MetLife, Inc. (MET)

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MetLife (MET)

Q4 2010 Earnings Call

February 10, 2011 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

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

John Nadel - Sterne Agee & Leach Inc.

Suneet Kamath - Bernstein Research

John Hall - Wells Fargo Securities, LLC

A. Mark Finkelstein - Macquarie Research

Edward Spehar - BofA Merrill Lynch

Christopher Giovanni - Goldman Sachs Group Inc.

Colin Devine - Citigroup Inc

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Fourth Quarter Earnings Release Conference Call. [Operator Instructions] 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'd like to turn the call over to Conor Murphy, Head of Investor Relations.

Conor Murphy

Thank you, Roxanne. Good morning, everyone, and welcome to MetLife's Fourth Quarter 2010 Earnings Call. We're 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 in our earnings press release and in our quarterly financial supplements, both of which are available at metlife.com. 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 in 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. And here with us today to participate in the discussion are other members of 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'd like to turn the call over to Rob.

C. Henrikson

Thank you, Conor, and good morning, everyone. Before we get into our earnings results, I'd like to say that 2010 was a very good year for MetLife. We had strong top line growth, and our operating earnings increased significantly. We remained committed to the fundamentals of our business, and we're continuing to gain market share. In addition, we were proud to have completed the largest, most strategic and transformational acquisition in MetLife's history, which has propelled us into becoming the leading global life insurance company.

Now let's get started on our results. Overall, for the fourth quarter, MetLife delivered very strong performance, growing premiums, fees and other revenues to $9.7 billion, up 4% over the prior year and 12% sequentially. Operating earnings grew significantly to $1.2 billion, up 46% over the prior year and 32% over the third quarter of 2010. Our book value increased year-over-year by 16% primarily attributable to strong operating earnings and investment performance.

Our businesses are performing well. Our underwriting results are very stable, and we continue our commitment to expense management as evidenced by the $700 million in annualized savings we highlighted at Investor Day. And also, our investment portfolio remains strong and experienced an excellent quarter. Steve will discuss investments in more detail in a moment.

Now let me share a few highlights from each of our businesses. In U.S. business, premiums, fees and other revenues were $7.2 billion, down from the prior year and flat versus the prior quarter. Operating earnings grew by 10% over the prior quarter, and we were down slightly over the prior year period. I'm pleased with the financial results in U.S. business, a direct result of our disciplined pricing and continued focus on risk management.

Within our Insurance Products segment, premiums, fees and other revenues were $5.1 billion, down 4% over the prior year and up 4% over the prior quarter. Group life earnings were down somewhat year-over-year as expected. Individual life earnings were down $74 million versus the prior year. The earnings decline is almost entirely attributable to the net difference in DAC [Dental Advisory Council] unlocking and other adjustments between years. Non-medical health premiums, fees and others declined by 4% from the prior year period. Lower earnings in individual disability offset improvements in dental and in group disability, where incidents remained elevated but recoveries are improving.

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