We're live again. We're broadcasting here at the Bank of America annual, U.S. Insurance Conference from One Bryant Park, and we're very excited because we have Michel Khalaf, John McCallion, and in the back there's John Hall, broadcasting from the historic MetLife building, right above Grand Central Station. From two iconic New York buildings, we're really happy to be here. I think everybody already knows, but Michel, I think you're about 18 months into your job as CEO, and John, you're about 2 years in. I think that the timing's pretty correct on that. Obviously, when you came in, you didn't know this COVID was going to happen, and so it's been an unusual time. I really appreciate you making time for us today. I appreciate all the work your employees are doing to try and cope during these unusual times. Thank you for coming to the conference. We're really happy to have you. Just by way of introduction, again, Michel joined about 18 months ago. He was the CEO of MetLife's Middle East, Africa, and South Asia region that they acquired through the acquisition of AIG's Alico business. In 2011, Michel joined the MetLife executive group, where he was named president of the EMEA region. In 2017, his responsibilities were added for U.S. businesses, Group Benefits, Retirement and Income Solutions, and property and casualty. John's been, as I said, the CFO for about 2 years now, 2 and a half years. Prior to that, he had many senior leadership roles at MetLife, since joining the company in 2006, including the CFO of MetLife's investment department, head of investor relations, the CFO of EMEA, and he was the treasurer. Thank you for coming again, and I guess we can start with strategy. Talk about the Next Horizon strategy you brought up at the 2019 Investor Day, and can you remind everyone what the guiding principles around Next Horizon are going to be? Sure, thanks for having us, Josh. John and I also share the distinction of both being Syracuse University graduates, so I thought I should mention that as well. First of all, let me say we're quite pleased with the progress we made in executing on our strategy in 2020. I think that was reflected in not only our fourth quarter performance, but full year as well. Having said that, we consider 2020 another installment in our journey of consistently delivering on our commitments. The management team here is very much focused on relentless execution. When we designed our Next Horizon strategy, clearly we did not have a pandemic in mind. Having said that, we did not also project a rosy picture. We wanted a strategy that would be all weather. Based on, again, our performance in 2020, I think that's proved to be the case. There are three pillars to our strategy, focus, simplify, and differentiate. Focus is all about capital, and that's our most precious resource, so making sure that we're deploying it consistently to its highest and best use. If we look at 2020, for example, we deployed in total about $7.6 billion. $3 billion was to support organic growth, and our new business generating mid-teen IRRs with about a seven-year payback. $1.88 went towards M&A, accretive M&A. We deployed $1.2 billion in share repurchases and around $1.6 billion in common dividends. Again, very consistent with that focus pillar of our strategy. Simplify is about driving operational efficiency. We made a decision that we're going to move away from serial expense programs here and continue to build an efficiency muscle. We feel that direct expense ratio is a good proxy, is a good measure of us being able to achieve that. We had committed to a 12.3% direct expense ratio for 2020. We achieved 12%, 30 basis points better. Again, that speaks to this muscle that we're building here around efficiency. Important to mention that we've achieved this expense ratio while continuing to make important investments in our business, especially around meeting customer expectation, digitizing aspects of our business, which have served us well during the pandemic. Last but not least, differentiate. That's about the competitive advantages that are, in some instances, unique or distinguish MetLife, and how do we continue to drive those? Group Benefits is a good example of, we have a leading franchise where we've continued to introduce new capabilities, new products to further our advantage, including an important M&A deal that we concluded in 2020. Another area of differentiation that I think is worth mentioning is in our asset management, in the asset management space where MIM manages over $500 billion in our general account. Great expertise developed over the years there. We're leveraging that to grow our third-party asset management business, and we saw good traction in that regard in 2020. All in all, I think that in a year where we dealt with significant unforeseen challenges, we continued to make really good progress in terms of advancing and making progress on our strategy. On the earnings outlook call, you made the comment that M&A is a strategic asset. Of course, there was a number of transactions in the last couple of years. Can you talk more about your philosophy behind M&A and what that statement means? Sure. Let me begin by saying that we have a well-diversified mix of market-leading businesses. Frankly, we don't see any major gaps when it comes to products and markets that we are in. Having said that, we do consider M&A to be a strategic capability. It's something that we use to leverage our strength. Our most recent activity, if you look at the last two, three years, was in asset management and then more recently, in Group Benefits. Again, I think that speaks to sort of the strategic fit in terms of any M&A deal needs to be sort of consistent with our Next Horizon strategy and present an important strategic fit for us as well. Our philosophy, I would say, has been consistent, has not changed. We evaluate a deal on a consistent basis globally. We look at several sort of elements when it comes to any potential M&A deal. I talked about strategic fit, very important. We look at whether a transaction can accelerate revenue growth. Any transaction would have to be accretive over time. It would need to clear a minimum risk-adjusted hurdle rate as well. We also compare any potential transaction to other potential uses of capital, such as share repurchases. Last but not least, I would say that we also like to maintain a healthy balance between M&A and returning capital to our shareholders. We also continue to assess our portfolio of businesses, again, from the lens of strategic fit. We're, I would say, just as disciplined in terms of what I refer to as the pruning, in terms of taking action that we believe makes sense, is consistent with our strategy. Recent examples of divestitures that we've had include Hong Kong, the Argentina annuities business, and Russia. Any transaction would have to be in the long-term interest of MetLife, either offering compelling economics or helping us to further reduce our risk profile. That's a little bit sort of our philosophy when it comes to M&A. How did the Versant transaction sort of fit into that framework? I think if you think about Versant, it literally ticks every box in terms of this philosophy or this approach that I just outlined. The strategic fit is obvious in the sense that it enhances our Group Benefits business. We've had a significant focus in recent years on voluntary benefits, where we're seeing really good traction. It fits right into that focus area for us as well. The boost in revenue is significant. We're talking about responsible growth here. We're not talking about growth for growth's sake. The improvements in our financial performance are also immediate, and returns are above our cost of capital. This is a high-teens IRR business, about eight-year payback. Even compares favorably to capital we're deploying to support organic growth here. The revenue synergies we feel are real and achievable. Think about adding a market-leading capability to our market-leading franchise in Group Benefits. We see great potential there in offering a really strong product to our existing customer base. We look at this as potentially helping us expand the pie in terms of vision care. Also, we think there are opportunities for us also in time to take market share here, again, by virtue of offering a competitive and compelling value proposition. All in all, we're very pleased with the transaction and also very pleased with the reaction that we've seen from customers and intermediaries. I think that sort of speaks to, again, the way that this transaction has been received, I think further tells us that this was the right deal for us. The fact that we were able, I think, to conclude this transaction in a really tough environment, I think that again, speaks volumes to our financial strength and flexibility here. People should not be shy about asking questions. There are 135 people online right now, and there's a question on Versant that I want to read. They want one of the actual date. We know that Versant closed in four Q, what was the actual date of the closure? The individual wants to know, A, were there any earnings numbers for Versant included in the fourth quarter? How is the integration going? Yeah. I can answer that. It closed, I'd say, the last week. I forget the exact day. No to earnings in the fourth quarter. Just given materiality, we didn't post any earnings there. We did post the balance sheet, so the balance sheet was trued up for Versant, but no earnings. I think from integration, all things are moving forward as expected. Very pleased with the integration to date and all speed ahead. In the framework you just talked about with Versant about why it made sense, why did it also make sense to sell the P&C operations? Someone could say, "Oh, look, it's a high IRR business, it expanded our footprint." Some of these arguments you might be able to make, but of course, you're not getting rid of P&C, just you're going to continue to represent that business on your slate, but the underwriting is going to be owned by somebody else. Can you talk about the thought behind why one fits and the other doesn't? Sure. Absolutely. First of all, let me just say that transaction is also very consistent with our Next Horizon strategy. It'll allow us to do several things. One, it'll allow us to focus on our core strengths. It'll allow us to simplify the company operationally. It further differentiates our offering in the Group Benefits space. This is a good business with a strong track record. We feel it's a better strategic fit for Farmers. They specialize in personal lines. They're a top 10 player in that space, 90 years of experience, and an excellent track record also, in terms of customer service. We don't believe that our P&C business, its value has been fully reflected, when we look at how our shares are valued. From our standpoint, it was sort of the right transaction, the right deal at the right price, I would say. I don't know, John, if you want to add anything. No, I would agree. I think, it was an opportunity for us to, as Michel said, to kind of just continue to deploy our strategic thinking and our strategy around Next Horizon. It gets us a chance to accelerate what we're the best at with an excellent partner. I think, as Michel said, we believe Farmers is probably better suited to grow that business at a rate faster than we could, to be quite honest. We can leverage what we're best in class at in terms of our Group Benefits distribution platform, and continue to have a strategic partnership and to have a great product to deliver on that platform. I think all in all, it was a win-win, we would see it as. Shifting away from strategy more to the outlook. Let's just talk about business in general. I guess some would be surprised at how strong 2020 results were. Obviously, there was a pandemic, high mortality, low interest rates, recessionary economy. I guess there's no offsets in the MetLife business. Why was the company able to navigate these things without an aggregate negative impact to the P&L? I'll let John jump in in a second. Let me just say here, Josh, you referenced it in your opening, just how proud we are of how our people showed up and delivered for our customers and for our shareholders during this most unprecedented period. I heard it said that in times like these, there's no place for companies to hide. You're either purpose-driven or you're not, and that shows up in how you deliver for your customers, for your communities. Our people have really gone above and beyond in making sure that we continue to deliver, and I believe that was a major factor in us having the year that we had in 2020. John? I would just add is, I think Michel alluded to it earlier, just we have a great set of market-leading businesses and a diverse set. We have diverse set of businesses, products, risks, geographies. I think that resiliency really showed through in 2020. It has to do with execution, and I think we prepared well heading into the crisis. I've said before that we were, from a financial and condition perspective and capitalization perspective, and really kind of operational perspective, we were better prepared heading into this crisis than the last one. I think we did a very good job heading into the last one. We took actions early. I think philosophically, with the belief that we need to manage uncertainty as opposed to letting it manage us. Being proactive there on the investment portfolio and a lot of the de-risking happened prior to the crisis. Being prepared for kind of different scenarios to emerge. Being responsive to all of our stakeholders throughout the year, I think really put us in a position to leverage our strengths. I think Michel pointed out earlier around Versant Health and the ability to act on that. I'd say that was leveraging some of our strengths, which is scale and financial strength. I think all in all, 2020 was a very unprecedented year, but I think a year that really showed the resiliency and the power of our business mix. Some of that strength, especially late in the year, was probably related to variable investment income being better than expected. Investors can't really rely upon that consistently quarter to quarter. It's volatile. You upped your guidance for the new year to $1.2 billion-$1.4 billion of variable investment income. Is it going to be taking on more risk? Is the type of investments differing? Where does the confidence you have, and I guess confidence and comfort in taking that number up from the investment perspective? As you said, private equity was a very strong performer, particularly in the second half of the year. Let's not forget the fact that second quarter was a very big negative, one we haven't seen for quite some time. I might just touch on a little bit of the returns that we saw and how I will say the fourth quarter felt a little different and emerged differently than we typically see. If you think about our private equity portfolio and variable investment income more broadly, it tends to move at a kind of a less-- it reacts to a lesser degree to what you see in the overall market. Remember, it's recorded on a one-quarter lag. At any time, we saw a big drop in the market in the first quarter. You saw obviously negative returns in the second, but to a lesser degree than what the S&P would've told you if you just took that and applied it to our portfolio. Similarly, just saw that relationship carry until the fourth quarter. We saw. It's on a one-quarter lag. You saw roughly high single digit, roughly 8% return in the third quarter, and you saw something similar for private equity recorded for us in the fourth quarter. That relationship of less volatile returns on a quarter lag broke. It actually was more like one to one. We think that migrates back to its normal course. We ended the year, actually, our full year return was just under 12%. We simply just applied, and that's kind of our best estimate that we typically apply for our outlook. We think on average, it's hard to predict this asset class. On average, it's a 12% type of returning asset. We effectively applied 12% to the new average balance that we're going to see for 2021. While, like you said, Josh, people can't necessarily rely on it because it can be volatile, I would just go back to, I would put this back into the camp of diversification. We have built a strategic asset in our investment capabilities. The ability to have that as an asset class that we think we're best in class at kind of managing and investing in. We have a number of other asset classes. All of those things kind of have built resilience into our spreads and into our investment spread earnings in the outlook. I would just make it part of the overall capabilities that we can deploy in different markets. Along another investment question, this one coming from the people who are online. How are the current low interest rate environment and the spread environment, as well as ESG considerations affecting your investment policy? Maybe I'll touch on the first couple questions, and I don't know, Michel, you want just to address the ESG? First, as you've seen throughout the year, there's been a resiliency in our spreads. Again, what we make relative to what we credit. Certainly low interest rates has put pressure on that and tighter spreads as well. The fact that we have a number of different investment capabilities that can work across the curve, the steepening of the curve has helped a lot. Lower LIBOR has helped us be resilient in times like this. To be proactive and to manage different circumstances and environments. Remember in the early part of 2020, we deployed quite a bit of money in the March timeframe. We locked in some very good spreads then. I think being nimble and agile in these environments is going to be really important because I think what we know is that volatility will remain. Nonetheless, I think what we've tried to articulate in the outlook is that despite all of this volatility, lower rates and kind of unprecedented level of lower rates. We're still able to keep our spread guidance equal to 2020 for 2021, and that's a result and a testament to the various capabilities that we bring to bear. If you want to touch on ESG. On the ESG front, I would say that we've been consistently applying an ESG lens to our investment approach strategy. It's something that will continue. We understand the importance. It's a focus area for us. I would say also that our board is very interested in this area as well, and we regularly have discussions with the board on this topic. It's something that's built into our investment strategy and approach, and that will continue to be the case. Talk a little about expenses. You've been working really hard to manage your expenses over the last few years. The 2020 direct expense ratio was 12%. Your near-term guidance is under 12.3%. How should we view that target? Is that a little higher than it's been in the past, maybe, or is that the same? Are you suggesting that we're at a bottom and no more improvement can occur? Where do you think we stand right now? Yeah. First, we've been on a long journey when it comes to expenses. I think as we talked about and rolled out the Next Horizon strategy, one of the things Michel articulated in his opening, and that we've been really building into the DNA of the company, is we're moving away from these serial expense programs, as Michel said earlier. 2020 was the end to one that we started back in 2015, where we said we would decrease the direct expense ratio by roughly 200 basis points. We've decreased it by 230 basis points, being about 30 points lower than the target of 12.3%. It's really a testament to going back to Michel's opening points around consistent execution, managing for uncertainty, and really delivering on our commitments. As we look forward, a couple of things to note. As we pull the P&C business out, they actually had a lower direct expense ratio, pulling them out probably adds 20 basis points just naturally. There'll be a little pressure on 2021. What we've committed to make sure that we're back under the 12.3 in 2022. I think we continue to deliver and instill an efficiency mindset, as we refer to it in the firm. We might have a little bit of an uptick in 2021, but we'll continue to maintain and drive efficiencies. The other thing we're trying to do is, it's not just about cutting costs for us. We're really trying to build capacity to reinvest. It's extremely important that we're getting ahead of these consumer trends, building solutions as opposed to products, and really digitizing our workforce. We need to make sure that we are freeing up a scarce asset that we can redeploy, and that's part of efficiency mindset as well. We are maintaining below a 12.3 as our guidance and continuing to look to reinvest and shift the mix as to what those expenses constitute. If we think about Group a little bit, let's just change focus. I think that you put a low double-digit growth guidance in Group for 2021. How did the new year renewal sales go? When we think about Versant, was there a cross-sell? Did having Versant give you some opportunities to sell Versant customers some other benefits? Did other customers who you already had who are not Versant customers, did they engage Versant? Is there anything to be thought there in terms of how you'd guide it to and whether it's successfully, maybe more successful than you thought? Yeah, we did guide, Josh, as you referenced, to a low double-digit growth in 2021. Then reverting to our more traditional guidance, I would say, of 4% to 6%, albeit obviously from a higher base. Just to give you a sense first about the renewal season, I would say we're seeing strong renewals. We're getting the right action that we believe is appropriate. Good persistency. That's very much, I would say, in line with expectations. The other aspect I would mention here is that we're seeing more jumbo case activity in 2021 compared to 2020. We're winning our fair share, so that's a positive as well. As far as the Versant cross-sell opportunities, I wouldn't say that that's necessarily baked into our 2021 guidance. We do the potential for cross-sell opportunities, but we believe those would materialize over time, probably beyond 2021. The 2021 guidance excludes those Okay. Let's shift focus to know some of Latin America a little bit. Can you talk about how 2021's shaping up, given the major impact COVID had this past year on Latin America? Obviously, it was a very weak Q4 result. How should we transmute that into our thoughts on that 2021 guidance? Maybe I can start, and if you want to- Sure You can jump in, certainly. Yeah, 2020 certainly had its challenges in Latin America. Just in that business alone, there's just less of any offsets where we've seen that in other businesses to the extent, just higher mortality is just in and of itself a negative for the business. We saw that transpire, and they've basically been on a one-quarter lag relative to the U.S. You didn't see as much of activity in Latin America in Q2, but then you started to see it really build up in Q3 and Q4. We expect that to continue. Where Q4 has continued to show pressure in the U.S., and quite honestly, we're still seeing that in the early parts of Q1. We expect Latin America's pressure to continue. We've kind of thought of Q1 of 2021 looking very similar to what we saw in Q4 at this point, but maybe further outlook. You want to touch on that? Yeah. I think, as you think about 2021, I think John mentioned sort of this lag that LatAm is on. A lot will also depend on the rollout of the vaccine because again, I think, generally speaking, LatAm is behind the U.S., for example, on that front. We're pleased with the fundamentals of our business because we believe those remain very much intact in terms of the strength of our franchise, our distribution capabilities, our product set, and the like. Our persistency has also been strong, which is why we feel that we would see revenue growth this year. Looking ahead, we believe that we will get back in 2022 to more of a normal sort of pattern in terms of LatAm's contribution from an earnings perspective to MetLife. Let's quickly transition to MetLife Holdings. There's a lot of pressure maybe on you, maybe some inbound call going from me on people doing life transactions to get rid of unwanted blocks. I would notice MetLife Holdings is still part of MetLife because New York is the regulator on that business, so maybe it doesn't translate itself as well to doing a transaction, but it's also very profitable. Where do you stand on your desire, I guess, or willingness to get that off the balance sheet? How do you weigh the sense in which it might be weighing on your stock price versus what is a fair price to do such a transaction at? Yeah. As we've seen a lot of momentum in the closed block accumulation, I'll say, trend. As we've talked about, these are long tail, for the most part, closed blocks that have complexity. The good news is that they are a diverse set of blocks of businesses, and so we have kind of a natural set of offsets that are in there, and you're seeing that actually come through in their earnings power in 2020. It does produce good cash flow. Now, as I've said before, we're taking a third-party external view, and we're seeing other opportunities to accelerate some of that runoff of the business and in a prudent way, we would say. Because, as I said, that we have a well-run business. We're continuing to optimize that internally. It's important for us to take an external view to look at opportunities. I think this market's going to continue to evolve. We have the team focused on looking at different combinations, different blocks of business, seeing where the supply of capital comes about, and also watching interest rates. Interest rates are still a bit of a headwind when it comes to that bid-ask spread. All in all, I think, we need to be prepared, do the work upfront because this takes some time to work through. That's kind of been our mantra. One last question. The Metropolitan Life Insurance Company, that Metropolitan, their seed market is New York City. You are a big employer of the city. You have one of the most iconic buildings. Obviously, the pandemic has disrupted things in New York City. What are MetLife's plans for New York City going forward? I mean, that's obviously a question that comes in a lot of ways, but where do you guys think about that? Yeah, as you mentioned, Josh, we have 150-year-old roots in the city and New York more broadly. Not a good sign. Rebounding from adversity, think about the financial crisis. New York has a way of reinventing itself, and we believe that will again be the case here. There will be some short to medium-term pain, but eventually, the city will come back, and we will be part of that comeback. I think through the sort of not only our presence but our participation also, whether it's the Partnership for New York or other bodies, we will sort of certainly play our part in helping New York get back on its feet. Well, I look forward to that future. I'll be here, glad you'll be here. I want you all to be very safe and take care of your families and your employees. Next year, this time, we'll do this again, but we'll do it in person, I'm confident. It's just about a five-minute walk anyway. Be well. Thank you for your time. Sounds good. If anyone has any questions for MetLife, send them to me, or you can send them directly. We have Allstate coming up next. Take care, and thank you very much. All right. Thanks, Josh. Thanks very much, guys. Take care. Be safe. You as well. Take care.