MetLife 2011 Annual Report Download - page 3

Second, in addition to being highly diversified by geography, we have exceptional product and distribution
diversity. MetLife is not overly dependent on any one product for earnings, and we can adjust our mix to take
advantage of market opportunities. We can also leverage our product capabilities around the world. For example, we
believe the expertise we have developed with Accident & Health in Japan and China will allow us to sell this product
successfully in markets throughout Asia and the Americas. In addition, we have expertise in all four distribution
channels — face-to-face, bancassurance, broker and direct — which allows customers to do business with us how they
wish. In every channel, and across the company, we are placing a much stronger focus on becoming a customer-centric
company, breaking down barriers and becoming easier to do business with.
Third, we have what we believe is the best risk-management culture in the business, which saw us safely
through the financial crisis and allowed us to complete the $16.3 billion purchase of Alico. Today, that same commitment
to risk management is allowing us to weather the low interest rate environment with a far smaller impact on earnings than
many expected. A significant part of the reason is that we started buying protection against low interest rates in 2004,
when rates were much higher and the cost of hedging was comparatively low. Even under an extended low-rate
scenario, we expect to continue to generate excess capital.
Finally, we have one of the strongest brands in the industry, driven by our nearly 145-year history of doing what
is right for our customers. We recently re-launched our brand in the United States around the promise that MetLife will
enable and embolden consumers to build their financial security, and we kicked off our campaign with our first-ever ad
during the Super Bowl. This built on our 2011 acquisition of the naming rights to MetLife Stadium, home of the NFL’s
Giants and Jets. We are also extending the reach of our brand to new customers in key markets. Our re-branding efforts
for the combined MetLife-Alico companies are now complete and have been well received across the globe. In an
industry where many products are easy to replicate, brand becomes a key differentiator — one that we believe is helping
to drive consumer preference for our products and create shareholder value.
The Right Strategy
As we did in 2007 and again in 2009, MetLife is conducting a strategic business review to ensure that we capitalize
on our strengths. As CEO of MetLife, I believe it is important for us to continuously reassess our strategy, especially in
light of the uncertain external environment.
Our strategic review is being guided by core principles essential to running a successful enterprise. First and
foremost, we are committed to taking a portfolio view of our businesses. That means we will invest in the businesses that
will deliver the highest risk-adjusted returns for shareholders. No business is automatically entitled to capital. All must
compete on the basis of which will deliver the most value to shareholders.
A corollary principle is that we will strike the right balance between growth, profitability and risk. MetLife will not pursue
growth for growth’s sake. On the contrary, we are committed to achieving returns in excess of our long-term cost of
capital. We will not achieve this goal overnight. But over time, we will fix or exit businesses that cannot consistently clear
their hurdle rates.
You can see these principles in action in our decision to exit the long-term care business in 2010. You can see them
in our decision in 2011 to sell businesses in the Caribbean and Taiwan, and sell certain blocks in the U.K., which will free
up more than $1 billion of capital. Finally, you can see them in our decision to re-price our leading variable annuity
product and our plan to reduce our VA sales to roughly $18 billion in 2012.
The Right Structure
Of course, having the right strategy is not sufficient. We must also have the right structure in place to ensure that we
are positioned to deliver superior business results. Last November, I announced that MetLife was reorganizing from a
U.S. and International structure into three broad geographic regions — the Americas, EMEA, and Asia — and creating a
Global Employee Benefits business. We believe this structure lays the foundation for a truly global company: It eliminates
the separation between the U.S. and the rest of the world, drives collaboration and efficiency, and more effectively meets
the needs of our customers. With these changes, we have taken a big step toward operating as One MetLife.
Conclusion
In closing, let me say that as proud as I am of our achievements in 2011, I am even more excited about the
opportunities that lie ahead. I believe that MetLife is building the right strengths, the right strategy and the right structure to
achieve our vision of being recognized as the leading global life insurance and employee benefits company.