Metlife, Inc. · NYSE:MET
Metlife — Investor Day (May 2013)
108 slides from Metlife's investor day presentation, May 21, 2013
Slide 1: MetLife Investor Day 2013
MetLIfe INVESTOR DAY 2013 Edward A. Spehar Senior Vice President & Head of Investor Relations May 21, 2013
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 – Creating Shareholder Value Steven A. Kandarian Chairman, President & Chief Executive Officer Annuities John C.R. Hele Lisa S. Kuklinski Eric Steigerwalt Chief Financial Officer Americas Chief Actuary Head of U.S. Retail Annuities Q&A Break Earnings and Free Cash Flow John C.R. Hele
Slide 4: MetLife
MetLife
Slide 5: Steven A. Kandarian
Steven A. Kandarian Chairman, President & Chief Executive Officer May 21, 2013 INVESTOR DAY 2013
Slide 6: Investor Day Key Messages
Investor Day Key Messages Variable annuities pose manageable risk with upside in a better market environment Attractive earnings mix today and strategy will drive improvement over time Free cash flow expected to be 35%-45% of operating earnings1 and a higher ratio is our ultimate goal 1Over the 2014
Slide 7: Strategy to Become a World Class Company
Strategy to Become a World Class Company Drive Toward Customer Centricity and a Global Brand Grow Emerging Markets Build Global Employee Benefits Business Refocus the U.S. Business Global * World-Class * Scale One
Slide 8: Recognize Need to Increase ROE and Lower COEC
Recognize Need to Increase ROE and Lower COEC Sources: BofA Merrill Lynch and Professor Aswath Damodaran, Stern School of Business (NYU). See Appendix for non-GAAP financial information, definitions and/or reconciliations. MetLife Operating ROE Spread to Cost of Equity Capital (COEC) (CHART)
Slide 9: Addressing VA is Biggest Lever We Have to Lower COEC
Addressing VA is Biggest Lever We Have to Lower COEC Reduce Risk and Highlight Value in Retail Annuities Merge subsidiaries to increase transparency and reduce risk of variable annuity business Illustrate value and risk of variable annuity business based on cash flow analysis Reduce sales of higher
Slide 10: Commitment to Value Creation and Transparency
Commitment to Value Creation and Transparency Improve Value Proposition for Shareholders Highlight improving earnings risk profile Focus on free cash flow generation Shift business mix from capital-intensive to protection-oriented products
Slide 11: We are Focused on Creating Shareholder Value
Current business performing well despite external challenges Our focus areas for growth should contribute to both a higher operating ROE and lower risk profile Cash generation is a high priority and we are working to return cash to shareholders We are Focused on Creating Shareholder Value See Append
Slide 12: MetLife
MetLife
Slide 13: John C.R. Hele
John C.R. Hele Executive Vice President & Chief Financial Officer May 21, 2013 INVESTOR DAY 2013
Slide 14: Managing variable annuity risk remains a top priority
Managing variable annuity (VA) risk remains a top priority Variable annuity risk will be more transparent The VA book has value today, upside with market improvement, and manageable risk in downside scenarios We remain committed to annuities, the product meets an important consumer need Key Messages
Slide 15: Actions to Address Variable Annuity Risk
Redesigned product portfolio to further improve risk-return profile Continue to manage reduction of variable annuity sales volume Merging offshore captive reinsurer into U.S. regulated entity Actions to Address Variable Annuity Risk See Appendix for non-GAAP financial information, definitions and/or
Slide 16: Multiple Generations of VA Product De-risking
Combination of price increases and benefit reductions in recent years GMIB MAX V is the most recent version of our guaranteed minimum income benefit (GMIB) variable annuity Roll-up rate was reduced from 5.0% to 4.0% Withdrawal rate was lowered from range of 4.5%-5.0% to 4.0% Multiple Generations of
Slide 17: Managing Down Variable Annuity Sales
Managing Down Variable Annuity Sales MetLife U.S. Variable Annuity Sales ($ in billions) $10.0—$11.0 $15.3 $13.9 $15.4 $18.3 $28.4 $17.7 $10.0-$11.0 2007 2008 2009 2010 2011 2012 2013P See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 18: Merging of Subsidiaries, On-shoring of VA Risk
Merging of Subsidiaries, On-shoring of VA Risk MetLife Insurance Company of Connecticut (CT) MetLife Investors USA Insurance Company (DE) MetLife Investors Insurance Company (MO) Exeter Reassurance Company, Ltd. (Variable Annuity Reinsurer)New Company Merge three U.S. life companies and one foreign
Slide 19: Benefits from Merger of Subsidiaries
Better position to deal with Dodd-Frank derivative collateral requirements Proactively addresses recent regulatory concerns about the use of captive reinsurers Increases transparency of variable annuity business Bulk of VA business moving to U.S. regulated subsidiary from offshore captive reinsurer
Slide 20: Key Takeaways
Key Takeaways Active de-risking of variable annuity products in recent years Ongoing process to ensure business is right sized Restructuring will improve transparency and risk profile
Slide 21: MetLife
MetLife
Slide 22: Lisa S. Kuklinski
Lisa S. Kuklinski Vice President & Americas Chief Actuary May 21, 2013 INVESTOR DAY 2013
Slide 23: Agenda
Agenda Profile of U.S. variable annuities in-force Net amount at risk Cash flows and market consistent valuation Policyholder behavior
Slide 24: 60% of In-Force has Low-Risk Death Benefits
60% of In-Force has Low-Risk Death Benefits U.S. Variable Annuities In-Force1– Death Benefits (DB) $168.9 billion of account balances Compound 4% Enhanced Death Benefit 18% Return of Premium 31% Annual Step-Up 18% No Guarantee, Other 2% 5/7 Year Step-Up 27% As of 1Q13. Excludes Corporate & Other.
Slide 25: Death Benefits are a Modest Risk
Death Benefits are a Modest Risk U.S. Variable Annuity Death Benefit Claims History ($ in millions) $0 $20 $40 $60 $80 $100 $120 $140 $160 2007 2008 2009 2010 2011 2012
Slide 26: 30% of In-Force has No Living Benefit Guarantees
30% of In-Force has No Living Benefit Guarantees U.S. Variable Annuities In-Force1 – Living Benefits (LB) $168.9 billion of account balances No Living Benefit Riders 30% GMIB 1, 2, Plus 39% GMIB MAX 16% Withdrawal Benefits 15% GMAB <1% As of 1Q13. Excludes Corporate & Other.
Slide 27: Natural Hedge between Living and Death Benefits
Natural Hedge between Living and Death Benefits U.S. Variable Annuities In-Force1 - Overlap of LB and DB ($ in billions) $117.8 Living Benefits $30.5 Living Benefits & Enhanced DB Combined $37.2 Enhanced Death Benefits 1 As of 1Q13. Excludes Corporate & Other.
Slide 28: Conservative GMIB Payout Rates Materially Reduce Risk
Conservative GMIB Payout Rates Materially Reduce Risk Illustration1 for Male, Age 75—GMIB MAX I 1% interest rate 10-year age setback Conservative mortality Assumptions $100 GMIB Benefit Base $60 PV Income Guarantee 1 As of 3/31/13.
Slide 29: Other Factors that Limit Risk
Other Factors that Limit Risk Asset allocation requirements 10-year waiting period Hedging since 2004 External reinsurance
Slide 30: Definition of Net Amount at Risk (NAR)
Definition of Net Amount at Risk (NAR) Gross exposure if all claims come due on a particular date For Guaranteed Minimum Death Benefits (GMDB): -Death Benefit less Account Value For Guaranteed Minimum Income Benefits (GMIB): -PV of Guaranteed Lifetime Income less Account Value No offset from reserve
Slide 31: Illustrative Calculations of Net Amount at Risk
Illustrative Calculations of Net Amount at Risk GMDB $100 $100 GMDB Benefit Base NAR=$50 $50$50 GMIB 1 GMIB Benefit Base X Guaranteed Rate ÷ SPIA Rate Benefit Base AV GMIB1 $60 NAR=$10 $50 GMIB Benefit Base PV Income Guarantee AV 1 Illustrative calculation as of 3/31/13.
Slide 32: GMIB NAR Cut by Half with +10% in Account Value
GMIB NAR Cut by Half with +10% in Account Value Net Amount at Risk by Issue Year ($ in millions) $1,200 $1,000 $800 $600 $400 $200 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13 $2.5 billion NAR at 3/31/13 $1.7 billion with +5% in AV $1.2 billion with +10% in AV
Slide 33: GMIB NAR Down 60% with +100 bps in Rates
GMIB NAR Down 60% with +100 bps in Rates Net Amount at Risk by Issue Year ($ in millions) $1,200 $1000 $800 $600 $400 $200 $0 $2.5 billion NAR at 3/31/13 $1.0 billion with +100 bps in rates $0.4 billion with 4.5% Treasury yield 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13 Note: B
Slide 34: Net Amount at Risk is Sensitive to Market Conditions
Net Amount at Risk is Sensitive to Market Conditions GMIB NAR Sensitivity to Separate Account Performance and Rates ($ in billions) Interest Rates As of 3/31/13 + 100bps + 250bps Separate Account Performance -10% 0% +10% $4.6, $2.5, $1.2 $2.2 $1.0 $0.5 $1.0 $0.4 $0.2 Note: Hedges not reflected in th
Slide 35: Cash Flow Scenario Analysis - Approach & Assumptions
Cash Flow Scenario Analysis - Approach & Assumptions Projection includes all policies with living benefits1 Shows year by year cash flows including: Rider fees and claims Base product revenues and expenses Excludes hedges and reinsurance For present value, discount at 4% 1 Excludes block without liv
Slide 36: Base Case Scenario for Equity Market and Interest Rates
Base Case Scenario for Equity Market and Interest Rates 5% S&P growth and 4.5% 10-year swap rate ($ in billions) $3,000 $ 2,500 $2,000 $1,500 $1,000 $500 $0 0 5 10 15 20 25 30 35 40 45 50 Projection Year Total Claims Rider Fees, Base Fees, Exp ($ in billions) Present Value of: Base Contract Fees min
Slide 37: Base Case for Market with Flat Interest Rates
Base Case for Market with Flat Interest Rates 5% S&P growth and flat 10-year swap rate ($ in millions) $3,000 $ 2,500 $2,000 $1,500 $1,000 $500 $ 0 0 5 10 15 20 25 30 35 40 45 50 Projection Year Total Claims Rider Fees, Base Fees, Exp ($ in billions) Present Value of: Base Contract Fees minus Expens
Slide 38: Stress Followed by Base Case for Market and Rates
Stress Followed by Base Case for Market and Rates ($ in billions) -30% S&P return followed by 5% S&P growth and 4.5% 10-year swap rate $ 2,500 $2,000 $1,500 $1,000 $500 $0 0 5 10 15 20 25 30 35 40 45 50 $ millions Projection Year Total Claims Rider Fees, Base Fees, Exp Present Value of: Base Contrac
Slide 39: Stress Followed by Base Case for Market and Flat Rates
Stress Followed by Base Case for Market and Flat Rates -30% S&P return followed by 5% S&P growth and flat 10-year swap rate ($ in billions) $ 2,500 $2,000 $1,500 $1,000 $500 $ 0 0 5 10 15 20 25 30 35 40 45 50 Projection Year Total Claims Rider Fees, Base Fees, Exp ($ in millions) Present Value of: B
Slide 40: Both Equity Market and Interest Rates Remain Flat
Both Equity Market and Interest Rates Remain Flat 0% S&P growth and flat 10-year swap rate ($ in millions) $3,000 $ 2,500 $2,000 $1,500 $1,000 $500 $ 0 0 5 10 15 20 25 30 35 40 45 50 Projection Year Total Claims Rider Fees, Base Fees, Exp ($ in billions) Present Value of: Present Base Contract Fees
Slide 41: Stress Followed by Flat Market and Flat Rates
Stress Followed by Flat Market and Flat Rates -30% S&P return followed by 0% S&P growth and flat 10-year swap rate ($ in millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 0 5 10 15 20 25 30 35 40 45 50 Projection Year Total Claims Rider Fees, Base Fees, Exp ($ in billions) Pr
Slide 42: Definition of Market Consistent Valuation (MCV)
Definition of Market Consistent Valuation (MCV) Average present value of asset and liability cash flows Projected over 1,000 stochastic scenarios Over the 1,000 scenarios: Average S&P growth rate is risk-free rate (2.0% at 10 years) Average volatility is the implied volatility from options market Di
Slide 43: MCV Suggests Material Upside, Especially if Rates Rise
MCV Suggests Material Upside, Especially if Rates Rise Market Consistent Value and Sensitivities as of 3/31/13 ($ in billions) MCV as of 3/31/131 +20% in Equity Market 10-Year Treasury +100 bps 10-Year Treasury at 4.50% $13.0 $14.9 $12.8 $12.4 ($10.9) ($8.6) ($3.7) $3.6 $2.2 $0.3 $0.5 ($0.9) VA Prod
Slide 44: Policyholder Behavior Assumptions Could be Conservative
Policyholder Behavior Assumptions Could be Conservative While still too early to unlock, experience favorable to pricing Experience in-line with pricing, not as big a risk factor as commonly perceived Assumptions lowered to be in-line with post- crisis experience GMIB Annuitization Dollar-for-Dollar
Slide 45: Lapse Assumption Lowered to Fully Reflect Post-Crisis Experience
Lapse Assumption Lowered to Fully Reflect Post-Crisis Experience Lapse Function Relative to “In the Moneyness” Lapses 40% 35% 30% Prior Curve 25% Current 20% Curve 15% 10% 5% 0% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% “In the Moneyness” Note: In-the-Moneyness (ITM) = Adjusted GMIB Benefit B
Slide 46: GMIB Annuitization, Much Better than Expected So Far
GMIB Annuitization, Much Better than Expected So Far GMIB Annuitization – Actual vs. Expected 25% 5,225 5000 20% 3,791 4000 15% 3000 10% 2,640 1,944 2000 1,773 1,889 5% 1000 828 0% 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 % of Policies Expected to Annuitize % of Policies that Actually Annuitized # of
Slide 47: Dollar-for-Dollar, In-Line with Expectations
Dollar-for-Dollar, In-Line with Expectations Aggregate Total Withdrawal Rate 20% 12% 15% 9% 10% 6% 5% 3% 0% 0% 2007 2008 2009 2010 2011 2012 Aggregate Total Withdrawal Rate (Left Y-Axis) % of IRA and Age 70+ (Right Y-Axis) Increase over time is consistent with pricing assumptions If 100% utilization
Slide 48: Key Takeaways
Key Takeaways Profile of U.S. VA in-force block and product design limit risk Lapse assumption curve based on post-crisis experience and annuitization rates have been favorable to pricing Cash flow analysis suggests manageable downside risk and material upside with market improvement
Slide 49: MetLife
MetLife
Slide 50: Eric Steigerwalt
Eric Steigerwalt Executive Vice President & Head of U.S. Retail May 21, 2013 INVESTOR DAY 2013
Slide 51: U.S. Retail Focused on Operating and Capital Efficiency
U.S. Retail Focused on Operating and Capital Efficiency Reorganized U.S. Retail leadership team Reduced advisor count Personnel Distribution Product Portfolio Repriced variable annuity products Exiting lifetime secondary guarantee market for universal life (UL) products Restructured agency footprint
Slide 52: Scale & Simplicity Initiative for U.S. Retail
Scale & Simplicity Initiative for U.S. Retail On track to achieve over $150 million of net pre-tax expense savings by end of 2014 U.S. Retail Location Strategy: Create headquarters in Charlotte, moving 500 positions in 2013 and 800 positions in 2014/15 Significantly reduce Retail geographic foo
Slide 53: Shift Away from Capital-Intensive Products
Shift Away from Capital-Intensive Products 1Based on 2013 plan. See Appendix for non-GAAP financial information, definitions and/or reconciliations. Percent Change 2012 YoY Percent Change 2013 YoY1 -38% -41% -25% -35% Variable Annuities ULSG Life Sales
Slide 54: Shifting the Risk Profile of New Sales
Shifting the Risk Profile of New Sales ($ in millions) Life Sales $392 $436 $126 $113 $32 $162 $126 $119 $32 $105 -$10 -$3 20121 2013P 1Excludes direct distribution sales of $21 million. See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 55: U.S. Retail Annuity Product Strategy
U.S. Retail Annuity Product Strategy Reduce risk by lowering sales of traditional variable annuity lifetime living benefits and adding managed volatility funds to the in-force block Diversify risk by shifting annuity product mix Offset risk by launching new products such as MetLife Shield Level Sele
Slide 56: GMIB MAX V: An Improved Risk-Return Profile
GMIB MAX V: An Improved Risk-Return Profile Improvement in return on investment (ROI) Lower hedge costs Lower capital required Likely lower utilization of immediate dollar-for-dollar withdrawals
Slide 57: MetLife Shield Level Selector
MetLife Shield Level Selector New single premium deferred annuity Allows clients to: Protect retirement assets Participate in growth opportunities Personalize their strategy Offsets variable annuity equity risk See Appendix for further product information.
Slide 58: MetLife Shield Level Selector & Up Market Scenario
MetLife Shield Level Selector & Up Market Scenario Scenario A Scenario B Hypothetical Example. For Illustrative Purposes Only. Example: 10% Protection, Large Cap Equity Index, 6% Cap Rate See Appendix for further product information. 10% 5% 0% -5% -10% MAXIMUM GROWTH OPPORTUNITY
Slide 59: MetLife Shield Level Selector – Down Market Scenario
MetLife Shield Level Selector – Down Market Scenario Scenario A Scenario B Hypothetical Example. For Illustrative Purposes Only. Example: 10% Protection, Large Cap Equity Index, 6% Cap Rate Scenario A Scenario B See Appendix for further product information. 6% 0% -5% -10% -15% MAXIMUM GROWTH OP
Slide 60: Value of Option to Policyholders for GMIB MAX V
Value of Option to Policyholders for GMIB MAX V Increases with Decreasing Equity Markets (CHART) Present Value of Option to Policyholders Change in Equity Level Illustration: Results shown based on experienced sales distribution, 3/31/13 capital markets, and $100,000 initial purchase payment. GMIB M
Slide 61: Value of Option to Policyholders for MetLife Shield Level Selector
Value of Option to Policyholders for MetLife Shield Level Selector Decreases with Decreasing Equity Markets Present Value of Option to Policyholders Change in Equity Level Illustration: Results shown based on expected sales distribution, 3/31/13 capital markets, and $100,000 initial purchase payment
Slide 62: More Favorable ROI for New Products
1GMIB MAX IV (5% rollup) launched on August 20, 2012 and was replaced by GMIB MAX V (4% rollup) on February 4, 2013 (most states). MSLS launched on May 1, 2013. The pricing results were based on market conditions as of February 28, 2013. Incidences of ROIs reflected in the chart above are the result
Slide 63: Key Takeaways
Key Takeaways Significant strides to manage our new business risk profile and restructure distribution in 2013 Manage to $10-$11 billion of U.S. variable annuity sales and launch MetLife Shield Level Selector Exiting lifetime secondary guarantee market for UL products and launching new whole life pr
Slide 64: MetLife
Metlife
Slide 65: John C.R. Hele
John C.R. Hele Executive Vice President & Chief Financial Officer May 21, 2013 INVESTOR DAY 2013
Slide 66: Key Messages on Earnings and Free Cash Flow
Products with substantial protection margins are key contributors to profitability Growth businesses generate profits driven by lower capital intensive products, so favorable mix shift occurring over time Statutory to GAAP results validate operating earnings quality Ratio of free cash flow to operat
Slide 67: Lower Risk Products More Than 60% of Earnings
Lower Risk Products More Than 60% of Earnings 2012 Normalized Operating Earnings1 Protection Investment Operating Earnings primarily driven by: Lower risk businesses account for 62% 1Excludes Corporate & Other. Total normalized adjustments reduced operating earnings by $45 million, including reducti
Slide 68: High Quality Earnings in the U.S.
High Quality Earnings in the U.S. ($ in millions) Cumulative Statutory to GAAP Ratio is 83% Ratio of Statutory to GAAP -6% 150% 96% 68% 96% 1U.S. insurance subsidiaries statutory operating earnings adjusted to exclude affiliated insurance company dividends. 2U.S. insurance subsidiaries operating ear
Slide 69: High Quality Earnings in Latin America
High Quality Earnings in Latin America ($ in millions) Cumulative Statutory to GAAP Ratio is 81% 1Net Income adjusted for capital gains and losses. 2Operating earnings derived from GAAP. Note: Latin America analysis based on Mexico and Chile. See Appendix for non-GAAP financial information, definiti
Slide 70: High Quality Earnings in Asia Considering Conservative Regulatory Accounting
High Quality Earnings in Asia Considering Conservative Regulatory Accounting Cumulative Statutory to GAAP Ratio is 49% ($ in millions) 55% Ratio of Statutory to GAAP 43% $379 $882 $574 $1,044 2011 2012 Net Income adjusted for capital gains and losses. 2Operating earnings derived from GAAP. Note: Asi
Slide 71: Key Takeaways
More than 60% of operating earnings from products with a lower risk profile Execution of our strategy will increase the proportion of earnings from protection businesses Statutory to GAAP results indicate high quality operating earnings Key Takeaways See Appendix for non-GAAP financial information,
Slide 72: MetLife
Metlife
Slide 73: Marlene Debel
Marlene Debel Senior Vice President & Treasurer May 21, 2013 INVESTOR DAY 2013
Slide 74: What We Said on December 2012 Guidance Call
What We Said on December 2012 Guidance Call Holding Companies Cash Roll Forward1 ($ in billions) 1 2013 cash and liquid assets is prior to incremental capital actions such as M&A, common stock buybacks and common stock dividend increase. The bars represent mid-points of ranges. $5.4 $3.0 - $3.5 $1.0
Slide 75: Cash Higher Than Expected Before Incremental Capital Actions
Cash Higher Than Expected 1 Before incremental capital actions. Note: The bars represent mid-points of ranges. 2013 Cash and Liquid Assets Estimate at Holding Companies ($ in billions) $4.8 - $5.8 2013 Guidance1 ($2.3) Provida and Dividend Increase $2.5 - $3.5 2013 Guidance Adjusted $3.9 - $4.9 2013
Slide 76: How We Define Free Cash Flow
How We Define Free Cash Flow Dividends from operating subsidiaries Expenses and other net flows of the holding companies Leverage at ‘AA’ financial strength rating Free Cash Flow Available for Common Dividends, Stock Buybacks, Debt Reduction and M&A
Slide 77: Components of Free Cash Flow
Components of Free Cash Flow ($ in billions) 1 The bars represent mid-points of ranges. 2 Reflects dividends and return of capital to holding companies. 3 Represents Moody’s financial leverage ratio. $5 $4 $4 $2 $1 $0 35% 30% 25% 20% 2013E1 Subsidiary Dividends2 Expenses and Other Leverage Ratio3
Slide 78: Free Cash Flow Improving Over Time
Free Cash Flow Improving Over Time Estimate of Free Cash Flow as a Percentage of Operating Earnings1 1 Assumes leverage maintained at ‘AA’ financial strength target. 2 The bars represent mid-points of ranges. See Appendix for non-GAAP financial information, definitions and/or reconciliations. 50% 40
Slide 79: Key Takeaways
Key Takeaways Cash at the holding companies is anticipated to exceed our initial guidance for 2013 We expect free cash flow to be 35%-45% of operating earnings over the 2014-2016 period Cash generation is a high priority and we are working to increase it over time See Appendix for non-GAAP financial
Slide 80: MetLife
MetLife
Slide 81: John C.R. Hele
John C.R. Hele Executive Vice President & Chief Financial Officer May 21, 2013 INVESTOR DAY 2013
Slide 82: Understanding Net Income and Book Value
Understanding Net Income and Book Value Adjusted net income1 substantially below operating earnings during the past five years, but 2008-2012 an unusual period Adjusted book value1 shows faster growth and much lower volatility Eliminating reversion to the mean assumption for interest rates would hav
Slide 83: Relationship between Operating Earnings, Net Income and Adjusted Net Income
Relationship between Operating Earnings, Net Income and Adjusted Net Income Cumulative results from 2008 to 2012 ($ in millions) Operating Earnings $18,446 Net Income $10,393 Less: Non-Economic/Asymmetrical Accounting $1,150 Adjusted Net Income $9,243 Difference between Operating Earnings and Adjust
Slide 84: Significant Items that Depressed Adjusted Net Income
Significant Items that Depressed Adjusted Net Income Cumulative results from 2008 to 2012 ($ in millions) Difference between Operating Earnings and Adjusted Net Income $9,203 Net Investment Losses ($4,137) Goodwill Writedown ($1,621) 4Q12 Assumption Change ($739) Integration Costs ($607) Divested Bu
Slide 85: Steady Book Value Growth Obscured by Non-Economic and Asymmetrical Accounting Adjustments
Steady Book Value Growth Obscured by Non-Economic and Asymmetrical Accounting Adjustments Actual vs. Adjusted for Non-Economic and Asymmetrical Accounting $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 Actual BV/share ex.AOCI Adjusted BV/share ex.AOCI See Appendix for non-GAAP financial information, defi
Slide 86: Adjusted BV Growth was Higher and Less Volatile
Adjusted BV Growth was Higher and Less Volatile Actual vs. Adjusted Book Value - Average Annual Growth Rate and Standard Deviation1 Growth rates from 2008 to 2012 See Appendix for non-GAAP financial information, definitions and/or reconciliations. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Average Growth Rate St
Slide 87: What if Interest Rates Remain Low... Indefinitely?
What if Interest Rates Remain Low. . . Indefinitely? Assumptions Used Interest Rates September 2012 U.S. Treasury rates held constant No mean reversion Fund Performance Separate account returns at 6.0%, reduced from 7.25% General account returns at 3.5% to 4.0%, reduced from 5.25% to 6.0% Extent of
Slide 88: Flat Rates Indefinitely... Summary of Impact
Flat Rates Indefinitely. . . Summary of Impact Statutory Capital No required strengthening Continue practice of modest annual strengthening of $300 million pre-tax DAC, Related Items, and Goodwill After 3 to 5 years, would anticipate DAC unlockings of: $2.5 billion pre-tax in U.S. variable annuities
Slide 89: Key Takeaways
Key Takeaways 75% of difference between net income and operating earnings explained by items that reflect challenging 5-year period Adjusted book value1 shows faster growth and much less volatility Eliminating reversion to the mean accounting for interest rates would have manageable impact on book v
Slide 90: MetLife
MetLife
Slide 91: Steven A. Kandarian
Steven A. Kandarian Chairman, President & Chief Executive Officer May 21, 2013 INVESTOR DAY 2013
Slide 92: Key Takeaways for the Day
Key Takeaways for the Day Strong results despite prevailing headwinds Steady progress in executing strategy to increase operating ROE and decrease COEC Committed to delivering shareholder value See Appendix for non-GAAP financial information, definitions and/or reconciliations.
Slide 93: MetLife
MetLife
Slide 94: Appendix
MetLife Appendix INVESTOR DAY 2013
Slide 95: Safe Harbor Statement
MetLife Safe Harbor Statement This presentation may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of futur
Slide 96: Safe Harbor Statement (Continued)
MetLife Safe Harbor Statement (Continued) respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the acquisition of ALICO; (26) the dilutive impact on our stockholders resulting from the settlement of our outstanding common equ
Slide 97: Explanatory Note on Non-GAAP Financial Information
MetLife Explanatory Note on Non-GAAP Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information slide and this Appendix) to net income (loss), net income (loss) per share, operating earnings, operating earnings per share, book value p
Slide 98: Explanatory Note on Non-GAAP Financial Information (Continued)
MetLife 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
Slide 99: Explanatory Note on Non-GAAP Financial Information (Continued)
MetLife Explanatory Note on Non-GAAP Financial Information (Continued) MetLife believes the presentation of operating earnings and operating earnings available to common shareholders as MetLife measures it for management purposes enhances the understanding of the company’s performance by highlightin
Slide 100: Definitions
MetLife Definitions INVESTOR DAY 2013
Slide 101: Definitions
MetLife Definitions Sales: Retail Life Sales: Statistical sales information for life insurance is calculated using the LIMRA International, Inc. definition of sales for core direct sales, excluding company sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and p
Slide 102: Reconciliations
MetLife Reconciliations INVESTOR DAY 2013
Slide 103: Reconciliation of Operating Earnings to Net Income – Total Company
MetLife Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders – Total Company Cumulative Results from ($ in millions) 2008 2009 2010 2011 2012 2008 to 2012 Operating earnings available to common shareholders $ 2,47
Slide 104: Reconciliation of Operating Earnings to Net Income – U.S. Insurance Subsidiaries
MetLife Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to Common Shareholders – U.S. Insurance Subsidiaries ($ in millions) 2008 2009 2010 2011 2012 Operating earnings available to common shareholders $ 2,149 $ 2,088 $ 3,309 $ 3,367 $ 4,483 Adjus
Slide 105: Reconciliation of Operating Earnings to Net Income – Latin America
MetLife Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to Common Shareholders – Latin America ($ in millions) 2008 2009 2010 2011 2012 Operating earnings available to common shareholders $ 349 $ 246 $ 364 $ 468 $ 504 Adjustments from operating ea
Slide 106: Reconciliation of Operating Earnings to Net Income – Asia
MetLife Reconciliation of Operating Earnings Available to Common Shareholders to Net Income (Loss) Available to Common Shareholders – Asia ($ in millions) 2011 2012 Operating earnings available to common shareholders $ 882 $ 1,044 Adjustments from operating earnings available to common shareholders
Slide 107: Reconciliation of Book Value Per Common Share
MetLife Reconciliation of Book Value Per Common Share 2008 2009 2010 2011 2012 Book Value Per Common Share 1 Book value per common share, excluding accumulated other comprehensive income (loss) and non-economic/asymmetrical accounting $ 38.67 $ 39.08 $ 41.31 $ 44.20 $ 45.67 Add: Non-economic/asymmet
Slide 108: MetLife
MetLife