Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Second Quarter 2018 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 the 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. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to MetLife's second quarter 2018 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 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 McCallion, Chief Financial Officer. Also here with us today to participate in the discussions are other members of senior management. Last night, we released an expanded set of supplemental slides. They are available on our website. John McCallion will speak to those supplemental slides in his prepared remarks if you wish to follow along. The content of the slides begins following the romanette pages that feature a number of GAAP reconciliations. After prepared remarks, we will have a Q&A session that given the busy earnings call schedule this morning will extend no longer than the top of the hour. So, in fairness to all participants, please limit yourself to one question and one followup. With that, I will turn the call over to Steve.

Thank you, John, and good morning, everyone. Last night, we reported second quarter adjusted earnings of $1.3 billion or $1.30 per share, up from $1.04 per share a year ago. Overall, it was another strong quarter in 2018, driven by solid underwriting and expense management across the company. Reflecting the strong results, adjusted return on equity in the quarter was 12.2%. After notable items, adjusted earnings were $1.36 per share. The only notable item in the second quarter was cost incurred to support our unit cost initiative, which totaled $0.06 per share. Net income for the quarter was $845 million compared to $865 million a year ago. During the second quarter, MetLife successfully divested its remaining equity stake in Brighthouse. Included in second quarter net income is a realized loss on our disposed Brighthouse shares, as well as other transaction costs, which, together, totaled $212 million. These items represent the largest portion of the difference between net income and adjusted earnings in the quarter. We are focused on delivering results where net income and adjusted earnings track more closely than in the past. Turning to business highlights. Both Group Benefits and Retirement and Income Solutions reported good volume growth and solid underwriting. With Property & Casualty, lower catastrophe losses and improved auto underwriting contributed to solid adjusted earnings, which more than doubled year-over-year. For our international segments, Asia benefited from volume growth, higher investment income and lower taxes. Latin America faced only minor currency headwinds and EMEA continued to benefit from expense management. Moving to total company investments, recurring investment income was up 6.7% from a year ago, as the growth and higher interest rates account for the increase. In the quarter, our global new money yield was 3.98% in comparison to an average roll-off rate of 4.52%. Our new…

Thank you, Steve, and good morning. I'll begin by discussing the 2Q 2018 supplemental slides that we released last evening along with our earnings release and quarterly financial supplement. These slides cover our second quarter 2018 financial results and business highlights. Starting on page 4. The schedule provides a comparison of net income and adjusted earnings in the second quarter. Net income was $845 million, which included $159 million mark-to-market loss related to the disposition of our remaining investment in Brighthouse Financial. In addition, costs associated with the debt exchange were $53 million after tax. Excluding these items, net income was $1.1 billion in the quarter or $269 million lower than adjusted earnings of $1.3 billion, primarily due to the results in our investment portfolio and hedging program. Overall, the relatively modest net investment and net derivative losses in the quarter reflect MetLife's post-separation product mix and refined hedging program, as well as the continued benign credit environment. Now, let's turn to page 5. Book value per share, excluding AOCI other than FCTA, was $42.76 as of June 30, down 1% versus $43.36 as of March 31. The decline was primarily due to a change in FCTA in the second quarter as the U.S. dollar strengthened significantly against all major currencies. As of June 30, FCTA was a negative $4.7 billion, which reflects a decline of nearly $1 billion or $0.96 per share from March 31. While the change this quarter was significant, it largely reverses the FCTA gain that we had in the first quarter of 2018 when the dollar had weakened. As we have seen in our results, the FCTA senses the movements in currencies and can fluctuate from quarter to quarter. We only have one notable item in the quarter as shown on page six and highlighted…

And our first question is from the line of Ryan Krueger with KBW. Please go ahead. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Hi. Thanks. Good morning. John, you mentioned that in retirement there was some benefit from interest rate caps that were near expiration. Can you help us quantify that amount as well as think about when those will actually run off?

Yeah, sure. Hey, Ryan. So, let me just back up. On the outlook call, we indicated that a 10-basis point move would have a $5 million to $10 million impact on earnings. So, since that time, two things have happened. So, first, the three-month LIBOR has risen probably 60 basis points or 70 basis points above our expectations. It's actually up like 90 basis points year-to-date. And so, we did have some out-of-the-money caps that are now in the money. So, that's one. The second thing I would also emphasize is there were certain management actions that we took on the liability side to reduce the exposure to our – to kind of the floating rate liabilities. So, that also had a modest improvement relative to the guidance. So, as a result, I'd say it's temporarily neutralized at this level of rates. I say temporarily because, as you point out, these caps will gradually roll off to the latter half of this year and into 2019. So, ex these actions and the caps, we think the sensitivity holds, but LIBOR has obviously increased outside of our expectations. So, right now through the rest of this year, I would say at these levels we are less sensitive than previously disclosed. And I think what we'll do is we'll try to give you a more holistic update on the next outlook call. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Thanks. That's helpful. And then, just one on long-term care. I know that you've said your statutory reserves do not assume any benefit from future premium rate increases. Can you disclose if you assume morbidity improvement currently?

Sure. So, let me just start with a high level – a few high-level comments. So, first, yeah, we will be – we're starting our annual assumption view now. That takes place in the third quarter. So, as we speak, it's underway. And we'll obviously share the results when we get there. I think until then, let me give you some additional color and maybe some guardrails. So, reminders, we have roughly $14.5 billion of statutory reserves. In there, we do not assume any rate increases and we do not assume morbidity improvement. So, that's on the statutory side. For GAAP, we do assume some planned rate increases, but it's really over a short period of time and it's based on our experience to-date. As a reminder, we had roughly 7% rate increase off of 2017. On the premium that we got the rate increase, it was roughly 20% increases on – it was about $250 million of the $750 million of premium we had. So, I think from a GAAP perspective, we would track similar way. We're tracking that way in 2018 to similar levels. Regarding morbidity for GAAP. We do include some assumptions for morbidity improvement. It's on roughly 20% of our long-term care block. So, if we were to eliminate that assumption, we would not incur an LTC charge. It would get absorbed by our loss recognition testing margin and we'd probably still have some left pretty significantly after that. So, hopefully, that gives you a little color. Ryan Krueger - Keefe, Bruyette & Woods, Inc.: Thanks, John. That's really helpful.

Next, we go to line of Erik Bass with Autonomous Research. Please go ahead.

Hi. Thank you. I was just hoping you could comment a bit more on the pension risk transfer pipeline and the competitive environment, particularly for larger deals.

Yeah. Hi, Erik. This is Michel. So, we continue to find the market opportunity attractive with a good pipeline. Last year was a record year for us from a PRT standpoint. This year, obviously, with the FedEx deal, we'll exceed that. So, we – I think we continue to be active. We continue to see opportunity on the market. Our approach is consistent in terms of balancing growth with the efficient use of capital, also considering alternative uses of capital. So, we'll remain disciplined and consider the risk and pricing parameters for each deal, but we do think that the market opportunity continues to be attractive.

Got it. And maybe as a followup. Just given Steve's somewhat comment – or cautious comments on credit, do you have any concerns about taking on the asset leverage or just the investment funding needs associated with large PRT blocks?

Hi. It's Steve Goulart. The best answer is no. I mean, I think just go back to Steve's comments. I don't think we're sounding any alarm bells. But we're basically saying, hey, our job's getting tougher in this environment. But remember, we're investing billions of dollars a quarter and we're still finding sound, attractive investment alternatives. It's just that market conditions remain tight. Market structure is different than it was years ago. So, we're spending more time just thinking about what happens in the next downturn and how do we position ourselves when we think it's coming. But we're still finding plenty of attractive investments. We are cautious, as Steve mentioned, on certain sectors. But I think our motto, I quote, one of my favorite investors who says, we're still in an environment of move forward with caution.

Great. Thank you.

Next, we go to the line of Tom Gallagher with Evercore. Please go ahead.

Good morning. Just a few on long-term care. Just given all the peer charges occurring around you, any reason to do a deeper dive for your 3Q review this year including third-party involvement?

Tom, it's John. I would say, we are normal course. We annually test our assumption rigorously, so we have in the past. We continue to do so and we will in the third quarter. I don't see anything changing in how we do things. So...

And my followup is, if you look at Met's development over the last few years compared to others, Met's have looked a lot better. You really have not seen the same level of adverse development that I would say the vast majority of peers are showing right now. Is it – and can you comment at all – I'm sure you guys have looked into this as well. So, can you comment at all about what you think is actually happening that is preventing Met from seeing the same deterioration that has now become pretty broad based?

Yeah. I think I will just go back to maybe the risk profile that we articulated, I mean, over the last few quarters, right? So, I think part of it is when we exited, we exited in 2010. I think we have a – if you think about our block, it's pretty high percentage. Almost 40% of that block is in the Group space, which is generally the lower ages, smaller policies, less generous provisions than the individual. We've been doing a lot on getting premiums in. We've taken rate actions. We started early. I think that's a big component of that. We have $750 million of premium coming in and we'd be getting rate increases and we're halfway through the actuarial justified rate increases. So, I think it's a combination of risk profile coupled with, I'd say, management actions that have occurred.

Okay. Thanks.

Next, we go to line of Andrew Kligerman with Credit Suisse. Please go ahead. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Hey, thanks a lot. So, just kind of looking at slide 8, the direct expense ratio, and you want to get it from 14.3% in 2015, down by 200 basis points into 2020. Last two years, it was 13.3%. Now, it's kind of 13% and you're saying it's going to kind of come up a bit as we go to the second half of the year. So – and it was good that you pointed out the 40 bps of material weakness. So, does that come off next year once you kind of resolve the material weakness? And maybe you could give us a little color on the trajectory of this direct expense ratio over the next two years as it seems to have kind of leveled out over the last three years.

Yeah, sure, Andrew. So, couple things I would just note to help with the trajectory comment. Don't forget, if you went backwards, we have the strand came in. So, that kind of offset some of the saves that we would have otherwise seen. So, I think the trend will look better if we normalize for the strand. That's one. Two, just to edit one thing you said, the 40 basis points is combination of two things. It's the extra cost we have for remediating the material weaknesses coupled with our growth in the investment management business, which is high-returning business but has a higher expense ratio. So, we are – but that doesn't change our commitment. We're still committed to getting 200 basis points. I think I will go back to Steve's comments to assure you that we feel very comfortable about achieving that by 2020. This is a bigger exercise than just a cost exercise. This is a transformational exercise. We are investing for not – for this just to be completed by 2020, but investing so this is an ongoing platform that we can leverage for growth. And so I think some of it will kind of start to trend in into 2019 and 2020 at a better clip. But a lot of this right now we're doing a lot of the investment now that will translate into the saves in the future. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Got it. And then just to follow up on Asia. PFO were kind of – they were up about 1% year-over-year. Do you see that materially going up over time? Or are things a bit slower in Japan where it might be a bit mature?

Well, I think if we go back to our outlook call, Andrew, I think we're still in line with our expectations there and very comfortable with that. Japan actually continue to be very strong. We talked about that. And we're also seeing strong growth in other markets. Remember, it's a portfolio of 10 different countries. They're not all going to perform the exact same at any point in time. But basically, that strong sales growth in certain other markets slower growth given some of the environment, including some regulatory changes in different markets. But all in all, I think we're still expecting – what we've seen is building momentum in the second quarter and we're very comfortable with what we've said for outlook call expectations.

I would just add, Andrew, just also if you think to the mix of business there a little bit. So, we're shifting quite a bit to the foreign currency denominated to FAS 97-type product. So, it's fee oriented as opposed to premium. So, we're seeing great growth there I think as Steve talked about. But you may not see it just in the premium line, but we're seeing it through margin. Andrew Kligerman - Credit Suisse Securities (USA) LLC: Okay. So, for guidance, low-single-digit PFO growth makes sense. Thanks a lot.

And next, we will go to line of Jimmy Bhullar with JPMorgan. Please go ahead.

Hi. Good morning. First just on – I thought overall your international results were pretty good, but there were a few areas of weakness just specifically sales in ex-Japan Asia, Mexico sales, and then EMEA sales overall seemed weak as well. So, could you just give us some color on what drove that and what your outlook is?

Hi, Jimmy, it's Steve Goulart again. Just sort of picking upon what I just commented on really, again, there were markets outside Japan where we did see slower sales growth. But when I think about why that happened, I mentioned we saw regulatory changes in certain markets. We've been really sort of rebounding from those changes and I do see building momentum. So, I think we're comfortable with the full-year outlook in really all of Asia and ex-Japan as well.

And for EMEA, this is Michel, Jimmy. A couple of comments. One is keep in mind that our sales figure is influenced by the exit from the UK Wealth Management business last year. If you adjust for that, our sales are up 1%. That's still below the level that we'd expect for EMEA. The main driver for that is the increasingly competitive pricing environment in the Gulf on the Group Medical business in particular. The margins are (42:12) on this business and we're holding firm on pricing and that's having an impact on our sales.

Okay. And then, Mexico, I guess, there was the sale there as well, so...

Hey, Jimmy, this is Oscar. Good morning. So, let me talk about sales first. So, sales year-over-year grew 6%, but if you adjust for the divestiture of our Afore business in Mexico, that's like three percentage points, goes to nine percentage points. So, well aligned with our high-single-digit expectation from outlook call. If you go to premiums and fees, which is at 7% year-over-year, you do the same, if you adjust for the Afore divestiture, it goes to 8%, which is again aligned with our high-single-digit expectation.

Okay. And then if I could ask another question on long-term care. You were pretty active at buybacks this quarter. Your review's coming up. How concerned are you or what's the likelihood of it being stat charge as well if you take the charge? And do you think under reasonable scenarios it could have an impact on your free cash flow or capital deployment strategy for this year and next?

Yeah, Jimmy in terms of stat reserves, we are comfortable at the present time. We're going through the assumption review as I said in the third quarter. But right now, there's no reason to believe or there's any concerns for changing our capital management plans.

As I said in my remarks, we anticipate extinguishing the $1.5 billion authorization for share repurchases by the end of the year, so that's on track.

Okay. Thank you.

Next, we have a question from John Nadel with UBS. Please go ahead.

Hey, good morning. So, this may be a little bit complicated to do on a consolidated basis, but it looks like investment income was up pretty significantly versus the level we've seen maybe the average of the last five quarters, 4% or maybe a little over 4% higher. And that really doesn't look like there was much of a corresponding offset anywhere in the interest credit line or otherwise. And I guess it's really evident in RIS, maybe a little bit in international, especially Asia. Just trying to understand the sustainability of this higher level of investment income. Are we already seeing the benefits of higher new money rates? And is this something – is this the new level we ought to think about from here?

John, it's Steve. Again, let me – I'll start with just sort of investment performance and then let John talk more about it from a margin perspective. But put in the context of what's happening in the environment. Rates have, I guess, you could say steadily if you use the point-in-time. But rates continue to rise in general over time. We continue to see our new money yield rising along with it. I don't get hung up on quarter-to-quarter. We're really looking at trends. But we do see the overall performance and yield in the portfolio rising. Is it sustainable? I think it depends a lot on the overall market, what happens with underlying rate levels and, of course, what happens with spreads. And then, I think I'll let John comment more about overall investment margin.

But, Steve, if I can...

Yeah.

...just follow up real quick. Was the new money rate – I know it's a global sort of approach, but was the global new money rate in the last couple of quarters above the portfolio yield?

No. No, we haven't had our new money rate above the portfolio yield in years.

Okay.

But we're getting closer.

Okay.

Yeah, I would just add, John, that I think it's probably always relative to expectations here, right? I mean – so, we did. We are starting – seeing a benefit from the rate environment and we've seen some benefits for some of the things I talked about earlier in RIS. We saw some initiatives in Asia that have helped us. So, I think it depends a little bit where you're referencing, but those are probably the two largest businesses seeing the benefit of some investment margin.

Okay. That's helpful. And then, just real quick. I think you had mentioned one-time impact on the tax rate and I forget what the other one was. I think there was something in Asia. Could you just remind us of those real quick?

Yeah. It's for taxes you're referencing?

Yeah. I think you mentioned something on the tax rate. The underlying tax rate was a little over 18%.

Yes. So, it's 15.4%, but there's a one-time charge – or, sorry, benefit coming through in Corporate & Other relates to this one-time transfer that we had of some assets from a foreign subsidiary to U.S. parent really our effort to simplify some structure and it's just a release of an accrual that we had up in GAAP.

Okay. And in Asia, I think you mentioned 20 year a little over $20 million?

Those are – what we said there was really just some one-time items. It wasn't tax related. Half of it is – actually, it just – that region got allocated a higher level of VII this quarter. The other half, I would kind of put into campus and reserve refinements.

Got you. Okay, thanks.

Next, we go to the line of Alex Scott with Goldman Sachs. Please go ahead. Alex Scott - Goldman Sachs & Co. LLC: Hi. Thanks for taking the questions. Just the first one on long-term care. Could you provide any clarity just on the mortality improvement that's assumed on statutory and GAAP?

Yeah, I don't think we're going to go through that right now. Just I think we're going to – obviously, we're going through our annual assumption review and that's not something we would disclose at this time. Alex Scott - Goldman Sachs & Co. LLC: Okay. And then maybe just a followup. Just thinking about Holdings more broadly. It seems like the supply of reinsurance capital is pretty robust. Any updated thoughts on the potential for doing a risk reduction transaction or risk transfer transaction whether it be long-term care, annuity blocks, et cetera?

Alex, this Marty Lippert. We continue to look for economic deals that can help drive positive returns. And when we come across one that looks strong enough to us, we'll pursue it. Alex Scott - Goldman Sachs & Co. LLC: And would you guys expect a cash flow coming out of MetLife Holdings to remain the same, I guess, as you've kind of stated previously? Can you just remind us about what that cash flow would be relative to earnings and what you expect there?

Yeah. I would just say it's consistent with the guidance we've given. We see this – there's a little bit of a unique situation going in 2018 because of the change in taxes. But going forward, it's about a 5% runoff. Alex Scott - Goldman Sachs & Co. LLC: Okay. And would cash flow be greater than 100% potentially?

I don't know about greater. I'd say around 100%. Alex Scott - Goldman Sachs & Co. LLC: Okay. Very helpful. Thank you.

Next, we go to the line of Larry Greenberg with Janney Montgomery Scott. Please go ahead.

Good morning, and thank you. Two questions on the Property Casualty (sic) [Property & Casualty] (50:13) segment. If you could just discuss pricing trends in personal auto. And then I think you referenced some management actions you've taken to lower catastrophes this year. If you could just give us a little bit of color on that and if possible how much it might have reduced your catastrophe load 2018 versus 2017?

Yeah. Hi, Larry. This is Michel. So, on auto, I think we've seen loss trends that are more favorable generally speaking in recent quarters especially compared to 2015 and 2016. We think this is due to a number of factors, mainly the miles driven, which seemed to have flattened after several years of increase. I think this is reflected in the industry. If you look at rate taking, I think it slowed down. We had taken aggressive action from late 2016 onwards above industry level rate action. I think that's reflected in some of the improvement that you see in our auto loss ratios. We think that going forward our rate action would be more in line with industry. And on the cat front, again we had taken a number of management actions mostly focused on reducing and lessening our exposure to areas where historically we had seen significant cat activity. And I think we see the benefit of that. If we compare our second quarter cats for this year compared to last year on a pre-tax basis, they were better by $19 million. So, I think that's reflective of some of the action that we've taken.

Is there a specific geography in terms of the actions on the cat side?

There are certain geographies where we were experiencing a high level of cat losses. Dallas-Fort Worth, for example, Colorado. So, we've taken action to – but not limited to those states, but we've certainly taken action to lessen exposure in those areas.

Great, thank you.

Next, we go to line of Jay Cohen with Bank of America. Please go ahead.

My question was answered. Thank you.

Thank you. Next, we go to line of John Barnidge with Sandler O'Neill. Please go ahead. John Bakewell Barnidge - Sandler O'Neill & Partners LP: Thank you. I know you guys have been focused on growing your investment management, asset management business. Could you talk about what percent, if any, of your assets under management are exposed to index funds?

Yeah. We do have a fairly large block of index funds, but they're all related to MetLife separate accounts. It is less than a quarter of our overall third-party assets if you want to include it in that and it's really not material from a revenue generation perspective. John Bakewell Barnidge - Sandler O'Neill & Partners LP: Thank you. And then you talked about wanting to grow, not divest. What areas are you looking to grow through M&A other than asset management obviously? Thank you.

Hey, it's Steve Kandarian. We look at opportunities in the marketplace that fit our strategy. And obviously, the areas we are in now in the United States are largely the Group area and the Retirement area. And of course, outside of the United States, we have a significant position in Latin America, Asia and Middle East. So, those been the logical places for us to be looking for opportunities. But as we've always said, we compare any acquisition opportunity against the share repurchase and doesn't mean we wouldn't do an acquisition or that has to be accretive day one, but it has to be accretive quickly for us to pursue something. John Bakewell Barnidge - Sandler O'Neill & Partners LP: Thanks for the answer.

There are no other questions. You may continue.

Okay. Great. If there's no other questions, thanks, everybody, for your attention and we'll speak with you next quarter.

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