Business Segment Information

6 Months Ended

Jun. 30, 2011

Business Segment Information [Abstract]


13.	Business Segment Information

MetLife is organized into six segments: Insurance Products, Retirement Products, Corporate Benefit Funding and Auto & Home (collectively, “U.S. Business”), and Japan and Other International Regions (collectively, “International”). In the first quarter of 2011, the Company began reporting the results from its international operations in two separate segments to reflect a change in the manner in which the financial results are reviewed and evaluated by executive management. The assets, liabilities and the operating results relating to the Acquisition are included in Japan and Other International Regions segments. In addition, the Company reports certain of its results of operations in Banking, Corporate & Other, which includes MetLife Bank and other business activities. Prior period results have been adjusted to conform to this new presentation of segments.

Insurance Products offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into three distinct businesses: Group Life, Individual Life and Non-Medical Health. Group Life insurance products and services include variable life, universal life and term life products. Individual Life insurance products and services include variable life, universal life, term life and whole life products. Non-Medical Health products and services include dental insurance, short- and long-term disability, long-term care and other insurance products. Retirement Products offers asset accumulation and income products, including a wide variety of annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. Auto & Home provides personal lines property and casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance. In the fourth quarter of 2010, management realigned certain income annuity products within the Company’s segments to better conform to the way it manages and assesses its business and began reporting such product results in the Retirement Products segment, previously reported in the Corporate Benefit Funding segment. Accordingly, prior period results for these segments have been adjusted by $3 million of operating earnings, net of $2 million of income tax, and $11 million of operating earnings, net of $6 million of income tax, for the three months and six months ended June 30, 2010, respectively, to reflect such product reclassifications.

Japan life insurance products include whole life, term life, variable life and universal life products. Japan also provides accident and health insurance, fixed and variable annuities and endowment products. These products are offered to both individuals and groups. Other International Regions provide life insurance, accident and health insurance, non medical health insurance, credit insurance, annuities, endowment and retirement & savings products to both individuals and groups.

Banking, Corporate & Other contains the excess capital not allocated to the segments, the results of operations of MetLife Bank, the internal resource costs for associates committed to the Acquisition, various start-up entities and run-off entities, as well as interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Banking, Corporate & Other also includes the elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings.

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources and, consistent with GAAP accounting guidance for segment reporting, it is the Company’s measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for GAAP income (loss) from continuing operations, net of income tax. The Company believes the presentation of operating earnings as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results from operations and the underlying profitability drivers of the business.

Operating earnings is defined as operating revenues less operating expenses, both net of income tax.

Operating revenues exclude net investment gains (losses) and net derivative gains (losses). The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues:


	•	Universal life and investment-type product policy fees exclude the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB Fees”);

	•	Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

	•	Other revenues are adjusted for settlements of foreign currency earnings hedges.

The following adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:


	•	Policyholder benefits and claims and policyholder dividends exclude: (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, (iii) benefits and hedging costs related to GMIBs (“GMIB Costs”), and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);

	•	Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and 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 exclude costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii) business combinations.

In the first quarter of 2011, management modified its definition of operating earnings to exclude impacts related to certain variable annuity guarantees and Market Value Adjustments to better conform to the way it manages and assesses its business. Accordingly, such results are no longer reported in operating earnings. Consequently, prior period results for Retirement Products and total consolidated operating earnings have been reduced by $105 million, net of $56 million of income tax, and $71 million, net of $38 million of income tax, for the three months and six months ended June 30, 2010, respectively.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Banking, Corporate & Other for the three months and six months ended June 30, 2011 and 2010. The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in consolidation.

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.

Effective January 1, 2011, the Company updated its economic capital model to align segment allocated equity with emerging standards and consistent risk principles. Such changes to the Company’s economic capital model are applied prospectively. Segment net investment income is also credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, operating earnings or income (loss) from continuing operations, net of income tax.


	Operating Earnings
	U.S. Business															International
							Corporate			Auto									Other						Banking,
	Insurance			Retirement			Benefit			&									International						Corporate									Total
Three Months Ended June 30, 2011	Products			Products			Funding			Home			Total			Japan			Regions			Total			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	4,268		$	240		$	781		$	748		$	6,037		$	1,602		$	1,653		$	3,255		$	2		$	9,294		$	—		$	9,294
Universal life and investment-type product policy fees		565			622			58			—			1,245			195			470			665			—			1,910			59			1,969
Net investment income		1,572			792			1,325			51			3,740			517			539			1,056			297			5,093			5			5,098
Other revenues		204			75			61			7			347			4			35			39			202			588			4			592
Net investment gains (losses)		—			—			—			—			—			—			—			—			—			—			(155	)		(155	)
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—			—			352			352

Total revenues		6,609			1,729			2,225			806			11,369			2,318			2,697			5,015			501			16,885			265			17,150

Expenses
Policyholder benefits and claims and policyholder dividends		4,634			402			1,292			719			7,047			1,019			1,218			2,237			1			9,285			208			9,493
Interest credited to policyholder account balances		246			395			330			—			971			388			152			540			—			1,511			(69	)		1,442
Interest credited to bank deposits		—			—			—			—			—			—			—			—			23			23			—			23
Capitalization of DAC		(214	)		(400	)		(6	)		(117	)		(737	)		(519	)		(442	)		(961	)		—			(1,698	)		—			(1,698	)
Amortization of DAC and VOBA		214			238			5			113			570			371			312			683			—			1,253			128			1,381
Amortization of negative VOBA		—			—			—			—			—			(141	)		(23	)		(164	)		—			(164	)		(19	)		(183	)
Interest expense on debt		—			1			2			—			3			—			—			—			325			328			92			420
Other expenses		1,038			784			118			198			2,138			823			1,109			1,932			337			4,407			145			4,552

Total expenses		5,918			1,420			1,741			913			9,992			1,941			2,326			4,267			686			14,945			485			15,430

Provision for income tax expense (benefit)		242			108			170			(51	)		469			132			109			241			(130	)		580			(61	)		519

Operating earnings	$	449		$	201		$	314		$	(56	)	$	908		$	245		$	262		$	507		$	(55	)		1,360

Adjustments to:
Total revenues																													265
Total expenses																													(485	)
Provision for income tax (expense) benefit																													61

Income (loss) from continuing operations, net of income tax																												$	1,201					$	1,201


	Operating Earnings
	U.S. Business															International
							Corporate			Auto								Other						Banking,
	Insurance			Retirement			Benefit			&								International						Corporate									Total
Three Months Ended June 30, 2010	Products			Products			Funding			Home			Total			Japan		Regions			Total			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	4,317		$	250		$	474		$	723		$	5,764		$	—	$	817		$	817		$	3		$	6,584		$	—		$	6,584
Universal life and investment-type product policy fees		546			509			56			—			1,111			—		312			312			—			1,423			59			1,482
Net investment income		1,495			842			1,234			52			3,623			—		274			274			223			4,120			(59	)		4,061
Other revenues		188			54			59			8			309			—		4			4			231			544			—			544
Net investment gains (losses)		—			—			—			—			—			—		—			—			—			—			(14	)		(14	)
Net derivative gains (losses)		—			—			—			—			—			—		—			—			—			—			1,481			1,481

Total revenues		6,546			1,655			1,823			783			10,807			—		1,407			1,407			457			12,671			1,467			14,138

Expenses
Policyholder benefits and claims and policyholder dividends		4,721			422			979			506			6,628			—		751			751			(2	)		7,377			(59	)		7,318
Interest credited to policyholder account balances		237			405			364			—			1,006			—		41			41			—			1,047			1			1,048
Interest credited to bank deposits		—			—			—			—			—			—		—			—			36			36			—			36
Capitalization of DAC		(217	)		(262	)		(3	)		(117	)		(599	)		—		(157	)		(157	)		—			(756	)		—			(756	)
Amortization of DAC and VOBA		206			272			4			111			593			—		109			109			—			702			312			1,014
Amortization of negative VOBA		—			—			—			—			—			—		—			—			—			—			—			—
Interest expense on debt		—			1			1			—			2			—		2			2			262			266			103			369
Other expenses		1,031			607			117			193			1,948			—		477			477			273			2,698			48			2,746

Total expenses		5,978			1,445			1,462			693			9,578			—		1,223			1,223			569			11,370			405			11,775

Provision for income tax expense (benefit)		199			74			126			17			416			—		42			42			(102	)		356			471			827

Operating earnings	$	369		$	136		$	235		$	73		$	813		$	—	$	142		$	142		$	(10	)		945

Adjustments to:
Total revenues																												1,467
Total expenses																												(405	)
Provision for income tax (expense) benefit																												(471	)

Income (loss) from continuing operations, net of income tax																											$	1,536					$	1,536


	Operating Earnings
	U.S. Business															International
							Corporate			Auto									Other						Banking,
	Insurance			Retirement			Benefit			&									International						Corporate									Total
Six Months Ended June 30, 2011	Products			Products			Funding			Home			Total			Japan			Regions			Total			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	8,460		$	446		$	1,072		$	1,483		$	11,461		$	3,119		$	3,264		$	6,383		$	4		$	17,848		$	—		$	17,848
Universal life and investment-type product policy fees		1,129			1,208			112			—			2,449			389			906			1,295			—			3,744			114			3,858
Net investment income		3,101			1,578			2,636			104			7,419			956			960			1,916			627			9,962			452			10,414
Other revenues		404			150			121			15			690			13			68			81			384			1,155			3			1,158
Net investment gains (losses)		—			—			—			—			—			—			—			—			—			—			(254	)		(254	)
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—			—			37			37

Total revenues		13,094			3,382			3,941			1,602			22,019			4,477			5,198			9,675			1,015			32,709			352			33,061

Expenses
Policyholder benefits and claims and policyholder dividends		9,299			777			2,113			1,251			13,440			1,968			2,320			4,288			3			17,731			365			18,096
Interest credited to policyholder account balances		487			788			665			—			1,940			757			295			1,052			—			2,992			374			3,366
Interest credited to bank deposits		—			—			—			—			—			—			—			—			46			46			—			46
Capitalization of DAC		(430	)		(717	)		(18	)		(222	)		(1,387	)		(1,041	)		(839	)		(1,880	)		—			(3,267	)		—			(3,267	)
Amortization of DAC and VOBA		445			436			10			222			1,113			663			600			1,263			—			2,376			61			2,437
Amortization of negative VOBA		—			—			—			—			—			(287	)		(41	)		(328	)		—			(328	)		(38	)		(366	)
Interest expense on debt		—			1			4			—			5			—			2			2			644			651			184			835
Other expenses		2,063			1,462			237			391			4,153			1,593			2,111			3,704			648			8,505			207			8,712

Total expenses		11,864			2,747			3,011			1,642			19,264			3,653			4,448			8,101			1,341			28,706			1,153			29,859

Provision for income tax expense (benefit)		431			222			327			(41	)		939			289			211			500			(244	)		1,195			(248	)		947

Operating earnings	$	799		$	413		$	603		$	1		$	1,816		$	535		$	539		$	1,074		$	(82	)		2,808

Adjustments to:
Total revenues																													352
Total expenses																													(1,153	)
Provision for income tax (expense) benefit																													248

Income (loss) from continuing operations, net of income tax																												$	2,255					$	2,255


	Operating Earnings
	U.S. Business															International
							Corporate			Auto								Other						Banking,
	Insurance			Retirement			Benefit			&								International						Corporate									Total
Six Months Ended June 30, 2010	Products			Products			Funding			Home			Total			Japan		Regions			Total			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	8,640		$	503		$	1,145		$	1,437		$	11,725		$	—	$	1,644		$	1,644		$	3		$	13,372		$	—		$	13,372
Universal life and investment-type product policy fees		1,095			974			111			—			2,180			—		601			601			—			2,781			106			2,887
Net investment income		2,999			1,694			2,425			105			7,223			—		702			702			466			8,391			(10	)		8,381
Other revenues		377			103			122			6			608			—		5			5			444			1,057			—			1,057
Net investment gains (losses)		—			—			—			—			—			—		—			—			—			—			18			18
Net derivative gains (losses)		—			—			—			—			—			—		—			—			—			—			1,522			1,522

Total revenues		13,111			3,274			3,803			1,548			21,736			—		2,952			2,952			913			25,601			1,636			27,237

Expenses
Policyholder benefits and claims and policyholder dividends		9,568			829			2,152			1,000			13,549			—		1,516			1,516			(7	)		15,058			101			15,159
Interest credited to policyholder account balances		471			811			719			—			2,001			—		191			191			—			2,192			(2	)		2,190
Interest credited to bank deposits		—			—			—			—			—			—		—			—			75			75			—			75
Capitalization of DAC		(423	)		(496	)		(11	)		(221	)		(1,151	)		—		(338	)		(338	)		—			(1,489	)		—			(1,489	)
Amortization of DAC and VOBA		445			441			8			218			1,112			—		209			209			—			1,321			290			1,611
Amortization of negative VOBA		—			—			—			—			—			—		—			—			—			—			—			—
Interest expense on debt		—			2			2			—			4			—		3			3			523			530			209			739
Other expenses		2,023			1,169			233			372			3,797			—		983			983			547			5,327			78			5,405

Total expenses		12,084			2,756			3,103			1,369			19,312			—		2,564			2,564			1,138			23,014			676			23,690

Provision for income tax expense (benefit)		360			181			245			34			820			—		99			99			(171	)		748			435			1,183

Operating earnings	$	667		$	337		$	455		$	145		$	1,604		$	—	$	289		$	289		$	(54	)		1,839

Adjustments to:
Total revenues																												1,636
Total expenses																												(676	)
Provision for income tax (expense) benefit																												(435	)

Income (loss) from continuing operations, net of income tax																											$	2,364					$	2,364

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


	June 30, 2011		December 31, 2010
	(In millions)

U.S. Business:
Insurance Products	$	143,626	$	141,366
Retirement Products		189,411		177,045
Corporate Benefit Funding		187,041		172,929
Auto & Home		5,865		5,541

Total		525,943		496,881

International:
Japan		98,803		87,416
Other International Regions		69,946		77,579

Total		168,749		164,995
Banking, Corporate & Other		76,791		69,030

Total	$	771,483	$	730,906

Net investment income is based upon the actual results of each segment’s specifically identifiable asset portfolio 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 revenues derived from any customer did not exceed 10% of consolidated operating revenues for the three months and six months ended June 30, 2011 and 2010. Operating revenues from U.S. operations were $11.4 billion and $22.5 billion for the three months and six months ended June 30, 2011, respectively, which represented 67% and 69%, respectively, of consolidated operating revenues. Operating revenues from U.S. operations were $11.1 billion and $22.1 billion for the three months and six months ended June 30, 2010, respectively, which represented 88% and 87%, respectively, of consolidated operating revenues.