Edgar Filing: METLIFE INC

MET-2015.3.31-10Q

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 MARCH 31, 2015



¨	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) 578-9500

(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. (Check one):



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 April 30, 2015, 1,115,818,705 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 March 31, 2015 (Unaudited) and December 31, 2014 and for the Three Months Ended March 31, 2015 and 2014 (Unaudited))	3
	Interim Condensed Consolidated Balance Sheets	3
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Interim Condensed Consolidated Statements of Equity	5
	Interim Condensed Consolidated Statements of Cash Flows	6
	Notes to the Interim Condensed Consolidated Financial Statements:
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	7
	Note 2 — Segment Information	8
	Note 3 — Insurance	15
	Note 4 — Closed Block	16
	Note 5 — Investments	18
	Note 6 — Derivatives	31
	Note 7 — Fair Value	46
	Note 8 — Long-term Debt	69
	Note 9 — Equity	69
	Note 10 — Other Expenses	73
	Note 11 — Employee Benefit Plans	73
	Note 12 — Earnings Per Common Share	74
	Note 13 — Contingencies, Commitments and Guarantees	75
	Note 14 — Subsequent Event	82
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	83
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	148
Item 4.	Controls and Procedures	149

Part II — Other Information
Item 1.	Legal Proceedings	150
Item 1A.	Risk Factors	152
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	157
Item 6.	Exhibits	158

Signatures		159

Exhibit Index		E - 1

Table of Contents

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, or are tied to future periods, 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. 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 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 difficulties, unforeseen liabilities, asset impairments, or rating agency actions arising from business acquisitions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company, and integrating and managing the growth of such acquired businesses, or arising from dispositions of businesses or legal entity reorganizations; (25) regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (26) 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; (27) the possibility that MetLife, Inc.’s Board of Directors may influence the outcome of stockholder votes through the voting provisions of the MetLife Policyholder Trust; (28) changes in accounting standards, practices and/or policies; (29) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (30) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (31) inability to attract and retain sales representatives; (32) provisions of laws and our incorporation documents may delay, deter or prevent takeovers and corporate combinations involving MetLife; (33) 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; (34) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (35) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission.

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 U.S. Securities and Exchange Commission.

Corporate Information

We announce financial and other information about MetLife to our investors through the MetLife Investor Relations web page at www.metlife.com, as well as U.S. Securities and Exchange Commission (“SEC”) filings, press releases, public conference calls and webcasts. MetLife encourages investors to visit the Investor Relations web page from time to time, as information is updated and new information is posted. The information found on our website is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

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.

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MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

March 31, 2015 (Unaudited) and December 31, 2014

(In millions, except share and per share data)

Part I — Financial Information

Item 1. Financial Statements



	March 31, 2015			December 31, 2014
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $332,909 and $334,780, respectively; includes $4,326 and $4,266, respectively, relating to variable interest entities)	$	366,275		$	365,425
Equity securities available-for-sale, at estimated fair value (cost: $3,133 and $3,076, respectively)	3,713			3,631
Fair value option and trading securities, at estimated fair value (includes $714 and $704, respectively, of actively traded securities; and $56 and $60, respectively, relating to variable interest entities)	16,471			16,689
Mortgage loans (net of valuation allowances of $315 and $305, respectively; includes $272 and $280, respectively, at estimated fair value, relating to variable interest entities; includes $329 and $308, respectively, under the fair value option)	62,409			60,118
Policy loans (includes $3 and $3, respectively, relating to variable interest entities)	11,606			11,618
Real estate and real estate joint ventures (includes $8 and $8, respectively, relating to variable interest entities, includes $56 and $172, respectively, of real estate held-for-sale)	10,310			10,525
Other limited partnership interests (includes $34 and $34, respectively, relating to variable interest entities)	8,074			8,085
Short-term investments, principally at estimated fair value (includes $24 and $20, respectively, relating to variable interest entities)	14,130			8,621
Other invested assets, principally at estimated fair value (includes $70 and $56, respectively, relating to variable interest entities)	23,763			21,283
Total investments	516,751			505,995
Cash and cash equivalents, principally at estimated fair value (includes $54 and $57, respectively, relating to variable interest entities)	8,127			10,808
Accrued investment income (includes $26 and $21, respectively, relating to variable interest entities)	4,298			4,120
Premiums, reinsurance and other receivables (includes $29 and $21, respectively, relating to variable interest entities)	24,190			22,244
Deferred policy acquisition costs and value of business acquired (includes $246 and $235, respectively, relating to variable interest entities)	24,003			24,442
Goodwill	9,717			9,872
Other assets (includes $136 and $134, respectively, relating to variable interest entities)	7,980			7,862
Separate account assets (includes $1,167 and $1,128, respectively, relating to variable interest entities)	324,724			316,994
Total assets	$	919,790		$	902,337
Liabilities and Equity
Liabilities
Future policy benefits (includes $636 and $579, respectively, relating to variable interest entities)	$	191,217		$	189,586
Policyholder account balances (includes $34 and $33, respectively, relating to variable interest entities)	206,591			209,294
Other policy-related balances (includes $220 and $198, respectively, relating to variable interest entities)	14,586			14,422
Policyholder dividends payable	677			684
Policyholder dividend obligation	3,483			3,155
Payables for collateral under securities loaned and other transactions	37,312			35,326
Short-term debt	100			100
Long-term debt (includes $143 and $151, respectively, at estimated fair value, relating to variable interest entities)	17,714			16,286
Collateral financing arrangements	4,196			4,196
Junior subordinated debt securities	3,193			3,193
Current income tax payable	243			184
Deferred income tax liability	13,305			11,821
Other liabilities (includes $100 and $80, respectively, relating to variable interest entities)	28,040			24,437
Separate account liabilities (includes $1,167 and $1,128, respectively, relating to variable interest entities)	324,724			316,994
Total liabilities	845,381			829,678
Contingencies, Commitments and Guarantees (Note 13)
Redeemable noncontrolling interests in partially-owned consolidated subsidiaries	95			99
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; 1,156,311,419 and 1,153,998,144 shares issued, respectively; 1,114,347,885 and 1,131,927,894 shares outstanding, respectively	12			12
Additional paid-in capital	30,632			30,543
Retained earnings	33,754			32,020
Treasury stock, at cost; 41,963,534 and 22,070,250 shares, respectively	(2,158		)	(1,172		)
Accumulated other comprehensive income (loss)	11,529			10,649
Total MetLife, Inc.’s stockholders’ equity	73,770			72,053
Noncontrolling interests	544			507
Total equity	74,314			72,560
Total liabilities and equity	$	919,790		$	902,337

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the Three Months Ended March 31, 2015 and 2014 (Unaudited)

(In millions, except per share data)



	Three Months Ended March 31,
	2015			2014
Revenues
Premiums	$	9,253		$	9,219
Universal life and investment-type product policy fees	2,394			2,421
Net investment income	5,461			5,035
Other revenues	495			478
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities	(8		)	(14		)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)	(10		)	4
Other net investment gains (losses)	304			(401		)
Total net investment gains (losses)	286			(411		)
Net derivative gains (losses)	821			343
Total revenues	18,710			17,085
Expenses
Policyholder benefits and claims	9,257			9,324
Interest credited to policyholder account balances	1,995			1,469
Policyholder dividends	339			303
Other expenses	4,060			4,163
Total expenses	15,651			15,259
Income (loss) from continuing operations before provision for income tax	3,059			1,826
Provision for income tax expense (benefit)	896			484
Income (loss) from continuing operations, net of income tax	2,163			1,342
Income (loss) from discontinued operations, net of income tax	—			(3		)
Net income (loss)	2,163			1,339
Less: Net income (loss) attributable to noncontrolling interests	5			11
Net income (loss) attributable to MetLife, Inc.	2,158			1,328
Less: Preferred stock dividends	30			30
Net income (loss) available to MetLife, Inc.’s common shareholders	$	2,128		$	1,298
Comprehensive income (loss)	$	3,101		$	4,482
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax	63			43
Comprehensive income (loss) attributable to MetLife, Inc.	$	3,038		$	4,439



Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	1.89	$	1.15
Diluted	$	1.87	$	1.14
Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	1.89	$	1.15
Diluted	$	1.87	$	1.14
Cash dividends declared per common share	$	0.350	$	0.275

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, 2015 and 2014 (Unaudited)

(In millions)



	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Treasury Stock at Cost			Accumulated Other Comprehensive Income (Loss)		Total MetLife, Inc.’s Stockholders’ Equity			Noncontrolling Interests (1)			Total Equity
Balance at December 31, 2014	$	1	$	12	$	30,543	$	32,020		$	(1,172	)	$	10,649	$	72,053		$	507		$	72,560
Treasury stock acquired in connection with share repurchases										(986		)			(986		)				(986		)
Stock-based compensation					89										89						89
Dividends on preferred stock							(30		)						(30		)				(30		)
Dividends on common stock							(394		)						(394		)				(394		)
Change in equity of noncontrolling interests															—			(26		)	(26		)
Net income (loss)							2,158								2,158			5			2,163
Other comprehensive income (loss), net of income tax													880		880			58			938
Balance at March 31, 2015	$	1	$	12	$	30,632	$	33,754		$	(2,158	)	$	11,529	$	73,770		$	544		$	74,314



	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Treasury Stock at Cost			Accumulated Other Comprehensive Income (Loss)		Total MetLife, Inc.’s Stockholders’ Equity			Noncontrolling Interests (1)			Total Equity
Balance at December 31, 2013	$	1	$	11	$	29,277	$	27,332		$	(172	)	$	5,104	$	61,553		$	543		$	62,096
Stock-based compensation					107										107						107
Dividends on preferred stock							(30		)						(30		)				(30		)
Dividends on common stock							(311		)						(311		)				(311		)
Change in equity of noncontrolling interests															—			(12		)	(12		)
Net income (loss)							1,328								1,328			11			1,339
Other comprehensive income (loss), net of income tax													3,111		3,111			32			3,143
Balance at March 31, 2014	$	1	$	11	$	29,384	$	28,319		$	(172	)	$	8,215	$	65,758		$	574		$	66,332

__________________


(1)	Net income (loss) attributable to noncontrolling interests excludes gains of redeemable noncontrolling interests in partially-owned consolidated subsidiaries of less than $1 million at both March 31, 2015 and 2014.

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2015 and 2014 (Unaudited)

(In millions)



	Three Months Ended March 31,
	2015			2014
Net cash provided by (used in) operating activities	$	2,686		$	2,484
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	35,647			27,904
Equity securities	58			72
Mortgage loans	2,719			2,973
Real estate and real estate joint ventures	280			260
Other limited partnership interests	279			220
Purchases of:
Fixed maturity securities	(33,305		)	(24,954		)
Equity securities	(107		)	(209		)
Mortgage loans	(5,559		)	(2,483		)
Real estate and real estate joint ventures	(140		)	(578		)
Other limited partnership interests	(275		)	(485		)
Cash received in connection with freestanding derivatives	947			395
Cash paid in connection with freestanding derivatives	(1,494		)	(1,045		)
Cash received under repurchase agreements (Note 5)	199			—
Cash paid under reverse repurchase agreements (Note 5)	(199		)	—
Net change in policy loans	(7		)	(2		)
Net change in short-term investments	(5,690		)	47
Net change in other invested assets	(167		)	115
Other, net	(86		)	(66		)
Net cash provided by (used in) investing activities	(6,900		)	2,164
Cash flows from financing activities
Policyholder account balances:
Deposits	22,463			19,004
Withdrawals	(22,736		)	(22,628		)
Net change in payables for collateral under securities loaned and other transactions	1,985			2,058
Net change in short-term debt	—			(75		)
Long-term debt issued	1,492			—
Long-term debt repaid	(7		)	(1,460		)
Treasury stock acquired in connection with share repurchases	(986		)	—
Dividends on preferred stock	(30		)	(30		)
Dividends on common stock	(394		)	(311		)
Other, net	(64		)	(217		)
Net cash provided by (used in) financing activities	1,723			(3,659		)
Effect of change in foreign currency exchange rates on cash and cash equivalents balances	(190		)	(1		)
Change in cash and cash equivalents	(2,681		)	988
Cash and cash equivalents, beginning of period	10,808			7,585
Cash and cash equivalents, end of period	$	8,127		$	8,573
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	214		$	245
Income tax	$	147		$	97
Non-cash transactions:
Deconsolidation of MetLife Core Property Fund:
Reduction of redeemable noncontrolling interests	$	—		$	774
Reduction of long-term debt	$	—		$	413
Reduction of real estate and real estate joint ventures	$	—		$	1,132

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

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

Business

“MetLife” and the “Company” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. MetLife is a global provider of life insurance, annuities, employee benefits and asset management. 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 cutoff of November 30th. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of such subsidiaries as of February 28, 2015 and November 30, 2014 and the operating results of such subsidiaries for the three months ended February 28, 2015 and 2014.

The Company uses the equity method of accounting for equity securities when it has significant influence or at least 20% interest and for real estate joint ventures and other limited partnership interests (“investees”) when it has more than a minor ownership interest or more than a 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 2015 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, 2014 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10‑K for the year ended December 31, 2014 (the “2014 Annual Report”), 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 2014 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2015, the Company adopted guidance requiring repurchase-to-maturity transactions and repurchase financing arrangements to be accounted for as secured borrowings and providing for enhanced disclosures, including the nature of collateral pledged and the time to maturity. Certain interim period disclosures for repurchase agreements and securities lending transactions are not required until the second quarter of 2015. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.

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MetLife, Inc.

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

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

Future Adoption of New Accounting Pronouncements

In May, 2015, the Financial Accounting Standards Board (“FASB”) issued new guidance on fair value measurement (Accounting Standards Update (“ASU”) 2015‑07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and which should be applied retrospectively to all periods presented. Earlier application is permitted. The new amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient. In addition, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued new guidance on accounting for fees paid in a cloud computing arrangement (ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the new guidance is permitted and an entity can elect to adopt the guidance either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The new guidance provides that all software licenses included in cloud computing arrangements be accounted for consistent with other licenses of intangible assets. However, if a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract, the accounting for which did not change. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued new guidance on the presentation of debt issuance costs (ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and should be applied retrospectively to all periods presented. Early adoption of the new guidance is permitted for financial statements that have not been previously issued. The new guidance will require that debt issuance costs be presented in the balance sheet as a direct deduction from the related debt liability rather than as an asset, consistent with debt discounts. However, the current recognition and measurement guidance for debt issuance costs are not affected by the new guidance. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In February 2015, the FASB issued new guidance to improve consolidation guidance for legal entities (ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis), effective for fiscal years beginning after December 15, 2015 and interim periods within those years and early adoption is permitted. The new standard is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments in this ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and improve current GAAP by reducing the number of consolidation models. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In May 2014, the FASB issued a comprehensive new revenue recognition standard (ASU 2014‑09, Revenue from Contracts with Customers (Topic 606)), effective retrospectively for fiscal years beginning after December 15, 2016 and interim periods within those years. Early adoption of this standard is not permitted. The new guidance will supersede nearly all existing revenue recognition guidance under GAAP; however, it will not impact the accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. 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.

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MetLife, Inc.

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

2. Segment Information (continued)

As anticipated, in the first quarter of 2015, the Company implemented certain segment reporting changes related to the (i) measurement of segment operating earnings, which included revising the Company’s capital allocation methodology, and (ii) the realignment of consumer direct business. These changes were applied retrospectively and did not have an impact on total consolidated operating earnings or net income.

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. Group, Voluntary & Worksite Benefits insurance products and services include life, dental, group short- and long-term disability and accidental death and dismemberment (“AD&D”) coverages. In addition, the Group, Voluntary & Worksite Benefits segment offers property & casualty insurance, including private passenger automobile, homeowners and personal excess liability, which is offered to employees on a voluntary basis, long-term care, critical illness and accident & health coverages, as well as prepaid legal plans.

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 structured settlements and 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 & health insurance, group medical, dental, credit insurance, endowment and retirement & savings products written in Latin America. The Latin America segment also includes U.S. direct business, comprised of group and individual products sold through sponsoring organizations, affinity groups and direct to consumer. Products included are life, dental, group short- and long-term disability, AD&D coverages, property & casualty and other accident & health coverages, as well as non-insurance products such as identity protection.

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 & health insurance, fixed and variable annuities, credit insurance and endowment products.

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 & health insurance, credit insurance, annuities, endowment and retirement & savings products.

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MetLife, Inc.

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

2. Segment Information (continued)

Corporate & Other

Corporate & Other contains the excess capital, as well as certain charges and activities, not allocated to the segments, including external integration costs, internal resource costs for associates committed to acquisitions, enterprise-wide strategic initiative restructuring charges, various start-up businesses (including expatriate benefits insurance and the investment management business through which the Company offers fee-based investment management services to institutional clients) and certain run-off businesses. 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 and are referred to as 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.

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MetLife, Inc.

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

2. Segment Information (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 and other pass through adjustments, (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 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 addition to the tax impact of the adjustments mentioned above, provision for income tax expense (benefit) also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.

In the first quarter of 2015, the Company implemented certain segment reporting changes related to the (i) measurement of segment operating earnings, which included revising the Company’s capital allocation methodology, and (ii) the realignment of consumer direct business. Consequently, prior period results for the three months ended March 31, 2014 were impacted as follows:


•	Retail’s operating earnings increased by $24 million, net of $44 million of income tax benefit;


•	Group, Voluntary & Worksite Benefits’ operating earnings increased by $2 million, net of $1 million of income tax;


•	Corporate Benefit Funding’s operating earnings decreased by $15 million, net of $8 million of income tax benefit;


•	Latin America’s operating earnings decreased by $25 million, net of $16 million of income tax benefit;


•	Asia’s operating earnings increased by $5 million, net of $1 million of income tax;


•	EMEA’s operating earnings decreased by $17 million, net of $7 million of income tax benefit; and


•	Corporate & Other’s operating earnings increased by $26 million, net of $73 million of income tax.

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 ended March 31, 2015 and 2014. 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.

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MetLife, Inc.

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

2. Segment Information (continued)

The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.

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 portfolios 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.

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MetLife, Inc.

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

2. Segment Information (continued)



	Operating Results
	Americas
Three Months Ended March 31, 2015	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Latin America			Total			Asia			EMEA			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	1,749		$	4,117		$	418		$	699		$	6,983		$	1,752		$	508		$	10		$	9,253		$	—		$	9,253
Universal life and investment-type product policy fees	1,236			188			54			294			1,772			397			102			23			2,294			100			2,394
Net investment income	1,980			478			1,430			218			4,106			684			83			109			4,982			479			5,461
Other revenues	251			113			71			10			445			28			10			20			503			(8		)	495
Net investment gains (losses)	—			—			—			—			—			—			—			—			—			286			286
Net derivative gains (losses)	—			—			—			—			—			—			—			—			—			821			821
Total revenues	5,216			4,896			1,973			1,221			13,306			2,861			703			162			17,032			1,678			18,710
Expenses
Policyholder benefits and claims and policyholder dividends	2,449			3,835			991			581			7,856			1,340			239			12			9,447			149			9,596
Interest credited to policyholder account balances	542			37			293			86			958			337			30			6			1,331			664			1,995
Capitalization of DAC	(247		)	(36		)	(6		)	(111		)	(400		)	(435		)	(133		)	—			(968		)	—			(968		)
Amortization of DAC and VOBA	375			41			5			78			499			326			128			—			953			72			1,025
Amortization of negative VOBA	—			—			—			—			—			(86		)	(4		)	—			(90		)	(10		)	(100		)
Interest expense on debt	(1		)	—			1			—			—			—			—			297			297			1			298
Other expenses	1,176			664			124			425			2,389			904			362			145			3,800			5			3,805
Total expenses	4,294			4,541			1,408			1,059			11,302			2,386			622			460			14,770			881			15,651
Provision for income tax expense (benefit)	269			127			196			31			623			148			11			(188		)	594			302			896
Operating earnings	$	653		$	228		$	369		$	131		$	1,381		$	327		$	70		$	(110	)	1,668
Adjustments to:
Total revenues																									1,678
Total expenses																									(881		)
Provision for income tax (expense) benefit																									(302		)
Income (loss) from continuing operations, net of income tax																									$	2,163					$	2,163

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MetLife, Inc.

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

2. Segment Information (continued)



	Operating Results
	Americas
Three Months Ended March 31, 2014	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Latin America			Total			Asia			EMEA			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	1,724		$	4,002		$	301		$	683		$	6,710		$	1,890		$	597		$	20		$	9,217		$	2		$	9,219
Universal life and investment-type product policy fees	1,247			177			57			311			1,792			389			109			33			2,323			98			2,421
Net investment income	1,994			456			1,382			297			4,129			700			107			149			5,085			(50		)	5,035
Other revenues	245			107			68			7			427			27			16			21			491			(13		)	478
Net investment gains (losses)	—			—			—			—			—			—			—			—			—			(411		)	(411		)
Net derivative gains (losses)	—			—			—			—			—			—			—			—			—			343			343
Total revenues	5,210			4,742			1,808			1,298			13,058			3,006			829			223			17,116			(31		)	17,085
Expenses
Policyholder benefits and claims and policyholder dividends	2,407			3,781			888			616			7,692			1,397			261			23			9,373			254			9,627
Interest credited to policyholder account balances	555			40			278			98			971			387			34			9			1,401			68			1,469
Capitalization of DAC	(234		)	(34		)	(1		)	(107		)	(376		)	(494		)	(176		)	—			(1,046		)	—			(1,046		)
Amortization of DAC and VOBA	429			36			4			79			548			338			164			—			1,050			8			1,058
Amortization of negative VOBA	—			—			—			—			—			(94		)	(9		)	—			(103		)	(12		)	(115		)
Interest expense on debt	—			—			2			—			2			—			—			292			294			18			312
Other expenses	1,142			628			115			436			2,321			991			464			175			3,951			3			3,954
Total expenses	4,299			4,451			1,286			1,122			11,158			2,525			738			499			14,920			339			15,259
Provision for income tax expense (benefit)	275			101			182			18			576			148			20			(140		)	604			(120		)	484
Operating earnings	$	636		$	190		$	340		$	158		$	1,324		$	333		$	71		$	(136	)	1,592
Adjustments to:
Total revenues																									(31		)
Total expenses																									(339		)
Provision for income tax (expense) benefit																									120
Income (loss) from continuing operations, net of income tax																									$	1,342					$	1,342

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MetLife, Inc.

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

2. Segment Information (continued)

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



	March 31, 2015		December 31, 2014
	(In millions)
Retail	$	363,783	$	359,188
Group, Voluntary & Worksite Benefits	48,474		46,483
Corporate Benefit Funding	236,925		228,543
Latin America	72,074		72,259
Asia	116,278		117,894
EMEA	27,991		29,217
Corporate & Other	54,265		48,753
Total	$	919,790	$	902,337

3. Insurance

Guarantees

As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2014 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 policyholder account balances and are further discussed in Note 6.

The Company also issues two tier annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash (the “lower tier”) and a higher rate if the contractholder elects to annuitize (the “upper tier”). These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. 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 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 and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

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 allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved.

Two Tier and Other Annuities

Two tier annuities are defined as the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date. Other annuities are 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.

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MetLife, Inc.

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

3. Insurance (continued)

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.

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



	March 31, 2015				December 31, 2014
	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)	$	197,400	$	99,960	$	196,595	$	99,000
Separate account value	$	165,322	$	96,933	$	163,566	$	95,963
Net amount at risk (2)	$	3,892	$	1,996	$	4,230	$	1,770
Average attained age of contractholders	65 years		66 years		65 years		65 years
Two Tier and Other Annuities
Account value	N/A		$	939	N/A		$	1,040
Net amount at risk	N/A		$	301	N/A		$	340
Average attained age of contractholders	N/A		50 years		N/A		50 years



	March 31, 2015				December 31, 2014
	Secondary Guarantees		Paid-Up Guarantees		Secondary Guarantees		Paid-Up Guarantees
	(In millions)
Universal and Variable Life Contracts (1)
Account value (general and separate account)	$	17,072	$	3,556	$	16,875	$	3,587
Net amount at risk	$	178,870	$	19,980	$	180,069	$	20,344
Average attained age of policyholders	56 years		61 years		56 years		61 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 on the consolidated balance sheets, from assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan.

4. 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 of Reorganization”). 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.

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.

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MetLife, Inc.

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

4. Closed Block (continued)

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



	March 31, 2015			December 31, 2014
	(In millions)
Closed Block Liabilities
Future policy benefits	$	41,481		$	41,667
Other policy-related balances	309			265
Policyholder dividends payable	479			461
Policyholder dividend obligation	3,483			3,155
Current income tax payable	3			1
Other liabilities	482			646
Total closed block liabilities	46,237			46,195
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	29,093			29,199
Equity securities available-for-sale, at estimated fair value	98			91
Mortgage loans	6,103			6,076
Policy loans	4,643			4,646
Real estate and real estate joint ventures	651			666
Other invested assets	1,123			1,065
Total investments	41,711			41,743
Cash and cash equivalents	323			227
Accrued investment income	483			477
Premiums, reinsurance and other receivables	78			67
Deferred income tax assets	277			289
Total assets designated to the closed block	42,872			42,803
Excess of closed block liabilities over assets designated to the closed block	3,365			3,392
Amounts included in accumulated other comprehensive income (loss) (“AOCI”)
Unrealized investment gains (losses), net of income tax	2,441			2,291
Unrealized gains (losses) on derivatives, net of income tax	63			28
Allocated to policyholder dividend obligation, net of income tax	(2,264		)	(2,051		)
Total amounts included in AOCI	240			268
Maximum future earnings to be recognized from closed block assets and liabilities	$	3,605		$	3,660

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



	Three Months Ended March 31, 2015		Year Ended December 31, 2014
	(In millions)
Balance, beginning of period	$	3,155	$	1,771
Change in unrealized investment and derivative gains (losses)	328		1,384
Balance, end of period	$	3,483	$	3,155

Table of Contents

MetLife, Inc.

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

4. Closed Block (continued)

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



	Three Months Ended March 31,
	2015			2014
	(In millions)
Revenues
Premiums	$	430		$	446
Net investment income	515			530
Net investment gains (losses)	(1		)	—
Net derivative gains (losses)	25			(1		)
Total revenues	969			975
Expenses
Policyholder benefits and claims	608			624
Policyholder dividends	240			233
Other expenses	37			41
Total expenses	885			898
Revenues, net of expenses before provision for income tax expense (benefit)	84			77
Provision for income tax expense (benefit)	29			27
Revenues, net of expenses and provision for income tax expense (benefit)	$	55		$	50

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 of Reorganization. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.

5. 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. 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”).

Table of Contents

MetLife, Inc.

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

5. Investments (continued)

March 31, 2015

December 31, 2014

Cost or

Amortized

Cost

Gross Unrealized

Estimated

Fair

Value

Cost or

Amortized

Cost

Gross Unrealized

Estimated

Fair

Value

Gains

Temporary

Losses

OTTI

Losses

Gains

Temporary

Losses

OTTI

Losses

(In millions)

Fixed maturity securities

U.S. corporate

95,661

11,231

557

—

106,335

96,235