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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 2, 2017
METLIFE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-15787
13-4075851
(Commission File Number)
(IRS Employer Identification No.)
200 Park Avenue, New York, New York
10166-0188
(Address of Principal Executive Offices)
(Zip Code)
212-578-9500
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Table of Contents
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-99.1
EX-99.2
Table of Contents
Item 2.02 Results of Operations and Financial Condition.
On February 2, 2017, MetLife, Inc. (the “Company”) issued a video fourth quarter and full year 2016 financial update from chief financial officer John Hele, a
transcript and description of which are attached hereto as Exhibit 99.1 (the “Video Description”) and are incorporated herein by reference. The Non-GAAP Financial
information attached hereto as Exhibit 99.2 and incorporated herein by reference includes non-GAAP financial information, definitions and reconciliations of measures
referenced in the Video Description that are not calculated based on accounting principles generally accepted in the United States of America, also known as GAAP, to
their most directly comparable GAAP measures (the “Non-GAAP Financial Information”). The Video Description and Non-GAAP Financial Information are furnished
and not filed pursuant to instruction B.2 of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a)
Not applicable.
(b)
Not applicable.
(c)
Not applicable.
(d)
Exhibits
99.1
Description of video fourth quarter and full year 2016 financial update from chief financial officer John Hele
99.2
Non-GAAP Financial Information
3
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
METLIFE, INC.
By:
/s/ Timothy J. Ring
Name:
Title:
Timothy J. Ring
Senior Vice President and Secretary
Date: February 2, 2017
4
Table of Contents
EXHIBIT INDEX
EXHIBIT
NUMBER
EXHIBIT
99.1
Description of video fourth quarter and full year 2016 financial update from chief financial officer John Hele
99.2
Non-GAAP Financial Information
Exhibit 99.1
Description of Video Fourth Quarter and Full Year 2016 Financial Update
From Chief Financial Officer John Hele
This exhibit (video transcript and slides) contains forward-looking statements. Forward-looking statements give expectations or
forecasts of future events and use words such as “anticipate,” “estimate,” “expect,” “project” and other terms of similar meaning, or
that are tied to future periods. Any or all forward-looking statements may turn out to be wrong, and actual results could differ
materially from those expressed or implied in the forward-looking statements. Predictions of future performance are inherently
difficult and are subject to numerous risks and uncertainties, including those identified in the “Risk Factors” section of MetLife, Inc.’s
filings with the U.S. Securities and Exchange Commission. The company is not required to publicly correct or update any
forward-looking statement if it later becomes aware that such statement is not likely to be achieved.
This exhibit (video transcript and slides) also contains measures that are not calculated based on accounting principles generally
accepted in the United States of America, also known as GAAP. Information regarding those non-GAAP financial measures and the
reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the company’s
Fourth Quarter 2016 Financial Supplement, and/or the company’s earnings news release dated February 1, 2017 for the three months
and full year ended December 31, 2016, as well as in the Non-GAAP Financial Information included as Exhibit 99.2 to the company’s
Current Report on Form 8-K, dated February 2, 2017. This exhibit (video transcript and slides) and such Exhibit 99.2 are each exhibits
to the company’s Current Report on Form 8-K, dated February 2, 2017.
Video Transcript and Description:
[Shows slide 1]
[MetLife Executive Vice President & CFO John Hele speaks from a studio at MetLife’s corporate headquarters in New York City]
Hi, I’m John Hele and I am joining you from MetLife’s global headquarters in New York City to discuss our fourth quarter and full
year 2016 results.
2016 was a significant year for MetLife. We announced and made substantial progress on the planned separation of Brighthouse
Financial, we launched a new enterprise strategy and brand, and we shed our systemically important financial institution—or
SIFI—designation.
After dropping to record lows in mid-2016, interest rates rose sharply in the fourth quarter, characterized by an 85 basis point increase
in the 10-year U.S. treasury yield. For many years, MetLife has purchased derivatives to protect the company against the impact of
low interest rates. These derivatives are assets carried at market value, but many of the liabilities they protect are at book value. This
creates what is known as asymmetrical and non-economic accounting. [Shows slide 2]
Due to the strong upward movement in rates, we experienced large derivative losses that impacted our fourth quarter and full year
2016 net income results.
Economically, rising interest rates are very good for MetLife’s businesses and are a positive development.
In the fourth quarter of 2016, MetLife reported a net loss of 2.1 billion dollars, compared to net income of 785 million dollars in the
prior-year period. As I previously noted, this fourth quarter net loss included post-tax net derivative losses of 3.2 billion dollars, most
of which was asymmetrical and non-economic.
In the fourth quarter of 2016, MetLife reported operating earnings of 1.4 billion dollars, up 3 percent from the fourth quarter of 2015.
On a per share basis, operating earnings were 1 dollar and 28 cents, up 4 percent. [Shows slide 3]
Overall, MetLife fourth quarter 2016 operating earnings were aided by expense control, higher variable investment income and a
lower tax rate, offset in part by weaker underwriting results.
On a segment basis, the U.S., Asia, and EMEA delivered operating earnings above last year’s fourth quarter. Volume growth was a
common theme helping to drive up year-over-year operating earnings for these segments. [Shows slide 4]
A number of different factors impacted year-over-year operating earnings in Latin America, MetLife Holdings and Brighthouse
Financial, resulting in lower operating earnings.
Details regarding the key factors impacting our business segments’ performance are outlined in our fourth quarter and full year 2016
earnings news release dated February first.
Book value per common share was down 3 percent to 49 dollars and 83 cents. [Shows slide 5]
For the full year 2016, MetLife delivered net income of 697 million dollars. As I mentioned earlier, net derivative losses impacted full
year 2016 net income.
Full year operating earnings were 5.1 billion dollars, down 7 percent over 2015. On a per share basis, 2016 operating earnings were 4
dollars and 59 cents, down 6 percent from 2015.
As we move forward in 2017, we believe that higher interest rates and a more favorable regulatory environment, combined with our
new enterprise strategy, capital management and expense discipline, will position us for value creation.
Thank you for watching.
[Shows slide 6]
Slide 1
Fourth Quarter and Full Year 2016
Financial Update
Slide 2
Derivative Assets Market Value Certain Insurance Liabilities Boo k Value
Slide 3
FOURTH QUA RTE R 201 6 OPERATING EA RNINGS*
%1.4 billion +3%** *
$1.28**
+4%***
*Available to common shareholders
**Per share (reprted)
***Percent change over fourth quarter 2015 (reported)
Slide 4
Fourth Quarter 201 6 Operating Earning s* ($ in millio ns) $516 $354 $1 22 $72 $199 $ 330
+19%** +22%** -22%** +33%* * -25%** -15%* *
U.S. Asia Latin America EMEA MetLife Hold ings Brigh thouse Financial
* Available to common shareholders; graph excludes the Corporate & Other operating loss of $ 178 **% change (reported) from fourth quarter 2015
Slide 5
BOOK VALUE** DE CREASED 3%
FRO M DEC. 31, 20 15
Q4 2016: $59.56*
Q4 2016: $49.83* *
Slide 6
MetLife
Navigating life together
This video contains forward-loo king s tatements. Forward-loo king s tatements give expectations or forecasts of future events and use words such as “anticipate,” “estimate,” “expect,” “project” and other terms of similar meaning, or that are tied to future periods . Any or all forward-looking s tatements may turn out to be wron g, and actual results could d iffer materially from those expressed or implied in the forward-loo kin g statements. Prediction s of future performance are inherently difficult and are subject to numerous risks and uncertainties, including tho se identified in the “ Ris k Factors” section of MetLife, Inc.’s filings w ith the U.S. Securities and E xchange Commission . The company is not required to pu blicly correct or update any forward-looking statement if it later becomes aware that such statement is not likely to be achieved.
The video also conta ins measures that are not calculated based on accountin g princip les generally accepted in the United States of America, also know n as GAAP. Information regarding those no n-GAAP financial measures and the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the company ’s Fourth Quarter 2016 Financial Sup plement and/or the company ’s earnings news release dated Feb. 1, 2017 for the three months and full y ear ended Dec. 31, 2016, which may be obtained on the web page where y ou accessed this video and the Inves tor Relation s section of www.metlife.com.
Exhibit 99.2
Non-GAAP Financial Information
Explanatory Note on Non-GAAP Financial Information
Any references in Exhib it 99. 1 to this Form 8-K (except in this Exp lanatory Note on Non-GAAP Financial Information) to :
(i) net income (loss); (ii) operating earnings; and (iii) operating earning s per share.
should be read as, respectively :
(i) net income (loss) available to MetLife, Inc.’s common shareholders; and
(ii) operating earnings availab le to common shareholders.
(iii) operating earnings available to common shareholders per dilu ted common share.
In Exhibit 99.1 to th is Form 8-K, MetLife presents certain measures of its performance that are not calculated in accordance with accounting principles generally a ccepted in the United
States of America (“GAAP”). MetLife believes that these no n-GAAP financial measures enhance the understanding of MetLife ’s performance by highligh ting the results of operations and the underly ing profitab ility drivers of the b usines s. The follow ing n on-GAAP financial measures should no t be viewed as substitu tes for the most directly comparable financial measures
Non-GAAP financial measures:
(i) operating earnings available to common shareholders; and
(ii) operating earnings availab le to common shareholders per diluted share.
Comparable GAAP financial measures:
(i) net income (loss) available to MetLife, Inc.’s common shareholders; and (ii) net income (loss) available to MetL ife, Inc.’s common shareholders per dilu ted common share.
Reconciliatio ns of these no n-GAAP measures to the most directly comparable GAAP measures are included in this Exhib it 99 .2 to this Form 8-K and in MetLife’s fourth q uarter 2016 quarterly financial supplement, which is available at www.metlife.com.
MetLife’s definitions of the various no n-GAAP and other financial measures discussed in this news release may differ from those used by other companies:
Explanatory Note on Non-GAAP Financial Information (Continued)
Operating earnings and related measures
operating earnings available to common shareholders
operating earnings available to common shareholders per diluted common share
These measures are used by management to evaluate performance and allocate resources. Consistent w ith GAAP gu idance for segme nt reporting, operating earnings is als o MetLife ’s
GAAP measure of segment performance. Operating earnings and other financial measures based on operating earnings are also the measures by which Me tLife senior management’s and many other employ ees’ performance is evaluated for the purposes of determining their compensation un der applicable compensation plans. O perating earnings and o ther financial measures based on operating earnings allow analy sis of our performance relative to our business p lan and facilitate comparisons to ind ustry results.
Operating earnings is defined as operating revenues less o perating expenses, bo th net of income tax. Operating earnings available to common shareholders is def ined as operating earning s less preferred stock div idends.
Operating revenues and operating expenses
These financial measures, along with the related operating premiums, fees and other revenues, focus on our primary businesses principally by excluding the impact of market vo latility , which could d istort trends, and revenues and costs related to no n-core products and dives ted businesses and certain entitie s required to be consolidated under GAAP. Als o, these measures exclude results of discontin ued operations and other bus inesses that have been or will be s old or exited by MetLife and are referred to as divested bus inesses. In addition, for the y ear ended December 31, 2016, operating revenues and operatin g expenses exclude the financial impact of converting MetLife ’s Japan operation s to calendar-y ear end reporting witho ut retrospective application of this change to prior periods and is referred to as lag eliminatio n. Operating revenues also exclu des net inves tment gains (lo sses) (NIGL) and net derivative ga ins (los ses) (NDGL). Operating expenses also exclu des goodw ill impairments.
The following additional adj ustments are made to revenues, in the line items indicated, in calculating operatin g revenues:
Universal life and inves tment-ty pe product policy fees excludes the amortization of u nearned revenue related to NIGL and NDGL and certain variable annuity guaranteed minimum income benefits (GMIB) fees (GMIB fees);
Net investment income: (i) includes earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments b ut do not qualify for hedge accounting treatment (“investment hedge adjustments”), (ii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to con tractholder-directed unit-lin ked inves tments, and (iv) excludes certain amounts related to securitizatio n entities that are variable interest entities (VIEs) conso lidated u nder GAAP; and
Other revenues are adjusted for settlements of foreign currency earnings hedges.
Explanatory Note on Non-GAAP Financial Information (Continued)
The following additional adjustments are made to expenses, in the line items ind icated, in calculating operating expenses:
Policy holder benefits and claims and policy holder dividends excludes: ( i) changes in the p olicy holder dividend obligation related to NIGL and NDGL, (ii) inflation-indexed benefit adjustments associated w ith con tracts backed by inflation-indexed investments and amounts as sociated with periodic creditin g rate adjustments based on the total return of a contractually referenced pool of assets and other pass through adjustments, (iii) benefits and hedging cos ts related to G MIBs (G MIB costs), and (iv) market value adjustments assoc iated with surrenders or terminations of contracts (Mar ket value adjustments);
Interest credited to policy holder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policy holder account balances but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-lin ked investments ;
Amortization of DAC and value of business acquired (VOBA) excludes amounts related to: (i) NIGL and NDGL, ( ii) GMIB fees and GMIB costs and (iii) Marke t value adjustments;
Amortization of negative VOBA excludes amounts related to Marke t value adjustments;
Interest expense on debt excludes certain amounts related to securitization en tities that are VIEs consolidated under GAAP; and
Other operating expenses excludes costs related to: ( i) noncontrolling interests, ( ii) implementation of new insurance regulatory requirements, and (iii) acquisition, integratio n and other costs.
Operating earnings also excludes the recognition of certain contin gent assets and liabilities that could not be recognized at acquis ition or adj usted for during the measurement period under GAAP business combination accounting gu idance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign s tatutory tax rate, which could differ from the Company ’s effective tax rate. Additionally , the provision for income tax (expense) benefit also includes the impact related to the timin g of certain tax credits, as well as certain tax reforms.
The following additional information is relevant to an understanding of MetL ife ’s performance results:
Asy mmetrical and non-economic accounting refer to: (i) the portion of net derivative gains (losses) on embedded derivatives attributable to the inclusio n of MetL ife’s credit s preads in the liability valuations, (ii) hedgin g activity that generates net derivative gains (losses) and creates fluctuations in net inco me because hedge accounting cannot be achieved and the item being hedged d oes not a have an offsetting gain or loss recognized in earnings, (iii) inflation-indexed benefit adjustments ass ociated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass through adjustments, and (iv) impact of changes in foreign currency exchange rates on the re-measurement of foreign denominated unhedged fundin g agreements and financing transactions to the U. S. do llar and th e remeasurement of certain liabilities from non-functional currencies to functional currencies. MetLife believes that excluding the impact of asy mmetrical and non-economic accounting from total GAAP results enhances investor understanding of MetL ife’s performance by disclosing how these accounting practices affect reported GAAP results.
Explanatory Note on Non-GAAP Financial Information (Continued)
Reconciliatio n of Net income (loss) available to common shareholders to operating earning s available to common shareholders
For the Three Months Ended Decem ber 31,
2016 2015
Earnings Per Earnings Per Weighted Average Weighted Average Common Shares Common Shares Diluted (1) Diluted
($ in millions, except per share data)
Net Income (loss) available to MetLife, Inc.‘s common shareholders $(2,133) $ (1.94) $ 785 $ 0.70 Adjustments from net income (loss) available to MetL ife, Inc.‘s common shareholders to operatin g earnings available to common shareholders: Less: Net investment gains (losses) (367) (0.3 3) 62 .06 Les s: Net derivative gains (lo sses) (4,945) (4.46) (35 6) (0.32) Less: O ther adjustments to continuin g operations (2 0) (0.03) (398) (0.36) Less : Provisio n for income tax (expense) benefit 1,786 1.60 109 0. 10 Add: Net income (loss) attrib utable to noncontro llin g interests 2 - 8 0.01 Operating earnings availab le to c ommon shareholders $ 1,415 $ 1. 28 $ 1,3 76 $ 1. 23
Weighted average common shares outstandin g - dilu ted 1,108 .8 1,12 1.4
(1) For the three months ended December 31, 2016, 8.6 million shares related to the assumed exercise or issuance of stoc k -based awards have been excluded from the weighted average common shares outstandin g - diluted, as to include these assumed shares would be anti-d ilutive to net income (loss) available to common shareholders per common share - diluted. These shares were included in the calculation of o perating earnings available to common shareholders per common share - diluted.
Explanatory Note on Non-GAAP Financial Information (Continued)
Reconciliatio n of Net income (loss) available to common shareholders to operating earning s available to common shareholders
For the Year Ended December 31,
2016 2015
Earnings Per Earnings Per Weighted Average Weighted Average Common Shares Common Shares Diluted D iluted
($ in millions, except per share data)
Net Income (loss) available to MetLife, Inc.‘s common shareholders $ 697 $ 0.63 $ 5 ,152 $ 4.57 Adjustments from net income (loss) available to MetL ife, Inc.‘s common shareholders to operatin g earnings available to common shareholders: Less: Net investment gains (losses) 17 1 0.15 5 97 0.53 Less: Net derivative gains (lo sses) (6,760) (6.10) 3 8 0.03 Les s: Goo dwill impairment (260) (0.23) - -Less: Other adjustments to con tinu ing operation s 80 0. 07 (1,091) (0.9 6) Less: Provis ion for income tax (expense) benefit 2,381 2.15 17 8 0.16 Ad d: Net income (loss) attributab le to nonco ntrolling interests 4 - 12 0.01 Add: Preferred stock repurchase premium - - 42 0.04 Operating earnings available to common shareholders $ 5,08 9 $ 4.5 9 $ 5,48 4 $ 4.8 6
Weighted average common shares outstandin g - dilu ted 1,108 .9 1,12 8.3
MetLife
Navigating life together