Transcript Slide 1

Lessons Learned
MDRT Greece
©UFS
November 25, 2009
Joseph W. Jordan
Senior Vice-President
National Sales Organization
Metropolitan Life Insurance Company, 200 Park Ave., New York, NY 10166
L1109074077 (exp1209) (All States) (DC, GU, MP,PR,VI)
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WORLDWIDE
INSURANCE
MARKETS
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GDP growth and insurance penetrate levels will
impact the life insurance growth rates
Low GDP
Growth/High
Life Penetration
High GDP
Growth /Low
Life Penetration
-
- China
- India
- Russia
- Brazil
- SE Asia
- Poland
- Saudi Arabia
- Kuwait
US
UK
Western Europe
Japan
South Korea
Taiwan
- UAE
Moderate GDP
Growth/Low Life
Penetration
- Mexico
- Chile
- Argentina
- Greece
- Czech Republic
- Turkey
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Source: EIU, Swiss Re
International markets are growing more rapidly
than the U.S.
W. Europe
U.S.
Japan
Premiums $B
$1,069
$578
$367
Premium Growth
12%
4%
-0.3%
Markets of
Today
China
India
CEE
Greece
Premiums $B
$95
$49
$29
$3.5
Premium Growth
24%
29%
28%
12.5%
Markets of
Tomorrow
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Data provided by MetLife International Research
Opportunities for Greece
• The aging of Greece in general offers an excellent
environment for annuity products as people will be required
to make provisions for retirement themselves and not rely
on an inadequate pension system
• With a low life insurance penetration, gradual disintegration
of the joint family structure, and inadequate state pension
system Greece offers a potential market for attractive
retirement income and savings products
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WORLDWIDE
ECONOMIES
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ISI Economic Diffusion Index: United States
Charts provided with
permission by
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Source: ISI Group
ISI Economic Diffusion Index: Foreign Economies
Charts provided with
permission by
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Source: ISI Group
ISI Economic Diffusion Index: Emerging Economies
Charts provided with
permission by
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Source: ISI Group
ISI Economic Diffusion Index: Global Economy
Synchronized global
recovery lead by
emerging counties
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Charts provided with
permission by
Source: ISI Group
CRISIS
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Wall Street Journal – March 3, 2009
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©2009 Dow Jones & Company, Inc.
Joe’s Tip
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Wall Street Journal – October 1, 2009
The Dow Jones Industrial Average
jumped 15% in the latest three months
for its biggest quarterly gain since the
fourth quarter of 1998 and its best
third quarter since 1939.
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©2009 Dow Jones & Company, Inc.
Great Depression vs. Great Recession
Bank Failures
Unemployment Rate
Economic Decline
(drop in inflation adjusted GDP)
Changes in Prices
Source: LIMRA – New Normal: Myth or Reality
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Great
Depression
Great Recession
9,096
50% of banks
57
0.6% of banks
25%
9.4%
-26.5%
-3.3%
-25%
+0.5%
Is this time any different?
August 1979
S&P 500 closed at 109
October 30, 2009
S&P 500 closed at 1,036
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16
Same Story Different Day…
November 2, 1987
S&P 500 closed at 255
October 30, 2009
S&P 500 closed at 1,036
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17
History of the Bear (Post World War II)
Market Peak
Market Trough
% Return
Duration
Market Peak
Market Trough
05/29/46
06/13/49
-30%
36.5 months
19.3
13.6
08/02/56
10/22/57
-22
14.5 months
49.7
39.0
12/12/61
06/26/62
-28
6.5 months
72.6
52.3
02/09/66
10/07/66
-22
8.0 months
94.1
73.2
11/29/68
05/26/70
-36
18.0 months
108.4
69.3
10/03/74
-48
20.5 months
120.2
62.3
03/06/78
-19
17.5 months
107.8
86.9
08/12/82
-27
20.5 months
140.5
102.4
08/25/87
12/24/87
-34
4.0 months
336.8
223.9
07/16/90
10/11/90
-20
3.0 months
369.0
295.5
07/17/98
08/31/98
-19
1.5 months
1186.8
957.3
03/24/00
10/09/02
-49
30.5 months
1527.5
776.7
10/09/07
03/09/09
-57
17.0 months
1565.1
676.5
01/11/73
09/21/76
11/28/80
The march of equities
between bear markets
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Source: Nick Murray : Impact of the Bear October 2009
No bear market feels “average” —
or even normal — while you’re
going through it.
It feels like the end of the world.
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Left Brain – Right Brain
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Managing Behavior
Principles
Behaviors
1) Faith
1) Asset Allocation
2) Patience
2) Diversification
3) Discipline
3) Rebalancing
© 2008 Nick Murray All rights reserved. Used with permission. From Nick Murray's book Behavioral Investment Counseling
www.nickmurray.com
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LESSONS
LEARNED
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Used by permission: New York Public Library
IMPACT
ON
OTHERS
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Interesting and Amazing Stuff
Everyone Dies!
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People Will Live Longer
TIME
August 30, 2004
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© 2009 Time Inc.
The Risks
Many people greatly underestimate
the time they will spend in retirement
50% Chance
of living
beyond
Male (age 65)
25% Chance
of living
beyond
85
92
50% Chance of
living beyond
Female (age 65)
At least one person has a:
Couple (both age 65)
Source: U.S. 2000 Actuarial Male and Female Tables
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25% Chance of
living beyond
88
94
50% Chance of
living beyond
92
25% Chance of
living beyond
97
BusinessWeek
July 28, 2003
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© 2003-2009 The McGraw-Hill Companies Inc.
Wall Street Journal, April 23, 2003
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©2003-2009 Dow Jones & Company, Inc.
Mother-in-Law
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Consumer Change of Focus
Accumulation
Phase
Return on
Investment
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Distribution
Phase
Reliability
of Income
Research
January 2007
“By promising a lifetime of retirement
income, insurance companies are taking
on longevity risk—a risk that most
defined benefit pension plans are
running away from in droves.”
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© Copyright 2007-2009 Research Magazine. A Summit Business Media publication.
The Importance of Longevity
Traditional Retirement Calculation: Monthly Income
1. Retirement Start Age: 65 Years
3. Retirement Assets:
$1 mil
5. Inflated by 3% each year, year 2+
$5,800
$5,900
$6,000
2. Retirement Length: 15 Years
4. Simulated Success Rate: 90%
$5,800
Stocks
Bonds
$5,700
$5,500
$5,300
Stocks
5%
Stocks
15%
Stocks
25%
Stocks
40%
Stocks
60%
Stocks
80%
Stocks
100%
Bonds
25%
Bonds
35%
Bonds
40%
Bonds
40%
Bonds
30%
Bonds
20%
Bonds
0%
Short
Term
Bond
70%
Short
Term
Bond
50%
Short
Term
Bond
35%
Short
Term
Bond
20%
Short
Term
Bond
10%
Short
Term
Bond
0%
Short
Term
Bond
0%
Conservative
Aggressive
Portfolios
Source: Mathew Greenwald & Associates Inc., 2007. Chart reflects initial monthly income, inflated by 3% annually each year. Figures, calculations, and graphs
are for illustrative purposes only. They are based on hypothetical rates of return and do not represent investment in any specific product. Assumed Portfolios are
from T. Rowe Price Retirement Calculator which can be found at http://www3.troweprice.com/ric/RIC, and assume the use of Large Cap, Small Cap and
International stocks; Investment-Grade, High Yield, International, and short term Bonds. They may not be used to predict or project investment performance.
CONFIDENTIAL
Unless noted, charges and expenses that would be associated with an actual investment are not reflected.
The Importance of Longevity
Traditional Retirement Calculation: Monthly Income
1. Retirement Start Age: 65 Years
3. Retirement Assets:
$1 mil
5. Inflated by 3% each year, year 2+
$3,600
$3,700
$3,800
2. Retirement Length: 25 Years
4. Simulated Success Rate: 90%
$3,800
$3,800
$3,700
$3,600
Stocks
Bonds
Conservative
Portfolios
Aggressive
Source: Mathew Greenwald & Associates Inc., 2007. Chart reflects initial monthly income, inflated by 3% annually each year. Figures, calculations, and graphs
are for illustrative purposes only. They are based on hypothetical rates of return and do not represent investment in any specific product. Assumed Portfolios are
from T. Rowe Price Retirement Calculator which can be found at http://www3.troweprice.com/ric/RIC, and assume the use of Large Cap, Small Cap and
International stocks; Investment-Grade, High Yield, International, and short term Bonds. They may not be used to predict or project investment performance.
CONFIDENTIAL
Unless noted, charges and expenses that would be associated with an actual investment are not reflected.
Will Sequence of Returns Matter?
Drowning in Two Inches of Water
17%
$1 mil
Nest Egg
$3,800
8%
Monthly
Withdrawal
+
3% Inflation
CONFIDENTIAL
Source: Moshe
Average Return
27%
Milevsky, Ph.D.; IFID
-22%
Will Sequence of Returns Matter?1
Drowning in Two Inches of Water
$3,800
$1 mil
Monthly Withdrawal
+ 3% Inflation
Nest Egg
+17%
+17%
8%
8%
Average
Return
Average
Return
+27%
-22%
Age at Ruin: 2
90
+27%
-22%
Age at Ruin: 3
86
1.) Source: Moshe Milevsky, Ph.D.; IFID. 2.) Assumptions: Hypothetical return of 17%, 27% and -22% in 3 year cycle for life of investment. Hypothetical
investment management fee of 2.05% (0.8% fund company management fee and 1.25% WRAP fee. 3. Assumptions: Hypothetical return of 17%, -22 and -27%
in 3 year cycle for life of investment. Hypothetical investment management fee of 2.05% (0.8% fund company management fee and 1.25% WRAP fee.)
Figures, calculations, and graphs are for illustrative purposes only. They are based on hypothetical rates of return and do not represent investment in any
specific product. They may not be used to predict or project investment performance. Unless noted, charges and expenses that would be associated with an
CONFIDENTIAL
actual investment are not reflected.
Will Sequence of Returns Matter?
+17%
The Implications of Timing = Less In Future
8.00%
Avg. ROR
1. Retirement Start: Age 65
2. Retirement Length: 25 Years
3. Retirement Assets: $1 mil 4. Simulated Success Rate: 90%
5. Inflated by 3% each year, year 2+
$3,600
$3,700
3,800
Year 1
$3,800
$3,800
-22%
-20%
+27%
$3,700
$3,600
Yr 2+
$3,325
Conservative
Aggressive
Portfolios
Assumptions: Hypothetical return of 17%, -22% and -27% in 3 year cycle for life of investment. Hypothetical investment management fee of 2.05% (0.8% fund
company management fee and 1.25% WRAP fee.) Initial income inflated by 3% annually (per prior slides), Figures, calculations, and graphs are for illustrative
purposes only. They are based on hypothetical rates of return and do not represent investment in any specific product. They may not be used to predict or project
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investment performance. Unless noted, charges and expenses that would be associated with an actual investment are not reflected.
Wall Street Journal October 14, 2008
“Give yourself a pay cut by
withdrawing a little less today and
continuing to take out less over
the next several years.”
“If your portfolio took a 30% loss,
the news is much more grim:
You’d have a 79% chance of
running out of money prematurely
if you continued a traditional
withdrawal strategy.”
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©2009 Dow Jones & Company, Inc.
USA Today, October 9, 2007
“The first wave of 3.2
million baby boomers
turns 62 next year—
365 an hour.”
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© 2007-2009 USA TODAY, a division of Gannett Co. Inc.
A Life of
Significance
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What We Do – Life Stage Marketing
Age
25
35
45
55
65
75
… and beyond
Life Insurance
Disability Income Insurance
We protect the
innocent
from premature
death and loss
of income due
to disability.
PROTECTION
Annuities
We provide a
worry-free
retirement
by offering
income you
can’t outlive.
INDEPENDENCE
Long-Term Care
We protect
your assets
when you
get sick.
DIGNITY
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Life Insurance
Annuities
Long-Term Care
We provide legacy
when you die.
LEGACY
YOU’RE A
HERO
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Living a Life of Significance
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MDRT Excerpt
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Life of Significance
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