Edgar Filing: METLIFE INC

e10vq

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, 2009
OR
o		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 (State or other jurisdiction of incorporation or organization)		13-4075851 (I.R.S. Employer Identification No.)

200 Park Avenue, New York, NY (Address of principal executive offices)		10166-0188 (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 o

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 o

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 o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

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

At July 31, 2009, 818,638,951 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, 2009 (Unaudited) and December 31, 2008 and for the Three Months and Six Months Ended June 30, 2009 and 2008 (Unaudited)		4
Interim Condensed Consolidated Balance Sheets		4
Interim Condensed Consolidated Statements of Income		5
Interim Condensed Consolidated Statements of Stockholders’ Equity		6
Interim Condensed Consolidated Statements of Cash Flows		8
Notes to the Interim Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		116
Item 3. Quantitative and Qualitative Disclosures About Market Risk		251
Item 4. Controls and Procedures		261
Part II — Other Information
Item 1. Legal Proceedings		261
Item 1A. Risk Factors		263
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		268
Item 4. Submission of Matters to a Vote of Security Holders		268
Item 6. Exhibits		269
Signatures		270
Exhibit Index		E-1
EX-10.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Note Regarding Reliance on Statements in Our Contracts

In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife, Inc., its subsidiaries or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:


	•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

	•	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

	•	may apply standards of materiality in a way that is different from what may be viewed as material to investors; and

	•	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about MetLife, Inc. and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife, Inc.’s other public filings, which are available without charge through the SEC’s website at www.sec.gov.

Part I — Financial Information


Item 1.	*Financial Statements*

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets
June 30, 2009 (Unaudited) and December 31, 2008

(In millions, except share and per share data)


	June 30, 2009			December 31, 2008

Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $225,494 and $209,508, respectively)	$	211,563		$	188,251
Equity securities available-for-sale, at estimated fair value (cost: $3,679 and $4,131, respectively)		3,045			3,197
Trading securities, at estimated fair value (cost: $1,523 and $1,107, respectively)		1,471			946
Mortgage and consumer loans:
Held-for-investment, at amortized cost (net of valuation allowances of $543 and $304, respectively)		48,229			49,352
Held-for-sale, principally at estimated fair value		4,271			2,012

Mortgage and consumer loans, net		52,500			51,364
Policy loans		9,907			9,802
Real estate and real estate joint ventures held-for-investment		7,295			7,585
Real estate held-for-sale		1			1
Other limited partnership interests		5,193			6,039
Short-term investments		8,117			13,878
Other invested assets		13,071			17,248

Total investments		312,163			298,311
Cash and cash equivalents		13,213			24,207
Accrued investment income		3,019			3,061
Premiums and other receivables		16,730			16,973
Deferred policy acquisition costs and value of business acquired		20,323			20,144
Current income tax recoverable		253			—
Deferred income tax assets		3,856			4,927
Goodwill		5,036			5,008
Other assets		7,896			7,262
Assets of subsidiaries held-for-sale		—			946
Separate account assets		126,968			120,839

Total assets	$	509,457		$	501,678

Liabilities and Stockholders’ Equity
Liabilities:
Future policy benefits	$	132,823		$	130,555
Policyholder account balances		147,883			149,805
Other policyholder funds		8,319			7,762
Policyholder dividends payable		881			1,023
Short-term debt		4,757			2,659
Long-term debt		12,940			9,667
Collateral financing arrangements		5,297			5,192
Junior subordinated debt securities		2,691			3,758
Current income tax payable		—			342
Payables for collateral under securities loaned and other transactions		24,607			31,059
Other liabilities		14,679			14,284
Liabilities of subsidiaries held-for-sale		—			748
Separate account liabilities		126,968			120,839

Total liabilities		481,845			477,693

Contingencies, Commitments and Guarantees (Note 11)
Stockholders’ 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; 822,359,818 shares and 798,016,664 shares issued at June 30, 2009 and December 31, 2008, respectively; 818,586,271 shares and 793,629,070 shares outstanding at June 30, 2009 and December 31, 2008, respectively		8			8
Additional paid-in capital		16,849			15,811
Retained earnings		20,472			22,403
Treasury stock, at cost; 3,773,547 shares and 4,387,594 shares at June 30, 2009 and December 31, 2008, respectively		(203	)		(236	)
Accumulated other comprehensive loss		(9,834	)		(14,253	)

Total MetLife, Inc.’s stockholders’ equity		27,293			23,734
Noncontrolling interests		319			251

Total equity		27,612			23,985

Total liabilities and stockholders’ equity	$	509,457		$	501,678

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Income
For the Three Months and Six Months Ended June 30, 2009 and 2008 (Unaudited)

(In millions, except per share data)


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2009			2008			2009			2008

Revenues
Premiums	$	6,576		$	6,340		$	12,698		$	12,631
Universal life and investment-type product policy fees		1,216			1,396			2,399			2,793
Net investment income		3,731			4,319			6,994			8,616
Other revenues		572			351			1,126			720
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(566	)		(139	)		(1,119	)		(213	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive loss		234			—			234			—
Other net investment gains (losses), net		(3,497	)		(218	)		(3,850	)		(874	)

Total net investment gains (losses)		(3,829	)		(357	)		(4,735	)		(1,087	)

Total revenues		8,266			12,049			18,482			23,673

Expenses
Policyholder benefits and claims		6,946			6,579			13,528			13,162
Interest credited to policyholder account balances		1,229			1,196			2,397			2,429
Policyholder dividends		434			446			858			875
Other expenses		2,031			2,607			5,033			5,154

Total expenses		10,640			10,828			21,816			21,620

Income (loss) from continuing operations before provision for income tax		(2,374	)		1,221			(3,334	)		2,053
Provision for income tax expense (benefit)		(956	)		342			(1,332	)		549

Income (loss) from continuing operations, net of income tax		(1,418	)		879			(2,002	)		1,504
Income from discontinued operations, net of income tax		—			117			36			152

Net income (loss)		(1,418	)		996			(1,966	)		1,656
Less: Net income (loss) attributable to noncontrolling interests		(16	)		50			(20	)		62

Net income (loss) attributable to MetLife, Inc.		(1,402	)		946			(1,946	)		1,594
Less: Preferred stock dividends		31			31			61			64

Net income (loss) available to MetLife, Inc.’s common shareholders	$	(1,433	)	$	915		$	(2,007	)	$	1,530

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	(1.74	)	$	1.19		$	(2.50	)	$	2.03

Diluted	$	(1.74	)	$	1.18		$	(2.50	)	$	1.99

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	(1.74	)	$	1.28		$	(2.46	)	$	2.14

Diluted	$	(1.74	)	$	1.26		$	(2.46	)	$	2.10

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statement of Stockholders’ Equity
For the Six Months Ended June 30, 2009 (Unaudited)

(In millions)


													Accumulated Other Comprehensive Loss
													Net
													Unrealized						Foreign			Defined			Total
					Additional					Treasury			Investment			Other-Than-			Currency			Benefit			MetLife, Inc.’s
	Preferred		Common		Paid-in		Retained			Stock at			Gains			Temporary			Translation			Plans			Stockholders’			Noncontrolling			Total
	Stock		Stock		Capital		Earnings			Cost			(Losses)			Impairments			Adjustments			Adjustment			Equity			Interests			Equity

Balance at December 31, 2008	$	1	$	8	$	15,811	$	22,403		$	(236	)	$	(12,564	)	$	—		$	(246	)	$	(1,443	)	$	23,734		$	251		$	23,985
Cumulative effect of changes in accounting principle, net of income tax (Note 1)								76									(76	)
Common stock issuance — newly issued shares						1,035																				1,035						1,035
Treasury stock transactions, net						2					33															35						35
Deferral of stock-based compensation						1																				1						1
Dividends on preferred stock								(61	)																	(61	)					(61	)
Change in equity of noncontrolling interests																													95			95
Comprehensive income (loss):
Net loss								(1,946	)																	(1,946	)		(20	)		(1,966	)
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax														(57	)											(57	)					(57	)
Unrealized investment gains (losses), net of related offsets and income tax														4,624			(145	)								4,479			(7	)		4,472
Foreign currency translation adjustments, net of income tax																				(6	)					(6	)					(6	)
Defined benefit plans adjustment, net of income tax																							79			79						79

Other comprehensive income (loss)																										4,495			(7	)		4,488

Comprehensive income (loss)																										2,549			(27	)		2,522

Balance at June 30, 2009	$	1	$	8	$	16,849	$	20,472		$	(203	)	$	(7,997	)	$	(221	)	$	(252	)	$	(1,364	)	$	27,293		$	319		$	27,612

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statement of Stockholders’ Equity
For the Six Months Ended June 30, 2008 (Unaudited) — (Continued)

(In millions)


													Accumulated Other Comprehensive Loss
													Net
													Unrealized			Foreign		Defined			Total
					Additional					Treasury			Investment			Currency		Benefit			MetLife, Inc.’s			Noncontrolling Interests
	Preferred		Common		Paid-in		Retained			Stock			Gains			Translation		Plans			Stockholders’			Discontinued			Continuing			Total
	Stock		Stock		Capital		Earnings			at Cost			(Losses)			Adjustments		Adjustment			Equity			Operations			Operations			Equity

Balance at December 31, 2007	$	1	$	8	$	17,098	$	19,884		$	(2,890	)	$	971		$	347	$	(240	)	$	35,179		$	1,534		$	272		$	36,985
Cumulative effect of changes in accounting principles, net of income tax								27						(10	)							17									17

Balance at January 1, 2008		1		8		17,098		19,911			(2,890	)		961			347		(240	)		35,196			1,534			272			37,002
Treasury stock transactions, net						408					(1,157	)										(749	)								(749	)
Deferral of stock-based compensation						141																141									141
Dividends on preferred stock								(64	)													(64	)								(64	)
Dividends on subsidiary common stock																									(16	)					(16	)
Change in equity of noncontrolling interests																									14			(65	)		(51	)
Comprehensive loss:
Net income								1,594														1,594			71			(9	)		1,656
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax														(33	)							(33	)								(33	)
Unrealized investment gains (losses), net of related offsets and income tax														(3,624	)							(3,624	)		(128	)		(7	)		(3,759	)
Foreign currency translation adjustments, net of income tax																	80					80			(3	)					77

Other comprehensive loss																						(3,577	)		(131	)		(7	)		(3,715	)

Comprehensive loss																						(1,983	)		(60	)		(16	)		(2,059	)

Balance at June 30, 2008	$	1	$	8	$	17,647	$	21,441		$	(4,047	)	$	(2,696	)	$	427	$	(240	)	$	32,541		$	1,472		$	191		$	34,204

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, 2009 and 2008 (Unaudited)

(In millions)


	Six Months
	Ended
	June 30,
	2009			2008

Cash flows from operating activities
Net income (loss)	$	(1,966	)	$	1,656
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization expenses		259			334
Amortization of premiums and accretion of discounts associated with investments, net		(287	)		(526	)
Loss from sales of investments and businesses, net		4,687			1,226
Undistributed equity earnings of real estate joint ventures and other limited partnership interests		857			(66	)
Interest credited to policyholder account balances		2,400			2,576
Interest credited to bank deposits		84			84
Universal life and investment-type product policy fees		(2,413	)		(2,838	)
Change in accrued investment income		43			309
Change in premiums and other receivables		(997	)		(569	)
Change in deferred policy acquisition costs, net		(914	)		(643	)
Change in insurance-related liabilities		2,434			2,727
Change in trading securities		(459	)		(167	)
Change in residential mortgage loans held-for-sale, net		(2,291	)		—
Change in mortgage servicing rights		(479	)		—
Change in income tax payable		(1,675	)		243
Change in other assets		(463	)		904
Change in other liabilities		(96	)		157
Other, net		49			11

Net cash (used in) provided by operating activities		(1,227	)		5,418

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		31,711			46,828
Equity securities		1,154			786
Mortgage and consumer loans		3,015			3,066
Real estate and real estate joint ventures		7			119
Other limited partnership interests		640			380
Purchases of:
Fixed maturity securities		(47,052	)		(52,188	)
Equity securities		(1,102	)		(705	)
Mortgage and consumer loans		(2,076	)		(5,205	)
Real estate and real estate joint ventures		(213	)		(622	)
Other limited partnership interests		(413	)		(880	)
Net change in short-term investments		5,761			684
Net change in other invested assets		(59	)		(1,013	)
Net change in policy loans		(105	)		(345	)
Purchases of businesses, net of cash received of $0 and $44, respectively		—			(350	)
Sales of businesses, net of cash disposed of $180 and $0, respectively		(46	)		(4	)
Other, net		(103	)		(74	)

Net cash used in investing activities	$	(8,881	)	$	(9,523	)

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows — (Continued)
For the Six Months Ended June 30, 2009 and 2008 (Unaudited)

(In millions)


	Six Months
	Ended
	June 30,
	2009			2008

Cash flows from financing activities
Policyholder account balances:
Deposits	$	62,300		$	29,146
Withdrawals		(62,086	)		(23,082	)
Net change in short-term debt		2,098			(44	)
Long-term debt issued		2,225			117
Long-term debt repaid		(134	)		(66	)
Collateral financing arrangements issued		105			115
Cash received in connection with collateral financing arrangement		400			—
Cash paid in connection with collateral financing arrangement		(400	)		—
Junior subordinated debt securities issued		—			750
Debt issuance costs		(17	)		(9	)
Net change in payables for collateral under securities loaned and other transactions		(6,452	)		1,843
Stock options exercised		1			31
Common stock issued to settle stock forward contracts		1,035			—
Treasury stock acquired		—			(1,250	)
Dividends on preferred stock		(61	)		(64	)
Other, net		(16	)		8

Net cash (used in) provided by financing activities		(1,002	)		7,495

Effect of change in foreign currency exchange rates on cash balances		84			57

Change in cash and cash equivalents		(11,026	)		3,447
Cash and cash equivalents, beginning of period		24,239			10,368

Cash and cash equivalents, end of period	$	13,213		$	13,815

Cash and cash equivalents, subsidiaries held-for-sale, beginning of period	$	32		$	407

Cash and cash equivalents, subsidiaries held-for-sale, end of period	$	—		$	401

Cash and cash equivalents, from continuing operations, beginning of period	$	24,207		$	9,961

Cash and cash equivalents, from continuing operations, end of period	$	13,213		$	13,414

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Interest	$	475		$	572

Income tax	$	195		$	315

Non-cash transactions during the period:
Business acquisitions:
Assets acquired	$	—		$	1,411
Cash paid		—			(394	)

Liabilities assumed	$	—		$	1,017

Business disposition:
Assets disposed	$	841		$	—
Less: liabilities disposed		740			—

Net assets disposed		101			—
Less: cash disposed		180			—

Business disposition, net of cash disposed	$	(79	)	$	—

Remarketing of debt securities:
Fixed maturity securities redeemed	$	32		$	—

Long-term debt issued	$	1,035		$	—

Junior subordinated debt securities redeemed	$	1,067		$	—

Real estate and real estate joint ventures acquired in satisfaction of debt	$	172		$	—

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 (the “Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”). MetLife is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin America, Europe, and Asia Pacific regions. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.

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. The most critical estimates include those used in determining:


	(i)	the estimated fair value of investments in the absence of quoted market values;


	(ii)	investment impairments;

	(iii)	the recognition of income on certain investment entities;


	(iv)	the application of the consolidation rules to certain investments;

	(v)	the existence and estimated fair value of embedded derivatives requiring bifurcation;

	(vi)	the estimated fair value of and accounting for derivatives;

	(vii)	the capitalization and amortization of deferred policy acquisition costs (“DAC”) and the establishment and amortization of value of business acquired (“VOBA”);

	(viii)	the measurement of goodwill and related impairment, if any;

	(ix)	the liability for future policyholder benefits;

	(x)	accounting for income taxes and the valuation of deferred income tax assets;

	(xi)	accounting for reinsurance transactions;

	(xii)	accounting for employee benefit plans; and

	(xiii)	the liability for litigation and regulatory matters.

In applying the Company’s accounting policies, management makes subjective and complex judgments that frequently require estimates 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 businesses and operations. Actual results could differ from these estimates.

The accompanying interim condensed consolidated financial statements include the accounts of the Holding Company and its subsidiaries as well as partnerships and joint ventures in which the Company has control. 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. See Note 8. Intercompany accounts and transactions have been eliminated.

In addition, the Company has invested in certain structured transactions that are variable interest entities (“VIEs”) under Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46(r), Consolidation of Variable Interest Entities — An Interpretation of Accounting Research Bulletin No. 51. These structured

MetLife, Inc.

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

transactions include reinsurance trusts, asset-backed securitizations, trust preferred securities, joint ventures, limited partnerships and limited liability companies. The Company is required to consolidate those VIEs for which it is deemed to be the primary beneficiary. The Company reconsiders whether it is the primary beneficiary for investments designated as VIEs on a quarterly basis.

The Company uses the equity method of accounting for investments in equity securities in which it has a significant influence or more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture’s or partnership’s operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture’s or the partnership’s operations.

Certain amounts in the prior year periods’ interim condensed consolidated financial statements have been reclassified to conform with the 2009 presentation. Such reclassifications include $57 million for the six months ended June 30, 2008 relating to the effect of change in foreign currency exchange rates on cash balances. These amounts were reclassified from cash flows from operating activities in the consolidated statements of cash flows for the six months ended June 30, 2008. See also Note 17 for reclassifications related to discontinued operations.

The accompanying interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to state fairly the consolidated financial position of the Company at June 30, 2009, its consolidated results of operations for the three months and six months ended June 30, 2009 and 2008, its consolidated cash flows for the six months ended June 30, 2009 and 2008, and its consolidated statements of stockholders’ equity for the six months ended June 30, 2009 and 2008, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2008 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife’s Annual Report on Form 10-K for the year ended December 31, 2008, as amended on Form 8-K on June 12, 2009, (the “2008 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), which includes 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 2008 Annual Report.

Adoption of New Accounting Pronouncements

Financial Instruments

Effective April 1, 2009, the Company adopted FASB Staff Position (“FSP”) No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP 115-2”). FSP 115-2 amends the recognition guidance for determining whether an other-than-temporary impairment (“OTTI”) exists for fixed maturity securities, changes the presentation of OTTI for fixed maturity securities and requires additional disclosures for OTTI on fixed maturity and equity securities in interim and annual financial statements. FSP 115-2 requires that an OTTI be recognized in earnings for a fixed maturity security in an unrealized loss position when it is anticipated that the amortized cost will not be recovered. In such situations, the OTTI recognized in earnings is the entire difference between the fixed maturity security’s amortized cost and its fair value only when either (1) the Company has the intent to sell the fixed maturity security or (2) it is more likely than not that the Company will be required to sell the fixed maturity security before recovery of the decline in fair value below amortized cost. If neither of these two conditions exists, the difference between the amortized cost basis of the fixed maturity security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than credit factors (“noncredit loss”) is recorded as other comprehensive income (loss). When an unrealized loss on a fixed maturity security is considered temporary, the Company continues to record the unrealized loss in other comprehensive income (loss) and not in earnings. There was no change for equity

MetLife, Inc.

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

securities which, when an OTTI has occurred, continue to be impaired for the entire difference between the equity security’s cost or amortized cost and its fair value with a corresponding charge to earnings.

Prior to the adoption of this new guidance, the Company recognized in earnings an OTTI for a fixed maturity security in an unrealized loss position unless it could assert that it had both the intent and ability to hold the fixed maturity security for a period of time sufficient to allow for a recovery of fair value to the security’s amortized cost basis. Also prior to the adoption of FSP 115-2, the entire difference between the fixed maturity security’s amortized cost basis and its fair value was recognized in earnings if it was determined to have an OTTI.

The Company’s net cumulative effect adjustment of adopting FSP 115-2 was an increase of $76 million to retained earnings with a corresponding increase to accumulated other comprehensive loss to reclassify the noncredit loss portion of previously recognized OTTI losses on fixed maturity securities held at April 1, 2009. This cumulative effect adjustment was comprised of an increase in the amortized cost basis of fixed maturity securities of $126 million, net of policyholder related amounts of $10 million and net of deferred income taxes of $40 million, resulting in the net cumulative effect adjustment of $76 million. The increase in amortized cost basis of fixed maturity securities of $126 million by sector was as follows: $53 million - asset-backed securities, $43 million — residential mortgage-backed securities, $17 million — U.S. corporate securities, and $13 million — commercial mortgage-backed securities.

As a result of the adoption of FSP 115-2, the Company’s pre-tax earnings for the three months ended June 30, 2009 increased by $216 million offset by an increase in other comprehensive loss representing OTTI relating to noncredit losses recognized in the three months period ended June 30, 2009.

The enhanced financial statement presentation required by FSP 115-2 of the total OTTI loss and the offset for the portion of non credit OTTI loss transferred to and recognized in other comprehensive loss is presented in the consolidated statements of income and stockholders’ equity. The enhanced disclosures required by FSP 115-2 are included in Note 3.

Effective April 1, 2009, the Company adopted two FSPs providing additional guidance relating to fair value measurement and disclosure.


	•	FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP 157-4”), provides guidance on (1) estimating the fair value of an asset or liability if there was a significant decrease in the volume and level of trading activity for these assets or liabilities and (2) identifying transactions that are not orderly. Further, FSP 157-4 requires disclosure in interim financial statements of the inputs and valuation techniques used to measure fair value. The adoption of FSP 157-4 did not have an impact on the Company’s consolidated financial statements. Additionally, the Company has provided all of the material required disclosures in its consolidated financial statements.

	•	FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, requires interim financial instrument fair value disclosures similar to those included in annual financial statements. The Company has provided all of the material required disclosures in its consolidated financial statements.

Effective January 1, 2009, the Company adopted prospectively FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (“FSP 140-3”). FSP 140-3 provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. At adoption, FSP 140-3 did not have an impact on the Company’s consolidated financial statements.

Business Combinations and Noncontrolling Interests

Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations — A Replacement of FASB Statement No. 141 (“SFAS 141(r)”),

MetLife, Inc.

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

FSP 141(r)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (“FSP 141(r)-1”) and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (“SFAS 160”). Under this new guidance:


	•	All business combinations (whether full, partial or “step” acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions.

	•	Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date.

	•	The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date.

	•	Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if the acquisition-date fair value can be reasonably determined. If the fair value is not estimable, an asset or liability is recorded if existence or incurrence at the acquisition date is probable and its amount is reasonably estimable.

	•	Changes in deferred income tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense.

	•	Noncontrolling interests (formerly known as “minority interests”) are valued at fair value at the acquisition date and are presented as equity rather than liabilities.

	•	Net income includes amounts attributable to noncontrolling interests.

	•	When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized.

	•	Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions.

	•	When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized.

The adoption of SFAS 141(r) and FSP 141(r)-1 on a prospective basis did not have an impact on the Company’s consolidated financial statements. Financial statements and disclosures for periods prior to 2009 reflect the retrospective application of the accounting for noncontrolling interests as required under SFAS 160.

Effective January 1, 2009, the Company adopted prospectively Emerging Issues Task Force (“EITF”) Issue No. 08-6, Equity Method Investment Accounting Considerations (“EITF 08-6”). EITF 08-6 addresses a number of issues associated with the impact that SFAS 141(r) and SFAS 160 might have on the accounting for equity method investments, including how an equity method investment should initially be measured, how it should be tested for impairment, and how changes in classification from equity method to cost method should be treated. The adoption of EITF 08-6 did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted prospectively EITF Issue No. 08-7, Accounting for Defensive Intangible Assets (“EITF 08-7”). EITF 08-7 requires that an acquired defensive intangible asset (i.e., an asset an entity does not intend to actively use, but rather, intends to prevent others from using) be accounted for as a separate unit of accounting at time of acquisition, not combined with the acquirer’s existing intangible assets. In addition, the EITF concludes that a defensive intangible asset may not be considered immediately abandoned following its acquisition or have indefinite life. The adoption of EITF 08-7 did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted prospectively FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in

MetLife, Inc.

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

developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). This change is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(r) and other GAAP. The Company will determine useful lives and provide all of the material required disclosures prospectively on intangible assets acquired on or after January 1, 2009 in accordance with FSP 142-3. The adoption of FSP 142-3 did not have an impact on the Company’s consolidated financial statements.

Other Pronouncements

Effective April 1, 2009, the Company prospectively adopted SFAS No. 165, Subsequent Events (“SFAS 165”). SFAS 165 establishes general standards for accounting and disclosures of events that occur subsequent to the balance sheet date but before financial statements are issued or available to be issued. SFAS 165 also requires disclosure of the date through which management has evaluated subsequent events and the basis for that date. The Company has provided all of the material required disclosures in its consolidated financial statements.

Effective January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The Company has provided all of the material required disclosures in its consolidated financial statements.

Effective January 1, 2009, the Company implemented guidance of SFAS No. 157, Fair Value Measurements (“SFAS 157”), for certain nonfinancial assets and liabilities that are recorded at fair value on a nonrecurring basis. This guidance which applies to such items as (i) nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination, (ii) reporting units measured at estimated fair value in the first step of a goodwill impairment test and (iii) indefinite-lived intangible assets measured at estimated fair value for impairment assessment, was previously deferred under FSP 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). The adoption of FSP 157-2 did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted prospectively EITF Issue No. 08-5, Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement (“EITF 08-5”). EITF 08-5 concludes that an issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. In addition, EITF 08-5 requires disclosures about the existence of any third-party credit enhancement related to liabilities that are measured at fair value. The adoption of EITF 08-5 did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted EITF Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF 07-5”). EITF 07-5 provides a framework for evaluating the terms of a particular instrument and whether such terms qualify the instrument as being indexed to an entity’s own stock. The adoption of EITF 07-5 did not have an impact on Company’s consolidated financial statements.

Future Adoption of New Accounting Pronouncements

In June 2009, the FASB issued two standards providing additional guidance on financial instrument transfers and evaluation of special purpose entities for consolidation. The standards must be adopted in the first quarter of 2010.


	•	SFAS No. 166, Accounting for Transfers of Financial Assets (“SFAS 166”) eliminates the concept of a “qualifying special purpose entity,” eliminates the guaranteed mortgage securitization exception, changes

MetLife, Inc.

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

the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. SFAS 166 also requires additional disclosures about transfers of financial assets, including securitized transactions, as well as a company’s continuing involvement in transferred financial assets. The Company is currently evaluating the impact of SFAS 166 on its consolidated financial statements.


	•	SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS 167”) changes the determination of the primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the primary beneficiary must have both the ability to direct the activities of the VIE and the obligation to absorb either losses or gains that could be significant to the VIE. SFAS 167 also changes when reassessment is needed, as well as requires enhanced disclosures, including the effects of a company’s involvement with VIEs on its financial statements. The Company is currently evaluating the impact of SFAS 167 on its consolidated financial statements.

In December 2008, the FASB issued FSP No. FAS 132(r)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets (“FSP 132(r)-1”). FSP 132(r)-1 amends SFAS No. 132(r), Employers’ Disclosures about Pensions and Other Postretirement Benefits, to enhance the transparency surrounding the types of assets and associated risks in an employer’s defined benefit pension or other postretirement benefit plan. The FSP requires an employer to disclose information about the valuation of plan assets similar to that required under SFAS 157. FSP 132(r)-1 is effective for fiscal years ending after December 15, 2009. The Company will provide the required disclosures in the appropriate future annual periods.


2.	Acquisitions and Dispositions

Disposition of Texas Life Insurance Company

On March 2, 2009, the Company sold Cova Corporation (“Cova”), the parent company of Texas Life Insurance Company (“Texas Life”) to a third party for $134 million in cash consideration, excluding $1 million of transaction costs. The net assets sold were $101 million, resulting in a gain on disposal of $32 million, net of income tax. The Company also reclassified $4 million, net of income tax, of the 2009 operations of Texas Life into discontinued operations in the consolidated financial statements. As a result, the Company recognized income from discontinued operations of $36 million, net of income tax, during the first quarter of 2009. See also Note 17.

MetLife, Inc.

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


3.	Investments

Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized gain and loss, estimated fair value of the Company’s fixed maturity and equity securities, and the percentage that each sector represents by the respective total holdings for the periods shown. The unrealized loss amounts presented below at June 30, 2009 include the noncredit loss component of OTTI loss:


	June 30, 2009
	Cost or		Gross Unrealized						Estimated
	Amortized				Temporary		OTTI		Fair		% of
	Cost		Gain		Loss		Loss		Value		Total
	(In millions)

U.S. corporate securities	$	70,682	$	1,350	$	6,016	$	35	$	65,981		31.2	%
Residential mortgage-backed securities		44,834		1,078		3,913		201		41,798		19.8
Foreign corporate securities		35,817		976		3,177		9		33,607		15.9
U.S. Treasury, agency and government guaranteed securities (1)		27,277		1,053		657		—		27,673		13.1
Commercial mortgage-backed securities		16,354		75		2,410		24		13,995		6.6
Asset-backed securities		14,619		97		2,206		96		12,414		5.8
Foreign government securities		9,987		834		261		—		10,560		5.0
State and political subdivision securities		5,905		119		507		—		5,517		2.6
Other fixed maturity securities		19		—		1		—		18		—

Total fixed maturity securities (2), (3)	$	225,494	$	5,582	$	19,148	$	365	$	211,563		100.0	%

Common stock	$	1,730	$	59	$	71	$	—	$	1,718		56.4	%
Non-redeemable preferred stock (2)		1,949		28		650		—		1,327		43.6

Total equity securities	$	3,679	$	87	$	721	$	—	$	3,045		100.0	%

MetLife, Inc.

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


	December 31, 2008
	Cost or						Estimated
	Amortized		Gross Unrealized				Fair		% of
	Cost		Gain		Loss		Value		Total
	(In millions)

U.S. corporate securities	$	72,211	$	994	$	9,902	$	63,303		33.6	%
Residential mortgage-backed securities		39,995		753		4,720		36,028		19.2
Foreign corporate securities		34,798		565		5,684		29,679		15.8
U.S. Treasury, agency and government guaranteed securities (1)		17,229		4,082		1		21,310		11.3
Commercial mortgage-backed securities		16,079		18		3,453		12,644		6.7
Asset-backed securities		14,246		16		3,739		10,523		5.6
Foreign government securities		9,474		1,056		377		10,153		5.4
State and political subdivision securities		5,419		80		942		4,557		2.4
Other fixed maturity securities		57		—		3		54		—

Total fixed maturity securities (2), (3)	$	209,508	$	7,564	$	28,821	$	188,251		100.0	%

Common stock	$	1,778	$	40	$	133	$	1,685		52.7	%
Non-redeemable preferred stock (2)		2,353		4		845		1,512		47.3

Total equity securities	$	4,131	$	44	$	978	$	3,197		100.0	%


(1)		The Company has classified within the U.S. Treasury, agency and government guaranteed securities caption above certain corporate fixed maturity securities issued by U.S. financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) pursuant to the FDIC’s Temporary Liquidity Guarantee Program (“FDIC Program”) of $1,023 million and $2 million at estimated fair value with unrealized gains (losses) of $5 million and less than ($1) million at June 30, 2009 and December 31, 2008, respectively.

(2)		The Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has a punitive interest rate step-up feature as it believes in most instances this feature will compel the issuer to redeem the security at the specified call date. Perpetual securities that do not have a punitive interest rate step-up feature are classified as non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” Perpetual hybrid securities classified as non-redeemable preferred stock held by the Company at June 30, 2009 and December 31, 2008 had an estimated fair value of $1,063 million and $1,224 million, respectively. In addition, the Company held $264 million and $288 million at estimated fair value at June 30, 2009 and December 31, 2008, respectively, of other perpetual hybrid securities, primarily of U.S. financial institutions, also included in non-redeemable preferred stock. Perpetual hybrid securities held by the Company and included within fixed maturity securities (primarily within foreign corporate securities) at June 30, 2009 and December 31, 2008 had an estimated fair value of $2,378 million and $2,110 million, respectively. In addition, the Company held $52 million and $46 million at estimated fair value at June 30, 2009 and December 31, 2008, respectively, of other perpetual hybrid securities, primarily U.S. financial institutions, included in U.S. corporate securities.

(3)		At June 30, 2009 and December 31, 2008, the Company also held $2,082 million and $2,052 million at estimated fair value, respectively, of redeemable preferred stock which have stated maturity dates. These securities, commonly referred to as “capital securities,” are primarily issued by U.S. financial institutions, have cumulative interest deferral features and are included in U.S. corporate securities within fixed maturity securities.

MetLife, Inc.

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

Below-Investment-Grade or Non-Rated Fixed Maturity Securities. The Company held fixed maturity securities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $18.3 billion and $12.4 billion at June 30, 2009 and December 31, 2008, respectively. These securities had net unrealized losses of $5.6 billion and $5.1 billion at June 30, 2009 and December 31, 2008, respectively.

Non-Income Producing Fixed Maturity Securities. Non-income producing fixed maturity securities at estimated fair value were $206 million and $75 million at June 30, 2009 and December 31, 2008, respectively. Net unrealized losses associated with non-income producing fixed maturity securities were $31 million and $19 million at June 30, 2009 and December 31, 2008, respectively.

Fixed Maturity Securities Credit Enhanced by Financial Guarantee Insurers. At June 30, 2009, $4.6 billion of the estimated fair value of the Company’s fixed maturity securities were credit enhanced by financial guarantee insurers of which $2.1 billion, $1.7 billion and $0.8 billion are included within state and political subdivision securities, U.S. corporate securities and asset-backed securities, respectively, and 18% and 39% were guaranteed by financial guarantee insurers who were rated Aa and A, respectively. At December 31, 2008, $4.9 billion of the estimated fair value of the Company’s fixed maturity securities were credit enhanced by financial guarantee insurers of which $2.0 billion, $2.0 billion and $0.9 billion are included within state and political subdivision securities, U.S. corporate securities, and asset-backed securities, respectively, and 15% and 68% were guaranteed by financial guarantee insurers who were rated Aa and Baa, respectively. Approximately 50% of the asset-backed securities held at June 30, 2009 that are credit enhanced by financial guarantee insurers are asset-backed securities which are backed by sub-prime mortgage loans.

Concentrations of Credit Risk (Fixed Maturity Securities). The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings.

The Company is not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s stockholders’ equity, other than securities of the U.S. government, certain U.S. government agencies, and certain securities guaranteed by the U.S. government. At June 30, 2009 and December 31, 2008, the Company’s holdings in U.S. Treasury, agency and government guaranteed fixed maturity securities at estimated fair value were $27.7 billion and $21.3 billion, respectively. As shown in the sector table above, at June 30, 2009 the Company’s three largest exposures in its fixed maturity security portfolio were U.S. corporate securities 31.2%, residential mortgage-backed securities 19.8% and foreign corporate securities 15.9%; and at December 31, 2008 were U.S. corporate securities 33.6%, residential mortgage-backed securities 19.2% and foreign corporate securities 15.8%.

Concentrations of Credit Risk (Fixed Maturity Securities) — U.S. and Foreign Corporate Securities. At June 30, 2009 and December 31, 2008, the Company’s holdings in U.S. corporate and foreign corporate securities at estimated fair value were $99.6 billion and $93.0 billion, respectively. The Company maintains a diversified portfolio of corporate securities across industries and issuers. The portfolio does not have exposure to any single issuer in excess of 1% of total investments. The largest exposure to a single issuer of corporate securities held at June 30, 2009 and December 31, 2008 was $1.1 billion and $1.5 billion, respectively. At June 30, 2009 and December 31, 2008, the Company’s combined holdings in the ten issuers to which it had the greatest exposure totaled $7.7 billion and $8.4 billion, respectively, the total of these ten issuers being less than 3% of the Company’s

MetLife, Inc.

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

total investments at such dates. The table below shows the major industry types that comprise the corporate securities holdings at:


	June 30, 2009					December 31, 2008
	Estimated		% of			Estimated		% of
	Fair Value		Total			Fair Value		Total
	(In millions)

Foreign (1)	$	33,607		33.7	%	$	29,679		32.0	%
Industrial		15,312		15.4			13,324		14.3
Consumer		14,948		15.0			13,122		14.1
Utility		13,697		13.8			12,434		13.4
Finance		13,482		13.5			14,996		16.1
Communications		5,898		5.9			5,714		6.1
Other		2,644		2.7			3,713		4.0

Total	$	99,588		100.0	%	$	92,982		100.0	%


(1)		Includes U.S. Dollar-denominated debt obligations of foreign obligors, and other fixed maturity securities foreign investments.

Concentrations of Credit Risk (Fixed Maturity Securities) — Residential Mortgage-Backed Securities. The Company’s residential mortgage-backed securities consist of the following holdings at:


	June 30, 2009					December 31, 2008
	Estimated		% of			Estimated		% of
	Fair Value		Total			Fair Value		Total
	(In millions)

Residential mortgage-backed securities:
Collateralized mortgage obligations	$	24,555		58.7	%	$	26,025		72.2	%
Pass-through securities		17,243		41.3			10,003		27.8

Total residential mortgage-backed securities	$	41,798		100.0	%	$	36,028		100.0	%

Collateralized mortgage obligations are a type of mortgage-backed security that creates separate pools or tranches of pass-through cash flows for different classes of bondholders with varying maturities. Pass-through mortgage-backed securities are a type of asset-backed security that is secured by a mortgage or collection of mortgages. The monthly mortgage payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments, and for a fee, remits or passes these payments through to the holders of the pass-through securities.

The Company’s residential mortgage-backed securities portfolio consists of agency, prime and alternative residential mortgage loans (“Alt-A”) securities of 75%, 18% and 7% of the total holdings, respectively, at June 30, 2009 and 68%, 23% and 9% of the total holdings, respectively, at December 31, 2008. At June 30, 2009 and December 31, 2008, $34.5 billion and $33.3 billion, respectively, or 83% and 92%, respectively, of the residential mortgage-backed securities were rated Aaa/AAA by Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) or Fitch Ratings (“Fitch”). The majority of the agency residential mortgage-backed securities are guaranteed or otherwise supported by the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) or the Government National Mortgage Association. In September 2008, the U.S. Treasury announced that FNMA and FHLMC had been placed into conservatorship. Prime residential mortgage lending includes the origination of residential mortgage loans to the most credit-worthy customers with high quality credit profiles. Alt-A residential mortgage loans are a classification of mortgage loans where the risk profile of the borrower falls between prime and sub-prime. At June 30, 2009 and December 31, 2008,

MetLife, Inc.

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

the Company’s Alt-A residential mortgage-backed securities holdings at estimated fair value was $3.1 billion and $3.4 billion, respectively, with an unrealized loss of $1.8 billion and $2.0 billion, respectively. At June 30, 2009 and December 31, 2008, $0.5 billion and $2.1 billion, respectively, or 16% and 63%, respectively, of the Company’s Alt-A residential mortgage-backed securities were rated Aa/AA or better by Moody’s, S&P or Fitch. In January 2009, certain Alt-A residential mortgage-backed securities experienced ratings downgrades from investment grade to below investment grade, contributing to the decrease cited above in the Company’s Alt-A securities holdings rated Aa/AA or better. At June 30, 2009, the Company’s Alt-A holdings are distributed by vintage year as follows at estimated fair value: 2% in the 2009 vintage year, 25% in the 2007 vintage year, and 73% in the 2006 and prior vintage years. At December 31, 2008, the Company’s Alt-A holdings are distributed by vintage year as follows at estimated fair value: 23% in the 2007 vintage year, 25% in the 2006 vintage year and 52% in the 2005 and prior vintage years. Vintage year refers to the year of origination and not to the year of purchase.

Concentrations of Credit Risk (Fixed Maturity Securities) — Commercial Mortgage-Backed Securities. At June 30, 2009 and December 31, 2008, the Company’s holdings in commercial mortgage-backed securities were $14.0 billion and $12.6 billion, respectively, at estimated fair value. At June 30, 2009 and December 31, 2008, $13.0 billion and $11.8 billion, respectively, of the estimated fair value, or 93% for both years, of commercial mortgage-backed securities was rated Aaa/AAA by Moody’s, S&P, or Fitch. At both June 30, 2009 and December 31, 2008, the rating distribution of the Company’s commercial mortgage-backed securities holdings was as follows: 93% Aaa, 4% Aa, 1% A, 1% Baa, and 1% Ba or below. At June 30, 2009 and December 31, 2008, 85% and 84%, respectively, of the holdings are in the 2005 and prior vintage years. At June 30, 2009 and December 31, 2008, the Company had no exposure to the Commercial Mortgage-Backed Securities index securities and its holdings of commercial real estate collateralized debt obligations securities were $111 million and $121 million, respectively, at estimated fair value.

Concentrations of Credit Risk (Fixed Maturity Securities) — Asset-Backed Securities. At June 30, 2009 and December 31, 2008, the Company’s holdings in asset-backed securities were $12.4 billion and $10.5 billion, respectively, at estimated fair value. The Company’s asset-backed securities are diversified both by sector and by issuer. At June 30, 2009 and December 31, 2008, $9.5 billion and $7.9 billion, respectively, or 77% and 75%, respectively, of total asset-backed securities were rated Aaa/AAA by Moody’s, S&P or Fitch. At June 30, 2009, the largest exposures in the Company’s asset-backed securities portfolio were credit card receivables, student loan receivables, residential mortgage-backed securities backed by sub-prime mortgage loans, and automobile receivables of 57%, 13%, 8% and 8% of the total holdings, respectively. At December 31, 2008, the largest exposures in the Company’s asset-backed securities portfolio were credit card receivables, student loan receivables, automobile receivables and residential mortgage-backed securities backed by sub-prime mortgage loans of 49%, 10%, 10% and 10% of the total holdings, respectively. Sub-prime mortgage lending is the origination of residential mortgage loans to customers with weak credit profiles. At June 30, 2009 and December 31, 2008, the Company had exposure to fixed maturity securities backed by sub-prime mortgage loans with estimated fair values of $0.9 billion and $1.1 billion, respectively, and unrealized losses of $821 million and $730 million, respectively. At June 30, 2009, 39% of the asset-backed securities backed by sub-prime mortgage loans have been guaranteed by financial guarantee insurers, of which 20% and 5% were guaranteed by financial guarantee insurers who were Aa and A rated, respectively. At December 31, 2008, 37% of the asset-backed securities backed by sub-prime mortgage loans have been guaranteed by financial guarantee insurers, of which 19% and 37% were guaranteed by financial guarantee insurers who were Aa and Baa rated, respectively.

Concentrations of Credit Risk (Equity Securities). The Company is not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s stockholders’ equity in its equity securities holdings.

MetLife, Inc.

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

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), are as follows:


	June 30, 2009				December 31, 2008
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(In millions)

Due in one year or less	$	5,866	$	5,820	$	5,556	$	5,491
Due after one year through five years		37,648		37,040		33,604		30,884
Due after five years through ten years		41,453		39,858		41,481		36,895
Due after ten years		64,720		60,638		58,547		55,786

Subtotal		149,687		143,356		139,188		129,056
Mortgage-backed and asset-backed securities		75,807		68,207		70,320		59,195

Total fixed maturity securities	$	225,494	$	211,563	$	209,508	$	188,251

Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. Actual maturities may differ from contractual maturities due to the exercise of prepayment options.

Evaluating Investments for an Other-Than-Temporary Impairment

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2008 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

With respect to fixed maturity securities, the Company considers, amongst other criteria, whether it has the intent to sell a particular impaired fixed maturity security. The assessment of the Company’s intent to sell a particular fixed maturity security considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings. In certain circumstances, the Company may determine that it does not intend to sell a particular security but that it is more likely than not that it will be required to sell that security before recovery of the decline in fair value below amortized cost. In such instances, the fixed maturity security will be deemed other-than-temporarily impaired in the period during which it was determined more likely than not that the security will be required to be sold and an OTTI loss will be recorded in earnings. If the Company does not have the intent to sell (i.e. has not made the decision to sell) and it does not believe that it is more likely than not that it will be required to sell the security before recovery of its amortized cost, the Company estimates the present value of the expected future cash flows to be received from the security. If the present value of the expected future cash flows to be received is less than the amortized cost, the security will be deemed other-than-temporarily impaired in the period that such present value of the expected future cash flows falls below amortized cost and this difference, referred to as the credit loss, will be recognized in earnings. Any remaining difference between the present value of the expected future cash flows to be received and the estimated fair value of the security will be recognized as a separate component of other comprehensive loss and is referred to as the noncredit loss. Prior to April 1, 2009 the Company’s

MetLife, Inc.

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

assessment of OTTI for fixed maturity securities was performed in the same manner described below for equity securities.

With respect to equity securities, the Company considers in its OTTI analysis its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost. Decisions to sell equity securities are based on current conditions in relation to the same broad portfolio management considerations in a manner consistent with that described above for fixed maturity securities. If a sale decision is made with respect to a particular equity security and that equity security is not expected to recover to an amount at least equal to cost or amortized cost prior to the expected time of the sale, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings.

Net Unrealized Investment Gains (Losses)

The components of net unrealized investment gains (losses), included in accumulated other comprehensive loss, are as follows:


	June 30, 2009			December 31, 2008
	(In millions)

Fixed maturity securities that are temporarily impaired	$	(13,566	)	$	(21,246	)
Fixed maturity securities with noncredit OTTI losses in other comprehensive loss		(365	)		—

Total fixed maturity securities		(13,931	)		(21,246	)

Equity securities		(634	)		(934	)
Derivatives		(138	)		(2	)
Other		50			53

Subtotal		(14,653	)		(22,129	)

Amounts allocated from:
Insurance liability loss recognition		(116	)		42
DAC and VOBA on which noncredit OTTI losses have been recognized		28			—
DAC and VOBA		2,206			3,025

Subtotal		2,118			3,067
Deferred income tax benefit on which noncredit OTTI losses have been recognized		116			—
Deferred income tax benefit		4,204			6,508

Net unrealized investment gains (losses)		(8,215	)		(12,554	)
Net unrealized investment gains (losses) attributable to noncontrolling interest		(3	)		(10	)

Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(8,218	)	$	(12,564	)

Fixed maturity securities with noncredit OTTI losses in other comprehensive loss, as presented above, of $365 million includes $126 million related to the transition adjustment, $234 million ($216 million, net of DAC) of noncredit losses recognized in the three months ended June 30, 2009 and $5 million of additional unrealized losses incurred during the three months ended June 30, 2009 on such securities for which a noncredit loss was previously recognized in other comprehensive loss.

MetLife, Inc.

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

The changes in net unrealized investment gains (losses) are as follows:


	Six Months
	Ended
	June 30, 2009
	(In millions)

Balance, end of prior period	$	(12,564	)
Cumulative effect of change in accounting principle, net of income tax		(76	)
Fixed maturity securities on which noncredit OTTI losses have been recognized		(239	)
Unrealized investment gains (losses) during the period		7,813
Unrealized investment loss of subsidiary at the date of disposal		28
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition		(158	)
DAC and VOBA on which noncredit OTTI losses have been recognized		18
DAC and VOBA		(809	)
DAC and VOBA of subsidiary at date of disposal		(10	)
Deferred income tax on which noncredit OTTI losses have been recognized		76
Deferred income tax benefit		(2,298	)
Deferred income tax benefit of subsidiary at date of disposal		(6	)

Change in net unrealized investment gains (losses)		(8,225	)
Change in net unrealized investment gains (losses) attributable to noncontrolling interest		7

Balance, end of period	$	(8,218	)

Change in net unrealized investment gains (losses)	$	4,339
Change in net unrealized investment gains (losses) attributable to noncontrolling interest		7

Change in net unrealized investment gains (losses) attributable to MetLife, Inc.’s common shareholders	$	4,346

MetLife, Inc.

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

Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following tables present the estimated fair value and gross unrealized loss, of the Company’s fixed maturity and equity securities 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 presented below at June 30, 2009 include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive loss are categorized by length of time as being “less than 12 months” or “equal to or greater than 12 months” in a continuous unrealized loss position based on the point in time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.


	June 30, 2009
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	10,129	$	998	$	28,658	$	5,053	$	38,787	$	6,051
Residential mortgage-backed securities		5,507		334		10,447		3,780		15,954		4,114
Foreign corporate securities		6,425		907		10,939		2,279		17,364		3,186
U.S. Treasury, agency and government guaranteed securities		13,670		600		798		57		14,468		657
Commercial mortgage-backed securities		1,341		90		9,231		2,344		10,572		2,434
Asset-backed securities		3,263		200		6,195		2,102		9,458		2,302
Foreign government securities		2,229		101		372		160		2,601		261
State and political subdivision securities		830		59		2,038		448		2,868		507
Other fixed maturity securities		9		1		—		—		9		1

Total fixed maturity securities	$	43,403	$	3,290	$	68,678	$	16,223	$	112,081	$	19,513

Common stock		211		70		9		1		220		71
Non-redeemable preferred stock		263		144		868		506		1,131		650

Total equity securities	$	474	$	214	$	877	$	507	$	1,351	$	721

Total number of securities in an unrealized loss position		2,124				4,165

MetLife, Inc.

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


	December 31, 2008
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	30,076	$	4,479	$	18,011	$	5,423	$	48,087	$	9,902
Residential mortgage-backed securities		10,032		2,711		4,572		2,009		14,604		4,720
Foreign corporate securities		15,634		3,157		6,609		2,527		22,243		5,684
U.S. Treasury, agency and government guaranteed securities		106		1		—		—		106		1
Commercial mortgage-backed securities		9,259		1,665		3,093		1,788		12,352		3,453
Asset-backed securities		6,412		1,325		3,777		2,414		10,189		3,739
Foreign government securities		2,030		316		403		61		2,433		377
State and political subdivision securities		2,035		405		948		537		2,983		942
Other fixed maturity securities		20		3		2		—		22		3

Total fixed maturity securities	$	75,604	$	14,062	$	37,415	$	14,759	$	113,019	$	28,821

Equity securities	$	727	$	306	$	978	$	672	$	1,705	$	978

Total number of securities in an unrealized loss position		9,066				3,539

Aging of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized loss, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive loss at June 30, 2009, and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:


	June 30, 2009
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	27,591	$	6,804	$	940	$	1,973		739		315
Six months or greater but less than nine months		4,838		13,860		279		4,608		391		681
Nine months or greater but less than twelve months		9,909		8,978		599		3,724		589		464
Twelve months or greater		53,707		5,907		4,402		2,988		2,644		366

Total	$	96,045	$	35,549	$	6,220	$	13,293

Equity Securities:
Less than six months	$	61	$	400	$	5	$	143		89		54
Six months or greater but less than nine months		42		357		5		128		46		20
Nine months or greater but less than twelve months		46		525		6		221		29		19
Twelve months or greater		121		520		10		203		24		20

Total	$	270	$	1,802	$	26	$	695

MetLife, Inc.

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


	December 31, 2008
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	32,658	$	48,114	$	2,358	$	17,191		4,566		2,827
Six months or greater but less than nine months		14,975		2,180		1,313		1,109		1,314		157
Nine months or greater but less than twelve months		16,372		3,700		1,830		2,072		934		260
Twelve months or greater		23,191		650		2,533		415		1,809		102

Total	$	87,196	$	54,644	$	8,034	$	20,787

Equity Securities:
Less than six months	$	386	$	1,190	$	58	$	519		351		551
Six months or greater but less than nine months		33		413		6		190		8		32
Nine months or greater but less than twelve months		3		487		—		194		5		15
Twelve months or greater		171		—		11		—		20		—

Total	$	593	$	2,090	$	75	$	903

Concentration of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

At June 30, 2009 and December 31, 2008, the Company’s gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive loss at June 30, 2009, of $20.2 billion and $29.8 billion, respectively, were concentrated, calculated as a percentage of gross unrealized loss, by sector and industry as follows:


	June 30, 2009			December 31, 2008

Sector:
U.S. corporate securities		30	%		33	%
Residential mortgage-backed securities		20			16
Foreign corporate securities		16			19
Commercial mortgage-backed securities		12			11
Asset-backed securities		11			13
State and political subdivision securities		3			3
Foreign government securities		1			1
Other		7			4

Total		100	%		100	%

Industry:
Mortgage-backed		32	%		27	%
Finance		27			24
Asset-backed		11			13
Consumer		7			11
Utility		5			8
Communications		3			5
Industrial		2			4
Foreign government		5			1
Other		8			7

Total		100	%		100	%

MetLife, Inc.

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

Evaluating Temporarily Impaired Investments

At June 30, 2009 and December 31, 2008, $6.2 billion and $8.0 billion, respectively, of unrealized losses related to fixed maturity securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 6% and 9%, respectively, of the cost or amortized cost of such securities. At June 30, 2009 and December 31, 2008, $26 million and $75 million, respectively, of unrealized losses related to equity securities with an unrealized loss position of less than 20% of cost, which represented 10% and 13%, respectively, of the cost of such securities.

At June 30, 2009, $13.3 billion and $695 million of unrealized losses related to fixed maturity securities and equity securities, respectively, with an unrealized loss position of 20% or more of cost or amortized cost, which represented 37% and 39% of the cost or amortized cost of such fixed maturity and equity securities, respectively. Of such unrealized losses of $13.3 billion and $695 million, $2.0 billion and $143 million related to fixed maturity and equity securities, respectively, that were in an unrealized loss position for a period of less than six months. At December 31, 2008, $20.8 billion and $903 million of unrealized losses related to fixed maturity and equity securities, respectively, with an unrealized loss position of 20% or more of cost or amortized cost, which represented 38% and 43% of the cost or amortized cost of such fixed maturity and equity securities, respectively. Of such unrealized losses of $20.8 billion and $903 million, $17.2 billion and $519 million related to fixed maturity and equity securities, respectively, that were in an unrealized loss position for a period of less than six months.

The Company held 469 fixed maturity securities and 23 equity securities, each with a gross unrealized loss at June 30, 2009 of greater than $10 million. These 469 fixed maturity securities represented 50%, or $9.7 billion in the aggregate, of the gross unrealized loss on fixed maturity securities. These 23 equity securities represented 70%, or $506 million in the aggregate, of the gross unrealized loss on equity securities. The Company held 699 fixed maturity securities and 33 equity securities, each with a gross unrealized loss at December 31, 2008 of greater than $10 million. These 699 fixed maturity securities represented 50%, or $14.5 billion in the aggregate, of the gross unrealized loss on fixed maturity securities. These 33 equity securities represented 71%, or $699 million in the aggregate, of the gross unrealized loss on equity securities. The fixed maturity and equity securities, each with a gross unrealized loss greater than $10 million, decreased $6.3 billion and $5.0 billion during the three months and six months ended June 30, 2009, respectively. These securities were included in the regular evaluation of whether such investments are other-than-temporarily impaired. Based upon the Company’s current evaluation of these securities in accordance with its impairment policy, the cause of the decline being primarily attributable to a rise in market yields caused principally by an extensive widening of credit spreads which resulted from a lack of market liquidity and a short-term market dislocation versus a long-term deterioration in credit quality, and its 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.

In the Company’s impairment review process, the duration of, and severity of, an unrealized loss position, such as unrealized losses of 20% or more for equity securities, which was $695 million and $903 million at June 30, 2009 and December 31, 2008, respectively, is given greater weight and consideration, than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company’s evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration is given by the Company to a decline in market value and the likelihood such market value decline will recover.

Equity securities with an unrealized loss of 20% or more for less than six months was $143 million at June 30, 2009, of which $82 million of the unrealized losses, or 57%, were for non-redeemable preferred securities, of which $68 million, of the unrealized losses, or 83%, were for investment grade non-redeemable preferred securities. Of the $68 million of unrealized losses for investment grade non-redeemable preferred securities, $61 million of the

MetLife, Inc.

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

unrealized losses, or 90%, was comprised of unrealized losses on investment grade financial services industry non-redeemable preferred securities, of which 97% were rated A or higher.

Equity securities with an unrealized loss of 20% or more for six months or greater but less than twelve months was $349 million at June 30, 2009, all of which were for non-redeemable preferred securities, of which, $248 million of the unrealized losses, or 71%, are investment grade securities, and $243 million, or 98%, of which are within the financial services industry non-redeemable preferred securities, of which 56% were rated A or higher.

Equity securities with an unrealized loss of 20% or more for twelve months or greater was $203 million at June 30, 2009, of which $197 million of the unrealized losses, or 97%, were for investment grade non-redeemable preferred securities, within the financial services industry, of which 57% were rated A or higher.

In connection with the equity securities impairment review process at June 30, 2009, the Company evaluated its holdings in non-redeemable preferred securities, particularly those of financial services companies. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred securities with a severe or an extended unrealized loss. With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of 20% or less in an extended unrealized loss position (i.e., 12 months or greater).

At June 30, 2009, there were $695 million of equity securities with an unrealized loss of 20% or more, of which $634 million of the unrealized losses, or 91%, were for non-redeemable preferred securities. At June 30, 2009, $513 million of the unrealized losses of 20% or more, or 81%, of the non-redeemable preferred securities were investment grade securities, of which, $501 million of the unrealized losses of 20% or more, or 98%, are investment grade financial services industry non-redeemable preferred securities, of which 61% were rated A or higher. Also all non-redeemable preferred securities with unrealized losses of 20% or more, regardless of credit rating, have not deferred any dividend payments.

Future other-than-temporary impairments will depend primarily on economic fundamentals, issuer performance including changes in the present value of expected future cash flows to be collected, changes in credit rating, changes in collateral valuation, changes in interest rates, and changes in credit spreads. If economic fundamentals and any of the above factors continue to deteriorate, additional other-than-temporary impairments may be incurred in upcoming quarters.

Net Investment Gains (Losses)

Effective April 1, 2009, the Company adopted FSP 115-2. With the adoption of FSP 115-2, for those fixed maturity securities that are intended to be sold or for which it is more likely than not that the security will be required to be sold before recovery of the decline in fair value below amortized cost, the full OTTI loss from the fair value being less than the amortized cost is recognized in earnings. For those fixed maturity securities which the Company has no intent to sell (i.e., has not made the decision to sell) and the Company believes it is not more likely than not that it will be required to sell prior to recovery of the decline in fair value, and an assessment has been made that the amortized cost will not be fully recovered, only the OTTI credit loss component is recognized in earnings, while the remaining decline in fair value is recognized in accumulated other comprehensive income (loss), not in earnings, as a noncredit OTTI loss. Prior to the adoption of this new guidance, the Company recognized an OTTI loss in earnings for a fixed maturity security in an unrealized loss position unless it could assert that it had both the intent and ability to hold the fixed maturity security for a period of time to allow for a recovery of fair value to the security’s amortized cost basis. There was no change for equity securities which, when an OTTI has occurred, continue to be impaired for the entire difference between the equity security’s cost and its fair value with a corresponding charge to earnings.

MetLife, Inc.

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

The discussion below describes the Company’s methodology and significant inputs used to determine the amount of the credit loss effective April 1, 2009.

In order to determine the amount of the credit loss for a fixed maturity security, the Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment.

When determining the collectability and the period over which the fixed maturity security is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s best estimates of likely scenario-based outcomes after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer, and changes to the rating of the security or the issuer by rating agencies. Additional considerations are made when assessing the unique features that apply to certain structured securities such as residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities. These additional factors for structured securities include, but are not limited to: 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.

The components of net investment gains (losses) are as follows:


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(In millions)

Total losses on fixed maturity securities:
Total OTTI losses recognized	$	(566	)	$	(139	)	$	(1,119	)	$	(213	)
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive loss		234			—			234			—

Net OTTI losses on fixed maturity securities recognized in earnings		(332	)		(139	)		(885	)		(213	)
Fixed maturity securities — net gains (losses) on sales and disposals		(46	)		(167	)		(102	)		(296	)

Total losses on fixed maturity securities		(378	)		(306	)		(987	)		(509	)

Other net investment gains (losses):
Equity securities		(108	)		—			(377	)		(10	)
Mortgage and consumer loans		(125	)		(34	)		(271	)		(62	)
Real estate and real estate joint ventures		(68	)		4			(93	)		2
Other limited partnership interests		(247	)		(12	)		(344	)		(15	)
Freestanding derivatives		(3,637	)		(416	)		(4,687	)		(358	)
Embedded derivatives		793			366			2,010			(60	)
Other		(59	)		41			14			(75	)

Total net investment gains (losses)	$	(3,829	)	$	(357	)	$	(4,735	)	$	(1,087	)

MetLife, Inc.

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

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) are as follows:


	Fixed Maturity Securities												Equity Securities
	Three Months						Six Months						Three Months						Six Months
	Ended						Ended						Ended						Ended
	June 30,						June 30,						June 30,						June 30,
	2009			2008			2009			2008			2009			2008			2009			2008
	(In millions)

Proceeds	$	7,573		$	14,018		$	19,351		$	26,809		$	195		$	358		$	253		$	630


Gross investment gains		189			131			545			290			13			70			20			147

Gross investment losses		(235	)		(298	)		(647	)		(586	)		(49	)		(14	)		(67	)		(40	)

Total OTTI losses recognized in earnings:
Credit-related		(287	)		(136	)		(743	)		(210	)		—			—			—			—
Other (1)		(45	)		(3	)		(142	)		(3	)		(72	)		(56	)		(330	)		(117	)

Total OTTI losses recognized in earnings		(332	)		(139	)		(885	)		(213	)		(72	)		(56	)		(330	)		(117	)

Net investment gains (losses)	$	(378	)	$	(306	)	$	(987	)	$	(509	)	$	(108	)	$	—		$	(377	)	$	(10	)


(1)		Other OTTI losses recognized in earnings include impairments on equity securities, impairments on non-redeemable preferred securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position, and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in fair value.

The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management’s decision to sell securities based on current conditions, or the Company’s need to shift the portfolio to maintain its portfolio management objectives. Investment gains and losses on sales of securities are determined on a specific identification basis.

OTTI losses recognized in earnings on fixed maturity and equity securities, were $404 million and $1,215 million for the three months and six months ended June 30, 2009 and $195 million and $330 million for the three months and six months ended June 30, 2008, respectively. The substantial increase in the three months and six months ended June 30, 2009 was driven in part by impairments totaling $127 million and $478 million, respectively, on financial services industry securities holdings, comprised of $67 million and $188 million, respectively, of fixed maturity securities and $60 million and $290 million, respectively, of equity securities, as well as increased fixed maturity security impairments across several industry sectors as shown in the table below, which increased due to financial restructurings, bankruptcy filings, ratings downgrades or difficult underlying operating environments of the issuers. These financial services industry impairments included $68 million and $361 million, respectively, of perpetual hybrid securities, some classified as fixed maturity securities and some classified as non-redeemable preferred stock, where there had been a deterioration in the credit rating of the issuer to below investment grade and due to a severe and extended unrealized loss position.

MetLife, Inc.

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

Fixed maturity security OTTI losses recognized in earnings of $332 million and $139 million for the three months ended June 30, 2009 and 2008, respectively, and $885 million and $213 million for the six months ended June 30, 2009 and 2008, respectively, related to the following sectors and industries:


	Three Months				Six Months
	Ended				Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(In millions)

U.S. and foreign corporate securities:
Communications	$	61	$	—	$	203	$	17
Finance		67		83		188		114
Consumer		74		48		164		48
Utility		43		1		76		1
Industrial		3		—		20		—
Other		2		3		26		5

Total U.S. and foreign corporate securities		250		135		677		185
Asset-backed securities		28		4		94		28
Residential mortgage-backed securities		20		—		78		—
Commercial mortgage-backed securities		34		—		36		—

Total	$	332	$	139	$	885	$	213

OTTI losses recognized in earnings on equity securities were $72 million and $330 million for the three months and six months ended June 30, 2009, respectively, which included $60 million and $290 million of impairments on financial services industry holdings and $12 million and $40 million of impairments across several industries. Of the financial services industry equity security impairments in the three months and six months ended June 30, 2009 of $60 million and $290 million, respectively, $60 million and $260 million, respectively, related to perpetual hybrid securities where there had been a deterioration in the credit rating of the issuer to below investment grade and due to a severe and extended unrealized loss position.

The $72 million and $56 million of equity security impairments in the three months ended June 30, 2009 and 2008, respectively, and $330 million and $117 million in the six months ended June 30, 2009 and 2008, respectively, related to the following sectors:


	Three Months				Six Months
	Ended				Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(In millions)

Common stock	$	12	$	55	$	50	$	79
Non-redeemable preferred stock		60		1		280		38

Total	$	72	$	56	$	330	$	117

MetLife, Inc.

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

Credit Loss Rollforward — Rollforward of the Cumulative Credit Loss Component of OTTI Loss Recognized in Earnings on Fixed Maturity Securities Still Held for Which a Portion of the OTTI Loss was Recognized in Other Comprehensive Loss

The table below is a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive loss and are still held on June 30, 2009:


	Three Months
	Ended
	June 30, 2009
	(In millions)

Balance, beginning of period	$	—
Credit loss component of OTTI loss not reclassified to other comprehensive loss in the cumulative effect transition adjustment		230
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired		152
Additional impairments — credit loss OTTI recognized on securities previously impaired		5
Reductions:
Due to sales (or maturities, pay downs or prepayments) of securities previously credit loss OTTI impaired		(7	)

Balance, end of period	$	380

Net Investment Income

The components of net investment income are as follows:


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(In millions)

Fixed maturity securities	$	2,936		$	3,431		$	5,754		$	6,978
Equity securities		55			82			93			150
Trading securities (1)		130			9			147			(42	)
Mortgage and consumer loans		696			695			1,378			1,397
Policy loans		161			151			318			299
Real estate and real estate joint ventures (2)		(71	)		206			(156	)		380
Other limited partnership interests (3)		72			71			(181	)		203
Cash, cash equivalents and short-term investments		34			102			82			212
International joint ventures (4)		(77	)		(1	)		(70	)		(5	)
Other		44			71			119			147

Total investment income		3,980			4,817			7,484			9,719
Less: Investment expenses		249			498			490			1,103

Net investment income	$	3,731		$	4,319		$	6,994		$	8,616

MetLife, Inc.

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


(1)		Net investment income from trading securities includes interest and dividends earned on trading securities in addition to the net realized gains (losses) and subsequent changes in estimated fair value recognized on trading securities and the short sale agreements liabilities. During the three months and six months ended June 30, 2009, changes in estimated fair value were recognized in net investment income on certain equity securities within the trading securities portfolio, due to recovery in certain equity markets, in addition to interest and dividends earned and net realized gains (losses) on securities sold.

(2)		Net investment income from real estate joint ventures within the real estate and real estate joint ventures caption represents distributions for investments accounted for under the cost method and equity in earnings for investments accounted for under the equity method. Overall, for the three months and six months ended June 30, 2009, the net amount recognized were losses of $71 million and $156 million, respectively, resulting primarily from declining property valuations on real estate held by certain real estate investment funds that carry their real estate at fair value and operating losses incurred on real estate properties that were developed for sale by real estate development joint ventures, in excess of earnings from wholly-owned real estate. The commercial real estate properties underlying real estate investment funds have experienced declines in value driven by capital market factors and deteriorating market conditions, which has led to declining property valuations, while the real estate development joint ventures have experienced fewer property sales due to declining real estate market fundamentals and decreased availability of real estate lending to finance transactions.

(3)		Net investment income from other limited partnership interests, including hedge funds, represents distributions from other limited partnership interests accounted for under the cost method and equity in earnings from other limited partnership interests accounted for under the equity method. Overall for the six months ended June 30, 2009, the net amount recognized were losses of $181 million, resulting principally from losses on equity method investments. Such earnings and losses recognized for other limited partnership interests are impacted by volatility in the equity and credit markets.

(4)		Net of changes in estimated fair value of derivatives related to economic hedges of these equity method investments that do not qualify for hedge accounting of ($92) million and ($116) million for the three months and six months ended June 30, 2009, respectively, and ($33) million and $8 million for the three months and six months ended June 30, 2008, respectively.

Securities Lending

The Company participates in securities lending programs whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, primarily major brokerage firms and commercial banks. The Company generally obtains collateral in an amount equal to 102% of the estimated fair value of the securities loaned. Securities with a cost or amortized cost of $20.7 billion and $20.8 billion and an estimated fair value of $20.9 billion and $22.9 billion were on loan under the program at June 30, 2009 and December 31, 2008, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $21.5 billion and $23.3 billion at June 30, 2009 and December 31, 2008, respectively. Of this $21.5 billion of cash collateral at June 30, 2009, $2.4 billion was on open terms, meaning that the related loaned security could be returned to the Company on the next business day requiring return of cash collateral, and $11.0 billion, $4.0 billion, $2.4 billion and $1.7 billion, respectively, were due within 30 days, 60 days, 90 days and over 90 days. Substantially all (99%) of the $2.3 billion of estimated fair value of the securities related to the cash collateral on open terms at June 30, 2009, were U.S. Treasury, agency and government guaranteed securities which, if put to the Company, can be immediately sold to satisfy the cash requirements. The remainder of the securities on loan are primarily U.S. Treasury, agency and government guaranteed securities, and very liquid residential mortgage-backed securities. The estimated fair value of the reinvestment portfolio acquired with the cash collateral was $19.6 billion at June 30, 2009, and consisted principally of fixed maturity securities (including residential mortgage-backed, asset-backed, U.S. corporate and foreign corporate securities).

MetLife, Inc.

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

Security collateral of $29 million and $279 million on deposit from counterparties in connection with the securities lending transactions at June 30, 2009 and December 31, 2008, respectively, may not be sold or repledged, unless the counterparty is in default, and is not reflected in the consolidated financial statements.

Assets on Deposit, Held in Trust and Pledged as Collateral

The assets on deposit, assets held in trust and assets pledged as collateral are summarized in the table below. The amounts presented in the table below are at estimated fair value for cash, fixed maturity and equity securities and at carrying value for mortgage loans.


	June 30, 2009		December 31, 2008
	(In millions)

Assets on deposit:
Regulatory agencies (1)	$	1,279	$	1,282
Assets held in trust:
Collateral financing arrangements (2)		5,750		4,754
Reinsurance arrangements (3)		1,244		1,714
Assets pledged as collateral:
Debt and funding agreements — FHLB of NY (4)		22,065		20,880
Debt and funding agreements — FHLB of Boston (4)		434		1,284
Funding agreements — Farmer MAC(5)		2,870		2,875
Federal Reserve Bank of New York (6)		2,961		1,577
Collateral financing arrangements — Holding Company (7)		123		316
Derivative transactions (8)		1,257		1,744
Short sale agreements (9)		545		346
Other		190		180

Total assets on deposit, held in trust and pledged as collateral	$	38,718	$	36,952


(1)		The Company had investment assets on deposit with regulatory agencies consisting primarily of fixed maturity and equity securities.

(2)		The Company held in trust cash and securities, primarily fixed maturity and equity securities to satisfy collateral requirements. The Company has also pledged certain fixed maturity securities in support of the collateral financing arrangements described in Note 10.

(3)		The Company has pledged certain investments, primarily fixed maturity securities, in connection with certain reinsurance transactions.

(4)		The Company has pledged fixed maturity securities and mortgage loans in support of its debt and funding agreements with the Federal Home Loan Bank of New York (“FHLB of NY”) and has pledged fixed maturity securities to the Federal Home Loan Bank of Boston (“FHLB of Boston”). The nature of the Federal Home Loan Bank arrangements is described in Note 7 of the Notes to the Consolidated Financial Statements included in the 2008 Annual Report.

(5)		The Company has pledged certain agricultural real estate mortgage loans in connection with funding agreements with the Federal Agricultural Mortgage Corporation (“Farmer MAC”). The nature of the Farmer MAC arrangements is described in Note 7 of the Notes to the Consolidated Financial Statements included in the 2008 Annual Report.

MetLife, Inc.

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


(6)		The Company has pledged qualifying mortgage loans and securities in connection with collateralized borrowings from the Federal Reserve Bank of New York’s Term Auction Facility. The nature of the Federal Reserve Bank of New York arrangements is described in Note 9.

(7)		The Holding Company has pledged certain collateral in support of the collateral financing arrangements described in Note 10.

(8)		Certain of the Company’s invested assets are pledged as collateral for various derivative transactions as described in Note 4.

(9)		Certain of the Company’s trading securities are pledged to secure liabilities associated with short sale agreements in the trading securities portfolio as described in the following section.

See also the immediately preceding section “Securities Lending” for the amount of the Company’s cash and invested assets received from and due back to counterparties pursuant to the securities lending program.

Trading Securities

The Company has trading securities portfolios to support investment strategies that involve the active and frequent purchase and sale of securities, the execution of short sale agreements and asset and liability matching strategies for certain insurance products. Trading securities and short sale agreement liabilities are recorded at estimated fair value with subsequent changes in estimated fair value recognized in net investment income.

At June 30, 2009 and December 31, 2008, trading securities at estimated fair value were $1,471 million and $946 million, respectively, and liabilities associated with the short sale agreements in the trading securities portfolio, which were included in other liabilities, were $201 million and $57 million, respectively. The Company had pledged $545 million and $346 million of its assets, at estimated fair value, consisting of trading securities and cash and cash equivalents, as collateral to secure the liabilities associated with the short sale agreements in the trading securities portfolio at June 30, 2009 and December 31, 2008, respectively.

Interest and dividends earned on trading securities in, addition to the net realized gains (losses) and subsequent changes in estimated fair value recognized on the trading securities and the related short sale agreement liabilities included within net investment income, totaled $130 million and $147 million for the three months and six months ended June 30, 2009, respectively, and $9 million and ($42) million for the three months and six months ended June 30, 2008, respectively. Changes in estimated fair value in net investment income of such trading securities and short sale agreement liabilities were $141 million and $143 million for the three months and six months ended June 30, 2009, respectively, and ($4) million and ($47) million for the three months and six months ended June 30, 2008, respectively.

MetLife, Inc.

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

Mortgage Servicing Rights

The following table presents the changes in capitalized mortgage servicing rights (“MSRs”), which are included in other invested assets, for the six months ended June 30, 2009:


	Carrying Value
	(In millions)

Fair value, beginning of period	$	191
Acquisition of mortgage servicing rights		117
Origination of mortgage servicing rights		289
Reduction due to loan payments		(61	)
Changes in fair value due to:
Changes in valuation model inputs or assumptions		133
Other changes in fair value		1

Fair value, end of period	$	670

The Company recognizes the rights to service residential mortgage loans as MSRs. MSRs are either acquired or are generated from the sale of originated residential mortgage loans where the servicing rights are retained by the Company. MSRs are carried at estimated fair value and changes in estimated fair value, primarily due to changes in valuation inputs and assumptions and to the collection of expected cash flows, are reported in other revenues in the period in which the change occurs. See also Note 18 for further information about how the estimated fair value of MSRs is determined and other related information.

Variable Interest Entities

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated in the Company’s financial statements at June 30, 2009 and December 31, 2008. Generally, creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company.


	June 30, 2009				December 31, 2008
	Total		Total		Total		Total
	Assets		Liabilities		Assets		Liabilities
	(In millions)

MRSC collateral financing arrangement (1)	$	3,073	$	—	$	2,361	$	—
Real estate joint ventures (2)		23		13		26		15
Other limited partnership interests (3)		135		33		20		3
Other invested assets (4)		31		2		10		3

Total	$	3,262	$	48	$	2,417	$	21


(1)		See Note 10 for a description of the MetLife Reinsurance Company of South Carolina (“MRSC”) collateral financing arrangement. At June 30, 2009 and December 31, 2008, these assets are reflected at estimated fair value and consist of the following:

MetLife, Inc.

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


	June 30, 2009		December 31, 2008
	(In millions)

Fixed maturity securities available-for-sale:
U.S. corporate securities	$	977	$	948
Asset-backed securities		848		409
Residential mortgage-backed securities		601		561
U.S. Treasury, agency and government guaranteed securities		262		—
Commercial mortgage-backed securities		168		98
Foreign corporate securities		93		95
State and political subdivision securities		21		21
Foreign government securities		5		5
Cash and cash equivalents (including cash held-in-trust of less than $1 million and $60 million, respectively)		98		224

Total	$	3,073	$	2,361


(2)		Real estate joint ventures include partnerships and other ventures which engage in the acquisition, development, management and disposal of real estate investments. Upon consolidation, the assets and liabilities are reflected at the VIE’s carrying amounts. At June 30, 2009 and December 31, 2008, the assets consist of $18 million and $20 million, respectively, of real estate and real estate joint ventures held-for-investment, $4 million and $5 million, respectively, of cash and cash equivalents and $1 million and $1 million, respectively, of other assets. At June 30, 2009 and December 31, 2008, liabilities consist of $13 million and $15 million of other liabilities, respectively.

(3)		Other limited partnership interests include partnerships established for the purpose of investing in public and private debt and equity securities. Upon consolidation, the assets and liabilities are reflected at the VIE’s carrying amounts. At June 30, 2009 and December 31, 2008, the assets of $135 million and $20 million, respectively, are included within other limited partnership interests while the liabilities of $33 million and $3 million, respectively, are included within other liabilities.

(4)		Other invested assets includes tax-credit partnerships and other investments established for the purpose of investing in low-income housing and other social causes, where the primary return on investment is in the form of tax credits. Upon consolidation, the assets and liabilities are reflected at the VIE’s carrying amounts. At June 30, 2009 and December 31, 2008, the assets of $31 million and $10 million, respectively, are included within other invested assets. At June 30, 2009 and December 31, 2008, the liabilities consist of $1 million and $2 million, respectively, of long-term debt and less than $1 million and $1 million, respectively, of other liabilities.

MetLife, Inc.

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

The following table presents the carrying amount and maximum exposure to loss relating to VIEs for which the Company holds significant variable interests but is not the primary beneficiary and which have not been consolidated at June 30, 2009 and December 31, 2008:


	June 30, 2009				December 31, 2008
			Maximum				Maximum
	Carrying		Exposure		Carrying		Exposure
	Amount (1)		to Loss (2)		Amount(1)		to Loss (2)
	(In millions)

Fixed maturity securities available-for-sale:
Foreign corporate securities	$	892	$	892	$	1,080	$	1,080
U.S. corporate securities		711		711		992		992
Real estate joint ventures		31		31		32		32
Other limited partnership interests		2,243		2,578		3,496		4,004
Other invested assets		383		257		318		108

Total	$	4,260	$	4,469	$	5,918	$	6,216


(1)		See Note 1 of the Notes to the Consolidated Financial Statements included in the 2008 Annual Report for further discussion of the Company’s accounting policies with respect to the basis for determining carrying value of these investments.

(2)		The maximum exposure to loss relating to the fixed maturity securities available-for-sale is equal to the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the real estate joint ventures and other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. For certain of its investments in other invested assets, the Company’s return is in the form of tax credits which are guaranteed by a creditworthy third party. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by tax credits guaranteed by third parties of $254 million and $278 million at June 30, 2009 and December 31, 2008, respectively.

As described in Note 11, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, MetLife did not provide financial or other support to investees designated as VIEs during the six months ended June 30, 2009.


4.	Derivative Financial Instruments

Accounting for Derivative Financial Instruments

Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter market. The Company uses a variety of derivatives, including swaps, forwards, futures and option contracts, to manage the risk associated with variability in cash flows or changes in estimated fair values related to the Company’s financial instruments. The Company also uses derivative instruments to hedge its currency exposure associated with net investments in certain foreign operations. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance contracts that have embedded derivatives.

Freestanding derivatives are carried on the Company’s consolidated balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value as determined through the use of quoted market prices for exchange-traded derivatives and interest rate forwards to sell residential mortgage backed securities or through the use of pricing models for over-the-counter derivatives. The determination of estimated fair

MetLife, Inc.

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

value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models.

The significant inputs to the pricing models for most over-the-counter derivatives are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, certain over-the-counter derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: independent broker quotes, credit correlation assumptions, references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such instruments. Most inputs for over-the-counter derivatives are mid market inputs but, in certain cases, bid level inputs are used when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all over-the-counter derivatives after taking into account the effects of netting agreements and collateral arrangements. Credit risk is monitored and consideration of any potential credit adjustment is based on a net exposure by counterparty. This is due to the existence of netting agreements and collateral arrangements which effectively serve to mitigate credit risk. The Company values its derivative positions using the standard swap curve which includes a credit risk adjustment. This credit risk adjustment is appropriate for those parties that execute trades at pricing levels consistent with the standard swap curve. As the Company and its significant derivative counterparties consistently execute trades at such pricing levels, additional credit risk adjustments are not currently required in the valuation process. The need for such additional credit risk adjustments is monitored by the Company. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. The evaluation of the requirement to make an additional credit risk adjustments is performed by the Company each reporting period.

Pursuant to FIN No. 39, Offsetting of Amounts Related to Certain Contracts, the Company’s policy is to not offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net investment gains (losses) except for those (i) in policyholder benefits and claims for economic hedges of liabilities embedded in certain variable annuity products offered by the Company, (ii) in net investment income for economic hedges of equity method investments in joint ventures, or for all derivatives held in relation to the trading portfolios and (iii) in other revenues for derivatives held in connection with the Company’s mortgage banking activities. The fluctuations in estimated fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (i) a hedge of the estimated fair value of a recognized asset or liability or an unrecognized firm commitment (“fair value hedge”); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”); or (iii) a hedge of a

MetLife, Inc.

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

net investment in a foreign operation. In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments of hedge effectiveness and measurements of ineffectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income.

The accounting for derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under these accounting standards. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact on the consolidated financial statements of the Company from that previously reported.

Under a fair value hedge, changes in the estimated fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the estimated fair value of the hedged item related to the designated risk being hedged, are reported within net investment gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. However, balances that are not scheduled to settle until maturity are included in the estimated fair value of derivatives.

Under a cash flow hedge, changes in the estimated fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholders’ equity, and the deferred gains or losses on the derivative are reclassified into the consolidated statement of income when the Company’s earnings are affected by the variability in cash flows of the hedged item. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. However, balances that are not scheduled to settle until maturity are included in the estimated fair value of derivatives.

In a hedge of a net investment in a foreign operation, changes in the estimated fair value of the hedging derivative that are measured as effective are reported within other comprehensive income (loss) consistent with the translation adjustment for the hedged net investment in the foreign operation. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses).

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; (iv) a hedged firm commitment no longer meets the definition of a firm commitment; or (v) the derivative is de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the consolidated balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net investment gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the

MetLife, Inc.

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

consolidated statement of income when the Company’s earnings are affected by the variability in cash flows of the hedged item.

When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur by the end of the specified time period or the hedged item no longer meets the definition of a firm commitment, the derivative continues to be carried on the consolidated balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net investment gains (losses). Any asset or liability associated with a recognized firm commitment is derecognized from the consolidated balance sheet, and recorded currently in net investment gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) pursuant to the cash flow hedge of a forecasted transaction are recognized immediately in net investment gains (losses).

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the consolidated balance sheet, with changes in its estimated fair value recognized in the current period as net investment gains (losses).

The Company is also a party to financial instruments that contain terms which are deemed to be embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. If the instrument would not be accounted for in its entirety at estimated fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the consolidated balance sheet at estimated fair value with the host contract and changes in their estimated fair value are reported currently in net investment gains (losses) or in policyholder benefits and claims. If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or in policyholder benefits and claims. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or in policyholder benefits and claims if that contract contains an embedded derivative that requires bifurcation. There is a risk that embedded derivatives requiring bifurcation may not be identified and reported at estimated fair value in the consolidated financial statements and that their related changes in estimated fair value could materially affect reported net income.

See Note 18 for information about the fair value hierarchy for derivatives.

Primary Risks Managed by Derivative Financial Instruments and Non Derivative Financial Instruments

The Company is exposed to various risks relating to its ongoing business operations, including interest rate risk, foreign currency risk, credit risk, and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of derivative instruments. The following table presents the notional amount, estimated

MetLife, Inc.

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

fair value, and primary underlying risk exposure of the Company’s derivative financial instruments, excluding embedded derivatives held at:


		June 30, 2009						December 31, 2008
				Current Market						Current Market
Primary Underlying		Notional		or Fair Value (1)				Notional		or Fair Value (1)
Risk Exposure	Instrument Type	Amount		Assets		Liabilities		Amount		Assets		Liabilities
		(In millions)

Interest rate	Interest rate swaps	$	35,613	$	1,887	$	1,336	$	34,060	$	4,617	$	1,468
	Interest rate floors		26,191		544		51		48,517		1,748		—
	Interest rate caps		22,635		183		—		24,643		11		—
	Interest rate futures		8,711		14		11		13,851		44		117
	Interest rate options		300		6		—		2,365		939		35
	Interest rate forwards		19,577		191		39		16,616		49		70
	Synthetic GICs		4,313		—		—		4,260		—		—
Foreign currency	Foreign currency swaps		17,527		1,438		1,222		19,438		1,953		1,866
	Foreign currency forwards		6,292		61		142		5,167		153		129
	Currency options		890		36		—		932		73		—
	Non-derivative hedging instruments (2)		351		—		344		351		—		323
Credit	Swap spreadlocks		—		—		—		2,338		—		99
	Credit default swaps		6,867		166		108		5,219		152		69
	Other		10		—		—		—		—		—
Equity market	Equity futures		6,345		20		10		6,057		1		88
	Equity options		23,438		2,083		659		5,153		2,150		—
	Variance swaps		11,969		283		13		9,222		416		—
	Other		250		—		98		250		—		101

	Total	$	191,279	$	6,912	$	4,033	$	198,439	$	12,306	$	4,365


(1)		The estimated fair value of all derivatives in an asset position is reported within other invested assets in the consolidated balance sheets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets.

(2)		The estimated fair value of non-derivative hedging instruments represents the amortized cost of the instruments, as adjusted for foreign currency transaction gains or losses. Non-derivative hedging instruments are reported within policyholder account balances in the consolidated balance sheets.

Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. The Company utilizes interest rate swaps in fair value, cash flow, and non-qualifying hedging relationships.

The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. In a basis swap, both legs of the swap are floating with each based on a different index. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counterparty at each due date. Basis swaps are included in interest rate swaps in the preceding table. The Company utilizes basis swaps in non-qualifying hedging relationships.

MetLife, Inc.

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

Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in interest rate swaps in the preceding table. The Company utilizes inflation swaps in non-qualifying hedging relationships.

Implied volatility swaps are used by the Company primarily as economic hedges of interest rate risk associated with the Company’s investments in mortgage-backed securities. In an implied volatility swap, the Company exchanges fixed payments for floating payments that are linked to certain market volatility measures. If implied volatility rises, the floating payments that the Company receives will increase, and if implied volatility falls, the floating payments that the Company receives will decrease. Implied volatility swaps are included in interest rate swaps in the preceding table. The Company utilizes implied volatility swaps in non-qualifying hedging relationships.

The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches), as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in non-qualifying hedging relationships.

In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, and to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance. The value of interest rate futures is substantially impacted by changes in interest rates and they can be used to modify or hedge existing interest rate risk. The Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships.

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. Swaptions are included in interest rate options in the preceding table. The Company utilizes swaptions in non-qualifying hedging relationships.

The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company also uses interest rate forwards to sell securities as economic hedges against the risk of changes in the fair value of mortgage loans held-for-sale and interest rate lock commitments. The Company utilizes interest rate forwards in cash flow and non-qualifying hedging relationships.

Interest rate lock commitments are short-term commitments to fund mortgage loan applications in process (the pipeline) for a fixed term at a fixed price. During the term of an interest rate lock commitment, the Company is exposed to the risk that interest rates will change from the rate quoted to the potential borrower. Interest rate lock commitments to fund mortgage loans that will be held-for-sale are considered derivatives pursuant to SFAS No. 133, Accounting for Derivative Instruments and Hedging (“SFAS 133”). Interest rate lock commitments are included in interest rate forwards in the preceding table. Interest rate lock commitments are not designated as hedging instruments.

A synthetic guaranteed interest contract (“GIC”) is a contract that simulates the performance of a traditional GIC through the use of financial instruments. Under a synthetic GIC, the policyholder owns the underlying assets.

MetLife, Inc.

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

The Company guarantees a rate return on those assets for a premium. Synthetic GICs are not designated as hedging instruments.

Foreign currency derivatives, including foreign currency swaps, foreign currency forwards and currency option contracts, are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency forwards and swaps to hedge the foreign currency risk associated with certain of its net investments in foreign operations.

In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow, net investment in foreign operations, and non-qualifying hedging relationships.

In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. The Company utilizes foreign currency forwards in net investment in foreign operations and non-qualifying hedging relationships.

The Company enters into currency option contracts that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign exchange rate and the strike price. The Company uses currency options to hedge against the foreign currency exposure inherent in certain of its variable annuity products. The Company utilizes currency options in non-qualifying hedging relationships.

The Company uses certain of its foreign currency denominated GICs to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. Such contracts are included in non-derivative hedging instruments in the preceding table.

Swap spreadlocks are used by the Company to hedge invested assets on an economic basis against the risk of changes in credit spreads. Swap spreadlocks are forward transactions between two parties whose underlying reference index is a forward starting interest rate swap where the Company agrees to pay a coupon based on a predetermined reference swap spread in exchange for receiving a coupon based on a floating rate. The Company has the option to cash settle with the counterparty in lieu of maintaining the swap after the effective date. The Company utilizes swap spreadlocks in non-qualifying hedging relationships.

Certain credit default swaps are used by the Company to hedge against credit-related changes in the value of its investments and to diversify its credit risk exposure in certain portfolios. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to insure credit risk. If a credit event, as defined by the contract, occurs, generally the contract will require the swap to be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. The Company utilizes credit default swaps in non-qualifying hedging relationships.

Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury or Agency security. The Company also enters into certain credit default swaps held in relation to trading portfolios for the purpose of generating profits on short-term differences in price. These credit default swaps are not designated as hedging instruments.

In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-

MetLife, Inc.

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

traded equity futures are used primarily to hedge liabilities embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. Equity index options are included in equity options in the preceding table. The Company utilizes equity index options in non-qualifying hedging relationships.

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. Equity variance swaps are included in variance swaps in the preceding table. The Company utilizes equity variance swaps in non-qualifying hedging relationships.

Total rate of return swaps (“TRRs”) are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and LIBOR, calculated by reference to an agreed notional principal amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. The Company uses total return swaps to hedge its equity market guarantees in certain of its insurance products. TRRs can be used as hedges or to synthetically create investments. TRRs are included in the other classification in the preceding table. The Company utilizes TRRs in non-qualifying hedging relationships.

Hedging

The following table presents the notional amount and estimated fair value of derivatives designated as hedging instruments under SFAS 133 by type of hedge designation at:


	June 30, 2009						December 31, 2008
	Notional		Fair Value				Notional		Fair Value
Derivatives Designated as Hedging Instruments	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Fair Value Hedges:
Foreign currency swaps	$	5,665	$	744	$	159	$	6,093	$	467	$	550
Interest rate swaps		4,507		599		89		4,141		1,338		153

Subtotal		10,172		1,343		248		10,234		1,805		703

Cash Flow Hedges:
Foreign currency swaps		3,558		164		251		3,782		463		381
Interest rate swaps		—		—		—		286		—		6
Interest rate forwards		4,691		73		—		—		—		—
Other		10		—		—		—		—		—

Subtotal		8,259		237		251		4,068		463		387

Foreign Operations Hedges:
Foreign currency forwards		1,787		8		60		1,670		32		50
Foreign currency swaps		102		—		5		164		1		—
Non-derivative hedging instruments		351		—		344		351		—		323

Subtotal		2,240		8		409		2,185		33		373

Total Qualifying Hedges	$	20,671	$	1,588	$	908	$	16,487	$	2,301	$	1,463

MetLife, Inc.

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

The following table presents the notional amount and estimated fair value of derivatives that are not designated or do not qualify as hedging instruments under SFAS 133 by derivative type at:


	June 30, 2009						December 31, 2008
	Notional		Fair Value				Notional		Fair Value
Derivatives Not Designated or Not Qualifying as Hedging Instruments	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Interest rate swaps	$	31,106	$	1,288	$	1,247	$	29,633	$	3,279	$	1,309
Interest rate floors		26,191		544		51		48,517		1,748		—
Interest rate caps		22,635		183		—		24,643		11		—
Interest rate futures		8,711		14		11		13,851		44		117
Interest rate options		300		6		—		2,365		939		35
Interest rate forwards		14,886		118		39		16,616		49		70
Synthetic GICs		4,313		—		—		4,260		—		—
Foreign currency swaps		8,202		530		807		9,399		1,022		935
Foreign currency forwards		4,505		53		82		3,497		121		79
Currency options		890		36		—		932		73		—
Swaps spreadlocks		—		—		—		2,338		—		99
Credit default swaps		6,867		166		108		5,219		152		69
Equity futures		6,345		20		10		6,057		1		88
Equity options		23,438		2,083		659		5,153		2,150		—
Variance swaps		11,969		283		13		9,222		416		—
Other		250		—		98		250		—		101

Total non-designated or non-qualifying derivatives	$	170,608	$	5,324	$	3,125	$	181,952	$	10,005	$	2,902

The following table presents the settlement payments recorded in income for the:


	Three Months					Six Months
	Ended					Ended
	June 30,					June 30,
	2009		2008			2009			2008
	(In millions)

Qualifying hedges:
Net investment income	$	10	$	4		$	27		$	2
Interest credited to policyholder account balances		55		42			97			63
Other expenses		3		(1	)		(1	)		(1	)
Non-qualifying hedges:
Net investment income (loss)		—		1			(1	)		(1	)
Net investment gains (losses)		33		(27	)		63			(19	)
Other revenues		14		—			22			—

Total	$	115	$	19		$	207		$	44

Fair Value Hedges

The Company designates and accounts for the following as fair value hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert fixed rate investments to floating rate investments; (ii) interest rate swaps to convert fixed rate liabilities to floating rate liabilities; and (iii) foreign

MetLife, Inc.

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

currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities.

The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net investment gains (losses). The following table represents the amount of such net investment gains (losses) recognized for the three months and six months ended June 30, 2009 and 2008:


								Ineffectiveness
		Net Investment Gains			Net Investment Gains			Recognized in
Derivatives in Fair Value	Hedge Items in Fair Value	(Losses) Recognized			(Losses) Recognized			Net Investment
Hedging Relationships	Hedging Relationships	for Derivatives			for Hedged Items			Gains (Losses)
		(In millions)

For the Three Months Ended June 30, 2009:
Interest rate swaps:	Fixed maturity securities	$	33		$	(29	)	$	4
	Policyholder account balances (1)		(518	)		509			(9	)
Foreign currency swaps:	Foreign-denominated fixed maturity securities		(16	)		15			(1	)
	Foreign-denominated policyholder account balances (2)		427			(421	)		6

Total		$	(74	)	$	74		$	—

For the Three Months Ended June 30, 2008:
Total		$	(323	)	$	313		$	(10	)

For the Six Months Ended June 30, 2009:
Interest rate swaps:	Fixed maturity securities	$	47		$	(41	)	$	6
	Policyholder account balances (1)		(812	)		801			(11	)
Foreign currency swaps:	Foreign-denominated fixed maturity securities		(13	)		11			(2	)
	Foreign-denominated policyholder account balances (2)		320			(308	)		12

Total		$	(458	)	$	463		$	5

For the Six Months Ended June 30, 2008:
Total		$	22		$	(27	)	$	(5	)


(1)		Fixed rate liabilities

(2)		Fixed rate or floating rate liabilities

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

Cash Flow Hedges

The Company designates and accounts for the following as cash flow hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert floating rate investments to fixed rate investments; (ii) interest rate swaps to convert floating rate liabilities to fixed rate liabilities; (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities; and (iv) interest rate forwards to lock in the price to be paid for forward purchases of fixed rate investments.

For the three months and six months ended June 30, 2009, the Company recognized insignificant net investment losses which represented the ineffective portion of all cash flow hedges. For the three months and six months ended June 30, 2008, the Company did not recognize any net investment gains (losses) which represented

MetLife, Inc.

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

the ineffective portion of all cash flow hedges. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. The net amounts reclassified into net investment gains (losses) for the three months and six months ended June 30, 2009 related to such discontinued cash flow hedges were gains (losses) of $0 and $1 million, respectively, and for the three months and six months ended June 30, 2008, related to such discontinued cash flow hedges were gains (losses) of ($3) million and ($7) million, respectively. With the exception of certain cash flow hedges involving interest rate forwards, there were no hedged forecasted transactions, other than the variable payments or receipts on existing assets and liabilities, for the three months and six months ended June 30, 2009. In connection with certain interest rate forwards, the maximum length of time over which the Company is hedging its exposure to variability in future cash flows for forecasted transactions does not exceed one year. There were no hedged forecasted transactions, other than the variable payments or receipts on existing assets and liabilities, for the three months and six months ended June 30, 2008.

The following table presents the components of other comprehensive loss, before income tax, related to cash flow hedges:


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(In millions)

Other comprehensive income (loss), beginning of period	$	113		$	(361	)	$	82		$	(270	)
Gains (losses) deferred in other comprehensive loss on the effective portion of cash flow hedges		(97	)		(11	)		(105	)		(46	)
Amounts reclassified to net investment gains (losses)		(6	)		51			33			(7	)
Amounts reclassified to net investment income		4			3			6			5
Amounts reclassified to other expenses		(1	)		(1	)		(1	)		(1	)
Amortization of transition adjustment		—			1			(2	)		1

Other comprehensive income (loss), end of period	$	13		$	(318	)	$	13		$	(318	)

At June 30, 2009, $40 million of deferred net losses on derivatives accumulated in other comprehensive loss is expected to be reclassified to earnings within the next 12 months.

MetLife, Inc.

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

The following table presents the effects of derivatives in cash flow hedging relationships on the consolidated statements of income and the consolidated statements of stockholders’ equity for the three months and six months ended June 30, 2009 and 2008:

Amount and Location

Amount of Gains

Amount and Location

of Gains (Losses)

(Losses) Deferred

of Gains (Losses)

Recognized in Income

in Accumulated

Reclassified from

on Derivatives

Derivatives in Cash Flow

Other Comprehensive

Accumulated Other

(Ineffective Portion and

Hedging Relationships

Loss on Derivatives

Comprehensive Loss into Income

Amount Excluded from

(Effective Portion)

Effectiveness Testing)

Net Investment