MetLife, Inc. (NYSE:MET.PRA) Q1 2016 Earnings Conference Call Transcript

May 05, 2016 • 08:00 am ET

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MetLife, Inc. (NYSE:MET.PRA) Q1 2016 Earnings Conference Call Transcript

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Operator
operator

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife First Quarter 2016 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) As a reminder, this conference is being recorded.

(Forward-Looking Cautionary Statements)

With that, I would like to turn the call over to Ed Spehar, Head of Investor Relations.

Executive
Ed Spehar

Thank you, Greg. Good morning, everyone, and welcome to MetLife's first quarter 2016 earnings call. We will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so-called non-GAAP measures. Reconciliations of these non-GAAP measures and related definitions to the most directly comparable GAAP measures may be found on the Investor Relations portion of MetLife.com, in our earnings release, and our quarterly financial supplements.

A reconciliation of forward-looking financial information to the most directly comparable GAAP measure is not accessible, because MetLife believes it's not possible to provide a reliable forecast of net investment and net derivative gains and losses, which can fluctuate from period to period and may have a significant impact on GAAP net income.

Now joining me this morning on the call are Steve Kandarian, Chairman, President and CEO, and John Hele, CFO. After their prepared remarks, we will take your questions. Also here with us today to participate in the discussions are other members of senior management.

After prepared remarks, we will have a Q&A session. In fairness to all participants, please limit yourself to one question and one follow-up. With that, I'd like to turn the call over to Steve.

Executive
Steve Kandarian

Thank you, Ed, and good morning, everyone. Last night, we reported first quarter operating earnings per share of $1.20, which compares to $1.44 per share in the first quarter of 2015. The negative impact from market factors more than offset a benefit from volume growth. The combination of weak equity markets for most of the quarter, continued strength in the US dollar, and low interest rates reduced operating earnings by $0.16 per share versus the prior year period.

In addition, variable investment income, or VII, declined by $0.12 per share. Variable investment income can be volatile, largely because it is driven by the performance of alternative asset classes. We believe some earnings variability is an acceptable risk, as these asset classes have provided strong returns to MetLife shareholders over time.

To illustrate, VII was better than plan in seven of the past 10 years, with a cumulative positive variance of $505 million after tax. This favorable performance to plan is noteworthy, given that the time period includes the financial crisis.

Despite the sluggish global economy, we estimate overall volume growth was 3% year-over-year, driven by 11% growth in our non-US businesses. In addition, the value generated from new business written has improved, as a result of our accelerating value strategic initiative.

For example, in Japan, our second largest market, foreign currency denominated product sales were up more than 50% in the first quarter. We are focused on growth in this area, because non-yen products have