MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife first quarter 2020 earnings release conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you'd like to ask a question at any time, please press 1 and 0. Once again, for questions over the phone lines, please press 1 and 0. As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in MetLife's 8K filed last night and its other SEC filings. With that, I will turn the call over to John Hall, Head of Investor Relations.

Thank you, Operator. Good morning, everyone. Now more than ever, we appreciate you joining us for MetLife's first quarter 2020 earnings call. Before we begin, I refer you to the information on non-GAAP measures on the investor relations portion of MetLife.com in our earnings release and in our quarterly financial supplements, which you should review. On the call this morning are Michelle Halaf, President and Chief Executive Officer, and John McCallion, Chief Financial Officer. Also participating in the discussions are other members of senior management. Last night, we released a set of supplemental slides. They are available on our website. John McCallion will speak to those supplemental slides in his prepared remarks if you wish to follow along. An appendix to these slides features disclosures and gap reconciliations, which you should also review. After prepared remarks, we will have a Q&A session that will extend to the top of the hour. In fairness to all participants, please limit yourself to one question and one follow-up. Before I turn the call over to Michel, I have a quick scheduling update. As you might have concluded, given the environment, we will not be hosting an Investor Day in Tokyo this September. Now over to Michel.

Thank you, John, and good morning, everyone. I'd like to begin by acknowledging the difficulties and challenges that so many people have endured as a result of the pandemic. What the world has been living through is tragic, yet it is also demonstrating the best of humanity. We see this every day as thousands of first responders, healthcare workers, and other frontline employees risk their lives to care for others and provide essential services. And we see it at MetLife as our employees go above and beyond to deliver on our promises to customers. While we feel the effects of the crisis deeply, both the personal loss and the economic disruption, these are the moments that MetLife is built for. At our investor day last December, I led with the importance we place on being a purpose-driven company. Our purpose statement, always with you, building a more confident future, has taken on greater meaning in the current environment. People are counting on us like never before to provide the value, support, and financial security they need. Our next horizon strategy is a roadmap for how the company will create value for all of its stakeholders, our people, our customers, our shareholders, and our communities. As I have said before, it is our people who will deliver for our customers. And that in turn is how we will create value for our shareholders and communities. It starts with our people, which means making their health and well-being our top priority. We've done that in a variety of ways. We rapidly moved employees to a work-from-home environment, expanded benefits to help cover COVID-19 testing and treatment, enhanced mental health support to help employees cope with stress, and deploy tools and resources to keep people connected. I am proud of the level of engagement and motivation our people are showing. They know they are making a difference. Since we do business in many markets, MetLife got an early look at how the pandemic could affect societies and our own operations. Our experience in Asia gave us a running start on the activation of our business continuity plan globally. Across our enterprise, 92% of our 38,000 non-agent employees are now working from home, including 98% in the United States. Of course, the true test of our business continuity plan was not merely whether employees could log on from home, but whether they had full functionality to be able to deliver for our customers. On this front, we are very pleased that we've been able to maintain service levels with 95% of all customer calls, claims, and other transactions successfully handled by employees working remotely. This includes our group insurance business, where even in this highly disrupted environment, MetLife still expects to meet or exceed its performance guarantees. For our customers, this moment is crucial. The way we show up now will resonate with them for years to come. Across the enterprise, we are acting to provide them with comprehensive and compassionate care. We are extending premium grace periods, fast-tracking claims, crediting or adjusting auto and dental premiums, and providing our digital financial wellness portal to small businesses and their employees at no cost. The shutdown of face-to-face distribution has also spurred us to innovate and accelerate the digital transformation of our business. In China, for example, sales of our medical reimbursement product rose sharply after we created a WeChat store for agents. In times of crisis, we must do more for the communities where we work and live. MetLife Foundation has committed $25 million And MetLife has donated millions of dollars and thousands of masks, disinfectant wipes, and hand sanitizers to the COVID-19 fight. We also had a unique opportunity to help. As a large commercial real estate investor, we were pleased to work with the state of New York to offer the Intercontinental Times Square as free housing for medical workers. Most impactful is the social and economic benefit MetLife creates as a life insurance company. The heart of our business is a promise to pay when people need us most. Through the power of risk pooling, the premiums of the many become payments to those who need them. MetLife paid more than $24 billion in policyholder claims, benefits, and dividends in the U.S. alone last year, an average of more than $65 million a day. At a time when people's jobs and incomes are at risk, life insurers form a vital part of the social safety net that sustains people financially. MetLife entered the current period of uncertainty from a position of strength. As you know, we've made substantial changes to our strategy and product portfolio. The biggest change is to the profile of our liabilities. We are now a less market-sensitive and capital-intensive company. At our investor day, we showed that approximately two-thirds of our adjusted earnings came from protection and fee-based products and only one-third from spread-related businesses. Within our investment portfolio, we took early action in anticipation of a recession. Beginning in 2018, we became concerned about certain lower-rated areas of the credit markets. We reduced our holdings in sectors and names that we thought would carry heightened risk in a downturn. Overall, our investment portfolio is marked by broad diversification, high quality, and ample liquidity. Notably, at our operating insurance companies, we have nearly $100 billion of U.S. government and agency securities Japan government bonds, and other cash and short-term investments. MetLife has also further strengthened its already strong capital and liquidity position. As part of our planned capital actions, in late March, we accessed the bond market, when few others could, to raise $1 billion. For the quarter, This helped bring the company's total cash and liquid assets at our holding companies to $5.3 billion. Our combined U.S. NAIC risk-based capital ratio as of year end 2019 was 395%, and we enjoy high ratings from all major credit rating agencies. Another proactive step we've taken is to increase our focus on expenses. MetLife remains committed to meeting the expense target we set as part of our unit cost initiative program. In the current environment, perhaps no area gives us greater opportunity to demonstrate our commitment to consistent execution than expense discipline. As we announced last week, our financial strength enabled us to increase our quarterly common stock dividend which provides a steady and growing source of income to millions of people during this economically challenging time. We raised our second quarter 2020 common stock dividend by 4.5%, which illustrates our confidence in MetLife's future. Given our strong starting position, we expect the impact of the pandemic to be an earnings event, not a balance sheet event. MetLife has a great set of globally diversified businesses, some of which may be pressured by today's unprecedented events, while others act as offsets. Take our Retirement and Income Solutions, or RIS, business. While we are seeing a slowdown in new pension risk transfer deals, we are also seeing a surge in demand for our stable value offerings as 401K sponsors and participants seek the safety of these book value products backed by MetLife. And although rollover reinvestment rates continue to be pressured for our long-tail businesses in RIS, the current configuration of the yield curve, very low at the short end and a positive slow, is favorable for our capital market investment products and securities lending activities. Similar balance exists across our global protection businesses, where mortality, morbidity, longevity, and property and casualty risks serve as natural offsets. At the core, our scale, strong balance sheet, and broad diversification are key strengths of our franchise. These strengths enabled us to generate first quarter adjusted earnings of $1.4 billion, or $1.58 per share, up 7% from a year ago. The direct impacts on our adjusted earnings from the pandemic and economic slowdown were limited. Adjusted earnings reflected strong underwriting margins in group benefits and favorable underwriting margins in property and casualty. Variable investment income was very strong, mostly due to private equity, which is reduced on a one-quarter lag. These positives were offset in part by unfavorable market factors across interest rates, equities, and foreign currency. Net income was $4.4 billion, or $4.75 per share, up from $1.40 the year prior. Falling interest rates drove substantial gains in the derivatives we hold to protect our balance sheet. Book value per share excluding AOCI other than FCTA, was $52.36, up 7% sequentially from year end, while adjusted return on equity on the same basis totaled 12.6%. Looking ahead to the second quarter, we anticipate the greatest earnings impact will be felt within variable investment income, where we expect less favorable private equity returns for a time. The strong historical returns associated with our private equity portfolio and its role as a good match for our long-dated liabilities justify this asset class as an important ongoing component of the general account. In fact, the current economic turmoil is precisely the environment where the seeds of tomorrow's private equity returns are being planted. We believe our next horizon strategy was the right approach before the pandemic struck. and we are even more confident that the pillars of focus, simplify, and differentiate are the right approach today. By focusing even more intently on where we deploy capital, and by further simplifying the company, we will enable MetLife to emerge from the current environment in the best shape possible. If anything, we must accelerate our next horizon work. This is how we will truly differentiate MetLife and capture the opportunities that periods of disruptions always bring. MetLife has seen many such periods during its history. The 1918 flu pandemic, the Great Depression, World War II, 9-11, the financial crisis. Through all of them, we never faltered. We maintained our financial strength, kept our promises, and provided people with the security and confidence they need. That's what we mean when we say always with you, and it will be true throughout this pandemic and beyond. I will now turn the call over to John McCallion.