Welcome back, everyone, to the Bank of America U.S. Insurance Conference live from One Bryant Park in N.Y. We're really pleased we have here MetLife presenting. We have CEO Michel Khalaf and CFO John McCallion here to discuss. Also, I see John Hall, who directs investor relations. He's an absolute pro. Let me just say that Michel joined MetLife in 2010 as CEO of the Middle East, and he became the CEO of the overall company in 2019. He worked as the president of the EMEA region in the past. He also had responsibility for the U.S. businesses group, retirement income solutions, property and casualty. John's been the CFO since 2018. Prior to that time, he had many senior leadership roles, including the CFO of the investment department, head of investor relations, the CFO of EMEA, and he was the treasurer. Gentlemen, thank you very much for appearing today. We appreciate it. Congratulations on a very strong fourth Q, and grateful for your performance. I'd like to get more sense of the strategy and the vision for going forward. If you could introduce sort of maybe to begin the Next Horizon program that you talked about in investing and where we're at in terms of the time frame for that business, that would be wonderful. Sure, Josh. Good morning, and thanks for having us. We were hoping this would be in person, but unfortunately, Omicron had other ideas for us. This will be the last online. Look, we're really pleased with the progress we're making on the three pillars of our Next Horizon strategy: focus, simplify, and differentiate. Focus is all about deploying capital to its best and highest use. I think there you can see our progress in a number of ways. We're investing in organic growth at increasingly attractive economics. We're transparent in disclosing our VNB figures. You can see from our disclosures that in 2020, the value of new business we wrote was nearly $2 billion. We had an IRR of 17% and a six-year payback. On the M&A front, we acquired Versant Health, which made us the third-largest vision care provider in the U.S. If you think about that acquisition, it's a capital-light business, attractive returns, high free cash flow generation. Right in the wheelhouse of our Next Horizon strategy. As we've said many times, when we don't see attractive opportunities to invest, we will return capital to our shareholders. In 2021, we returned $6 billion in dividends and by share repurchases, which was a record for the company. At the heart of Simplify is the notion of operational efficiency. As I think our investors know by now, we have moved away from the serial expense reduction programs. What we have instead is a publicly disclosed direct expense ratio target of 12.3%. If you think about it, from 2015, we brought down our direct expense ratio by 200 basis points. What we've said is that we're going to hold at 12.3% or under that. As a matter of fact, in 2021, we came in at 11.6%, so well under. What we've said is despite the inflationary pressures that we see going into 2022, we will also, we're committed to coming in under 12.3% in 2022. What this sort of efficiency mindset allows us to do is a couple of things. One, it allows us to generate higher earnings, and two, it allows us to continue to free up capacity to make important investments that help us drive growth and innovation. On the Differentiation front, again, any successful company has to differentiate to drive its competitive advantage. A couple of examples I would give there, in group benefits, where we've already built sort of the most attractive platform, especially if you think about our product range. We continue to add to that as we've done over the last couple of years by introducing pet insurance, by introducing digital wills, vision care, HSAs, and we've also launched our financial wellness platform, Upwise, an important engagement tool, again, to further sort of differentiate in the marketplace. Another sort of example I would give here is on the investment side, in terms of our investment expertise, we manage $650 billion in AUMs. That sort of gives us the scale and the expertise whereby we're able to source assets that deliver superior risk-adjusted returns. I think our performance on the private equity front in 2021 is a case in point. We have long-standing expertise in this area. $11 billion invested there through close to 700 fund relationships. That's really what sort of allowed us to generate a 40% plus return in 2021. Those are some of the examples that I would give on the differentiate front. Overall, really good progress in executing on our strategy. You did say on the call that the next 10 yards are not going to be as easy as the previous 10. I know you want to underpromise and overdeliver, can you be more specific about the challenges on the 10 next yards? What I meant by that is really a commitment to a high and steady performance. We think that MetLife has made really significant progress over the last few years. Our risk is down, our returns are up, our expense discipline is strong, we have divested to simplify the company, and we've invested for growth. We are going to continue to gain yards by committing to sort of this continuous improvement mindset. That mindset also is one where we're never going to rest on our laurels. If anything, we are going to double down on our commitment to relentless, steady, focused execution. We think that that's what's going to allow us to make further progress. I think it's also about embracing higher expectations that we know customers and shareholders have of us. I think the bar has clearly been raised, and that's not lost on our management team and our board, and our internal expectations are also growing. We are also holding ourselves to a higher standard. Well, in the period that you've been CEO, you've returned a lot of capital to shareholders, grown the dividend. Obviously that's returning capital when that's the best use, growth is always many times the best use. What are the, I guess, the ROI considerations as future priorities that you're considering instead of returning capital to shareholders, that you would do M&A or whatnot as another way of being prudent about shareholder capital? Sure. We always look at M&A opportunities, first and foremost that fit strategically, but also that are accretive over time to our shareholders. I believe you've referenced this. We've built a solid track record in this regard here. We evaluate all opportunities on a consistent basis globally. We focus on value and cash generation. These opportunities have to earn more than their cost of capital. We determine what we're willing to pay for a business by evaluating capital markets, the cost of raising capitals, and synergies. I would also say that acquisition opportunities should be more attractive than share repurchases, that's another lens that we apply. Ideally, we'd like to achieve a healthy balance between returning cash to our shareholders and investing in attractive future growth through M&A as well. John McCallion, related to this M&A story, there's also dispositions. Obviously, transfers through reinsurance of closed blocks has been a major theme for a lot of life insurers. When you're thinking about disposing of future earnings through such a transaction, what are the considerations that you're putting on that can guide investors' thinking about how you are approaching that opportunity? Yeah, sure. Thanks for having us here, Josh. I think when you look at MetLife Holdings, it's a well-seasoned, well-diversified block of businesses right now. I think we've been really focused on optimizing that, certainly that's from an internal perspective, meeting customer obligations, looking for different ways to drive value as we manage it. Quite honestly, as we've said this before, we're probably maybe the best or one of the best operators for this business. We've developed a real expertise. On the flip side, we've always talked about that there's a no regret move here, taking a third-party view of this business. I think it helps us manage the business better internally. There's a market that's kind of evolved with regards to risk transfers. If we can find an appropriate way to accelerate the release of capital and reserves, we would consider that. The work we're doing is to kind of maintain that optionality to engage possibly with third parties. I think the main focus for us would need to be a value creative opportunity. We're very pleased with how the business has performed. The team's done an excellent job, and we're very happy holding it. If there's an opportunity externally, then we would certainly explore that. Thank you. Michel, let's go back to you on group benefits. COVID mortality is a big problem, but your growth is fantastic. I guess let's frame those two things. We don't know what the COVID mortality is going to be in the future, but how do we think about that in terms of When we think about the growth, what's the trajectory there? Ultimately, is Met a great consolidator of the market share in that benefits business? Sure. I'll start by saying that we're really pleased with the top-line growth of the business in 2021, and even, I would say, over several years. As you know, we're the market leader, and we continue to grow the business faster than the broader market. That's especially true for our voluntary products where we're seeing double-digit growth, PFO growth. Consistent with the industry, we've seen elevated mortality due to COVID. As a matter of fact, since the onset of the pandemic, we've paid close to $1.6 billion in COVID claims. That's sort of meeting our purpose and being there for customers when they need us to be there for them. In 2021, we saw very strong PFO growth, strength, I would say, across products and markets. We also had a very strong year in terms of jumbo case activity, and we won our fair share there. A strong persistency as well. If you think about PFO growth for 2021, excluding the higher premium from the participating policies, it was about 12%, half of that coming from Versant and half of it coming from growth across our product sets. Looking into 2022, what we've said is that we will revert to our historical 4% to 6% PFO growth rate, albeit from a higher base. That's after sort of adjusting for the roughly $1.1 billion in excess BAR premium from 2021. I've said before, and I will say here, it's a competitive market. Price matters, but it's not only price that matters in this market. I think scale matters, especially the ability to continue to make investments in digitizing the business, meeting customer needs and expectations, continuing to add to our product set. As we look forward, I think we're going to continue to take market share by maintaining a strong persistency, by continuing to be disciplined when it comes to how we price the business, and by entering new markets and adjacencies through our product offerings as well. Thank you. Let's shift focus to the retirement income segment. You're suggesting relatively modest growth, 2%-4%, based on how quickly you think liabilities are going to grow. There's two really attractive growth opportunities. There's pension risk transfer, and there's obviously, you've been doing more business in the U.K. longevity reinsurance transfers as well. Let's take each of those. How do you view the pension risk opportunity? How does it align with the overall strategy? What are the reasons why a counterparty chooses MetLife outside of price for doing these kinds of deals? Sure, Josh. Just before I talk about PRT, I just want to highlight that I think RIS is a great example of where we have a great set of really diversified businesses that perform under a variety of economic conditions and environments. I think a good example I would give there is stable value, where, in 2020, at the height of the pandemic and with the uncertainty created by the pandemic, we had a record year when it comes to stable value sales. We're market leaders there, and the business performed really well in that type of environment. Coming back to PRT, the market continues to be attractive. I think 2021 was probably a record year in terms of the volumes that we saw on the PRT front. What's helping there is that plans funding has improved. That sort of encouraged more plan sponsors to come to market. We think 2022, the market will be robust as well. I would reemphasize there the principle of responsible growth, which is something that we hold near and dear. Again, price matters in this business. For us, discipline matters as well, and I've referenced before the fact that especially as we bid on the bigger deals where we think we have some competitive advantages, we treat those transactions in a similar fashion to how we view M&A deals. We apply a very similar discipline. We're not going to chase business. We're going to continue to be disciplined in our approach in terms of the business that we bid on. I think that besides price, we do bring to the table competitive advantages when you think about our balance sheet strength, our ratings, our investment expertise, our admin capabilities as well. All those play a role in our ability to compete effectively in that market. That's why we think sponsors do choose MetLife. Our ability to fulfill our commitments to their retirees, because we bid on retiree cases only, is important to them. Those are some of the things that I would point to when it comes to PRT. The U.K. longevity transactions, how do they compare in terms of capital utilization or ROI to the PRT transactions? In the MetLife enterprise, do they act as a counterbalance to other risks, that actually by doing longevity transactions, you can de-risk some of the weight on the other things they're putting onto the balance sheet? Sure. I would say we're very excited about this business. The market for longevity reinsurance in the U.K. has been quite robust and held up really well during the pandemic as well. We went from a standing start in 2020. In the 2 years since, we've written $16 billion. We had $16 billion in sales, really good traction. I think that speaks also to how well our entry to the market has been received and the strength of the relationships that we've managed to build in a short timeframe as well. We're beginning to also evaluate other opportunities for growth there. We see good potential for continued traction on that front. From a capital and ROI perspectives, we think the business is attractive. I think it's very consistent also with our Next Horizon strategy. It's a capital light business. It's really driving fee-based income. This business is very close to a pure longevity play. It doesn't have some of the risks that you see with funded PRT deals. Hence, the capital required is much lower as well. Obviously, we are sort of long mortality. In a way, this is a nice sort of counterbalance. I wouldn't say that's the main reason we're in this business. I think we like the business because it's quite attractive and it's quite a good fit in terms of our Next Horizon strategy as well. Let's shift to John McCallion for a second. On MetLife Holdings, I think that you've made a sort of statement that this business generates about $1 billion with 100% free cash flow conversion as a general rule of thumb now. Last year, it did $2.8 billion. You had a huge year for variable investment income. Is the $1 billion benchmark still a good way of thinking about it? 2, MetLife Holdings gets smaller over time. Does that mean that, 1, we should expect that $1 billion to also shrink, and 2, as that shrinks, does that mean your allocation firm-wide to private equity declines with the size of MetLife Holdings getting smaller? I think we gave guidance this coming year for 1 to 1.2, I think. Roughly speaking, $1 billion of earnings and free cash flow is a pretty good marker to use. It's been, like I said before, pretty resilient runoff. It really hasn't run off as much as we probably thought it would, which is a big credit to the team. I think we've been relentlessly focused on optimizing the business, done a really good job with expense management and finding efficiencies. We also did get a benefit from higher equity markets, as well as we lowered some of the dividends on the closed block recently. That has helped kind of counterbalance some of the runoff. I think this will run off, and as it does, the allocation of private equity to holdings would naturally kind of decline over time. It's a roughly 5%, I think we gave a little higher in terms of revenues type of runoff. It's going to take some time here. It would depend on what other businesses do that do leverage the private equity type of investment when we think about asset liability management. All right. Let's switch to Asia for a little bit. Japan sales continue to be quite robust. Can you talk about the product suite that's really driving the growth? I guess for Michel. One of the products in the past we talked about is that FX annuity product you're selling in Japan, which had great growth in 2018 and 2019, it seems like it slowed in terms of the contribution from growth from that angle. How has the product suite been changing, and why has that product been de-emphasized? Let me start by saying that we think that our business in Japan has a number of competitive advantages. First of all, we know the market extremely well. We've been in Japan since 1973, so close to 50 years. Second, we have the necessary size and scale in Japan. We're number 6 overall, and we have a stable in force portfolio of 9 million policies. In addition, I believe we have the most diverse set of products and distribution channels, which does a couple of things for us. One, it allows us to capture long-term trends, but it also allows us to react and be proactive when it comes to near-term shifts as well. Over the last couple of years, we've done a few things in Japan. One, we've enhanced our product offerings. We've improved our speed to market, which is important when it comes to offering new products in that market. We've invested heavily in digitizing our sales processes, and that was particularly helpful to us during the lockdowns, and we continue to see some of that even currently in Japan. This led to a good recovery in sales. We saw sales growth of 13% in 2021. Again, that's with the background of ongoing COVID challenges. The two drivers I would say are, again, our diversification at scale and very focused execution by our team. We have a seasoned, experienced team in Japan. From a product perspective, we offer life, health, and retirement products. From a channel perspective, we have our own agents, we have independent agents, high street stores, and banks, as well as a refreshed best-in-class digital online offering as well. This diversification allows us to pivot quickly when we see changes in the market and doesn't overexpose us to a single channel or product set as well. To give you an example, in 2021, we launched three new products, and those new product offerings represented a third of our fourth quarter sales in Japan. We see the impact already. We've already launched a new product in 2022, and we have more in store. With regards to your question on the fixed annuity products, whereas there was a decline in the overall market, we've managed to maintain our market share in that segment. We have very strong banker relationships in Japan. We've also introduced some new products there, and we think that rising U.S. interest rates may provide some tailwinds, again, depending on what happens with yen rates as well. If we move to the rest of Asia, you have an interesting mix. You have mature markets, thinking about Korea and Australia. You have huge growth markets in China and India. You have some seeds planted in other Southeast Asian countries that are smaller but have How do you pick? Do you need to be planting the seeds now? Should you be in even more markets than you're already in if you plan on being there in the future? What's sort of the strategy? Sure. As you reference, we operate in nine markets in Asia, including Japan. I think we have a really good footprint. We're comfortable with our mix of markets, including how we're positioned to meet customer needs in Asia. We have a presence in some major population centers, where we offer a wide range of products, and we have also a diversified distribution. Whereas Japan and Korea are major contributors to our earnings today, we see significant growth potential in markets such as China, India. Those are the two markets with the largest populations in the world. Bangladesh is another market where we have a leading presence and which is in the top 10 from a population perspective as well. I would sort of highlight that we've recently increased our shareholding subject to regulatory approvals in PNB MetLife India. Post this increase, we will own just over 47% of that business. That sort of showcases our commitment to that market. Again, it's a market where our own business has been growing very nicely. We think that trajectory can be maintained, if not enhanced, going forward. We will continue to invest where we believe it makes sense to invest, where we see sort of a fit in terms of what we're trying to achieve from a strategic perspective. I don't see a burning platform in terms of the need for us to enter new markets in Asia. Let's shift to John McCallion for a second. Thinking about the ROE targets of 12%-14%, obviously last year you blew that out of the park, huge variable investment income returns offset by some COVID losses here and there. When we think about if we look at two sort of benchmarks, one 12%-14% ROE, 65%-75% free cash flow conversion on the earnings. What's the confidence interval in that, and what puts it at risk? Yeah, I would say it all starts with kind of how we've been really changing the business mix over time, being kind of a fanatic discipline around our IRRs and payback periods, and you kind of see that coming through our value of new business. That gives us the confidence about hitting those targets. That's the real, I would say, underpinning driver. As we look at ROE, to your point, yeah, we significantly exceeded. Even if you adjusted for VII and adjusted for kind of excess mortality from COVID, we've probably hit that 12%-14% target earlier than we thought. Probably thought about a two-year time period before we did. We had some kind of headwinds from the P&C transaction that we were able to accelerate some of those expense efficiencies. The return of capital has been robust. I would say we're well within that 12%-14%. Again, with where rates are, we're probably at the lower end, but I'd say, I guess if there's an upward bias with rates, there's probably an upward bias to where we are in the range. I think we feel really good about being in that 12%-14%, and the free cash flow ratio has been steady. I would say that our track record has shown that we've been a steady deliverer of free cash flow and returning capital to shareholders. The next question, I guess I want perspective from both John McCallion and Michel Khalaf. If we think about $6 billion of cash flow return through buybacks and dividends last year, you have a strong holdco cash position right now. You're obviously having this very strong free cash flow. That was probably a higher than typical year, given a lot of things going on. But also, it seems to me that MetLife, given its mix of businesses, could possibly hold a higher debt-to-capital leverage than some of your competitors who have more volatile businesses. Also, interest rates look like they're going up, and it might be prophylactically responsible to have more debt this year raised than having to raise debt 5 years out. How do you look at the opportunity? Is there an opportunity to raise some cash right now? Does it make sense? Where do you square all that together? Maybe I'll just quickly answer the latter part of that. I'd say, look, I think we're very comfortable with where we are from a leverage perspective. I'd say we still have capacity from a leverage perspective relative to some of the targets that our rating agencies provide us. I'd say that's one. Two, our next maturity is not till September of 2023. Like you said, we probably have some freedom of being opportunistic between from now and with depending on how environment kind of shapes up. I'd say that's probably my general statement on leverage. We are not at our limit, and that's probably where I'd end that. I think from a return of capital, it was probably a little bit of a heavier foot to the pedal type of environment for us last year, particularly in the fourth quarter, probably a little bit of a heavier share repurchases run rate than we had seen, and a little bit had to do with just kind of the volatility in the stock. All in all, I think we've showed a track record over time about taking down some of that excess capital, and I'd say that would continue. Well, we're out of time. Congratulations on what's been a tremendous year, and good luck on the next 10 yards. I hope that maybe you have a little Super Bowl working in your favor. Maybe, who knows? All the best. I hope your day goes great. If you have any questions, I can certainly convey them over to this great MetLife team. Thank you all. Thank you so much, Josh. Thanks, Josh. Take care. Take care. October coming up next, everybody. Thank you.