MetLife, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife fourth quarter 2023 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. John Hall, Global Head of Investor Relations Thank you, operator.

Good morning, everyone. We appreciate you joining us for MetLife's fourth quarter 2023 earnings and near-term outlook 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 address the quarter as well as our near-term outlook. They are available on our website. John McCallion will speak to those supplemental slides in his prepared remarks. An appendix to the slides features outlook sensitivities, disclosures, gap reconciliations, and other information which you should also review. After prepared remarks, we will have a Q&A session, which will end promptly at the top of the hour. As a reminder, please limit yourself to one question and one follow-up. With that, over to Michelle.

Thank you, John, and good morning, everyone. As we begin 2023, I shared our conviction that despite the uncertain times, MetLife would exit the year stronger than we entered it. We accomplished this by countering the challenging environment with the actions we've taken to focus, simplify, and differentiate our business. We maintained an accelerated momentum in MetLife's diversified set of market-leading businesses, driving strong results for the year and the quarter. and we illustrated our financial strength and flexibility with sound transactions and well-timed capital management, ending the year with solid capital ratios and robust cash on hand. Clearly, our all-weather strategy stood up again in 2023. We remain steadfastly focused on what matters most in delivering for our customers and shareholders. In 2023, we exited a pandemic and have yet to enter a widely expected U.S. recession. We managed through a bank liquidity crisis and the resulting credit concerns, and we adapted to an inverted yield curve that has persisted longer than any in history. Against this backdrop, the fundamentals of our businesses are as strong as I have ever seen. Our successful 2023 is a testament to the resilience and durability of our business model, a relentless focus on execution, concentrating on the factors we control, our risk management culture and processes, the discipline we apply to managing our assets and liabilities, and the prudence of our investment portfolio. On that last point, the strength and stability of our commercial real estate portfolio, which we detailed a year ago, has borne out, as we said, a modest increase in LTVs and stable debt service coverage ratios, and we expect that to remain true in 2024. For the year, We delivered an adjusted return on equity excluding notable items of 13.8%, achieving our target for this all-important metric. We were unwavering in our expense discipline, employing efficiency and agility to post a full-year direct expense ratio of 12.2%. We upheld our commitment to responsible growth, directing capital to its highest and best use with high teen IRRs and mid-single digit payback periods on new business. We returned $4.7 billion to shareholders via common stock dividends and share repurchases. And we continue to generate strong recurring free cash flow and remain financially flexible with significant liquidity at our holding companies. The resilience of our strategy and the clarity of our purpose remain powerful drivers of MetLife's success. Our diversified portfolio of market-leading businesses is well-positioned to perform for years to come. Backed by a strong balance sheet and our demonstrated ability to generate cash flow, I am confident in MetLife's ability to create value for shareholders and other stakeholders and to deliver financial security to our customers as we have for over a century and a half. Now turning to our fourth quarter 2023 results, last night we reported quarterly adjusted earnings of $1.4 billion or $1.83 per share, excluding notable items we reported $1.93 per share, up 21% compared to $1.59 per share a year ago. Again this quarter, our businesses showed strong underlying momentum with excellent underwriting results. Also, our recurring investment income grew on higher balances and higher new money rates. Shifting to the full year 2023, the differentiation and scale across our market-leading businesses were among the factors that helped fuel our underlying business fundamentals. We generated adjusted earnings excluding notable items of $5.6 billion. On the strength of new money yields, our adjusted net investment income grew 9% year over year to almost $20 billion, despite variable investment income falling below expectations. Adjusted PFOs excluding pension risk transfers climbed 6%, with healthy growth across most business segments. Group benefits posted adjusted earnings excluding notable items of $1.6 billion, up 22% from the prior year. The scale and breadth of this franchise business continues to drive organic growth and represents a clear point of competitive advantage. Sales gained 9%, while adjusted PFOs, excluding the impact of participating policies, rose roughly 5%. We believe group PFO growth is sustainable at more than $1 billion per year. Higher interest rates serve as a tailwind to our leading retirement and income solutions business, with new money yields exceeding roll-off rates for the past seven consecutive quarters. Volume growth in RIS away from PRT was very strong, with more than $5 billion of longevity reinsurance sales and more than $3 billion of structured settlements. Pension risk transfers totaled $5.3 billion for the year, the third largest annual total in MetLife's history. This followed an all-time record year in 2022, and we have a strong pipeline of new opportunities in 2024 and beyond. Sales growth in Asia remains strong, propelled by market demand in Japan for FX-denominated life insurance products and a new cash value life product in Korea. Finally, Latin America continues to be a growing and important region for MetLife. Adjusted earnings on a reported basis in 2023 grew 15% over the prior year, and we've expanded our distribution capabilities as well as our product portfolio. One of the ways we hold ourselves accountable is against the next horizon commitments we made in 2019. On that basis, we are ahead of schedule to meet all criteria. In fact, we have even moved the goalposts on ourselves and raised the bar on certain of our next horizon commitments. For instance, we initially committed to an adjusted return on equity of 12 to 14%. And last year, we chose to push that target even higher to 13 to 15%. And as you've seen within our outlook disclosure, we further tightened our expense ratio target from 12.6% to 12.3%. While we have the strongest conviction in our next horizon strategy, we do not view it as a ceiling on our aspirations. We constantly look to set higher standards and position MetLife for even greater success. When I spoke of emerging from 2023 stronger, our capital and cash is another prime example. During a year marked by periods of financial and geopolitical turmoil, our balance sheet strength enabled us to repurchase $3.1 billion of our common stock and increase our common stock dividend per share, paying out roughly $1.6 billion in common stock dividends. Even still, we entered 2024 with robust levels of cash and higher capital ratios in our key markets. Our capital management has carried into 2024, and we have repurchased roughly half a billion dollars of Metcom and shares in the month of January. We continue to have capacity for further action with approximately $1.6 billion remaining on our repurchase authorization. There is no doubt MetLife's financial strength and financial flexibility was on full view during 2023, particularly with the execution of our $19 billion risk transfer transaction that closed in November. This will free up more than $3 billion of capital over time and illustrate the disciplined approach we apply to evaluating our portfolio of businesses. We ended the year with $5.2 billion of cash and liquid assets on our balance sheet, which is comfortably above our target cash buffer of $3 to $4 billion. We have consistently said that when responsible growth is attractive and available, we will deploy capital organically or inorganically. If not, we will return capital to our shareholders. I am pleased our next horizon strategy continues to prove its metal amid uncertainty. Looking ahead, whether driven by Fed policy and changes to the yield curve, geopolitical events, or the unfolding U.S. election cycle, it is prudent to anticipate more uncertainty in 2024. The supplemental slides we published last night include some near-term targets and elements of guidance. It should be plain to see that we anticipate the underlying momentum building across our businesses to continue. This is evident in our flagship group benefits business where, off a large embedded base, we've established a strong growth outlook for premiums, fees, and other revenues. And of further note, we've also increased our expectations for both group life and non-medical health margins. Importantly, the outlook that we've provided reflects the world as we see it, not as we wish it to be. In that context, we assume a more modest private equity return of high single digits in the near term, down from the 12% assumption we have used in prior years. Private equity remains an important contributor to our well-tested asset liability matching program. It is an asset class well-suited to defease long-term liabilities, and our historical track record has been very strong. In closing, When we launched our next horizon strategy in 2019, we could not have predicted the many challenges we would face in the markets where we operate. But our unyielding execution against our strategy is serving us and our many stakeholders well, allowing us to positively impact our customers and live our purpose. Our 2023 results reflect our capacity to move ahead with urgency and deliver on our strategy. We saw very good underlying business performance supported by a strong capital base. We will continue to concentrate on controlling what we can control, balance sheet security, responsible growth, expense efficiency, and capital deployment, among others. In the final year of the Next Horizon Strategy timeframe, we believe our past progress positions us to reach for new heights not possible four years ago. I am energized for the future of MetLife, driven by the continued momentum I see building in our businesses for 2024 and beyond. Now I'll turn it over to John to cover our performance and outlook in detail.