Metlife, Inc. · NYSE:MET
Metlife — Investor Day (December 2007)
178 slides from Metlife's investor day presentation, Dec 3, 2007
Slide 1: Investor Day 2007
Conor Murphy Vice President Institutional Business investor day 2 0 0 7 Conor Murphy Vice President Investor Relations
Slide 2: Safe Harbor Statement
Safe Harbor Statement These materials contain statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the operations and financial results and the business and the products of MetLif
Slide 3: 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 4: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Operating return on common equity is calculated by dividing operating earnings available to common shareholders (as defined above) by average common equity for the period indicated, excluding accumulated other comprehensive income. For t
Slide 5: Agenda
Agenda Topic Presenters Registration / Continental Breakfast Outline of Day Conor Murphy Overview C. Robert Henrikson Investments Steven A. Kandarian Finance William J. Wheeler Finance & Investments Q&A William J. Wheeler Steven A. Kandarian Break Institutional William J. Mullaney Individual Lisa We
Slide 6: MetLife
MetLife
Slide 7: C. Robert Henrikson, Chairman, President & CEO
C. Robert Henrikson Chairman, President & CEO investor day 2 0 0 7
Slide 8: We are winning in the marketplace... every day
We are winning in the marketplace... EVERY DAY.
Slide 9: U.S. Group Employee Benefits - We Stood Alone
MetLife A B C D E F G H I Total 8.76 4.61 4.49 3.73 2.39 1.67 1.15 0.96 0.91 0.32 ($ Billions) Group Life & Non-Medical Health 2000 In-force Premiums & Equivalents U.S. Group Employee Benefits - We Stood Alone Source: Life excluding COLI & BOLI (LIMRA), Disability (LIMRA), Dental (MetLife Research),
Slide 10: U.S. Group Employee Benefits - We Extended Our Lead
($ Billions) U.S. Group Employee Benefits - We Extended Our Lead MetLife A C B D E H G F I Total 11.79 4.95 4.65 4.11 3.05 1.94 1.47 0.85 0.69 0.26 Group Life & Non-Medical Health 2003 In-force Premiums & Equivalents Source: Life excluding COLI & BOLI (LIMRA), Disability (LIMRA), Dental (MetLife Res
Slide 11: U.S. Group Employee Benefits - The Clear Leader
($ Billions) U.S. Group Employee Benefits - The Clear Leader MetLife B A C D E H G F I Total 14.03 5.45 4.67 4.41 3.48 3.28 1.67 0.61 0.56 0.34 Group Life & Non-Medical Health 2006 In-force Premiums & Equivalents Source: Life excluding COLI & BOLI (LIMRA), Disability (LIMRA), Dental (MetLife Researc
Slide 12: U.S. Group Employee Benefits - Alone and Diversified
MetLife B A C D E H G F I Life 5.24 1.12 1 1.2 2.68 1.18 0.65 0.32 0.29 - Dental 5.12 3.53 2.79 - - - - - - - Disability 2.47 0.8 0.89 3.01 0.76 2.1 1.01 0.29 0.17 - LTC 0.33 - - 0.19 0.04 - - - - 0.34 Auto & Home 0.87 - - - - - - - 0.09 - ($ Billions) U.S. Group Employee Benefits - Alone...and Dive
Slide 13: 2000 Sales U.S. Variable Annuities
($ Billions) 2000 Sales U.S. Variable Annuities A B C D E F G H I J MetLife Sales 14.6 10.3 9.9 9.8 7.1 6.7 6.7 5.5 4.8 4.7 4.5 Source: VARDS. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 14: 2003 Sales U.S. Variable Annuities - Growing
($ Billions) 2003 Sales U.S. Variable Annuities - Growing... B C G MetLife D A I E H F K Sales 15.8 12.8 10.1 9.8 8 7.5 6.3 6 4.6 4.5 4.1 Source: VARDS. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 15: 2006 Sales U.S. Variable Annuities - Growing
($ Billions) 2006 Sales U.S. Variable Annuities - Growing... C MetLife G B K A I L H D E Sales 13.8 13.4 12.9 12.2 10.3 10.2 9.5 9.4 9.1 8.8 8.8 Source: VARDS. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 16: 3Q07 YTD Sales U.S. Variable Annuities - Growing to Lead
($ Billions) 3Q07 YTD Sales U.S. Variable Annuities - Growing...to Lead MetLife G C B K A L I H D E Sales 11.6 11.4 10.5 10.1 9.2 8.5 8.2 8.2 7.9 7.1 7 Source: VARDS. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 17: International - Exporting our Expertise
29.0% CAGR2 ($ Billions) International - Exporting our Expertise Revenue1 2000 2001 2002 2003 2004 2005 2006 2007E Revenue 0.7 0.9 1.1 1.7 2.1 2.8 3.6 4.1 1Premiums, Fees & Other Revenues. 2Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconcili
Slide 18: Converting Growth into Earnings
Converting Growth into Earnings Operating EPS 8.9% CAGR2 17.8% CAGR2 2000 2001 2002 2003 2004 2005 2006 2007E Revenue 19.3 20.2 22.3 24.3 26.3 30 32.6 35 2000 2001 2002 2003 2004 2005 2006 2007E Operating EPS 1.93 2.17 2.59 2.83 3.36 4.31 5.21 6.07 Revenue1 ($ Billions) ($ Billions) 1Premiums, Fees
Slide 19: Building Book Value
Building Book Value 2000 2001 2002 2003 2004 2005 2006 2007E BVPS 20.17 20.11 21.96 24.24 27.12 33.2 40.74 44.39 Book Value per Common Share (Actual) ($ per share) 11.9% CAGR1 1Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 20: Return on Equity
Return on Equity 2000 2001 2002 2003 2004 2005 2006 2007E Operating ROE 0.103 0.112 0.127 0.125 0.133 0.145 0.144 0.147 Operating ROE 14.6% - 14.7% See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 21: 2010 Goal = 15% Sustainable ROE
2010 Goal = 15% Sustainable ROE 2000 2001 2002 2003 2004 2005 2006 2007E 2008E Operating ROE 0.103 0.112 0.127 0.125 0.133 0.145 0.144 0.147 0.133 14.6 - 14.7% See Appendix for non-GAAP financial information definitions and/or reconciliations. 13.0 - 13.6% 2008P Operating ROE
Slide 22: MetLife Delivers Shareholder Value
MetLife Delivers Shareholder Value MET Total Return vs. Indices IPO - 11/28/07 MET S&P 500 S&P Ins 4/5/2000 0 0 0 4/6/2000 0.0000403226 0.0000956769 0.0000653283 4/7/2000 -0.000120968 0.000196602 -0.000160597 4/10/2000 -0.0000403226 0.000116662 0.000115658 4/11/2000 -0.000241935 0.0000911091 0.00026
Slide 23: MetLife
MetLife
Slide 24: Steven A. Kandarian, Chief Investment Officer
investor day 2 0 0 7 Steven A. Kandarian Executive Vice President & Chief Investment Officer
Slide 25: Well-Positioned for 2008
Well-Positioned for 2008 Reduced exposure to housing, auto and airline sectors Decreased BBB exposure over time Corporate Credit Sub-Prime Real Estate Identified housing bubble early Limited exposure to sub-prime RMBS Virtually no exposure to sub-prime CDOs No exposure to asset-backed commercial pap
Slide 26: Market Overview
Market Overview
Slide 27: 2008 Market View and Themes
2008 Market View and Themes Economy Slow growth Higher risk of recession Inflation Headline inflation increases Core inflation stalls near 2% Interest Rates Short end of curve inverted through 2Q08 Upward slope mid-year '08 Fixed Income Sectors Fundamentals deteriorating Wider spreads reflect fundam
Slide 28: Portfolio Income
Portfolio Income
Slide 29: Interest Rate Sensitivity: Limited Impact
Ran a variety of interest rate scenarios Federal Reserve cuts rates aggressively Extended inversion Bottom line after-tax net result => +/- $115 million Shape of yield curve more impactful than parallel shifts Interest Rate Sensitivity: Limited Impact
Slide 30: Variable Income by Quarter
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Plan Actual Volatile Income 185 130 165 269 202 288 246 367 279 472 342 449 398 392 276 491 414 515 440 305 Corporate Joint Ventures Real Estate Joint Ventures Corporate Bond Prepayments Commercial Mortgage Prepayments Securities Lending 2008
Slide 31: Portfolio Overview
Portfolio Overview
Slide 32: High Quality Diversified Portfolio
Investment Grade Corporate Bonds Structured Finance Commercial and Agricultural Mortgages U.S. Treasury Below Investment Grade Corporate Bonds Real Estate Equity Corporate Equity Cash and Short-Term East 37 28 13 7 6 3 3 3 High Quality Diversified Portfolio $329 Billion of Managed Assets* 37% 6% 13%
Slide 33: Portfolio Trends
Portfolio Trends Dec-04* Dec-04* Dec-04* Dec-06* Dec-06* Sept-07* Sept-07* 2008 Mid-Point Target Range* U.S. Treasury/Agency 7.7% 7.7% 9.8% 9.8% 6.7% 6.7% 7.5% 7.5% Structured Finance RMBS CMBS Asset-Backed Securities Total Structured Finance 14.0% 5.4% 4.7% 24.1% 16.5% 5.3% 4.4% 26.2% 16.5% 5.3% 4.
Slide 34: Portfolio Trends
Dec-04* Dec-04* Dec-04* Dec-06* Dec-06* Sept-07* Sept-07* 2008 Mid-Point Target Range* U.S. Treasury/Agency 7.7% 7.7% 9.8% 9.8% 6.7% 6.7% 7.5% 7.5% Structured Finance RMBS CMBS Asset-Backed Securities Total Structured Finance 14.0% 5.4% 4.7% 24.1% 16.5% 5.3% 4.4% 26.2% 16.5% 5.3% 4.4% 26.2% 18.1% 6.
Slide 35: Portfolio Trends
Dec-04* Dec-04* Dec-04* Dec-06* Dec-06* Sept-07* Sept-07* 2008 Mid-Point Target Range* U.S. Treasury/Agency 7.7% 7.7% 9.8% 9.8% 6.7% 6.7% 7.5% 7.5% Structured Finance RMBS CMBS Asset-Backed Securities Total Structured Finance 14.0% 5.4% 4.7% 24.1% 16.5% 5.3% 4.4% 26.2% 16.5% 5.3% 4.4% 26.2% 18.1% 6.
Slide 36: Fixed Maturity Securities
Fixed Maturity Securities 1 2 3 & 4 5 & 6 MetLife 71.9 20.6 7.3 0.2 Peers 65.8 29.1 4.9 0.2 MetLife's barbell approach to fixed maturity securities Higher allocation to NAIC 1 Lower allocation to NAIC 2 Higher allocation to NAIC 3&4 Better relative value for given risk profile % NAIC Rating <0.5% Fi
Slide 37: Below Investment Grade Credit
9/30/2000 9/30/2001 9/30/2002 9/30/2003 9/30/2004 9/30/2005 9/30/2006 9/30/2007 2008P % of Portfolio 0.066 0.058 0.057 0.061 0.053 0.053 0.052 0.057 2007 Projections 0.052 0.057 0.055 Corp. Bonds Emerging Markets Secured Bank Loans Other 43 15 33 9 Defensive Below Investment Grade Strategy 33% 9% 43
Slide 38: High Quality RMBS Provide Good Value
$59.5 billion* 99.8% AAA 89% Prime and 63% Agency Backed Portfolio duration < 4 years Highly liquid and attractive relative value Volatility mitigated by: Matching assets with liabilities Structure / security underwriting Hedging with derivatives High Quality RMBS Provide Good Value *Market value as
Slide 39: Alt-A Residential Mortgage-Backed Securities
Alt-A Residential Mortgage-Backed Securities Superior Structural Support 86% Super Senior Average portfolio subordination level is 12% versus standard new issue AAA of about 5.5% 88% fixed rate No option ARM's and none backed by second liens Super Senior AAA $5,633 86% 13% AAA 949 14% 9% Total $6,58
Slide 40: Identified Sub-Prime Risk Early
Identified Sub-Prime Risk Early Dec-05 Dec-06 9/1/2007 AAA/AA 3093 2420 2142 A and Below 321 117 41 Stopped purchasing 'A' and lower tranches in late 2004 Reduced exposure by 36% from year-end 2005 to 3Q 2007 *Excludes $0, $293 million, and $255 million of RGA holdings at 12/31/05, 12/31/06 and 9/30
Slide 41: Seasoned, High Quality Sub-Prime Holdings
Seasoned, High Quality Sub-Prime Holdings *Excludes $255 million of RGA holdings. MetLife owns 52% of RGA. Holdings at market value as of 9/30/07. $974 $740 $327 $143 ($ Millions) 44% 34% 15% 7% 61% 37% 1% 1% 100%
Slide 42: Minimal Exposure to Sub-Prime CDO's
Minimal Exposure to Sub-Prime CDO's Virtually no exposure to this $275+ billion market No asset-backed commercial paper / structured investment vehicle exposure AAA $52.1 84% AA 7.3 12% A and below 2.5 4% Total $61.9 100% Sub-Prime Mortgage-Backed Collateralized Debt Obligations* ($ Millions) Total
Slide 43: Minimal Alt-A & Sub-Prime Losses
Minimal Alt-A & Sub-Prime Losses Alt-A & Sub-Prime Mortgages ($ Millions) Alt-A RMBS $6,582 $57 $18 Sub-Prime Mortgages 2,184 139 1 Sub-Prime CDO's 62 8 14 Total $8,828 $204 $33 Holdings* 9/30/07 Unrealized* 10/31/07 Realized Year-to-Date* 10/31/07 Losses *Excludes $64 million and $255 million of RG
Slide 44: Notable Investment Capabilities
Notable Investment Capabilities
Slide 45: Private Asset Origination
Corporate Debt $36.0 Commercial Mortgages 33.4 Agricultural Mortgages 10.2 Total $79.6 Private Asset Origination Experienced, dedicated teams Strong underwriting culture Effective diversifier Incremental spread to public assets Well structured with covenants and collateral Total Privately Originated
Slide 46: High Quality Commercial Mortgages
High Quality Commercial Mortgages Leader in commercial mortgage lending Virtually no defaults Focused on lower loan-to- value (LTV) mortgages Diversified by property type and geographic location Commercial Mortgages* ($ Billions) *Market value as of 9/30/07. Dec-05 Dec-06 Sept-07 <65% LTV 59% 62% 66
Slide 47: Solid Real Estate Equity Portfolio
Office Retail Industrial Apartment Hotel MetLife 93 98 91 95 76 Market 88 93 91 94 72 Solid Real Estate Equity Portfolio $3.8 billion unrealized gain Focus on core properties in primary markets Higher than market occupancy rates Diversified by property type and geographic location Good fit for long
Slide 48: Alternative Investments Portfolio
$4.8 billion: Alternative investments portfolio included in $11.6 billion Equity Securities and Other Limited Partnership Interests* Key contributor in investment income Growing portfolio while decreasing reliance on LBO funds MetLife Alternative Investments Portfolio 12/31/2003 12/31/2004 12/31/200
Slide 49: Risk Management: Continuous Improvement
Risk Management: Continuous Improvement Risk metrics Credit aggregation system Standardized international credit framework Portfolio management Asset liability management Strong underwriting culture Proactive credit management
Slide 50: Summary
Summary Focus on risk management and making early calls Strong origination capabilities Well-positioned for 2008
Slide 51: MetLife
MetLife
Slide 52: William J. Wheeler, Chief Financial Officer
investor day 2 0 0 7 William J. Wheeler Executive Vice President & Chief Financial Officer
Slide 53: Fourth Quarter 2007 EPS Projection
Fourth Quarter 2007 EPS Projection See Appendix for non-GAAP financial information definitions and/or reconciliations. 2
Slide 54: Fourth Quarter 2007 Projection
Fourth Quarter 2007 Projection Strong revenue growth Underwriting results A&H prior year development (+) Individual life claims review adjustment (-) Product investment spreads Higher than plan variable income (+) Expense levels Contribution to MetLife Foundation (-) DAC adjustments (+/-) Higher inv
Slide 55: Revenue Growth
Revenue Growth Premiums, Fees and Other Revenues 2003 2004 2005 2006 2007E 24269 26265 29959 32560 35000 CAGR 9.6%1 ($ Millions) 1 Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. $32,560 $34,800 - $35,200 7.5%1
Slide 56: Total Assets
Total Assets 2003 2004 2005 2006 2007E General Account & Other 251 270 353.7 384 404.5 Separate Account 76 87 127.9 144 165.5 ($ Billions) CAGR 14.9%1 $357 $327 $482 $565 - $575 $528 8.0%1 1Calculated using 2007E mid-point. 5
Slide 57: Strong Underwriting Results
2003 2004 2005 2006 2007E Combined Ratio 0.997 0.968 0.964 0.872 0.88 Combined Ratio Ex Cats 0.971 0.904 0.867 0.828 0.86 Strong Underwriting Results 2003 2004 2005 2006 2007E Individual Mortality (Gross of Reinsurance) 0.877 0.82 0.854 0.8505 0.87 2003 2004 2005 2006 2007E Group Term Life Mortality
Slide 58: Investment Performance
Investment Performance 2003 2004 2005 2006 2007E 0.0672 0.0655 0.0621 0.0647 0.066 2003 2004 2005 2006 2007E Annuities 0.0061 0.0065 0.0076 0.0067 0.0062 Group Life 0.0036 0.0035 0.0027 0.0021 0.0022 R&S 0.0063 0.0077 0.008 0.0073 0.0076 Non-Medical Health 0.0012 0.0014 0.0015 0.0011 0.0013 UL/VUL 0
Slide 59: Operating Expense Ratio
Operating Expense Ratio 2003 2004 2005 2006 2007E 0.278 0.28 0.285 0.3005 0.2995 30.6% 27.8% 28.0% 30.0% - 30.4% 28.5% See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 60: Operating Earnings Per Share
Operating Earnings Per Share 2003 2004 2005 2006 2007E 2.83 3.36 4.31 5.21 6.065 CAGR 21.0%1 1 Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. $6.04 - $6.09 16.4%1
Slide 61: 2007 Normalized Operating EPS
2007 Normalized Operating EPS See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 62: Operating Earnings Per Share
Operating Earnings Per Share 2005 2006 2007E 4.31 5.21 6.07 CAGR 18.6%1 1 Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. $6.04 - $6.09
Slide 63: Normalized Operating Earnings Per Share
Normalized Operating Earnings Per Share 2005 2006 2007E 4.31 5.21 6.07 1 Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items. $6.04 - $6.09 2005 2006 2007E 4.01 4.7 5.595 $5.57 - $5.62 CAGR 18.1%1 CAGR 1
Slide 64: Dividends Per Common Share
Dividends Per Common Share 2003 2004 2005 2006 2007 0.23 0.46 0.52 0.59 0.74 CAGR 33.9% $0.741 25.4% 1 Declared on October 23, 2007. Payable on December 14, 2007 to shareholders of record as of November 6, 2007.
Slide 65: Book Value Per Common Share
Book Value Per Common Share1 2003 2004 2005 2006 2007E 24.24 27.12 33.2 40.74 44.4 1 Based on actual shares outstanding. 2 Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. CAGR 16.3%2 $44.35 - $44.45 9.0%2 14
Slide 66: Operating ROE
Operating ROE 2003 2004 2005 2006 2007E 0.125 0.133 0.145 0.144 0.1465 See Appendix for non-GAAP financial information definitions and/or reconciliations. 12.5% 14.4% 13.3% 14.6% - 14.7% 14.5%
Slide 67: Risk Management
Risk Management Risk Management: Embedded in business Transparency across enterprise Pricing / underwriting discipline Rated "Strong" by S&P (Top 13%1 of Insurance Industry) Focus for 2008: Market/Credit risk management investments Economic capital refresh Variable annuity hedging Build-out of CRM s
Slide 68: 2008 Operating EPS & ROE
2008 Operating EPS & ROE See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 69: 2008 Outlook
2008 Outlook Solid result in a challenging environment Strong revenue growth Underwriting margins generally steady Declining product investment spreads Much lower expense ratio Assumed share repurchase of $2.2 billion
Slide 70: 2008 Projected Revenue Growth
2008 Projected Revenue Growth Premiums, Fees and Other Revenues 1Calculated mid-point to mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. ($ Millions)
Slide 71: 2008 Product Investment Spread
2008 Product Investment Spread1 2007E 2008P Annuities 0.0057 0.0049 Group Life 0.0023 0.0022 R&S 0.0062 0.0064 Non-Medical Health 0.0011 0.0012 UL/VUL 0.0016 0.0016 Excess Variable Income 0.0021 0 Lower private equity planned income Challenging yield curve environment Change in business mix 1 Weight
Slide 72: Short End of Yield Curve
Short End of Yield Curve Basis points 1 Source: Federal Reserve Board / Haver Analytics.
Slide 73: 2008 Operating Expense Ratio
2008 Operating Expense Ratio 2007E 2008P 0.3 0.285 28.0% - 29.0% 30.0% - 30.4% See Appendix for non-GAAP financial information definitions and/or reconciliations. Benefits from investment spending over past several years Continue to leverage our scale Pension costs may increase
Slide 74: 2007 Normalized Operating Earnings
2007 Normalized Operating Earnings ($ Millions) See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 75: 2008 Projected Operating Earnings
2008 Projected Operating Earnings 1 Growth rate is calculated as 2007 Normalized to 2008 Plan, mid-point to mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items. ($ Millions)
Slide 76: Stock Buyback Activity
Stock Buyback Activity Purchased $1.7 billion of stock in 2007 (27 million shares) Repurchase target of $2.2 billion in 2008 $750 million cash share repurchase $1.45 billion offset to mandatory conversion in August 2008 Expected $2.2 billion buyback in 2009 25
Slide 77: Capital Structure & Flexibility
Capital Structure & Flexibility See Appendix for non-GAAP financial information definitions and/or reconciliations. 2007E 2008P Cash at Holding Company $2.5B $3.0B Debt Leverage Ratio 25% 24% Book Value Per Share (Actual) $44.35 - $44.45 $48.00 - $48.40 ~ ~ 26
Slide 78: Closed Block Reinsurance Transaction
Closed Block Reinsurance Transaction Creates up to $3.1 billion of statutory surplus at MLIC Replaces existing reinsurance treaties Net statutory RBC improvement of $1.2 billion Improves 2008 ordinary dividend capacity by $300+ million No impact on financial leverage May be completed in December or
Slide 79: 2008 Plan Operating ROE
2008 Plan Operating ROE Yield Curve Impact Cash at Holding Company Other Capital / Efficiency Mgmt Operating ROE Target Long-Term ROE Target _______ 13.0% - 13.6% +0.6% +0.6% - +0.8% TBD ~15.0% 28
Slide 80: MetLife
MetLife
Slide 81: Bill Mullaney, President Institutional Business
Bill Mullaney President Institutional Business investor day 2 0 0 7
Slide 82: 2007 Highlights
2007 Highlights $14.1B+ Revenue $1.9B+ Operating Earnings $18B+ Sales 20%+ Operating ROE Record Revenue Record Earnings Record Sales WE STAND ALONE See Appendix for non-GAAP financial information definitions and/or reconciliations.
Slide 83: Institutional: 2007 Results
Institutional: 2007 Results See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 84: A History of Results
A History of Results 1Prior periods recasted to conform to current accounting treatment. 2Calculated using 2007E mid-point. 2002 2003 2004 2005 2006 2007E Premiums, Fees & Other Revenues (*) 9500 10300 11400 12800 13300 14200 Premiums, Fees & Other Revenues1 CAGR = 8.4%2 ($ Billions)
Slide 85: A History of Results
2002 2003 2004 2005 2006 2007E Premiums, Fees & Other Revenues (*) 56.6 62.5 70.6 103.4 110.4 118.8 36.3 40.5 40.4 45.2 47 52.3 Total Future Policy Benefits, Policyholder Account Balances, and Separate Account Liabilities1 A History of Results 1Prior periods recasted to conform to current accounting
Slide 86: A History of Results
A History of Results 1Prior periods recasted to conform to current accounting treatment. 2Calculated using 2007E mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations. 2002 2003 2004 2005 2006 2007E Premiums, Fees & Other Revenues (*) 1 1.1 1.2 1.4 1.7 1.9 Pos
Slide 87: Institutional Business Value Proposition
Institutional Business Value Proposition Trusted advisor on benefits and retirement issues Keen understanding of how to capitalize on trends Broad and deep benefits expertise Innovative solutions to help customers optimize their benefit plans Best relationships in the business
Slide 88: How We Win
How We Win Keep Grow Add Understand Understand Customers
Slide 89: Keep Customers
Keep Customers 95% average revenue persistency from 2000 to 2007 for Mid-Large/National Accounts National Accounts customers have been with MetLife for 27 years on average Mid-Large Market Customer Loyalty has increased 20% in the past three years
Slide 90: Grow Customers
Grow Customers 90% of National Accounts sales (25,000+ employees) come from existing customers Average # of group insurance products per National Accounts customer has grown 162% since 2000 162% 2000 2007 2.1 5.5 Average # of products per National Accounts customer
Slide 91: Grow Customers
Grow Customers 16-year relationship Added 5 products Grown from $7M in premium to $225M in premium 1 16 Initial Sales 7 106.6 Mergers & Acquisitions 62.6 Organic Growth 56.2 ($ Millions) Annual Premiums Years 11
Slide 92: Add Customers
Add Customers 13.4% increase in group insurance customers in Mid-Large/National Accounts Markets 60% increase in customers in the Small Market 13.4% 2000 2007 3,403 3,860 Increase in # of Mid-Large/ National Accounts customers 12
Slide 93: Understanding Customer Needs
Understanding Customer Needs Changing face of the workforce Medical care costs Shift to employee-paid benefits Funding employer and employee retirement liabilities Trusted Advice Innovative Solutions
Slide 94: Growing our Dental Business
Growing our Dental Business 2002 2003 2004 2005 2006 2007E Premiums, Fees & Other Revenues 1410 1579 1739 1913 2067 2330 CAGR = 10.6%1 Premiums, Fees & Other Revenues 1Calculated using 2007E mid-point. ($ Millions)
Slide 95: Taking Dental into Adjacent Markets
Taking Dental into Adjacent Markets Safeguard acquisition DHMO capability in critical states - CA, TX, FL Adds 8.5% to Dental revenue More than 10,000 small market customers Dental HMOs
Slide 96: Creating a Voluntary Offering for Dental
Creating a Voluntary Offering for Dental Strong Dental capabilities Voluntary benefits enrollment expertise Customer segmentation By 2010, expect that 10%-15% of Dental revenue will be voluntary
Slide 97: Pension Closeouts
Pension Closeouts Employer/Plan Sponsor Considerations Legislation and Regulation Plan Funding Status Interest Rate Environment Outlook for 2008
Slide 98: Investing for Future Growth
Investing for Future Growth Absence Management Income Annuities Small Market
Slide 99: Positive Outlook for 2008
Positive Outlook for 2008 Strong top-line revenue growth Lower year-over-year investment income Aggressive expense management Healthy mix of short- and long-term investments for growth
Slide 100: Institutional: 2008 Targets
Institutional: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items. 20
Slide 101: Summary
Summary High return business Unmatched ROEs in the group space Strong top-line growth Commitment to continued expense management Best relationships in the business Experienced leadership and sales distribution Well positioned for the future Continued short-term enhancements Investing for long-term g
Slide 102: MetLife
MetLife
Slide 103: Lisa M. Weber, President Individual Business
Lisa M. Weber President Individual Business investor day 2 0 0 7
Slide 104: 2007 Individual Business Highlights
2007 Individual Business Highlights Delivered solid operating earnings Achieved record annuity sales Continued evolution of retirement products Retained, grew and strengthened distribution Drove disciplined life sales Improved distribution profitability
Slide 105: 2007 Results
2007 Results See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 106: Core Businesses
Core Businesses 2004 2005 2006 2007E Life Sales 435 549 521 526 Life Sales Choosing the Right Markets 2004 2005 2006 2007E Annuity Sales 11248.8 12223 15495.7 16680.4 Annuity Sales Making Rapid Innovations ($ Millions) CAGR = 14.0% CAGR = 6.5% See Appendix for non-GAAP financial information definiti
Slide 107: Annuities - Room to Grow, Even at Top
Annuities - Room to Grow, Even at Top Variable Annuities Year MetLife Industry Rank Share Sales 2007E #1 8.8% $175* 2006 2 8.7% $155 2005 2 7.7% $131 2004 4 7.3% $128 2003 4 7.9% $124 2002 5 5.7% $112 2001 7 4.2% $107 *Annualized from Q3 YTD industry results. Source: VARDS. See Appendix for non-GAAP
Slide 108: Life Insurance - A Larger Case Market
Source: MetLife Analysis of Industry Pricing, 2002-2007. ....That Requires Expertise and Patience Life Insurance - A Larger Case Market... 2003 2004 2005 2006 2007 Annual Premium for $1M in UL Coverage 75 Year Old Standard Non-Smoker ($ Thousands) Risk management Can't buy market share Maintain disc
Slide 109: Our Competitive Advantage
Our Competitive Advantage Broadest Reach in the Industry Product Service Distribution 7
Slide 110: Thriving Agency Systems
Thriving Agency Systems Quality recruiting Industry-leading retention Strong local office infrastructure 500,000+ in-force leads per year Increasing agent productivity The Formula for Success 2004 2005 2006 2007E Salespower 7980 7810 8003 8210 Agent Headcount 2004 2005 2006 2007E Productivity 91490
Slide 111: Strong Independent Distribution
Strong Independent Distribution Strong Independent Distribution Partner of Choice Strong account management Leading technology platform Top wholesalers Exceptional sales desk Tight market focus 9
Slide 112: The 4.00% Solution
The 4.00% Solution Invest+ SPIA LIG (MAX) GMIB+ LWG LIG (FLEX) SPIA GMIB GWB I V A Broad Portfolio of Solutions 10
Slide 113: Made Simple: Structured for Meeting Client Needs
....Made Simple Structured for Meeting Client Needs 11
Slide 114: Customized Products for Third-Party Firms
Customized Products for Third-Party Firms Line-up that Fits Their Strategies Edward Jones Citigroup Raymond James Smith Barney Primerica 12
Slide 115: Channel Organizational Focus
Channel Organizational Focus Agency Producer - Tiered Services Independent Firm - Dedicated Teams With a Small Company Feel Service Aligned by Advisors and Firms 13
Slide 116: Individual Business Distribution Expense Gap
2003 2004 2005 2006 2007E Distribution P&L -209 -136 -102 -31 -15 Individual Business Distribution Expense Gap Efficient and Productive Organization See Appendix for non-GAAP financial information definitions and/or reconciliations. ($ Millions) 14
Slide 117: 2008 Key Initiatives
2008 Key Initiatives Refresh core income riders Update life portfolio Drive income spectrum concept Simplify life and annuity applications Deepen connectivity with third-party firms
Slide 118: 2008 Targets
2008 Targets 1Growth rate is calculated mid-point to mid-point. 2Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 119: Summary
Summary Broadest reach in face-to-face distribution Best integrated retirement offering for clients Strong product offering in all major market segments Exceptional service built around relationships A plan to win 17
Slide 120: MetLife
MetLife
Slide 121: Bill Toppeta, President International
Bill Toppeta President International investor day 2 0 0 7
Slide 122: 2007: A Very Strong Year
2007: A Very Strong Year Record profitability and revenues Japan JV: expanding distribution and sales outpace market Korea: turbo charged sales and increased distribution power Mexico: strong fundamentals; retained Policy One Chile: substantial growth in all segments India Expansion: Axis Bank and B
Slide 123: International: 2007 Results
International: 2007 Results See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items.
Slide 124: Strong Growth in Operating Revenues
Strong Growth in Operating Revenues 2004 2005 2006 2007E Premiums, Fees & Other Revenues 2062 2785 3554 4135 Net Investment Income 585 795 950 1200 CAGR 26%1 $2,647 $3,580 $4,504 $5,270 - $5,400 ($ Millions) 1CAGR based upon mid-point 2007E. See Appendix for non-GAAP financial information definition
Slide 125: Very Strong Growth in Normalized Operating Earnings
Very Strong Growth in Normalized Operating Earnings 2004 2005 2006 2007 Operating Earnings 139 216 288 412.5 CAGR 44%1 ($ Millions) 1CAGR based on mid-point 2007. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items. 5
Slide 126: Global Opportunity in Retirement & Savings
Global Opportunity in Retirement & Savings 2002 2003 2004 2005 2006 Argrentina 11 16 18 22 29 Brazil 18 27 37 46 58 Chile 42 50 58 65 80 Mexico 30 35 42 54 57 Asia Age Demographic (Millions) CAGR 25% $99 $134 $163 $200 $243 Latin America Pension AUM ($ Billions) Asia includes China, Hong Kong, Taiwa
Slide 127: Retirement & Savings: International Sales and Assets will Grow
Retirement & Savings: International Sales and Assets will Grow Significantly ($ Billions) Includes separate account assets for Japan and sales of joint ventures at 100%. See Appendix for non-GAAP financial information definitions and/or reconciliations. R&S Sales CAGR 19% $10 $17 Separate Accounts C
Slide 128: Japan - MSI/MetLife Growth Highlights
Japan - MSI/MetLife Growth Highlights Operating earnings growth of 27%1: 2007N: $60 - $65 million 2008P: $77 - $82 million Core R&S products: VA/FA comprise 95% of sales #3 Variable Annuity Sales2 Sales grew 7%, market fell 12%; increased market share from 11% to 14% Grew to 81 distribution partners
Slide 129: Japan - Our Largest Near-Term Opportunity
2007E 2010P Total Assets 28 53 Japan - Our Largest Near-Term Opportunity in Retirement & Savings Current Market: $130B Variable Annuity AUM Projected 2010: $350-$450B Variable Annuity AUM Market Growth Drivers: $7 trillion in bank deposits, Japan Post distribution, rapidly aging society CAGR 15% CAG
Slide 130: MetLife Korea - Growth Highlights
MetLife Korea - Growth Highlights Operating earnings growth of 15%1: 2007N: $130 - $140 million 2008P: $150 - $160 million Core R&S products: VUL/VA comprise 87% of sales #4 VUL Sales2 14% growth agency force; 30% of agents MDRT qualified High productivity: 5.5 policies per agent/month Distribution
Slide 131: Korea - Retirement & Savings Products are Key to Growth
Korea - Retirement & Savings Products are Key to Growth CAGR 19% CAGR 26% Current Market: $44B R&S deposits Projected 2010: $69B R&S deposits Market Growth Drivers: 96% of wealth in bank deposits & real estate, fastest aging society in the world, distribution through agents and banks Source: Korea I
Slide 132: MetLife Mexico - Growth Highlights
Operating earnings growth of 11%1: 2007N: $240 - $250 million 2008P2: $267 - $277 million Core R&S products: UL/AFORE comprise 77% of sales #1 Life Insurer3 High WSM productivity: 20 policies per agent/month Strong WSM persistency: 90% MetLife Mexico - Growth Highlights 1 Growth rate calculated 2007
Slide 133: Mexico - Retirement & Savings Products Drive Sales
Mexico - Retirement & Savings Products Drive Sales Current Market: $74B AFORE AUM Projected 2010: $108B AFORE AUM Market Growth Drivers: growing middle class, increasing GDP per capita, regulatory changes, formal employment growth MetLife Mexico - R&S Sales1 ($ Millions) CAGR 22% CAGR 9% MetLife Mex
Slide 134: MetLife Chile - Growth Highlights
MetLife Chile - Growth Highlights Operating earnings growth of 17%1: 2007N: $33 - $38 million 2008P: $39 - $44 million Core R&S product: SPIAs comprise 76% of sales #2 Life Insurer2 - grew total life premiums 27% compared to market 9% #3 in SPIAs2 - grew annuity premiums 35% compared to market 12% 1
Slide 135: Chile - Retirement & Savings Products Lead Growth
Chile - Retirement & Savings Products Lead Growth CAGR 8% Current Market: $1.6B SPIA sales Projected 2010: $2.1B SPIA sales Market Growth Drivers: regulatory changes, expanding pension coverage, tax incentives for voluntary savings, growing middle-class/GDP CAGR 6% Source: Asociacion de Aseguradores
Slide 136: International: 2008 Targets
International: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Appendix for non-GAAP financial information definitions and/or reconciliations, including for normalized items. 16
Slide 137: Summary - MetLife International Growth Continues
Summary - MetLife International Growth Continues 2007: A very strong year 2008 - 2010: Operating earnings and sales at 20-25% CAGR Future growth will be driven by Retirement & Savings opportunities worldwide Key markets over the next couple of years: Japan, Korea, Mexico & Chile
Slide 138: MetLife
MetLife
Slide 139: Appendix
Appendix Appendix Appendix Appendix investor day 2 0 0 7
Slide 140: 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 141: Explanatory Note on Non-GAAP Financial Information (Continued)
Explanatory Note on Non-GAAP Financial Information (Continued) Operating return on common equity is calculated by dividing operating earnings available to common shareholders (as defined above) by average common equity for the period indicated, excluding accumulated other comprehensive income. For t
Slide 142: Table of Contents
Table of Contents Definitions.......................................................................................................5 Reconciliation Reconciliation of Net Income to Common Shareholders........................................8 Reconciliation of Book Value Per Common Share.............
Slide 143: Definitions
Definitions investor day 2 0 0 7
Slide 144: Definitions
Definitions Sales (Institutional): Sales include annualized revenue at issue and initial deposit. Sales (Individual): Variable annuity sales are on a VARDS basis. Fixed annuity and life sales are on a LIMRA basis. Sales (International): Sales include annualized full year premiums and fees from risk
Slide 145: Reconciliation
Reconciliation investor day 2 0 0 7
Slide 146: Reconciliation of Net Income to Operating Earnings - Total Company
Reconciliation of Net Income Available to Common Shareholders to Operating Earnings Available to Common Shareholders - Total Company
Slide 147: Reconciliation of Net Income per Share to Operating Earnings per Share
Reconciliation of Net Income Available to Common Shareholders per Share to Operating Earnings Available to Common Shareholders per Share - Total Company
Slide 148: Reconciliation of Net Income to Operating Earnings
Reconciliation of Net Income Available to Common Shareholders to Operating Earnings Available to Common Shareholders ($ Millions)
Slide 149: Reconciliation of Net Income to Operating Earnings
Reconciliation of Net Income Available to Common Shareholders to Operating Earnings Available to Common Shareholders ($ Millions) ($ Millions)
Slide 150: Reconciliation of Book Value per Common Share
Reconciliation of Book Value per Common Share
Slide 151: Reconciliation of Premiums, Fees & Other Revenues
Reconciliation of Premiums, Fees & Other Revenues
Slide 152: Reconciliation of Operating Expenses and Expense Ratio
Reconciliation of Operating Expenses and Expense Ratio 1The operating expense ratio is calculated by dividing operating expenses by premiums, fees & other revenues. The operating expense ratio, as presented, is calculated by dividing operating expenses, as presented, by premiums, fees & other revenu
Slide 153: Reconciliation of Return on Common Equity
Reconciliation of Return on Common Equity ($ Millions)
Slide 154: Normalization
Normalization Normalization investor day 2 0 0 7
Slide 155: 2005 - 2007 Total Company Normalized Results
2005 - 2007 Total Company Normalized Results 1 2005 Auto & Home prior year development and catastrophes includes impact of Hurricane Katrina. 2Other includes, but is not limited to, items such as tax adjustments, reserve adjustments other than Auto & Home prior year development and catastrophes, pre
Slide 156: 2007 Normalized Operating Earnings
2007 Normalized Operating Earnings 1Other includes, but is not limited to, items such as tax adjustments, reserve adjustments other than Auto & Home prior year development and catastrophes, premium recoverables and liability write-offs.
Slide 157: 2007 Normalized Operating Earnings
2007 Normalized Operating Earnings 1Other includes, but is not limited to, items such as tax adjustments, reserve adjustments other than Auto & Home prior year development and catastrophes, premium recoverables and liability write-offs.
Slide 158: Institutional Metrics
Institutional Metrics Institutional Metrics investor day 2 0 0 7
Slide 159: Institutional: 2007 Results
Institutional: 2007 Results See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 160: Institutional: 2008 Targets
Institutional: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 161: Institutional: 2006 - 2008 Operating Earnings
Institutional: 2006 - 2008 Operating Earnings 1 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 162: Group Life: Key Metrics
Group Life: Key Metrics 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 163: Retirement & Savings: Key Metrics
Retirement & Savings: Key Metrics 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 164: Non-Medical Health: Key Metrics
Non-Medical Health: Key Metrics 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 165: Individual Metrics
Individual Metrics Individual Metrics investor day 2 0 0 7
Slide 166: Individual: 2007 Results
Individual: 2007 Results See Definitions, Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 167: Individual: 2008 Targets
Individual: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Definitions, Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 168: Individual: 2006 - 2008 Operating Earnings
Individual: 2006 - 2008 Operating Earnings 1 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 169: Individual: 2006 - 2008 Premiums, Fees & Other
Individual: 2006 - 2008 Premiums, Fees & Other 1 Growth rate is calculated mid-point to mid-point.
Slide 170: Auto & Home Metrics
Auto & Home Metrics Auto & Home Metrics investor day 2 0 0 7
Slide 171: Auto & Home: 2006 - 2007 Results
Auto & Home: 2006 - 2007 Results See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 172: Auto & Home: 2008 Targets
Auto & Home: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 173: International Metrics
International Metrics International Metrics investor day 2 0 0 7
Slide 174: International: 2007 Results
International: 2007 Results See Definitions, Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 175: International: 2008 Targets
International: 2008 Targets 1 Growth rate is calculated mid-point to mid-point. 2 Growth rate is calculated 2007N to 2008P, mid-point to mid-point. See Definitions, Reconciliation and Normalization sections included elsewhere in this Appendix.
Slide 176: Investments Metrics
Investments Metrics investor day 2 0 0 7
Slide 177: Plan Interest Rate Outlook
Plan Interest Rate Outlook Inversion Eases for Second Half of 2008
Slide 178: MetLife
MetaLife