Ladies and gentlemen, we like to thank you for standing by and welcome to the MetLife's First Quarter 2014 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, instructions will be given at that time. As a reminder, this conference call is being recorded. Before we get started, I would like to read the following statement on behalf of MetLife. Except with respect to historical information, statements made in this conference call constitute forward-looking statements within the meaning of the federal securities laws including statements relating to the trends in the company's operations and financial results and the business and the products of the company and its subsidiaries. MetLife's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties including those described from time to time in MetLife's filings with the U.S. Securities and Exchange Commission including the risk factors section of those filings. MetLife specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. With that, I would like to turn the call over to Mr. Ed Spehar, Head of Investor Relations. Sir, the floor is yours.

Thank you, Steve, and good morning, everyone. Welcome to MetLife's first quarter 2014 earnings call. We’ll be discussing certain financial measures not based on generally accepted accounting principles so called non-GAAP measures reconciliation of these non-GAAP measures and related definitions to the most directly comparable GAAP measures may be found in the Investor Relations portion metlife.com in our earnings press release and our quarterly financial supplements. A reconciliation of forward-looking financial information to the most directly comparable GAAP measures is not accessible because MetLife believes it's not possible to provide a reliable forecast of net investment income and net derivative gains and losses, which can fluctuate from period to period and may have a significant impact on GAAP net income. Now, joining me this morning on the call are Steve Kandarian, Chairman, President and Chief Executive Officer; and John Hele, Chief Financial Officer. After their prepared remarks we will take your questions. Also here with us today to participate in the discussions are other members of management including Bill Wheeler, President of the Americas, Chris Townsend, President of Asia and Michel Khalaf, President of EMEA and Steve Goulart, Chief Investment Officer. With that I would like to turn the call over to Steve.

Thank you, Ed, and good morning, everyone. We're pleased to report solid first quarter results with operating earnings of $1.6 billion, which exceeded our plan. Favorable investment margins and well-controlled expenses more than offset fluctuations in underwriting and $57 million after-tax charge to settle a licensing matter in New York. We anticipate that underwriting margins will improve and consider the New York settlement to be an unusual item. While operating earnings were better than our expectations results were down 5% from a strong first quarter last year. Operating earnings in the prior year quarter benefited from a weaker dollar and stronger equity market returns. Operating earnings per share were $1.37; a 7% decrease in the prior year period. Performance on a per share basis was dampened by the conversion of equity units issued in 2010 to fund the acquisition of Alico. The final $1 billion tranche of equity units will convert in October of this year. Operating return on equity was 11.4% in the quarter. First quarter operating earnings benefited from strong variable investment income driven by returns in private equity. The operating earnings impacting variable investment income was $63 million above the top end of our expected range or $0.06 per share. Investment margins had been resilient despite a prolonged period of low interest rates. Our margins continue to benefit from effective asset liability management, good global investment income and income from derivatives many of which were purchased in the mid-2000s, protect earnings in a low interest rate environment. Lower operating expenses had a positive impact on earnings in the quarter driven by expense control in all three geographic regions, the Americas, Asia, and Europe, Middle East and Africa. We feel good that our cost savings initiatives are translating to improve bottom line results. Underwriting margins were lower than…

Thank you, Steve, and good morning. Today, I'll cover our first quarter results including a discussion of insurance margins, investment spreads expenses and business highlights. I will then conclude with some comments on cash and capital. As Steve noted, operating earnings were $1.6 billion, down 4% year-over-year and operating earnings per share were $1.37 down 7% year-over-year. This quarter included two notable items. First, pretax variable investment income was $429 million, reflecting strong private equity returns. After taxes and the impact of DAC, variable investment income was $274 million which is $63 million or $0.06 per share above the top end of our 2014 quarterly guidance range. The second item was a legal settlement with New York, which reduced operating earnings and corporate and other by $57 million after tax or $0.05 per share. Turning to our bottom line results, first quarter net income was $1.3 billion or $1.14 per share. Net income included in investment loss of $343 million after tax from the previously announced sale of the U.K. pension risk transfer business. This was modestly below the $350 million to $390 million after tax range we previously disclosed. In addition, net income included net derivative gains of $223 million after tax. The net derivative gains in the quarter were driven primarily by three items that we consider to be either non-economic or the result of asymmetrical accounting treatment. Number one, a decline in long-term interest rates, number two changes in foreign currencies and number three, the MetLife own credit impact associated with our VA program. The decline in long-term interest rates in the quarter contributed approximately 70% of the net derivative gains, while foreign currency and MetLife's own credit combined for most of the remaining balance. Book value per share excluding AOCI was $49.34 at March 31st, up…

We are ready to take questions operator.

Ladies and gentlemen, we will now begin the question-and-answer session of our conference. (Operator Instructions) Our first question will come from the line of Mr. Tom Gallagher of Credit Suisse. Please go ahead.

Good morning. Steve, first question for you just on your follow-up to your comments on the environment for capital rules and how you expect clarity around non-bank SIFI to be pushed out to 2015. There is currently legislation running through both the House and Senate to clarify Collins' amendment. If that legislation passes, will that change your view in terms of having to wait or will that give you enough confidence that you'd be able to do something less conservative? That's my first question.

Hi, Tom. Yes. There's legislation now proposed both in the House and the Senate and then there is Susan Collins from there's an amendment named in Dodd-Frank, which is Section 171 of Dodd-Frank was interpreted by the Federal Reserve as requiring them to use no less than bank standards for non-bank SIFI such as insurance companies. And there is now a bill that Susan Collins, Sherrod Brown and Mike Johanns in the Senate have coalesced behind S.2270. There is an identical bill now in the house HR 4510, again, bipartisan support by representatives Gary Miller and Carolyn McCarthy. That's all encouraging news, but of course, these be a vehicle by which this would turn into legislation not just a bill and to-date there has been resistance to any amendments to Dodd-Frank, a bill that's been promulgated now for four years this summer. So our hope is that there will be some softening of the position of not opening up Dodd-Frank for amendments. And it's not unusual for a very complex bill to have technical amendments after some period of time. And our hope is that Congress can find a way to navigate these issues and get these kinds of technical amendments or non-partisan, excuse me, bipartisan non-controversial through Congress and signed by the President. That's our hope and we're working hard to try to support those efforts. If such a bill were to pass, that would be very favorable news, but I don't want to over blow it either. All I would say is to the Fed that you're not constrained, you are hands are not tied in terms of opposing Basel rules on the insurance industry. It doesn't say what rules they would apply but presumably they would be more tailored to the insurance industry I think that certainly would be a net positive so that would be a positive piece of information that we certainly would take into account as we thought about capital management.

So if it does pass positive directionally, maybe, maybe not enough for you to change your plan for now? Is that a fair way to characterize it?

I wouldn't phrase it that way. I think there would be positive news and certainly that we take that into account as we thought about capital management and that could have an impact upon how we would move forward.

Okay. That's helpful. And then just one I guess business question from the standpoint of so Met and the rest of the life insurance industry now this quarter have had pretty weak mortality results across the board. We've seen more pockets of this over the last few years. Any thoughts overall about whether this is truly just seasonality and randomness of more deaths this quarter? Or do you think we're seeing something more structural in terms of seasoning of more aggressive pricing years any help or color on that would be appreciated.

Tom, hi, it's Bill Wheeler. So we ask ourselves that question when we have a quarter like this. We look at the claims and the data, our overall book, we look at, we always go back and look at the last five years or 10 years and say gee, am I missing a trend here, is there something I should be paranoid about in terms of our underwriting or pricing. So we examine this really carefully. And I think our conclusion after this quarter is, there isn't a trend, there isn't something that we need a deeper concern that we need to be worried about. What we saw was some increases in severity, both in the Individual Life block as well as Group Life. And maybe just a slight increase in frequency in Retail Life, which probably brought on by the weather. And we know that happen, right? We see quarters occasionally like this where you have a big pop in severity. And of course, this quarter in Retail Life, which wasn't very good, just remember the third and fourth quarter last year we're extraordinarily low in terms of mortality experience very good mortality experience. So I think we just have to appreciate that this can be a volatile business. And as Steve said in his prepared remarks, it doesn't mean, it's not a good business and with great returns on capital, but mortality over the short-term can be volatile and so you've just got to take a little longer term view.

Got it. So Bill, no cohort years and anything along those lines as you vandalize the data to raise alarms?

That's right.

Okay. Thanks.

Next question comes from the line of John Nadel of Sterne, Agee. Please go ahead.

Hi. Good morning, everybody. Steve, I have a question about the recent CCAR results for the large bank financial institutions. I'm just curious whether you and the Board and the rest of management have any real sort of learnings or takeaways from the recent CCAR process. And maybe particularly with the focus on Citigroup's "failure" which appear to be, at least this is my sense driven in part by sort of the global nature of their business. And I'm just sort of wondering, if you're incrementally thinking about implementing any changes or anything incrementally to your enterprise risk management as a result of what you saw?

John, I think you raise a good point, which is we're in uncharted waters here. Dodd-Frank passed in 2010; implementation really is in the very early stages, everyone's learning how to work together both on regulatory side and in this case in the bank side. I think people are going through the learnings of all this. And I think as of now there's not a great deal of transparency in terms of how all these calculations get done on the regulatory side. So I think people are trying to figure out how to operate within that environment. And it's obviously been difficult in some cases and we're mindful of that. And we are certainly building out our capabilities in case we are designated a SIFI on a final basis and regulated by the Federal Reserve. So it is something that we've spent a great deal of time discussing internally at the management level with our Board. And we certainly are taking steps at MetLife to make sure that we are prepared going forward should we'd be finally designated as a SIFI.

Okay. That's helpful. I mean obviously, it was a little surprising, right? And my sense is that management at a couple of these companies in particular Citigroup were also may be taken by surprise in terms of the result. So I know you guys had a little experience with that. The next question is more, it's about Asia. And I was just hoping we could get a little bit better detail on some of the underlying trends that more of the product level maybe first sector in Japan versus third sector, what you like and what you saw on the sales side, what you're sort of unhappy with you. If you can just give us a sense there that would be great.

Sure, Tom. It's Chris Townsend here. So the sales for Asia as John mentioned were up 2% year-on-year and they were down 34% sequentially. So if I take that sequential plan of first of all, we wrote a very significant account in Australia in the fourth quarter of 2013 plus there was some high sales of two yen-based life products before they were repriced. It was repriced both of those products, one in October, one in December and then now at or above our return hurdle rate. So what you've seen is following that repricing a significant reduction in terms of the first step, the life sales and because of some of the packaging element which we spoken to you before about there has been a knock on impact in terms of the third sector as well. The persistency overall is good, revenues are up both sequentially and year-on-year. The cancer product is selling very well. We launched a new cancer product last August and we're just about at 100,000 new customers for that product now. And the cancer sales overall are up about 120% year-on-year. Going forward, what you'll see is that we'll tweak slightly to – one of the short pay periods, the life product and also in the second half we'll launch a range of new A&H products and riders as well. So that will lift sales towards the second half of the year. I think Dave (sic) John, the other couple points to mention here is that we've spoken a number of times about the multichannel benefits of our business in Japan. And I would just like to point out that the bank channel sales of return significantly as we've got greater stability in the yen dollar and there's sort of a reduction and the increases in the Nikkei and the Topix. We have seen that bank channel come back very strongly in 100% growth year-on-year. And the final point here is, collectively as you think the repricing of those actions have turned into very positive margin for us and we're up about 300 or 400 basis points quarter-on-quarter.

That's really helpful. And Chris maybe just one more quick one, any expectation, way I guess maybe sort of what's your view reading tea leaves if you will have any chance for in Japan for the government to make some changes incrementally to co-pays?

I don't have a view on that right now.

Our next question will come from the line of Mr. Erik Bass of Citigroup. Please go ahead.

Hi. Thank you. First, can you provide an update on your thinking about the equity units? And I know you've been clear certainly that you don't want to do a buyback and then have to issue equity of capital requirements change, but is your view on equity units at all different since you are essentially issuing equity if you don't offset the dilution?

It was our intent when we issued those securities that we'll buy them back in the marketplace and we mentioned that before. And again, the capital considerations that we're analyzing, because of the uncertainty of the rules which are not yet in draft form for us to review has resulted in us to date not buying back those equity units. But certainly philosophically that is something that we had intended to do when we engaged in the Alico transaction back in 2010 and issued those securities.

Okay. And then it's on the group business, can you comment a little bit more on just to what's driving the strong sales so far in kind of current activity and pricing trends in the market? And I guess the strong sales is like coming more from new accounts or an expanded product offering?

Eric, it's Bill. I would say that the answer is both. Remember, we talked a lot about our strategy of growing our group business, but going down marketing growing at what I would call the middle market. We have a very strong presence in the large company marketplace in the U.S. and going down market with what I would say our broad product offering, which means not only our base coverages, but also all our worksite products. And we're having a lot of success down there. So we have seen increased sales and I would say the middle market as well as strong worksite sales, and that's consistent with I think the strategy that we've laid out here in terms of shift to more protection product. And in terms of just that I would say the tone of pricing, the pricing environment is I would say relatively good. I mean the guys who run that business are always sort of flinch when I say that because they always feel there's somebody out there who has been a little aggressive. But I would say today the pricing environment is relatively attractive and for the worksite portion of the business we think it's quite attractive.

Okay. Thank you for the color.

Our next question will come from the line of Mark Finkelstein of Evercore. Please go ahead.

Hi. Good morning. Actually sort of a follow-up to Erik Bass' question. Steve, in your opening remarks I think you addressed to palm kind of the evolution of the rules and some of the legislative actions. But you also talked about draft rules not coming out until 2015. And in your comments you actually used the words take into consideration the timing of the rules when you think about capital deployment. So the question is, I mean how was the timing influencing or how is your thinking evolving in terms of the timing in terms of those actions?

Hi, Mark. Well, I think you saw it with our dividend announcement. I think that's fairly aggressive increase in the dividend given that we had a large dividend increase one year earlier. And $1.40 a share for dividend for MetLife that translates to 2.7% yield, and roughly a 25% payout ratio. So I think you're seeing we're taking actions now that we think makes sense for us given the delay in the pronouncement of the draft rules of the Fed. And when we first engaged in this analysis and discussion internally two years ago or more, we anticipated that we would have greater clarity by now about capital rules. So as time goes on and cash accumulates in the company, if we're trying to find that right balance between making sure that we have adequate capital imposed rules by the Fed on one hand, if we're finally designated. And on the other hand making sure we're here to our philosophy of returning excess capital to our shareholders. So the dividend increase, I think is reflective of that consideration of the timing being pushed back and further accumulation of cash and again, you saw effectively another capital action back last year in the fall when we acquired ProVida for $2 billion in cash without issuing any shares in that acquisition. So we're trying to again strike that right balance. And certainly in terms of what we're thinking about in the future, we have to really look at all these things from a perspective of both timing, how much cash we're accumulating, merger and acquisition opportunities for us, acquisition opportunities for us and our dividend levels and so on. So everything is really kind of part of a more complex equation that we consider as we look at capital management.

Okay. That's helpful. And then just two very quick business questions. In Asia, you referenced favorable expenses. How much did that positively influence the Asia earnings? And then in EMEA, if you talked about maybe the run rate being lower. How should we think about that as well?

Hi. This is John. It's about $10 million for the Asia earnings on the expenses in the quarter as it's really just a matter of timing. I'm sorry but I missed the second part of the question?

A similar comment on EMEA that the run rate was likely should be going forward is a little bit lower? Just trying to frame out how we should think about EMEA earnings?

Slightly lower.

Slightly lower. Okay. Thank you.

Our next question will come from the line of Chris Giovanni of Goldman Sachs. Please go ahead.

Thanks so much. Steve, you made the comment about VA where you think you now might be in a position to grow with the better risk product. Is this still with 4% roll-up product? Are you looking to maybe re-risk the product to get back more in line with peers? And then and thinking about kind of the growth year, I think one of the concerns you had with VA was uncertainty over the capital treatment for separate accounts the way the current bank framework is written. So if you're looking to now grow VA again, has this changed? What's changed I guess in terms of your confidence, the bigger VA book won't be an issue in federal oversight?

So Chris let me take the first part of your question regarding the capital treatment of VAs. Then I'll turn it over to Bill for the business discussion about our strategy going forward. Again, the rules are not written so we don't know exactly how the Fed will treat separate accounts. However, I'd say conversations we've been having with them and others in Washington are encouraging from the following perspective. I think they better understand today than they did a couple of years ago, how our business now differs from that of a bank. And I think they understand that the non-guarantee portion of VA is the true separate account component really it's not a risk to MetLife on its balance sheet. And banks don't have this separate account situation on their balance sheet. So there is even if the Collins amendment is not modified, I think an opportunity for the Fed to say bank rules just don't apply in this particular instance about separate accounts. So it is possible it's up to them obviously not me but it's possible for them to look at separate accounts and not assess significant capital charges or significant capital charges for the non-guarantee portion of that business for us. And there's no indication by them one way or the other, but I would simply say the conversations we've had indicate more and better understanding on their part about what the risks really are associated with that part of our balance sheet which is virtually zero, if it's someone else's money that has been accounted for in our balance sheet. So with that I'll turn it over to Bill for the business question.

Chris with regard to VA pricing and competitiveness, I know you know this, but obviously, you've seen a real hardening of that market in terms of product features and investment options and the roll-up rate is an important consideration, but it's really only one living benefit rider there is other things going on. And I think the other thing that's happened of course is, you've seen a lot of sales now much broader diverse group of sales where there is no living benefit rider where the main motivation is tax efficiency or other things. And so our plan going forward is really to pursue all those of avenues, not just oh, we got to have a more aggressive living benefit rider, it's we've got to make sure that we are in all the other kinds of variable annuity products to meet specific customer needs. And so when we talk about our strategy, that's a big piece of it. Now we're always looking at how we can change our living benefit rider and my guess is, we'll modify that as well but there is nothing to talk about at the moment. But that kind of gives you a little color on our thinking here.

Okay. Those comments helpful. And then just one on ROE, Steve, you made the comment that the group business despite some of this adverse underwriting is still generating good returns. And I know you don't want to get into kind of segmented allocation of capital. But clearly you are focused on growing certain lines of business. So how should we be thinking about the returns on kind of the in-force that you're generating on those kind of core businesses that you guys have? And then what's maybe the drag that you're seeing from those run-off blocks that you've clearly deemphasized around long-term care and SGUL?

Well, I'll give you a little color on that, Chris. Our protection businesses, we're talking mid to high teens ROEs and they have always been that way honestly that's the – even in what I would say a tough underwriting period. And obviously Group is really the leader there and it's quite attractive ROE business. I would say the asset intensive businesses right now especially with the longer-term liability there go a long-term care and where there's been really low interest rates those ROEs are underperforming. And that's our challenge going forward as to – sort of work on the risk profile of those particular products, but at the same time grow the higher ROE business. And I would say obviously another factors in emerging markets ROE there is protracted this way.

And Bill with those be point drags to ROE or basis point drags to ROE just speaking kind of an aggregate?

You mean, you're asking order of magnitude of the drags?

Yes. I mean thinking about long-term care in SGUL, I mean clearly they are underperforming but is there kind of reducing aggregate ROEs by a point or are we talking basis points?

Well, the long-term-care block in and of itself isn't that big. So it's relative to the size of MetLife. So I'm sure that would be bps not full basis – full points. But, yes, I would say in general, sure, those bigger – those more asset intensive long guarantee businesses have the impact on the ROEs point.

Thank you.

Our next question will come from the line of Mr. Eric Berg of RBC Capital Markets. Please go ahead.

Thanks very much. The underwriting in 2013 was in some quarters quite challenging. And now you have another quarter of it although you have said that really relates to – now being there’s no trend here. That doesn’t necessarily tell you that you, that you got things are okay you might have a broader problem. My question is, when will we, when will you be in a position to sort of sound the all clear sign? If we have another quarter or two more quarters, how many quarters, how many quarters of normal underwriting results do you need before you can conclude that there is no problem? Thanks. That’s my first question.

Yes. Eric, you broke up a little bit, but I think I got the gist of your question which is, group underwriting experience last year was a little soft and now we’ve had a soft quarter in the first quarter of 2014. How long until we feel better about it? There is, if you look back at our history especially in Group Life over time, in the first quarter we often run a mortality ratio of 90% plus, that’s not that uncommon. This was a little worse than that, obviously, and so I would see this, I kind of view the Group Life experience as really kind of a seasonal quarter, but a tough seasonal quarter, tougher than normal. In terms of the future, look, we – our expectation is that our underwriting, especially in Group Life should start, should revert to the mean in the second quarter. And if it doesn’t, that’ll be another data point, which would cause us concern. But that's our – that's why we kind of view this really as a blip, and there are definitely blips in these, in this experience, not a trend. So I – my expectation is, I should see improvement in the second quarter and if I don't I should be worried. And so that's kind of our feeling.

Very helpful. And, Steve, one follow-up question. On a global basis, it feels like the top line, and by the top line, I don't mean sales, I mean premium fees and other deposits, is growing at about 5% pace excluding the effect of currency. Is that consistent with your expectations? And how do you feel about that level of top line growth? Are you satisfied with that? Or should it be better? Do feel it's appropriate given the markets in which Met is competing, or do you feel it should be better still? Thank you.

Eric, I think it's consistent with what our expectations are. But I also would point you to the my remarks a little bit earlier talking about essentially us pivoting from trying to get the risk profile of right of the company to now focusing on growth going forward. And I think that is – this is the right time for us to really think about those opportunities throughout MetLife's business platform, meaning through geographies, different products, and so on and to press on the issue of growth going forward. So we've spent the last roughly three years trying to make sure that we had a risk profile in the right place, the products designed the way that we felt offered good value to our customers on the one hand, but also a fair return to our shareholders on the other hand, and didn't result in significant fat-tail risk in the future. That was sort of step one of the strategy here, in step two now that we're pivoting to what is, is finding ways to further grow the business.

Thank you.

Our next question will come from the line of Mr. Jay Gelb of Barclays. Please go ahead.

Thanks. John, can you give us a bit more insight on the sources of the net cost savings in 2015, the $600 million you broadly outlined?

Sure. So these costs are really throughout the entire company. We've been focusing on many different aspects and taking out over the last few years layers of management particularly in the U.S. as well as the reorganization we've done in retail in the United States and moving people to Charlotte. In the technology side, we've created a new center in Raleigh-Durham. And so you're starting now to see some of these flowing through, whereas in 2012 and 2013 we had more restructuring charges that were flowing through so the net basis was less. You're starting to see these cost saves flow through the entire company not just in the U.S. but also even in Asia and other areas we're seeing continued cost discipline. I think this is something that is starting to stick in our company and you're starting to see the results in our financials.

Is there a certain metric we should focus on in terms of trying to track that level of improvement in 2015 and beyond?

It's the expense ratio. However, you do need to adjust a little bit if we had some material moves in our mix of business. So for example, in Latin America by the acquisition of ProVida that runs at a higher expense ratio very profitable business but a higher expense ratio. Without a mix change and for the whole company, it takes quite a bit to really shift that. So on a quarter-by-quarter basis you'll see that ratio be a very good measure. But I just caution you to adjust your models for when we do major material changes in the mix different businesses have slightly different expense ratios.

Okay. Then separate topic, I guess more for Steve and Bill. On variable annuity sales growth, you mentioned the likelihood that you could start growing VA sales growth again now with the new product in place and the new mix and less reliance on living benefits. Should we think about that as a low, mid-single-digit growth opportunity or perhaps something larger?

I think if you think about the overall revenue of the business, yes, I'd say it's, I don't see this being a double-digit grower. Obviously, it somewhat depends on what's going on with the capital markets. But assuming those are benign, I don't expect it to be a double-digit grower. Jay Gelb – Barclays: Is that starting in 2015 though?

Well, I don't think we're – I think we’re a little ahead of ourselves in terms of kind of giving specific forecasts for 2015 yet. But, I think what we're trying to do is make sure it's clear that we're still committed to the annuity business.

Makes sense. Thank you.

Okay. We're at 9 o’clock. Thank you all for your participation, and have a good day.