UFS. investor day

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Anne Carson
6 years ago
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1 UFS investor day

2 UFS Institutional Business investor day

3 Institutional Business Todd Katz Senior Vice President Life, Dental & Disability Products investor day

4 UFS Institutional Business investor day

5 Poised for Growth Group Insurance will. Grow faster than the market Leverage our National Account franchise Increase market share with small and mid-size employers Leverage trend toward employee-paid benefits Insured Dental growth Group & Individual product combinations drive competitive advantage Maintain and improve margins Disciplined risk selection Strong Disability results Expense management/scale 5

6 National Accounts - Continued Strong Growth Adding an average of 10 new customers annually Growing through existing customers purchasing new products Uniquely positioned to (> 25,000 capitalize Employees) from corporate # of Customers consolidations 10% Sales Revenue 214 (52%) 201 (48%) 90% MetLife Non-MetLife New Customers Existing Customers Includes core products: Term Life, GUL, AD&D, Dental and Disability 9/30/06 6

7 National Accounts - Continued Strong Growth Including all products, customer share increases to 64% (> 25,000 Employees) # of Customers # of Customers 267 (64%) 214 (52%) 201 (48%) 148 (36%) MetLife Non-MetLife MetLife Non-MetLife Includes core products: Term Life, GUL, AD&D, Dental and Disability 9/30/06 Includes all products 9/30/06 7

8 Mid/Large Market Double Digit Growth 11% market share Relationships with 3,700 of 35,000 employers in this market Bottom line growing faster than the top line ($Millions) 3,000 2,500 2,000 1,500 1, Premiums & Fees 1 CAGR 10.8% 2,661 2,948 3,084 2, E Mid-Large Market (500-24,999 Employees) 1 Includes other revenues. Includes core products: Term Life, GUL, AD&D, Dental and Disability 8

9 Small Market - Tremendous Opportunity $1.1 billion of operating revenues with solid margins 7% market share built primarily on Dental Expansion of Life and Disability sales Premiums & Fees 1 1,200 CAGR 15.7% ($ Millions) 1, , E Small Market (2-499 Employees) 1 Includes other revenues. Includes core products: Term Life, GUL, AD&D, Dental and Disability 9/30/06 9

10 Insured Dental Adds Higher Revenues and Profits Expanding sales in small and retiree market and shift toward voluntary benefits leads to increased insured revenue 2000 Employees/Dependents 2006E Annual Premium Per Employee Insured 36% Selffunded 64% Insured 43% Selffunded 57% Insured ASO Total 16.3 million Total 21.0 million 10

11 Disability Producing Results / Investment for the Future Investing in talent, technology, fundamentals and our focus on the absence business has driven premiums higher and morbidity lower 1,650 98% 1,450 95% 96% ($ Millions) 1,250 92% 1,311 1,392 94% 92% 1,050 1,040 1,153 90% 89% 90% 1 Includes other revenues Group Disability Premiums & Fees 2005 Morbidity Ratio 2006E 88% 11

12 Disability - Leveraging Group Customers & Distribution Our group customer relationships allow us to segment our markets further 1,650 98% ($ Millions) 1,450 1, , ,392 96% 94% 1, ,040 1,153 92% 90% E 88% 1 Includes other revenues. 1 Group Disability Premiums and Fees Individual Disability Premiums 12

13 Group Life - Leveraging What s Unique Broad and diverse product set - not just Term solution-based approach GVUL - for higher earners Over 20% market share Significant asset base Growing faster than the marke Record keeping drives persistency and enrollment Strong ROE Will preparation is a competitive advantage 13

14 Expense Discipline/Scale Creates Margin Expansion 15.0 Group Life and Non-Medical Health ($ Billions) % 16.0% 16.6% 15.7% 14.9% E 2007P Premiums, Fees & Other Revenues Expense Ratio 14

15 Group Insurance - Poised for Growth in 2007 $12+ billion business - we still stand alone 6%+ top line growth and growing faster than the market Unprecedented customer relationships Tremendous growth opportunities Innovative products and capabilities 8% bottom line growth with expanding margins Maintain underwriting margins discipline Expand expense margins scale Offset spread compression 20% ROE 15

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17 Institutional Business Sherif Zakhary Vice President Retirement & Savings investor day

18 UFS Institutional Business investor day

19 MetLife s Pension Solutions Defined benefit pension closeout purchase of annuities to manage risk structured and tailored to client need MetLife Pension Solutions advise clients regarding defined benefit risks management current book of business nearly $20 billion market forces drive client demand 19

20 Defined Benefit Pension Closeouts Client need growing financial statement volatility demise of defined benefit plans operational simplicity Flexible structures risk taking and risk sharing MetLife s strengths experience & expertise relationships financial strength & administrative platforms 20

21 Defined Benefit Pension Market U.S. Defined Benefit Plans $2 trillion market 30,000 plans 44 million participants U.K. Defined Benefit Plans $1.9 trillion market 10,000 plans 14 million participants Fortune 500 $1,332 B $668 B FTSE 350 $770 B $1,130 B 21

22 Regulatory Catalysts Pension Protection Act of 2006 (U.S.) increased accuracy of liability calculation New Math = stringent funding requirements increased PBGC premiums Pension Act of 2004 (U.K.) established Pension Regulator created employer accountability instituted pension insurance levies 22

23 Accounting Catalysts FASB 158 (U.S.) IASB 19/FRS 17 (U.K.) mandates funding status on balance sheet reduced balance sheet shareholder equity on balance sheet recognition of surplus/deficit future accounting uncertainty Balance sheet impact greater volatility reporting transparency 23

24 Economic Catalysts Uneven equity returns volatile asset levels questions appropriateness of asset class Sustained low interest rates reduced returns reinvestment risk Global economies growth of multinational corporations more complex variables 24

25 Under Funded Pensions Create Handcuffs Pressure on corporate operating cash flows higher regulatory premiums and levies increased funding requirements distraction from managing business Management restrictions derail mergers, acquisitions, divestitures impact the ability to pay shareholder dividends impede bankruptcy filing 25

26 10 Single Employer Plans FY (5) (10) (15) (20) (25) ($ Billions) PBGC Net Position Source: PBGC Annual Reports

27 State of Defined Benefit Plans Major paradigm shift not just about assets; liabilities receive equal weight asset liability management / liability-driven investments Reaction by pension plan sponsors closing plans freezing benefits shifting from DB s to DC s seeking advice and solutions transferring liabilities 27

28 High Barriers to Entry Business hard to build, hard to execute Requires expertise underwriting regulatory environment asset/liability management Financial capacity capital intensive Administrative platform Confidence in solution provider 28

29 MetLife s Advantages Experience & expertise closeout book of business of nearly $20 billion service over 1 million annuitants built complex administration platforms Access to capital Relationships large U.S. franchise - National Accounts, Mid/Large strong multinational U.K. opportunities 29

30 MetLife s Closeout Expectations for 2007 Financial impact top line impact - lumpy, hard to predict bottom line impact - step function increases asset growth - step function increases capital usage depends on structure Placeholder of $1 billion revenues in Plan 30

31 2007 Retirement & Savings Growth Global GICs funding agreements structured settlements pension closeouts Operating Earnings impacted by a decline in variable income over 2006 actual Total R&S assets projected to grow to $ billion 31

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Retirement & Income Solutions 2019 Pension Risk Transfer Poll

Retirement & Income Solutions 2019 Pension Risk Transfer Poll A survey of U.S. defined benefit plan sponsors 1 About the poll For U.S. defined benefit (DB) pension plans, 2018 was another very robust year