MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife second 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. Instructions will be given at that time. 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 SEC filings. With that, I will turn the call over to Don Hall, Head of Investor Relations.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for MetLife's second quarter 2020 earnings call. We hope you and your families are both safe and healthy. 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. Now over to Michelle.

Thank you, John, and welcome, everyone. My focus this morning will be on how MetLife is successfully managing through the current crisis financially, operationally, and culturally. I'll begin with our financial performance in the second quarter, which demonstrates three key fundamentals about our business. First, we have become a simpler and more predictable company. On our last earnings call, we set the major pandemic-related impact in the second quarter would be the loss in our private equity portfolio. The negative 8.2% return we reported fell squarely within the range provided. Second, our businesses are well diversified by both geography and product, providing meaningful offsets to increased claims from COVID-19. In aggregate, the second quarter was not an underwriting event. And third, we remain a company that is committed to and generates strong free cash flow providing us with significant liquidity and flexibility. In the quarter, we reported adjusted earnings of $758 million, or 83 cents per share, compared to $1.38 per share a year ago. Net income of $68 million fell below adjusted earnings, primarily due to losses on derivatives held to protect our balance sheet against declining equity markets. On a 2020 year-to-date basis, MetLife has generated $4.4 billion of net income. As you know, our private equity portfolio is reported on a one-quarter lag, so our results reflect the extremely difficult first quarter equity market. The percentage decline in our private equity portfolio was much smaller than the 20% drop in the S&P 500, but still generated an after-tax quarterly loss of $0.48 per share, consistent with the expectations we shared with you. Given the substantial rebound in the equity market, we expect a significant recovery in our private equity portfolio when we next report our quarterly results. Our roughly $500 billion investment portfolio remains a key strength for MetLife. We believe the diversity, quality, and liquidity of our portfolio, as well as our early actions to reduce risk, position us well for a variety of market outcomes Year-to-date, we have seen only modest realized investment losses. Our underwriting results in the quarter reflect the broad diversity of our businesses. For example, higher claims frequencies in the U.S. were largely balanced by fewer auto insurance claims of setting longevity impacts and lower claims and utilization of other protection products globally. Our group benefits business is instructive. Higher mortality drove our group life benefit ratio beyond our annual target range, but this was offset in part by a decrease in dental utilization. Looking ahead, we expect group life mortality to improve but remain elevated in the third quarter. And while dental utilization should increase as we move through the year, we've deferred recognition of dental premium given the significant decrease in the availability of dental services. This has the effect of limiting outsized results in any one quarter. Overall, we continue to expect that the diversity of our business mix will mitigate the global underwriting impact of COVID-19. Turning to free cash flow, we have long spoken of a life insurer's capacity to generate cash as one of the most critical measures of the strength and sustainability of its business model. In the second quarter, we were able to grow total cash and liquid assets at our holding companies to $6.6 billion. This is up from $5.3 billion sequentially and well above our cash buffer target of $3 to $4 billion. Our strong cash reserves provide us with significant financial flexibility to navigate an uncertain and changing economic landscape, including taking advantage of opportunities as well as managing potential impacts to our investment portfolio. Beyond our financial results, I would like to spend a few minutes on other ways we are managing the challenges presented by the pandemic. Operationally, our people continue to show grit and determination in not only stepping up to respond effectively to a challenging environment, but in accelerating some of the trends that will be critical to our long-term success. Enterprise-wide, 75% of our employees continue to work remotely. Throughout the crisis, we have been able to deliver for our customers without interruption. In our U.S. group business, for example, we continue to meet or exceed our service level agreements. The crisis is also causing us to fast-forward the digitization of our company, which will produce lasting benefits. Turning to the U.S. group business again, we have expedited and now completed the rollout of an enhanced digital platform that makes it easier for customers to get benefit information make payments, and file claims. Since the start of the year, the number of people eligible to access the platform has grown by more than 30 million. In addition to continuing to invest to improve the customer experience, we also provided our customers with significant premium relief in the second quarter. While this created some top-line pressure, we remain committed to strong expense discipline. We moved quickly to find savings as part of our efficiency mindset, and are still on track to achieve our full-year direct expense ratio target of 12.3%. For the first six months of the year, the ratio is 12.2%. An essential part of being a high-performing company is having a strong culture, and here, too, we are seeing improvements. One of the biggest concerns about the shift to working from home was that employee engagement would suffer. We have been experiencing the opposite effect. In all three of our priority areas, collaboration across the enterprise, a strong focus on the customer, and a spirit of experimentation, employee engagement has actually strengthened. Part of this is the deep sense of purpose that our employees feel at a time when what we do matters more than ever. Another factor is our commitment as a leadership team to communicating at unprecedented levels. For example, we have been holding interactive global town halls for all of our employees every other week. Our commitment to building momentum for our next horizon strategy has a new urgency as well. More than 25,000 employees have participated in immersive virtual sessions to build a strong sense of ownership. The pillars of our strategy remain more relevant than ever. Focus on deploying scarce capital to its highest use. simplify MetLife by driving operational efficiency and improving the customer experience, and differentiate to derive competitive advantage in the marketplace. Far from slowing us down, the current crisis is accelerating our efforts to find attractive opportunities. In June, we closed our first-ever deal in the UK longevity reinsurance market. Longevity risk is a business that allows us to tap several competitive advantages, including our world-class actuarial talent. In addition, the underwriting and capital dynamics of this business fit well with our internal rate of return and payback period requirements. Another growth opportunity is the new suite of products we are adding to our market-leading employee benefits platform. In January, we closed on the acquisition of PetFirst to give us access to the fast-growing pet insurance market. Even though we will not launch the product on our platform until later this year, 25 large employers with approximately 250,000 eligible employees have already signed up to offer pet insurance as a voluntary benefit. Before I close, I would like to say a word about MetLife's commitment to diversity and inclusion, a topic that has taken on greater importance in light of recent protests across the United States. MetLife has taken a number of steps to contribute to a more just and equitable society. We have spoken out in the face of injustice. We have committed to improving diversity within our own workforce. And we have contributed financially to organizations that advance racial equity. While we know there is more work to do, both as a company and as a society, our purpose is motivating us to help make forward progress. What I hope you will take away from today's call is that MetLife feels a tremendous sense of urgency about the future. Everyone has heard the expression, don't let a crisis go to waste. At MetLife, we are taking that to heart and doing the work now to position ourselves for long-term success. We're becoming more efficient, we're gaining new customer insights, we're strengthening our culture, and we're remaining laser-focused on consistent execution. With that, I will turn the call over to John McCallion to discuss our second quarter results in greater detail.