MetLife, Inc. (MET)

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MetLife (MET)

Q3 2010 Earnings Call

October 29, 2010 8:00 am ET

Executives

William Mullaney - President of the U.S. Business organization

Steven Kandarian - Chief Investment Officer, Executive Vice President, Chief Investment Officer of Metropolitan Life Insurance Company and Executive Vice President of Metropolitan Life Insurance Company

Conor Murphy - IR

William Toppeta - President of International and President of International - Metropolitan Life Insurance Company

C. Henrikson - Chairman, Chief executive officer, President, Chairman of Executive Committee, Member of Corporate Responsibility & Compliance Committee, Member of Investment Committee, Chief Executive Officer of Metropolitan Life, President of Metropolitan Life and Director of Metropolitan Life Insurance Company

William Wheeler - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Metropolitan Life and Executive Vice President of Metropolitan Life

Analysts

Thomas Gallagher - Crédit Suisse AG

Andrew Kligerman - UBS Investment Bank

Jeffrey Schuman - Keefe, Bruyette, & Woods, Inc.

John Nadel - Sterne Agee & Leach Inc.

Nigel Dally - Morgan Stanley

A. Mark Finkelstein - Macquarie Research

Colin Devine - Citigroup Inc

Presentation

Operator

Before we get started, I would like to read the following statement on behalf of MetLife. Except with respect to historical information, statements made in this conference call constitute forward-looking statements within the meaning of the federal securities laws, including statements relating to trends in the company's operations and financial results, and the business and the products of the company and its subsidiaries.

MetLife's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties, including those described from time to time in MetLife, Inc.'s filings with the U.S. Securities and Exchange Commission. MetLife, Inc. specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.

With that, I would like to turn the call over to Conor Murphy, Head of Investor Relations.

Conor Murphy

Good morning, everyone. Welcome to MetLife's Third Quarter 2010 Earnings Call. We are delighted to be here this morning to talk about our results for the quarter. We will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so-called non-GAAP measures. We have reconciled these non-GAAP measures to the most directly comparable GAAP measures and in our earnings press release and in our quarterly financial supplement, both of which are available at metlife.com on our Investor Relations page.

A reconciliation of forward-looking financial information to the most directly comparable GAAP measure is not accessible, because MetLife believes it is not possible to provide a reliable forecast of the net investment-related gains and losses, which can fluctuate from period to period and may have a significant impact on GAAP net income.

Joining me this morning on the call are Rob Henrikson, our Chairman and Chief Executive Officer; Steve Kandarian, our Chief Investment Officer; and Bill Wheeler, our Chief Financial Officer. After our brief prepared comments, we will take your questions. Here with us today to participate in the discussion are other members of the management, including Bill Mullaney, President of U.S. Business; Bill Toppeta, President of International; Bill Moore, President of Auto & Home; and Donna DeMaio, President of MetLife Bank.

With that, I would like to turn the call over to Rob.

C. Henrikson

Thank you, Conor, and good morning, everyone. Today, I'd like to begin with some comments on the acquisition of ALICO. As you know, we expect to complete the deal very soon, and let me remind you what this will do for MetLife.

It will be rewarding to our shareholders and will significantly accelerate our strategy by improving our long-term growth in revenues, in earnings and in ROE. It will increase our global presence in both emerging and mature markets, many in which MetLife will have a top five market share, and will give us the opportunity to become the leading life insurance and employee benefits provider in the word.

Now let me share our overall MetLife results for the quarter. MetLife performed well, with continued growth in both our top and bottom lines. We generated premiums, fees and other revenues of $8.6 billion, up 2% over the third quarter of 2009. We increased operating earnings to $878 million, up 22% over the prior year period. I'm also pleased to report that our book value improved considerably, up 24% over the year-ago period and 8% sequentially, driven by our strong operating earnings and our investment performance.

Driving this quarter's growth is our continued focus on the fundamentals: disciplined growth, excellent underwriting, solid expense control and strong investment returns.

You'll hear more from Steve Kandarian in a moment, but I'd like to say that we continue to be pleased with the investment portfolio performance. Investment losses, including impairments continue to trend lower. This was partly due to our best-in-class real estate portfolio, we're loan to value's improved again this quarter. Our reserve against future losses came down further, and now our delinquencies have fallen back to just two basis points.

Turning to our Domestic business segment results, U.S. Business generated premiums, fees and other revenues of $7.1 billion, flat over the prior year period, though up modestly, excluding the impact of lower pension closeout activity which, as you know, can vary from quarter-to-quarter. Operating earnings grew by 21%, with significant increases in each of the major segments, largely driven by very strong underwriting results, as well as the benefit of ongoing expense management.

In our Insurance Products segment, premiums, fees and other revenues were consistent with the third quarter of 2009 at $5 billion. And operating earnings grew 14%, up in each product line. Group Life premiums grew 2% and operating earnings were up 6% compared with the prior year period. The Group Life mortality ratio was very good at 89% and has remained below Investor Day guidance each quarter this year.

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