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Segment Information
 9 Months Ended
Sep. 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 (“RIS”) 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 RIS 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 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 nine months ended September 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 September 30, 2018
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
6,431

 
$
1,689

 
$
692

 
$
514

 
$
949

 
$
(33
)
 
$
10,242

 
$
—

 
$
10,242

Universal life and investment-type product policy fees
 
252

 
428

 
229

 
105

 
286

 
—

 
1,300

 
43

 
1,343

Net investment income
 
1,787

 
830

 
339

 
73

 
1,375

 
58

 
4,462

 
24

 
4,486

Other revenues
 
206

 
12

 
7

 
15

 
70

 
86

 
396

 
83

 
479

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
117

 
117

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(378
)
 
(378
)
Total revenues
 
8,676

 
2,959

 
1,267

 
707

 
2,680

 
111

 
16,400

 
(111
)
 
16,289

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
6,219

 
1,354

 
670

 
281

 
1,766

 
(38
)
 
10,252

 
155

 
10,407

Interest credited to policyholder account balances
 
457

 
381

 
102

 
24

 
238

 
—

 
1,202

 
132

 
1,334

Capitalization of DAC
 
(116
)
 
(478
)
 
(97
)
 
(109
)
 
(8
)
 
(2
)
 
(810
)
 
—

 
(810
)
Amortization of DAC and VOBA
 
128

 
366

 
5

 
110

 
13

 
2

 
624

 
108

 
732

Amortization of negative VOBA
 
—

 
(4
)
 
(1
)
 
(2
)
 
—

 
—

 
(7
)
 
—

 
(7
)
Interest expense on debt
 
2

 
—

 
2

 
—

 
2

 
246

 
252

 
15

 
267

Other expenses
 
982

 
943

 
351

 
333

 
264

 
314

 
3,187

 
100

 
3,287

Total expenses
 
7,672

 
2,562

 
1,032

 
637

 
2,275

 
522

 
14,700

 
510

 
15,210

Provision for income tax expense (benefit)
 
209

 
131

 
65

 
15

 
78

 
(206
)
 
292

 
(128
)
 
164

Adjusted earnings
 
$
795

 
$
266

 
$
170

 
$
55

 
$
327

 
$
(205
)
 
1,408

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(111
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(510
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
128

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
 
 
 
 
 
 
 
 
 
 
 
 
$
915

 
 
 
$
915

 
 
 
 
 
 
 
Three Months Ended September 30, 2017
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
6,987

 
$
1,696

 
$
701

 
$
527

 
$
989

 
$
13

 
$
10,913

 
$
(37
)
 
$
10,876

Universal life and investment-type product policy fees
 
247

 
458

 
229

 
109

 
349

 
—

 
1,392

 
36

 
1,428

Net investment income
 
1,602

 
762

 
299

 
77

 
1,390

 
26

 
4,156

 
139

 
4,295

Other revenues
 
197

 
11

 
7

 
(2
)
 
37

 
65

 
315

 
(14
)
 
301

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(606
)
 
(606
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(123
)
 
(123
)
Total revenues
 
9,033

 
2,927

 
1,236

 
711

 
2,765

 
104

 
16,776

 
(605
)
 
16,171

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
6,916

 
1,223

 
640

 
282

 
1,732

 
7

 
10,800

 
230

 
11,030

Interest credited to policyholder account balances
 
376

 
349

 
99

 
26

 
255

 
—

 
1,105

 
233

 
1,338

Capitalization of DAC
 
(126
)
 
(420
)
 
(94
)
 
(109
)
 
(14
)
 
(2
)
 
(765
)
 
4

 
(761
)
Amortization of DAC and VOBA
 
118

 
424

 
—

 
78

 
(70
)
 
3

 
553

 
73

 
626

Amortization of negative VOBA
 
—

 
(24
)
 
(1
)
 
(5
)
 
—

 
—

 
(30
)
 
(2
)
 
(32
)
Interest expense on debt
 
2

 
—

 
1

 
—

 
2

 
279

 
284

 
—

 
284

Other expenses
 
933

 
905

 
377

 
347

 
322

 
237

 
3,121

 
80

 
3,201

Total expenses
 
8,219

 
2,457

 
1,022

 
619

 
2,227

 
524

 
15,068

 
618

 
15,686

Provision for income tax expense (benefit)
 
275

 
156

 
51

 
21

 
174

 
(90
)
 
587

 
(985
)
 
(398
)
Adjusted earnings
 
$
539

 
$
314

 
$
163

 
$
71

 
$
364

 
$
(330
)
 
1,121

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(605
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(618
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
985

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
 
 
 
 
 
 
 
 
 
 
 
 
$
883

 
 
 
$
883








Nine Months Ended September 30, 2018

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


(In millions)
Revenues


















Premiums

$
22,950


$
5,091


$
2,079


$
1,611


$
2,856


$
(14
)

$
34,573


$
—


$
34,573

Universal life and investment-type product policy fees

772


1,221


786


324


901


—


4,004


101


4,105

Net investment income

5,168


2,464


942


221


4,056


157


13,008


(304
)

12,704

Other revenues

613


40


24


51


205


246


1,179


249


1,428

Net investment gains (losses)

—


—


—


—


—


—


—


(443
)

(443
)
Net derivative gains (losses)

—


—


—


—


—


—


—


(88
)

(88
)
Total revenues

29,503

 
8,816

 
3,831

 
2,207

 
8,018

 
389

 
52,764

 
(485
)
 
52,279

Expenses









 



 



 
Policyholder benefits and claims and policyholder dividends

22,590


3,934


1,976


861


5,022


(38
)

34,345


252


34,597

Interest credited to policyholder account balances

1,303


1,094


295


75


709


—


3,476


51


3,527

Capitalization of DAC

(336
)

(1,438
)

(282
)

(348
)

(28
)

(7
)

(2,439
)

(1
)

(2,440
)
Amortization of DAC and VOBA

357


993


136


324


214


5


2,029


103


2,132

Amortization of negative VOBA

—


(31
)

(1
)

(12
)

—


—


(44
)

(1
)

(45
)
Interest expense on debt

8


—


5


—


6


798


817


45


862

Other expenses

2,908


2,871


1,052


1,023


815


805


9,474


336


9,810

Total expenses

26,830

 
7,423

 
3,181

 
1,923

 
6,738

 
1,563

 
47,658

 
785

 
48,443

Provision for income tax expense (benefit)

554


437


195


62


248


(599
)

897


(127
)

770

Adjusted earnings

$
2,119

 
$
956

 
$
455

 
$
222

 
$
1,032

 
$
(575
)

4,209





Adjustments to:













 



 
Total revenues













(485
)



 
Total expenses













(785
)



 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 

127




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

$
3,066




$
3,066


 
 

 
 
 
 
Nine Months Ended September 30, 2017
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
18,049

 
$
5,063

 
$
1,993

 
$
1,534

 
$
3,070

 
$
59

 
$
29,768

 
$
(347
)
 
$
29,421

Universal life and investment-type product policy fees
 
763

 
1,199

 
764

 
296

 
1,056

 
—

 
4,078

 
74

 
4,152

Net investment income
 
4,789

 
2,193

 
891

 
229

 
4,232

 
107

 
12,441

 
468

 
12,909

Other revenues
 
600

 
32

 
24

 
43

 
170

 
185

 
1,054

 
(119
)
 
935

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(414
)
 
(414
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(535
)
 
(535
)
Total revenues
 
24,201

 
8,487

 
3,672

 
2,102

 
8,528

 
351

 
47,341

 
(873
)
 
46,468

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
18,047

 
3,785

 
1,869

 
821

 
5,182

 
33

 
29,737

 
206

 
29,943

Interest credited to policyholder account balances
 
1,086

 
1,003

 
275

 
75

 
767

 
1

 
3,207

 
874

 
4,081

Capitalization of DAC
 
(342
)
 
(1,268
)
 
(264
)
 
(301
)
 
(71
)
 
(6
)
 
(2,252
)
 
34

 
(2,218
)
Amortization of DAC and VOBA
 
346

 
1,005

 
146

 
260

 
143

 
5

 
1,905

 
40

 
1,945

Amortization of negative VOBA
 
—

 
(91
)
 
(1
)
 
(13
)
 
—

 
—

 
(105
)
 
(8
)
 
(113
)
Interest expense on debt
 
8

 
—

 
4

 
—

 
22

 
833

 
867

 
(16
)
 
851

Other expenses
 
2,756

 
2,675

 
1,060

 
995

 
1,032

 
614

 
9,132

 
272

 
9,404

Total expenses
 
21,901

 
7,109

 
3,089

 
1,837

 
7,075

 
1,480

 
42,491

 
1,402

 
43,893

Provision for income tax expense (benefit)
 
771

 
459

 
123

 
47

 
465

 
(630
)
 
1,235

 
(1,351
)
 
(116
)
Adjusted earnings
 
$
1,529

 
$
919

 
$
460

 
$
218

 
$
988

 
$
(499
)
 
3,615

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(873
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,402
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
1,351

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,691

 
 
 
$
2,691

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
 
September 30, 2018
 
December 31, 2017
 
 
(In millions)
U.S.
 
$
251,231

 
$
255,428

Asia
 
142,033

 
136,928

Latin America
 
73,973

 
79,670

EMEA
 
29,024

 
30,500

MetLife Holdings
 
173,351

 
183,160

Corporate & Other
 
28,839

 
34,206

Total
 
$
698,451

 
$
719,892

Revenues derived from one U.S. segment customer were $6.0 billion for the nine months ended September 30, 2018, which represented 15% 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 nine months ended September 30, 2018 and 2017.