Edgar Filing: METLIFE INC

10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013

or

¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-15787

MetLife, Inc.

(Exact name of registrant as specified in its charter)


Delaware		13-4075851
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Park Avenue, New York, N.Y.		10166-0188
(Address of principal executive offices)		(Zip Code)

(212) 578-2211

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

At July 31, 2013, 1,097,145,355 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Table of Contents


	Page
Part I — Financial Information
Item 1. Financial Statements (at June 30, 2013 (Unaudited) and December 31, 2012 and for the Three Months and Six Months Ended June 30, 2013 and 2012 (Unaudited))		5
Interim Condensed Consolidated Balance Sheets		5
Interim Condensed Consolidated Statements of Operations and Comprehensive Income		6
Interim Condensed Consolidated Statements of Equity		7
Interim Condensed Consolidated Statements of Cash Flows		9
Notes to the Interim Condensed Consolidated Financial Statements:
Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies		10
Note 2 — Segment Information		12
Note 3 — Acquisitions and Disposition		21
Note 4 — Insurance		23
Note 5 — Closed Block		24
Note 6 — Investments		27
Note 7 — Derivatives		45
Note 8 — Fair Value		62
Note 9 — Goodwill		97
Note 10 — Equity		98
Note 11 — Other Expenses		101
Note 12 — Employee Benefit Plans		102
Note 13 — Earnings Per Common Share		103
Note 14 — Contingencies, Commitments and Guarantees		104
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		113
Item 3. Quantitative and Qualitative Disclosures About Market Risk		199
Item 4. Controls and Procedures		207

Part II — Other Information		207
Item 1. Legal Proceedings		207
Item 1A.Risk Factors		210
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		219
Item 5. Other Information		220
Item 6. Exhibits		222

Signatures		223

Exhibit Index		E-1

As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates.

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) increased volatility and disruption of the capital and credit markets, which may affect our ability to meet liquidity needs and access capital, including through our credit facilities, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets, including assets supporting risks ceded to certain of our captive reinsurers or hedging arrangements associated with those risks; (3) exposure to financial and capital market risks, including as a result of the disruption in Europe and possible withdrawal of one or more countries from the Euro zone; (4) impact of comprehensive financial services regulation reform on us, as a potential non-bank systemically important financial institution, or otherwise; (5) numerous rulemaking initiatives required or permitted by the Dodd-Frank Wall Street Reform and Consumer Protection Act which may impact how we conduct our business, including those compelling the liquidation of certain financial institutions; (6) regulatory, legislative or tax changes relating to our insurance, international, or other operations that may affect the cost of, or demand for, our products or services, or increase the cost or administrative burdens of providing benefits to employees; (7) adverse results or other consequences from litigation, arbitration or regulatory investigations; (8) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (9) investment losses and defaults, and changes to investment valuations; (10) changes in assumptions related to investment valuations, deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (11) impairments of goodwill and realized losses or market value impairments to illiquid assets; (12) defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial institutions that could adversely affect us; (14) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (15) downgrades in our claims paying ability, financial strength or credit ratings; (16) a deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (17) availability and effectiveness of reinsurance or indemnification arrangements, as well as any default or failure of counterparties to perform; (18) differences between actual claims experience and underwriting and reserving assumptions; (19) ineffectiveness of risk management policies and procedures; (20) catastrophe losses; (21) increasing cost and limited market capacity for statutory life insurance reserve financings; (22) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, and for

personnel; (23) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (24) our ability to address unforeseen liabilities, asset impairments, or rating actions arising from acquisitions or dispositions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company (collectively, “ALICO”) and to successfully integrate and manage the growth of acquired businesses with minimal disruption; (25) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the acquisition of ALICO; (26) the dilutive impact on our stockholders resulting from the settlement of our outstanding common equity units; (27) regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (28) MetLife, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (29) the possibility that MetLife, Inc.’s Board of Directors may control the outcome of stockholder votes through the voting provisions of the MetLife Policyholder Trust; (30) changes in accounting standards, practices and/or policies; (31) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (32) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (33) inability to attract and retain sales representatives; (34) provisions of laws and our incorporation documents may delay, deter or prevent takeovers and corporate combinations involving MetLife; (35) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on the value of our investment portfolio, our disaster recovery systems, cyber- or other information security systems and management continuity planning; (36) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (37) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.

MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.

Note Regarding Reliance on Statements in Our Contracts

See “Exhibit Index — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.

Part I — Financial Information

Item 1. Financial Statements

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

June 30, 2013 (Unaudited) and December 31, 2012

(In millions, except share and per share data)


	June 30, 2013		December 31, 2012
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $335,626 and $340,870, respectively; includes $4,064 and $3,378, respectively, relating to variable interest entities)	$	356,514	$	374,266
Equity securities available-for-sale, at estimated fair value (cost: $2,922 and $2,838, respectively)		3,231		2,891
Fair value option and trading securities, at estimated fair value (includes $744 and $659, respectively, of actively traded securities; and $92 and $112, respectively, relating to variable interest entities)		16,110		16,348
Mortgage loans:
Held-for-investment, principally at amortized cost (net of valuation allowances of $302 and $347, respectively; includes $2,316 and $2,715, respectively, at estimated fair value, relating to variable interest entities)		55,636		56,592
Held-for-sale, principally at estimated fair value (includes $0 and $49, respectively, under the fair value option)		—		414

Mortgage loans, net		55,636		57,006
Policy loans (includes $3 and $0, respectively, relating to variable interest entities)		11,722		11,884
Real estate and real estate joint ventures (includes $9 and $10, respectively, relating to variable interest entities)		9,886		9,918
Other limited partnership interests (includes $159 and $274, respectively, relating to variable interest entities)		7,197		6,688
Short-term investments, principally at estimated fair value (includes $13 and $0, respectively, relating to variable interest entities)		12,990		16,906
Other invested assets, principally at estimated fair value (includes $78 and $81, respectively, relating to variable interest entities)		17,920		21,145

Total investments		491,206		517,052
Cash and cash equivalents, principally at estimated fair value (includes $54 and $99, respectively, relating to variable interest entities)		9,184		15,738
Accrued investment income (includes $26 and $13, respectively, relating to variable interest entities)		4,357		4,374
Premiums, reinsurance and other receivables (includes $16 and $5, respectively, relating to variable interest entities)		23,283		21,634
Deferred policy acquisition costs and value of business acquired (includes $265 and $0, respectively, relating to variable interest entities)		24,782		24,761
Goodwill		9,447		9,953
Other assets (includes $142 and $5, respectively, relating to variable interest entities)		7,830		7,876
Separate account assets (includes $1,096 and $0, respectively, relating to variable interest entities)		245,573		235,393

Total assets	$	815,662	$	836,781

Liabilities and Equity
Liabilities
Future policy benefits (includes $458 and $0, respectively, relating to variable interest entities)	$	184,697	$	192,351
Policyholder account balances (includes $66 and $0, respectively, relating to variable interest entities)		215,195		225,821
Other policy-related balances (includes $129 and $0, respectively, relating to variable interest entities)		15,279		15,463
Policyholder dividends payable		750		728
Policyholder dividend obligation		2,273		3,828
Payables for collateral under securities loaned and other transactions		33,247		33,687
Bank deposits		—		6,416
Short-term debt		100		100
Long-term debt (includes $2,126 and $2,527, respectively, at estimated fair value, relating to variable interest entities)		18,577		19,062
Collateral financing arrangements		4,196		4,196
Junior subordinated debt securities		3,193		3,192
Current income tax payable		111		401
Deferred income tax liability		6,602		8,693
Other liabilities (includes $90 and $40, respectively, relating to variable interest entities)		25,331		22,492
Separate account liabilities (includes $1,096 and $0, respectively, relating to variable interest entities)		245,573		235,393

Total liabilities		755,124		771,823

Contingencies, Commitments and Guarantees (Note 14)
Redeemable noncontrolling interests in partially-owned consolidated subsidiaries		130		121

Equity
MetLife, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference		1		1
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,099,795,436 and 1,094,880,623 shares issued at June 30, 2013 and December 31, 2012, respectively; 1,096,601,549 and 1,091,686,736 shares outstanding at June 30, 2013 and December 31, 2012, respectively		11		11
Additional paid-in capital		28,137		28,011
Retained earnings		25,824		25,205
Treasury stock, at cost; 3,193,887 shares at June 30, 2013 and December 31, 2012		(172)		(172)
Accumulated other comprehensive income (loss)		6,202		11,397

Total MetLife, Inc.’s stockholders’ equity		60,003		64,453
Noncontrolling interests		405		384

Total equity		60,408		64,837

Total liabilities and equity	$	815,662	$	836,781

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income

For the Three Months and Six Months Ended June 30, 2013 and 2012 (Unaudited)

(In millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Revenues
Premiums	$	9,158	$	9,161	$	18,309	$	18,290
Universal life and investment-type product policy fees		2,371		2,097		4,662		4,175
Net investment income		5,282		4,719		11,359		10,919
Other revenues		490		393		970		990
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(35)		(118)		(64)		(253)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)		(4)		27		(35)		29
Other net investment gains (losses)		149		27		523		50

Total net investment gains (losses)		110		(64)		424		(174)
Net derivative gains (losses)		(1,690)		2,092		(2,320)		114

Total revenues		15,721		18,398		33,404		34,314

Expenses
Policyholder benefits and claims		8,960		8,911		18,355		18,015
Interest credited to policyholder account balances		1,846		1,022		4,436		3,579
Policyholder dividends		329		352		642		695
Other expenses		4,025		4,775		8,163		9,096

Total expenses		15,160		15,060		31,596		31,385

Income (loss) from continuing operations before provision for income tax		561		3,338		1,808		2,929
Provision for income tax expense (benefit)		53		1,038		305		763

Income (loss) from continuing operations, net of income tax		508		2,300		1,503		2,166
Income (loss) from discontinued operations, net of income tax		2		3		(1)		17

Net income (loss)		510		2,303		1,502		2,183
Less: Net income (loss) attributable to noncontrolling interests		8		8		14		32

Net income (loss) attributable to MetLife, Inc.		502		2,295		1,488		2,151
Less: Preferred stock dividends		31		31		61		61

Net income (loss) available to MetLife, Inc.’s common shareholders	$	471	$	2,264	$	1,427	$	2,090

Comprehensive income (loss)	$	(3,881)	$	3,765	$	(3,703)	$	4,819
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax		(5)		1		4		16

Comprehensive income (loss) attributable to MetLife, Inc.	$	(3,876)	$	3,764	$	(3,707)	$	4,803

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.43	$	2.13	$	1.30	$	1.95

Diluted	$	0.43	$	2.12	$	1.29	$	1.93

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.43	$	2.13	$	1.30	$	1.97

Diluted	$	0.43	$	2.12	$	1.29	$	1.95

Cash dividends declared per common share	$	0.550	$	—	$	0.735	$	—

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity

For the Six Months Ended June 30, 2013 (Unaudited)

(In millions)


											Accumulated Other Comprehensive Income (Loss)
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock at Cost		Net Unrealized Investment Gains (Losses)		Other-Than- Temporary Impairments		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total MetLife, Inc.’s Stockholders’ Equity		Noncontrolling Interests (1)		Total Equity
Balance at December 31, 2012	$	1	$	11	$	28,011	$	25,205	$	(172)	$	14,642	$	(223)	$	(533)	$	(2,489)	$	64,453	$	384	$	64,837
Stock-based compensation						165														165				165
Dividends on preferred stock								(61)												(61)				(61)
Dividends on common stock								(808)												(808)				(808)
Change in equity of noncontrolling interests						(39)														(39)		17		(22)
Net income (loss)								1,488												1,488		14		1,502
Other comprehensive income (loss), net of income tax												(4,025)		49		(1,292)		73		(5,195)		(10)		(5,205)

Balance at June 30, 2013	$	1	$	11	$	28,137	$	25,824	$	(172)	$	10,617	$	(174)	$	(1,825)	$	(2,416)	$	60,003	$	405	$	60,408

(1)	Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially-owned consolidated subsidiaries of less than $1 million.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity — (Continued)

For the Six Months Ended June 30, 2012 (Unaudited)

(In millions)


											Accumulated Other Comprehensive Income (Loss)
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock at Cost		Net Unrealized Investment Gains (Losses)		Other-Than- Temporary Impairments		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total MetLife, Inc.’s Stockholders’ Equity		Noncontrolling Interests (1)		Total Equity
Balance at December 31, 2011	$	1	$	11	$	26,782	$	24,814	$	(172)	$	9,115	$	(441)	$	(648)	$	(1,943)	$	57,519	$	370	$	57,889
Stock-based compensation						145														145				145
Dividends on preferred stock								(61)												(61)				(61)
Change in equity of noncontrolling interests																						(63)		(63)
Net income (loss)								2,151												2,151		20		2,171
Other comprehensive income (loss), net of income tax												2,805		26		(229)		50		2,652		(4)		2,648

Balance at June 30, 2012	$	1	$	11	$	26,927	$	26,904	$	(172)	$	11,920	$	(415)	$	(877)	$	(1,893)	$	62,406	$	323	$	62,729

(1)	Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially-owned consolidated subsidiaries of $12 million.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2013 and 2012 (Unaudited)

(In millions)


	Six Months Ended June 30,
	2013		2012
Net cash provided by (used in) operating activities	$	7,314	$	12,102

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		64,674		51,495
Equity securities		449		789
Mortgage loans		5,033		4,625
Real estate and real estate joint ventures		271		544
Other limited partnership interests		510		453
Purchases of:
Fixed maturity securities		(65,745)		(61,507)
Equity securities		(644)		(393)
Mortgage loans		(4,826)		(4,877)
Real estate and real estate joint ventures		(721)		(279)
Other limited partnership interests		(926)		(586)
Cash received in connection with freestanding derivatives		777		1,011
Cash paid in connection with freestanding derivatives		(4,300)		(1,549)
Net change in securitized reverse residential mortgage loans		—		(1,116)
Sales of businesses (1)		373		—
Sale of bank deposits		(6,395)		—
Net change in policy loans		(111)		(46)
Net change in short-term investments		3,880		(1,037)
Net change in other invested assets		(174)		(225)
Other, net		22		(79)

Net cash provided by (used in) investing activities		(7,853)		(12,777)

Cash flows from financing activities
Policyholder account balances:
Deposits		41,507		49,224
Withdrawals		(45,852)		(44,889)
Net change in payables for collateral under securities loaned and other transactions		(440)		6,586
Net change in bank deposits		8		(3,717)
Net change in short-term debt		—		(585)
Long-term debt repaid		(356)		(1,022)
Collateral financing arrangements repaid		—		(349)
Cash received (paid) in connection with collateral financing arrangements		—		(44)
Net change in liability for securitized reverse residential mortgage loans		—		1,116
Dividends on preferred stock		(61)		(61)
Dividends on common stock		(505)		—
Other, net		(91)		32

Net cash provided by (used in) financing activities		(5,790)		6,291

Effect of change in foreign currency exchange rates on cash and cash equivalents balances		(225)		(42)

Change in cash and cash equivalents		(6,554)		5,574
Cash and cash equivalents, beginning of period		15,738		10,461

Cash and cash equivalents, end of period	$	9,184	$	16,035

Supplemental disclosures of cash flow information:
Net cash paid (received) for:
Interest	$	618	$	494

Income tax	$	444	$	302

Non-cash transactions:
Real estate and real estate joint ventures acquired in satisfaction of debt	$	55	$	221

Collateral financing arrangements repaid	$	—	$	102

Redemption of advances agreements in long-term debt (1)	$	—	$	3,806

Issuance of funding agreements in policyholder account balances (1)	$	—	$	3,806

Dividends on common stock declared and unpaid	$	303	$	—

(1) See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. MetLife is a leading global provider of insurance, annuities and employee benefit programs throughout the United States, Japan, Latin America, Asia, Europe and the Middle East. MetLife offers life insurance, annuities, property & casualty insurance, and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.

MetLife is organized into six segments: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively, the “Americas”); Asia; and Europe, the Middle East and Africa (“EMEA”).

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from estimates.

The accompanying interim condensed consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.

Certain international subsidiaries have a fiscal year-end of November 30. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of such subsidiaries as of May 31, 2013 and November 30, 2012 and the operating results of such subsidiaries for the three months and six months ended May 31, 2013 and 2012.

The Company uses the equity method of accounting for investments in equity securities when it has significant influence or at least a 20% interest and for investments in real estate joint ventures and other limited partnership interests (“investees”) when it has more than a minor ownership interest or more than minor influence over the investee’s operations, but does not have a controlling financial interest. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. The Company uses the cost method of accounting for investments in which it has virtually no influence over the investee’s operations.

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2013 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2012 consolidated balance sheet data was

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2012 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2013, the Company adopted new guidance regarding comprehensive income that requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) (“AOCI”) by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The adoption was prospectively applied and resulted in additional disclosures in Note 10.

Effective January 1, 2013, the Company adopted new guidance regarding balance sheet offsetting disclosures which requires an entity to disclose information about offsetting and related arrangements for derivatives, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions, to enable users of its financial statements to understand the effects of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The adoption was retrospectively applied and resulted in additional disclosures related to derivatives in Note 7.

Future Adoption of New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding derivatives (Accounting Standards Update (“ASU”) 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate (“OIS”)) as a Benchmark Interest Rate for Hedge Accounting Purposes), effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The amendments permit the Fed Funds Effective Swap Rate (or OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the United States Treasury and London Inter-Bank Offered Rate (“LIBOR”). Also, the amendments remove the restriction on using different benchmark rates for similar hedges. The Company has adopted this new guidance in July 2013. The new guidance will not have a material impact on the consolidated financial statements upon adoption, but may impact the selection of benchmark interest rates for hedging relationships in the future.

In March 2013, the FASB issued new guidance regarding foreign currency (ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity), effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2013. The amendments require an entity that ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity to apply the guidance in Subtopic 830-30, Foreign Currency Matters — Translation of Financial Statements, to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

in section 830-30-40, Derecognition, still applies. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In February 2013, the FASB issued new guidance regarding liabilities (ASU 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date), effective retrospectively for fiscal years beginning after December 15, 2013 and interim periods within those years. The amendments require an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. In addition, the amendments require an entity to disclose the nature and amount of the obligation, as well as other information about the obligations. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In July 2011, the FASB issued new guidance on other expenses (ASU 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers), effective for calendar years beginning after December 31, 2013. The objective of this standard is to address how health insurers should recognize and classify in their income statements fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. The amendments in this standard specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using the straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

2. Segment Information

MetLife is organized into six segments, reflecting three broad geographic regions: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively, the “Americas”); Asia; and EMEA. In addition, the Company reports certain of its results of operations in Corporate & Other, which includes MetLife Bank, National Association (“MetLife Bank”) (see Note 3) and other business activities.

As anticipated, in the third quarter of 2012, the Company continued to realign certain products and businesses among its existing segments. Management realigned certain individual disability income and property & casualty products, which were previously reported in the Group, Voluntary & Worksite Benefits segment and began reporting such product results in the Retail segment. In accordance with this realignment, prior period operating earnings for the Retail segment increased by $28 million, net of $6 million of income tax, and $89 million, net of $25 million of income tax, with a corresponding decrease in the Group, Voluntary & Worksite Benefits segment, for the three months and six months ended June 30, 2012, respectively. Management also realigned the businesses in South Asia and India, which were previously reported in the EMEA segment and began reporting such results in the Asia segment. In accordance with this realignment, prior period operating earnings for the Asia segment increased by $4 million, net of $2 million of income tax, and $8 million, net of $4 million of income tax, with a corresponding decrease in the EMEA segment, for the three months and six months ended June 30, 2012, respectively.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Americas

The Americas consists of the following segments:

Retail

The Retail segment offers a broad range of protection products and services and a variety of annuities to individuals and employees of corporations and other institutions, and is organized into two businesses: Life & Other and Annuities. Life & Other insurance products and services include variable life, universal life, term life and whole life products. Additionally, through broker-dealer affiliates, the Company offers a full range of mutual funds and other securities products. Life & Other products and services also include individual disability income products and personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance. Annuities includes a variety of variable and fixed annuities which provide for both asset accumulation and asset distribution needs.

Group, Voluntary & Worksite Benefits

The Group, Voluntary & Worksite Benefits segment offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into two businesses: Group and Voluntary & Worksite. Group insurance products and services include variable life, universal life and term life products. Group insurance products and services also include dental, group short- and long-term disability and accidental death & dismemberment coverages. The Voluntary & Worksite business includes personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance offered to employees on a voluntary basis. The Voluntary & Worksite business also includes long-term care, prepaid legal plans and critical illness products.

Corporate Benefit Funding

The Corporate Benefit Funding segment offers a broad range of annuity and investment products, including guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets. This segment also includes certain products to fund postretirement benefits and company-, bank- or trust-owned life insurance used to finance non-qualified benefit programs for executives.

Latin America

The Latin America segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident and health insurance, group medical, dental, credit insurance, endowment and retirement & savings products written in Latin America. Starting in the first quarter of 2013, the Latin America segment includes U.S. sponsored direct business, comprised of group products sold through sponsoring organizations and affinity groups. Products included are life, dental, group short- and long-term disability, accidental death & dismemberment coverages, property & casualty and critical illness.

Asia

The Asia segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include whole life, term life, variable life, universal life, accident and health insurance, fixed and variable annuities and endowment products.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

EMEA

The EMEA segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident and health insurance, credit insurance, annuities, endowment and retirement & savings products.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments, external integration costs, internal resource costs for associates committed to acquisitions, enterprise-wide strategic initiative restructuring charges, and various start-up and certain run-off businesses. Start-up businesses include expatriate benefits insurance, as well as direct and digital marketing products. Corporate & Other also includes assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan. Under this in-force reinsurance agreement, the Company reinsures living and death benefit guarantees issued in connection with variable annuity products. Additionally, Corporate & Other includes interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings.

Financial Measures and Segment Accounting Policies

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is the Company’s measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for income (loss) from continuing operations, net of income tax. The Company believes the presentation of operating earnings as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business.

Operating earnings is defined as operating revenues less operating expenses, both net of income tax.

Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by MetLife (“Divested Businesses”). Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes goodwill impairments.

The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues:

•

Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”);

•

Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

•

Other revenues are adjusted for settlements of foreign currency earnings hedges.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:

•

Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (iii) benefits and hedging costs related to GMIBs (“GMIB Costs”), and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);

•

Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances (“PABs”) but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-linked investments;

•

Amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB Fees and GMIB Costs, and (iii) Market Value Adjustments;

•

Amortization of negative VOBA excludes amounts related to Market Value Adjustments;

•

Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

•

Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii) acquisition and integration costs.

Operating earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.

In the third quarter of 2012, MetLife began reporting additional MetLife Bank operations as Divested Businesses. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. Consequently, prior period results for Corporate & Other have increased by $6 million, net of $5 million of income tax, and $7 million, net of $5 million of income tax, for the three months and six months ended June 30, 2012, respectively.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and six months ended June 30, 2013 and 2012. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for operating earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.

Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The Company’s economic capital model aligns segment allocated equity with emerging standards and consistent risk principles. Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, operating earnings or income (loss) from continuing operations, net of income tax.

Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Operating Earnings
	Americas
Three Months Ended June 30, 2013	Retail		Group, Voluntary & Worksite Benefits		Corporate Benefit Funding		Latin America		Total		Asia		EMEA		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums		$ 1,581		$ 3,797		$ 503		$ 710		$ 6,591		$ 1,980		$ 558		$ 28		$ 9,157	$	1		$ 9,158
Universal life and investment-type product policy fees		1,238		170		65		235		1,708		442		96		35		2,281		90		2,371
Net investment income		1,987		472		1,443		281		4,183		723		120		78		5,104		178		5,282
Other revenues		257		105		67		5		434		28		34		4		500		(10)		490
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		110		110
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		(1,690)		(1,690)

Total revenues		5,063		4,544		2,078		1,231		12,916		3,173		808		145		17,042		(1,321)		15,721

Expenses
Policyholder benefits and claims and policyholder dividends		2,272		3,514		1,110		601		7,497		1,433		256		18		9,204		85		9,289
Interest credited to policyholder account balances		589		39		305		103		1,036		437		37		11		1,521		325		1,846
Capitalization of DAC		(344)		(35)		(6)		(108)		(493)		(522)		(192)		(5)		(1,212)		—		(1,212)
Amortization of DAC and VOBA		396		33		6		83		518		392		195		—		1,105		(147)		958
Amortization of negative VOBA		—		—		—		—		—		(113)		(11)		—		(124)		(14)		(138)
Interest expense on debt		1		1		2		1		5		—		(1)		283		287		34		321
Other expenses		1,265		578		121		390		2,354		1,054		460		146		4,014		82		4,096

Total expenses		4,179		4,130		1,538		1,070		10,917		2,681		744		453		14,795		365		15,160

Provision for income tax expense (benefit)		303		139		190		36		668		162		(4)		(203)		623		(570)		53

Operating earnings		$581	$	275	$	350	$	125	$	1,331	$	330	$	68	$	(105)		1,624

Adjustments to:
Total revenues																		(1,321)
Total expenses																		(365)
Provision for income tax (expense) benefit																		570

Income (loss) from continuing operations, net of income tax																	$	508			$	508

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Operating Earnings
	Americas
Three Months Ended June 30, 2012	Retail		Group, Voluntary & Worksite Benefits		Corporate Benefit Funding		Latin America		Total		Asia		EMEA		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	1,576	$	3,683	$	523	$	652	$	6,434	$	2,064	$	627	$	14	$	9,139	$	22	$	9,161
Universal life and investment-type product policy fees		1,119		165		57		196		1,537		352		71		39		1,999		98		2,097
Net investment income		1,894		439		1,431		283		4,047		760		127		238		5,172		(453)		4,719
Other revenues		217		112		65		3		397		(3)		27		5		426		(33)		393
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		(64)		(64)
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		2,092		2,092

Total revenues		4,806		4,399		2,076		1,134		12,415		3,173		852		296		16,736		1,662		18,398

Expenses
Policyholder benefits and claims and policyholder dividends		2,212		3,391		1,131		568		7,302		1,435		343		52		9,132		131		9,263
Interest credited to policyholder account balances		590		43		338		90		1,061		426		26		12		1,525		(503)		1,022
Capitalization of DAC		(446)		(33)		(8)		(71)		(558)		(555)		(200)		—		(1,313)		(2)		(1,315)
Amortization of DAC and VOBA		477		28		4		54		563		419		180		—		1,162		317		1,479
Amortization of negative VOBA		—		—		—		(1)		(1)		(128)		(35)		—		(164)		(17)		(181)
Interest expense on debt		—		—		2		—		2		4		1		290		297		45		342
Other expenses		1,355		570		120		323		2,368		1,153		422		108		4,051		399		4,450

Total expenses		4,188		3,999		1,587		963		10,737		2,754		737		462		14,690		370		15,060

Provision for income tax expense (benefit)		210		133		171		36		550		140		37		(144)		583		455		1,038

Operating earnings	$	408	$	267	$	318	$	135	$	1,128	$	279	$	78	$	(22)		1,463

Adjustments to:
Total revenues																		1,662
Total expenses																		(370)
Provision for income tax (expense) benefit																		(455)

Income (loss) from continuing operations, net of income tax																	$	2,300			$	2,300

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Operating Earnings
	Americas
Six Months Ended June 30, 2013	Retail		Group, Voluntary & Worksite Benefits		Corporate Benefit Funding		Latin America		Total		Asia		EMEA		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	3,128	$	7,671	$	967	$	1,385	$	13,151	$	3,978	$	1,125	$	54	$	18,308	$	1	$	18,309
Universal life and investment-type product policy fees		2,405		350		133		460		3,348		886		187		71		4,492		170		4,662
Net investment income		3,948		925		2,878		558		8,309		1,455		248		224		10,236		1,123		11,359
Other revenues		500		213		140		9		862		41		61		17		981		(11)		970
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		424		424
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		(2,320)		(2,320)

Total revenues		9,981		9,159		4,118		2,412		25,670		6,360		1,621		366		34,017		(613)		33,404

Expenses
Policyholder benefits and claims and policyholder dividends		4,425		7,154		2,208		1,155		14,942		2,848		493		27		18,310		687		18,997
Interest credited to policyholder account balances		1,168		78		648		207		2,101		879		72		23		3,075		1,361		4,436
Capitalization of DAC		(718)		(68)		(23)		(213)		(1,022)		(1,068)		(369)		(9)		(2,468)		—		(2,468)
Amortization of DAC and VOBA		727		67		17		157		968		793		360		—		2,121		(339)		1,782
Amortization of negative VOBA		—		—		—		(1)		(1)		(226)		(28)		—		(255)		(29)		(284)
Interest expense on debt		1		1		4		—		6		—		—		569		575		67		642
Other expenses		2,543		1,166		264		762		4,735		2,148		908		310		8,101		390		8,491

Total expenses		8,146		8,398		3,118		2,067		21,729		5,374		1,436		920		29,459		2,137		31,596

Provision for income tax expense (benefit)		628		256		351		77		1,312		323		30		(396)		1,269		(964)		305

Operating earnings	$	1,207	$	505	$	649	$	268	$	2,629	$	663	$	155	$	(158)		3,289

Adjustments to:
Total revenues																		(613)
Total expenses																		(2,137)
Provision for income tax (expense) benefit																		964

Income (loss) from continuing operations, net of income tax																	$	1,503			$	1,503

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Operating Earnings
	Americas
Six Months Ended June 30, 2012	Retail		Group, Voluntary & Worksite Benefits		Corporate Benefit Funding		Latin America		Total		Asia		EMEA		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	3,200	$	7,268	$	1,030	$	1,338	$	12,836	$	4,103	$	1,279	$	28	$	18,246	$	44	$	18,290
Universal life and investment-type product policy fees		2,233		331		108		392		3,064		714		151		79		4,008		167		4,175
Net investment income		3,805		875		2,832		582		8,094		1,441		284		430		10,249		670		10,919
Other revenues		426		220		129		8		783		13		63		19		878		112		990
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		(174)		(174)
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		114		114

Total revenues		9,664		8,694		4,099		2,320		24,777		6,271		1,777		556		33,381		933		34,314

Expenses
Policyholder benefits and claims and policyholder dividends		4,440		6,704		2,223		1,160		14,527		2,795		686		63		18,071		639		18,710
Interest credited to policyholder account balances		1,186		85		677		190		2,138		855		59		12		3,064		515		3,579
Capitalization of DAC		(922)		(64)		(15)		(155)		(1,156)		(1,142)		(377)		—		(2,675)		(4)		(2,679)
Amortization of DAC and VOBA		881		58		14		109		1,062		792		326		—		2,180		13		2,193
Amortization of negative VOBA		—		—		—		(3)		(3)		(259)		(39)		—		(301)		(35)		(336)
Interest expense on debt		—		—		4		1		5		5		1		601		612		88		700
Other expenses		2,752		1,145		248		649		4,794		2,344		893		263		8,294		924		9,218

Total expenses		8,337		7,928		3,151		1,951		21,367		5,390		1,549		939		29,245		2,140		31,385

Provision for income tax expense (benefit)		450		256		332		86		1,124		301		78		(324)		1,179		(416)		763

Operating earnings	$	877	$	510	$	616	$	283	$	2,286	$	580	$	150	$	(59)		2,957


Adjustments to:
Total revenues																		933
Total expenses																		(2,140)
Provision for income tax (expense) benefit																		416

Income (loss) from continuing operations, net of income tax																	$	2,166			$	2,166

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:


	June 30, 2013		December 31, 2012
	(In millions)
Retail	$	336,021	$	332,387
Group, Voluntary & Worksite Benefits		43,441		44,138
Corporate Benefit Funding		219,978		217,352
Latin America		23,300		23,272
Asia		118,197		131,138
EMEA		23,293		23,474
Corporate & Other		51,432		65,020

Total	$	815,662	$	836,781

3. Acquisitions and Disposition

2013 Pending Acquisition

Provida

On February 1, 2013, MetLife, Inc. announced that it has entered into a definitive agreement with Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”) and BBVA Inversiones Chile S.A. (together with BBVA, the “BBVA Sellers”) to acquire Administradora de Fondos de Pensiones Provida S.A. (“Provida”), the largest private pension fund administrator in Chile by assets under management and number of contributors. Under the terms of the agreement, MetLife will conduct a public cash tender offer for all of the outstanding shares of Provida, and the BBVA Sellers have agreed to transfer their 64.3% stake to MetLife. Assuming all publicly-held shares are tendered, the purchase price, which MetLife, Inc. and certain of its subsidiaries will fund from their existing cash balances, would be approximately $2.1 billion. The transaction is anticipated to close in the fourth quarter of 2013, subject to the satisfaction of certain customary conditions.

2013 Disposition

MetLife Bank

On January 11, 2013, MetLife Bank and MetLife, Inc. completed the sale of MetLife Bank’s $6.4 billion of deposits to GE Capital Retail Bank for $6.4 billion in net consideration paid. On February 14, 2013, MetLife, Inc. announced that it had received the required approvals from both the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) to de-register as a bank holding company. Subsequently, MetLife Bank terminated its deposit insurance and MetLife, Inc. de-registered as a bank holding company.

MetLife Bank has sold or has otherwise committed to exit substantially all of its operations. In conjunction with exiting its businesses (the “MetLife Bank Divestiture”), the Company recorded net losses of $15 million and $74 million, net of income tax, for the three months and six months ended June 30, 2013, respectively, related to the gain on disposal of the depository business and other costs related to MetLife Bank’s businesses. For the three months and six months ended June 30, 2012, the Company recorded net losses of $117 million and $110 million, respectively, net of income tax, related to the loss on disposal of mortgage servicing rights

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(“MSRs”), gains (losses) on securities and mortgage loans sold, and other costs related to MetLife Bank’s businesses. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. The Company expects to incur additional charges of $65 million to $90 million, net of income tax, exclusive of incremental legal settlements, related to the MetLife Bank Divestiture. See Note 14.

Each of the businesses that were exited could not be separated from the rest of the MetLife Bank operations since the Company did not separately manage the businesses as a reportable segment, operating segment, or reporting unit. As a result, the businesses have not been reported as discontinued operations in the consolidated financial statements.

2010 Acquisition

American Life Insurance Company

Branch Restructuring

During the first quarter of 2013, and in accordance with the closing agreement, American Life Insurance Company (“American Life”) entered into on March 4, 2010 (the “Closing Agreement”) with the Commissioner of the Internal Revenue Service (see Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report), the Company transferred the business of American Life in Portugal and Spain to wholly-owned subsidiaries. The deferred tax asset valuation allowance associated with this branch restructuring was reduced from $25 million at December 31, 2012 to $0 at June 30, 2013. For further information, see Note 19 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report.

A liability of $277 million was recognized in purchase accounting at November 1, 2010 for the anticipated and estimated costs associated with restructuring American Life’s foreign branches into subsidiaries in connection with the Closing Agreement. This liability has been reduced based on payments and revised estimates through June 30, 2013 resulting in a liability of $48 million at June 30, 2013.

Japan Income Tax Refund

In December 2012, the Tokyo District Court ruled in favor of the Japan branch of American Life in a tax case related to the deduction of unrealized foreign exchange losses on certain securities held by American Life prior to its acquisition by MetLife. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. During the first quarter of 2013, American Life received a refund of ¥16 billion ($176 million) related to income tax, interest and penalties. Under the indemnification provisions of the stock purchase agreement dated March 7, 2010, as amended, by and among MetLife, Inc., American International Group, Inc. (“AIG”) and AM Holdings LLC (formerly known as ALICO Holdings LLC), MetLife, Inc. has remitted the refund to AIG, net of certain amounts it can retain as a counter claim. The receipt of the refund, net of obligations to AIG with related foreign currency exchange impact and corresponding U.S. tax effects, resulted in a net charge of $16 million in the interim condensed consolidated statements of operations and comprehensive income for the six months ended June 30, 2013, which was comprised of a $154 million charge included in other expenses, a $19 million gain included in other net investment gains (losses) and a $119 million benefit included in provision for income tax expense (benefit).

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

4. Insurance

Guarantees

As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report, the Company issues variable annuity products with guaranteed minimum benefits. The non-life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that does not require annuitization are accounted for as embedded derivatives in PABs and are further discussed in Note 7.

The Company also issues annuity contracts that apply a lower rate of funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize (“two tier annuities”). These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit.

Based on the type of guarantee, the Company defines net amount at risk as listed below. These amounts include direct and assumed business, but exclude offsets from hedging or reinsurance, if any.

Variable Annuity Guarantees

In the Event of Death

Defined as the guaranteed minimum death benefit less the total contract account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

At Annuitization

Defined as the amount (if any) that would be required to be added to the total contract account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that only allow annuitization of the guaranteed amount after the 10th anniversary of the contract, which not all contractholders have achieved.

Two Tier Annuities

Defined as the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date. These contracts apply a lower rate of funds if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize.

Universal and Variable Life Contracts

Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts was as follows at:


	June 30, 2013				December 31, 2012
	In the Event of Death		At Annuitization		In the Event of Death		At Annuitization
	(In millions)
*Annuity Contracts* (1)
Variable Annuity Guarantees
Total contract account value (2)	$	188,810	$	92,875	$	184,095	$	89,137
Separate account value	$	151,039	$	88,730	$	143,893	$	84,354
Net amount at risk	$	6,744	$	3,585	$	9,501	$	4,593
Average attained age of contractholders		63 years		64 years		62 years		62 years
Two Tier Annuities
General account value		N/A	$	854		N/A	$	848
Net amount at risk		N/A	$	221		N/A	$	232
Average attained age of contractholders		N/A		52 years		N/A		51 years

	June 30, 2013				December 31, 2012
	Secondary Guarantees		Paid-Up Guarantees		Secondary Guarantees		Paid-Up Guarantees
	(In millions)
*Universal and Variable Life Contracts* (1)
Account value (general and separate account)	$	15,201	$	3,757	$	14,256	$	3,828
Net amount at risk	$	186,976	$	22,440	$	189,197	$	23,276
Average attained age of policyholders		55 years		60 years		54 years		60 years

(1)	The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.

(2)	Includes amounts, which are not reported in the consolidated balance sheets, from assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan.

5. Closed Block

On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.

Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item.

Information regarding the closed block liabilities and assets designated to the closed block was as follows:


	June 30, 2013		December 31, 2012
	(In millions)
Closed Block Liabilities
Future policy benefits	$	42,228	$	42,586
Other policy-related balances		284		298
Policyholder dividends payable		489		466
Policyholder dividend obligation		2,273		3,828
Current income tax payable		21		—
Other liabilities		635		602

Total closed block liabilities		45,930		47,780

Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value		28,725		30,546
Equity securities available-for-sale, at estimated fair value		94		41
Mortgage loans		6,243		6,192
Policy loans		4,670		4,670
Real estate and real estate joint ventures		463		459
Other invested assets		963		953

Total investments		41,158		42,861
Cash and cash equivalents		302		381
Accrued investment income		492		481
Premiums, reinsurance and other receivables		87		107
Current income tax recoverable		—		2
Deferred income tax assets		324		319

Total assets designated to the closed block		42,363		44,151

Excess of closed block liabilities over assets designated to the closed block		3,567		3,629

Amounts included in AOCI:
Unrealized investment gains (losses), net of income tax		1,825		2,891
Unrealized gains (losses) on derivatives, net of income tax		15		9
Allocated to policyholder dividend obligation, net of income tax		(1,477)		(2,488)

Total amounts included in AOCI		363		412

Maximum future earnings to be recognized from closed block assets and liabilities	$	3,930	$	4,041

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Information regarding the closed block policyholder dividend obligation was as follows:


	Six Months Ended June 30, 2013			Year Ended December 31, 2012
	(In millions)
Balance, beginning of period	$	3,828		$	2,919
Change in unrealized investment and derivative gains (losses)		(1,555	)		909

Balance, end of period	$	2,273		$	3,828

Information regarding the closed block revenues and expenses was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In millions)
Revenues
Premiums	$	489	$	528	$	953	$	1,026
Net investment income		529		539		1,062		1,089
Net investment gains (losses)		24		13		27		24
Net derivative gains (losses)		7		11		15		2

Total revenues		1,049		1,091		2,057		2,141

Expenses
Policyholder benefits and claims		669		700		1,312		1,362
Policyholder dividends		247		275		489		543
Other expenses		43		46		85		91

Total expenses		959		1,021		1,886		1,996

Revenues, net of expenses before provision for income tax expense (benefit)		90		70		171		145
Provision for income tax expense (benefit)		33		25		60		52

Revenues, net of expenses and provision for income tax expense (benefit) from continuing operations		57		45		111		93
Revenues, net of expenses and provision for income tax expense (benefit) from discontinued operations		—		—		—		4

Revenues, net of expenses and provision for income tax expense (benefit)	$	57	$	45	$	111	$	97

MLIC charges the closed block with federal income taxes, state and local premium taxes and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

6. Investments

Fixed Maturity and Equity Securities Available-for-Sale

Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following table presents the fixed maturity and equity securities available-for-sale (“AFS”) by sector. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairments (“OTTI”) losses. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”).


	June 30, 2013											December 31, 2012
	Cost or Amortized Cost		Gross Unrealized							Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized							Estimated Fair Value
	Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses			Estimated Fair Value		Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses			Estimated Fair Value
	(In millions)
Fixed maturity securities:
U.S. corporate	$	101,627	$	8,398	$	1,017	$	—		$	109,008	$	102,669	$	11,887	$	430	$	—		$	114,126
Foreign corporate (1)		60,928		3,893		636		(1	)		64,186		61,806		5,654		277		(1	)		67,184
Foreign government		48,199		4,373		275		—			52,297		51,967		5,440		71		—			57,336
U.S. Treasury and agency		44,254		3,683		511		—			47,426		41,874		6,104		11		—			47,967
RMBS		35,295		1,848		436		266			36,441		35,666		2,477		315		349			37,479
CMBS		16,680		757		174		—			17,263		18,177		1,009		57		—			19,129
ABS		15,502		332		167		12			15,655		15,762		404		156		13			15,997
State and political subdivision		13,141		1,276		179		—			14,238		12,949		2,169		70		—			15,048

Total fixed maturity securities	$	335,626	$	24,560	$	3,395	$	277		$	356,514	$	340,870	$	35,144	$	1,387	$	361		$	374,266

Equity securities:
Common stock	$	1,895	$	344	$	8	$	—		$	2,231	$	2,034	$	147	$	19	$	—		$	2,162
Non-redeemable preferred stock		1,027		59		86		—			1,000		804		65		140		—			729

Total equity securities	$	2,922	$	403	$	94	$	—		$	3,231	$	2,838	$	212	$	159	$	—		$	2,891

(1)

OTTI losses, as presented above, represent the noncredit portion of OTTI losses that is included in AOCI. OTTI losses include both the initial recognition of noncredit losses, and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that were previously noncredit loss impaired. The noncredit loss component of OTTI losses for foreign corporate securities was in an unrealized gain position of $1 million at both June 30, 2013 and December 31, 2012, due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The Company held non-income producing fixed maturity securities with an estimated fair value of $69 million and $85 million with unrealized gains (losses) of $22 million and $11 million at June 30, 2013 and December 31, 2012, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at:


	June 30, 2013				December 31, 2012
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	20,433	$	20,684	$	24,177	$	24,394
Due after one year through five years		69,684		73,065		66,973		70,759
Due after five years through ten years		77,693		84,144		82,376		91,975
Due after ten years		100,339		109,262		97,739		114,533

Subtotal		268,149		287,155		271,265		301,661
Structured securities (RMBS, CMBS and ABS)		67,477		69,359		69,605		72,605

Total fixed maturity securities	$	335,626	$	356,514	$	340,870	$	374,266

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately, as they are not due at a single maturity.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity and equity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts include the noncredit component of OTTI loss.


	June 30, 2013								December 31, 2012
	Less than 12 Months				Equal to or Greater than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(In millions, except number of securities)
Fixed maturity securities:
U.S. corporate	$	15,848	$	749	$	2,291	$	268	$	3,799	$	88	$	3,695	$	342
Foreign corporate		11,417		486		1,602		149		2,783		96		2,873		180
Foreign government		5,802		237		290		38		1,431		22		543		49
U.S. Treasury and agency		16,198		511		—		—		1,951		11		—		—
RMBS		9,711		288		2,531		414		735		31		4,098		633
CMBS		3,198		149		278		25		842		11		577		46
ABS		3,797		88		919		91		1,920		30		1,410		139
State and political subdivision		2,043		124		226		55		260		4		251		66

Total fixed maturity securities	$	68,014	$	2,632	$	8,137	$	1,040	$	13,721	$	293	$	13,447	$	1,455

Equity securities:
Common stock	$	70	$	7	$	16	$	1	$	201	$	18	$	14	$	1
Non-redeemable preferred stock		379		18		250		68		—		—		295		140

Total equity securities	$	449	$	25	$	266	$	69	$	201	$	18	$	309	$	141

Total number of securities in an unrealized loss position		4,443				886				1,941				1,335

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

As described more fully in Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired at June 30, 2013. Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, changes in collateral valuation, changes in interest rates and changes in credit spreads. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.

Gross unrealized losses on fixed maturity securities in an unrealized loss position increased $2.0 billion during the six months ended June 30, 2013 from $1.7 billion to $3.7 billion. The increase in gross unrealized losses for the six months ended June 30, 2013, was primarily attributable to an increase in interest rates and widening credit spreads.

At June 30, 2013, $266 million of the total $3.7 billion of gross unrealized losses were from 90 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Investment Grade Fixed Maturity Securities

Of the $266 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $104 million, or 39%, are related to gross unrealized losses on 42 investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads and, with respect to fixed rate fixed maturity securities, rising interest rates since purchase.

Below Investment Grade Fixed Maturity Securities

Of the $266 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $162 million, or 61%, are related to gross unrealized losses on 48 below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to non-agency RMBS (primarily alternative residential mortgage loans), ABS (primarily foreign ABS) and foreign government securities (primarily European sovereign bonds) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over unemployment levels, sovereign debt levels and valuations of residential real estate supporting non-agency RMBS. Management evaluates foreign government securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuer; and evaluates non-agency RMBS and ABS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security.

Equity Securities

Equity securities in an unrealized loss position decreased $65 million during the six months ended June 30, 2013 from $159 million to $94 million. Of the $94 million, $50 million were from 10 equity securities with gross unrealized losses of 20% or more of cost for 12 months or greater, all of which were financial services industry investment grade non-redeemable preferred stock, of which 64% were rated A, AA, or AAA.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Fair Value Option and Trading Securities

See Note 8 for tables that present the categories of securities that comprise fair value option (“FVO”) and trading securities. See “— Net Investment Income” and “— Net Investment Gains (Losses)” for the net investment income recognized on FVO and trading securities and the related changes in estimated fair value subsequent to purchase included in net investment income and net investment gains (losses) for securities still held as of the end of the respective periods, as applicable.

Mortgage Loans

Mortgage Loans Held-for-Investment and Held-for-Sale by Portfolio Segment

Mortgage loans are summarized as follows at:


	June 30, 2013					December 31, 2012
	Carrying Value		% of Total			Carrying Value		% of Total
	(In millions)					(In millions)
Mortgage loans held-for-investment:
Commercial	$	39,110		70.3	%	$	40,472		71.0	%
Agricultural		12,669		22.8			12,843		22.5
Residential		1,741		3.1			958		1.7

Subtotal (1)		53,520		96.2			54,273		95.2
Valuation allowances		(302)		(0.5)			(347)		(0.6)

Subtotal mortgage loans held-for-investment, net		53,218		95.7			53,926		94.6
Residential — FVO		150		0.2			—		—
Commercial mortgage loans held by CSEs		2,268		4.1			2,666		4.7

Total mortgage loans held-for-investment, net		55,636		100.0			56,592		99.3

Mortgage loans held for sale		—		—			414		0.7

Total mortgage loans, net	$	55,636		100.0	%	$	57,006