MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife first quarter 2021 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 John Hall, Global Head of Investor Relations.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for MetLife's first quarter 2021 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. Michelle Halaf, President and Chief Executive Officer, is on the call this morning, along with other members of senior management, who will be available to participate in the discussion. Last night, we released a set of supplemental slides, which address the quarter. They are available on our website. John McCallion is under the weather today. We are going to let him rest his voice, and I will speak to the supplemental slides following Michelle's remarks. An appendix to the supplemental slides features outlook sensitivities, disclosures, gap reconciliations, and other information, all of which you should also review. After our 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. With that, over to Michelle.

Thank you, John, and good morning, everyone. As we reported last evening, MetLife delivered very strong financial results for the first quarter of 2021. Our diverse business mix, sound investment strategy, and strong expense discipline combined to generate earnings well above consensus expectations. By the numbers, we reported first quarter 2021 adjusted earnings of $2 billion, or $2.20 per share, up 39% from $1.58 a year ago. The primary driver was exceptionally strong variable investment income, or VII, partially offset by elevated COVID-19-related claims. Net income for the quarter was $290 million, down from $4.4 billion a year ago, primarily due to losses on derivatives that protect our balance sheet from declines in equity markets and interest rates. Such gains and losses are the result of GAAP accounting rules that require us to mark certain of our derivative hedges to market through net income without similar treatment for the assets and liabilities being hedged. We believe the economics and the free cash flow of our business are captured in adjusted earnings. Regarding variable investment income, The key driver of gains in the first quarter was our private equity portfolio, which delivered returns of 13.3%. Recall that private equity returns are reported on a one quarter lag. The strong performance in the fourth quarter was driven primarily by three private equity sectors, domestic leveraged buyout funds, European LBOs and venture capital. In the second half of 2020, IPOs from U.S.-based LBOs and venture capital firms more than doubled over the prior year, and the market rewarded many entrants with strong valuations. Venture capital was our best performer across the three subsectors, largely due to the market's appetite for tech companies. VC deal volumes hit a record in 2020, and the increase in digital activity spurred by the pandemic drove attractive valuations for early-stage tech firms positioned to capitalize on that trend. While our private equity portfolio return in the quarter was robust, it was in line with industry benchmarks, most notably Cambridge Associates Private Equity Index. We are confident this asset class will continue to be a significant source of alpha for MetLife in the future. Turning to the performance of our business segments, I'll begin with our U.S. group benefits results. Adjusted earnings were down 70% year over year, on elevated COVID-19 life claims. In the US, overall, COVID-19 related deaths were 40% higher in the first quarter of 2021 than they were in the fourth quarter of 2020. For MetLife, our group life mortality ratio was 106.3%, well above the high end of our target range of 85 to 90%, with approximately 17 percentage points attributable to COVID-19 claims. The top-line performance of the group benefits business was strong, with sales up 45% year-over-year. We are doing especially well with national accounts, and if trends hold, we expect the group business to deliver a record sales year. Adjusted PFO growth was also solid at 16%, with the addition of Versant Health being a large contributor. In Retirement and Income Solutions, or RIS, adjusted earnings were up 92% year-over-year, driven by higher VII. Beyond VII, adjusted earnings were still strong on favorable underwriting and volume growth. Looking ahead, we continue to see a robust pension risk transfer pipeline. Rising equity markets and interest rates have improved pension plan funding levels and lowered the cost for plan sponsors to transact with an insurer. Within Asia, we saw a similar earnings pattern to RIS. Adjusted earnings were up 70% year over year on a constant currency basis, driven by higher VII. However, even allowing for VII, adjusted earnings were strong, driven by favorable foreign exchange rates, volume growth, and underwriting. Sales in the region were up 12% on a constant currency basis, even with a COVID resurgence in certain markets. In Latin America, adjusted earnings were down 57% year-over-year on a constant currency basis, primarily due to the pandemic. COVID-related claims in the quarter totaled approximately $150 million, mainly in Mexico. In EMEA, adjusted earnings of $71 million were down 11% on a constant currency basis on higher COVID-related claims, as well as higher expenses compared to the favorable prior year quarter. Sales were up 4% on a constant currency basis with strong momentum in the UK employee benefits space. To finish my business segment discussion, I think a theme is clear. If you look past higher VII and mortality in the quarter, the underlying performance of the business was very solid. On the fundamentals, we continue to demonstrate consistent execution with strong earnings power across a range of different economic scenarios. Turning to cash and capital management, MetLife ended the first quarter with cash at the holding company of $3.8 billion, near the top end of our $3 to $4 billion target buffer. Our two-year average free cash flow ratio remains within our guidance range of 65 to 75%. Currently, our cash balances are much higher following the receipt of $3.94 billion of proceeds on the sale of our US PNC business. During the quarter, we were pleased to return $1.4 billion of capital to shareholders, $1 billion in share repurchases, and approximately $400 million in common stock dividends. So far in Q2, we have bought back an additional $210 million of common shares, and we have roughly $1.6 billion remaining under our current repurchase authorization. Last week, Our Board of Directors approved a second quarter 2021 common stock dividend of 48 cents per share, up 4.3% from the first quarter. Over the last decade, we have increased our common dividend at a 10% compound annual growth rate. Our consistent execution continues to generate strong free cash flow that allows us to invest in growth and return capital to our shareholders, all with the goal of driving long-term value creation. As we look ahead, we see a path to a brighter future from both an economic and health perspective. In the United States, conditions look promising for a period of employment growth, which is always good for our group business. On the pandemic front, we believe the worst of the underwriting effects on our company are behind us as the vaccine rollout continues to advance. The progress is not yet uniform across the world, and certain areas are still struggling, But the trend line is clear. A slow but steady return to something we can call normalcy. While we welcome an improving external environment, we also remain laser focused on executing our strategy to ensure we are prepared for the post-pandemic world. For our customers, we continue to accelerate our digital transformation to meet their evolving needs. In Japan, for example, 95% of our policy submissions are now done digitally. For our employees, we will be implementing a more flexible workplace model in Q3, which for most will be a hybrid approach. While our people have performed exceptionally well working from home during the pandemic, we believe the office will continue to play a critical role in fostering collaboration, innovation, and career development. we are equally confident that by incorporating more virtual work into our model, we will enhance productivity, gain access to a broader talent pool, and strengthen employee engagement. To close this morning, I want to emphasize the urgency we are feeling at MetLife to keep raising our game. As I said in my annual letter to shareholders, consistent execution is our new baseline. Continuous improvement is our new aspiration and expectation. Thank you. And with that, I'll turn it over to John.