MetLife, Inc. (MET)

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MetLife, Inc. (MET)

Year End 2011 Investor Conference Call

December 05, 2011 8:00 am ET

Executives

Steven J. Goulart - Chief Investment Officer and Executive Vice President

Steven A. Kandarian - Chief Executive Officer, President and Director

Eric T. Steigerwalt - Chief Financial officer of Individual Business Segment

William J. 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

Analysts

Andrew Kligerman - UBS Investment Bank, Research Division

Thomas G. Gallagher - Crédit Suisse AG, Research Division

A. Mark Finkelstein - Evercore Partners Inc., Research Division

Suneet Kamath - Sanford C. Bernstein & Co., LLC., Research Division

Edward A. Spehar - BofA Merrill Lynch, Research Division

Nigel P. Dally - Morgan Stanley, Research Division

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Jamminder S. Bhullar - JP Morgan Chase & Co, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Year End 2011 Investor Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John McCallion. Please go ahead.

John McCallion

Thank you, Gregg, and good morning, everyone. Welcome to MetLife's Year End Investor Conference Call. Presentation materials for this discussion are currently available at metlife.com through a link on the Investor Relations page.

Now if you’ll please turn to the agenda for this presentation. On Slide 2 is the Safe Harbor statement. This governs the forward-looking statements made on this call. Forward-looking statements include our estimated results for the fourth quarter and full year 2011, our projections for 2012 and any other statements providing information about future periods. As the statement notes, actual results may differ materially from the projected results we'll be discussing today. For a discussion of the factors that could cause actual results to differ, please see the Risk Factors in our 10-K and 10-Q reports filed with the SEC.

Now starting on Slide 3, let me remind you that we'll be discussing non-GAAP financial measures on today's call. Slides 3 and 4 explain how we calculate these measures and the reasons we believe they are useful. Reconciliations to the most directly comparable GAAP measures are included in the Appendix.

Now if you turn to Slide 5, here's our agenda for today. We'll begin the presentation with some opening remarks from Steve Kandarian. Then Steve Goulart will provide an overview of our investment portfolio. And finally, Bill Wheeler will discuss our financial projections for the remainder of this year and into 2012, and then we'll have some time for Q&A.

As we mentioned last time, please limit yourself to one question and only one follow-up, which relates to your initial question. Now I'd like to turn the call over to Steve.

Steven A. Kandarian

Thank you, John, and good morning, everyone. MetLife faced several challenges during 2011, a volatile macroeconomic environment, several natural disasters and an uncertain regulatory environment. Yet our results this year reflect the strong underlying fundamentals of our business, with estimated earnings per share and operating ROE both up from 2010. Our outlook for 2012 assumes continued softness in the global economic environment. However, as we've seen throughout 2011, our diversified business mix is resilient in the face of headwinds, and we expect to continue to produce strong results. You will hear more shortly about our 2012 outlook and plan from Steve Goulart and Bill Wheeler.

In light of our strong track record and attractive growth prospects, I am frustrated, as I'm sure you are, with the performance of our stock. We have a diversified business mix with high return opportunities, many of which are outside the United States. We have shown through the financial crisis and in the current low-rate environment that managing risk is one of our core competencies, and we have a strong balance sheet to support our growth. This is not to suggest the path before us is an easy one. All of us in the life insurance industry face challenging macroeconomic forces that are beyond our control and are impacting our stock prices.

At MetLife, we are focusing on what we can control. By the end of today's call, I hope you will have a deeper appreciation of MetLife's attractive growth opportunities, our fundamental earnings power, our superior investment and risk management abilities and our commitment to create shareholder value.

To begin, please turn to Slide 2 of the presentation. We believe MetLife has the strongest platform for growth and shareholder value creation in the life insurance industry. That platform is built on 4 pillars.

First, we are one of the most geographically diverse insurance companies in the world, spanning 90% of the global insurance market. We have leadership positions in highly profitable businesses in the 2 largest insurance markets in the world, the United States and Japan. And we have strong and expanding positions in high-growth markets with attractive demographics and increasing demand for insurance products. Overall, we are top 5 by revenue in almost half the markets in which we do business.

Second, we believe we have the strongest brand in the industry, built not just on advertising but on our 140-year history of doing what is right for our customers. We are extending the reach of MetLife's iconic brand to access new customers in key markets. Our rebranding efforts for the combined MetLife Alico companies are now complete and have all been well received across the globe.

Third, we have one of the broadest and most diverse product in distribution networks. We can leverage our product expertise to meet the needs of a broader set of customers. For example, as I mentioned on our third quarter earnings call, our Accident & Health products are making a strong contribution to our bottom line in regions outside of Japan. And recently, we launched a new stand-alone whole life cancer product in Korea. That's the only product in the market to offer a whole life feature with additional protection for secondary cancer diagnosis.

Finally, we have what we believe is the best risk management culture in the business, which has served us well throughout the financial crisis and enabled us to buy Alico. Today, that same commitment to risk management is allowing us to weather the low interest rate environment with a far smaller impact on earnings than many expected. Indeed, even under an extended low-rate scenario, we are expected to continue to generate excess capital.

Turning to Slide 3. You can see MetLife's diversification across different types of markets. We are a leader in the top 2 insurance markets in the world. We are the #1 life insurer in the U.S., the largest life insurance market, and we have one of the top insurance operations in Japan. While these are relatively mature markets, we see opportunities for growth due to demographic trends, pressure on government finances and changing consumer preferences. In addition, these operations will continue to produce strong profits and excess cash flow that can fund growth opportunities elsewhere or be returned to shareholders.

We are also in markets that are already significant, yet still capable of growing at a double-digit pace. For example, Mexico, Poland, Korea and Chile, all contribute significantly to our earnings. All generate returns in the high teens, and all have strong growth rates.

And we are in emerging markets such as the BRICs where we expect revenue to grow by approximately 20% annually through 2015. Brazil is becoming an increasingly significant contributor. In Russia, we are already the #1 life insurer. In India, we've expanded our presence through a partnership with PNB, the second largest bank in the country. In Turkey, we have acquired a life insurance and pension company that's taken our market position from 12th to 9th. And in China, our business is now profitable even as we invest for future growth.

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