MetLife Inc (MET)

“So when we think about looking ahead, we still think the 95 to 100 even with the rate environment. And in a way, we're positioned fairly well regardless of what happens with the curve. We've been able to kind of put ourselves in a position where should the curve steepen or even stay flat, we still think that 95 to 100 is a good baseline. So if we had to kind of pick a point for the third quarter, it'd be more like the midpoint of the range at this point, just because of the seasonality of some of the real estate returns in 3Q.”

“We knew that was going to happen. We did see a little bit better improved real estate equity income in the quarter that is likely to probably seasonally reverse in the third quarter.”

“Looking ahead, we expect stronger private equity returns in the third quarter, particularly from our venture capital investments, supported by elevated IPO activity and higher public market valuations.”

“Net-net, looking at all of RIS, we are confident we will be within our retained balance growth target of 3% to 5% for the full year, which reflects the strength of our franchise and product portfolio.”

“We manage expenses on a full year basis and we remain confident in our ability to beat our 2026 target of 12.1%.”

“But I would point you to the 2 points of normalization here that we've seen this quarter that we don't expect to repeat in the second half of the year.”

“So we'll see PFOs continue to grow, but the bulk of our business remains AUM focused.”

“And then maybe taking one last step back and look at the overall nonmedical health ratio. Dental is exhibiting the normal seasonality here, and that seasonality would point to a fact that the second half of the year would give us more favorable results and, therefore, more favorable nonmedical health ratio in aggregate compared to the first half of the year.”

“When it comes to the kind of 4% to 7% range, think of that as a multiyear number. In any given year, we could be at the low end, high end of the range.”

“All in all, the trend is a modest decline in private equity over time, but we will continue to invest in the space. Given our seasoned, diversified portfolio, we expect distributions to outpace contributions.”

“I just think those things mean there is no quick change that would ever occur. But over time, higher rates, as we discussed before, do provide positive momentum.”

“And you can see from our results that LatAm is very much on a path to generate $1 billion in earnings this year, which, by the way, is roughly double from pre-pandemic levels, and this is being fueled by sustained growth there.”

“The first half of this year has been lighter, particularly in the jumbo space, but our pipeline is stronger for the second half and we see more opportunities emerging for Q3 and Q4.”

“This is a business with a renewal cycle of three to five years in our life book, so any normalization would unfold over a number of years rather than in a single quarter or as a 2027-type impact.”

“To your question, considering the overall results and the forward trend, if this favorable mortality continues you would expect our margins to gradually normalize over time.”

“Think of those two points as something we expect to normalize as we go forward. There's early evidence of that in our July numbers. I want to make sure you view this quarter in perspective and expect moderation for the rest of the year.”

“This growth, combined with a 410 basis point improvement in operating margin during the quarter, positions MIM to deliver full year adjusted earnings within its guidance range of $240 million to $280 million, though likely toward the low end.”

“Over time, we expect that to be a meaningful and durable tailwind to both growth and productivity while creating an even more seamless experience for our customers.”

“I think taken all together, our expectation for Q2 is that core spreads will remain close to where we are in Q1, maybe slightly above, modest improvement in Q2. And total spreads will continue to track to our full year range.”

“Now looking ahead, we can expect a little bit of moderation in year-over-year growth rates just given the strong prior year comparatives, but we really expect the momentum we have to continue going into the second quarter.”

“And finally, in Japan, we expect our initial economic solvency ratio, or ESR, to be in the middle of our 170% to 190% target range for fiscal year ending March 2026, following completion of regulatory filings in June.”

“However, outflows have stabilized the latter part of Q1 and so far in April, and we're seeing a solid pipeline ahead.”

“I mean, we continue to demonstrate a free cash flow ratio of 65% to 75% and remain confident to do that throughout New Frontier.”

“We continue to manage expenses on a full year basis, and this quarter reinforces confidence in our ability to deliver against our 2026 target.”

“As always, we manage the business assuming a normalized level of VII over time and remain comfortable with our full year outlook.”

“And I would just add, Pablo, just in terms of outlook, we probably -- obviously, this is a very strong quarter. I wouldn't consider this to be a run rate where we had a $90 million to $100 million quarterly run rate as part of the outlook. And we're probably trending towards the middle to upper end of that range is where we -- going forward.”

“So far, we have not seen any impact. And I think EMEA's performance in the quarter is -- provides evidence of that. And we think that, provided the situation stabilizes from here, we're not going to see any impact. And if we do, they're not going to be material to EMEA overall and certainly not to MetLife's overall results as well.”

“So if you put all of these pieces together, from an aggregate perspective, back to your question, we would expect this ratio to moderate, but look for that moderation in the second half of the year, if you think that coming through our numbers.”

“Despite RIS' strong results in Q1, we still expect full year adjusted earnings to be between $1.6 billion to $1.8 billion that we provided on our outlook call.”

“And from a specific life perspective, if the favorability that we see does persist and does become credible on these RIS, we would expect some portion of it to flow back into pricing, but that would happen gradually over time. So think of that happening in years, not quarters, if you think about our underwriting ratio.”

“We anticipate the Japan solvency margin ratio to be around 770% as of December 31, pending the final statutory filings in the coming weeks.”

“I think at the end of the day, for us, we're not seeing any constraints on our dividend capacity, in Japan.”

“For the full year in '25, our surrenders have come down relative to where they were in '24, and for '26, we're assuming that surrenders come back to our long-term assumption over there.”

“By 2028, we are targeting an operating margin of approximately 32%.”

“For MIM adjusted earnings, we expect to be between $240 million and $280 million in 2026, then grow 15% to 20% per year in 2027 and 2028 from a combination of revenue and expense synergies as well as greater operating leverage.”

“Finally, for MIM, we expect revenues to grow roughly 30% in 2026, largely driven by the combination of PineBridge and then increase by mid-single digits thereafter.”

“For adjusted earnings, we expect EMEA's new quarterly run rate to increase to $90 million to $100 million in 2026, and then grow mid to high single digits in 2027 and 2028.”

“Moving to EMEA, we expect adjusted PFOs to continue to grow high single digits given the strong momentum in the business.”

“Expect adjusted earnings to return to high single digits growth in 2027 and 2028.”

“Expect the Latin America adjusted earnings excluding notable items to increase 6% to 8% in 2026, including a roughly $50 million impact from the Mexico VAT change, which we expect to be mostly in the first half of the year.”

“On page 15, for Latin America, we expect adjusted PFOs to grow high single digits over the near term.”

“Asia adjusted earnings, excluding notable items, are expected to grow mid-single digits over the near term.”

“And general account AUM growth in the mid-single digits.”

“For Asia, on Page 14, we expect annual sales growth to be mid to high single digits on a constant currency basis over the near term.”

“Finally, we expect total general account investment spread to range from 100 to 120 basis points in 2026.”

“Expect RIS adjusted earnings in 2026 to be between $1.6 billion and $1.8 billion.”

“More specifically, the average retained liability exposures, which we expect to grow 3% to 5% in 2026, with growth weighted toward the second half of the year.”

“Taking all these factors into account, we expect Group Benefits adjusted earnings ex notables to grow 7% to 9% in 2026.”

“For group nonmedical health, we are increasing our interest adjusted benefit ratio target range by one point, to 70% to 75%.”

“We are reducing our group life mortality ratio target range by one point to 83% to 88% as we expect favorable mortality trends will continue in 2026.”

“We are maintaining our adjusted PFO growth target of 4% to 7% over the near term as we continue to strengthen our market leadership.”

“We are assuming annual returns for private equity to be 9%, real estate and other funds to be 7% over the near term.”

“We expect the average asset balances for private equities to decline in 2026 and over the near term as we continue to strategically reposition the portfolio to higher-yielding fixed income securities, consistent with the higher interest rate environment.”

“We are maintaining our expected effective tax rate range of 24% to 26%.”

“Our corporate and other adjusted loss is expected to be between $500 million and $700 million after tax.”

“Favorable investment income is expected to be approximately $1.6 billion pretax.”

“Specifically for 2026, given asset management businesses tend to have higher expense ratios, the acquisition of PineBridge will add 50 basis points to our direct expense ratio in 2026, with our 2026 target being 12.1%.”

“This change increased fourth-quarter adjusted earnings by $57 million and is expected to add about $200 million annually, mostly benefiting corporate and other.”

“We expect 2026 repurchases to be in line with 2025.”

“Life mortality continues to trend favorably, which we expect to persist in 2026.”

“We committed to generate $25 billion over the course of five years.”

“We committed to shaving 100 basis points over five years to achieve a direct expense ratio of 11.3%.”

“We committed to achieving a 15% to 17% adjusted return on equity.”

“We committed to achieving double-digit adjusted EPS growth over the time frame, recognizing this will not always be a linear path.”

“Given the segment's strength in the quarter, it is not hard to see a pathway to $1 billion in annual earnings over the near term.”

“However, the fourth quarter is shaping up to be a record quarter as we've already written $12 billion of PRT transactions, demonstrating the trust the marketplaces in MetLife.”

“providing further confidence in achieving a combined 400 basis points of improvement across the third and fourth quarters.”

“As we think about Q4, all else equal, we'd expect kind of a steady spread level from Q3.”

“Now looking ahead, we expect this momentum to continue going into the fourth quarter, and we expect to exceed full year sales guidance for '25.”

“Based on our initial work, we expect to report an economic solvency ratio within a range of 170% to 190% from March 2026.”

“We anticipate the Japan solvency margin ratio to be around 740% as of September 30, pending the final statutory filings in the coming weeks.”

“We anticipate an additional after-tax charge of $20 million to $25 million in 4Q.”

“The change to the VAT deductions results in notable impacts in 2025 with lesser impact in 2026.”

“And for 2026, we estimate a reduction in Latin America adjusted earnings of roughly $50 million to $60 million as we recalibrate our underlying rate assumptions in Mexico with little to no impact in 2027 and beyond.”

“So well-funded plans, they look to exit, I would say, more limited capacity in terms of insurance capital there and hence, the need for reinsurers like us with strong balance sheet, strong counterparty credit risk protections, and we expect to see nice growth there as well.”

“We consistently issue somewhere between $6 billion to $8 billion a year in the market.”

“So relative to expectations, earnings were lower due primarily to the variable investment income. But when you look at the outlook, we expect full year underlying earnings to remain strong and in line with guidance.”

“So we would expect the resolution of loans to pick up this year, probably peak a little bit this year.”

“But within RIS itself, because it's a mix of RIS, the MIM fees, also our investment in Chariot so that all nets to a few pennies. But within RIS itself, we could think of like another $15 million to $20 million short-term headwind there, considering the loss of earnings from the reinsurance.”

“But we think, given the current pipeline, we expect to be within the 3% to 5% growth rate by the end of the year.”

“As we head into Q3, based on the forward curve, we do expect core spreads to remain stable.”

“Now looking ahead through the rest of the year, we kind of expect our -- to be at the top end of our guidance range when it comes to overall sales for Asia.”

“So nothing macro here that we expect to trend over time, and therefore, we think all of these are going to effectively normalize in the outer quarters.”

“Finally, we expect the Japan solvency margin ratio to be approximately 710% as of June 30, which will be based on statutory statements that will be filed in the next few weeks.”

“Given the continued difficulty in forecasting VII, we plan to once again disclose preliminary information regarding our Q3 expectations for VII toward the end of September.”

“That said, we believe our results in Q1 position us well to achieve our full year direct expense ratio target of 12.1%, demonstrating our ongoing expense discipline and a sustained efficiency mindset.”

“However, this will be offset by an annual hedge cost savings to the enterprise of roughly $45 million associated with this block of business.”

“Also, we expect the transaction will result in foregone adjusted earnings in MetLife Holdings of approximately $100 million annually.”

“It is expected to deliver approximately $250 million in statutory value, consisting of a ceding commission and release of capital over time.”

“So with Q1 behind us and Q1 being favorable, just a simple arithmetic here even if we continue not to see any further favorability, the simple arithmetic would have us towards the lower end of our range for the full year. So think about an 84 number for the full year compared to the guidance that we have given you before.”

“This has been very well received and we've got other actions planned during the rest of the year. So we expect this momentum to continue.”

“We're on track to grow full year sales in line with our outlook of mid to high single digits.”

“And that will set us up nicely in combination with the heavy Q1 utilization quarter behind us to see a gradual decline for the nonmedical health ratio. And think of that for the full year being towards the midpoint of our range.”

“And then I think we'll -- as we look at it now, there's certainly nothing that would indicate that it would change our dividend policy or factor as it relates to Japan.”

“So don't use the 1.4 billion in the quarter as a quarterly run rate. And we'll continue to be opportunistic, but deliberate as well when it comes to our activity here.”

“And then the last thing I would say is based on our really strong results this quarter, we're also expecting no change to our full year outlook on earnings for the group business.”

“So you should expect us for a full year reported basis to be back in line with our guidance of 4% to 7%.”

“So which that tells you the stability of the segment of PRT plan sponsor of DB plan sponsors who would transact well hedged and we wouldn't expect to see much change in their funding ratios.”

“But as Ramy said, if you take growth is probably exceeding expectations cap are coming in a little lower here likely going to stabilize from here into the second quarter.”

“The underlying growth of our international businesses, which has been partly masked by the strong dollar could start to emerge as a tailwind.”

“But I mentioned this maybe last quarter, this year and probably next year, you will resolve a lot of the things that we put up reserves were over the last several years.”

“And, you know, we don't foresee any material impact to our business that we wouldn't be able to mitigate.”

“So, you know, you think of, like, the 106 to 108 over the near term is a pretty good sense of what our core spread we're you're going to see a lot more stability in the spread as we go forward.”

“So we're really just kind of moving it up a point.”

“If you think about next year versus this year, we did finish 2024 about less than a point above the midpoint of our range. We haven't changed the range for next year, so a good starting point for 2025 is to go back at the midpoint of that range on the nonmedical health ratio, which does factor in some of the improvements around dental that you mentioned as well.”

“Finally, for EMEA, we are expecting adjusted PFOs to grow mid to high single digits on a reported basis.”

“For Latin America, we expect both adjusted PFOs and adjusted earnings in 2025 to grow high single digits on a constant currency basis and flat on a reported basis given the forward currency rates, which assumes Mexican and Chilean pesos weaken in 2025.”

“Asia adjusted earnings in 2025 are expected to grow mid-single digits on a constant currency basis and low single digits on a reported basis given the yen weakness assumed in the forward curve.”

“For MetLife Holdings, we are expecting adjusted PFOs to decline approximately 4% to 6% in 2025, and we are lowering the adjusted earnings guidance range to $650 to $800 million in 2025.”

“Beyond spread earnings, total fee and underwriting income, net of expenses, adds an incremental 5% to RIS adjusted earnings.”

“We expect 2025 total general account investment spread to be 110 to 135 basis points, assuming the forward curve holds and based on our VII estimate for 2025.”

“Lastly, we expect group benefits adjusted earnings to benefit from factors outside of underwriting, largely from continued change in our product mix, greater operating efficiencies, and higher investment income, which will add an incremental 5% to 10% to adjusted earnings in 2025.”

“We are maintaining our near-term underwriting guidance ranges: group life mortality ratio of 84% to 89%, and group nonmedical health interest adjusted benefit ratio of 69% to 74%.”

“On page twelve, the chart reflects our expectation of VII average asset balances to be stable in 2025.”

“We are maintaining our expected effective tax rate range of 24% to 26%.”

“Our corporate and other adjusted loss is expected to be between $850 to $950 million after tax.”

“Based on the forward currency curve, the US dollar is expected to further strengthen, which creates a headwind to adjusted earnings growth of approximately $150 to $175 million in 2025.”

“For 2026 and 2027, we expect adjusted PFOs and adjusted earnings to grow high single digits on both a reported and constant currency basis.”

“For 2026 and 2027, adjusted earnings are expected to grow mid-single digits on both a reported and constant currency basis.”

“In addition, we expect general account AUM on a constant currency basis to maintain mid-single-digit growth.”

“For Asia, we expect sales to grow mid to high single digits on a constant currency basis over the near term.”

“For group benefits, we are increasing our adjusted PFO growth target to 4% to 7% annually over the near term.”

“In 2025, we expect both PE and real estate and other funds to be toward the lower end of their respective ranges before trending higher in 2026 and 2027.”

“We are increasing our near-term expected annual returns for private equity to be 9% to 11%, and we are also increasing our expected returns for real estate and other funds to be in a range of 7% to 9% over the near term.”

“Also, given our continued focus on expense discipline, we target reducing our expense ratio down 100 basis points to 11.3% by 2029.”

“We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings, which supports our five-year commitment to generate $25 billion plus of free cash flow.”

“We expect adjusted ROE to be in the range of 15% to 17%.”

“We expect to achieve double-digit adjusted EPS growth.”

“That said, our performance year-to-date positions us to beat our full year 2024 direct expense ratio target of 12.3%, demonstrating our consistent execution and a sustained efficiency mindset.”

“Yes. I mean, I think that should give a good indication in terms of direction of traffic here, especially if you consider that besides what we just mentioned, the fact that MetLife Holdings, which is a low-ROE business, is running off. So, all of these factors combined, I think, would point to a ROE trending upwards.”

“As far as an outlook goes, look, year-to-date sales have been in line with the prior year, and we expect full year sales for Asia to be close to flat year-over-year.”

“Finally, we expect the Japan solvency margin ratio to be approximately 745% as of September 30, which will be based on statutory statements that will be filed in the next few weeks.”

“Looking ahead, we would expect our direct expense ratio to be higher in the fourth quarter, consistent with the seasonal nature of our business.”

“Given the vast majority of interest caps have expired and based on the current forward interest rate curve, we expect fourth quarter spreads, excluding variable investment income, to now stabilize and be flat to up 1 to 2 basis points.”

“But all in all, we are seeing more stability now. And so, I think that's a fair assumption for now.”

“As we approach the finish line of that five-year strategic cycle, we are on track to accomplish, if not exceed, each of the key targets and objectives we laid out relative to distributable cash, operating leverage and return on equity.”

“With that in mind, we are at the vanguard of this topic, and we'll be issuing our policy on the responsible use of AI in the third quarter.”

“That said, our performance year-to-date positions us well to achieve a full year 2024 direct expense ratio of 12.3% or below demonstrating our consistent execution and a sustained efficiency mindset.”

“And we think we're on track for kind of that kind of closer to $100 million of write-offs for the year, very well within kind of the modest area for us in terms of our capital and size and position.”

“And then as you mentioned, the new ESR comes into effect April 1, 2025. We'll report on that for the first time, March 31, 2026.”

“We anticipate that the new money yields will remain above roll-off yields given the prevailing interest rate environment.”

“Although we foresee an increase in variable investment income, it will likely be balanced out by reduced earnings from the expiration of the interest rate caps.”

“We anticipate that spreads will remain between our annual target range of 115 and 140 basis points in the third quarter.”

“And then you should see some stabilization in the Q4.”

“Also, we're projecting VII to marginally increase each of the next two quarters as well, kind of similar to the trend that we saw here.”

“But sitting here now, looking at the rest of the year, we're seeing a pretty healthy jumbo pipeline.”

“If you look at the outlook for the year, we expect full year earnings to kind of remain strong, in line with guidance.”

“And I think if you go back to what we said at the outlook call, which was, we thought, all in, 2024 would show an all-in spread similar to 2023. And that's generally where we're trending towards.”

“I think our guidance that we gave last quarter is we continued to believe another 8 to 10 would occur during the course of the Q3 on ex-VII as most of the of the remaining interest rate caps mature over the course next few months.”

“But if you think about our expectations on a go-forward basis, we think mortality will kind of moderate back in line with historical levels.”

“We do not have any further debt maturities for the balance of the year.”

“And we believe that the outlook guidance we provided is still a reasonable run rate for the remainder of the year.”

“I mean Q3 tends to be the lightest. So you'd expect it to come down in the second quarter. Q3 will be a lot lighter.”

“So from a top line perspective, we're still very much within the 4% to 6% range. We got a 6% PFO growth this year -- this quarter, but think of that ratio being close to the midpoint of the range for the full year.”

“But having said that, we continue to see a very robust pipeline ahead of us, particularly for the jumbo end of the market, where we focus.”

“So looking ahead and without me getting overly prescriptive, I would say that we lead into the first quarter at a pace that is greater than what you might see for the balance of the year.”

“Our view is that it will start to moderate. We probably still have some pressure in 2Q, but less so and then moderates through the rest of this year. And then we think you start to see things start to pick up in a positive way towards the latter part of this year into '25.”

“Finally, we expect the Japan solvency margin ratio to be approximately 725% as of March 31, which will be based on statutory statements that will be filed in the next few weeks.”

“We are off to a good start achieving a full year 2024 direct expense ratio of 12.3% or below, demonstrating our consistent execution and a sustained efficiency mindset.”

“We would expect this positive trend of new money yields outpacing roll-off yields to persist given the current level of interest rates.”

“Looking ahead, we continue to expect VII returns to move toward the upper end of our near-term outlook range in the second half of the year, and we remain comfortable with our full year VII guidance of $1.5 billion.”

“While EMEA adjusted earnings were above trend this quarter, we still view the run rate to be $60 million to $65 million per quarter for the remainder of the year.”

“Our outlook there remains pretty positive. We continue to see a very healthy pipeline, in particular, a pipeline at the larger end of the market where we are most competitive.”

“In terms of growth, regional markets has grown two to three percentage points higher than the overall average, and we see a clear path for that growth to continue.”

“And then on the disability side, our outlook in terms of the ratios does include an expectation that the profitability of our disability line of business will moderate over time.”

“we've seen double-digit growth over many years and we expect that to persist in the future given customer needs and the opportunity to drive penetration in the workplace.”

“Having said that, we think distributions will likely outpace new contributions just given our revised level of new commitments.”

“As we point out on the slide, we think VII in the first quarter will continue to be pressured.”

“And so we think the best way to think about the spreads for the year is relatively flat to what you saw for the full year of 2023.”

“And our view is the interest rate caps will roll off throughout the year and then VII will emerge throughout the year and essentially offset the decline there.”

“Finally, for EMEA, we're expecting sales to grow mid- to high-single digits and adjusted PFOs to grow mid-single digits over the near-term.”

“For Latin America, we expect both adjusted PFOs and adjusted earnings to grow by high single digits over the near-term.”

“We are maintaining mid-single digit adjusted earnings growth expectation over the remainder of the near-term.”

“And we are lowering the adjusted earnings guidance range to $700 million to $900 million in 2024 to reflect the foregone earnings from the reinsurance transaction as well as lower expected PE returns and natural runoff of the business.”

“For MetLife Holdings, we are expecting adjusted PFOs to decline by approximately 13% to 15% in 2024 and then declining 4% to 6% annually thereafter.”

“As such, we expect the investment spread range for 2024 is 115 to 140 basis points.”

“Regarding investment spread, full year 2023 was 125 basis points and is expected to be relatively flat for the full year of 2024.”

“As such, we are reducing our near-term group life mortality ratio and non-medical health interest adjusted benefit ratio ranges by 1 percentage point to 84% to 89% and 69% to 74%, respectively.”

“Regarding underwriting, we expect 2024 underwriting margins to be generally consistent with 2023.”

“We are increasing our expected effective tax rate range by two points to 24% to 26% to reflect our expectation for higher earnings in foreign markets with higher tax rates and lower tax credits in the U.S.”

“Our corporate and other adjusted loss target is expected to be $750 million to $850 million after tax in 2024.”

“We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings.”

“For our near-term targets, we are maintaining our adjusted ROE range of 13% to 15%.”

“Our expectation going forward remains for modest credit losses on the portfolio.”

“It should be playing to see that we anticipate the underlying momentum building across our businesses to continue.”

“This will free up more than $3 billion of capital over time and illustrates the disciplined approach we apply to evaluating our portfolio of businesses.”

“We believe group PFO growth is sustainable at more than $1 billion per year.”

“the strength and stability of our commercial real estate portfolio, which we detailed a year ago, has borne out, as we said, a modest increase in LTVs and stable debt service coverage ratios, and we expect that to remain true in 2024.”

“I wouldn't sort of consider January as monthly run rate for the full year, but we're going to continue to be opportunistic here.”

“We see a very healthy pipeline ahead and really with a lot of visibility into 2024.”

“On that front, we are on track to exceed each commitment made at our December 2019 Investor Day and I am confident. we will continue to deliver for our shareholders and other stakeholders.”

“If we look at the economy in Japan, it is really strong but our sales are primarily driven by interest rates. And so the stronger interest rates have really helped us. So as long as that continues, we think we've got a really solid platform on which to leverage the higher sales.”

“I think there's a couple of ways to think through that as I mentioned in the earlier comment, I mean, we are seeing an increase in demand. And that is -- we've been able to solve that fairly efficiently with just annual capital generation. And that -- but we do think that it is going to grow and we are constantly considering different ways to take advantage of that.”

“We believe that, favorability will over time. It's not going to happen in any given quarter but will over time come back into pricing.”

“We also have a track record post major divestitures of returning capital and a deliberate and expeditious manner. So I would suggest that we would conduct ourselves in the same manner here.”

“As we had mentioned, we expect that to add about 60 points to our RBC and we consider that to be excess capital.”

“In terms of IRR and pricing, typically the rate environment will price in. These -- the counterparties were buying or selling however you want to look at it, they're pricing in the current rate environment. So I wouldn't expect a big uptick in IRRs. I think 17% IRR is a pretty healthy level to be at.”

“we see a path to continue to grow at within the range that we provided organically”

“We are seeing a tick up in the jumbo activity into next year as well building on what we're doing this year.”

“Finally we expect the Japan solvency margin ratio to be approximately 600% as of September 30th, which we based on statutory statements that will be filed over the next few weeks.”

“With regards to CML loan maturities, we now have successfully resolved almost 90% of the portfolio scheduled to mature in 2023 and our expectation remains for minimal losses on the portfolio.”

“We expect this favorable trend to continue assuming interest rates remain near current levels.”

“Therefore, VII would more closely resemble second quarter results.”

“As of now, we anticipate PE returns to remain consistent with the second and third quarter with a modest improvement in real estate funds in the fourth quarter.”

“Looking ahead, while we anticipate Asia year-over-year sales will decline in the fourth quarter, we expect full year 2023 sales growth to be at the top end or exceed our annual guidance range of mid- to high single-digits.”

“As a reminder, mortality results tend to be more favorable in the third quarter, so we would expect our Group Life ratio to be back within the 85% to 90% range in the fourth quarter and full year of 2023.”

“At this juncture, we have received all necessary regulatory approvals and we expect to close in short order. We do not anticipate any material changes to the terms announced in May.”

“we launched a digital platform that seamlessly integrates insurance solutions into the customer journeys of our LatAm business partners, such as banks, financial institutions, retailers and others, which we expect will lead to even more responsible growth in the region over time.”

“These findings confirm what I have said before we should continue to see a strong pipeline for our pension risk transfer business.”

“Year-to-date sales are up 11% while adjusted PFOs are up more than 4% in the quarter reflecting the impact of our contracts and within our 4% to 6% outlook range which we expect to achieve for the full year.”

“Our CML portfolio scheduled maturities over the next three years are very manageable, 10% in 2024 13% in 2025 and 16% in 2026.”

“We remain committed to achieving a full year direct expense ratio of 12.6% or below in 2023, demonstrating our consistent execution and focus on an efficiency mindset.”

“But I think right now we would view the kind of the third quarter outlook would be somewhere in this vicinity or maybe the average of Q1 and Q2.”

“I think as you look forward, we would think spreads kind of hover around this point.”

“But when we look at the year over year comparison for the second half, we're going to be challenged given we had a strong second half of the year last year.”

“So if you want to kind of step back and look at the non-medical health benefit ratio for the full year which is inclusive of dental and disability, we expect to be at the midpoint of our guidance range for the full year here.”

“So we don't expect these to be recurring as I mentioned. And so, you could essentially normalize for those on a go-forward basis.”

“We obviously we're looking to close the transaction in the second half of the year. And one we do, we'll assess the environment at the time.”

“Finally, we expect the Japan-Solvency Margin Ratio to be approximately 700% as of June 30, which will be based on statutory statements that will be filed in the next few weeks.”

“In addition, as previously disclosed, we expect the transaction to add approximately 60 combined RBC points.”

“With regards to CML loan maturities, we now have successfully resolved 69% of the portfolio's schedule to mature in 2023, and our expectation is for minimal losses on the portfolio.”

“We expect this favorable trend to continue assuming interest rates remain near current levels.”

“As of now, we anticipate that VII in the third quarter will generally be in line with the second quarter result.”

“Beyond this, the dynamics of our reinsurance transaction will further add to cash as we move through the remainder of this year.”

“We are on track to generate group benefits PFOs of roughly $24 billion in 2023, representing $5 billion of growth at a CAGR of more than 5%.”

“In total, year-to-date sales are up 13% while year-to-date adjusted PFOs are up 5%, reflecting the impact of par firmly within our 4% to 6% outlook range, which we expect to achieve for the full year 2023.”

“If you think about the macro environment, we're seeing some of those tailwinds right now, but we continue to be disciplined in our pricing because there's a fair bit of uncertainty in the environment going forward. And we're certainly continuing to bake that into our pricing as we look into '24.”

“In the absence of responsible organic growth or compelling M&A opportunities, we will return capital over time to our shareholders.”

“We remain committed to achieving a full year direct expense ratio of 12.6% or below in 2023, demonstrating our consistent execution and focus on an efficiency mindset.”

“As we think about the rest of the year, we continue to -- from a pricing perspective, we continue to bake in a load for softness in the environment.”

“We probably think Q2 has some kind of similarity to Q1 at this point for ex-VII spreads. And then we'll need to see how the forward curve and how rates progress through the rest of the year.”

“But that being said, we believe that the guidance we provided is still a reasonable run rate for the remaining of the year for the region.”

“Finally, as I referenced earlier, we expect that Japan's solvency margin ratio to be approximately 725% as of March 31, which will be based on a statutory statements that will be filed in the next few weeks.”

“Of our remaining 2023 maturities, we expect most will be similarly resolved with only 0% to 3% of our 2023 maturities potentially resulting in defaults.”

“Yeah. And I would just maybe add, Tracy. I mean I think obviously Q1 is a -- year-end marks. We're moving into now Q1 -- Q2 being off of Q1 results, so I think directionally we would be kind of optimistic that it would improve from Q1. Maybe we don't revert back to plan, but I think we're on kind of an upward trend.”

“Sitting here today, we're still seeing a pretty healthy pipeline given funded status of pension plans.”

“Finally, for EMEA, we are expecting sales and adjusted PFOs to grow mid to high single digits on a constant currency basis over the near term.”

“We expect our adjusted earnings to grow high single digits over the near term, excluding roughly $80 million due to favorable market-related factors in 2022.”

“For Latin America, we expect adjusted PFOs to grow by low double digits over the near term.”

“We expect Asia's adjusted earnings, excluding $270 million of COVID-19 claims in 2022, to grow at mid-single digits over the near term.”

“Finally, we are maintaining the adjusted earnings guidance of $1 billion to $1.2 billion in 2023.”

“We are lowering the life interest adjusted benefit ratio target to 40% to 45% in 2023 from the prior 45% to 50% target to reflect the impact of lowering policyholder dividend levels.”

“Beyond 2023, we expect annual PFOs to decline 6% to 8%.”

“For MetLife Holdings, we are expecting adjusted PFOs to decline 12% to 14% in 2023, driven by the normal runoff of the business, market declines and the transition to LDTI.”

“Overall, the conversion to LDTI will not significantly change RIS run rate adjusted earnings.”

“The majority of this increase is driven by continued expectations of rising interest rates on the short end of the curve and the resulting benefit of interest rate cap income, which we expect to peak in the first half of 2023.”

“We are also maintaining the expected group non-medical health interest adjusted benefit ratio at 70% to 75%.”

“Regarding underwriting, we expect the Group Life mortality ratio to be between 85% to 90%.”

“We are increasing our expected effective tax rate range by 1 point to 22% to 24% to reflect our expectation for higher earnings in foreign markets and lower tax credits in the U.S.”

“Our Corporate and Other adjusted loss target is expected to remain at $650 million to $750 million after tax in 2023.”

“We expect to maintain our 2 year average free cash flow ratio of 65% to 75% of adjusted earnings, excluding total notable items.”

“We said we would generate $20 billion over 5 years of free cash flow. We expect to exceed this target.”

“And we do expect to migrate back to those levels over time.”

“But right now, we feel very comfortable with being able to fund within the operating entities, what's needed to successfully grow this business.”

“Now when we did sort of establish the 12 3 target, obviously, it was also in a different environment if you consider the inflationary pressures that everyone is feeling at the moment. Yet, I mean -- and again, I think this is credit to the sort of efficiency mindset that we've built here. We continue to be committed to achieving 12 3 for the year.”

“Clearly, we've seen -- we're on track to have a record year this year.”

“I'd say for fourth quarter, we'd expect spreads all else equal to grow by 5-plus bps.”

“So I don't think our outlook would change for it now but we continue to like it for the reasons that we've mentioned.”

“First is just remember our guidance. We've been very consistent for several years in that. 12% is our expectation every year when we're going to planning, 3% a quarter. And I'd say that even now looking forward to the last part of your question, I wouldn't anticipate that changing.”

“That being said, rising interest rates improve the overall economic solvency of our Japan business.”

“But if you look at our results, historically, there's some seasonality to both of those ratios and we'd expect them to somewhat pick up in the fourth quarter just from a seasonality perspective.”

“The pipeline continues to be pretty active and pretty robust, as Michel mentioned.”

“While we would expect our direct expense ratio to be higher in the second half of the year, consistent with the seasonality of our business, we remain committed to achieving a full year direct expense ratio below 12.3% in 2022 despite the challenging inflationary environment.”

“As we look at the rest of the year, on the Group business side, we're cautiously optimistic given the results here. But clearly, you know the trajectory of the pandemic is uncertain. At this point, I would say, if you exclude COVID, we anticipate that our mortality ratio to be comfortably inside our range for the second half of the year for the group business.”

“We're introducing new products in Korea. And also, we expect some relief in the lockdown conditions in China.”

“Looking forward, we expect strong momentum going into the third quarter.”

“But I think what we've proven over time through the diversification in our portfolio across strategies and geographies is we would expect that directionally but likely not to the same degree as a market overall.”

“Given the accelerated pace of buyback activity in the first half of the year, we anticipate a modestly slower pace in the back half.”

“We continue to see a strong pipeline for the balance of the year based on good funding levels and higher long-term interest rates.”

“So, from a guidance perspective, hitting to the mid-to-high single sales growth guidance we gave in February.”

“We remain committed to achieving a full year direct expense ratio below 12.3% in 2022, demonstrating our consistent execution and focus on an efficiency mindset.”

“And in terms of timing, I expect a much stronger year-on-year performance in the second half for Asia as a whole.”

“We did one transaction this quarter for $1.3 billion and we still see a very robust pipeline in front of us as we look towards the rest of the year.”

“Yeah. We don’t -- we would not expect any unusual impacts to occur.”

“I think as long as rates are moving, we will probably see similar action and similar results, yeah.”

“I think the broad interest rate sensitivities we gave as part of our outlook directionally still hold, even though the shape of the curve is a little different, so numbers may not be exact, but I would say the directional nature of that from an earnings perspective, which means that it’s a little negative in the first year, may -- I might call it neutral-ish now just the way things have kind of panned out and then you start to see kind of the positive momentum emerge in the 2023 and 2024, again, assuming rates kind of pan out as they are projected to.”

“But if the forward curves come to fruition, we would actually start to see maybe a shift in the spread moving back up a little bit, and I’d say, there’s probably two reasons for that.”

“So, we are seeing less movement in the jumbo market. And so we are expecting that activity to come down in ‘22 from a jumbo perspective.”

“In terms of statutory capital for our U.S. companies, we expect our combined 2021 NAIC RBC ratio will be above our 360% target.”

“We expect adjusted earnings and PFOs to decline in 2022 due to the impact from the stronger U.S. dollar and divestitures in the region.”

“Finally, for EMEA, we expect sales to grow mid to high single-digits over the near-term.”

“We are expecting mid-single-digit adjusted earnings growth when excluding the excess VII over plan of approximately $800 million post tax in 2021.”

“In addition, we expect journal account AUM to maintain mid-single-digit growth.”

“Finally, we are maintaining the adjusted earnings guidance of $1 billion to $1.2 billion in 2022.”

“We are lowering the life interest adjusted benefit ratio to 45% to 50% in 2022 from the prior 50% to 55% in 2021 to reflect the impact of lowering the policyholder dividend levels.”

“For MetLife Holdings, we are expecting adjusted PFOs to decline between 6% to 8% annually higher than our prior guidance of 5% to 7%.”

“Overall, we would expect a significant decline in RIS adjusted earnings in 2022, given the exceptional private equity returns in 2021 as well as 2021 benefiting from higher mortgage pay-downs and excess mortality gains, we believe were likely due to COVID.”

“However, we are increasing our expected annual RIS investment spread by 5 basis points to 95 to 120 basis points in 2022, consistent with our higher VII range.”

“For RIS, we are maintaining our 2% to 4% expected annual growth for total liability exposures across our general account spread and fee-based businesses.”

“We are also maintaining the expected group non-medical health interest adjusted benefit ratio at 70% to 75%.”

“Regarding underwriting, we expect the annual Group Life mortality ratio to be between 85% to 90% excluding COVID impacts.”

“In addition, our 2022 average VII asset balance also factors in, our expected sale of $1 billion of private equity in the secondary market in 2022.”

“The takeaway is that changes in interest rates are expected to have a relatively modest impact on adjusted earnings over the near-term.”

“We also expect to maintain our 2-year average free cash flow ratio of 65% to 75% of adjusted earnings.”

“As a result, we would expect adjusted earnings in 2022 versus 2021, will be reduced by roughly $50 million in Asia, roughly $25 million for both Latin America and EMEA.”

“FX rates based on the forward curve indicate the U.S. dollar is expected to remain strong, which will be a headwind for our businesses outside the U.S.”

“Our U.S. group benefits business should benefit from rising overall employment and compensation levels.”

“Despite higher inflation, we still expect our direct expense ratio to be below 12.3% for the full year 2022.”

“So at this point, I'd say nothing has caused us to feel the need to change the time line.”

“continue to be on target for implementation come 11/23.”

“if we're above 12.3% in the fourth quarter by a bit that would that would not be a surprise, per se, but that's not our focus... we continue to anticipate to be under that on a full year basis.”

“our expectation right now is that for the full year, we're going to get a ratio that's very close to the midpoint of our range.”

“We would expect that to continue into 4Q and kind of start to make its way down.”