MetLife Financial MetLife Financial Services Services
MetLife Financial Services MetLife Financial Services Snapshot Snapshot � MetLife’s Career Agency Field Force � 5,350 career agents by end 2003 � 129 agencies � It’s a Face-to-Face business � Compensation - straight commission � 91% is Proprietary business
MetLife Financial Services MetLife Financial Services Product Mix Product Mix Product 1999 2003E Life 53% 52% Annuities 25% 30% LTC 1% 4% DI 2% 2% Funds 10% 4% Other (MetGA, P& 9% 8% C, Group) TOTAL 100% 100%
MetLife Financial Services MetLife Financial Services Action Plans Action Plans � Agent population - Year End 2003E is 5,350 – Trim low producers – Close or consolidate less profitable agencies – Realign recruiting and training � Agent population - Year End 2004P is 5,600 � Limit who can recruit and who can train � Grow our agent population more selectively � Focus on increased productivity
MetLife Financial Services MetLife Financial Services Agents vs. Per Rep Productivity 6,500 $37,000 $35,000 6,000 $33,000 5,500 $31,000 5,000 $29,000 4,500 $27,000 4,000 $25,000 2001 2002 2003E 2004P Agents Prod.
MetLife Financial Services MetLife Financial Services FYC vs. Agents 220 6,500 210 6,000 200 FYC $Millions 190 5,500 180 5,000 170 160 4,500 150 140 4,000 2001 2002 2003E 2004P FYC Agents
MetLife Financial Services MetLife Financial Services Leverage Existing Client Base Leverage Existing Client Base � 10M Individual Clients, 3.9M Institutional Clients – Total Leads Generated 3.73M – Sales $137.3M Protection Premium, $1.5 B Annuities – 45% of policies sold in 2003 are to existing clients � MetLife Bank attracted 4,000 customers in 2003
MetLife Financial Services MetLife Financial Services Efficiency Gains Efficiency Gains � Continue common platform � Restrict recruiting to proven management � Tie all levels of management compensation to P&L � Leverage our large inforce customer base � Leverage our Institutional client base � Reduce management infrastructure
MetLife Financial Services MetLife Financial Services Focus on the Fundamentals - “They Still Work” Focus on the Fundamentals - “They Still Work” � Drive performance through key metrics � Grow agent population selectively � Emphasize Life, DI, then investment products � Focus on expense management � Intensify discipline in selection and training � Increase sales to existing clients
New England New England Financial Financial
New England Financial New England Financial Structure Structure � Entrepreneurial General Agency System � Interdependency between Home Office and Field � Pay for Performance � Operate within Commission plus Expense allowances � Non-distribution functions leveraged through MetLife “shared services”
New England Financial New England Financial Market Focus: Affluent and Small Business Market Focus: Affluent and Small Business Affluent Market Household Growth Small Business Market Entity Growth 15% 16% 16% 13% 14% 14% 12% 12% 12% 2003E Growth Annual Growth 10% 10% 8% 8% 6% 6% 4% 4% 2% 1% 1% 2% 2% 0% 0% U.S. Affluent Wealth U.S. Net Small Small Population Market Market Population Business Business Entity Growth Formation Source: Spectrum Group/NFO Wold Group Affluent Market Research Program Source: Census Bureau/Small Business Admin.
New England Financial New England Financial Producer Trends Producer Trends 1996 2003E Agent Count 2,361 3,000 Agent 4-Year Retention 17.6% 21.4% Agent Productivity $31,900 $37,400
New England Financial New England Financial Decisive Actions Decisive Actions � Eliminated redundant management structure � Reduced Home Office costs by 50% � Right-sized number of distribution points from 84 to 70 � Key Metrics: Agency Profitability � Minimal disruption to business
New England Financial New England Financial Profitable Growth Profitable Growth � Modest agent growth � Retention 2x industry � Productivity 25% above industry � Life sales 45 - 50% of mix � Continue strong annuity growth
MetLife MetLife Independent Independent Distribution Distribution
Independent Distribution Independent Distribution Combine GenAm distribution and MetLife Investors to form Independent Combine SFG Distribution and Cova to form Acquire GenAm MetLife Investors Annuity distribution to broker/dealers through Cova and life distribution through GenAm Acquire Security Distributors First Group for bank distribution 1997 1999 2001 2003
Current State Current State Annuities � – Dramatic increase in sales in all channels, across all products – Increased sales power – Moved from expense loss to expense contribution Life � – Steep decline in sales across all products – Decline in the number of agents producing at a $25,000 annual rate – Reorganization of sales support functions resulted in dramatically lower 2004 budget Long Term Care � – Recently introduced in a limited number of selling firms – Strong interest from all distribution channels
Annuity Sales Power Annuity Sales Power Selling Arrangements and Wholesalers Selling Arrangements and Wholesalers 80 500 400 60 300 40 200 20 100 0 0 Dec-01 Dec-02 Dec 03E 41 60 75 Annuity Wholesalers Selling Agreements 157 344 449
Annuity Sales Power Annuity Sales Power Appointed Reps Appointed Reps 500 70,000 400 56,000 300 42,000 200 28,000 100 14,000 0 0 Dec-01 Dec-02 Dec 03E 157 344 450 Selling Agreements 23,291 52,588 66,092 Appointed Reps
Annuity Sales Annuity Sales 2001 Actual - 2004 Plan Annuity Sales % 5 6 E 4 0 0 2 - 1 0 0 2 R $8,000 G A C $6,400 ($Millions) $3,288 $1,776 2001 2002 2003E 2004P
GenAm Sales Power Sales Power GenAm Agents Selling $25,000 or more Agents Selling $25,000 or more 700 600 500 400 300 200 100 0 Dec-01 Dec-02 Dec 03E 444 616 471 Committed Agents
Protection Product Sales Protection Product Sales CAGR 2001 - 2004P -3.8% 120 80 40 0 2001A 2002A 2003E 2004P 0 2 2 2 DI 0 0 1 4 LTC Life 111 100 83 99
Expense Management Expense Management 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% -100% 2001 2002 2003E 2004P Premiums and Deposits Direct expenses
Strategy for Achieving Annuity Sales Strategy for Achieving Annuity Sales Goals Goals � Selling agreement with another national broker/dealer � Increase market share with independent broker/dealers � Additional penetration of existing relationships. In its 25 largest accounts, MetLife is in the top three firms in 13 � Increase coverage and sales power by adding 40 new wholesalers � Increase market share in existing distribution organization through the introduction of a new lifetime income solution product � Increase sales of fixed annuities
Strategy for Achieving Sales Goals for Strategy for Achieving Sales Goals for Protection Products Protection Products � Increase sales power by adding 16 wholesalers during the year � Continue the controlled roll-out of LTC � Use GenAm life wholesaling capabilities to leverage existing MLI annuity relationships � Leverage Walnut Street Securities to increase sale of proprietary products � Introduction of new term and VUL products tailored to independent distribution needs � Reorganization of life sales support departments, including development of a sales desk function for internal wholesaling
Summary Summary � Focused distribution model � Untapped potential to leverage relationships in previously uncombined independent channels � Expansion of product offering in the independent channels � Commitment to profitable distribution � Prudent management of risks � Tremendous opportunity to continue strong growth
Annuity Guarantees Annuity Guarantees
Annuities Annuities Minimum Guaranteed Interest Rates Minimum Guaranteed Interest Rates � 1.5% minimum introduced in 45 jurisdictions in September 2003 � Implementing Florida and Maryland January 2, 2004 � Breakdown of current inforce -- majority at 3% with room to move before hitting guarantees: Account September 2003 Balance % of Total Credited Rate 3% minimum $22.7B 81% 4.11% 4% minimum $4.7B 17% 4.58% Other $0.7B 2% 4.71% Total $28.1M 4.21%
Annuities Annuities Guaranteed Minimum Death Benefit Risk Guaranteed Minimum Death Benefit Risk ($Millions) 9/30/03 9/30/02 Change Total Annuity Account Balance $55,569 $44,465 +25% Total Account Balance with GMDB Provisions $34,988 $27,191 +29% Net Amount at Risk (Death Benefit less Account Balance) $2,198 $4,577 -52% YTD Death Benefits (Pre-Tax) $23.6 $18.2 +30%
Annuities Annuities GMIB Asset Distribution GMIB Asset Distribution ($Millions) Total Annuity Account Balance as of 9/30/03: $55,569 3% 9% 88% Non-GMIB Self-Insured GMIB Reinsured GMIB
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