MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife third quarter 2022 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 now turn the call over to John Hall, Global Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for MetLife's third quarter 2022 earnings call. To 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. Presenting on the call this morning are Michelle Halaf, President and Chief Executive Officer, and John McCallion, Chief Financial Officer. Also available to participate in the discussion are other members of senior management. Last night, we released a set of supplemental slides, which addressed the quarter. 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 incremental disclosures, gap reconciliations, and other information which you should also review. After prepared remarks, we will have a Q&A session, and it will end no later than the top of the hour. In fairness to all, please limit yourself to one question and one follow-up. Now on to Michelle.

Thank you, John, and good morning, everyone. Many of the macroeconomic trends from the first half of the year persisted in the third quarter. As equity markets fell again, interest rates rose some more, and the possibility of a recession remains in sight. Against this backdrop, we are pleased with the execution of our next horizon strategy, which continues to prove its resilience in the face of uncertainty. Looking ahead, there are several areas that we believe differentiate MetLife and position us well going forward. We have established a track record of relentless execution focused on controlling those factors that we can control. We have built a diversified portfolio of businesses with natural offsets through organic growth, supplemented by strategic acquisitions and tactical divestments. We have a commitment to responsible growth aided by the use of powerful analytical tools such as VNB or value of new business, to produce high teen IRRs and mid single digit payback periods. We have embedded an efficiency mindset in our DNA, which drives our productivity and provides us with the capacity to invest in the future. And we generate strong recurring free cash flow that supports clear and consistent capital and liquidity management. Turning to quarterly performance as a whole, recurring investment rates rose, PFOs on a constant rate basis were strong, COVID-19 losses in the aggregate moderated and expense discipline health firm. The greatest headwind was variable investment income. Starting with some numbers, last night we reported third quarter 2022 adjusted earnings of $966 million, or $1.21 per share. Notable items in the quarter included our annual actuarial assumption review and other insurance adjustments, which had a positive impact of $34 million or 4 cents per share on adjusted earnings. Excluding notable items, adjusted earnings in the quarter were $1.16 per share. Net income in the third quarter was $331 million compared to $1.5 billion a year ago, primarily driven by lower adjusted earnings and derivative losses from hedges we hold to protect our balance sheet, as well as investment losses from standard investment activity. In the third quarter, variable investment income was a loss of $53 million. Private equity is the largest contributor to VII and generated a negative 1.3% return in the quarter. As you know, our PE portfolio is reported on a one-quarter lag. Third quarter private equity results reflect the difficult second quarter equity market, which fell 16.4% as measured by the S&P 500. Our investment in private equity is driven by its properties as a long-dated asset class that provides a good match for our long-dated liabilities. Not only has this proven to be a good ALM strategy, but we have generated substantial gains over time for the benefit of our policyholders and our shareholders. As a partial offset to private equity in the quarter, we saw recurring investment income grow sequentially on higher new money rates. For roughly the past decade, We effectively managed through an interest rate environment where our new money rate was below our roll off rate. In the second quarter, that finally reversed as our new money rate exceeded our roll off rate. This repeated in the third quarter to even greater effect. With the duration of our investment portfolio at roughly eight years, we expect the impact of this change to build over time. Broadly speaking, rising interest rates are a good thing for MetLife. Shifting to our business segments, We saw strong growth in U.S. group benefits with adjusted earnings of $399 million, up 259% year over year. This represents favorable underwriting, including a substantial decline in COVID-19 life insurance claims and aided by strong volume growth. Group life mortality, including COVID-19 losses, registered a benefit ratio of 86%, which continues to be at the low end of our annual target range of 85 to 90%. And our non-medical health ratio was 70.8%, also at the low end of our annual target range of 70 to 75%. Execution across our enrollment and voluntary strategy is going well and responsible for driving double-digit PFO growth across our voluntary suite of products. The investments we've made to expand our product breadth, to deepen our understanding of employee needs, and to connect and communicate with employees are all paying off. In retirement and income solutions, or RIS, adjusted earnings were $345 million, which were down from a year ago, largely due to lower variable investment income. Benefiting from higher rates, recurring investment income spreads remained strong. The highlight in the quarter for RIS was winning our largest ever pension risk transfer deal of roughly $8 billion. Year to date, we have booked $12.3 billion of new PRT business, already an all-time annual high for MetLife. And we continue to see a robust pipeline with a market opportunity extending out for years. For Asia, adjusted earnings of $197 million were below a year ago, mostly on lower variable investment income and unfavorable underwriting. COVID claims reduced adjusted earnings in the quarter by $129 million, driven largely by hospitalization claims in Japan. Changes to hospitalization claims eligibility rules, which took effect at the end of September, will greatly reduce such claims looking ahead. Asia sales were up 27% on a constant currency basis from a year ago, led by Japan foreign currency annuities and accident and health products. Two weeks ago, on a visit to Asia, I had the opportunity to engage with our team and our distribution partners and bear witness to our strong execution. In this fast-changing environment, our efforts to meet our customers where they are and the nimbleness of that pursuit are strengthening our competitive advantage. In Latin America, the region had another strong quarter with adjusted earnings totaling $171 million, up significantly from a COVID-impacted $29 million a year ago. Latin America sales continue to be strong, rising 22% for the quarter across the region on a constant currency basis, reflecting sustained business momentum. MetLife's focus on responsible growth is an integral element of our strategy. On an annual basis in the third quarter, we disclose our value of new business metrics for the prior year. As I mentioned earlier, VNB is a tool that underpins our efforts to generate responsible growth. The metrics show that MetLife has been able to put capital to work to support organic growth more effectively and efficiently over time. For example, in 2019, we deployed $3.8 billion of capital at a 15% IRR to generate $1.8 billion of VNB. Two years later, we put less capital to work, $2.8 billion, at a higher IRR to generate even more VNB, $1.9 billion. We think our principal use of VNB and the results that we've achieved are clear differentiators for MetLife. The discipline we use to evaluate and drive new business is no different than the discipline we employ to score merger and acquisition opportunities. During the third quarter, MetLife Investment Management announced a definitive agreement to acquire affirmative investment management. AIM is an award-winning global environmental, social, and corporate governance investment manager with roughly $1 billion of assets under management. Combining AIM's ESG capabilities with MIM's fundamental investment expertise will create differentiated client solutions and offer a new and attractive opportunity for growth. Further, this transaction underscores our strategic objective to grow our investment management business while highlighting M&A as a strategic capability for MetLife. Moving to cash and capital, MetLife continued to be active with capital management during the third quarter. We paid $400 million of common stock dividends to shareholders. We also repurchased $674 million of our common shares, bringing total capital return in the quarter to roughly $1.1 billion. In October, we repurchased an additional $176 million of MetLife shares. There remains $1.6 billion outstanding on our current $3 billion authorization. MetLife is well capitalized and highly liquid. At the end of the quarter, we had $5.2 billion of cash and liquid assets at our holding companies. We remain comfortably above our target cash buffer of $3 to $4 billion. In closing, our all-weather Next Horizon strategy continues to be the right strategy to guide us through the changing times ahead. Together, the diversification of our great set of market-leading businesses, our responsible growth, our efficiency mindset, and our strong free cash flow generation will serve MetLife well across a range of economic cycles. We believe these are the right ingredients to create value for our shareholders and our stakeholders now and into the future. With that, I will turn things over to John.