Welcome to the MetLife Third Quarter 2017 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 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 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 in the Risk Factor section of those filings. MetLife specifically disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise. With that, I would like to turn the call over to John Hall, Head of Investor Relations

Thank you, Greg. Good morning, everyone, and welcome to MetLife's third quarter 2017 earnings call. On this call we will be discussing certain financial measures not based on generally accepted accounting principles, so-called non-GAAP measures. Reconciliations of these non-GAAP measures and related definitions to the most directly comparable GAAP measures may be found on the Investor Relations portion of metlife.com, in our earnings release, and our quarterly financial supplements. A reconciliation of forward-looking financial information to the most directly comparable GAAP measure is not accessible, because MetLife believes it's not possible to provide a reliable forecast of net investment 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. Also here with us today to participate in the discussions are other members of senior management. After prepared remarks, we will have a Q&A session. In fairness to all participants, please limit yourself to one question and one follow-up. With that, I'd like to turn the call over to Steve

Thank you, John, and good morning, everyone. Last night we reported third quarter operating earnings per share of $1.09, down from $1.22 per share a year ago. Overall, it was a solid quarter, with good underwriting and volume growth. Low interest rates continue to pressure recurring investment margins, while equity markets and foreign currency had limited impact on quarterly operating results. Operating return on equity in the quarter, adjusting for Brighthouse, was 11.3%. Adjusting for notable items, operating earnings were $1.13 per share, which compares to $1.27 per share on the same basis in the prior-year period. Net notable items of $0.04 per share included a net tax charge of $0.16 per share due to the repatriation of foreign cash, partially offset by a tax benefit associated with foreign dividends. In addition, we incurred $0.02 per share of cost to achieve our target of $800 million in pre-tax savings by 2020. These items were largely offset by favorable deferred acquisition costs unlocking associated with our annual actuarial assumption review and other positive insurance adjustments totaling $0.14 per share. MetLife's annual actuarial assumption review was completed during the quarter. To summarize, the review was positive to earnings, with improved expense assumptions and our traditional U.S. life insurance block being the largest contributor. Outside the U.S., there were small offsetting pluses and minuses. The net loss for the quarter was $87 million, compared to net income of $571 million a year ago. The current period net loss was driven by previously disclosed Brighthouse separation costs of $1.1 billion. John Hele will discuss the assumption review and separation costs in greater detail. During the quarter, MetLife successfully spun off 80.8% of Brighthouse Financial. This transaction was the product of the hard work and dedication of our associates and represents a key milestone in…

Thank you, Steve, and good morning. Today, I'll cover our third quarter results, including a discussion of our insurance underwriting margins, investment spreads, expenses, and business highlights. I will then conclude with some comments on cash and capital. In addition to our earnings release and quarterly financial supplement, last evening we released disclosure labeled 3Q17 Supplemental Slides that provide a walk from net income to operating earnings, as well as a schedule of our separation-related losses in the quarter. I will speak to these slides later in my presentation. The results of Brighthouse Financial were previously included as a separate operating segment. For the current quarter up to the separation date, as well as prior periods, Brighthouse Financial results have been reclassified to discontinued operations. Operating earnings in the third quarter were $1.2 billion, or $1.09 per share. This quarter included four notable items, which totaled negative $41 million that we highlighted in our news release and quarterly financial supplement. First, the actuarial assumption review completed in the third quarter for all products and other insurance adjustments increased operating earnings by $153 million after tax, or $0.14 per share. The key drivers were lower maintenance expense assumptions, positive impacts and updates to closed block projection, favorable U.S. (sic) [U.S. Life] mortality, and higher persistency in Mexico worksite marketing. In addition, favorable refinements resulted in reserve releases for life products and long-term care. We've completed loss recognition testing on long-term care that resulted in positive margins, so no need to strengthen reserves. The non-operating portion of the assumption review was a negative $41 million, mainly driven by changes in labs and other assumptions for GMIB variable annuities. Second, higher taxes due to certain discrete items totaled $167 million after-tax, or $0.16 per share. This included $180 million related to the previously…

Okay. And one moment, please, for your first question. Your first question comes from the line of Jimmy Bhullar from JPMorgan. Please go ahead

Hi. Good morning. First, I just wanted to clarify, I think you mentioned there was – part of the reason that the separation costs were lower was that there was a $300 million roughly lower than assumed DAC write-off. So should DAC expense be higher than otherwise as a result in the future? And if yes, what's the rough DAC write-off period for the related business?

Hi, Jimmy, this is John. This is dealing with the riders, so this will amortize through net income over like 30 years.

Okay. Not operating, though.

That's correct.

Okay. And then on MetLife Holdings, what's your sort of desire and ability to do an annuity exchange offer, as I recognize it's harder, given that it's New York business, but is that something that you've contemplated?

It's something we're always looking at, but we always balance with the customers' interests and what's appropriate, so, e study this carefully, but we've not done anything to-date.

Okay. And then just lastly, any comments on the timing of the completion of the $2 billion buyback program?

The additional $2 billion, we still have just a little over $200 million left from the existing $3 billion authorization and we've announced an additional $2 billion and we would expect that all this will be done by the end of 2018.

Okay. Thank you

Your next question comes from the line of Thomas Gallagher from Evercore. Please go ahead

Good morning. Steve, after announcing the capital plans for buybacks in the exchange offer, is it fair to say that that takes off the table much in the way of M&A over the near term? Like Australia in life insurance I think there's been some news flow on that. Or is M&A still on the table? And also, why do the exchange offer versus secondary?

Hi, Tom. As we've said consistently, excess capital above liquidity buffer belongs to our shareholders and we kind of go down the list of things that it could be used for, dividends, share repurchases, and strategic acquisitions that clear the hurdle rate. So, all those remain on the table. I won't comment on any specific transaction, but all those uses of capital are still on the table. As to the exchange offer, that's our current intent to exchange our shares in Brighthouse for MetLife shares and our hope is to do that in the year 2018. That is subject to market conditions and regulatory issues, constraints, but that is the intent currently.

Okay. And just follow-up question is, in terms of the news of Chris Townsend joining AIG and Steve Goulart becoming the interim head, how should we be thinking about that? Steve has dual roles now. Is that truly going to become temporary? Is it possible he might take that role over? Or should we be thinking more about more extensive process, where you're looking at external and internal candidates, before making a decision on Asia?

Chris Townsend had come to me a while back and – just to, I mean, give you a little background on this. Chris was the longest serving President of that region for a non-Asian company. So my point is that people go to those regions typically at some reasonable number of years, before people move on to do other things. So, this is not something that was a big surprise in terms of Chris doing something different. We wanted to retain Chris, but he found another opportunity. We've already begun the process for a search. We'll look both internally and externally. The search was actually already ongoing. It wasn't after Chris' announcement. It was before, the search began. So we're in process. Steve Goulart, who has experience with the Alico transaction, Steve was running M&A and he's, of course, Treasurer of our company, he was involved directly in the Alico transaction, understands that business, and he'll be overseeing the region on an interim basis, temporary basis, as we complete our work finding a replacement for Chris.

Okay. Thanks.

Your next question comes from the line of Suneet Kamath from Citi. Please go ahead

Thanks. I wanted to start with your comment about the 800 to 900 basis points above Treasury ROE target. I thought that that was sort of the guidance that you gave before you spun-off Brighthouse, so I would have expected, all else equal, that maybe that would have gone up ex-Brighthouse. Is my understanding correct, and any thoughts on that?

Hi, Suneet, this is John. When we did our Investor Day last year and gave that guidance, that was for RemainCo, that was for – excluding Brighthouse. So the 800 to 900 is for the new MetLife, and we're on track for that.

Okay. And then my follow-up to that is, should we be thinking about that as the way that you guys price your products? In other words, a spread to Treasury, because I'd always thought that the way you approach pricing was more on an absolute ROE basis?

We approach pricing to get a margin above what we expect to be the hurdle rate required by our shareholders. And that can vary around the world, because, obviously, what you invest in does change, but we seek spread and we call that value. So, as we add value to get a return on your capital that we invest in the business, we seek to get a margin above that.

Okay. And then just lastly, if I could, you'd mentioned in your prepared remarks the refreshed hedging strategy. Should we be thinking that the sensitivity, just with the marks on the interest rate derivatives now, will be lower as interest rates move, versus what we've seen in the past?

With the separation of Brighthouse, we are less sensitive in total, and we also have restructured some of our derivatives that particularly make it less sensitive to – on a statutory basis, to interest rates being between – 10-year Treasury being between 1.5% and 4%, which should still fall within our stated cash flow guidance.

Okay. Thanks.

Your next question comes from the line of Ryan Krueger from KBW. Please go ahead Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Hi. Thanks. Good morning. Following up on the ROE, I think at Investor Day last year, you talked about 800 to 900 basis points over the near term, but that increasing to 900 to 1,000 basis points after the cost saves are phased in and you return excess capital. Can you comment if that 900 to 1,000 is still the longer-term expectation?

Yes, but we were speaking longer term, and our cost save program goes out to 2020, so... Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Okay. But no – we shouldn't think about any change to that?

No change. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Okay. And then, just given the moving parts this year, can you just help us think about where you'd expect HoldCo cash to end the year, after free cash flow in the fourth quarter? And I think you also have a debt maturity?

Well, Ryan, we don't give guidance on detailed elements like that. There are a lot of moving parts, and I leave it to – you'd have to calculate those out of (40:00). Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Okay, got it. All right. Thanks.

Your next question comes from the line of Sean Dargan from Wells Fargo. Please go ahead

Yeah, thanks. I'm just wondering about the $3 billion to $4 billion liquidity buffer, given the motions on November 17. I guess my question is, if your SIFI status is settled once and for all in a manner that you would like, can that liquidity buffer come down?

Hi, Sean. The $3 billion to $4 billion is what we've done with our own internal targets for liquidity and stress testing. That does not include a SIFI buffer on it, as it stands now. Of course, we examine this on an ongoing basis as to what we think, but we always want to be certain that, in a wide range of scenarios, that we have sufficient cash to get through, and that currently our buffer is $3 billion to $4 billion.

Okay, thanks. And then in a couple hours, we're going to get a tax bill allegedly. I'm wondering if you have any thoughts on how tax reform proposals could impact you, namely around the DAC tax, as well as global minimum tax, and if that would impact pricing or free cash flow.

Hi. It's Steve. What we've said for some time now is that we support a pro-growth tax reform package, a significantly lower marginal rate, and we're prepared to see certain preferences changed or eliminated. And we think that will be acceptable to us as a company overall. We think that will drive economic growth, which is a key factor in terms of our growth as a company, especially in the U.S. group insurance market. So that's what we're supportive of. We've also said that if there are changes in the tax code that truly put at risk our business model, then we have to press forward with our case as to why we think that would not be a positive change for not only MetLife, but for the economy. But we are not really focused on any one specific preference or provision of the code as it relates to our business.

Okay. Thank you.

Your next question comes from the line of Erik Bass from Autonomous Research. Please go ahead.

Hi. Thank you. RIS core spreads declined materially on a sequential basis, and it's well below the recent run rate. Is this quarter spread just a function of low interest rates and the flat yield curve, so it's a reasonable run rate, or was there any other noise in the quarter?

Hi, Erik, this is John. So last year we gave guidance that the spreads we thought for the full year in 2017 for RIS would be between 1.15% and 1.40% including VII, and VII could swing between 15 to 30 basis points. So we are within those ranges so far this year. It is less than a year ago. We are seeing, of course, some spread compression both on the long end as things slowly wear off, and then also LIBOR is up a little year-over-year, so that also squeezes the business as well. But we are in line with the guidance that we've given.

Got it. So you just suggest it's a little bit of a noisy quarter and not sort of to overweight this quarter's spread as the run rate?

Well, this quarter's spread was 1.35%.

I guess I was looking at the 99 basis points ex-VII.

Well, if you take -- our low end is 1.15% to 1.40% and the minus 15 to 30 basis points, you'd see even the 99 is within our guidance.

Okay. And then just a question on group, where you and the industry have seen another quarter of very strong underwriting results. And I was just hoping you could comment on what you see is driving the trends for this, and do you see anything that suggests results could continue to trend favorably versus your target benefit ratios?

Hi, Erik, this is Michel. So, as you mentioned, this has been a strong underwriting quarter in Group Benefits. Group life mortality in particular was very favorable, at the low end of our target range. This was driven by lower incidents and a positive prior year development in IB&A (44:40) reserve release. So, I mean, I would expect longer-term trends to be at the midpoint of the range that we had provided, 85 to 90. Our non-medical health results were also favorable and below the low end of the range, and that's been driven by dental trends. So group underwriting results can be volatile, as we know, quarter-to-quarter. So I wouldn't choose the third quarter as a trend, I would say.

Okay. Thank you.

Your next question comes from the line of Alex Scott from Goldman Sachs. Please go ahead. Alex Scott - Goldman Sachs & Co. LLC: Hi. Thanks for taking the question. My first one was just on the expense initiative costs in the Corporate segment. Could you just provide an update on, I guess, how much of the expected $300 million for 2017 have been experienced year-to-date, and sort of how much is left thinking about the fourth quarter?

Hi, Alex, this is John. So we are running a little less on the investment side. The savings that we gave in the guidance to you some time ago last year at our Investor Day are flowing through. The strength of the (46:05) save is about the same as we had said, but we are spending a little less and we do expect the fourth quarter will pick up a little, we'll make some of that up. We'll probably be, when we end the whole year, maybe $70 million short of the whole amount, but we do expect to catch this up and be able to still deliver the savings as we promised out to 2020. Alex Scott - Goldman Sachs & Co. LLC: And are all of the year-to-date expense initiative costs in that notable item that you guys provide, or are there other costs in the Corporate segment outside of that?

There's another piece in panorama, which is in net income, so it's booked a little lower. That's also added to it as well. Alex Scott - Goldman Sachs & Co. LLC: Okay. Thank you.

Your next question comes from the line of Humphrey Lee from Dowling & Partners. Please go ahead. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Good morning and thank you for taking my questions. I have a question related to Group Benefits. So you talked about getting good momentum in voluntary products, especially in the small end of the market. Can you just talk about the overall kind of RFP activities, especially (47:30) around the corner? Where do you see in terms of potential pricing and quotes?

Yeah, hi, Humphrey. Michel again. So we're having a good year in Group. On the competitive landscape front, the market environment is competitive. I would say in dental it's highly competitive. But we continue to be disciplined in terms of our approach. We tend to focus also on distributors and employers that see value beyond the lowest price. So we're able to get terms that we're comfortable with, and that's reflected in our results so far this year in terms of sales and earnings. So that's a little bit on the competitive environment. As you mentioned, voluntary is a major focus area for us and we're seeing very good momentum on this front this year. That's also helping us grow in the mid-market and we're seeing good growth in small market as well, and we think that that's sustainable. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Okay. Thank you. And then a question related to the exchange offer. Is there any kind of potential tax implication that we need to be aware of either from a shareholders' perspective or from MetLife's perspective?

This is John. It's an exchange, it's actually disposition of shares. Humphrey Hung Fai Lee - Dowling & Partners Securities LLC: Okay. Thank you.

And at this time there are no further questions. I'd like to turn the call back over to Mr. Hall.

Great. Thank you very much, Greg, and thank you to everyone for joining us. We look forward to speaking to you again at our December outlook call on December 15. Thanks very much.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive TeleConference. You may now disconnect.