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Segment Information
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Segment Information
2. Segment Information
MetLife is organized into five segments: U.S.; Asia; Latin America; EMEA; and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other.
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, 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 stable value and pension risk transfer products, institutional income annuities, tort settlements, capital market investment products, as well as postretirement benefits and company-, bank- or trust-owned life insurance.
•
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 and term life, endowments, universal and variable life, accident & health insurance and fixed and variable annuities.
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, retirement and savings products, accident & health insurance and credit insurance.
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, retirement and savings products and credit insurance.
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, such as variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, long-term care insurance, as well as the assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.
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 the investment management business through which the Company offers fee-based investment management services to institutional clients). Additionally, Corporate & Other includes run-off businesses such 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
Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is also the Company’s GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed as a substitute for income (loss) from continuing operations, net of income tax. The Company believes the presentation of adjusted 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.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax.
The financial measures of adjusted revenues and adjusted 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 certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also includes the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net derivative gains (losses). Adjusted expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
•
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”);
•
Net investment income: (i) includes 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 adjusted earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed unit-linked investments, (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (v) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) for GAAP; and
•
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in association with services provided under transition service agreements (“TSA fees”).
The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted 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. Other expenses includes TSA fees.
Adjusted 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, 2018 and 2017. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for adjusted earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.
The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.
Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, income (loss) from continuing operations, net of income tax, or adjusted earnings.
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.
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
11,302

 
$
1,654

 
$
688

 
$
546

 
$
957

 
$
6

 
$
15,153

 
$
—

 
$
15,153

Universal life and investment-type product policy fees
 
262

 
399

 
275

 
107

 
301

 
—

 
1,344

 
26

 
1,370

Net investment income
 
1,719

 
839

 
327

 
73

 
1,329

 
40

 
4,327

 
146

 
4,473

Other revenues
 
203

 
13

 
9

 
20

 
68

 
79

 
392

 
83

 
475

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(227
)
 
(227
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(59
)
 
(59
)
Total revenues
 
13,486

 
2,905

 
1,299

 
746

 
2,655

 
125

 
21,216

 
(31
)
 
21,185

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
11,233

 
1,237

 
660

 
286

 
1,706

 
3

 
15,125

 
50

 
15,175

Interest credited to policyholder account balances
 
439

 
362

 
95

 
26

 
235

 
—

 
1,157

 
267

 
1,424

Capitalization of DAC
 
(114
)
 
(495
)
 
(91
)
 
(121
)
 
(10
)
 
(3
)
 
(834
)
 
—

 
(834
)
Amortization of DAC and VOBA
 
114

 
313

 
71

 
108

 
101

 
1

 
708

 
(1
)
 
707

Amortization of negative VOBA
 
—

 
(12
)
 
—

 
(4
)
 
—

 
—

 
(16
)
 
—

 
(16
)
Interest expense on debt
 
4

 
—

 
1

 
—

 
2

 
272

 
279

 
30

 
309

Other expenses
 
965

 
976

 
363

 
339

 
275

 
259

 
3,177

 
142

 
3,319

Total expenses
 
12,641

 
2,381

 
1,099

 
634

 
2,309

 
532

 
19,596

 
488

 
20,084

Provision for income tax expense (benefit)
 
174

 
161

 
55

 
26

 
66

 
(234
)
 
248

 
(41
)
 
207

Adjusted earnings
 
$
671

 
$
363

 
$
145

 
$
86

 
$
280

 
$
(173
)
 
1,372

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(31
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(488
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
41

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
 
 
 
 
 
 
 
 
 
 
 
 
$
894

 
 
 
$
894

 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
5,877

 
$
1,659

 
$
645

 
$
505

 
$
1,022

 
$
8

 
$
9,716

 
$
(136
)
 
$
9,580

Universal life and investment-type product policy fees
 
251

 
375

 
275

 
92

 
345

 
—

 
1,338

 
26

 
1,364

Net investment income
 
1,575

 
729

 
289

 
78

 
1,401

 
41

 
4,113

 
80

 
4,193

Other revenues
 
199

 
11

 
8

 
28

 
37

 
61

 
344

 
(52
)
 
292

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
104

 
104

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(200
)
 
(200
)
Total revenues
 
7,902

 
2,774

 
1,217

 
703

 
2,805

 
110

 
15,511

 
(178
)
 
15,333

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
5,887

 
1,247

 
596

 
270

 
1,717

 
1

 
9,718

 
22

 
9,740

Interest credited to policyholder account balances
 
359

 
333

 
94

 
25

 
255

 
—

 
1,066

 
226

 
1,292

Capitalization of DAC
 
(116
)
 
(428
)
 
(88
)
 
(100
)
 
(23
)
 
(3
)
 
(758
)
 
14

 
(744
)
Amortization of DAC and VOBA
 
114

 
290

 
68

 
95

 
139

 
1

 
707

 
(51
)
 
656

Amortization of negative VOBA
 
—

 
(30
)
 
—

 
(5
)
 
—

 
—

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

 
—

 
2

 
—

 
5

 
277

 
288

 
(4
)
 
284

Other expenses
 
914

 
895

 
357

 
332

 
370

 
202

 
3,070

 
55

 
3,125

Total expenses
 
7,162

 
2,307

 
1,029

 
617

 
2,463

 
478

 
14,056

 
259

 
14,315

Provision for income tax expense (benefit)
 
247

 
157

 
34

 
14

 
105

 
(269
)
 
288

 
(126
)
 
162

Adjusted earnings
 
$
493

 
$
310

 
$
154

 
$
72

 
$
237

 
$
(99
)
 
1,167

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(178
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(259
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
126

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

 
 
 
 
 
 
 
 
 
 
 
 
 
$
856

 
 
 
$
856








Six Months Ended June 30, 2018

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


(In millions)
Revenues


















Premiums

$
16,519


$
3,402


$
1,387


$
1,097


$
1,907


$
19


$
24,331


$
—


$
24,331

Universal life and investment-type product policy fees

520


793


557


219


615


—


2,704


58


2,762

Net investment income

3,381


1,634


603


148


2,681


99


8,546


(328
)

8,218

Other revenues

407


28


17


36


135


160


783


166


949

Net investment gains (losses)

—


—


—


—


—


—


—


(560
)

(560
)
Net derivative gains (losses)

—


—


—


—


—


—


—


290


290

Total revenues

20,827

 
5,857

 
2,564

 
1,500

 
5,338

 
278

 
36,364

 
(374
)
 
35,990

Expenses









 



 



 
Policyholder benefits and claims and policyholder dividends

16,371


2,580


1,306


580


3,256


—


24,093


97


24,190

Interest credited to policyholder account balances

846


713


193


51


471


—


2,274


(81
)

2,193

Capitalization of DAC

(220
)

(960
)

(185
)

(239
)

(20
)

(5
)

(1,629
)

(1
)

(1,630
)
Amortization of DAC and VOBA

229


627


131


214


201


3


1,405


(5
)

1,400

Amortization of negative VOBA

—


(27
)

—


(10
)

—


—


(37
)

(1
)

(38
)
Interest expense on debt

6


—


3


—


4


552


565


30


595

Other expenses

1,926


1,928


701


690


551


491


6,287


236


6,523

Total expenses

19,158

 
4,861

 
2,149

 
1,286

 
4,463

 
1,041

 
32,958

 
275

 
33,233

Provision for income tax expense (benefit)

345


306


130


47


170


(393
)

605


1


606

Adjusted earnings

$
1,324

 
$
690

 
$
285

 
$
167

 
$
705

 
$
(370
)

2,801





Adjustments to:













 



 
Total revenues













(374
)



 
Total expenses













(275
)



 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 

(1
)



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

$
2,151




$
2,151


 
 

 
 
 
 
Six Months Ended June 30, 2017
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
11,062

 
$
3,367

 
$
1,292

 
$
1,007

 
$
2,081

 
$
46

 
$
18,855

 
$
(310
)
 
$
18,545

Universal life and investment-type product policy fees
 
516

 
741

 
535

 
187

 
707

 
—

 
2,686

 
38

 
2,724

Net investment income
 
3,187

 
1,431

 
592

 
152

 
2,842

 
81

 
8,285

 
329

 
8,614

Other revenues
 
403

 
21

 
17

 
45

 
133

 
120

 
739

 
(105
)
 
634

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
192

 
192

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(412
)
 
(412
)
Total revenues
 
15,168

 
5,560

 
2,436

 
1,391

 
5,763

 
247

 
30,565

 
(268
)
 
30,297

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
11,131

 
2,562

 
1,229

 
539

 
3,450

 
26

 
18,937

 
(24
)
 
18,913

Interest credited to policyholder account balances
 
710

 
654

 
176

 
49

 
512

 
1

 
2,102

 
641

 
2,743

Capitalization of DAC
 
(216
)
 
(848
)
 
(170
)
 
(192
)
 
(57
)
 
(4
)
 
(1,487
)
 
30

 
(1,457
)
Amortization of DAC and VOBA
 
228

 
581

 
146

 
182

 
213

 
2

 
1,352

 
(33
)
 
1,319

Amortization of negative VOBA
 
—

 
(67
)
 
—

 
(8
)
 
—

 
—

 
(75
)
 
(6
)
 
(81
)
Interest expense on debt
 
6

 
—

 
3

 
—

 
20

 
554

 
583

 
(16
)
 
567

Other expenses
 
1,823

 
1,770

 
683

 
648

 
710

 
377

 
6,011

 
192

 
6,203

Total expenses
 
13,682

 
4,652

 
2,067

 
1,218

 
4,848

 
956

 
27,423

 
784

 
28,207

Provision for income tax expense (benefit)
 
496

 
303

 
72

 
26

 
291

 
(540
)
 
648

 
(366
)
 
282

Adjusted earnings
 
$
990

 
$
605

 
$
297

 
$
147

 
$
624

 
$
(169
)
 
2,494

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(268
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(784
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
366

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,808

 
 
 
$
1,808

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
 
June 30, 2018
 
December 31, 2017
 
 
(In millions)
U.S.
 
$
256,668

 
$
255,428

Asia
 
141,653

 
136,928

Latin America
 
73,214

 
79,670

EMEA
 
29,353

 
30,500

MetLife Holdings
 
174,470

 
183,160

Corporate & Other
 
30,975

 
34,206

Total
 
$
706,333

 
$
719,892

Revenues derived from one U.S. segment customer were $6.0 billion for both the three months and six months ended June 30, 2018, which represented 35% and 21%, respectively, of consolidated premiums, universal life and investment-type product policy fees and other revenues. The revenue was from a single premium received for a pension risk transfer. Revenues derived from any other customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the three months and six months ended June 30, 2018 and 2017.