Metlife, Inc. · NYSE:MET
Metlife — Conference Presentation (March 2009)
34 slides from Metlife's conference presentation, Mar 18, 2009
Slide 1: MetLife
MetLife Eric Steigerwalt, Senior VP and Treasurer John Rosenthal, Senior Managing Director
Slide 2: 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 3: Explanatory Note on Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information The historical and forward-looking financial information used in these slides and contained in this presentation includes performance measures which are based on methodologies other than Generally Accepted Accounting Principles ("GAAP"). MetLife ana
Slide 4: Evaluation of Insurance Companies
Evaluation of Insurance Companies Several key criteria have become dominant: Criteria MetLife Status Diversified Yes Capital "Cushion" $3.6 - $5.7 Billion Liquidity* $38 Billion Risk Management Strong Investment Quality Good * Cash & Cash Equivalents and Short-term Investments
Slide 5: MetLife's Diverse & Complementary Businesses
MetLife's Diverse & Complementary Businesses Premiums, Fees & Other (2008) 2008 Group Life 7604 Retirement & Savings 2948 Non-Medical & Other 6073 Individual Life 5657 Individual Annuities 2169 Auto & Home 3009 International 4583 Other 820
Slide 6: MetLife's Capital "Cushion" is Strong
MetLife's Capital "Cushion" is Strong Current estimated excess capital of $3.6 - $5.7 billion 2008 estimated RBC ratio of 365% - 400% Manage domestic life subsidiaries to "AA Levels"
Slide 7: MetLife's Excess Liquidity
MetLife's Excess Liquidity Cash & short-term investments $38 billion at 12/31/08 Securities lending $23 billion at 12/31/08 Stable business liability profile Lapses in insurance products are declining or stable No debt maturities in the near term
Slide 8: Variable Annuity Hedging
Variable Annuity Hedging MetLife has a strong and effective hedge program Why have we been successful? We did what we said we would do (3 Greeks) We hedged our Japanese products Regulation 128 has been adjusted Variable annuity hedging is a manageable capital issue
Slide 9: Financial Strength Ratings & Outlook
Financial Strength Ratings & Outlook* Moody's Aa2 Negative S&P AA- Negative Fitch AA Negative A.M. Best A+ Stable * Ratings current as of March 11, 2009 for Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, and MetLife Investors USA Insurance Company
Slide 10: MetLife Investments
MetLife MetLife Investments
Slide 11: Defensively Positioned for Current Environment
Defensively Positioned for Current Environment RMBS Real Estate Recognized deterioration in mortgage underwriting standards early Limited exposure to sub-prime RMBS Vast majority of Alt-A holdings are Super Senior Decreased commercial mortgage portfolio loan-to-value Diversified real estate equity p
Slide 12: MetLife Investments
MetLife Investments Total Portfolio: Diversified portfolio across many sectors Liability Driven: Asset-liability management Team Investment Approach: 580+ investment and support professionals Risk Management: Part of our culture *Market value as of 12/31/08 Investment Grade Corporate Bonds Structure
Slide 13: Portfolio Trends
Portfolio Trends Dec -07* Dec -08 U.S. Treasury/Agency 6.7% 7.3% Structured Finance RMBS CMBS ABS Total Structured Finance 17.5% 5.4% 3.4% 26.3% 12.3% 4.3% 3.6% 20.2% Credit 'A' or Better Corporates 'BBB' Corporates Below Investment Grade Credit Total Credit 21.3% 14.2% 5.5% 41.0% 20.3% 12.6% 3.9% 3
Slide 14: High Quality Structured Finance Portfolio
High Quality Structured Finance Portfolio $70.3 billion book value* $59.2 billion market value* Collateral characteristics and tranche selection is critical *As of 12/31/08 12/31/2007 12/31/2008 RMBS 0.175 0.123 CMBS 0.054 0.043 ABS 0.034 0.036 Structured Finance as a % of Managed Assets $82.6B $59.
Slide 15: MetLife RMBS Holdings Positioned Conservatively
MetLife RMBS Holdings Positioned Conservatively $10.5 billion book value* $7.9 billion market value* 38% Super Senior 96% Fixed Rate is key *As of 12/31/08 **Source: Hybrid ARMs (2003-2007): UBS AG; Loan-to-Value (2003-2007): J.P.Morgan; Credit Enhancement (2005-2007): Fitch Ratings Statistics MetLi
Slide 16: Non-Agency Prime RMBS: MetLife versus Market
MET 60+ DQ Non-Agency Prime RMBS MetLife versus Market Better collateral results in better performance MET C/E* Market C/E* Market 60+ DQ 60+DQ or C/E Level Loan Age in Months Credit Enhancement & Delinquencies *Credit Enhancement as of 12/31/08 Source: Intex; Data as of 12/31/08; Delinquencies weig
Slide 17: Non-Agency Prime RMBS Price Does Not Convey Full Story
Non-Agency Prime RMBS Price Does Not Convey Full Story Bond 1 Bond 2 Non-Agency RMBS $59 $57 Current Rating AAA AAA Vintage 2005 2007 FICO 749 730 LTV 66 71 60+ Days Delinquencies 0.5% 5.7% Expected Coverage 14.7x 1.3x As of 2/25/2009
Slide 18: MetLife RMBS Holdings Positioned Conservatively (Alt-A)
MetLife RMBS Holdings Positioned Conservatively $5.3 billion book value* $3.4 billion market value* 83% Super Senior 92.4% of 2006-2007 vintages are Super Senior No Option ARMs and 88% Fixed Rate is key MetLife* Market** Option ARMs 0% 29% Hybrid ARMs 12% 36% Fixed Rate 88% 35% Loan-to-Value 69% 74%
Slide 19: Alt-A RMBS: MetLife versus Market
Alt-A RMBS MetLife versus Market Better collateral results in better performance *Credit Enhancement as of 12/31/08 Source: Intex; Data as of 12/31/08; Delinquencies weighted by Loan Age, 05-07 Credit Enhancement & Delinquencies MET C/E* Market C/E* Market 60+ DQ with Option ARMs MET 60+ DQ Market 6
Slide 20: Alt-A RMBS Price Does Not Convey Full Story
Alt-A RMBS Price Does Not Convey Full Story Bond 1 Bond 2 Alt-A $52 $54 Current Rating AA B Vintage 2006 2006 LTV 68 74 Interest Only Loans 24% 46% 60+ Days Delinquencies 11.6% 24.9% Expected Coverage 2.1x 0.7x As of 2/25/2009
Slide 21: MetLife's CMBS Positioned for Downturn
MetLife's CMBS Positioned for Downturn $16.1 billion book value* $12.6 billion market value* 23% average credit enhancement for conduits No exposure to CMBX $183 million book value CRE CDO holdings AAA AA A BBB BB and Below East 93 4 1 1 1 CMBS Holdings by Ratings *As of 12/31/08 1% 1% 1% 4% 93%
Slide 22: Seasoned, High Quality CMBS Holdings
Seasoned, High Quality CMBS Holdings 16% from 2006-2007 vintage vs. 50% of the market 91% of 2006-2007 vintages are Super Senior and Senior AAA *Market value as of 12/31/08 CMBS Holdings by Vintage* Below BBB 67 10 0 0 BBB 35 1 36 9 A 165 13 14 28 AA 372 49 39 28 AAA 7,230 2,664 1,348 535 77 81 220
Slide 23: CMBS Price Does Not Convey Full Story
Bond 1 Bond 2 CMBS $33 $33 Current Ratings Senior AAA Senior AAA Vintage 2007 2007 Loans on Servicer Watch List 5.0% 51.2% Debt Service Coverage (DSC) 1.6x 1.2x Loans with DSC <1x 2.1% 21.4% Expected Coverage 2.4x 1.0x CMBS Price Does Not Convey Full Story As of 3/6/09
Slide 24: Ratings Actions Through 12/31/08
Ratings Actions Through 12/31/08 Source: Bloomberg RATT function The Market represents all new issuances from 2004 through 2008. The Alt-A Market of 129.8% reflects 1) the same securities that were downgraded multiple times during 2008, and 2) downgraded securities issued prior to 2004. The Subprime
Slide 25: Reduced Risk in Credit Portfolio
Reduced Risk in Credit Portfolio $122.0 billion book value* $107.7 billion market value* 89% Investment Grade Decreased 'BBB' and Below Investment Grade exposure Approximately 30% private placements 12/31/2007 12/31/2008 AAA/AA/A 0.213 0.203 BBB 0.142 0.126 Below Inv Grade 0.055 0.039 Corporate Cred
Slide 26: Defensively Positioned Below Investment Grade Portfolio
Defensively Positioned Below Investment Grade Portfolio $15.7 billion book value* $11.3 billion market value* Reduced below investment grade credit from 5.5%** to 3.9%* Portfolio repositioned to reduce holdings in cyclical sectors Higher allocation to BB rated credits BB B CCC and Below Other MetLif
Slide 27: High Quality Real Estate and Agricultural Investments
High Quality Real Estate and Agricultural Investments 12/31/2007 12/31/2008 Commercial Mortgages 0.114 0.1195 Agricultural Mortgages 0.034 0.042 Real Estate Equity 0.033 0.035 Real Estate & Agricultural Investments as a % of Managed Assets* $56.9B $57.8B 3.3% 3.4% 11.4% 12.0% 4.2% 3.5% 19.7% 18.1% F
Slide 28: Commercial Mortgage Portfolio Defensively Positioned
2003 2004 2005 2006 2007 6/30/1905 MetLife LTV 0.65 0.66 0.63 0.62 0.61 0.53 CMBS LTV 0.723 0.725 0.727 0.73 0.71 0.7 70% CMBS LTV** Average Loan to Value Commercial Mortgage Portfolio Defensively Positioned $36.0 billion* Decreased portfolio LTV as market became more aggressive Underwritten to sust
Slide 29: Positioned to Withstand Value Declines
Positioned to Withstand Value Declines Below 65% LTV 65% to 75% LTV 75-80% LTV Above 80% LTV MetLife LTV 0.63 0.29 0.05 0.03 Positioned to withstand 40% property value declines Approximately 3% of portfolio has LTV greater than 80% Commercial Mortgage Portfolio LTV* *As of 12/31/08
Slide 30: Summary
Summary Diversified portfolio across fixed income, real estate, agricultural and equity sectors Focus on risk management, underwriting and proactive portfolio management Defensively positioned for current environment
Slide 31: MetLife - Positioned to Win
MetLife - Positioned to Win Diverse mix of businesses Our capital position is strong Our investment portfolio is defensively positioned We continue to benefit from the flight to quality
Slide 32: MetLife
MetLife
Slide 33: Reconciliation of Total Investments to Market Value of Managed Assets
Reconciliation of Total Investments to Market Value of Managed Assets ($ Billions) 12/31/2007 12/31/2008 Total Investments 318.0 298.3 Plus Cash and Cash Equivalents 10.0 24.2 Less Policy Loans (9.3) (9.8) Less Other Invested Assets (8.1) (17.3) Less Mortgages Held For Sale 0.0 (2.0) Adjustment to R
Slide 34: MetLife
MetLife