MetLife, Inc.

of expense capacity to invest in growth initiatives and technology. And we have done so, matching both sides of this equation. This shows up in dozens of internal technology initiatives that are making it easier for customers to purchase our products, as well as for them to receive their benefit and retirement payments. We see our capacity to invest in technology at MetLife's scale as a true differentiator relative to our competitors, which we believe will only get more impactful over time. There are many tools in our toolbox that will help drive this advantage forward, including artificial intelligence or AI. From our standpoint, we believe MetLife's large pool of data puts us in an advantage position with AI having the potential to act as a force multiplier and further widen the divide in our favor. Yet, this is not just future talk. AI has been part of our playbook at MetLife for years and we are seeing many initiatives move from innovation to implementation to create seamless and personalized customer experiences, improve decision-making, and empower employees to focus on purposeful work. Be assured, we understand the power of AI commands great responsibility. With that in mind, we are at the vanguard of this topic and will be issuing our policy on the responsible use of AI in the third quarter. Shifting to our business segment results, Our leading group benefits business reported adjusted earnings of $533 million, representing an all-time quarterly record as group life mortality experience snapped back from the seasonally impacted first quarter. Group life mortality registered a benefit ratio of 79.1% in the second quarter. For the year-to-date period, the group life benefit ratio is now firmly at the lower end of our annual target range of 84 to 89%. Our growth strategy in the attractive group benefit space is twofold. On a national accounts basis, employers with greater than 5,000 employees, we are driving penetration across employer groups via new products and greater employee participation. On a regional accounts basis, employers with less than 5,000 employees, we are seeking to accelerate growth via a more refined distribution focus, a broader suite of products, and by attacking white space, the absence of any employer-offered benefits. Across both avenues of growth, national and regional, increasing enrollment and utilization of voluntary products are primary elements of boosting sales and margins. Moving to RIS, business momentum was evident in our retirement and income solutions segment, which enjoyed several notable wins. These included two jumbo pension risk transfer deals totaling $3.5 billion, a $2.2 billion stable value addition, as well as $3.3 billion of UK longevity reinsurance, underscoring the breadth of our liability origination in this segment. Beyond these wins, we continue to see strong flow for structured settlements where we are the market leader with more than $700 million sold in the second quarter. In Asia, we enjoyed solid growth across a range of metrics, While sales in Japan have been impacted by currency fluctuations, assets under management in Asia continue to grow, rising 5% on a constant currency basis in the quarter. Outside of Japan, sales were up 60% on the strength of a large group sale in Australia. Looking to Latin America, top line and bottom line results were strong, again, despite some currency headwinds. Adjusted premiums, fees, and other revenues were up 12% on a constant currency basis, pointing to sustained business momentum in Mexico, Chile, and Brazil. EMEA adjusted earnings rose 10% year-over-year on strong volume growth and higher recurring interest margins. Adjusted PFOs were up 12% on a constant currency basis due to strong sales across the region. Our business in EMEA is an example of our efficiency mindset at work. We simplified the structure of our business and refocused it on protection products with strong free cash flow, producing positive, tangible results. Moving to capital and cash, MetLife is well capitalized, and our capacity to generate strong, recurring free cash flow allows us to meet our commitments and provides flexibility to proactively seize attractive growth opportunities. And in the absence of compelling M&A opportunities, we will return capital to our shareholders. We were active on the capital management front in the second quarter from both an equity and debt standpoint. We paid common stock dividends of roughly $400 million, reflecting a 4.8% increase to our common stock dividend per share. We also bought back around $900 million of our common shares in the second quarter and repurchased about another $270 million worth in July. This brings total common stock repurchase for the year through July to about $2.3 billion. we still have roughly $2.8 billion remaining on our board authorization. From a debt standpoint, we paid off or redeemed approximately $1.5 billion of debt and issued $500 million of senior debt. We have now largely pre-funded our 2025 maturing debt issues. And finally, at the end of the second quarter, we had $4.4 billion of cash and liquid assets at our holding companies, which is above our target cash buffer of $3 to $4 billion. Turning to our recently published sustainability report, MetLife operates within a virtuous circle comprised of our customers, our people, our communities, and our shareholders with the objective of delivering long-term value to each of these stakeholders. Perhaps nowhere is the success of these efforts more evident than in the pages of our annual sustainability report and can be found on MetLife's website. In it, you'll see highlights of our efforts to build more confident futures for our stakeholders and updates on our sustainability commitments. Among our many successes, I am pleased to mention that the MetLife Foundation has surpassed $1 billion in total giving in its history. As a 156-year-old company, and the intent to log another 156 years more, sustainability is an essential part of MetLife's heritage. As I close, one of the objectives of our Next Horizon strategy was to emerge as a stronger, more predictable company. As we approach the finish line of that five-year strategic cycle, we are on track to accomplish, if not exceed, each of the key targets and objectives we laid out relative to distributable cash, operating leverage, and return on equity. As I have said before, we do not stand still here at MetLife. We constantly look for opportunities to raise the bar and challenge ourselves further, pursuing these new challenges with passion and enthusiasm. We are hard at work developing and pressure testing our next five-year strategy, which we are calling New Frontier. This will build on the core pillars of Next Horizon while looking to accelerate growth, boost returns, and foster consistency. The first stop on this journey will begin with our annual board strategy review in September. Subsequently, I look forward to sharing with you our plans for the future at our investor day scheduled for December 12th of this year. Now I'll turn it over to John to cover our quarterly performance in more detail. Thank you, Michel, and good morning.

I'll start with the two Q24 supplemental slides, which provide highlights of our financial performance and an update on our liquidity and capital position. Starting on page three, we provide a comparison of net income to adjusted earnings in the second quarter. We had net derivative losses, primarily due to the strengthening of the U.S. dollar versus the yen, as well as higher interest rates. That said, derivative losses were partially offset by market risk benefit or MRB remeasurement gains due to the higher interest rates and stronger equity markets. Net investment losses were mainly the result of normal trading activity for fixed maturity securities in a higher rate environment. Overall, the investment portfolio remains well positioned, credit losses continue to be modest, and our hedging program performed as expected. On page 4, you can see the second quarter year-over-year comparison of adjusted earnings by segment, which should not have any notable items in either period. Adjusted earnings were $1.6 billion, up 9% and 11% on a constant currency basis. Favorable underwriting, volume growth, and higher variable investment income drove the year over year increase. This was partially offset by lower recurring interest margins. Adjusted earnings per share were $2.28, up 18% and up 20% on a constant currency basis. Moving to the businesses, Group benefits adjusted earnings were $533 million, up 43% year-over-year, primarily due to favorable underwriting margins. The group life mortality ratio was a record low of 79.1%, well below our annual target range of 84% to 89%, driven by favorable experience across all coverages. The strong group life results mirror the notably low number of U.S. deaths between the ages of 25 and 64 in April and May, according to CDC data. Regarding non-medical health, the interest-adjusted benefit ratio was 70.8% in the quarter, toward the bottom end of our annual target range of 69 to 74%, and below the prior year quarter of 73.7%. Favorable disability results benefited from a reserve adjustment of approximately $30 million after tax. Turning to the top line, group benefits adjusted PFOs were up 3% year over year. Taking participating contracts into account, which dampened growth by roughly 200 basis points, the underlying PFOs were up approximately 5% year over year and at the midpoint of our 2024 target growth range of 4% to 6%. Group benefits 2Q24 year-to-date sales were up 11%, driven by strong growth across most products, including our suite of voluntary products. RAS adjusted earnings were $410 million, down 2% versus the prior year. Lower recurring interest margins were partially offset by higher variable investment income and strong volume growth. RAS investment spreads were 121 basis points, down six basis points sequentially. mainly due to the expiration of interest rate caps in the second quarter of 24. We anticipate that spreads will remain between our annual target range of 115 and 140 basis points in the third quarter. Although we foresee an increase in variable investment income, it will likely be balanced out by reduced earnings from the expiration of the interest rate caps. RAS adjusted PFOs, excluding pension risk transfers, were up 4% year over year. primarily driven by strong sales of institutional income annuities, as well as growth in UK longevity reinsurance. With regards to PRT, we had approximately $3.5 billion in deals in the second quarter and continue to see an active market. Moving to Asia, adjusted earnings were $449 million, up 4% and 8% on a constant currency basis, primarily due to favorable underwriting margins and higher variable investment income. For Asia's key growth metrics, general account assets under management on an amortized cost basis were up 5% year over year on a constant currency basis. Sales were up 4% on a constant currency basis compared to a strong prior year quarter. While Japan's sales were down 19% year over year on a constant currency basis, primarily due to the impact of yen volatility on foreign currency products, this was more than offset by strong sales growth of 60% in the rest of the region. including a large group case in Australia. Latin America adjusted earnings for $226 million, up 3% on a reported basis and 8% on a constant currency basis, primarily driven by solid volume growth across the region and favorable underwriting. This was partially offset by lower Chilean and Cahay returns of a negative 2.4% in Q2 of 24 compared to a positive 1.4% in Q2 of the prior year. Latin America's top line continues to perform well as adjusted PFOs are up 9% or 12% on a constant currency basis, driven by growth across the region. AMIA adjusted earnings were $77 million, up 10% and 20% on a constant currency basis, driven by volume growth and higher recurring interest margins. This was partially offset by less favorable expense margins year over year. EMEA adjusted PFOs were up 7% and 12% on a constant currency basis, and sales were up 31% on a constant currency basis, reflecting strong growth in Turkey, the Gulf, and the UK. MetLife Holdings adjusted earnings were $153 million, down 27% versus the prior year quarter. The primary driver was the foregone earnings due to the reinsurance transaction that closed in November. Corporate and other adjusted loss was $220 million versus an adjusted loss of $228 million in the prior year. The company's effective tax rate on adjusted earnings in the quarter was approximately 24% and within our 2024 guidance range of 24 to 26%. On page five, this chart reflects our pre-tax variable investment income for the prior five quarters, including $298 million in Q2 of 24. Private equity portfolio, which makes up the vast majority of the VII asset balance, had a positive 2.3% return in the quarter, while our real estate equity funds had a negative 1.4% return in the quarter. As a reminder, both private equity and real estate equity funds are reported on a one quarter lag. Looking ahead, we expect VII returns to continue to improve over the course of the second half of the year. On page six, we provide VII post-tax by segment for the last four quarters and the second quarter of 24. As you can see in the chart, Asia, RAS, and MetLife Holdings continue to hold the largest proportion of VII assets given their long-dated liability profile. Now turning to page seven, the chart on the left of the page illustrates the split of our net investment income between recurring and VII for the last three years including second quarters of 2023 and 24. Adjusted net investment income in Q2 of 24 was up $120 million year-over-year. Recurring investment income has benefited from higher interest rates, partially offset by the roll-off of interest rate caps. In addition, we have seen VII improvement driven by higher private equity returns. Turning your attention to the right side of the page, this shows our new money yield versus roll-off yield since second quarter of 21. Over the last nine quarters, new money yields have outpaced roll-off yields, consistent with higher interest rates. In the second quarter of 24, our global new money rate achieved the yield of 6.27%, 63 basis points higher than the roll-off rate. We anticipate that the new money yields will remain above roll-off yields given the prevailing interest rate environment. However, the spread can fluctuate depending on the mix of sales across our businesses. Now moving to expenses discussed on page 8, this chart shows a comparison of our direct expense ratio for full year 2023 of 12.2% and the first two quarters of 24, both at 11.9%. As we have highlighted previously, we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results. Our Q2 direct expense ratio benefited from solid top line growth and ongoing expense discipline. Looking ahead, we would expect our direct expense ratio to be higher in the second half of the year, consistent with the seasonal nature of our business. That said, our performance year to date positions us well to achieve a full year 2024 direct expense ratio of 12.3% or below, demonstrating our consistent execution and a sustained efficiency mindset. I will now discuss our cash and capital positions on page nine. Cash and liquid assets at the holding companies were $4.4 billion at June 30th, which is above our target cash buffer of three to $4 billion. but down from $5.2 billion at March 31st. The sequential decline in holding companies' cash is primarily the result of approximately $1.5 billion used in April for a debt maturity and a debt redemption, partially offset by a $500 million senior debt issuance in June. Beyond this, cash of the holding companies reflects the net effects of subsidiary dividends, payment of our common stock dividend, and share repurchases of roughly $900 million in the second quarter. as well as holding company expenses and other cash flows. In addition, we have repurchased shares totaling approximately $270 million in July. For our U.S. companies, preliminary second quarter year-to-date 2024 statutory operating earnings were approximately $1.9 billion, essentially flat year-over-year, while net income was approximately $1.3 billion. We estimate that our total U.S. statutory adjusted capital was approximately $18 billion as of June 30, down 2% from March 31, 2024, primarily due to dividends paid and derivative losses partially offset by operating earnings. Finally, we expect the Japan solvency margin ratio to be approximately 670% as of June 30, which will be based on statutory statements that will be filed in the next few weeks. Before I wrap up, I would just like to highlight that we have an updated commercial mortgage loan slide as of June 30th in the appendix. Overall, the CML portfolio continues to perform as expected with attractive loan to value and debt service coverage ratios, as well as the expectation of modest losses. In summary, the underlying strength of our business fundamentals was evident with strong top line growth, disciplined underwriting, and prudent expense management. Our group benefits segment achieved record earnings. Higher interest rates continue to support flows and spreads, and we continue to see improvement in variable investment income. MetLife continues to move forward from a position of strength with a strong balance sheet and a diversified set of market-leading businesses generating solid recurring free cash flow. And we are committed to deploying this free cash flow to achieve responsible growth and build long-term, sustainable value for our customers and our shareholders. And with that, I'll turn the call back to the operator for your questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll go to our first question from Tom Gallagher at Evercore.