Closed Block

9 Months Ended

Sep. 30, 2011

Closed Block [Abstract]

Closed Block

7.   Closed Block

On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.

Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.

Information regarding the closed block liabilities and assets designated to the closed block was as follows:

	September 30, 2011			December 31, 2010
	(In millions)
Closed Block Liabilities
Future policy benefits	$	43,184		$	43,456
Other policy-related balances		336			316
Policyholder dividends payable		618			579
Policyholder dividend obligation		2,782			876
Current income tax payable		—			178
Other liabilities		692			627
Total closed block liabilities		47,612			46,032
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $26,966 and $27,067, respectively)		30,540			28,768
Equity securities available-for-sale, at estimated fair value (cost: $42 and $110, respectively)		34			102
Mortgage loans		6,165			6,253
Policy loans		4,645			4,629
Real estate and real estate joint ventures held-for-investment		335			328
Short-term investments		—			1
Other invested assets		744			729
Total investments		42,463			40,810
Cash and cash equivalents		297			236
Accrued investment income		534			518
Premiums, reinsurance and other receivables		89			95
Current income tax recoverable		36			—
Deferred income tax assets		396			474
Total assets designated to the closed block		43,815			42,133
Excess of closed block liabilities over assets designated to the closed block		3,797			3,899
Amounts included in accumulated other comprehensive income (loss):
Unrealized investment gains (losses), net of income tax of $1,249 and $594, respectively		2,321			1,101
Unrealized gains (losses) on derivative instruments, net of income tax of $7 and $5, respectively		13			10
Allocated to policyholder dividend obligation, net of income tax of ($974) and ($307), respectively		(1,808	)		(569	)
Total amounts included in accumulated other comprehensive income (loss)		526			542
Maximum future earnings to be recognized from closed block assets and liabilities	$	4,323		$	4,441

Information regarding the closed block policyholder dividend obligation was as follows:

	Nine Months		Year
	Ended		Ended
	September 30, 2011		December 31, 2010
	(In millions)
Balance, beginning of period	$	876	$	—
Change in unrealized investment and derivative gains (losses)		1,906		876
Balance, end of period	$	2,782	$	876

Information regarding the closed block revenues and expenses was as follows:

	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(In millions)
Revenues
Premiums	$	554		$	593		$	1,657		$	1,776
Net investment income		553			571			1,698			1,714
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(1	)		(5	)		(8	)		(23	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)		—			—			—			—
Other net investment gains (losses)		23			3			40			42
Total net investment gains (losses)		22			(2	)		32			19
Net derivative gains (losses)		17			(36	)		3			(22	)
Total revenues		1,146			1,126			3,390			3,487
Expenses
Policyholder benefits and claims		731			758			2,166			2,262
Policyholder dividends		304			329			897			974
Other expenses		48			50			146			151
Total expenses		1,083			1,137			3,209			3,387
Revenues, net of expenses before provision for income tax expense (benefit)		63			(11	)		181			100
Provision for income tax expense (benefit)		25			(5	)		63			32
Revenues, net of expenses and provision for income tax expense (benefit)	$	38		$	(6	)	$	118		$	68

The change in the maximum future earnings of the closed block was as follows:

	Three Months					Nine Months
	Ended					Ended
	September 30,					September 30,
	2011			2010		2011			2010
	(In millions)
Balance, end of period	$	4,323		$	4,519	$	4,323		$	4,519
Balance, beginning of period		4,361			4,513		4,441			4,587
Change during period	$	(38	)	$	6	$	(118	)	$	(68	)

MLIC charges the closed block with federal income taxes, state and local premium taxes and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.