Metlife, Inc. · NYSE:MET
Metlife — Investor Presentation (December 2012)
43 slides from Metlife's investor presentation, Dec 13, 2012
Slide 1: 2012 Guidance Presentation
Exhibit 99.1 Agenda PRESENTATION 2 0 1 2 GUIDANCE
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 Finance John C.R. Hele Chief Financial Officer Q&A Appendix 3
Slide 4: Steven A. Kandarian, Chairman, President & CEO
Steven A. Kandarian Chairman, President & Chief Executive Officer 2012 GUIDANCE PRESENTATION
Slide 5: Strategy to Become a World-Class Company
Strategy to Become a World-Class Company Build Global Refocus the U.S. Employee Benefits Business Business G LOBAL * W ORLD -C LASS * S CALE Drive Toward Grow Customer Centricity Emerging Markets and a Global Brand 5
Slide 6: Full Year 2012 Financial Overview
Full Year 2012 Financial Overview 1 2012 Plan vs Estimate 4Q12 estimate reflects impact (Operating Earnings per Share) from Superstorm Sandy $5.15 - $5.25 $5.22 - $5.32 Investment spreads benefit $4.80 - $5.20 from variable investment 4Q12E $1.12 - income & interest rate hedges $1.22 Improved underw
Slide 7: Mixed Global Economic Outlook
Mixed Global Economic Outlook The Americas U.S. Low interest rates, regulatory and fiscal uncertainty, modest recovery Latin America Sustainable growth, contained inflation, continued progress Asia Japan Recession risk, increasing debt burden, high savings rate Asia (Ex-Japan) Cooling growth, modera
Slide 8: Interest Rate Hedge Income Flat, Portfolio Yield Declines
Interest Rate Hedge Income Flat, Portfolio Yield Declines 1 U.S. Business Interest rate hedge income (Pre-tax $ in Millions) is estimated to be flat next 5.66% 5.57% year 5.27% Effect of low reinvestment $537 $537 rates more evident in 2013 $370 2011 2012 Estimate 2013 Plan 2 Interest Rate Hedge Inc
Slide 9: 2013 Guidance Illustrates Resilience of Operating Earnings
2013 Guidance Illustrates Resilience of Operating Earnings Low Rates Reducing Operating Low interest rate impact is EPS Growth Rate as Expected consistent with what we have $4.95 - $5.35 said previously 2 $5.07 Still project operating earnings 1 $4.69 growth over time even if rates remain low 2011 N
Slide 10: Expanding Operating ROE in a Challenging Environment
Expanding Operating ROE in a Challenging Environment Expect to Achieve 12% Operating ROE by 2016 Even if Interest Rates Remain Low1 12.0% - 14.0% 11.0% - 11.1% 2012 Estimate 2016 Target 1 The bars represent mid-points of ranges. See Appendix for non-GAAP financial information, definitions and/or rec
Slide 11: Upward Trend in EPS and Operating ROE Despite Low Rates
Upward Trend in EPS and Operating ROE Despite Low Rates Growth in non-U.S. through 2016 should drive overall growth in operating earnings even if low interest rates persist Focused on what we can control, cost saves and strategic initiatives expected to contribute 200 bps to operating ROE by 2016 Se
Slide 12: Base Case is Business Generates Excess Capital
Base Case is Business Generates Excess Capital Assuming regulatory capital rules reflect the insurance business model, MetLife should generate excess capital Shift from market sensitive to protection products improves our risk profile and free cash flow Goal is to increase free cash flow from approx
Slide 13: John C. R. Hele, Chief Financial Officer
John C. R. Hele Executive Vice President & Chief Financial Officer 2012 GUIDANCE PRESENTATION
Slide 14: Agenda
Agenda Review of estimated results – Fourth quarter 2012 – Full year 2012 Review of 2013 plan 14
Slide 15: Fourth Quarter 2012 Estimate
Fourth Quarter 2012 Estimate ($ in Millions, except per share data) 4th Quarter Operating Earnings $1,215 - $1,320 Operating Earnings per Share $ 1.12 - $ 1.22 PY Development/CATs 0.06 DAC and Other Assumption Items 0.05 Reorganization Costs 0.01 Variable Investment Income (0.05) Q4 2012 "Normalized
Slide 16: 4Q12 DAC and Other Actuarial Assumptions Update
4Q12 DAC and Other Actuarial Assumptions Update Projected charge of $600 - $800 million after-tax for DAC and other actuarial assumption updates Reflects changes in variable annuity lapse rates Includes changes to long-term fixed income returns 16
Slide 17: Full Year 2012 Financial Overview
Full Year 2012 Financial Overview ($ in Billions, except per share data) 2011 Actual 2012 Plan 2012 Estimate Premiums, Fees & Other Revenues (Operating) $45.4 $47.3 - $48.6 $47.3 - $47.7 Operating Earnings $4.7 $5.1 - $5.6 $5.5 - $5.6 Operating Earnings per Share $4.38 $4.80 - $5.20 $5.15 - $5.25 Op
Slide 18: 2012 MetLife Capital Position Year-End Estimate
2012 MetLife Capital Position Year-End Estimate Enterprise capital levels remain strong 1 – Combined U.S. RBC ratio 425% - 450% – Japan solvency margin ratio (SMR) 800% - 900% – $5.4 billion cash and liquid assets at holding companies 2 Moody’s leverage ratio of 27.0% 1 Calculated based on the Compa
Slide 19: 2013 Plan Assumptions
2013 Plan Assumptions 5% annual S&P 500 Index growth – S&P 500 Index of 1,422 as of Dec. 31, 2012 U.S interest rates based on consensus – 10 year at 1.65% at Dec. 31, 2012 going to 2.38% at Dec. 31, 2013 Exchange rates at consensus – Yen/$ at 79 at Dec. 31, 2012; 84 at Dec. 31, 2013 No stock buyback
Slide 20: 2013 Plan
2013 Plan ($ in Millions, except per share data) 2013 Plan Operating Earnings $5,500 - $5,940 Average Shares Outstanding (in Millions) 1,110.4 Operating Earnings per Share $ 4.95 - $ 5.35 Operating Expense Ratio 23.6% - 24.5% Net Investment Gains/(Losses) ($600) - ($200) Book Value per Share (exclud
Slide 21: Variable Investment Income Outlook
Variable Investment Income Outlook Variable Investment Income Plan Alternative Investments $800M to $1.2B for 2013 ($ in Millions) Range $1,400 Real Estate Funds 1,200 and Other Joint Ventures 1,000 800 Prepayments 600 400 200 0 2012 Plan 2012 Estimate 2013 Plan 21
Slide 22: 2013 Operating Earnings by Line of Business
2013 Operating Earnings by Line of Business ($ in Millions) 2012 Normalized 1 Estimate 2013 Plan Growth Rate Retail $1,860 - $1,910 $1,910 - $2,010 4.0% Group, Voluntary & Worksite Benefits 990 - 1,000 995 - 1,055 3.0% Corporate Benefit Funding 1,160 - 1,170 1,095 - 1,155 (3.4%) Latin America 580 -
Slide 23: 2013 Cash and Liquid Assets Estimate at Holding Companies
2013 Cash and Liquid Assets Estimate at Holding Companies 1 Holding Companies Cash Roll Forward ($ in Billions) $1.0 ($2.5 - $3.0) $3.0 - $3.5 ($1.6) $5.4 $4.8 - $5.8 2012E Subsidiary Dividends Mandatory Expenses Current Common 2013 Cash and Liquid Equity Units and Other Dividend and Assets Before D
Slide 24: Managing Variable Annuity Risk
Managing Variable Annuity Risk 1 MetLife U.S. Variable Annuity Sales Targeting more than a 40% ($ in Billions) decline in VA sales for 2013 $28.4 Continued movement toward lower-risk product design and $17.5 - rationalizing distribution $18.3 $18.5 $15.3 $15.4 $13.9 $10.0 - $11.0 Consistent with str
Slide 25: Key Takeaways
Key Takeaways 2012 was a good year with operating earnings growth expected to be in a range of 18% to 20% 2013 looks challenging, but still see double-digit operating ROE despite no assumption for capital management Focused on risk reduction and improving free cash flow Well positioned to manage in
Slide 26: MetLife
MetLife
Slide 27: Appendix
Appendix 2012 GUIDANCE PRESENTATION
Slide 28: 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 29: Safe Harbor Statement (Continued)
Safe Harbor Statement (Continued) including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (30) deterioration in the experience of the “
Slide 30: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information All references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information slide and the Appendix) to net income (loss), net income (loss) per share, operating earnings, operating earnings per share, book value per common
Slide 31: 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 32: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) For the historical periods presented, reconciliations of non-GAAP measures used in this presentation to the most directly comparable GAAP measures may be included in an Appendix to the presentation materials and/or are on the Investor Re
Slide 33: Reconciliations
Reconciliations 2012 GUIDANCE PRESENTATION
Slide 34: Reconciliation of Operating Earnings to Income from Continuing Operations
Reconciliation of Operating Earnings Available to Common Shareholders to Income (Loss) from Continuing Operations, Net of Income Tax ($ in Millions, except per share data) 2011 3Q12 YTD Operating earnings available to common shareholders $ 4,677 $ 4,313 Add: Preferred stock dividends 122 91 Operatin
Slide 35: Reconciliation of Premiums, Fees & Other Revenues and Operating Expense Ratio
Reconciliation of Premiums, Fees & Other Revenues (Operating) to Premiums, Fees & Other Revenues (GAAP) and Calculation of Operating Expense Ratio ($ in Millions) 2011 Premiums, fees & other revenues (operating) $ 45,449 Adjustments from premiums, fees & other revenues (operating) to premiums, fees
Slide 36: Reconciliation of Return on Common Equity
Reconciliation of Return on Common Equity 2011 Return on MetLife, Inc.'s Common Equity (1) Return on MetLife, Inc.'s common equity (2) 12.2% Return on MetLife, Inc.'s common equity, excluding AOCI (2) 13.2% Operating return on MetLife, Inc.'s common equity (3) 9.3% Operating return on MetLife, Inc.'
Slide 37: Outlook
Outlook 2012 GUIDANCE PRESENTATION
Slide 38: 2012 Normalized Operating Earnings
2012 Normalized Operating Earnings ($ in Millions) Normalized 2012 Normalized 1 2012 Estimate Adjustments Estimate Retail $1,875 - $1,925 ($15) $1,860 - $1,910 Group, Voluntary & Worksite Benefits 955 - 965 34 990 - 1,000 Corporate Benefit Funding 1,195 - 1,205 (37) 1,160 - 1,170 Latin America 580 -
Slide 39: Normalized Operating Earnings Per Share
Normalized Operating Earnings Per Share 2011 2012 Estimate Operating Earnings per Share $4.38 Operating Earnings per Share $5.15 - $ 5.25 Variable Investment Income (0.13) Variable Investment Income (0.12) Prior Year Development/CATS 0.14 Prior Year Development/CATS 0.04 DAC & Other (0.03) DAC & Oth
Slide 40: 2012 Schedule of Normalized Adjustments
2012 Schedule of Normalized Adjustments Variable Prior Year Investment Development/ Reorganization Normalized Income CATS DAC & Other Costs Other Adjustments Retail ($9) $28 ($60) $0 $26 ($15) Group, Voluntary & Worksite Benefits 0 12 22 0 0 34 Corporate Benefit Funding (37) 0 0 0 0 (37) Latin Ameri
Slide 41: 2013 Premiums, Fees & Other Revenues Growth
1 2013 Premiums, Fees & Other Revenues Growth ($ in Billions) 2 2012 Estimate 2013 Plan Growth Rate Retail $11.9 - $12.0 $12.1 - $12.5 2.8% Group, Voluntary & Worksite Benefits 15.8 - 15.9 16.3 - 16.8 4.6% Corporate Benefit Funding 3.5 - 3.6 2.7 - 2.9 (22.1%) Latin America 3.4 - 3.4 3.7 - 3.9 10.6%
Slide 42: 2013 Operating Expense Ratio
2013 Operating Expense Ratio Operating Expense Ratio Expense discipline continues 23.9% - 24.1% 23.6% - 24.5% Maintaining focus on Alico integration 22.9% - 23.1% 22.5% - 23.4% Pension/PRB cost has a negative impact of $90 million 2012E 2013P Excl. Pension/PRB Pension/PRB See “Explanatory Note on No
Slide 43: MetLife
MetLife