Metlife, Inc. · NYSE:MET
Metlife — Investor Day (December 2009)
174 slides from Metlife's investor day presentation, Dec 7, 2009
Slide 1: MetLife, Inc. Annual Investor Day
Exhibit 99.1 MetLife, Inc. Annual Investor Day December 7, 2009 Agenda Topic Presenters Registration / Continental Breakfast Outline of Day Conor Murphy Overview C. Robert Henrikson Investments Steven A. Kandarian Finance William J. Wheeler Investments & Finance Q&A Steven A. Kandarian William J. Wh
Slide 2: Conor Murphy, Vice President Investor Relations
Conor Murphy Vice President Investor Relations
Slide 3: Safe Harbor Statement
Safe Harbor Statement These materials 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 4: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information The historical and forward-looking financial information presented at Investor Day and contained in these presentations include performance measures which are based on methodologies other than Generally Accepted Accounting Principles ("GAAP"). MetLi
Slide 5: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Managed Assets (as defined below) is a financial measure based on methodologies other than GAAP. MetLife, Inc. utilizes "Managed Assets" to describe assets in its investment portfolio which are actively managed, available for sale and re
Slide 6: Agenda
Agenda Topic Presenters Registration / Continental Breakfast Outline of Day Conor Murphy Overview C. Robert Henrikson Investments Steven A. Kandarian Finance William J. Wheeler Investments & Finance Q&A Steven A. Kandarian William J. Wheeler Break MetLife Bank Donna A. DeMaio U.S. Business William J
Slide 7: MetLife
MetLife
Slide 8: C. Robert Henrikson, Chairman, President & CEO
C. Robert Henrikson Chairman, President & Chief Executive Officer
Slide 9: Leading with Discipline
Leading with Discipline We have strengthened and protected our franchise We are growing our businesses We are increasing our market share We are maintaining pricing and risk management discipline We are focused on our margins We are positioned to extend our lead
Slide 10: We Stand Alone
We Stand Alone 1Premiums, fees and other revenues. Source: Publicly available SEC filings. Top-Line1 Growth Over the Trailing 12 Months Ended 9/30/09
Slide 11: Focused Growth Market
Focused Growth Market MetLife Focus Product Share Rank Holding our market leading position Group Life1 26% 1 Gaining market share where Variable Annuity2 12% 1 we choose Focused on high margin businesses Group Dental3 13% 2 Maintaining our pricing discipline Group Disability4 15% 2 Increasing market
Slide 12: Recovery of Separate Account Assets
Recovery of Separate Account Assets: 9/30/09 vs. 6/30/08 Source: Publicly available SEC filings. Separate Account Assets
Slide 13: Impairments as a Percentage of General Account Assets
Impairments as a Percentage of General Account Assets Source: Publicly available SEC filings. ($ Billions) Total Invested Assets at 9/30/09 2 Year Impairments at 9/30/09
Slide 14: Strategic Actions
Strategic Actions Focused on building value We weren't distracted - we executed on what we needed to do New U.S. Business organization Why we put these businesses together - a growth story Operational Excellence Moving the bar even higher on expenses
Slide 15: Expanding Product Margins
Expanding Product Margins Extending our lead Growing our core businesses Expanding our high-margin businesses Organic growth and targeted acquisitions Pricing discipline Walking away where we can't achieve our targets Increasing pricing where experience warrants Enhancing our products New, more simp
Slide 16: Further Expense Improvements
Further Expense Improvements We continue to achieve organizational efficiencies through our Operational Excellence initiative Prior Goal $400 million of pre-tax annualized savings by year-end 2010 Already achieved New Goal Increased by $200 million to reach $600 million in pre-tax annualized savings
Slide 17: And Core Investment Spreads are Improving
And Core Investment Spreads are Improving Increased liquidity at year-end 2008 Significant liquidity flexibility remains Opportunistically moving liquid assets into spread assets Will continue to do so on a disciplined basis
Slide 18: Expansion of Operating ROE
Expansion of Operating ROE 2010 Operating ROE ^ 10% Plus: Underwriting improvement Expense improvement Spread improvement & alternative investments = 200 - 300 ROE bps Plus: Acquisition opportunities remain Capital management = Additional ROE expansion See Appendix for non-GAAP financial information
Slide 19: MetLife
MetLife
Slide 20: Steven A. Kandarian, EVP & Chief Investment Officer
Steven A. Kandarian Executive Vice President & Chief Investment Officer
Slide 21: We Came Out of the Crisis Strong
We Came Out of the Crisis Strong Proactive actions protected the portfolio Strong liquidity position Well-positioned to seize market opportunities
Slide 22: U.S. Economic Expectations
U.S. Economic Expectations Slow growth recovery Unemployment will remain high Interest rates begin to rise Credit markets stabilize, but real estate remains under pressure S&P 500 5% equity returns assumed for plan
Slide 23: Portfolio Overview
MetLife Portfolio Overview
Slide 24: Portfolio Allocation Trend
Portfolio Allocation Trend See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 25: Cash and Short-Term Investments
Cash and Short-Term Investments $22.4 billion at 9/30/09 Business model requires higher cash balances Expect to reduce cash from current levels in 2010 by $3 billion to $5 billion
Slide 26: Structured Finance
MetLife Structured Finance
Slide 27: Residential Mortgage-Backed Securities
Residential Mortgage-Backed Securities AAA AA A BBB BB B CCC & Below MetLife 0.82 0.01 0.02 0.02 0.02 0.02 0.09 Residential Mortgage-Backed Securities $43.4 billion at 9/30/09 Collateral characteristics and tranche selection is key Downgrades do not reflect limited severity of loss
Slide 28: MetLife Non-Agency Prime RMBS
MetLife Non-Agency Prime RMBS $6.7 billion at 9/30/09 53% Super Senior 97% Fixed Rate is key 1Source (Market Represented by 2004-2007 Vintages): Hybrid ARMS and Fixed Rate: Bank of America (10/8/09); LTV: J.P. Morgan (9/11/09); Credit Enhancement: Intex (10/12/09). Statistics MetLife Market1 Hybrid
Slide 29: MetLife Alt-A Holdings
MetLife Alt-A Holdings $3.8 billion at 9/30/09 88% Super Senior No Option ARMs and 89% Fixed Rate is key Statistics MetLife Market1 Option ARMs 0% 28% Hybrid ARMs 11% 36% Fixed Rate 89% 36% Loan-to-Value 69% 74% Credit Enhancement 15.8% 8.0% .. 1Source (Market Represented by 2004-2007 Vintages): Opt
Slide 30: RMBS Rated 'B' or 'CCC'
RMBS Rated 'B' or 'CCC' $4.9 billion at 9/30/09 Analyzed potential impairments using rating agency expected losses1 Results in only $200 million of additional impairments Actual impairments expected to be lower 1Moody's expected loss when Moody's rated. Average of Fitch and S&P when not rated by Moo
Slide 31: Seasoned, High Quality CMBS Holdings
Seasoned, High Quality CMBS Holdings $15.5 billion at 9/30/09 89% rated AAA 84% from 2005 and prior vintages vs. 47%1 of the market CMBS Holdings by Vintage Below BBB 67 37 20 15 BBB 103 4 59 87 A 223 26 209 100 AA 545 129 64 29 AAA 9,085 2,908 1,297 528 139 253 558 767 13,818 Total Total 10,023 3,1
Slide 32: Credit
MetLife Credit
Slide 33: Credit
Credit AAA AA A BBB BB B CCC and Below MetLife 0.061 0.117 0.337 0.366 0.068 0.04 0.011 $126.2 billion at 9/30/091 28% Private Placements Diversified by sector and issuer Ratings Profile 1Includes U.S. Corporate Securities ($71.6 billion), Foreign Corporate Securities ($36.6 billion), Foreign Govern
Slide 34: Private Placements
Private Placements Leading market position in private placement origination Spread premium to public bonds Structural elements offer significant downside protection Private placements have outperformed public corporate bonds historically
Slide 35: Real Estate
MetLife Real Estate
Slide 36: Commercial Mortgages
Commercial Mortgages $34.8 billion at 9/30/09 Focus primarily on Class 'A' properties in primary markets Originated lower loan- to-value (LTV) mortgages during market rally LTV at Origination 2001 2002 2003 2004 2005 2006 2007 6/30/1905 MetLife LTV 0.69 0.69 0.65 0.66 0.63 0.62 0.61 0.53 Moodys LTV
Slide 37: Commercial Mortgages LTV
Commercial Mortgages Below 65% LTV 65-75% LTV 75-80% LTV Above 80% LTV MetLife 0.45 0.25 0.11 0.19 Approximately 1,000 loans 67% average LTV1 2.1x average Debt Service Coverage Ratio (DSCR) Loans above 80% have average DSCR of 1.6x Less than 1% of portfolio with >80% LTV and <1.0x DSCR 1Based on rol
Slide 38: MetLife Commercial Mortgage Portfolio
MetLife Commercial Mortgage Portfolio Q409 2010 2011 2012 2013 & Beyond Total Loans Maturing 1.5 2.4 4.8 6.8 19.7 Average LTV 0.68 0.73 0.68 0.7 0.64 Loan Maturities ($ Billions) Loan Maturities & Average LTV of Maturing Loans Average LTV of Maturing Loans1 Refinanced $2.6 billion of commercial mort
Slide 39: Commercial Mortgage Refinance Example
Commercial Mortgage Refinance Example Three loans on dominant malls Improved collateral by cross-defaulting and cross-collateralizing loans Lowered LTV by 27% due to pay down of debt Increased spread by over 475 basis points
Slide 40: Real Estate Delinquencies
Real Estate Delinquencies Commercial mortgage valuation allowance of $542 million Covers a 5% default rate Current delinquency rate of 1 basis point
Slide 41: Gains and Losses
MetLife Gains and Losses
Slide 42: Total Unrealized Gains and Losses
Total Unrealized Gains and Losses 6/30/2008 9/30/2008 12/31/2008 3/31/2009 6/30/2009 9/30/2009 Total Loans Maturing 3.996 12.745 22.191 24.365 14.565 1.61 Average LTV 0.54 0.57 0.59 0.65 0.56 ($ Billions) $1.6 billion net unrealized loss at 9/30/09 $11.8 billion gross unrealized loss $10.2 billion g
Slide 43: Gross Unrealized Gains and Losses at 9/30/09
Gross Unrealized Gains and Losses at 9/30/09 ($ Billions)
Slide 44: 2009 Projected Post-Tax Realized Gains and Losses
2009 Projected Post-Tax Realized Gains and Losses1 Quarter 3/31/2009 6/30/2009 9/30/2009 12/31/09E Total 1.0244 0.9048 0.7488 0.4 Economic 1135 597 696 Other 441 795 456 ($ Billions) 2009 Actual and Projected Post-Tax Gross Losses and Impairments $0.9 billion of realized gains $3.1 billion of gross
Slide 45: 2010 Expectations
MetLife 2010 Expectations
Slide 46: Moving Forward
Moving Forward Reinvest $4 billion to $7 billion of Cash and U.S. Treasuries in spread assets during 2010 Attractive opportunities for new money Variable investment income improves
Slide 47: Annual Variable Investment Income
Components: Alternative Investments: Corporate Joint Ventures Hedge Funds Real Estate Development Joint Ventures and Funds Prepayments: Corporate Bond Prepayments Commercial Mortgage Prepayments Securities Lending 2010 Plan Variable Investment Income $100-200 Million per Quarter / $400-800 Million f
Slide 48: Alternative Investments and Real Estate
Alternative Investments and Real Estate LBO Funds Hedge Funds Other CJV Real Estate Funds and Development Joint Ventures MetLife 0.34 0.17 0.17 0.32 $8.1 billion at 9/30/09 Real estate expected to remain challenged Alternative investments projected to improve in 2010 Holdings
Slide 49: Securities Lending
Securities Lending 12/31/2007 12/31/2008 9/30/2009 Total Loans Maturing 42.9 23.3 21.9 Average LTV 0.54 0.57 0.59 ($ Billions) Securities Lending Balances $21.9 billion at 9/30/09 $3.3 billion on open 91% of loaned assets are U.S. Treasuries, Agencies and Pass- Throughs Maintain program liquidity an
Slide 50: Opportunities for New Money
Opportunities for New Money Corporate credit spreads still above historical averages Potential for attractive structured finance transactions Mortgage platform is a competitive advantage Real estate equity opportunities beginning to emerge
Slide 51: Summary
Summary Losses continue to decline Income expected to improve Well-positioned to seize market opportunities
Slide 52: MetLife
MetLife
Slide 53: William J. Wheeler, EVP & Chief Financial Officer
William J. Wheeler Executive Vice President & Chief Financial Officer
Slide 54: Agenda
Agenda Review of 4th Quarter 2009 Estimated Results Review of Full Year 2009 Estimated Results MetLife Liquidity and Capital Position Review of 2010 Plan Longer Term Outlook
Slide 55: Observations
Observations Financial crisis/recession put significant strain on 2009 earnings But our risk management practices, financial strength and leading insurance franchise have been major differentiators As the environment improves, MetLife is well-positioned to succeed We expect meaningful earnings recov
Slide 56: Fourth Quarter 2009 Estimate
Fourth Quarter 2009 Estimate ($ Millions, except per share data) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 57: Fourth Quarter 2009 Estimate: Financial Performance
Fourth Quarter 2009 Estimate: Financial Performance Solid revenue growth Strong International results (+) MetLife Bank reverse and forward mortgage businesses (+) Annuities favorable market impact and net flows (+) Investment results continue to improve Hedge funds and CJVs performing well (+) Losse
Slide 58: MetLife Bank
MetLife Bank Separate financial data to be provided in the 4th quarter QFS reflects the growing importance of MetLife Bank Acquisitions of both reverse and forward mortgage operations during 2008 - no legacy issues Origination volumes of reverse and forward mortgages have increased substantially dur
Slide 59: Premiums, Fees and Other Revenues Growth
Premiums, Fees and Other Revenues Growth 2005 2006 2007 2008 2009E 25975 28071 29685 32863 33455 6.5%1 CAGR ($ Millions) 1Calculated using 2009E mid-point. $32,863 $33,160 - $33,750 1.8%1 Market share increases in recessionary environment Solid growth in MetLife Bank and Group Insurance 2009 growth
Slide 60: Total Assets
Total Assets 2005 2006 2007 2008 2009E General Account & Other 353.7 384 399 381 393 Separate Account 127.9 144 160 121 147 2.9%1 CAGR $535 - $545 $502 7.6%1 1Calculated using 2009E mid-point. $482 $528 $559 $390-$395 $145-$150 Recovery of separate account investment performance Improvement in mark-
Slide 61: Steady Underwriting Results
2005 2006 2007 2008 2009E Group Term Life Mortality 0.924 0.915 0.916 0.923 0.92 Steady Underwriting Results 2005 2006 2007 2008 2009E Individual Mortality (Gross of Reinsurance) 0.854 0.851 0.864 0.875 0.85 2005 2006 2007 2008 2009E Combined Ratio 0.964 0.872 0.884 0.912148 0.928 Combined Ratio Ex
Slide 62: Non-Medical Health Underwriting Results
Non-Medical Health Underwriting Results 2005 2006 2007 2008 2009E Individual Mortality (Gross of Reinsurance) 0.855 0.849 0.847 0.869 0.89 Higher dental claims activity in late 2008 and 2009 Weaker disability margins in recession Repricing of group coverages will help in 2010 and 2011 Long Term Care
Slide 63: Investment Spreads
Investment Spreads 2005 2006 2007 2008 2009E Annuities 0.0076 0.0067 0.0063 0.0041 0.0043 Group Life 0.0027 0.0021 0.0023 0.0027 0.0024 R&S 0.008 0.0073 0.0078 0.0053 0.0021 Non-Medical Health 0.0015 0.0011 0.0013 0.0004 0.0001 UL/VUL 0.0019 0.0018 0.0017 0.0014 0.0011 Decline in investment spreads
Slide 64: Operating Expense Ratio
2005 2006 2007 2008 2009E Expense Ratio Excl. MetLife Bank and Pension/PRB 0.211 0.228 0.234 0.212 0.199 MetLife Bank 0.002 0.002 0.002 0.006 0.017 Pension/PRB 0.009 0.008 0.003 0.001 0.015 Operating Expense Ratio1 22.3% 23.8% 23.9% 22.0% 23.0% - 23.4% Successful execution of Operational Excellence
Slide 65: Operational Excellence
Operational Excellence Objective: Operational Excellence is a series of enterprise- wide and business unit initiatives designed to build upon MetLife's tradition of success and market leadership, by: Driving effective decision making Increasing productivity and efficiency Accelerating growth in our
Slide 66: Operating Earnings Per Share
Operating Earnings Per Share 2005 2006 2007 2008 2009E 2010P 4.18 5.01 5.99 3.62 2.88 4.2 1Growth rate is calculated for 2009E to 2010P, mid-point to mid-point. 2Adjusted operating earnings per share. See slide 18. See Appendix for non-GAAP financial information definitions and/or reconciliations. 4
Slide 67: Dividends Per Common Share
Dividends Per Common Share 2005 2006 2007 2008 2009 0.52 0.59 0.74 0.74 0.74 9.2% CAGR $0.74 1Payable on December 14, 2009 to shareholders of record as of November 9, 2009. Declared $0.74 on October 30, 20091 One of a few financial services institutions to not reduce or eliminate dividend Dividends
Slide 68: MetLife Liquidity and Capital Position
MetLife Liquidity and Capital Position Consolidated 2009 RBC ratio estimated at 355 to 375 Projected 2009 year-end cash & liquid assets at Holding Company is $4.0 billion (before any subsidiary capital contributions) May invest from $0 to $1.0 billion in MLIC to maintain MLIC's RBC above 350 No debt
Slide 69: AXXX Reserve Solutions
AXXX Reserve Solutions AXXX is a conservative reserving standard for universal life 5 funded & long-term letter of credit solutions totaling $9.6 billion of capacity to cover business written through 2009 2010 sales can be covered with current facilities We are funded through peak reserves and the d
Slide 70: 2010 Plan
2010 Plan ($ Millions, except per share data) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 71: 2010 Premiums, Fees and Other Revenues Growth
2010 Premiums, Fees and Other Revenues Growth ($ Millions) 1Growth rate is calculated for 2009E to 2010P, mid-point to mid-point.
Slide 72: Investment Spreads
Investment Spreads Forecasted variable investment income of $400 million - $800 million in 2010 Reinvestment of cash & U.S. Treasuries during 2010 Attractive new money opportunities (e.g. commercial mortgages) Very little impact from higher interest rates forecast for late 2010 1Weighted average, in
Slide 73: 2010 Operating Expense Ratio
2010 Operating Expense Ratio1 2009E 2010P Expense Ratio Excl. MetLife Bank and Pension/PRB 0.199 0.191 MetLife Bank 0.017 0.018 Pension/PRB 0.015 0.012 21.8% - 22.5% 23.0% - 23.4% 1Operating expense ratio is calculated by dividing operating expenses, excluding amortization of DAC, by premiums, fees
Slide 74: Operating Earnings Per Share 2009E-2010P
2009E 2010P 2.84 4.2 Operating Earnings Per Share 48.1%1 Earnings recovery in most of our businesses +/- 1% movement in S&P 500 this year is equal to approximately +/- $6 million in 2010 $2.81 - $2.86 $4.00 - $4.402 822.6 828.9 Operating Earnings Per Share Average shares outstanding (Millions) 1Grow
Slide 75: Operating Earnings by Line of Business
Operating Earnings by Line of Business ($ Millions) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 76: 2010 Operating ROE
2010 Operating ROE 2009E 2010P 0.067 0.098 9.4% - 10.2% 6.6% - 6.7% Revenue growth Some recovery in investment spread Some recovery in separate account performance Expense improvements Operating ROE See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 77: Longer Term Outlook for ROE
Longer Term Outlook for ROE Recovery of alternative asset classes to normal levels Complete reinvestment into full spread assets On-going expense reduction: Operational Excellence and pension & post-retirement benefit expenses Widening product margins Higher long-term interest rates Will add 200 - 3
Slide 78: MetLife
MetLife
Slide 79: Donna A. DeMaio, President & CEO MetLife Bank
Donna A. DeMaio President & CEO MetLife Bank
Slide 80: Who is MetLife Bank?
Who is MetLife Bank? A Direct Bank that leverages the internet and call centers to fulfill customer deposit needs Top 100 bank with $10 billion in deposits A top-tier player in Forward Mortgage space in both the origination and servicing arena A top-tier player in Reverse Mortgage space $13 billion
Slide 81: MetLife Bank: Leveraging the Brand
MetLife Bank: Leveraging the Brand Leverage skills, competencies and the MetLife brand Natural cross-sell opportunities with Group, Individual and Bank distribution Creates a platform to pursue growth opportunities Disruption in the industry has provided opportunity for low risk acquisitions yieldin
Slide 82: MetLife Bank Forward Mortgage
MetLife Bank Forward Mortgage Originated over $28 billion1 Service over 550,000 customers1 Mostly agency and conforming loans No sub-prime or Alt-A originations 1At 10/31/09.
Slide 83: MetLife Bank Reverse Mortgage
MetLife Bank Reverse Mortgage 1Reverse Market Insight, 2009. Loans sold to GNMA, insured by HUD and serviced by MetLife Bank Complements MetLife retirement strategy Growth industry tied to "baby boomer" market Industry market size: 2009 market of $17 billion1 2015 market forecasted to grow to $41 bi
Slide 84: Financials ($ Millions)
Financials ($ Millions) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 85: Financials ($ Billions, except headcount)
Financials ($ Billions, except headcount) See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 86: MetLife Bank Focus for 2010
MetLife Bank Focus for 2010 Expand current business lines Optimize the operating model to ensure scalability Leverage the MetLife enterprise
Slide 87: MetLife
MetLife
Slide 88: William J. Mullaney, President U.S. Business
William J. Mullaney President U.S. Business
Slide 89: Formation of the U.S. Business
Formation of the U.S. Business New marketplace realities emerging Saw opportunity to transform the way we do business Brought together Institutional, Individual and Auto & Home to form unified U.S. Business About accelerating growth, increasing margins and extending our lead
Slide 90: Transforming the U.S. Business
Transforming the U.S. Business Customer-Focused Distribution Leverage Sales Power Common Manufacturing Model Expand Solutions Across Markets Holistic Approach to Marketing Capitalize on Insights Aligned Support Functions Facilitate Growth
Slide 91: Deliver Earnings Growth
Deliver Earnings Growth Managing for the Long-Term Portfolio view for critical decision making Risk management Disciplined pricing Margin expansion Aligning for organizational synergies
Slide 92: U.S. Business Financial Results
U.S. Business Financial Results See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 93: Market Environment
Market Environment Economic outlook Benefit reductions and cost shifting Intense price competition in some markets Importance of guarantees even greater Consumers substantially underinsured
Slide 94: Driving Growth through Broad, Diverse Distribution
Driving Growth through Broad, Diverse Distribution
Slide 95: Broad, Diverse Distribution
People can buy the way they want Broad, Diverse Distribution Agency distribution Third party Broker dealer Direct to consumer Employee Benefits Sales
Slide 96: Driving Growth Through Distribution
Driving Growth Through Distribution Small business benefits Workplace programs Individual Disability Direct-to-consumer life insurance Direct-to-consumer life insurance Direct-to-consumer life insurance Direct-to-consumer life insurance Direct-to-consumer life insurance
Slide 97: Managing the U.S. Business Portfolio
Projected mix of 2010 operating earnings based on announced realignment Auto & Home Insurance Products Retirement Products Corporate Benefit Funding FY 2008 10 45 22 23 Managing the U.S. Business Portfolio See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 98: Auto & Home
Auto & Home Auto Insurance Home Insurance Other Personal Lines Auto & Home Insurance Products Retirement Products Corporate Benefit Funding FY 2008 10 45 22 23
Slide 99: Auto Insurance: Market Overview
Auto Insurance: Market Overview $160 billion market1 Vehicle sales rebounding Clear signs prices are firming Direct writers gaining market share2 Combined ratios projected to improve 2007 2008 2009E 2084 2061 1995 ($ Millions) Auto Net Earned Premium 1Conning Research and Consulting - Third Quarter
Slide 100: Auto Insurance: Outlook for 2010
Policy sales grow 8% - 11% Exposure decline slows Written premium stabilizes Pricing outlook: 2% - 3% Combined ratio: 95% - 96% Auto Insurance: Outlook for 2010
Slide 101: Insurance Products
Insurance Products Group Insurance Life Dental Disability Long Term Care Individual Life Insurance Term Life Whole Life Universal Life Variable Universal Life Auto & Home Insurance Products Retirement Products Corporate Benefit Funding FY 2008 10 45 22 23
Slide 102: Group Insurance: Market Overview
Group Insurance: Market Overview High unemployment pressuring premium growth Certain competitors pricing very aggressively in pursuit of top-line growth Increased health care utilization Financial strength less of a differentiator
Slide 103: Group Insurance Top-Line Growth
2005 2006 2007 2008 2009E Group Life Premiums, Fees and Other Revenues 6444 6754 7100 7604 7905 Non-Medical Health Premiums, Fees and Other Revenues 4430 4842 5324 6073 6320 Top-Line Growth Faster Than the Market Diversified product and market mix #1 Market Share1 in Group Life #2 Market Share2 in G
Slide 104: Operating Expense Ratio: Group Insurance Products
Operating Expense Ratio: Group Insurance Products 2005 2006 2007 2008 2009E Operating Expense Ratio 0.166 0.161 0.1685 0.15 0.148 16.6% 16.1% 14.6%-15.0% 16.9% 15.0% Operating Expense Ratio See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 105: Group Insurance: Outlook for 2010
Group Insurance: Outlook for 2010 Top-line growth of 3% to 4% Pricing actions taking effect Aggressive expense management Earnings growth of 25% Enhancing voluntary benefits capabilities
Slide 106: Retirement Products
Retirement Products Variable Annuities Fixed Annuities Immediate Annuities Institutional Annuities Auto & Home Insurance Products Retirement Products Corporate Benefit Funding FY 2008 10 45 22 23
Slide 107: Variable Annuities: Market Overview
Variable Annuities: Market Overview Clear winners and losers emerging Shift in distribution landscape Emergence of simplified and lower cost products 2007 2008 2009E 15135 13893 15200 Variable Annuity Sales See Appendix for non-GAAP financial information definitions and/or reconciliations. ($ Millio
Slide 108: Variable Annuities: Outlook for 2010
Variable Annuities: Outlook for 2010 Continued strong sales: $15.1 billion - $15.5 billion plan Manage sales for attractive returns Maintain momentum in core markets Drive additional growth in new markets See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 109: October 2007 Cohort Assumptions
October 2007 Cohort Assumptions $100 million block of variable annuities with GMIB Plus 6% issued at October 2007 market peak 10 year waiting period, then annuitization starting in 2017 No lapses, no deaths Steady mortality improvement for annuitization rates
Slide 110: GMIB Claims Scenario
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GMIB Income Base 100 106 112 119 126 134 142 150 159 169 179.1 AV 100 69 74 79 83 88 94 99 105 112 118 GMIB Claims Scenario 6% net account value (AV) growth 6% SPIA1 interest In 2017: AV is 34% below GMIB Income Base Adjusting for payouts, curre
Slide 111: October 2007 Cohort: Conclusions
October 2007 Cohort: Conclusions GMIB Claims Scenario (6% Net Fund Growth & 6% SPIA Interest): Zero claims ROI over life of product in high single digits Future ROEs in mid-teens At 5% Net Fund Growth & 5% SPIA Interest: Modest claims ROI over life of product in mid-single digits Future ROEs in high
Slide 112: Corporate Benefit Funding
Corporate Benefit Funding Pension Risk Solutions Structured Settlements Stable Value & Investment Products Benefit Funding Solutions Auto & Home Insurance Products Retirement Products Corporate Benefit Funding FY 2008 10 45 22 23
Slide 113: Structured Settlements: Market Overview
Structured Settlements: Market Overview Consistent market size Traditionally, highly competitive market Several competitors have exited the market Pricing and returns more attractive 2007 2008 2009E 661 857 1150 ($ Millions) Structured Settlements Sales See Appendix for non-GAAP financial informatio
Slide 114: Structured Settlements: Outlook for 2010
Structured Settlements: Outlook for 2010 Planned sales of $800 million - $900 million Potential for new entrants Returns will drive sales levels Focus on broker relationships Capacity and scale See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 115: Pension Closeouts: Market Overview
Pension Closeouts: Market Overview Plan funding levels recovering Heightened customer awareness of risks in managing pensions Greater appreciation for guarantees 2007 2008 2009E 147 1465 950 Closeout Sales (US/UK) See Appendix for non-GAAP financial information definitions and/or reconciliations. ($
Slide 116: Pension Closeouts: Outlook for 2010
Pension Closeouts: Outlook for 2010 Significant sales: $1.75 billion - $2.00 billion plan Dependent on economic climate Differentiated, innovative solutions Capacity for large, complex deals See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 117: Summary
Summary Solid top-line growth expected in 2010 Continued pricing discipline Aggressive expense management Strong earnings growth Strategic investments for the future
Slide 118: MetLife
MetLife
Slide 119: William J. Toppeta, President International
William J. Toppeta President International
Slide 120: Leading from Strength
Leading from Strength Consistently strong growth Top market positions Excellent 2009 performance Leveraging MetLife's proven competencies Decisive actions/diversification position future success Executing strategic growth initiatives Accelerating growth in 2010
Slide 121: International: A Powerful Growth Engine
2005 2006 2007 2008 2009E PFOI 2785 3544 4115 4583 4200 $4,115 $4,583 International: A Powerful Growth Engine $3,554 $4,100 - $4,300 11% CAGR1 (15% Constant FX CAGR1) $2,785 ($ Millions) 1Calculated using 2009E mid-point. Premiums, Fees and Other Revenues
Slide 122: Strong Bottom Line Growth
2005 2006 2007 2008 2009E Earnings 227 228 568 479 555 $568 $479 Strong Bottom Line Growth $228 $550 - $560 25% CAGR1 (32% Constant FX CAGR1) $229 1Calculated using 2009E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. ($ Millions) Operating Earnings
Slide 123: Top Positions in Many Key Markets
Top Positions in Many Key Markets 1Life, Major Medical and Personal Accident combined premium (EstadisticAMIS, September 2009). 2Variable Annuity Assets Under Management (Hoken Mainichi News, March 2009). 3Institutional Life Premium and Payout Annuity Sales (Superintendecia de Valores y Seguros, 1Q
Slide 124: 2009 Achievements
2009 Achievements Met earnings and ROE objectives Grew Japan distribution and Japan Post penetration Accelerated growth in Mexico group and individual businesses Expanded Brazil dental
Slide 125: Strong Growth Ahead
Strong Growth Ahead ($ Millions) 1Growth rate is calculated for 2009E to 2010P, mid-point to mid-point. 2Adjusted to reflect ($40) million of the following items: Argentina Pesification ($100) million, Japan and other ($10) million, and foreign exchange impact $70 million. See Appendix for non-GAAP
Slide 126: Leveraging MetLife's Competencies
Attract strong, compatible talent Customer and distributor appeal Strong customer and regulator relationships Product management Hedging competency Investment and Asset-Liability Management expertise Building proprietary distribution 3rd party distributor training, support and service Education, nee
Slide 127: Decisive Actions Differentiate Us
Decisive Actions Differentiate Us Significant business investments Distribution expansion Emerging markets Operating platforms Risk management and underwriting Disciplined hedging program De-risked and repriced products Expense management Customer retention
Slide 128: Diversification Strengthens Risk Management and Growth
2009 Banks 18 DM 8 Financial Advisors 5 Institutional Private 16 Institutional Public 14 Proprietary Agents 28 Worksite Marketing 11 2009 Group Life 18 Medical 9 UL 11 Traditional Life 26 Payment Protection 13 VA/VUL 9 Fixed Annuity 6 A&H and Other 8 Diversification Strengthens Risk Management and G
Slide 129: Europe: Future Growth Opportunity
Europe1: Future Growth Opportunity 2009E 2010P 2011P 413 528 680 $400 - $425 28% CAGR2 $600 - $750 2009E 2010P 2011P 1111 2119 3400 75% CAGR2 ($ Millions) ($ Millions) $500 - $550 $1,075 - $1,150 $2,000 - $2,200 $3,300 - $3,500 1 Europe region includes Europe, Middle East and India. 2Growth rate is
Slide 130: UK: Growing Retirement Opportunity
2008 2006 2007 2009E 2010P 2011P 175 1925.3 2203.7 813 2080 4388 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 UK: Growing Retirement Opportunity 2008 2006 2007 2009E 2010P 2011P 350 1925.3 2203.7 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 350 1,000
Slide 131: Latin America: Excellent Growth
2009E 2010P 2011P 2009E 2010P 2011P 2091 2475 2747 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 2009E 2010P 2011P 2009E 2010P 2011P 325 380 420 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 Latin America: Excellent Growth $2,000 - $2,200
Slide 132: MetLife Mexico...We Stand Alone
MetLife Mexico...We Stand Alone 27% market share Over 6 million customers 1Mexican Insurance Association (AMIS): based on Mexican Statutory Direct Premium. ($ Billions) 2008 Direct Premium1 Life, Medical and Personal Accident
Slide 133: Mexico: Rapid Growth in Private Sector
2009E 2010P 2011P 2009E 2010P 2011P 51 63 72 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 2009E 2010P 2011P 2009E 2010P 2011P 21 31 39 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 Mexico: Rapid Growth in Private Sector $20 - $22 36% CAG
Slide 134: Brazil Dental: Significant Growth Opportunity
2008 2009E 2010P 2011P 2011P 128 230 500 850 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 2008 2009E 2010P 2011P 2011P 4000 10000 13000 15000 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 Brazil Dental: Significant Growth Opportunity 4,000 9,800 - 10,200 12
Slide 135: Asia Pacific: A Powerful Growth Driver
2009E 2010P 2011P 2009E 2010P 2011P 210 250 300 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 2009E 2010P 2011P 2009E 2010P 2011P 1672 1998 2316 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 Asia Pacific: A Powerful Growth Driver $1,600 -
Slide 136: Korea: Agency Expansion Fuels Growth
2009E 2010P 2011P 2009E 2010P 2011P 720 932 1248 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 2009E 2010P 2011P 2009E 2010P 2011P 5058 5990 6651 1050 1500 2000 APAC 1070.2 1345.3 1607.2 1700.4 EMEI 130.8 284.7 303.5 410.3 Korea: Agency Expansion Fuels Growth 4,900 - 5
Slide 137: Japan: Growth Opportunity; Consistent Leadership
Japan: Growth Opportunity; Consistent Leadership 3Q09 - #4 2008 - #1 2007 - #1 2006 - #2 2005 - #4 2005 2006 2007 2008 2009E VA 0.11 0.15 0.15 0.12 0.11 FA 0.06 0.07 0.12 0.14 0.13 15% 7% 15% 12% 14% 12% 11% 13% 11% 6% Aging population, over $8 trillion in low yielding bank deposits1 Transient compe
Slide 138: Japan: Maintaining Leadership Going Forward
2007 2008 2009E 2010P 2011P 21.9 22.64 27.99 29.14 30.62 Japan: Maintaining Leadership Going Forward ($ Billions) $22 $23 $27 - $29 $28 - $30 $30 - $33 10% CAGR2 #2 in variable annuity assets under management1 Assets Under Management 1Hoken Mainichi News, March 2009. 2Calculated using 2011P mid-poin
Slide 139: Accelerating Growth in 2010
See Appendix for non-GAAP financial information definitions and/or reconciliations. Accelerating Growth in 2010 Sales 20% - 22% Premiums, Fees & Other Revenues 19% - 21% Normalized Operating Earnings 14% - 16%
Slide 140: MetLife
MetLife
Slide 141: Key Takeaways
Disciplined Growth Margin Improvement ROE Expansion Key Takeaways:
Slide 142: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information The historical and forward-looking financial information presented at Investor Day and contained in these presentations include performance measures which are based on methodologies other than Generally Accepted Accounting Principles ("GAAP"). MetLi
Slide 143: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Operating earnings available to MetLife, Inc.'s common shareholders per diluted common share is calculated by dividing operating earnings available to MetLife, Inc.'s common shareholders by the number of weighted average diluted common s
Slide 144: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) In the presentations made at Investor Day, MetLife, Inc. provides guidance on its future earnings, earnings per diluted common share and return on common equity on an operating and non-GAAP basis. A reconciliation of the non-GAAP measure
Slide 145: Table of Contents
Table of Contents Definitions 6 Reconciliations: Reconciliation of Net Income Available to MetLife Inc.'s Common Shareholders 9 Reconciliation of Operating Expenses and Expense Ratio 11 Reconciliation of Total Investments to Managed Assets 12 Metrics: U.S. Business 13 Institutional 15 Individual 21
Slide 146: Definitions
Definitions
Slide 147: Definitions
Definitions Sales (Total Company): Variable annuity sales are on a VARDS basis. Sales (Institutional): Sales include annualized revenue at issue and initial deposit. Sales (Individual Business): Variable annuity sales are on a VARDS basis. Fixed annuity and Life sales are on a LIMRA basis. Sales (In
Slide 148: Reconciliations
Reconciliations
Slide 149: Reconciliation of Net Income to Operating Earnings - Total Company
Reconciliation of Net Income Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to MetLife, Inc.'s Common Shareholders - Total Company
Slide 150: Reconciliation of Net Income to Operating Earnings
Reconciliation of Net Income Available to MetLife, Inc.'s Common Shareholders to Operating Earnings Available to MetLife, Inc.'s Common Shareholders
Slide 151: Reconciliation of Operating Expenses and Expense Ratio
Reconciliation of Operating Expenses and Expense Ratio
Slide 152: Reconciliation of Total Investments to Managed Assets
Reconciliation of Total Investments to Managed Assets
Slide 153: U.S. Business Metrics
U.S. Business Metrics
Slide 154: U.S. Business: 2009 - 2010 Targets
U.S. Business: 2009 - 2010 Targets
Slide 155: Institutional Metrics
Institutional Metrics
Slide 156: Institutional: 2009 - 2010 Targets
Institutional: 2009 - 2010 Targets
Slide 157: Institutional: 2009 - 2010 Operating Earnings
Institutional: 2009 - 2010 Operating Earnings
Slide 158: Group Life: Key Metrics
Group Life: Key Metrics ($ Millions) 20095 2010P | Premiums, Fees & Other Revenues $7,890 - $7,920 $8,230 - $8,280 4.4% Operating Earnings $445-$455 $530 - $560 21.1% Investment Spread 215-225 bps 240 - 260 bps Mortality Ratio 91.0% - 93.0% 90.0% - 95.0% "cro ate cate fr 2086 f 20, mii omit 18 Seo D
Slide 159: Retirement & Savings: Key Metrics
Retirement & Savings: Key Metrics
Slide 160: Non-Medical Health: Key Metrics
Non-Medical Health: Key Metrics
Slide 161: Individual Metrics
Individual Metrics
Slide 162: Individual: 2009 - 2010 Targets
Individual: 2009 - 2010 Targets
Slide 163: Individual: 2009 - 2010 Operating Earnings
Individual: 2009 - 2010 Operating Earnings
Slide 164: Individual: 2009 - 2010 Premiums, Fees & Other Revenues
Individual: 2009 - 2010 Premiums, Fees & Other Revenues
Slide 165: Auto & Home Metrics
Auto & Home Metrics
Slide 166: Auto & Home: 2009 - 2010 Targets
Auto & Home: 2009 - 2010 Targets
Slide 167: International Metrics
International Metrics
Slide 168: International: 2009 - 2010 Targets
International: 2009 - 2010 Targets
Slide 169: MetLife Bank Metrics
MetLife Bank Metrics
Slide 170: MetLife Bank: 2009 - 2010 Targets
MetLife Bank: 2009 - 2010 Targets
Slide 171: Other Information
Other Information
Slide 172: U.S. Business Realignment: Operating Earnings
U.S. Business Realignment: Operating Earnings ($ Millions)
Slide 173: International: Key 2010 Assumptions
International: Key 2010 Assumptions Equity markets TOPIX +7% KOSPI +5% Hang Seng +7% FTSE +6% Foreign exchange rates per U.S. Dollar Mexican Peso - 13.0 Korea - 1150 Japanese Yen - 96.5 Chilean Peso - 546.25 Economic growth (GDP) Mexico - 2.5 to 3.0% Korea - 3.5 to 4.0% Japan - 1.5 to 2.0%
Slide 174: MetLife
MetLife