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| 8-K - FORM 8-K - METLIFE INC | d320842d8k.htm |
 Eric
Steigerwalt Executive Vice President &
Interim Chief Financial Officer
March 23, 2012
Exhibit 99.1 |
 Safe
Harbor 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.
These statements can be identified by the fact that they do not relate strictly to historical
or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection
with a discussion of future operating or financial performance. In particular, these include
statements relating to future actions, prospective services or products, future performance or
results of current and anticipated services or products, sales efforts, expenses, the outcome of
contingencies such as legal proceedings, trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate
assumptions or by known or unknown risks and uncertainties. Many such factors will be important
in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic
environment. They involve a number of risks and uncertainties that are difficult to predict. These
statements are not guarantees of future performance. Actual results could differ materially
from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties
and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange
Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital
markets; (2) concerns over U.S. fiscal policy and the trajectory of the national debt of the U.S., as
well as rating agency downgrades of U.S. Treasury securities; (3) uncertainty about the
effectiveness of governmental and regulatory actions to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (4)
increased volatility and disruption of the capital and credit markets, which may affect our ability to
seek financing or access our credit facilities; (5) impact of comprehensive financial services
regulation reform on us; (6) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates;
(7) exposure to financial and capital market risk, including as a result of the disruption in Europe
and possible withdrawal of one or more countries from the Euro zone; (8) changes in general
economic conditions, including the performance of financial markets and interest rates, which may affect our ability to raise capital, generate fee income and market-related
revenue and finance statutory reserve requirements and may require us to pledge collateral or make
payments related to declines in value of specified assets; (9) potential liquidity and other
risks resulting from our participation in a securities lending program and other transactions; (10) investment losses and defaults, and changes to investment valuations; (11)
impairments of goodwill and realized losses or market value impairments to illiquid assets; (12)
defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial
institutions that could adversely affect us; (14) our ability to address unforeseen liabilities, asset impairments, or rating actions arising from acquisitions or dispositions,
including our acquisition of American Life Insurance Company and Delaware American Life Insurance
Company (collectively, “ALICO”) and to successfully integrate and manage the growth
of acquired businesses with minimal disruption; (15) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue
Service in connection with the acquisition of ALICO; (16) the dilutive impact on our stockholders
resulting from the settlement of common equity units issued in connection with the acquisition
of ALICO or otherwise; (17) MetLife, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and the applicable
regulatory restrictions on the ability of the subsidiaries to pay such dividends; (18) downgrades in
our claims paying ability, financial strength or credit ratings; (19) ineffectiveness of risk
management policies and procedures; (20) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform;
(21) discrepancies between actual claims experience and assumptions used in setting prices for our
products and establishing the liabilities for our obligations for future policy benefits and
claims; (22) catastrophe losses; (23) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new
products by new and existing competitors, distribution of amounts available under U.S. government
programs, and for personnel; (24) unanticipated changes in industry trends; (25) changes in
assumptions related to investment valuations, deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (26) changes in
accounting standards, practices and/or policies; (27) increased expenses relating to pension and
postretirement benefit plans, as well as health care and other employee benefits; (28) exposure
to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates,
unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance
risk; (29) deterioration in the experience of the “closed block” established in
connection with the reorganization of Metropolitan Life Insurance Company; (30) adverse results or
other consequences from litigation, arbitration or regulatory investigations; (31) inability to
protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (32) discrepancies between actual experience and assumptions
used in establishing liabilities related to other contingencies or obligations; (33) regulatory,
legislative or tax changes relating to our insurance, banking, international, or other
operations that may affect the cost of, or demand for, our products or services, or increase the cost
or administrative burdens of providing benefits to employees; (34) the effects of business
disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on our
disaster recovery systems, cyber-or other information security systems and management continuity
planning; (35) the effectiveness of our programs and practices in avoiding giving our
associates incentives to take excessive risks; and (36) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking
statement if MetLife, Inc. later becomes aware that such statement is not likely to be
achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to
the SEC. |
 Explanatory Note on Non-GAAP Financial Information
All references in this presentation (except in this Explanatory Note on
Non-GAAP Financial slide) to net income (loss), net income (loss) per
share,
operating
earnings,
operating
earnings
per
share,
book
value
per
share,
and
operating
return
on
equity,
should
be
read
as
net
income
(loss) available to MetLife, Inc.'s common shareholders, net income (loss)
available to MetLife, Inc.'s common shareholders per diluted common share,
operating earnings available to common shareholders, operating earnings available to common shareholders per diluted common share,
book value per common share, excluding accumulated other comprehensive income
(loss) ("AOCI"), and operating return on MetLife, Inc.’s common
equity, excluding AOCI, respectively. Operating
earnings
is
the
measure
of
segment
profit
or
loss
that
MetLife
uses
to
evaluate
segment
performance
and
allocate
resources.
Consistent with accounting principles generally accepted in the United States of
America ("GAAP") accounting guidance for segment reporting,
operating
earnings
is
MetLife's
measure
of
segment
performance. Operating
earnings
is
also
a
measure
by
which
MetLife
senior management's
and many other employees' performance is evaluated for the purposes of determining
their compensation under applicable compensation plans. Operating earnings is
defined as operating revenues less operating expenses, both net of income tax. Operating earnings available to common
shareholders is defined as operating earnings less preferred stock dividends.
Operating
revenues
and
operating
expenses
exclude
results
of
discontinued
operations
and
other
businesses
that
have
been
or
will
be
sold
or
exited by MetLife, Inc. (“Divested Businesses”). Operating revenues also
excludes net investment gains (losses) (“NIGL”) and net derivative
gains (losses) (“NDGL”).
The following additional adjustments are made to GAAP revenues, in the line items
indicated, in calculating operating revenues: •
Universal life and investment-type product policy fees excludes the
amortization of unearned revenue related to NIGL and NDGL and certain
variable annuity guaranteed minimum income benefits ("GMIB") fees
("GMIB Fees"); •
Net investment income: (i) includes amounts for scheduled periodic settlement
payments and amortization of premium on derivatives that are hedges of
investments but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations,
(iii) excludes post-tax operating earnings adjustments relating to insurance
joint ventures accounted for under the equity method, (iv) excludes certain
amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to
securitization entities that are variable interest entities ("VIEs")
consolidated under GAAP; and •
Other revenues are adjusted for settlements of foreign currency earnings hedges.
|
 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 dividend obligation related to NIGL and NDGL, (ii)
inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated
with periodic crediting rate adjustments based on the total return of a
contractually referenced pool of assets, (iii) benefits and hedging costs
related to GMIBs ("GMIB Costs"), and (iv) market value adjustments
associated with surrenders or terminations of contracts ("Market Value
Adjustments");
Interest credited to policyholder account balances includes adjustments for
scheduled periodic settlement payments and amortization of premium on
derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes
amounts related to net investment income earned on contractholder-directed
unit-linked investments; Amortization of deferred policy acquisition
costs (“DAC”) and value of business acquired ("VOBA") excludes amounts related to: (i) NIGL and
NDGL, (ii) GMIB Fees and GMIB Costs, and (iii) Market Value Adjustments;
Amortization
of
negative
VOBA
excludes
amounts
related
to
Market
Value
Adjustments;
Interest expense on debt excludes certain amounts related to securitization
entities that are VIEs consolidated under GAAP; and Other expenses excludes
costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii)
business combinations.
Operating return on MetLife, Inc. common equity is defined as operating earnings
available to common shareholders divided by average GAAP common
equity. 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
highlighting the results of operations and the underlying
profitability
drivers
of
the
business.
Operating
revenues,
operating
expenses,
operating
earnings,
operating
earnings
available
to
common
shareholders, operating earnings available to common shareholders per diluted
common share, book value per common share, excluding AOCI, book value per
diluted common share, excluding AOCI, operating return on MetLife, Inc.’s common equity and operating return on MetLife, Inc.’s
common
equity,
excluding
AOCI,
should
not
be
viewed
as
substitutes
for
the
following
financial
measures
calculated
in
accordance
with
GAAP:
GAAP revenues, GAAP expenses, GAAP income (loss) from continuing
operations, net of income tax, GAAP net income (loss) available
to
MetLife, Inc.'s common shareholders, GAAP net income (loss) available to MetLife,
Inc.'s common shareholders per diluted common share, book value per common
share, book value per diluted common share, return on MetLife, Inc.’s common equity and return on MetLife, Inc.’s common
equity, excluding AOCI, respectively.
Explanatory Note on Non-GAAP Financial Information
(Continued) |
 Explanatory Note on Non-GAAP Financial Information
(Continued)
For the historical periods presented, reconciliations of non-GAAP measures used
in this presentation to the most directly comparable GAAP measures are
included in the Appendix to the presentation materials and are on the Investor Relations
portion of our Internet website. Additional information about our historical
results is also available on our Internet website in our Quarterly Financial
Supplements for the corresponding periods. Managed Assets (as defined below)
is a financial measure based on methodologies other than GAAP. MetLife utilizes
“Managed Assets”
to describe assets in its investment portfolio which are actively managed and
reflected at estimated fair value. MetLife believes the use of Managed
Assets enhances the understanding and comparability of its investment
portfolio by excluding assets such as policy loans, other invested assets, mortgage
loans held-for-sale, and mortgage loans held by consolidated
securitization entities, as substantially all of those assets are not actively managed in MetLife’s
investment portfolio. Trading and other securities are also excluded as this
amount is primarily comprised of contractholder-directed unit-linked
investments, where the contractholder, and not the Company, directs the investment of
these funds. Mortgage loans and certain real estate investments have also been
adjusted from carrying value to estimated fair value. Additional information
about each of MetLife’s investments is available in MetLife, Inc.’s Quarterly Financial
Supplement
for
the
quarter
ended
December
31,
2011,
which
may
be
accessed
through
MetLife’s
Investor
Relations
Web
page at http://investor.metlife.com and MetLife’s Annual Report on Form
10-K for the period ended December 31, 2011. The non-GAAP measures
used in this presentation should not be viewed as substitutes for the most directly comparable
GAAP measures.
In this presentation, we sometimes refer to sales activity for various products.
These sales statistics do not correspond to revenues under GAAP, but are
used as relevant measures of business activity. In this presentation, we
provide guidance on our future earnings, earnings per diluted common share and return on
common equity on an operating basis. A reconciliation of the non-GAAP
measures to the most directly comparable GAAP measures is not accessible on
a forward-looking basis because we believe it is not possible to provide other than a range
of net investment gains and losses and net derivative gains and losses, which can
fluctuate significantly within or without the range and from period to
period and may have a significant impact on GAAP net income. |
 6
Overview
Solid financial results,
despite macro
headwinds
Focused on creating
long-term shareholder
value
A global and growing
franchise
Strong capital position
Prudent risk
management |
 Financial Performance |
 8
MetLife’s 2011 Results
Solid year in a challenging environment
Operating earnings per share grew 16% year over year,
despite:
–
Low interest rates
–
Volatile equity markets
–
Record natural disasters
Alico providing expected value; integration on-track
|
 9
2011 Plan
2011
Actual
Operating Earnings
(in $ millions)
$5,060
-
$5,490
$5,358
Operating Earnings per Share
$4.75
-
$5.15
$5.02
Operating Return on Equity
10.6%
-
11.4%
11.0%
Book Value* (excluding AOCI)
$46.80
-
$47.65
$49.02
* Book Value per Common Share, actual common shares outstanding
9
Full Year 2011 Financial Overview
See Explanatory
Note
on
Non-GAAP
Financial
Information
slide.
See
also
Appendix
for
Non-GAAP
reconciliations. |
 A
Global and Growing Franchise |
 11
A Global and Growing Franchise
Global
Presence
Leadership positions in large established markets
Strong and growing presence in high growth
markets with favorable demographics and high
margins
Risk
Management
Disciplined risk management to protect our
customers and shareholders
Diversified
Distribution &
Products
Broad and diverse distribution channels and
product offerings to meet customer needs
worldwide
Financial
Strength
Solid balance sheet and capital generation |
 12
Leadership Positions in Markets of Today and Tomorrow
Established
Significant & Growing
Emerging
United States
Japan
Mexico
Korea
Poland
Chile
Russia
Brazil
China
India
Turkey
High Margins with
Attractive Growth
Prospects
Largest Global
Markets with Strong
Cash Generation
Fast Growing with
Good Margins |
 Diversified Products to Meet Customers Needs
13
2012 Plan Operating Earnings by Product¹
International
United States
Individual Life
Auto & Home
Non-Medical Health
Retirement
Group Insurance
Group Life
Corporate Benefit Funding
Retirement
Individual Life
1. Calculated using mid-point of range, excluding MetLife Bank and Corporate
& Other. See Explanatory Note on Non-GAAP Financial Information
slide. Accident & Health |
 14
Take a portfolio view of our businesses
Continuously assess our strategy
Balance growth, profitability and risk
Optimize the use of capital
Guiding Principles for Building on Our Strengths |
 15
Retail Key Themes
1
2
3
4
Commitment to Face-to-Face
Profitable Growth
Investing for Return
Organizational Alignment |
 16
Retail Organization Structure
Retail
Business
Product
Distribution
Administration/
Marketing
Promotes accountability
Aligns strategy across Product and Distribution
Drives efficiency gains |
 17
Variable Annuity Highlights
Well diversified block
–
Over one-third of our VA block has no living benefits
–
Dollar
cost
averaged
over
time
-
never
stopped
writing
–
By channel
Proven risk management practices
–
Product design
–
Hedging
2012 Variable Annuity sales $17.5B to $18.5B
–
Plan developed based on self funding levels
–
Approximately 35% reduction from 2011 sales |
 18
Variable Annuity Account Value by Guarantee Type (Domestic)
Living Benefits
Total VA Account Balance¹
= $139 Billion
1. Deferred Variable Annuities account balance as of December 31, 2011
|
 GMIB MAX
Protected Growth Strategy (“PGS”) funds provide more
stable fee base
More capital efficient
Improved distribution of returns
19 |
 20
GMIB MAX: Distribution of Returns
Return on Investment (ROI)
Distribution
No
scenarios
observed
below
0%
ROI
1
1. GMIB MAX (5% Rollup) launched on Jan 2, 2012. The pricing results were based on
market conditions as of Oct 31, 2011. Incidences of ROIs reflected in the
chart above are the results of roughly 1,000 stochastic scenarios observed.
GMIB MAX (5% Rollup)
> 15%
12%
-
15%
10%
-
12%
8%
-
10%
0%
-
8%
< 0% |
 Risk
Management |
 Actively Managing Interest Rate Risk
Approximately $47
billion notional²
to hedge
against low rates
Protection extending into
next decade
22
1. Estimated based on August 31, 2011 rates, assuming parallel curve shift.
2. MetLife investment portfolio (excluding International and VA hedging program and
MetLife Bank) as of August 31, 2011. |
 Peripheral European Sovereign Exposure
Total Peripheral
European Sovereign
exposure is 0.1% of
total Managed Assets,
as of 12/31/11
Net Impairment and
Losses of $272 million,
after-tax in 2011
Remaining Greece
exposure manageable
See Explanatory Note on Non-GAAP Financial Information slide.
($ Millions)
23
$682
$165
12/31/2010
12/31/2011
Spain
Ireland
Portugal
Italy
Greece
U.S. GAAP Book Value
$1,644
$254 |
 European Bank Exposure
12/31/2010
12/31/2011
Peripherals¹
Non-Peripherals
U.S. GAAP Book Value
$9,279
$6,263
Country of Domicile
($ Millions)
1
Spain, Ireland, Portugal, Italy and Greece.
The exposures presented above are based on MetLife Inc. 4Q 2011 financials and
therefore include 11/30/11 figures for Alico. 24
Proactively reduced
exposure during 2011
Remaining holdings
primarily in large
“national champion”
banks in core Europe
and U.K. |
 Commercial Mortgages
LTV and DSCR Matrix
$42.1 Billion
61% Loan to Value (LTV)
2.1x average Debt Service
Coverage Ratio (DSCR)
Commercial mortgage
valuation allowance of $398
million
Delinquency rate of 16 basis
points
Low losses in 2011 of $12
million
LTV
>1.2x
1.0-1.2x
<1.0x
Total
< 65%
61.8%
1.1%
1.4%
64.3%
65-75%
20.5%
0.8%
1.0%
22.3%
76-80%
2.8%
0.2%
0.6%
3.6%
> 80%
6.7%
2.2%
0.9%
9.8%
Total
91.8%
4.3%
3.9%
100.0%
Based on rolling four quarter valuation process.
1. Estimated Fair Market value as of December 31, 2011.
25
1
1 |
 Capital Position |
 27
Comprehensive Capital Analysis and Review (“CCAR”)
One of the 19 Bank Holding Companies (“BHCs”)
Federal Reserve objected to 2012 capital plan
–
Share repurchases of $2.0 billion
–
Common stock dividend increase to $1.10 per share from $0.74
per share
MetLife submitted its own calculations above required
minimums for all four BHC capital ratios
Our plan is not to be a BHC by the end of the second
quarter 2012 |
 28
Life Insurance -vs-
BHC Profile
CCAR methodology designed for banks
Risk profile unique compared to BHC
–
Investment portfolio composition driven by liability profile
–
Corporate bonds “penalized”
in risk-weighted assets
–
Separate accounts “penalized”
by inclusion in Tier 1 Leverage Ratio
MetLife is well capitalized and well positioned |
 29
Strong Capital Position
Strong capitalization at operating subsidiaries at year-end
2011
–
U.S. combined risk based capital (RBC): 450%
–
Japan solvency margin ratio (SMR): 881%
Deployable capital at Holding Companies
–
$3.5 billion at year-end 2011
–
Estimated
$6
to
$7
billion
at
year-end
2012
¹
Committed to returning capital to shareholders
1. 2012 deployable capital is prior to common stock dividends
and any other capital actions. |
 30
Delivering solid financial results in a challenging
environment
Strong presence in established and high growth markets
Focused on profitable growth
Strong capital generation to fuel growth and deliver
shareholder value
Summary |
 Appendix |
 Reconciliation of Net Income (Loss) Available to MetLife, Inc.’s Common
Shareholders to Operating Earnings Available to Common Shareholders and
Reconciliation of Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders Per
Common
Share
–
Diluted
to
Operating
Earnings
Available
to
Common
Shareholders
Per
Common
Share
–
Diluted
($ Millions, except per share data)
Total Company
2011
Net income (loss) available to MetLife, Inc.'s common shareholders
6,713
$
Adjustments from net income (loss) available to MetLife, Inc.'s common
shareholders to operating earnings available to common shareholders:
Less: Net investment gains (losses)
(867)
Less: Net derivative gains (losses)
4,824
Less: Other adjustments to continuing operations
(1,641)
Less: Provision for income tax (expense) benefit
(845)
Less: Income (loss) from discontinued operations, net of income tax
20
Add: Net income (loss) attributable to noncontrolling interests
(10)
Add: Preferred stock redemption premium
146
Operating earnings available to common shareholders
5,358
$
Net income (loss) available to MetLife, Inc.'s common shareholders per
common share -
diluted
6.29
$
Adjustments from net income (loss) available to MetLife, Inc.'s common
shareholders per common share -
diluted to operating earnings available
to
common
shareholders
per
diluted
common
share:
Less: Net investment gains (losses)
(0.81)
Less: Net derivative gains (losses)
4.52
Less: Other adjustments to continuing operations
(1.54)
Less: Provision for income tax (expense) benefit
(0.79)
Less: Income (loss) from discontinued operations, net of income tax
0.02
Add: Net income (loss) attributable to noncontrolling interests
(0.01)
Add: Preferred stock redemption premium
0.14
Operating earnings available
to
common
shareholders
per
common
share
-
diluted
5.02
$
Weighted average common shares
outstanding
-
diluted
1,068.1 |
 Reconciliation of MetLife, Inc.’s Common Equity and Reconciliation of MetLife,
Inc.’s Book Value per Common Share
Total Company
2011
Return on MetLife, Inc.'s common equity
12.8%
Return on MetLife, Inc.'s common equity, excluding AOCI
13.8%
Operating return on MetLife, Inc.'s common equity
10.2%
Operating return on MetLife, Inc.'s common equity, excluding AOCI
11.0%
Book value per common share - (actual common shares outstanding)
54.59
$
Less: Accumulated other comprehensive income (loss) per common share
5.57
Book value per common share, excluding accumulated other comprehensive
income (loss) - (actual common shares outstanding)
49.02
$
Common shares outstanding (in millions)
1,058.0
|
 |