Business Segment Information

9 Months Ended

Sep. 30, 2011

Business Segment Information [Abstract]

Business Segment Information

14.   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 the 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 revised 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. Such products were previously reported in the Corporate Benefit Funding segment. Accordingly, prior period results for these segments have been adjusted by $7 million of operating earnings, net of $4 million of income tax, and $18 million of operating earnings, net of $10 million of income tax, for the three months and nine months ended September 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 provides 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 of 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 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 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 increased by $82 million, net of $44 million of income tax, and $11 million, net of $6 million of income tax, for the three months and nine months ended September 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 nine months ended September 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 September 30, 2011	Products			Products			Funding			Home			Total			Japan			Regions			Total			& Other			Total			Adjustments			Consolidated
																(In millions)
Revenues
Premiums	$	4,159		$	393		$	724		$	760		$	6,036		$	1,601		$	1,702		$	3,303		$	3		$	9,342		$	—		$	9,342
Universal life and investment-type product policy fees		566			620			69			—			1,255			220			433			653			—			1,908			90			1,998
Net investment income		1,526			800			1,289			50			3,665			540			550			1,090			297			5,052			(795	)		4,257
Other revenues		216			77			61			8			362			5			40			45			308			715			5			720
Net investment gains (losses)		—			—			—			—			—			—			—			—			—			—			(55	)		(55	)
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—			—			4,196			4,196
Total revenues		6,467			1,890			2,143			818			11,318			2,366			2,725			5,091			608			17,017			3,441			20,458
Expenses
Policyholder benefits and claims and policyholder dividends		4,816			585			1,287			613			7,301			999			1,315			2,314			4			9,619			(218	)		9,401
Interest credited to policyholder account balances		255			408			327			—			990			401			146			547			—			1,537			(799	)		738
Interest credited to bank deposits		—			—			—			—			—			—			—			—			26			26			—			26
Capitalization of DAC		(213	)		(478	)		(6	)		(121	)		(818	)		(619	)		(415	)		(1,034	)		—			(1,852	)		—			(1,852	)
Amortization of DAC and VOBA		186			347			4			114			651			318			268			586			—			1,237			621			1,858
Amortization of negative VOBA		—			—			—			—			—			(135	)		(16	)		(151	)		—			(151	)		(19	)		(170	)
Interest expense on debt		—			—			2			—			2			—			—			—			326			328			97			425
Other expenses		1,016			867			126			200			2,209			909			1,074			1,983			438			4,630			96			4,726
Total expenses		6,060			1,729			1,740			806			10,335			1,873			2,372			4,245			794			15,374			(222	)		15,152
Provision for income tax expense (benefit)		142			57			139			(10	)		328			178			90			268			(162	)		434			1,300			1,734
Operating earnings	$	265		$	104		$	264		$	22		$	655		$	315		$	263		$	578		$	(24	)		1,209
Adjustments to:
Total revenues																													3,441
Total expenses																													222
Provision for income tax (expense) benefit																													(1,300	)
Income (loss) from continuing operations, net of income tax																												$	3,572					$	3,572

	Operating Earnings
	U.S. Business															International
							Corporate			Auto								Other						Banking,
	Insurance			Retirement			Benefit			&								International						Corporate									Total
Three Months Ended September 30, 2010	Products			Products			Funding			Home			Total			Japan		Regions			Total			& Other			Total			Adjustments			Consolidated
																		(In millions)
Revenues
Premiums	$	4,234		$	227		$	402		$	740		$	5,603		$	—	$	878		$	878		$	3		$	6,484		$	—		$	6,484
Universal life and investment-type product policy fees		539			500			58			—			1,097			—		301			301			—			1,398			54			1,452
Net investment income		1,515			856			1,216			51			3,638			—		451			451			225			4,314			50			4,364
Other revenues		185			56			59			8			308			—		7			7			309			624			—			624
Net investment gains (losses)		—			—			—			—			—			—		—			—			—			—			(342	)		(342	)
Net derivative gains (losses)		—			—			—			—			—			—		—			—			—			—			(244	)		(244	)
Total revenues		6,473			1,639			1,735			799			10,646			—		1,637			1,637			537			12,820			(482	)		12,338
Expenses
Policyholder benefits and claims and policyholder dividends		4,685			378			963			506			6,532			—		763			763			(4	)		7,291			409			7,700
Interest credited to policyholder account balances		243			394			380			—			1,017			—		242			242			—			1,259			5			1,264
Interest credited to bank deposits		—			—			—			—			—			—		—			—			33			33			—			33
Capitalization of DAC		(204	)		(270	)		(6	)		(118	)		(598	)		—		(168	)		(168	)		—			(766	)		—			(766	)
Amortization of DAC and VOBA		221			153			4			110			488			—		104			104			(1	)		591			(18	)		573
Amortization of negative VOBA		—			—			—			—			—			—		—			—			—			—			—			—
Interest expense on debt		—			2			1			—			3			—		(1	)		(1	)		292			294			103			397
Other expenses		998			615			113			200			1,926			—		506			506			278			2,710			42			2,752
Total expenses		5,943			1,272			1,455			698			9,368			—		1,446			1,446			598			11,412			541			11,953
Provision for income tax expense (benefit)		185			129			98			20			432			—		2			2			(14	)		420			(352	)		68
Operating earnings	$	345		$	238		$	182		$	81		$	846		$	—	$	189		$	189		$	(47	)		988
Adjustments to:
Total revenues																												(482	)
Total expenses																												(541	)
Provision for income tax (expense) benefit																												352
Income (loss) from continuing operations, net of income tax																											$	317					$	317

	Operating Earnings
	U.S. Business															International
							Corporate			Auto									Other						Banking,
	Insurance			Retirement			Benefit			&									International						Corporate									Total
Nine Months Ended September 30, 2011	Products			Products			Funding			Home			Total			Japan			Regions			Total			& Other			Total			Adjustments			Consolidated
																(In millions)
Revenues
Premiums	$	12,619		$	839		$	1,796		$	2,243		$	17,497		$	4,720		$	4,966		$	9,686		$	7		$	27,190		$	—		$	27,190
Universal life and investment-type product policy fees		1,695			1,828			181			—			3,704			609			1,339			1,948			—			5,652			204			5,856
Net investment income		4,627			2,378			3,925			154			11,084			1,496			1,510			3,006			924			15,014			(345	)		14,669
Other revenues		620			227			182			23			1,052			18			108			126			692			1,870			8			1,878
Net investment gains (losses)		—			—			—			—			—			—			—			—			—			—			(309	)		(309	)
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—			—			4,233			4,233
Total revenues		19,561			5,272			6,084			2,420			33,337			6,843			7,923			14,766			1,623			49,726			3,791			53,517
Expenses
Policyholder benefits and claims and policyholder dividends		14,115			1,362			3,400			1,864			20,741			2,967			3,635			6,602			7			27,350			147			27,497
Interest credited to policyholder account balances		742			1,196			992			—			2,930			1,158			441			1,599			—			4,529			(425	)		4,104
Interest credited to bank deposits		—			—			—			—			—			—			—			—			72			72			—			72
Capitalization of DAC		(643	)		(1,195	)		(24	)		(343	)		(2,205	)		(1,660	)		(1,254	)		(2,914	)		—			(5,119	)		—			(5,119	)
Amortization of DAC and VOBA		631			783			14			336			1,764			981			868			1,849			—			3,613			682			4,295
Amortization of negative VOBA		—			—			—			—			—			(422	)		(57	)		(479	)		—			(479	)		(57	)		(536	)
Interest expense on debt		—			1			6			—			7			—			2			2			970			979			281			1,260
Other expenses		3,079			2,329			363			591			6,362			2,502			3,185			5,687			1,086			13,135			303			13,438
Total expenses		17,924			4,476			4,751			2,448			29,599			5,526			6,820			12,346			2,135			44,080			931			45,011
Provision for income tax expense (benefit)		573			279			466			(51	)		1,267			467			301			768			(406	)		1,629			1,052			2,681
Operating earnings	$	1,064		$	517		$	867		$	23		$	2,471		$	850		$	802		$	1,652		$	(106	)		4,017
Adjustments to:
Total revenues																													3,791
Total expenses																													(931	)
Provision for income tax (expense) benefit																													(1,052	)
Income (loss) from continuing operations, net of income tax																												$	5,825					$	5,825

	Operating Earnings
	U.S. Business															International
							Corporate			Auto								Other						Banking,
	Insurance			Retirement			Benefit			&								International						Corporate									Total
Nine Months Ended September 30, 2010	Products			Products			Funding			Home			Total			Japan		Regions			Total			& Other			Total			Adjustments			Consolidated
																(In millions)
Revenues
Premiums	$	12,874		$	730		$	1,547		$	2,177		$	17,328		$	—	$	2,522		$	2,522		$	6		$	19,856		$	—		$	19,856
Universal life and investment-type product policy fees		1,634			1,474			169			—			3,277			—		902			902			—			4,179			160			4,339
Net investment income		4,514			2,550			3,641			156			10,861			—		1,153			1,153			691			12,705			40			12,745
Other revenues		562			159			181			14			916			—		12			12			753			1,681			—			1,681
Net investment gains (losses)		—			—			—			—			—			—		—			—			—			—			(324	)		(324	)
Net derivative gains (losses)		—			—			—			—			—			—		—			—			—			—			1,278			1,278
Total revenues		19,584			4,913			5,538			2,347			32,382			—		4,589			4,589			1,450			38,421			1,154			39,575
Expenses
Policyholder benefits and claims and policyholder dividends		14,253			1,207			3,115			1,506			20,081			—		2,279			2,279			(11	)		22,349			510			22,859
Interest credited to policyholder account balances		714			1,205			1,099			—			3,018			—		433			433			—			3,451			3			3,454
Interest credited to bank deposits		—			—			—			—			—			—		—			—			108			108			—			108
Capitalization of DAC		(627	)		(766	)		(17	)		(339	)		(1,749	)		—		(506	)		(506	)		—			(2,255	)		—			(2,255	)
Amortization of DAC and VOBA		666			594			12			328			1,600			—		313			313			(1	)		1,912			272			2,184
Amortization of negative VOBA		—			—			—			—			—			—		—			—			—			—			—			—
Interest expense on debt		—			4			3			—			7			—		2			2			815			824			312			1,136
Other expenses		3,021			1,784			346			572			5,723			—		1,489			1,489			825			8,037			120			8,157
Total expenses		18,027			4,028			4,558			2,067			28,680			—		4,010			4,010			1,736			34,426			1,217			35,643
Provision for income tax expense (benefit)		545			310			343			54			1,252			—		101			101			(185	)		1,168			83			1,251
Operating earnings	$	1,012		$	575		$	637		$	226		$	2,450		$	—	$	478		$	478		$	(101	)		2,827
Adjustments to:
Total revenues																												1,154
Total expenses																												(1,217	)
Provision for income tax (expense) benefit																												(83	)
Income (loss) from continuing operations, net of income tax																											$	2,681					$	2,681

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

	September 30, 2011		December 31, 2010
	(In millions)
U.S. Business:
Insurance Products	$	148,629	$	141,366
Retirement Products		185,010		177,045
Corporate Benefit Funding		186,741		172,929
Auto & Home		5,965		5,541
Total		526,345		496,881
International:
Japan		104,493		87,416
Other International Regions		68,351		77,579
Total		172,844		164,995
Banking, Corporate & Other		86,041		69,030
Total	$	785,230	$	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 from U.S. operations were $11.7 billion and $34.2 billion for the three months and nine months ended September 30, 2011, each of which represented 69% of consolidated operating revenues. Operating revenues from U.S. operations were $11.1 billion and $33.3 billion for the three months and nine months ended September 30, 2010, each of which represented 87% of consolidated operating revenues.