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Segment Information
 6 Months Ended
Jun. 30, 2017
Segment Reporting [Abstract]  
Segment Information
2. Segment Information
As previously announced, in the third quarter of 2016, MetLife reorganized its businesses into six segments: U.S.; Asia; Latin America; EMEA; MetLife Holdings; and Brighthouse Financial, in anticipation of the planned Separation. In addition, the Company reports certain of its results of operations in Corporate & Other. Prior period results have been revised in connection with the reorganization and did not have an impact on total consolidated net income (loss) or operating earnings.
U.S.
The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of customers throughout their lives. These products are sold to corporations and their respective employees, other institutions and their respective members, as well as individuals. The U.S. segment is organized into three businesses: Group Benefits, Retirement and Income Solutions and Property & Casualty.
•
The Group Benefits business offers insurance products and services which include life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, critical illness, vision and accident & health coverages, as well as prepaid legal plans. This business also sells administrative services-only arrangements to some employers.
•
The Retirement and Income Solutions business offers a broad range of annuity and investment products, including guaranteed interest contracts and other stable value products, institutional income annuities and separate account contracts for the investment management of defined benefit and defined contribution plan assets. This business also includes structured settlements and certain products to fund postretirement benefits and company-, bank- or trust-owned life insurance used to finance nonqualified benefit programs for executives.
•
The Property & Casualty business offers personal and commercial lines of property and casualty insurance, including private passenger automobile, homeowners’ and personal excess liability insurance. In addition, Property & Casualty offers small business owners property, liability and business interruption insurance.
Asia
The Asia segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include whole life, term life, variable life, universal life, accident & health insurance, fixed and variable annuities, credit insurance and endowment products.
Latin America
The Latin America segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident & health insurance, group medical, dental, credit insurance, endowment and retirement and savings products.
EMEA
The EMEA segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident & health insurance, credit insurance, annuities, endowment and retirement and savings products.
MetLife Holdings
The MetLife Holdings segment consists of operations relating to products and businesses no longer actively marketed by the Company in the United States. These products and businesses include variable, universal, term and whole life, as well as variable, fixed and index-linked annuities. The MetLife Holdings segment also includes the Company’s discontinued long-term care business and the assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan.
Brighthouse Financial
The Brighthouse Financial segment offers a broad range of products and services which include variable, fixed, index-linked and income annuities, as well as variable, universal, term and whole life products. These products and services are actively marketed through various third party retail distribution channels in the United States. In addition, the Brighthouse Financial segment includes certain run-off businesses which are not actively marketed.
Corporate & Other
Corporate & Other contains the excess capital, as well as certain charges and activities, not allocated to the segments, including external integration and disposition costs, internal resource costs for associates committed to acquisitions and dispositions, enterprise-wide strategic initiative restructuring charges and various start-up businesses (including expatriate benefits insurance and the investment management business through which the Company offers fee-based investment management services to institutional clients, as well as the direct to consumer portion of the U.S. Direct business). Corporate & Other also includes interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. In addition, Corporate & Other includes the elimination of intersegment amounts, which generally relate to affiliated reinsurance and intersegment loans, which bear interest rates commensurate with related borrowings.
Financial Measures and Segment Accounting Policies
Operating earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is also the Company’s GAAP measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for net income (loss).The Company believes the presentation of operating earnings as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Operating earnings allows analysis of the Company’s performance relative to the Company’s business plan and facilitates comparisons to industry results.
Operating earnings is defined as operating revenues less operating expenses, both net of income tax.
The financial measures of operating revenues and operating expenses focus on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and divested businesses and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations and other businesses that have been or will be sold or exited by MetLife and are referred to as divested businesses. In addition, for the three months ended March 31, 2016 and the six months ended June 30, 2016, operating revenues and operating expenses exclude the financial impact of converting the Company’s Japan operations to calendar year-end reporting without retrospective application of this change to prior periods and is referred to as lag elimination. Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating operating revenues:
•
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”); and
•
Net investment income: (i) includes earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment,(ii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed unit-linked investments and (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
•
Other revenues are adjusted for settlements of foreign currency earnings hedges.
The following additional adjustments are made to expenses, in the line items indicated, in calculating operating expenses:
•
Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass through adjustments, (iii) benefits and hedging costs related to GMIBs (“GMIB Costs”) and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);
•
Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-linked investments;
•
Amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB Fees and GMIB Costs and (iii) Market Value Adjustments;
•
Amortization of negative VOBA excludes amounts related to Market Value Adjustments;
•
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
•
Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements and (iii) acquisition, integration and other costs.
Operating earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and six months ended June 30, 2017 and 2016. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for operating earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below, with the exception of the Brighthouse Financial segment, for which equity is reflective of the historical equity of the legal entities which comprise Brighthouse and related companies, which will be eliminated upon Separation. The Brighthouse Financial segment equity is not indicative of Brighthouse and related companies’ equity on a combined standalone basis.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.
The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.
Segment net investment income, with the exception of the Brighthouse Financial segment, is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, net income (loss) or operating earnings. As noted above, the Brighthouse Financial segment’s net investment income represents that of the legal entities which comprise Brighthouse and related companies on a historical basis, however, Brighthouse Financial segment’s net investment income may not be indicative of that on a combined standalone basis.
Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.
 
 
Operating Results
 
 
 
 
Three Months Ended June 30, 2017
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Brighthouse
Financial
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
5,877

 
$
1,659

 
$
645

 
$
505

 
$
1,022

 
$
217

 
$
10

 
$
9,935

 
$
—

 
$
9,935

Universal life and investment-type product policy fees
 
251

 
375

 
275

 
92

 
345

 
885

 
(32
)
 
2,191

 
111

 
2,302

Net investment income
 
1,575

 
729

 
289

 
78

 
1,401

 
791

 
21

 
4,884

 
75

 
4,959

Other revenues
 
199

 
11

 
8

 
28

 
37

 
162

 
(68
)
 
377

 
5

 
382

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
104

 
104

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(437
)
 
(437
)
Total revenues
 
7,902

 
2,774

 
1,217

 
703

 
2,805

 
2,055

 
(69
)
 
17,387

 
(142
)
 
17,245

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
5,878

 
1,247

 
596

 
270

 
1,720

 
654

 
(15
)
 
10,350

 
272

 
10,622

Interest credited to policyholder account balances
 
359

 
333

 
94

 
25

 
255

 
283

 
—

 
1,349

 
213

 
1,562

Capitalization of DAC
 
(116
)
 
(428
)
 
(88
)
 
(100
)
 
(23
)
 
(63
)
 
(3
)
 
(821
)
 
—

 
(821
)
Amortization of DAC and VOBA
 
114

 
290

 
68

 
95

 
139

 
136

 
2

 
844

 
(140
)
 
704

Amortization of negative VOBA
 
—

 
(30
)
 
—

 
(5
)
 
—

 
—

 
—

 
(35
)
 
(3
)
 
(38
)
Interest expense on debt
 
4

 
—

 
2

 
—

 
5

 
26

 
257

 
294

 
1

 
295

Other expenses
 
914

 
895

 
357

 
332

 
370

 
647

 
61

 
3,576

 
343

 
3,919

Total expenses
 
7,153

 
2,307

 
1,029

 
617

 
2,466

 
1,683

 
302

 
15,557

 
686

 
16,243

Provision for income tax expense (benefit)
 
250

 
157

 
34

 
14

 
104

 
89

 
(271
)
 
377

 
(262
)
 
115

Operating earnings
 
$
499

 
$
310

 
$
154

 
$
72

 
$
235

 
$
283

 
$
(100
)
 
1,453

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(142
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(686
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
262

 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
887

 
 
 
$
887

 
 
Operating Results
 
 
 
 
Three Months Ended June 30, 2016
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Brighthouse
Financial
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
5,171

 
$
1,681

 
$
631

 
$
519

 
$
1,122

 
$
280

 
$
13

 
$
9,417

 
$
—

 
$
9,417

Universal life and investment-type product policy fees
 
248

 
370

 
269

 
95

 
361

 
861

 
(31
)
 
2,173

 
113

 
2,286

Net investment income
 
1,565

 
678

 
243

 
83

 
1,477

 
870

 
(35
)
 
4,881

 
6

 
4,887

Other revenues
 
193

 
16

 
8

 
19

 
203

 
346

 
(301
)
 
484

 
3

 
487

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
266

 
266

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,099
)
 
(2,099
)
Total revenues
 
7,177

 
2,745

 
1,151

 
716

 
3,163

 
2,357

 
(354
)
 
16,955

 
(1,711
)
 
15,244

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
5,270

 
1,324

 
583

 
283

 
1,927

 
1,008

 
(10
)
 
10,385

 
213

 
10,598

Interest credited to policyholder account balances
 
323

 
324

 
84

 
30

 
261

 
291

 
1

 
1,314

 
186

 
1,500

Capitalization of DAC
 
(121
)
 
(426
)
 
(80
)
 
(106
)
 
(96
)
 
(83
)
 
(3
)
 
(915
)
 
—

 
(915
)
Amortization of DAC and VOBA
 
118

 
304

 
66

 
103

 
269

 
152

 
3

 
1,015

 
(894
)
 
121

Amortization of negative VOBA
 
—

 
(57
)
 
—

 
(4
)
 
—

 
—

 
—

 
(61
)
 
(6
)
 
(67
)
Interest expense on debt
 
3

 
—

 
—

 
—

 
14

 
32

 
254

 
303

 
3

 
306

Other expenses
 
918

 
877

 
323

 
336

 
864

 
555

 
(214
)
 
3,659

 
142

 
3,801

Total expenses
 
6,511

 
2,346

 
976

 
642

 
3,239

 
1,955

 
31

 
15,700

 
(356
)
 
15,344

Provision for income tax expense (benefit)
 
223

 
140

 
38

 
10

 
(43
)
 
105

 
(188
)
 
285

 
(499
)
 
(214
)
Operating earnings
 
$
443

 
$
259

 
$
137

 
$
64

 
$
(33
)
 
$
297

 
$
(197
)
 
970

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,711
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
356

 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
499

 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
114

 
 
 
$
114



Operating Results




Six Months Ended June 30, 2017

U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Brighthouse
Financial
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated


(In millions)
Revenues




















Premiums

$
11,062


$
3,367


$
1,292


$
1,007


$
2,081


$
394


$
47


$
19,250


$
—


$
19,250

Universal life and investment-type product policy fees

516


741


535


187


707


1,769


(63
)

4,392


212


4,604

Net investment income

3,187


1,431


592


152


2,842


1,649


26


9,879


276


10,155

Other revenues

403


21


17


45


133


236


(110
)

745


11


756

Net investment gains (losses)

—


—


—


—


—


—


—


—


112


112

Net derivative gains (losses)

—


—


—


—


—


—


—


—


(1,363
)

(1,363
)
Total revenues

15,168

 
5,560

 
2,436

 
1,391

 
5,763

 
4,048

 
(100
)
 
34,266

 
(752
)
 
33,514

Expenses









 





 



 
Policyholder benefits and claims and policyholder dividends

11,113


2,562


1,229


539


3,456


1,285


(6
)

20,178


620


20,798

Interest credited to policyholder account balances

710


654


176


49


512


558


—


2,659


615


3,274

Capitalization of DAC

(216
)

(848
)

(170
)

(192
)

(57
)

(130
)

(4
)

(1,617
)

—


(1,617
)
Amortization of DAC and VOBA

228


581


146


182


213


336


3


1,689


(452
)

1,237

Amortization of negative VOBA

—


(67
)

—


(8
)

—


—


—


(75
)

(6
)

(81
)
Interest expense on debt

6


—


3


—


20


58


503


590


1


591

Other expenses

1,823


1,770


683


648


710


1,259


151


7,044


449


7,493

Total expenses

13,664

 
4,652

 
2,067

 
1,218

 
4,854

 
3,366

 
647

 
30,468

 
1,227

 
31,695

Provision for income tax expense (benefit)

502


303


72


26


289


155


(554
)

793


(690
)

103

Operating earnings

$
1,002

 
$
605

 
$
297

 
$
147

 
$
620

 
$
527

 
$
(193
)

3,005





Adjustments to:















 



 
Total revenues















(752
)



 
Total expenses















(1,227
)



 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
 

690




 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 

$
1,716




$
1,716


 
 
Operating Results
 
 
 
 
Six Months Ended June 30, 2016
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Brighthouse
Financial
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
10,191

 
$
3,339

 
$
1,232

 
$
1,019

 
$
2,219

 
$
673

 
$
11

 
$
18,684

 
$
426

 
$
19,110

Universal life and investment-type product policy fees
 
498

 
720

 
537

 
190

 
716

 
1,719

 
(56
)
 
4,324

 
306

 
4,630

Net investment income
 
3,025

 
1,296

 
498

 
163

 
2,952

 
1,683

 
(30
)
 
9,587

 
(141
)
 
9,446

Other revenues
 
397

 
33

 
15

 
39

 
407

 
432

 
(352
)
 
971

 
3

 
974

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
281

 
281

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(764
)
 
(764
)
Total revenues
 
14,111

 
5,388

 
2,282

 
1,411

 
6,294

 
4,507

 
(427
)
 
33,566

 
111

 
33,677

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
10,316

 
2,560

 
1,133

 
544

 
3,750

 
1,711

 
(36
)
 
19,978

 
613

 
20,591

Interest credited to policyholder account balances
 
645

 
643

 
164

 
59

 
519

 
580

 
5

 
2,615

 
211

 
2,826

Capitalization of DAC
 
(232
)
 
(811
)
 
(153
)
 
(207
)
 
(196
)
 
(185
)
 
(7
)
 
(1,791
)
 
(105
)
 
(1,896
)
Amortization of DAC and VOBA
 
236

 
590

 
129

 
205

 
417

 
314

 
5

 
1,896

 
(780
)
 
1,116

Amortization of negative VOBA
 
—

 
(121
)
 
—

 
(7
)
 
—

 
—

 
—

 
(128
)
 
(38
)
 
(166
)
Interest expense on debt
 
5

 
—

 
—

 
—

 
28

 
64

 
518

 
615

 
3

 
618

Other expenses
 
1,860

 
1,728

 
633

 
669

 
1,460

 
1,179

 
(160
)
 
7,369

 
397

 
7,766

Total expenses
 
12,830

 
4,589

 
1,906

 
1,263

 
5,978

 
3,663

 
325

 
30,554

 
301

 
30,855

Provision for income tax expense (benefit)
 
432

 
235

 
88

 
21

 
82

 
220

 
(371
)
 
707

 
(202
)
 
505

Operating earnings
 
$
849

 
$
564

 
$
288

 
$
127

 
$
234

 
$
624

 
$
(381
)
 
2,305

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111

 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(301
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
202

 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,317

 
 
 
$
2,317

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
 
June 30, 2017
 
December 31, 2016
 
 
(In millions)
U.S.
 
$
257,676

 
$
253,683

Asia
 
130,363

 
120,656

Latin America
 
72,458

 
67,233

EMEA
 
28,219

 
25,596

MetLife Holdings
 
184,817

 
184,276

Brighthouse Financial
 
224,933

 
222,681

Corporate & Other
 
26,733

 
24,639

Total
 
$
925,199

 
$
898,764