MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife second 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. Welcome to MetLife's second 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. 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 which address second quarter results. 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 additional disclosures, gap reconciliations, and other information 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. With that, over to Michel.

Thank you, John, and good morning, everyone. MetLife's outstanding financial results in the second quarter provide further evidence of the tremendous progress we're making on the pillars of our Next Horizon strategy. We're continuing to focus with the right capital allocation and investment decisions We're continuing to simplify with exceptional expense discipline, and we're continuing to differentiate with enhancements to our market leading group benefits platform that are helping to drive record sales. When it comes to our strategy, we've transitioned from a period of execution risk to one of additional opportunity. Net income in the second quarter was $3.4 billion, up from $68 million a year ago. The primary drivers were growth and adjusted earnings, the gain we booked on the sale of our auto and home business, and derivative gains in the current quarter relative to derivative losses a year ago. Strong net income drove book value per share excluding AOCI other than SCTA growth of 8%. Adjusted earnings in the second quarter were $2.1 billion, or $2.37 per share, up 186% from 83 cents per share a year ago. As in the first quarter, our investment portfolio generated exceptionally strong variable investment income. Private equity remained the key driver of VII. As you know, private equity returns are reported on a one-quarter lag, so the strong Q2 performance reflected gains from Q1. We reported private equity gains of 9.7% in the second quarter, compared with a negative 8.2% a year ago. Equity markets continue to perform well from April through June, which we anticipate being reflected in our Q3 earnings. When we unveiled our next horizon strategy at Investor Day in December 2019, we pointed to the scale and expertise that we have in investments as a competitive advantage for MetLife. The strategic approach we have taken on private equity is a case in point. Our decision to sell most of our $2.5 billion hedge fund portfolio and increase the allocation to private equity has provided a better match for our long-dated liabilities while creating significant value for our shareholders. This was no accident, but the latest in a series of successful investment decisions from de-risking our portfolio ahead of the financial crisis to selling Peter Cooper Village Stuyvesant Town near a market top. Turning to our reporting segments, John McCallion will provide a complete overview shortly. I would like to focus on how our results show that COVID-19 is both still with us, but lessening in its impact. From an underwriting perspective, we've seen a sizable improvement, but we are still experiencing excess mortality. In the quarter, the group life mortality ratio was 94.3%, below the 106.3% from last quarter, but still above the top end of our guidance range. In Latin America, we had $66 million of COVID losses, again, below the $150 million of COVID losses from Q1, but still above normal. Yet at the same time, COVID-19's economic grip is easing somewhat. At MetLife, we see this emerging in sales trends. In the U.S. group business, Sales through the first half of 2021 are 39% higher than they were in the first half of 2020. And if current trends hold, 2021 will be a record sales year. In Latin America, sales are up 55% year over year. On a year over year basis, Asia sales are up 42%, while EMEA sales are up 20%. By their nature, claims are a backward-looking indicator and sales are a forward-looking indicator. So while we are not out of the woods, we are starting to see a clearing in the trees ahead. The path of the pandemic is something outside of our control, but as we have demonstrated over the past year and a half, we are not standing still. We are moving ahead with urgency to accelerate our strategy. To further differentiate our group benefits business, we acquired Versant Health, and immediately became the third largest vision care provider in the United States. Versant has now been part of our results for two quarters, and in Q2, it contributed six points of year-over-year growth in U.S. group premiums, fees, and other revenues, consistent with our expectations. Year-over-year, requests for vision care proposals are up more than 20% among our national account customers. We are pleased with how our new vision care offering is performing in the marketplace and expected to contribute meaningfully to growth going forward. Similarly, we have enhanced our pet insurance offering to make it even more attractive to customers. We now offer telehealth concierge services, rollover benefits from the prior year, and family plans covering multiple pets. In what we believe is a first for the industry, we also cover pre-existing conditions when an employee switches to MetLife Pet Insurance from another carrier as long as the condition was covered by the prior plan. More than 500 employers now offer MetLife Pet Insurance as a voluntary benefit to their employees, and we believe our best-in-class product will continue to make gains in this highly attractive and under-penetrated market. To strengthen our focus, we made a decision to sell our businesses in Poland and Greece to Anand Group. This was another promise we made at investor day. to continue to look at our portfolio through the lens of strategic fit and ability to achieve scale and clear our hurdle rate. Since that time, we have sold or reached agreements to sell our businesses in four markets, and we will continue to apply this disciplined approach. In early April, we also closed on the sale of our auto and home business to Farmers Insurance for $3.94 billion in cash. The 10-year strategic partnership we forged allows each company to focus on its core strength, farmers' 90 years of PNC underwriting and service excellence, and MetLife's unrivaled distribution reach in the U.S. group benefits space. The simplified pillar of our strategy was evident in our exceptional expense management. In the quarter, we delivered a direct expense ratio of 11.4%, and we now expect to beat our 12.3% target ratio, not only for all of 2021, but for 2022 as well. We are making this commitment despite selling our auto and home business, which operated at a lower expense ratio than the overall enterprise. As we have said many times, we are embedding an efficiency mindset across everything we do. It is central to our ability to deliver continuous improvement. At MetLife, we no longer have expense reduction programs. We do not need them. What we have instead is a publicly disclosed direct expense ratio target that we have brought down by 200 basis points over the past five years and promised to keep there. This is how we hold ourselves accountable, and this is how investors can hold us accountable as well. Our strategic decision to sell auto and home contributed to a $6.5 billion cash buffer as of June 30th, well above our target range. We repurchased $1.1 billion of common shares in the second quarter and another $248 million of common shares so far in the third. And yesterday, our board approved a new $3 billion share repurchase authorization. This is on top of the $475 million we have remaining on our December 2020 authorization. We believe that investing in responsible growth, steadily increasing our common dividend, and buying back common stock are all vital parts of a balanced approach to creating long-term shareholder value. COVID-19 continues to present MetLife with the opportunity and the obligation to step up for our employees, our customers, and our communities. That work is ongoing. We are in a new phase of the pandemic. The primary focus now is on vaccinating as many people as possible. Nothing will do more to prevent needless deaths and a potential resurgence of the lockdown measures that cause so much economic harm. As we did over 100 years ago with our visiting nurses program, MetLife has mobilized to make a positive contribution to advance public health. First and foremost, this means doing all we can to give our own employees and their families access to the vaccine. Examples from our markets include giving employees paid leave to get vaccinated, covering vaccine-related expenses such as travel and childcare, and holding free vaccine clinics for employees and their families in locations as varied as Oriskany, New York, and Osaka, Japan. But it also means helping to vaccinate the broader population as well. In Nagasaki, Japan, we've opened 6,500 square feet of our headquarters as a free vaccination site. McLife Foundation has committed $500,000 to delivering vaccines to underserved communities across the U.S., and our medically trained staff are volunteering to administer doses at vaccine sites. In closing, to perform as well as we have through a pandemic highlights some fundamental truths about MetLife. We have an all-weather strategy that holds up well to stress. We have an investment portfolio that captures meaningful upside. We have competitive advantages that enable us to grow in the most attractive markets, and we have a relentless focus on execution. At our 2019 Investor Day, we said our Next Horizon strategy would generate tangible benefits for shareholders. A 12% to 14% adjusted ROE, $20 billion of distributable cash over five years, and an additional $1 billion of operating leverage to self-fund growth. We are on track to meet every one of those commitments. Thank you. And with that, I'll turn it over to John.