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2Q20 Supplemental Slides1 · PDF file 2020. 8. 5. · 2Q20 Supplemental Slides1 John McCallion ... post-tax, divided by 913.1 million, which is the number of MetLife, Inc. weighted

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Text of 2Q20 Supplemental Slides1 · PDF file 2020. 8. 5. · 2Q20 Supplemental Slides1 John...

  • 2Q20 Supplemental Slides1

    John McCallion Chief Financial Officer

    1 These slides highlight information in MetLife, Inc.'s earnings release, quarterly financial supplement and other prior public disclosures.

  • 2

    Table of Contents Topic Page No. Net Income (Loss) to Adjusted Earnings 3

    Adjusted Earnings ex. Total Notable Items by Segment 4

    2Q20 Variable Investment Income (VII) Driven by Negative Private Equity Returns 5

    2Q20 VII by Segment 6

    2Q20 Adjusted EPS Impact of Variable Investment Income 7

    Group Non-Medical Health Interest Adjusted Benefit Ratio (IABR) 8

    Direct Expense Ratio 9

    3Q20 Outlook 10

    Sensitivities for Hypothetical Long-Term Interest Rate Assumption Changes 11

    Cash & Capital 12

    Appendix 13

  • 3

    Net Income (Loss) to Adjusted Earnings

    2Q20 ($ in millions - post-tax) $ in millions $ Per Share1 Net Income (Loss) $68 $0.07

    Less:

    Net Investment Gains (Losses) 182 0.20

    Net Derivative Gains (Losses) (561) (0.61)

    Investment Hedge Adjustments (149) (0.16)

    Other (162) (0.18)

    Adjusted Earnings $758 $0.83

    Variable Investment Income (438) (0.48)

    1 The per share data for each item is calculated on a standalone basis and may not sum to the total. See Appendix for non-GAAP financial information, definitions and/or reconciliations.

  • 4

    ($ in millions - post-tax) 2Q20 2Q19 %Change % Change

    (Constant Rate) Highlights 1

    Group Benefits $248 $311 (20%) - Underwriting Margins; + Volume Growth

    Retirement and Income Solutions 192 351 (45%) - Investment Margins; + Underwriting Margins

    Property & Casualty 83 70 19% + Underwriting Margins; - Investment Margins

    U.S. $523 $732 (29%)

    Asia 256 359 (29%) (27%) - Investment Margins; + Volume Growth;+ Expense Margins Latin America 132 159 (17%) 3% + Equity Markets; + Underwriting Margins;- Investment Margins EMEA 116 77 51% 59% + Underwriting Margins; + Expense Margins

    MetLife Holdings 20 299 (93%) - Investment Margins; - Underwriting Margins

    Corporate & Other (289) (237) (22%) - Investment Margins; - Taxes- Preferred Stock Dividend; + Expense Margins Adjusted Earnings, ex. Total Notable Items $758 $1,389 (45%) (44%)

    Adjusted EPS, ex. Total Notable Items $0.83 $1.46 (43%) (41%)

    Adjusted Earnings ex. Total Notable Items by Segment

    1 To be discussed on MetLife, Inc.'s second quarter 2020 earnings conference call and audio webcast. See Appendix for non-GAAP financial information, definitions and/or reconciliations.

  • 5

    2Q20 VII Driven by Negative Private Equity Returns

    2Q19 3Q19 4Q19 1Q20 2Q20

    $334 $326 $327 $351

    ($ in millions - pre-tax)

    Private Equity Other

    $0

    ($555)

  • 6

    ($ in millions - post-tax) 2Q20

    Group Benefits $3

    Retirement and Income Solutions (122)

    Property & Casualty (9)

    U.S. $(128)

    Asia (77)

    Latin America (7)

    EMEA —

    MetLife Holdings (161)

    Corporate & Other (65)

    Total Variable Investment Income $(438)

    2Q20 VII by Segment

  • 7

    2Q20 Adjusted EPS Impact of Variable Investment Income

    1 Full year 2020 pre-tax VII target range of $900 million to $1.1 billion or $225 million to $275 million per quarter. 2 Calculated using the mid-point of the VII quarterly range amount of $198 million, post-tax, divided by 913.1 million, which is the number of MetLife, Inc. weighted average common shares outstanding on a diluted basis for the three months ending June 30, 2020. See Appendix for non-GAAP financial information, definitions and/or reconciliations.

    VII at Mid-Point of Quarterly Target Range1 +$0.222

    VII of ($0.48) driven by -8.2%

    Private Equity Returns

    $0

  • 8

    Group Non-Medical Health IABR1

    2Q20

    Non-Medical Health IABR (As Reported) 58.5%

    Dental Premium Credit2 3.9%

    Dental Unearned Premium Reserve3 7.1%

    Non-Medical Health IABR, ex. Dental Items 69.5%

    1 Reflects actual claims experience and excludes the impact of interest credited on future policyholder benefits. The product within Group Non-Medical Health with interest credited on future policyholder benefits is disability. 2 Represents approximately $200 million reduction of premium revenue (assuming an equal amount of benefits) related to dental credits for April and May 2020. 3 Represents approximately $300 million reduction of premium revenue (assuming an equal amount of benefits) primarily related to the significant decrease in the availability of dental services in 2Q.

  • 9

    Managing to ~12.3% Direct Expense Ratio

    Direct Expense Ratio1

    2015 2016 2017 2018 2019 1Q20 2Q20

    14.3%

    13.3% 13.3% 12.9%

    12.6%

    12.0% 12.4%

    1 Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers (PRT). See Appendix for non-GAAP financial information, definitions and/or reconciliations.

    -170bps

  • 10

    3Q20 Outlook

    Investments

    Underwriting Margins

    Sales / Adjusted PFOs

    Expenses / Corporate & Other

    • Best estimate of positive mid-single digit private equity returns • Favorable short-end yield curve persists • Investment portfolio remains well-positioned for economic downturn

    • Largely offsetting global claims impact from COVID-19 • Decrease in U.S. life claims frequency, significant increase in Latin America claims frequency • Group Benefits non-medical health ratio close to low end of annual target range of 72-77% • Longevity offset impact in Retirement and Income Solutions

    • Global face-to-face sales environment remains challenging • Continued sales pressure in most segments, sequential increase expected in Japan • Lower adjusted PFOs in most segments, expect mid-single digit growth in Group Benefits

    • Year-to-date 2Q20 direct expense ratio1 of 12.2% • Expect to achieve ~12.3% direct expense ratio1 target for full year 2020 • 2H20 Corporate & Other loss of $325M to $375M

    Key Considerations Highlights

    1 Direct expense ratio, excluding total notable items related to direct expenses and PRT. See Appendix for non-GAAP financial information, definitions and/or reconciliations.

  • 11

    Sensitivities for Hypothetical Long-Term Interest Rate Assumption Changes

    • Hypothetical impact if long-term interest rate assumption changes from 3.75%1:

    Assumption Change Impact to Net Income($ in millions - post-tax) GAAP Loss Recognition

    -25 bps ($100) No

    -50 bps ($175) No

    -100 bps ($300) No

    -150 bps ($425) No

    1 Included in the assumptions that the Company used to measure its insurance contract liabilities, DAC and related actuarial items for its U.S. and MetLife Holdings segments, as of December 31, 2019, is the assumption that the 10-year Treasury rate will rise to 3.75% in 8 years, by 2027, and remain level afterwards. The hypothetical impact illustrated is the estimated effect of the assumed rate of 3.75% being reduced by the amounts indicated.

  • 12

    Holding Company Cash1

    2Q19 3Q19 4Q19 1Q20 2Q20

    $4.2B $4.2B

    $5.3B

    $6.6B

    Cash & Capital

    1 At quarter-end. Includes cash and liquid assets. 2 Includes MetLife, Inc.'s principal U.S. insurance subsidiaries, excluding American Life Insurance Company. 3 MetLife calculates RBC annually as of December 31 and, accordingly, the calculation does not reflect conditions and factors occurring after the year end. 4 Solvency ratio of MetLife's insurance subsidiary in Japan, which is calculated quarterly and does not reflect conditions and factors occurring after March 31, 2020.

    $3.0B to $4.0B Cash Buffer

    $3.5B

    Capital

    • 2019 Combined NAIC Risk-Based Capital ratio2,3 of 395%, above 360% target

    • Expected total U.S. Statutory Adjusted Capital2

    of $21.1B at June 30, 2020, up 13% from year-end 2019

    • Japan Solvency Margin ratio4 of 799% at March 31, 2020

  • Appendix

  • 14

    Cautionary Statement on Forward-Looking Statements

    The forward-looking statements in this presentation, such as "expect," "3Q20 outlook," "well-positioned," "remains," "persists," "continued," "full year 2020," "hypothetical," "if," "assumption," "estimate," "target," "2H20," "long-term," "will," and "assuming," are based on assumptions and expectations that involve risks and uncertainties, including the “Risk Factors” MetLife, Inc. describes in its U.S. Securities and Exchange Commission filings. MetLife’s future results could differ, and it has no obligation to correct or update any of these statements.

     

  • 15

    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 common shareholders; (ii) net income (loss) per share; (ii) net income (loss) available to MetLife, Inc.’s common shareholders per diluted

    common share; (iii) adjusted earnings; and (iii) adjusted earnings available to common shareholders; and (iv) adjusted earnings per share. (iv) adjusted ea