MetLife, Inc. (MET)

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MetLife (MET)

Q2 2011 Earnings Call

July 29, 2011 8:00 am ET

Executives

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

William Moore - President of MetLife Auto & Home and Senior Vice President of Eastern Zone - Individual Business

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

Steven Kandarian - Chief Executive Officer, President and Director

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

John McCallion - Head of Investor Relations and Vice President

Steven Goulart - Chief Investment Officer and Executive Vice President

Analysts

Thomas Gallagher - Crédit Suisse AG

Andrew Kligerman - UBS Investment Bank

John Nadel - Sterne Agee & Leach Inc.

John Hall - Wells Fargo Securities, LLC

Nigel Dally - Morgan Stanley

Suneet Kamath - Sanford C. Bernstein & Co., Inc.

Colin Devine - Citigroup Inc

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Second Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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 related 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's filings with the U.S. Securities and Exchange Commission. MetLife specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise.

With that, I would like to turn the conference call over to John McCallion, Head of Investor Relations. Please go ahead.

John McCallion

Thank you, Ernie. And good morning, everyone. Welcome to MetLife's Second Quarter 2011 Earnings Call. We will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so-called non-GAAP measures. Reconciliations of this non-GAAP measures to the most directly comparable GAAP measures may be found 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 net investment and net derivative 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 Steve Kandarian, President and Chief Executive Officer; and Bill Wheeler, Chief Financial Officer. After their prepared remarks, we will take your questions. Also here with us today to participate in the discussion are other members of management, including: Bill Toppeta, President of International business; Bill Mullaney, President of U.S. Business; Steve Goulart, Chief Investment Officer, Bill Moore, President of Auto & Home; and Donna DeMaio, President of MetLife Bank.

With that, I'd like to turn the call over to Steve.

Steven Kandarian

Thank you, John, and good morning, everyone. I'm pleased to announce that MetLife had a strong second quarter. We grew earnings per share by 13% over the prior year quarter demonstrating the ability of MetLife's diverse portfolio of businesses to create value for shareholders. Overall, operating earnings grew by 45% to $1.3 billion and we generated record premiums fees and other revenues of $11.8 billion, a 38% increase. What is notable is that we achieved these results despite losses of $218 million related to the natural disasters in the United States and Japan. As you know, I became President and CEO of MetLife on May 1. Over the last 90 days, I'm engaged with many of MetLife's senior leaders to gather their views on the company's strengths, areas for improvements and opportunities for growth. These meetings have reaffirmed my belief that MetLife can achieve its vision of being the leading life insurance employee benefits provider in the world.

We have also sharpen my focus on some initial high-level priorities to help drive value for our customers and shareholders. The first is the successful integration of Alico to ensure we capture the full value of this acquisition both on the short term and the long term. Essential to this process is optimizing our portfolio of countries and businesses to ensure the best strategic fit.

Since the beginning of the year, Bill Toppeta and his team have sold our businesses in Venezuela and Taiwan and a portion of our business in the U.K. and Japan. The specifics reasons vary from political uncertainty to asset liability mismatches to integration costs. But the common thread is that we did not believe these businesses would be able to meet the return thresholds we have set for the company. These divestitures will free up roughly $1 billion of capital that can be redeployed to deliver better value for shareholders.

At the same time, we have also been pursuing strategic acquisitions. During the second quarter we signed an agreement with Dexia, to purchase its Turkish Life Insurance business and enter into an exclusive 15-year distribution arrangement. While we expect this transaction to improve our market position from 12th to fifth in Turkey, a high-growth market with favorable demographics and an attractive macroeconomic department.

In addition, we announced this week that MetLife has entered into a 10-year exclusive distribution arrangement with Punjab National Bank of India, to sell MetLife products to its branch network. PNB, the second-largest bank in India gives MetLife access to 60 million customers from more than 5,000 branches. This move will provide MetLife with the opportunity to move into the top tier of insurance companies in India.

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