Metlife, Inc. · NYSE:MET
Metlife — Q4 2020 Earnings Presentation
30 slides from Metlife's earnings presentation, Feb 3, 2021
Slide 1: 4Q20 Supplemental Slides & Outlook
4Q20 Supplemental Slides1 & Outlook John McCallion Chief Financial Officer Exhibit 99.3 1 These slides highlight information in MetLife, Inc.'s earnings release, quarterly financial supplement and other prior public disclosures.
Slide 2: Table of contents
2 Table of contents Topic Page No. Net Income (Loss) to Adjusted Earnings 3 Adjusted Earnings ex. Total Notable Items by Segment 4 Variable Investment Income (VII) 5 Direct Expense Ratio 7 Cash & Capital 8 Outlook 9 Appendix 13
Slide 3: Net income (loss) to adjusted earnings
3 Net income (loss) to adjusted earnings 4Q20 FY20 (post-tax) $ in millions $ per share1 $ in millions $ per share1 Net Income (Loss) $124 $0.14 $5,191 $5.68 Less: Net Investment Gains (Losses) (26) (0.03) (87) (0.10) Net Derivative Gains (Losses)2 (1,233) (1.36) 1,066 1.17 Investment Hedge Adjustme
Slide 4: Adjusted earnings ex. total notable items by segment
4 ($ in millions - post-tax) 4Q20 4Q19 % Change % Change (Constant Rate) Highlights 1 Group Benefits $383 $329 16% + Expense Margins; + Underwriting Margins; + Volume Growth Retirement and Income Solutions 526 321 64% + Investment Margins; + Volume Growth Property & Casualty 112 25 348% + Underwriti
Slide 5: 2020 VII above guidance
5 2020 VII above guidance of $900 million - $1.1 billion 1Q20 2Q20 3Q20 4Q20 FY20 ($ in millions - pre-tax) Private Equity Other $0 $351 ($555) $652 $778 $1,226
Slide 6: VII by segment
6 ($ in millions - post-tax) 4Q201 FY201 Group Benefits $4 $16 Retirement and Income Solutions 202 340 Property & Casualty 19 33 U.S. 225 389 Asia 190 314 Latin America 10 4 EMEA — — MetLife Holdings 196 303 Corporate & Other (6) (41) Total Variable Investment Income $615 $969 VII by segment 1 Post-
Slide 7: 2020 direct expense ratio of 12.0% beats 12.3% target
7 2020 direct expense ratio of 12.0% beats 12.3% target Direct Expense Ratio1 14.3% 13.3% 13.3% 12.9% 12.6% 12.0% 12.0% 12.4% 11.4% 12.3% 2015 2016 2017 2018 2019 2020 1Q20 2Q20 3Q20 4Q20 1 Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers (PRT
Slide 8: Cash & capital
8 Holding Company Cash1 $5.3B $6.6B $7.8B $4.5B 4Q19 1Q20 2Q20 3Q20 4Q20 Cash & capital 1 Includes cash and liquid assets at MetLife, Inc. and other holding companies at quarter-end. 2 Excludes total notable items. 3 Based on estimate and includes MetLife, Inc.'s principal U.S. insurance subsidiarie
Slide 9: Outlook
Outlook i! MetLife
Slide 10: Overview: near-term targets and corporate guidance
10 Overview Gradual recovery from pandemic: • Continued impacts from COVID-19, mostly in 1H21 • Headwinds from low interest rates, directionally improving • Favorable impacts from weaker U.S. dollar Near-term1 targets: • Adjusted return on equity2 of 12-14% • Free cash flow ratio of 65-75% of adjust
Slide 11: Near-Term Guidance: U.S. and MetLife Holdings
11 Near-Term Guidance: U.S. and MetLife Holdings • Adjusted premiums, fees and other revenues (PFOs) expected to grow low double-digits in 2021 aided by the Versant acquisition, and 4-6% annual growth beyond • Group Life mortality ratio of 92.4% in 2020; target of 85-90% • Group Non-Medical Health i
Slide 12: Near-Term Guidance: Non-U.S.
12 Near-Term Guidance: Non-U.S.1 • Double-digit sales growth in 2021, mid-to-high single-digit growth in 2022 – 2023 • General account assets under management2 to grow at mid single-digits • Adjusted earnings essentially flat in 2021, mid single-digit growth in 2022 – 2023 • Dividends to holding com
Slide 13: Appendix
Appendix i! MetLife
Slide 14: Segments: new business value, capital deployed and IRR
14 Segments: U.S., Asia, Latin America and EMEA1 ($ in billions) Capital Deployed Value Added (VNB) Internal Rate of Return (IRR) Payback (Years) 2019 $3.8 $1.8 15% 7 2018 $3.8 $2.1 15% 7 2017 $3.1 $1.3 14% 7 Total $10.7 $5.2 2017 - 2019 New Business Value 1 Excludes the MetLife Holdings segment; Va
Slide 15: Interest Rates: Base vs. Flat Rate Scenario
15 12/31/20 12/31/21 12/31/22 12/31/23 Base Flat Rate Base Flat Rate Base Flat Rate Base Flat Rate 3-Month LIBOR1 0.24% 0.24% 0.20% 0.24% 0.32% 0.24% 0.56% 0.24% 10-Year U.S. Treasury1 0.91% 0.91% 1.12% 0.91% 1.31% 0.91% 1.49% 0.91% 30-Year U.S. Treasury1 1.65% 1.65% 1.72% 1.65% 1.80% 1.65% 1.88% 1.
Slide 16: Interest Rates: Base vs. Declining Rate Scenario
16 12/31/20 12/31/21 12/31/22 12/31/23 Base Declining Rate Base Declining Rate Base Declining Rate Base Declining Rate 3-Month LIBOR1 0.24% 0.24% 0.20% 0.24% 0.32% 0.24% 0.56% 0.24% 10-Year U.S. Treasury1 0.91% 0.91% 1.12% 0.50% 1.31% 0.50% 1.49% 0.50% 30-Year U.S. Treasury1 1.65% 1.65% 1.72% 0.77%
Slide 17: Key Sensitivities: U.S. and MetLife Holdings
17 Key Sensitivities: U.S. and MetLife Holdings • 1% change in Group Life mortality ratio translates to ~$65 million of adjusted earnings1 • 1% change in Group Non-Medical Health interest adjusted benefit ratio translates to ~$75 million of adjusted earnings1 • Roughly 70% of the separate account (S
Slide 18: Key Sensitivities: Non-U.S.
18 Key Sensitivities: Non-U.S. Asia Latin America EMEA 1 Independent parallel shift in yield curve for U.S. and Japan has the same impact. 2 Higher yields increase adjusted earnings and lower regulatory ratios. 3 Higher yields increase adjusted earnings and regulatory ratios.4 The ProVida encaje is
Slide 19: Cautionary Statement on Forward-Looking Statements
19 Cautionary Statement on Forward-Looking Statements The forward-looking statements in this presentation, such as “assumes,” “assumption,” “beyond, “continued,” “estimate,” “expected,” “forward,” “future,” “grow,” “guidance,” “near- term,” “ongoing,” “outlook,” “remain,” “scenario,” “sensitivities,
Slide 20: Explanatory Note on Non-GAAP and Other Financial Information
20 Explanatory Note on Non-GAAP and Other Financial Information Any references in this presentation (except in this Explanatory Note on Non-GAAP Financial Information and Reconciliations) to: Should be read as, respectively: (i) net income (loss); (i) net income (loss) available to MetLife, Inc.’s c
Slide 21: Explanatory Note on Non-GAAP (constant currency)
21 Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period and applied to the comparable prior period. Reconciliations of these
Slide 22: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
22 Explanatory Note on Non-GAAP and Other Financial Information (Continued) The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues: • Universal life and investment-type product policy fees excludes the amortization of unearned revenue
Slide 23: Explanatory Note on Non-GAAP and Other Financial Information (Continued)
23 Explanatory Note on Non-GAAP and Other Financial Information (Continued) Expense ratio, direct expense ratio, adjusted expense ratio and related measures: • Expense ratio: other expenses, net of capitalization of DAC, divided by premiums, fees and other revenues. • Direct expense ratio: adjusted
Slide 24: Reconciliation of Net Income to Adjusted Earnings
24 Reconciliation of Net Income (Loss) Available to MetLife, Inc.'s Common Shareholders to Adjusted Earnings Available to Common Shareholders 2020 4Q20 4Q19 Earnings Per Weighted Average Common Share Diluted1 Earnings Per Weighted Average Common Share Diluted1 Earnings Per Weighted Average Common Sh
Slide 25: Reconciliation to Adjusted Earnings, Excluding Total Notable Items
25 Reconciliation to Adjusted Earnings Available to Common Shareholders, Excluding Total Notable Items 4Q20 U.S.1 Group Benefits1 Retirement and Income Solutions1 Property & Casualty1 Asia Latin America EMEA MetLife Holdings1 Corporate & Other1 (In millions) Adjusted earnings available to common sha
Slide 26: Expense Detail and Ratios
26 Expense Detail and Ratios (In millions, except ratio data) 2015 2016 2017 2018 2019 2020 Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (3,319) $ (3,152) $ (3,002) $ (3,254) $ (3,358) $ (3,013) Less: Divested businesses and lag elimination1 120 (
Slide 27: Expense Detail and Ratios (quarterly)
27 Expense Detail and Ratios (In millions, except ratio data) 1Q20 2Q20 3Q20 4Q20 Reconciliation of Capitalization of DAC to Adjusted Capitalization of DAC Capitalization of DAC $ (774) $ (671) $ (764) $ (804) Less: Divested businesses (3) (2) — — Adjusted capitalization of DAC $ (771) $ (669) $ (76
Slide 28: Premiums, Fees and Other Revenues
28 Premiums, Fees and Other Revenues (In millions) 2015 2016 2017 2018 2019 2020 1Q20 2Q20 3Q20 4Q20 Total Company - Premiums, Fees and Other Revenues Premiums, fees and other revenues $ 43,900 $ 44,370 $ 45,843 $ 51,222 $ 49,680 $ 49,486 $ 11,336 $ 10,491 $ 11,887 $ 15,772 Less: Unearned revenue ad
Slide 29: Reconciliation of Operating Cash Flow to Free Cash Flow
29 Condensed Reconciliation of Net Cash Provided by Operating Activities of MetLife, Inc. to Free Cash Flow of All Holding Companies 2020 2019 (In billions, except ratios) MetLife, Inc. (parent company only) net cash provided by operating activities $ 3.5 $ 4.2 Adjustments from net cash provided by
Slide 30: MetLife: Navigating life together
iy’ MetLife Navigating life together i! MetLife