Metlife, Inc. · NYSE:MET
Metlife — Q1 2020 Earnings Presentation
25 slides from Metlife's earnings presentation, May 6, 2020
Slide 1: 1Q20 Supplemental Slides
Exhibit 99.3 1Q20 Supplemental Slides1 John McCallion Chief Financial Officer 1 These slides highlight information in MetLife, Inc.'s earnings release, quarterly financial supplement and other prior public disclosures.
Slide 2: Table of Contents
Table of Contents Topic Page No. Net Income (Loss) to Adjusted Earnings 3 Adjusted Earnings ex. Total Notable Items by Segment 4 Investments 5 Direct Expense Ratio 9 2Q20 Outlook 10 Cash & Capital 11 Appendix 12 2
Slide 3: Net Income (Loss) to Adjusted Earnings
Net Income (Loss) to Adjusted Earnings ($ in millions) – Post-tax 1Q20 $ in millions $ Per Share Net Income (Loss) $4,366 $4.75 Less: Net Investment Gains (Losses) (228) (0.25) Net Derivative Gains (Losses) 3,319 3.61 Investment Hedge Adjustments (109) (0.12) Other (65) (0.07) Adjusted Earnings $1,4
Slide 4: Adjusted Earnings ex. Total Notable Items by Segment
Adjusted Earnings ex. Total Notable Items by Segment ($ in millions) – Post-tax % % Change 1 1Q20 1Q19 Change (Constant Rate) Highlights %) - Underwriting Margins; - Expense Margins; Group Benefits $312 $342 (9 + Volume Growth Retirement and Income Solutions $359 $285 26% + Investment Margins; + Vol
Slide 5: Variable Investment Income (VII)
Variable Investment Income (VII) ($ in millions) - Pre-tax $351 $334 $326 $327 $174 1Q19 2Q19 3Q19 4Q19 1Q20 Private Equity Other 5
Slide 6: Strong Historical Returns from Private Equity
Strong Historical Returns from Private Equity Private Equity Returns Highlights • $7.6 billion1, diversified across 16.5% 16.7% strategy, geography and managers 15.8% 14.1% 14.4% 13.8% 13.4% 12.8% 12.4% 12.1% • No manager greater than 4%; no fund greater than 2% • Attractive fit for long-tailed liab
Slide 7: Favorable Loss History Over Time
Favorable Loss History Over Time1 Impairment and Charge-Off Rates2 Highlights Since 2008: • Fixed maturity securities: average annual impairment rate of 0.16% • Commercial mortgage loans: average annual charge-off rate of 0.04% • Agricultural mortgage loans: average annual charge-off rate of 0.08% •
Slide 8: Proactive Portfolio Positioning
Proactive Portfolio Positioning Below Investment Syndicated Grade Credit Bank Loans Highlights $17.7B; 4.6%1 $5.3B; 1.4%1 • Early repositioning is critical 12% • Reduced allocation to below investment grade $14.2B; 3.0%1 $4.0B; 0.9%1 • Reduced bank loans and increased quality 20% 72% 59% • Small BBB
Slide 9: Managing to ~12.3% Direct Expense Ratio
Managing to ~12.3% Direct Expense Ratio Direct Expense Ratio1 14.3% -170bps 13.3% 13.3% 12.9% 12.6% 12.0% 2015 2016 2017 2018 2019 1Q20 1 Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers (PRT). 9 See Appendix for non-GAAP financial information
Slide 10: 2Q20 Outlook Key Considerations
2Q20 Outlook Key Considerations Highlights • Best estimate of negative high-single to low double digit private equity returns to depress VII • New money yields stable as lower risk-free rate is offset by higher credit spreads Investments • More favorable short-end yield curve configuration • Investm
Slide 11: Cash & Capital
Cash & Capital Holding Company Cash1 Capital • Average free cash flow target ratio of $5.3B 65-75% holds for 2019-2020 based on market conditions2 $4.2B $4.2B • Average free cash flow ratio estimated to $3.5B $3.2B be 40-60% for 2020-2021 based on market conditions2 • 2019 Combined NAIC Risk-Based C
Slide 12: Appendix
Appendix Wi! MetLife
Slide 13: 2Q20 Outlook: Key Considerations by Business
2Q20 Outlook: Key Considerations by Business Key Considerations1 Group Benefits + / - Underwriting Margins; - PFO; - Direct Expense Ratio Retirement and Income Solutions - VII; + Recurring Interest Margins; + Underwriting Margins; - PFO; - Direct Expense Ratio Property & Casualty + Underwriting Marg
Slide 14: Fixed Maturity Securities Exposure to Stressed Sectors
Fixed Maturity Securities Exposure to Stressed Sectors1 Book Value2 Investment % of Total Sector ($ in millions) Grade % Investments Energy $8,696 85% 1.7% Airports 3,489 93% 0.7% Airlines 556 78% 0.1% Cruise Lines / Leisure 504 86% 0.1% Restaurants 415 89% 0.1% Lodging 307 77% 0.1% Fixed Maturity S
Slide 15: Cautionary Statement on Forward-Looking Statements
Cautionary Statement on Forward-Looking Statements The forward-looking statements in this presentation, such as "expect," "2Q20 outlook," "estimate," "target," and "assuming," are based on assumptions and expectations that involve risks and uncertainties, including the “Risk Factors” MetLife, Inc. d
Slide 16: Explanatory Note on Non-GAAP and Other Financial Information
Explanatory Note on Non-GAAP and Other Financial Information Any references in this presentation (except in this Explanatory Note on Non- GAAP Financial Information and Reconciliations) to: Should be read as, respectively: (i) net income (loss); (i) net income (loss) available to MetLife, Inc.’s com
Slide 17: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period
Slide 18: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues: • Universal life and investment-type product policy fees excludes the amortization of unearned revenue re
Slide 19: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
Explanatory Note on Non-GAAP and Other Financial Information (Continued) Statistical sales information: • U.S.: • Group Benefits: calculated using 10% of single premium deposits and 100% of annualized full-year premiums and fees from recurring premium policy sales of all products. • Retirement and I
Slide 20: Reconciliation of Net Income to Adjusted Earnings Available to Common Shareholders
Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Adjusted Earnings Available to Common Shareholders 1Q20 1Q19 Earnings Earnings Per Per Weighted Weighted Average Average Common Common Share Share Diluted1 Diluted1 (In millions, except per share data) Net Income
Slide 21: Reconciliation to Adjusted Earnings, Excluding Total Notable Items
Reconciliation to Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items 1Q20 Retirement and Group Income Property & Latin MetLife Corporate U.S.1 Benefits1 Solutions1 Casualty1 Asia America EMEA Holdings1 & Other1 (In millions) Adjusted earnings available to common shareh
Slide 22: Expense Detail and Ratios
Expense Detail and Ratios (In millions, except ratio data) 2015 2016 2017 2018 2019 Reconciliation of Capitalization of DAC to Capitalization of DAC, as reported on an adjusted basis Capitalization of DAC $ (3,319) $ (3,152) $ (3,002) $ (3,254) $ (3,358) Less: Divested businesses and lag elimination
Slide 23: Expense Detail and Ratios (Continued)
Expense Detail and Ratios (Continued) (In millions, except ratio data) 1Q 2020 Reconciliation of Capitalization of DAC to Capitalization of DAC, as reported on an adjusted basis Capitalization of DAC $ (774) Less: Divested businesses (3) Capitalization of DAC, as reported on an adjusted basis $ (771
Slide 24: Premiums, Fees and Other Revenues
Premiums, Fees and Other Revenues (In millions) 2015 2016 2017 2018 2019 1Q 2020 Total Company - Premiums, Fees and Other Revenues Premiums, fees and other revenues $ 43,900 $ 44,370 $ 45,843 $ 51,222 $ 49,680 $ 11,336 Less: Unearned revenue adjustments 7 30 12 (7) 97 18 Less: GMIB fees 97 124 125 1
Slide 25: MetLife: Navigating life together
iy’ MetLife Navigating life together Wi! MetLife