MetLife Q2 2010 Earnings Call Transcript

MetLife Q2 2010 Earnings Call Transcript
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MetLife (MET)

Q2 2010 Earnings Call

July 30, 2010 8:00 am ET

Executives

William Mullaney - President of the U.S. Business organization

Conor Murphy - IR

Compare to:
Previous Statements by MET
» MetLife Inc. Q1 2010 Earnings Call Transcript
» MetLife Inc. Q4 2009 Earnings Call Transcript
» MetLife Q3 2009 Earnings Call Transcript

Steven Kandarian - Chief Investment Officer, Executive Vice President, Chief Investment Officer of Metropolitan Life Insurance Company and Executive Vice President of Metropolitan Life Insurance Company

Peter Carlson -

William Toppeta - President of International and President of International - Metropolitan Life Insurance Company

C. Henrikson - Chairman, Chief executive officer, President, Chairman of Executive Committee, Member of Corporate Responsibility & Compliance Committee, Member of Investment Committee, Chief Executive Officer of Metropolitan Life, President of Metropolitan Life and Director of Metropolitan Life Insurance Company

William Wheeler - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Metropolitan Life and Executive Vice President of Metropolitan Life

Analysts

Andrew Kligerman - UBS Investment Bank

Suneet Kamath - Bernstein Research

John Nadel - Sterne Agee & Leach Inc.

Randy Binner - FBR Capital Markets & Co.

Jamminder Bhullar - JP Morgan Chase & Co

John Hall - Wells Fargo Securities, LLC

A. Mark Finkelstein - Macquarie Research

Colin Devine - Citigroup Inc

Presentation

Question-and-Answer Session

Steven Kandarian

We’ve seen at a minimum a bottom out of certain sectors of the commercial real estate market and even a slight improvement. And certainly, there are far more lenders going back into the area right now, and mortgage rates are coming down fairly significantly. So you're seeing activity pick up. You're seeing improving lease operates [ph] (59:39) and so on of buildings. So I don't want overstate it. I'm not saying that there’ll be other problems coming down the road, because there's always a lag in this sector regarding a borrower who eventually can't pay off a mortgage. But onto the fundamentals of the business, itself, have improved slightly. And I think that where things go from here will be largely driven by what happens in the overall economy. So if we do have a slow recovery here, which I think is our position in terms of the most likely outcome, then you anticipate that the market overall will improve along with the economy. Were we to go into some sort of double-dip, which we're not predicting, then obviously, things could get worse.

C. Henrikson

Andrew, this is Rob. It's hard for me to be quiet on this topic. Steve is absolutely correct in everything he said. I would say, though, that he's reflecting -- because the question is about our portfolio and our mortgage holdings and so forth, I just wouldn't want to hasten to say that our experience is necessarily reflective of the entire marketplace. It hasn't been in the past, and it won't be in the future. And I say that because we have very high-quality properties and extraordinarily strong real estate history and team. And I think he's being a little modest. So I would just put it that way. Don't project that as a proxy to the entire marketplace, which is full of a lot of secondary market problems still and might even trend a little bit worse in some of those markets.

Andrew Kligerman - UBS Investment Bank

So it's a reflection of market quality of properties as opposed to just a general?

C. Henrikson

Exactly.

Operator

And your final question today comes from the line of Randy Binner from FBR Capital Markets.

Randy Binner - FBR Capital Markets & Co.

Just interested in any thoughts we can get on Dodd-Frank bill specifically related to Volcker. And then derivatives on Volcker, there was a broad carve-up for the insurance industry. But at least we're still not clear on whether or not your holdings of hedge funds and private equity might be affected. And then just more broadly, kind of how you think derivatives might carry higher costs going forward?

C. Henrikson

Let me sort of provide a little color and commentary, Randy. Last call, and I think the one before that, I talked about, at least it was helpful for me to kind of differentiate thoroughbred racehorses from camels. I made that comment. And at least some of the people down in Washington kind of liked it and said it was actually reflective of what it was all about. So whether or not that's helpful for normal people, I don't know. But it seemed to help people in Washington. Let me just give you a little flavor. I mean as I said all along, the bill passes, and now relative to the insurance companies, the work is far from over which is a good thing, because the bill is full of bank language, full of bank processes and so forth. And so the clarifications then work to differentiate the insurance marketplace. And so it’s literally hundreds of rule-making and regulatory projects that are going on. You have an idea; there are 199 separate rule-making initiatives. There are 68 studies underway. There are 355 issues on which lawmakers have given regulators the authority to issue the regulations even if the regulations are not expressly required. And keep in mind that some of the studies are done by agencies that do not even now currently exist, like the Financial Services Oversight Council, the Consumer Financial Protection Bureau, et cetera, et cetera. So there's a lot of work to be done on the details. And because it is so important to us, other people may think that we would relax a little bit. And this is the time that we really have positioned ourselves, both as a company directly and through the ACLI as a resource to all of these rule-making initiatives and wordings and so forth. And so when it comes to things like – and this covers though Volcker rule, it covers derivatives. It covers things like resolution authority fees, taxes, this and the other. We're all very, very focused and very active here at MetLife in Washington. So that's probably the best way to answer that question because it's very difficult to be more clear than that. But we’re not discouraged. We’re not discouraged. We like this kind of slogging through. That’s kind of what we do very well.

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