Kandarian Chairman, President & Chief Executive Officer OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 5: Raising Expectations for Free Cash Flow
Raising Expectations for Free Cash Flow 2 26% 36% 44% 55%-65% Free Cash Flow as a Percentage of Operating Earnings 1 Estimated operating earnings for 2015 have been adjusted to exclude a non-cash charge of $792 million, net of income tax, related to an uncertain tax position. Unadjusted, the free ca
Slide 6: Material Increase in Capital Return to Shareholders
Material Increase in Capital Return to Shareholders Total Shareholder Distributions1 ($ in billions) 1Total shareholder distributions = common stock dividends plus common stock repurchases, net of non-compensatory common stock issuances. Total shareholder distributions for 2011 include approximately
Slide 7: Goals of Outlook Call
Goals of Outlook Call Improve understanding of MetLife’s business model Provide high quality information and more transparency Focus on multi-year outlook, the driver of shareholder value
Slide 8: Focus of This Year's Outlook Call is 2016 to 2018
Focus of This Year’s Outlook Call is 2016 to 2018 Quantitative and qualitative information to help you forecast earnings for the near-term (one to three years) “Accelerating Value” initiative expected to drive meaningful change; premature to update long-term outlook Plan to provide more insights on
Slide 9: Key Near-Term Macro Assumptions
Key Near-Term Macro Assumptions 5% annual appreciation in S&P 500 U.S. interest rates based on consensus and internal forecast1 10-year U.S. Treasury: 2.33% at 12/31/15, 2.98% at 12/31/16, 3.24% at 12/31/17 and 3.45% at 12/31/18 Three-month LIBOR: 0.42% at 12/31/15, 1.41% at 12/31/16, 1.99% at 12/31
Slide 10: Eric Steigerwalt, EVP U.S. Business
Eric Steigerwalt Executive Vice President U.S. Business OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 11: U.S. Business Overview
U.S. Business Overview Continue to accelerate growth in Group, Voluntary & Worksite Benefits Pursue Corporate Benefit Funding growth at appropriate risk and return Continue to execute on Retail strategic plan Double-digit growth in Voluntary / Worksite Strong pension risk transfer market Continued s
Slide 12: Group, Voluntary & Worksite Benefits Operating Earnings Analysis
Group, Voluntary & Worksite Benefits Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $935 Reported notable items1: Variable investment income, as compared to plan ($11) Catastrophe experience and prior year development, net ($8) Actuarial assumption review and oth
Slide 13: Group, Voluntary & Worksite Benefits Key Sensitivities
Group, Voluntary & Worksite Benefits Key Sensitivities 1 Includes catastrophes. See Appendix for non-GAAP financial information, definitions and/or reconciliations. 1% change in Group Life mortality ratio translates to approximately $40 million of operating earnings 1% change in Non-Medical Health i
Slide 14: Group, Voluntary & Worksite Benefits Factors Driving Near-Term Outlook
Modest job growth offset by slow wage growth Aggressive life and dental pricing environment Group, Voluntary & Worksite Benefits Factors Driving Near-Term Outlook Demand for voluntary products as responsibility shifts to employees Evolving distribution landscape Increase share in mid-sized and small
Slide 15: Group, Voluntary & Worksite Benefits Near-Term Guidance
Group, Voluntary & Worksite Benefits Near-Term Guidance on Certain Key Items 1 LTM = 4Q14 to 3Q15. 2 Includes catastrophes. See Appendix for non-GAAP financial information, definitions and/or reconciliations. Expect growth in operating premiums, fees and other revenues (PFOs) of 3-5% in 2016, with a
Slide 16: Group, Voluntary & Worksite Benefits Near-Term Guidance (Continued)
Group, Voluntary & Worksite Benefits Near-Term Guidance on Certain Key Items (Continued) 1 Includes variable investment income. See Appendix for non-GAAP financial information, definitions and/or reconciliations. Investment income spread of 255 bps1 in LTM; expect within 210-230 bps for 2016, 170-19
Slide 17: Corporate Benefit Funding Operating Earnings Analysis
Corporate Benefit Funding Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $1,461 Reported notable items1: Variable investment income, as compared to plan ($12) Tax adjustments $1 Baseline Operating Earnings $1,450 1 Cumulative impact, as reported in 3Q15 quarterly
Slide 18: Corporate Benefit Funding Key Sensitivities
Corporate Benefit Funding Key Sensitivities $1 billion of pension risk transfer sales translates to approximately $10 million of operating earnings 10 bps increase in LIBOR1 without any change in longer-term interest rates could reduce operating earnings by $3-5 million 1 Includes 1-month and 3-mont
Slide 19: Corporate Benefit Funding Factors Driving Near-Term Outlook
Uncertain capital rules and regulatory environment Flattening yield curve expected to pressure investment spreads Corporate Benefit Funding Factors Driving Near-Term Outlook Strong pension risk transfer market Investment and retirement income solutions for defined contribution market Opportunities C
Slide 20: Corporate Benefit Funding Near-Term Guidance
Corporate Benefit Funding Near-Term Guidance on Certain Key Items Continue to be selective on pension risk transfers to meet risk and return targets General account liabilities expected to grow 0-2% annually Expect spread compression from favorable 2015 results Investment income spread of 171 bps in
Slide 21: Retail Annuities Operating Earnings Analysis
Retail Annuities Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $1,587 Reported notable items1,2: Variable investment income, as compared to plan $2 Actuarial assumption review and other insurance adjustments $38 Tax adjustments ($14) Other noteworthy items2: Ini
Slide 22: Retail Annuities Key Sensitivities
Retail Annuities Key Sensitivities ~65% of the separate account (SA) assets are in equities Operating earnings sensitivity to SA returns: 10 bps change in the investment income spread translates to operating earnings of approximately $25 million annually SA Return Initial Market Impact1 Ongoing Mark
Slide 23: Retail Annuities Factors Driving Near-Term Outlook
Department of Labor fiduciary proposal Investment spread compression Continued negative variable annuity fund flows Retail Annuities Factors Driving Near-Term Outlook Variable annuity and Shield product sales growth Continued product expansion with improved risk adjusted returns Upside from rising i
Slide 24: Retail Annuities Near-Term Guidance
Retail Annuities Near-Term Guidance on Certain Key Items Expect annuity sales to increase approximately 20% in 2016, continue to increase through 2018 Expect net flows to improve, but still negative Total annuity spread of 233 bps1 in LTM; expect 205-225 bps in 2016 and 190-210 bps in 2017-2018 Chan
Slide 25: Retail Life & Other Operating Earnings Analysis
Retail Life & Other Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $997 Reported notable items1: Variable investment income, as compared to plan $4 Catastrophe experience and prior year development, net ($14) Actuarial assumption review and other insurance adjust
Slide 26: Retail Life & Other Key Sensitivities
Retail Life & Other Key Sensitivities 1 Includes catastrophes. See Appendix for non-GAAP financial information, definitions and/or reconciliations. 1% change in interest adjusted benefit ratio translates to approximately $35 million of operating earnings 1% change in the P&C combined ratio1 translat
Slide 27: Retail Life & Other Factors Driving Near-Term Outlook
New York limitations on closed block dividends Investment spread compression Operating PFO growth relatively flat Retail Life & Other Factors Driving Near-Term Outlook Expanded product set expected to drive above market sales growth Changes in portfolio mix continue to drive improved risk / return m
Slide 28: Retail Life & Other Near-Term Guidance
Retail Life & Other Near-Term Guidance on Certain Key Items Interest adjusted benefit ratio of 55.9% in LTM; expected to return to 51-56% range P&C combined ratio of 91.5%1 in LTM; expected to return to 93-97% range Variable & universal life spread of 194 bps2 in LTM; expect 150-170 bps in 2016, 120
Slide 29: Retail Life & Other Near-Term Guidance (Continued)
Retail Life & Other Near-Term Guidance on Certain Key Items (Continued) Closed block operating earnings expected to decline by approximately $30 million in 2016 Current plan is to include U.S. Direct in Retail Life & Other in 2016; expected operating loss of approximately $25 million Changes to expe
Slide 30: Oscar Schmidt, EVP Latin America
OUTLOOK CALL 2 0 1 5 December 11, 2015 Oscar Schmidt Executive Vice President Latin America
Slide 31: Latin America Overview
Latin America Overview Largest life insurance company in Latin America1 Present in seven countries covering approximately 80% of Latin America GDP2 Business consistently delivers high growth, operating ROEs3 and cash flows Strong track record of double-digit growth 1 Based on gross written premiums.
Slide 32: Latin America Operating Earnings Analysis
Latin America Operating Earnings Analysis 1 Cumulative impact, as reported in 3Q15 quarterly financial supplement. 2 Reported notable and other noteworthy items represent a positive (negative) impact to baseline operating earnings. 3 The ProVida encaje is capital required by Superintendencia de Pens
Slide 33: Latin America Key Sensitivities
Latin America Key Sensitivities 1% change in Mexican peso to U.S. dollar exchange rate translates to approximately $4 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 annual return on th
Slide 34: Latin America Factors Driving Near-Term Outlook
Regional economic growth Currency weakness Regulatory uncertainty across the region Latin America Factors Driving Near-Term Outlook Growth in worksite marketing Growth in ProVida Growth in employee benefits, agency and direct marketing Opportunities Challenges
Slide 35: Latin America Near-Term Guidance
Latin America Near-Term Guidance on Certain Key Items Mexico and Chile expected to remain at 85-90% of Latin America operating earnings Expect high single-digit annual growth in operating PFOs and operating earnings on a constant currency basis Macro challenges impacting growth by approximately two
Slide 36: Latin America Near-Term Guidance (Continued)
Latin America Near-Term Guidance on Certain Key Items (Continued) Baseline operating earnings at current exchange rates would be approximately 10% lower Changes to expense allocations and interest on capital expected to increase 2016 operating earnings by approximately $25 million See Appendix for n
Slide 37: Christopher Townsend, President Asia
Christopher Townsend President Asia OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 38: Asia Overview
Asia Overview Asia continues to offer attractive opportunities Diversified across geographies, currencies, products and channels Building differentiated capabilities Clear, consistent strategy to maximize value and earnings
Slide 39: Asia Operating Earnings Analysis
Asia Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $1,430 Reported notable items1,2: Variable investment income, as compared to plan $10 Actuarial assumption review and other insurance adjustments ($32) Tax adjustments ($61) Other noteworthy items2: Investment i
Slide 40: Asia Operating Earnings Breakdown
Asia Operating Earnings Breakdown 2015 Estimate 2018 Projection Japan 85-90% 75-80% Japanese yen 40-50% U.S. dollar 35-45% Australian dollar 10-15% Korea 10-15% 10-15% Rest of Asia* <5% 10-15% *Emerging markets expected to be approximately 3% in 2015 and 5-10% in 2018. See Appendix for non-GAAP fina
Slide 41: Asia Key Sensitivities
Asia Key Sensitivities Change Annual Impact on Operating Earnings ($ in millions) Solvency Margin Ratio (%)1 Foreign exchange rate to U.S. dollar: Japanese yen – unhedged basis +/- 1 $3-$42 Australian dollar +/- 0.01 $1-$2 Korean won +/- 10 $1-$2 Parallel shift in yield curve: U.S. +/- 10 bps $3-$4
Slide 42: Asia Factors Driving Near-Term Outlook
Strengthening of U.S. dollar Regulatory changes Low interest rate environment Asia Factors Driving Near-Term Outlook Margin expansion Product and distribution Capital Continued operational efficiency Invest in differentiation New markets and products Opportunities Challenges
Slide 43: Asia Near-Term Guidance
Asia Near-Term Guidance on Certain Key Items Proportion of protection sales expected to grow from 47% of total Asia sales in 2015 to 50-55% by 2018 Expect mid-single digit operating PFO growth on a constant currency basis, with focus on driving value and cash Expect high single-digit operating earni
Slide 44: Asia Near-Term Guidance (Continued)
Asia Near-Term Guidance on Certain Key Items (Continued) Expect currency exchange rates to have negative impact on 2016 operating earnings of $45 million Changes to expense allocations and interest on capital expected to decrease 2016 operating earnings by approximately $30 million Japan dividends o
Slide 45: Michel Khalaf, President EMEA
Michel Khalaf President Europe, Middle East and Africa OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 46: EMEA Overview
EMEA Overview Leading position in several markets in the Middle East and Central & Eastern Europe Emerging markets expected to comprise over 70% of EMEA operating earnings over the near term Diversified across geography, product and channel Operational efficiencies from legal entity restructuring in
Slide 47: EMEA Operating Earnings Analysis
EMEA Operating Earnings Analysis ($ in millions) 4Q14 – 3Q15 Reported Operating Earnings $250 Reported notable items1: Actuarial assumption review and other insurance adjustments ($6) Tax adjustments ($14) Baseline Operating Earnings $230 1 Cumulative impact, as reported in 3Q15 quarterly financial
Slide 48: EMEA Key Sensitivities
See Appendix for non-GAAP financial information, definitions and/or reconciliations. EMEA Key Sensitivities Largest operations in the Gulf, UK and Poland account for approximately 40% of EMEA’s operating earnings UK expected to be a key contributor, with growth coming from wealth management and empl
Slide 49: EMEA Factors Driving Near-Term Outlook
Strengthening of U.S. dollar Regulatory changes Political and economic headwinds EMEA Factors Driving Near-Term Outlook Drive operational efficiencies Capital diversification and cash generation Build the MetLife brand in key markets Opportunities Challenges
Slide 50: EMEA Near-Term Guidance
EMEA Near-Term Guidance on Certain Key Items Expect sales growth rate in high single digits, moving to low to mid-teens Expect operating PFOs to be relatively flat in 2016, low single-digit growth on a constant currency basis Expect high single-digit growth in operating PFOs in 2017-2018 Operating e
Slide 51: John C.R. Hele, Chief Financial Officer
John C.R. Hele Chief Financial Officer OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 52: Financial Update
Financial Update Outlook for variable investment income Impact of interest rates Outlook for Corporate & Other and tax rate
Slide 53: Outlook for Variable Investment Income
Outlook for Variable Investment Income Weaker than expected for 4Q15; anticipate variable investment income for 2015 to be below low end of $1.3-$1.7 billion1 range Variable investment income for 2016 expected to be within range of $1.2-$1.5 billion1 ¹ Pre-tax.
Slide 54: Manageable Balance Sheet Impact from Low Rates
Manageable Balance Sheet Impact from Low Rates Balance sheet impact if 10-year Treasury at 2% forever Statutory reserve increase of less than $1 billion GAAP charge with present value of less than $3 billion after tax Modest potential charges relative to earnings power LTM statutory operating gain o
Slide 55: Meaningful Low Rate Protection for Operating Earnings
Meaningful Low Rate Protection for Operating Earnings Pre-Tax Derivative Income1 (+/- 100 bps Sensitivity) Approximately $200 billion notional2 to hedge against adverse economic factors $0.7-$1.0 billion of annual pre-tax derivative income for 2016-2018 based on Flat rate scenario Protection extendi
Slide 56: Interest Rates: Stress Scenario vs. Plan
Interest Rates: Stress Scenario vs. Plan 1 Rates based on external consensus for next six quarters and internal forecast thereafter. 12/31/2015 12/31/2016 12/31/2017 12/31/2018 Stress Plan Stress Plan Stress Plan Stress Plan 3-Month LIBOR1 0.23% 0.42% 0.23% 1.41% 0.23% 1.99% 0.23% 2.45% 10-Year Trea
Slide 57: Manageable Earnings Impact from Low Rates
Manageable Earnings Impact from Low Rates Operating earnings impact from interest rate stress scenario Approximately $10 million reduction versus plan for 2016 Approximately $150 million reduction versus plan for 2017 Approximately $285 million reduction versus plan for 2018 10 bps increase in LIBOR
Slide 58: Guidance on Corporate & Other and Tax Rate
Guidance on Corporate & Other and Tax Rate Expect Corporate & Other operating loss of $500-$700 million in 2016 Changes to expense allocations and interest on capital expected to reduce 2016 operating loss by approximately $20 million Lower expenses and taxes expected to drive improvement in Corpora
Slide 59: Steven A. Kandarian, Closing Remarks
Steven A. Kandarian Chairman, President & Chief Executive Officer OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 60: Key Takeaways
Key Takeaways Challenging macro environment for operating earnings and operating ROE1, but focused on levers to drive improved results Producing more cash; upwardly revised free cash flow-to-operating earnings target of 55-65% Distributing more cash; barring adverse capital rules or attractive M&A,
Slide 61: MetLife
MetLife
Slide 62: Appendix
Appendix OUTLOOK CALL 2 0 1 5 December 11, 2015
Slide 63: Safe Harbor Statement
Safe Harbor Statement 63 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 eve
Slide 64: Safe Harbor Statement (Continued)
Safe Harbor Statement (Continued) 64 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
Slide 65: 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 share
Slide 66: 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 67: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) derivative gains (losses) should not be viewed as substitutes for the following financial measures calculated in accordance with GAAP: GAAP revenues, GAAP expenses, income (loss) from continuing operations, net of income tax, net income
Slide 68: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Return on MetLife, Inc.'s common stockholders' equity, excluding AOCI other than FCTA is defined as net income (loss) available to MetLife, Inc.’s common shareholders divided by MetLife, Inc.'s average common stockholders' equity, exclud
Slide 69: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) In this presentation, MetLife may provide forward-looking guidance on its future earnings, premiums, fees and other revenues, earnings per diluted common share, book value per common share, return on common equity and free cash flow (as
Slide 70: Definitions
MetLife Definitions
Slide 71: Definitions - Sales
Definitions - Sales Retail: Life Sales: Statistical sales information for life insurance is calculated by MetLife using the LIMRA definition of sales for core direct sales, excluding company sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placemen
Slide 72: Reconciliations
MetLife Reconciliations
Slide 73: Reconciliation of Operating Earnings to Net Income - Total Company
Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders – Total Company 73
Slide 74: Reconciliation of Operating Earnings to Net Income
Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders 74
Slide 75: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow 75
Slide 76: MetLife
MetLife