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| 8-K - FORM 8-K - METLIFE INC | d406461d8k.htm |
 Eric
Steigerwalt Executive Vice President
The Americas –
Retail
FINANCIALS SUMMIT 2012
Exhibit 99.1 |
 Safe
Harbor Statement 2
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 “fiscal cliff”
in 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; |
 Safe
Harbor Statement (Continued) 3
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 Information slide) to operating earnings, premiums,
fees and other revenues and operating return on equity, should be read as operating
earnings available to common shareholders, premiums, fees and other revenues
(operating) and operating return on MetLife, Inc.’s common equity, excluding accumulated other comprehensive
income (“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.
4 |
 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 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)
acquisition and integration costs.
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, operating return on MetLife, Inc.’s
common equity, excluding AOCI, investment portfolio gains (losses) and derivative
gains (losses) 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, return on MetLife, Inc.’s common equity,
excluding AOCI, net investment gains (losses) and net derivative gains
(losses), respectively.
5 |
 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 presentation materials where applicable 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.
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,
premiums,
fees
and
other
revenues,
and
return
on
common
equity
on
an
operating or non-GAAP 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 |
 Positioned to Deliver Shareholder Value
Global
Presence
Leadership positions in large established markets
Strong and growing presence in high growth
markets with favorable demographics and high
margins
Brand
Well established and expanding brand to drive
preference for our products
Diversified
Products &
Distribution
Broad and diverse products and distribution
channels to meet customer needs worldwide
Financial
Strength
Solid balance sheet and strong risk management
Strong capital generation
7 |
 Expanding ROE in a Challenging Environment
Emerging market growth
Significant margin
improvement, including
$600M pre-tax expense
saves
Shift from market
sensitive to protection
products improves risk
profile and free cash flow
8
1
Assumes 5% annual appreciation in S&P 500 Index.
See
Explanatory
Note
on
Non-GAAP
Financial
Information
slide.
Return
on
MetLife,
Inc.’s
common
equity
for
2011
was
12.8%
(Pre-DAC)
and
12.2%
(Post-DAC);
Return
on
MetLife,
Inc.’s common equity (excluding AOCI) for 2011 was 13.8% (Pre-DAC) and
13.2% (Post-DAC); Operating return on MetLife, Inc.’s common equity for 2011 was 10.2% (Pre-DAC) and
9.5% (Post-DAC) and Operating return on MetLife, Inc.’s common equity
(excluding AOCI) for 2011 was 11.0% (Pre-DAC) and 10.3% (Post-DAC).
12%
-
14%
1
10.3%
11.0%
2011
(Pre-DAC)
2011
(Post-DAC)
2016
Target
~300 bps of ROE Expansion |
 9
Refocus U.S. Business and Grow Profitably
Manage mature businesses for cash flow
Shift mix away from capital intensive products
Invest in Voluntary/Worksite and Direct
Drive margin improvement |
 2011 ROE
> 15%
10 -
15%
< 10%
Whole Life
UL
Annuities
Term Life
VUL
10
Retail, Contributing to the Strategy
–
Traditional: Whole & Term
–
Universal
–
Variable Universal
–
Fixed
–
Immediate
–
Variable
Retail
Annuity
Life
See Explanatory Note on Non-GAAP Financial Information slide.
|
 VA’s –
Manage Risk, Profitability & Growth
Well diversified block
–
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
11
See Explanatory Note on Non-GAAP Financial Information slide.
|
 Variable Annuities In-Force Block –
an Attractive Profile
Net amount at
risk = $3.3B
1
Over one-third of our
VA block has no living
benefits
Upside potential of
market and interest rate
improvements
12
1
At annuitization; as of June 30, 2012.
% of Variable
Annuity
Contract
Value
with
GMIB
1
Guaranteed Minimum Income Benefits
77%
Not in the Money
23%
In the
Money |
 Dollar Cost Averaged over Time
13
Source: S&P 500 year-end close price from Thomson One; 2012 price reflects
close as of June 30, 2012. |
 Lower volatility
Floor of income
protection
Manage sales
volumes
GMIB MAX –
Meeting Customer Needs
14
See Explanatory Note on Non-GAAP Financial Information slide.
($ in Billions)
MetLife U.S. Variable Annuity Sales
$15.3
$13.9
$15.4
$18.3
$28.4
$17.5 -
$18.5
2007
2008
2009
2010
2011
2012P |
 GMIB MAX –
Improved Risk Profile
Protected Growth Strategy (“PGS”) funds provide more
stable fee base
More capital efficient
Improved distribution of returns
15 |
 GMIB MAX: Distribution of Returns
1. GMIB MAX (5% Rollup) launched on Jan 2, 2012. The pricing results were based on
market conditions as of June 30, 2012. Incidences of ROIs reflected in the chart
above are the results of roughly 1,000 stochastic scenarios observed.
16
GMIB MAX (5% Rollup)
> 15%
12%
-
15%
10%
-
12%
8%
-
10%
0%
-
8%
<
0%
95% of scenarios observed have positive
1
Return on Investment (ROI)
Distribution
ROIs |
 Leading franchise
Rebalance risk and growth
Improve profitability and operating ROE
Retail: Manage Margins and Capital
17
See Explanatory Note on Non-GAAP Financial Information slide.
|
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