MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife second quarter 2023 earnings 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.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for MetLife's second quarter 2023 earnings call. Before we begin, I point 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 discussion are other members of senior management. Last night, we released a set of supplemental slides, which addressed the quarter. The slides are available on our website. John McCallion will speak to them in his prepared remarks if you wish to follow along. An appendix to the slides features disclosures, gap reconciliations, and other information which you should similarly review. As usual, after prepared remarks, we will host a Q&A session which will end promptly just prior to the top of the hour. In fairness to everyone, please limit yourself to one question and one follow-up. With that, over to Michel.

Thank you, John, and good morning, everyone. As market conditions continue to fluctuate, what has been a constant is the underlying performance of MetLife's diversified set of market-leading businesses. What has also been constant is the relentless execution of our strategy, which includes delivering in the second quarter on our commitment to accelerate the runoff of our legacy business through a financially attractive deal that also reduces enterprise risk. Our strong risk management capabilities are the bedrock of MetLife. This foundation enables us to successfully navigate shifting currents. We are confident in the prudence of our investment portfolio. We are secure in the effectiveness of our asset liability matching. We are certain of the safety and soundness of our capital and liquidity, and we are convinced of our balance sheet strength. Shifting to second quarter results, last night we reported adjusted earnings of $1.5 billion, or $1.94 per share, which compares to $1.7 billion, or $2.13 per share a year ago. We continue to be pleased with the underlying momentum of our core businesses, which was evident in the quarter. Our sales were strong across the board, with impressive results in Group, Retirement and Income Solutions, Asia, and Latin America. Our underwriting results were well within targeted levels. Our direct expense ratio totaled 12.2%, illustrating our capacity to generate further operating leverage. Our recurring investment income continues to climb, with new money rates pushing past 6%, and our adjusted return on equity of 14.6%, excluding AOCI other than FCTA, met our target range of 13 to 15%. For the quarter, variable investment income of $221 million came in below our outlook expectation. In the aggregate, private equity returns were about 1.5%, inclusive of a positive 40 basis point return on our venture capital portfolio. We generated a minus 1.9% return on real estate equity funds, an asset class that remains under some cyclical pressure. Nonetheless, we believe we've reached the trough relative to VII's contribution to our quarterly adjusted earnings. In total, Net income for the second quarter was $370 million, which reflects certain required accounting adjustments following the announcement of our pending reinsurance transaction with Global Atlantic. We did not incur material credit losses in our real estate portfolio or elsewhere during the second quarter. Shifting to MetLife's business performance in the quarter, I will start with our U.S. group benefits results. Adjusted earnings totaled $372 million, with underwriting results in line with our expectations after reflecting certain unfavorable items. In total, year-to-date sales are up 13%, while year-to-date adjusted PFOs are up 5%, reflecting the impact of PAR firmly within our 4% to 6% outlook range, which we expect to achieve for the full year 2023. Looking ahead, we are confident in our ability to sustain our growth trajectory in this attractive, capital-light business for many reasons. The strength of our relationships with our largest national accounts, where our average customer has been with us for more than 20 years, is well known. The power behind this strength is apparent when you consider that 75% of new sales are made to existing customers through product additions and enrollment growth. Our efforts to accelerate growth in regional business is evident in our market share gains. A key element of this success is driven by our expansive product portfolio, the broadest across the benefits universe. As a proof point, more than half of our new regional business customers purchase multiple products. And again, this can also be seen in our success with voluntary products, which we've been able to grow at a mid- to high-teens rate for many years now. For Retirement and Income Solutions, or RIS, Adjusted earnings totaled $417 million, up 11% from the prior year, driven by higher recurring investment margins and higher asset balances. Sales in the quarter were very strong across a range of products, including pension risk transfer with more than $2 billion booked, structured settlements, longevity reinsurance, and post-retirement benefits. We see good runways for growth in all these areas. In Asia, adjusted earnings of $431 million were below a year ago on lower variable investment income. Our ability to bring new products quickly to market was on full display in the quarter. Sales on a constant currency basis were up 34% in the region, led by Japan, where sales jumped 42% year over year, led by the introduction of a foreign currency life insurance product. Turning to Latin America, which put up another strong quarter, adjusted earnings totaled $219 million. Further, Latin America posted gains in both sales and adjusted PFOs of 13 and 14% respectively on a constant currency basis. Taking a wider lens on the momentum in our business, we managed through the pandemic expecting to emerge from the turmoil stronger than we entered. With the fullness of time, we can now see that is true. Some numbers can help. In full year 2019, our group benefits business generated premiums, fees, and other revenues of roughly $19 billion. We are on track to generate group benefits PFOs of roughly $24 billion in 2023, representing $5 billion of growth at a CAGR of more than 5%. In 2019, our retirement and income solutions business generated average quarterly adjusted earnings of $310 million with variable investment income matching outlook expectations. So far in 2023, RIS has averaged about $410 million of adjusted earnings per quarter without the benefit of normal VII. Similarly, our Latin America business averaged roughly $150 million of adjusted earnings per quarter in 2019 which has grown to an average of more than $200 million per quarter in 2023. To me, the message is clear. The fundamentals associated with our market-leading businesses continue to gather steam. Moving to capital and cash, MetLife remained active with capital management during the second quarter. Following the increase to our common stock dividend, we paid roughly $400 million of common stock dividends to shareholders, and we repurchased $672 million of our common stock. The pace of repurchases in the second quarter slowed due to the impending announcement of our reinsurance deal. In addition to our activity in the second quarter, we repurchased roughly another $300 million of our common stock during the month of July. Year-to-date through July, we have repurchased about $1.8 billion of our common shares, which leaves approximately $3.5 billion remaining on our expanded repurchase authorization. As we have done consistently over time, we carefully assess every use of capital with the goal of achieving the right balance between investing in responsible growth for the future and returning capital to generate sustainable long-term value for our shareholders. At the end of the quarter, we held $4.2 billion of cash at our holding companies, which is above the top end of the $3 to $4 billion liquidity buffer we maintain. In the beginning of July, we issued $1 billion of senior debt on attractive terms, which will be included in our cash balance in the third quarter. Beyond this, the dynamics of our reinsurance transaction will further add to cash as we move through the remainder of this year. During the quarter, we announced that Steve Goulart will retire at the end of August. Today will be his last earnings call with us, so feel free to pepper him with questions. You will not get another chance. I would like to take this moment to thank Steve for his 17 years of distinguished service to MetLife. In that time span, he led our corporate development and mergers and acquisitions team and served as treasurer before taking on his roles as MetLife's chief investment officer and the president of MetLife Investment Management. From a standing start in 2012, Steve established MetLife Investment Management and fostered its growth to its present status as a $167 billion institutional fixed income and real estate manager. I believe the talent at MetLife truly sets us apart and serves as a clear differentiator for our company. Steve's retirement provides the opportunity to broaden the roles and responsibilities of some of our top leaders. In addition to her role as Chief Risk Officer, Marlene DeBell will lead MetLife Insurance Investments, with Chief Investment Officer Chuck Scully reporting directly to Marlene. John McCallion, MetLife's chief financial officer, will take on additional responsibility as the head of MetLife investment management. And Rami Tadros, regional president, U.S. business, will add head of MetLife Holdings to his portfolio. These moves draw upon MetLife's deep bench and illustrate our ability to deploy top talent to the areas of greatest impact for our customers and shareholders. In closing, MetLife's all-weather strategy positions us to perform across a range of economic cycles. By focusing on what we can control, how we execute, how we invest, and how we deploy capital, we will continue to create long-term value for our shareholders and other stakeholders. Now I'll turn it over to John to cover our performance in greater detail. Thank you, Michelle, and good morning.