10-Q 1 y91773e10vq.htm FORM 10-Q e10vq
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Form 10-Q
 
     
(Mark One)    
 
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2011
OR
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    FOR THE TRANSITION PERIOD FROM          TO          
 
Commission file number: 001-15787
 
 
 
 
MetLife, Inc.
(Exact name of registrant as specified in its charter)
 
 
     
Delaware
(State or other jurisdiction of
incorporation or organization)
  13-4075851
(I.R.S. Employer
Identification No.)
     
200 Park Avenue, New York, N.Y.
(Address of principal executive offices)
  10166-0188
(Zip Code)
 
 
(212) 578-2211
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
     
Large accelerated filer þ
  Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)
  Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
At October 31, 2011, 1,057,633,998 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
 


 

 
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As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), its subsidiaries and affiliates.
 
Note Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.
 
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) concerns over U.S. fiscal policy and the trajectory of the national debt of the U.S., as well as rating agency downgrades of U.S. Treasury securities; (3) increased volatility and disruption of the capital and credit markets, which may affect our ability to seek financing or access our credit facilities; (4) uncertainty about the effectiveness of the U.S. government’s programs to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (5) impact of comprehensive financial services regulation reform on us; (6) exposure to financial and capital market risk; (7) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect our ability to raise capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets; (8) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (9) investment losses and defaults, and changes to investment valuations; (10) impairments of goodwill and realized losses or market value impairments to illiquid assets; (11) defaults on our mortgage loans; (12) the impairment of other financial institutions that could adversely affect our investments or business; (13) our ability to address unforeseen liabilities, asset impairments, loss of key contractual relationships, or rating actions arising from acquisitions or dispositions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company (collectively, “ALICO”) and to successfully integrate and manage the growth of acquired businesses with minimal disruption; (14) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the acquisition of ALICO; (15) the dilutive impact on our stockholders resulting from the issuance of equity securities in connection with the acquisition of ALICO or otherwise; (16) economic, political, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (17) our primary reliance, as a holding company, on dividends from our subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (18) downgrades in our claims paying ability, financial strength or credit ratings; (19) ineffectiveness of risk management policies and procedures; (20) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (21) discrepancies between actual claims experience and assumptions used in setting prices for our products and establishing the liabilities for our obligations for future policy benefits and claims; (22) catastrophe losses; (23) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, distribution of amounts available under U.S. government programs, and for personnel; (24) unanticipated changes in industry trends;


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(25) changes in accounting standards, practices and/or policies; (26) changes in assumptions related to deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (27) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (28) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (29) deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (30) adverse results or other consequences from litigation, arbitration or regulatory investigations; (31) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (32) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (33) regulatory, legislative or tax changes relating to our insurance, banking, international, or other operations that may affect the cost of, or demand for, our products or services, impair our ability to attract and retain talented and experienced management and other employees, or increase the cost or administrative burdens of providing benefits to employees; (34) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on our disaster recovery systems, cyber-or other information security systems and management continuity planning; (35) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (36) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.
 
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.
 
Note Regarding Reliance on Statements in Our Contracts
 
In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife, Inc., its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
 
  •  should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
 
  •  have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
 
  •  may apply standards of materiality in a way that is different from what may be viewed as material to investors; and
 
  •  were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
 
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about MetLife, Inc., its subsidiaries and affiliates may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife, Inc.’s other public filings, which are available without charge through the SEC website at www.sec.gov.


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Part I — Financial Information
 
Item 1.   Financial Statements
 
MetLife, Inc.

Interim Condensed Consolidated Balance Sheets
September 30, 2011 (Unaudited) and December 31, 2010

(In millions, except share and per share data)
 
                 
    September 30, 2011     December 31, 2010  
 
Assets
               
Investments:
               
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $334,009 and $317,617, respectively; includes $3,265 and $3,330, respectively, relating to variable interest entities)
  $ 353,927     $ 324,797  
Equity securities available-for-sale, at estimated fair value (cost: $3,227 and $3,621, respectively)
    3,118       3,602  
Trading and other securities, at estimated fair value (includes $415 and $463, respectively, of actively traded securities; and $321 and $387, respectively, relating to variable interest entities)
    18,698       18,589  
Mortgage loans:
               
Held-for-investment, principally at amortized cost (net of valuation allowances of $529 and $664, respectively; includes $3,277 and $6,840, respectively, at estimated fair value, relating to variable interest entities)
    59,209       58,976  
Held-for-sale, principally at estimated fair value
    3,740       3,321  
                 
Mortgage loans, net
    62,949       62,297  
Policy loans
    11,932       11,761  
Real estate and real estate joint ventures (includes $12 and $10, respectively, relating to variable interest entities)
    8,197       8,030  
Other limited partnership interests (includes $319 and $298, respectively, relating to variable interest entities)
    6,538       6,416  
Short-term investments, principally at estimated fair value
    15,913       9,384  
Other invested assets, principally at estimated fair value (includes $98 and $104, respectively, relating to variable interest entities)
    23,138       15,430  
                 
Total investments
    504,410       460,306  
Cash and cash equivalents, principally at estimated fair value (includes $37 and $69, respectively, relating to variable interest entities)
    10,001       12,957  
Accrued investment income (includes $17 and $34, respectively, relating to variable interest entities)
    4,793       4,328  
Premiums, reinsurance and other receivables (includes $2 and $2, respectively, relating to variable interest entities)
    23,137       19,799  
Deferred policy acquisition costs and value of business acquired
    27,623       27,092  
Goodwill
    12,006       11,781  
Other assets (includes $5 and $6, respectively, relating to variable interest entities)
    8,340       8,174  
Assets of subsidiaries held-for-sale
    3,421       3,331  
Separate account assets
    191,499       183,138  
                 
Total assets
  $ 785,230     $ 730,906  
                 
Liabilities and Equity
               
Liabilities
               
Future policy benefits
  $ 182,736     $ 170,912  
Policyholder account balances
    217,764       210,757  
Other policy-related balances
    15,451       15,750  
Policyholder dividends payable
    871       830  
Policyholder dividend obligation
    2,782       876  
Payables for collateral under securities loaned and other transactions
    34,933       27,272  
Bank deposits
    10,685       10,316  
Short-term debt
    451       306  
Long-term debt (includes $3,158 and $6,902, respectively, at estimated fair value, relating to variable interest entities)
    24,753       27,586  
Collateral financing arrangements
    5,297       5,297  
Junior subordinated debt securities
    3,192       3,191  
Current income tax payable
    385       297  
Deferred income tax liability
    7,214       1,856  
Other liabilities (includes $73 and $93, respectively, relating to variable interest entities)
    23,121       20,366  
Liabilities of subsidiaries held-for-sale
    3,221       3,043  
Separate account liabilities
    191,499       183,138  
                 
Total liabilities
    724,355       681,793  
                 
Contingencies, Commitments and Guarantees (Note 9)
               
Redeemable noncontrolling interests in partially owned consolidated subsidiaries
    130       117  
                 
Equity
               
MetLife, Inc.’s stockholders’ equity:
               
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized:
               
Preferred stock, 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference
    1       1  
Convertible preferred stock, 0 and 6,857,000 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
           
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,060,754,366 and 989,031,704 shares issued at September 30, 2011 and December 31, 2010, respectively; 1,057,560,479 and 985,837,817 shares outstanding at September 30, 2011 and
December 31, 2010, respectively
    11       10  
Additional paid-in capital
    26,744       26,423  
Retained earnings
    26,951       21,363  
Treasury stock, at cost; 3,193,887 shares at September 30, 2011 and December 31, 2010
    (172 )     (172 )
Accumulated other comprehensive income (loss)
    6,813       1,000  
                 
Total MetLife, Inc.’s stockholders’ equity
    60,348       48,625  
Noncontrolling interests
    397       371  
                 
Total equity
    60,745       48,996  
                 
Total liabilities and equity
  $ 785,230     $ 730,906  
                 
 
See accompanying notes to the interim condensed consolidated financial statements.


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MetLife, Inc.

Interim Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended September 30, 2011 and 2010 (Unaudited)

(In millions, except per share data)
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
 
Revenues
                               
Premiums
  $ 9,342     $ 6,484     $ 27,190     $ 19,856  
Universal life and investment-type product policy fees
    1,998       1,452       5,856       4,339  
Net investment income
    4,257       4,364       14,669       12,745  
Other revenues
    720       624       1,878       1,681  
Net investment gains (losses):
                               
Other-than-temporary impairments on fixed maturity securities
    (95 )     (143 )     (525 )     (538 )
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)
    (189 )     24       (5 )     181  
Other net investment gains (losses)
    229       (223 )     221       33  
                                 
Total net investment gains (losses)
    (55 )     (342 )     (309 )     (324 )
Net derivative gains (losses)
    4,196       (244 )     4,233       1,278  
                                 
Total revenues
    20,458       12,338       53,517       39,575  
                                 
Expenses
                               
Policyholder benefits and claims
    9,017       7,309       26,367       21,703  
Interest credited to policyholder account balances
    738       1,264       4,104       3,454  
Policyholder dividends
    384       391       1,130       1,156  
Other expenses
    5,013       2,989       13,410       9,330  
                                 
Total expenses
    15,152       11,953       45,011       35,643  
                                 
Income (loss) from continuing operations before provision for income tax
    5,306       385       8,506       3,932  
Provision for income tax expense (benefit)
    1,734       68       2,681       1,251  
                                 
Income (loss) from continuing operations, net of income tax
    3,572       317       5,825       2,681  
Income (loss) from discontinued operations, net of income tax
    4       3       (6 )     20  
                                 
Net income (loss)
    3,576       320       5,819       2,701  
Less: Net income (loss) attributable to noncontrolling interests
    (6 )     4       (6 )     (7 )
                                 
Net income (loss) attributable to MetLife, Inc. 
    3,582       316       5,825       2,708  
Less: Preferred stock dividends
    30       30       91       91  
Preferred stock redemption premium
                146        
                                 
Net income (loss) available to MetLife, Inc.’s common shareholders
  $ 3,552     $ 286     $ 5,588     $ 2,617  
                                 
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
                               
Basic
  $ 3.35     $ 0.33     $ 5.29     $ 3.09  
                                 
Diluted
  $ 3.33     $ 0.32     $ 5.24     $ 3.07  
                                 
Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
                               
Basic
  $ 3.35     $ 0.33     $ 5.28     $ 3.11  
                                 
Diluted
  $ 3.33     $ 0.32     $ 5.23     $ 3.09  
                                 
 
See accompanying notes to the interim condensed consolidated financial statements.


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MetLife, Inc.
 
For the Nine Months Ended September 30, 2011 (Unaudited)
 
(In millions)
 
                                                                                                         
                                        Accumulated Other Comprehensive Income (Loss)                    
                                        Net
          Foreign
    Defined
    Total
             
          Convertible
          Additional
          Treasury
    Unrealized
    Other-Than-
    Currency
    Benefit
    MetLife, Inc.’s
             
    Preferred
    Preferred
    Common
    Paid-in
    Retained
    Stock
    Investment
    Temporary
    Translation
    Plans
    Stockholders’
    Noncontrolling
    Total
 
    Stock     Stock     Stock     Capital     Earnings     at Cost     Gains (Losses)     Impairments     Adjustments     Adjustment     Equity     Interests (1)     Equity  
 
Balance at December 31, 2010
  $ 1     $     $ 10     $ 26,423     $ 21,363     $ (172 )   $ 3,356     $ (366 )   $ (541 )   $ (1,449 )   $ 48,625     $ 371     $ 48,996  
Redemption of convertible preferred stock
                          (2,805 )                                                     (2,805 )             (2,805 )
Preferred stock redemption premium
                                    (146 )                                             (146 )             (146 )
Common stock issuance — newly issued shares
                    1       2,949                                                       2,950               2,950  
Stock-based compensation
                            177                                                       177               177  
Dividends on preferred stock
                                    (91 )                                             (91 )             (91 )
Change in equity of noncontrolling interests
                                                                                            48       48  
Comprehensive income (loss):
                                                                                                       
Net income (loss)
                                    5,825                                               5,825       1       5,826  
Other comprehensive income (loss):
                                                                                                       
Unrealized gains (losses) on derivative instruments, net of income tax
                                                    1,005                               1,005               1,005  
Unrealized investment gains (losses), net of related offsets and income tax
                                                    4,503       (51 )                     4,452       (5 )     4,447  
Foreign currency translation adjustments, net of income tax
                                                                    291               291       (18 )     273  
Defined benefit plans adjustment, net of income tax
                                                                            65       65               65  
                                                                                                         
Other comprehensive income (loss)
                                                                                    5,813       (23 )     5,790  
                                                                                                         
Comprehensive income (loss)
                                                                                    11,638       (22 )     11,616  
                                                                                                         
Balance at September 30, 2011
  $ 1     $     $ 11     $ 26,744     $ 26,951     $ (172 )   $ 8,864     $ (417 )   $ (250 )   $ (1,384 )   $ 60,348     $ 397     $ 60,745  
                                                                                                         
 
 
(1) Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially owned consolidated subsidiaries of ($7) million.
 
See accompanying notes to the interim condensed consolidated financial statements.


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MetLife, Inc.

Interim Condensed Consolidated Statements of Equity  — (Continued)
For the Nine Months Ended September 30, 2010 (Unaudited)
 
(In millions)
 
                                                                                                 
                                  Accumulated Other Comprehensive Income (Loss)                    
                                  Net
          Foreign
    Defined
    Total
             
                Additional
          Treasury
    Unrealized
    Other-Than-
    Currency
    Benefit
    MetLife, Inc.’s
             
    Preferred
    Common
    Paid-in
    Retained
    Stock
    Investment
    Temporary
    Translation
    Plans
    Stockholders’
    Noncontrolling
    Total
 
    Stock     Stock     Capital     Earnings     at Cost     Gains (Losses)     Impairments     Adjustments     Adjustment     Equity     Interests     Equity  
 
Balance at December 31, 2009
  $ 1     $ 8     $ 16,859     $ 19,501     $ (190 )   $ (817 )   $ (513 )   $ (183 )   $ (1,545 )   $ 33,121     $ 377     $ 33,498  
Cumulative effect of change in accounting principle, net of income tax
                            (12 )             31       11                       30               30  
                                                                                                 
Balance at January 1, 2010
    1       8       16,859       19,489       (190 )     (786 )     (502 )     (183 )     (1,545 )     33,151       377       33,528  
Cumulative effect of change in accounting principle, net of income tax
                            (10 )             10                                              
Common stock issuance — newly issued shares
            1       3,528                                                       3,529               3,529  
Stock-based compensation
                    64               18                                       82               82  
Dividends on preferred stock
                            (91 )                                             (91 )             (91 )
Change in equity of noncontrolling interests
                                                                                    (22 )     (22 )
Comprehensive income (loss):
                                                                                               
Net income (loss)
                            2,708                                               2,708       (7 )     2,701  
Other comprehensive income (loss):
                                                                                               
Unrealized gains (losses) on derivative instruments, net of income tax
                                            409                               409               409  
Unrealized investment gains (losses), net of related offsets and income tax
                                            6,268       357                       6,625       (1 )     6,624  
Foreign currency translation adjustments, net of income tax
                                                            (92 )             (92 )     7       (85 )
Defined benefit plans adjustment, net of income tax
                                                                    94       94               94  
                                                                                                 
Other comprehensive income (loss)
                                                                            7,036       6       7,042  
                                                                                                 
Comprehensive income (loss)
                                                                            9,744       (1 )     9,743  
                                                                                                 
Balance at September 30, 2010
  $ 1     $ 9     $ 20,451     $ 22,096     $ (172 )   $ 5,901     $ (145 )   $ (275 )   $ (1,451 )   $ 46,415     $ 354     $ 46,769  
                                                                                                 
 
See accompanying notes to the interim condensed consolidated financial statements.
 


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MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2011 and 2010 (Unaudited)

(In millions)
 
                 
    Nine Months
 
    Ended
 
    September 30,  
    2011     2010  
 
Net cash provided by operating activities
  $ 9,040     $ 5,193  
                 
Cash flows from investing activities
               
Sales, maturities and repayments of:
               
Fixed maturity securities
    81,918       55,618  
Equity securities
    1,342       1,002  
Mortgage loans
    8,784       4,474  
Real estate and real estate joint ventures
    856       135  
Other limited partnership interests
    852       311  
Purchases of:
               
Fixed maturity securities
    (95,660 )     (69,997 )
Equity securities
    (869 )     (638 )
Mortgage loans
    (12,248 )     (5,888 )
Real estate and real estate joint ventures
    (608 )     (474 )
Other limited partnership interests
    (849 )     (745 )
Cash received in connection with freestanding derivatives
    2,841       1,717  
Cash paid in connection with freestanding derivatives
    (3,102 )     (1,949 )
Sale of interest in joint venture
    265        
Net change in policy loans
    (84 )     (169 )
Net change in short-term investments
    (6,508 )     (3,152 )
Net change in other invested assets
    (175 )     501  
Other, net
    (104 )     (115 )
                 
Net cash used in investing activities
    (23,349 )     (19,369 )
                 
Cash flows from financing activities
               
Policyholder account balances:
               
Deposits
    69,911       53,709  
Withdrawals
    (67,001 )     (50,126 )
Net change in payables for collateral under securities loaned and other transactions
    7,661       7,695  
Net change in bank deposits
    296       (959 )
Net change in short-term debt
    145       1,145  
Long-term debt issued
    1,346       4,590  
Long-term debt repaid
    (1,192 )     (689 )
Cash received in connection with collateral financing arrangements
    100        
Debt issuance costs
    (1 )     (14 )
Common stock issued, net of issuance costs
    2,950       3,529  
Stock options exercised
    77       32  
Redemption of convertible preferred stock
    (2,805 )      
Preferred stock redemption premium
    (146 )      
Dividends on preferred stock
    (91 )     (91 )
Other, net
    (68 )     (192 )
                 
Net cash provided by financing activities
    11,182       18,629  
                 
Effect of change in foreign currency exchange rates on cash and cash equivalents balances
    133       (8 )
                 
Change in cash and cash equivalents
    (2,994 )     4,445  
Cash and cash equivalents, beginning of period
    13,046       10,112  
                 
Cash and cash equivalents, end of period
  $ 10,052     $ 14,557  
                 
Cash and cash equivalents, subsidiaries held-for-sale, beginning of period
  $ 89     $ 88  
                 
Cash and cash equivalents, subsidiaries held-for-sale, end of period
  $ 51     $ 78  
                 
Cash and cash equivalents, from continuing operations, beginning of period
  $ 12,957     $ 10,024  
                 
Cash and cash equivalents, from continuing operations, end of period
  $ 10,001     $ 14,479  
                 
Supplemental disclosures of cash flow information:
               
Net cash paid during the period for:
               
Interest
  $ 1,184     $ 997  
                 
Income tax
  $ 668     $ 109  
                 
Non-cash transactions during the period:
               
Real estate and real estate joint ventures acquired in satisfaction of debt
  $ 106     $ 92  
                 
 
See accompanying notes to the interim condensed consolidated financial statements.


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Table of Contents

MetLife, Inc.
 
 
1.   Business, Basis of Presentation and Summary of Significant Accounting Policies
 
Business
 
“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), its subsidiaries and affiliates. MetLife is a leading global provider of insurance, annuities and employee benefit programs throughout the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, auto and homeowners insurance, mortgage and deposit products and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.
 
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”). See Note 14 for further business segment information.
 
Basis of Presentation
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements.
 
On November 1, 2010 (the “Acquisition Date”), MetLife, Inc. completed the acquisition of American Life Insurance Company (“American Life”) from AM Holdings LLC (formerly known as ALICO Holdings LLC) (“AM Holdings”), a subsidiary of American International Group, Inc. (“AIG”), and Delaware American Life Insurance Company (“DelAm”) from AIG (American Life, together with DelAm, collectively, “ALICO”) (the “Acquisition”). The Acquisition was accounted for using the acquisition method of accounting. ALICO’s fiscal year-end is November 30. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of ALICO as of August 31, 2011 and the operating results of ALICO for the three months and nine months ended August 31, 2011. The accounting policies of ALICO were conformed to those of MetLife upon the Acquisition. See Note 2.
 
In applying the Company’s accounting policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s businesses and operations. Actual results could differ from these estimates.
 
The accompanying interim condensed consolidated financial statements include the accounts of the Holding Company and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 7. Intercompany accounts and transactions have been eliminated.
 
The Company uses the equity method of accounting for investments in equity securities in which it has a significant influence or more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture’s or partnership’s operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture’s or the partnership’s operations.
 
Certain amounts in the prior year periods’ interim condensed consolidated financial statements have been reclassified to conform with the 2011 presentation. See Note 14 for a realignment that affected assets, liabilities and results of operations on a segment basis with no impact on the consolidated results and reclassifications related to


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
operating revenues and expenses that affected results of operations on both a segment and a consolidated basis. See also Note 15 for reclassifications related to discontinued operations.
 
The accompanying interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at September 30, 2011, its consolidated results of operations for the three months and nine months ended September 30, 2011 and 2010, its consolidated statements of equity for the nine months ended September 30, 2011 and 2010, and its consolidated statements of cash flows for the nine months ended September 30, 2011 and 2010, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2010 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010, as amended by MetLife, Inc.’s Form 10-K/A dated March 1, 2011 (as amended, the “2010 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2010 Annual Report.
 
Adoption of New Accounting Pronouncements
 
Effective January 1, 2011, the Company adopted new guidance that addresses when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure. Under the new guidance, if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The guidance also expands the supplemental pro forma disclosures to include additional narratives. The adoption did not have an impact on the Company’s consolidated financial statements.
 
Effective January 1, 2011, the Company adopted new guidance regarding goodwill impairment testing. This guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity would be required to perform Step 2 of the test if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The adoption did not have an impact on the Company’s consolidated financial statements.
 
Effective January 1, 2011, the Company adopted new guidance regarding accounting for investment funds determined to be VIEs. Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer’s evaluation of its economic interest in a VIE, unless the separate account contractholder is a related party. The adoption did not have a material impact on the Company’s consolidated financial statements.
 
Effective July 1, 2011, the Company adopted new guidance regarding accounting for troubled debt restructurings. This guidance clarifies whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for the purpose of determining when a restructuring constitutes a troubled debt restructuring. Additionally, the guidance prohibits creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower. The adoption did not have a material impact on the Company’s consolidated financial statements. See also expanded disclosures in Note 3.
 
Future Adoption of New Accounting Pronouncements
 
In September 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding enhanced disclosures for employers’ participation in multiemployer pension plans (Accounting Standards Update (“ASU”) 2011-09, Compensation-Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
an Employer’s Participation in a Multiemployer Plan). The revised disclosures will require additional qualitative and quantitative information about the employer’s involvement in significant multiemployer pension and other postretirement plans. The enhanced disclosures will be required for annual periods in fiscal years ending after December 15, 2011. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In September 2011, the FASB issued new guidance on goodwill impairment testing (ASU 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment), effective for calendar years beginning after December 15, 2011. Early adoption is permitted. The objective of this standard is to simplify how an entity tests goodwill for impairment. The amendments in this standard will allow an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it needs to perform the quantitative two-step goodwill impairment test. Only if an entity determines, based on qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying value will it be required to calculate the fair value of the reporting unit. The Company intends to adopt this new guidance beginning in fiscal year 2012 and is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In July 2011, the FASB issued new guidance on other expenses (ASU 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers), effective for calendar years beginning after December 31, 2013. The objective of this standard is to address how health insurers should recognize and classify in their income statements fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. The amendments in this standard specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using the straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In June 2011, the FASB issued new guidance regarding comprehensive income (ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income), effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The guidance should be applied retrospectively and early adoption is permitted. The new guidance provides companies with the option to present the total of comprehensive income, components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The objective of the standard is to increase the prominence of items reported in other comprehensive income and to facilitate convergence of GAAP and International Financial Reporting Standards (“IFRS”). The standard eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In May 2011, the FASB issued new guidance regarding fair value measurements (ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs), effective for the first interim or annual period beginning after December 15, 2011. The guidance should be applied prospectively. The amendments in this ASU are intended to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRS. Some of the amendments clarify the FASB’s intent on the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In April 2011, the FASB issued new guidance regarding effective control in repurchase agreements (ASU 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements), effective for the first interim or annual period beginning on or after December 15, 2011. The


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. The amendments in this ASU remove from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
 
In October 2010, the FASB issued new guidance regarding accounting for deferred acquisition costs (ASU 2010-26, Financial Services — Insurance (Topic 944): Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts) (“ASU 2010-26”), effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. ASU 2010-26 specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized as deferred acquisition costs (“DAC”); all other acquisition-related costs must be expensed as incurred. Under the new guidance advertising costs may only be included in DAC if the capitalization criteria in the direct-response advertising guidance in Subtopic 340-20, Other Assets and Deferred Costs — Capitalized Advertising Costs, are met. As a result, certain direct marketing, sales manager compensation and administrative costs currently capitalized by the Company will no longer be deferred. The Company plans to apply ASU 2010-26 retrospectively to all prior periods presented in its consolidated financial statements for all insurance contracts. The Company expects that the effect upon adoption of ASU 2010-26 will be a reduction in DAC with a corresponding reduction to equity, on an after tax basis. In addition, the Company expects a reduction in prior period earnings as a result of applying the new guidance retrospectively. The Company continues to evaluate the impact of this guidance on its consolidated financial statements and related disclosures.
 
2.   Acquisitions and Dispositions
 
2010 Acquisition of ALICO
 
Description of Transaction
 
On the Acquisition Date, MetLife, Inc. acquired all of the issued and outstanding capital stock of American Life from AM Holdings, a subsidiary of AIG, and DelAm from AIG for a total purchase price of $16.4 billion. The Acquisition significantly broadened the Company’s diversification by product, distribution and geography, meaningfully accelerated MetLife’s global growth strategy, and provides the opportunity to build an international franchise leveraging the key strengths of ALICO.
 
On March 8, 2011, AM Holdings sold, in public offering transactions, all the shares of common stock and common equity units it received as consideration from MetLife in connection with the Acquisition. The Company did not receive any of the proceeds from the sale of either the shares of common stock or the common equity units owned by AM Holdings. On March 8, 2011, MetLife, Inc. issued 68,570,000 shares of common stock for gross proceeds of $3.0 billion, which were used to repurchase and cancel 6,857,000 shares of convertible preferred stock received as consideration by AM Holdings from MetLife in connection with the Acquisition. See Note 11 herein and Note 2 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report.
 
Goodwill
 
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired and liabilities assumed that could not be individually identified. The goodwill recorded as part of the Acquisition includes the expected synergies and other benefits that management believes will result from combining the operations of ALICO with the operations of MetLife, including further diversification in geographic mix and product offerings and an increase in distribution strength. Of the $7.0 billion in goodwill resulting from the Acquisition, $5.2 billion was allocated to the reporting unit in the Japan segment and $1.8 billion was allocated to reporting units in the Other International Regions segment.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Negative Value of Business Acquired
 
For certain acquired blocks of business, the estimated fair value of acquired liabilities exceeded the initial policy reserves assumed at November 1, 2010, resulting in negative value of business acquired (“negative VOBA”) of $4.4 billion recorded at the Acquisition Date. Negative VOBA is recorded in other policy-related balances. The following summarizes the major blocks of business, all included within the Japan segment, for which negative VOBA was recorded and describes why the fair value of the liabilities associated with these blocks of business exceeded the initial policy reserves assumed:
 
  •  Fixed Annuities - This block of business provides a fixed rate of return to the policyholders. A decrease in market interest rates since the time of issuance was the primary driver that resulted in the fair value of the liabilities associated with this block being significantly greater than the initial policy reserves assumed at the Acquisition Date.
 
  •  Interest Sensitive Whole Life and Retirement Savings Products - These contracts contain guaranteed minimum benefit features. The recorded reserves for these guarantees increase ratably over the life of the policies in relation to future gross revenues. In contrast, the fair value of the guaranteed minimum benefit component of the initial policy reserves assumed represents the amount that would be required to be transferred to a market participant to assume the full liability at the acquisition date, implicitly incorporating market participant views as to all expected future cash flows. This results in a fair value significantly in excess of the initial guaranteed minimum benefit liability assumed at the Acquisition Date.
 
The weighted average amortization period for negative VOBA as of the Acquisition Date was 6.0 years. The estimated future amortization of credit to expenses recorded in other expenses for the first full five years after the Acquisition Date for negative VOBA is $711 million in 2011, $628 million in 2012, $561 million in 2013, $475 million in 2014 and $385 million in 2015. See Note 12.
 
Contingent Consideration
 
American Life has guaranteed that the fair value of a fund of assets backing certain United Kingdom unit-linked contracts will have a value of at least £1 per unit on July 1, 2012. If the shortfall between the aggregate guaranteed amount and the fair value of the fund exceeds £106 million, AIG will pay the difference to American Life and, conversely, if the shortfall at July 1, 2012 is less than £106 million, American Life will pay the difference to AIG. The Company believes that the fair value of the fund will equal or exceed the aggregate guaranteed amount by July 1, 2012. The contingent consideration liability was $121 million at September 30, 2011 and $88 million as of the Acquisition Date. The increase in the contingent consideration liability amount from the Acquisition Date to September 30, 2011 was recorded in net derivative gains (losses) in the interim condensed consolidated statement of operations.
 
Current and Deferred Income Tax
 
The future tax effects of temporary differences between financial reporting and tax bases of assets and liabilities are measured at the balance sheet dates and are recorded as deferred income tax assets and liabilities, with certain exceptions such as certain temporary differences relating to goodwill under purchase accounting.
 
For federal income tax purposes, in July 2011, MetLife, Inc. and AM Holdings made elections under Section 338 of the U.S. Internal Revenue Code of 1986, as amended (the “Section 338 Elections”) with respect to American Life and certain of its subsidiaries. In addition, in July 2011, MetLife, Inc. and AIG made a Section 338 Election with respect to DelAm. Under such elections, the U.S. tax basis of the assets deemed acquired and liabilities assumed of ALICO were adjusted as of the Acquisition Date to reflect the consequences of the Section 338 Elections.


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
During the three months ended June 30, 2011, the Company revised its deferred taxes as of the Acquisition Date to recognize $671 million of a U.S. deferred tax asset related to the reversal of temporary differences (between financial reporting and U.S. tax bases of assets and liabilities) of American Life’s foreign branches. However, the Company also recorded a valuation allowance on this U.S. deferred tax asset of $671 million, resulting in no net change to the consolidated balance sheet as of the Acquisition Date. The valuation allowance reflects management’s assessment, based on available information, that it is more likely than not that the U.S. deferred tax asset will not be realized.
 
At September 30, 2011, ALICO’s current and deferred income tax liabilities were provisional and not yet finalized. Therefore, current income taxes may be adjusted pending the resolution of the amount of taxes resulting from the Section 338 Elections and the filing of income tax returns. Deferred income taxes may be adjusted as a result of changes in estimates and assumptions relating to the reversal of U.S. temporary differences prior to the completion of the anticipated restructuring of American Life’s foreign branches, the filing of income tax returns, and as additional information becomes available during the measurement period. The Company expects to finalize these amounts in the fourth quarter of 2011.
 
Costs Related to Acquisition
 
Transaction and Integration-Related Expenses.  The Company incurred transaction costs of $2 million and $4 million for the three months and nine months ended September 30, 2011, respectively, and $21 million and $63 million for the three months and nine months ended September 30, 2010, respectively. Transaction costs represent costs directly related to effecting the Acquisition and primarily include banking and legal expenses. Such costs have been expensed as incurred and are included in other expenses. These expenses have been reported within Banking, Corporate & Other.
 
Integration-related expenses were $84 million and $254 million for the three months and nine months ended September 30, 2011, respectively, and $54 million and $96 million for the three months and nine months ended September 30, 2010, respectively. Integration-related costs represent incremental costs directly related to integrating ALICO, including expenses for consulting, rebranding and the integration of information systems. Such items have been expensed as incurred and are included in other expenses. As the integration of ALICO is an enterprise-wide initiative, these expenses have been reported within Banking, Corporate & Other.
 
Restructuring Costs and Other Charges.  As part of the integration of ALICO’s operations, management has initiated restructuring plans focused on increasing productivity and improving the efficiency of the Company’s operations. These restructuring costs were included in other expenses and have been reported within Banking, Corporate & Other.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Estimated restructuring costs may change as management continues to execute its restructuring plans. Management anticipates further restructuring charges, including severance, contract termination costs and other associated costs through the year ended December 31, 2013. However, such restructuring plans are not sufficiently developed to enable management to make an estimate of such restructuring charges at September 30, 2011.
 
                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2011  
    (In millions)  
 
Balance, beginning of period
  $ 9     $ 10  
Restructuring charges
    7       31  
Cash payments
    (7 )     (32 )
                 
Balance, end of period
  $ 9     $ 9  
                 
Restructuring charges incurred in current period
  $ 7     $ 31  
                 
Total restructuring charges incurred since inception of plans
  $ 41     $ 41  
                 
 
2011 Dispositions
 
On April 1, 2011, the Company sold its 50% interest in Mitsui Sumitomo MetLife Insurance Co., Ltd. (“MSI MetLife”), a Japan domiciled life insurance company, to its joint venture partner, MS&AD Insurance Group Holdings, Inc. (“MS&AD”), for $269 million (¥22.5 billion) in cash consideration, less $4 million (¥310 million) to reimburse MS&AD for specific expenses incurred related to the transaction. The accumulated other comprehensive losses in the foreign currency translation adjustment component of equity resulting from the hedges of the Company’s investment in the joint venture of $46 million, net of income tax, were released upon sale but did not impact net income for the nine months ended September 30, 2011 as such losses were considered in the overall impairment evaluation of the investment prior to the sale. During the nine months ended September 30, 2011, the Company recorded a loss on the sale of $57 million, net of income tax, in net investment gains (losses) within the interim condensed consolidated statements of operations. The Company’s operating earnings relating to its investment in MSI MetLife were included in the Other International Regions segment.
 
During the first quarter of 2011, the Company entered into a definitive agreement with a third party to sell its wholly-owned subsidiary, MetLife Taiwan Insurance Company Limited (“MetLife Taiwan”) for $180 million in cash consideration. As a result of recording MetLife Taiwan’s net assets at the lower of cost or fair value as assets and liabilities held-for-sale, the Company recognized a net investment loss in discontinued operations of $0 and $74 million, net of income tax, for the three months and nine months ended September 30, 2011, respectively. Income (loss) from the operations of MetLife Taiwan of ($11) million and $3 million, net of income tax, for the three months and nine months ended September 30, 2011, respectively, and $2 million and $9 million, net of income tax, for the three months and nine months ended September 30, 2010, respectively, were also recorded in discontinued operations. In October 2011, the sale received final regulatory approval in Taiwan and on November 1, 2011 the Company completed the sale of MetLife Taiwan to the third party. See Note 15.
 
3.   Investments
 
Fixed Maturity and Equity Securities Available-for-Sale
 
The following tables present the cost or amortized cost, gross unrealized gains and losses, estimated fair value of the Company’s fixed maturity and equity securities and the percentage that each sector represents by the


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
respective total holdings for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairment (“OTTI”) losses:
 
                                                 
    September 30, 2011  
    Cost or
    Gross Unrealized     Estimated
       
    Amortized
          Temporary
    OTTI
    Fair
    % of
 
    Cost     Gains     Losses     Losses     Value     Total  
    (In millions)  
 
Fixed Maturity Securities:
                                               
U.S. corporate securities
  $ 99,832     $ 8,219     $ 1,476     $     $ 106,575       30.1 %
Foreign corporate securities (1)
    61,013       3,616       1,108       (1 )     63,522       18.0  
Foreign government securities
    50,243       2,936       220             52,959       15.0  
Residential mortgage-backed securities (“RMBS”)
    40,799       2,383       698       591       41,893       11.8  
U.S. Treasury and agency securities
    36,159       5,686       11             41,834       11.8  
Commercial mortgage-backed securities (“CMBS”)
    19,259       635       307       2       19,585       5.5  
Asset-backed securities (“ABS”)
    14,765       322       583       86       14,418       4.1  
State and political subdivision securities
    11,939       1,371       169             13,141       3.7  
Other fixed maturity securities
                                   
                                                 
Total fixed maturity securities (2), (3)
  $ 334,009     $ 25,168     $ 4,572     $ 678     $ 353,927       100.0 %
                                                 
Equity Securities:
                                               
Common stock
  $ 2,173     $ 80     $ 42     $     $ 2,211       70.9 %
Non-redeemable preferred stock (2)
    1,054       39       186             907       29.1  
                                                 
Total equity securities
  $ 3,227     $ 119     $ 228     $     $ 3,118       100.0 %
                                                 
 
                                                 
    December 31, 2010  
    Cost or
    Gross Unrealized     Estimated
       
    Amortized
          Temporary
    OTTI
    Fair
    % of
 
    Cost     Gains     Losses     Losses     Value     Total  
    (In millions)  
 
Fixed Maturity Securities:
                                               
U.S. corporate securities
  $ 88,905     $ 4,469     $ 1,602     $     $ 91,772       28.3 %
Foreign corporate securities
    65,487       3,326       925             67,888       20.9  
Foreign government securities
    40,871       1,733       602             42,002       12.9  
RMBS
    44,468       1,652       917       470       44,733       13.8  
U.S. Treasury and agency securities
    32,469       1,394       559             33,304       10.2  
CMBS
    20,213       740       266       12       20,675       6.4  
ABS
    14,722       274       590       119       14,287       4.4  
State and political subdivision securities
    10,476       171       518             10,129       3.1  
Other fixed maturity securities
    6       1                   7        
                                                 
Total fixed maturity securities (2), (3)
  $ 317,617     $ 13,760     $ 5,979     $ 601     $ 324,797       100.0 %
                                                 
Equity Securities:
                                               
Common stock
  $ 2,059     $ 146     $ 12     $     $ 2,193       60.9 %
Non-redeemable preferred stock (2)
    1,562       76       229             1,409       39.1  
                                                 
Total equity securities
  $ 3,621     $ 222     $ 241     $     $ 3,602       100.0 %
                                                 
 
 
(1) OTTI losses as presented above represent the noncredit portion of OTTI losses that is included in accumulated other comprehensive income (loss). OTTI losses include both the initial recognition of noncredit losses, and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that were previously noncredit loss impaired. The noncredit loss component of OTTI losses for foreign corporate securities was in an unrealized gain (loss) position of $1 million at September 30, 2011 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
(2) Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics; while those with more equity-like characteristics are classified as equity securities within non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” The following table presents the perpetual hybrid securities held by the Company at:
 
                         
    September 30,
  December 31,
            2011   2010
            Estimated
  Estimated
Classification   Fair
  Fair
Consolidated Balance Sheets   Sector Table   Primary Issuers   Value   Value
            (In millions)
 
Fixed maturity securities
  Foreign corporate securities   Non-U.S. financial institutions   $ 632     $ 2,008  
Fixed maturity securities
  U.S. corporate securities   U.S. financial institutions   $ 181     $ 83  
Equity securities
  Non-redeemable preferred stock   Non-U.S. financial institutions   $ 481     $ 1,043  
Equity securities
  Non-redeemable preferred stock   U.S. financial institutions   $ 381     $ 236  
 
 
(3) The Company’s holdings in redeemable preferred stock with stated maturity dates, commonly referred to as “capital securities,” were primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $2.0 billion and $2.7 billion at estimated fair value of such securities at September 30, 2011 and December 31, 2010, respectively, which are included in the U.S. and foreign corporate securities sectors within fixed maturity securities.
 
The below investment grade and non-income producing amounts presented below are based on rating agency designations and equivalent designations of the National Association of Insurance Commissioners (“NAIC”), with the exception of certain structured securities described below held by the Company’s insurance subsidiaries that file NAIC statutory financial statements. Non-agency RMBS, CMBS and ABS held by such subsidiaries are presented based on ratings from the revised NAIC rating methodologies for structured securities (which may not correspond to rating agency designations). Currently, the NAIC evaluates structured securities held by insurers using the revised NAIC rating methodologies on an annual basis. If such insurance subsidiaries of the Company acquire structured securities that have not been previously evaluated by the NAIC, but are expected to be evaluated by the NAIC in the upcoming annual review, an internally developed rating is used for interim reporting. All NAIC designation (e.g., NAIC 1 — 6) amounts and percentages presented herein are based on the revised NAIC methodologies. All rating agency designation (e.g., Aaa/AAA) amounts and percentages presented herein are based on rating agency designations without adjustment for the revised NAIC methodologies described above. Rating agency designations are based on availability of applicable ratings from rating agencies on the NAIC acceptable rating organization list, including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”).
 
The following table presents selected information about certain fixed maturity securities held by the Company at:
 
                 
    September 30, 2011   December 31, 2010
    (In millions)
 
Below investment grade or non-rated fixed maturity securities:
               
Estimated fair value
  $ 24,494     $ 24,870  
Net unrealized gains (losses)
  $ (1,683 )   $ (696 )
Non-income producing fixed maturity securities:
               
Estimated fair value
  $ 145     $ 130  
Net unrealized gains (losses)
  $ (54 )   $ (23 )


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Concentrations of Credit Risk (Fixed Maturity Securities) — Summary.  The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings.
 
The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s equity, other than the government securities summarized in the table below. The par value and amortized cost of the Company’s holdings in sovereign fixed maturity securities of Portugal, Ireland, Italy, Greece and Spain, commonly referred to as “Europe’s perimeter region,” was $1,018 million and $571 million at September 30, 2011, respectively, and $1,912 million and $1,644 million at December 31, 2010, respectively. The estimated fair value of such holdings was $629 million and $1,562 million prior to considering net purchased credit default swap protection at September 30, 2011 and December 31, 2010, respectively. The estimated fair value of these Europe perimeter region sovereign fixed maturity securities represented 1.0% and 3.2% of the Company’s equity at September 30, 2011 and December 31, 2010, respectively, and 0.1% and 0.3% of total cash and invested assets at September 30, 2011 and December 31, 2010, respectively.
 
Concentrations of Credit Risk (Government and Agency Securities).  The following section contains a summary of the concentrations of credit risk related to government and agency fixed maturity and fixed-income securities holdings, which were greater than 10% of the Company’s equity at:
 
                 
    September 30, 2011   December 31, 2010
    Carrying Value (1)
    (In millions)
 
Government and agency fixed maturity securities:
               
United States
  $ 41,834     $ 33,304  
Japan
  $ 20,644     $ 15,591  
Mexico (2)
  $     $ 5,050  
U.S. Treasury and agency fixed-income securities included in:
               
Short-term investments
  $ 13,565     $ 4,048  
Cash equivalents
  $ 2,847     $ 5,762  
 
 
(1) Represents estimated fair value for fixed maturity securities; amortized cost, which approximates estimated fair value or estimated fair value, if available, for short-term investments; and amortized cost, which approximates estimated fair value, for cash equivalents.
 
(2) The Company’s investment in Mexico government and agency fixed maturity securities at September 30, 2011 of $5,028 million is less than 10% of the Company’s equity.


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Concentrations of Credit Risk (Fixed Maturity Securities) — U.S. and Foreign Corporate Securities.  The Company maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. This portfolio does not have an exposure to any single issuer in excess of 1% of total investments. The tables below present information for U.S. and foreign corporate securities at:
 
                                 
    September 30, 2011     December 31, 2010  
    Estimated
          Estimated
       
    Fair
    % of
    Fair
    % of
 
    Value     Total     Value     Total  
    (In millions)           (In millions)        
 
Corporate fixed maturity securities — by sector:
                               
Foreign corporate fixed maturity securities (1)
  $ 63,522       37.3 %   $ 67,888       42.5 %
U.S. corporate fixed maturity securities — by industry:
                               
Industrial
    27,245       16.0       22,070       13.8  
Consumer
    26,414       15.5       21,482       13.5  
Finance
    21,864       12.9       20,785       13.0  
Utility
    19,152       11.3       16,902       10.6  
Communications
    8,318       4.9       7,335       4.6  
Other
    3,582       2.1       3,198       2.0  
                                 
Total
  $ 170,097       100.0 %   $ 159,660       100.0 %
                                 
 
 
(1) Includes U.S. dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity securities.
 
                                 
    September 30, 2011   December 31, 2010
    Estimated
      Estimated
   
    Fair
  % of Total
  Fair
  % of Total
    Value   Investments   Value   Investments
    (In millions)       (In millions)    
 
Concentrations within corporate fixed maturity securities:
                               
Largest exposure to a single issuer
  $ 1,883       0.4 %   $ 2,291       0.5 %
Holdings in ten issuers with the largest exposures
  $ 11,955       2.4 %   $ 14,247       3.1 %


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Concentrations of Credit Risk (Fixed Maturity Securities) — RMBS.  The table below presents information on the Company’s RMBS holdings at:
 
                                 
    September 30, 2011     December 31, 2010  
    Estimated
          Estimated
       
    Fair
    % of
    Fair
    % of
 
    Value     Total     Value     Total  
    (In millions)           (In millions)        
 
By security type:
                               
Collateralized mortgage obligations
  $ 22,903       54.7 %   $ 22,303       49.9 %
Pass-through securities
    18,990       45.3       22,430       50.1  
                                 
Total RMBS
  $ 41,893       100.0 %   $ 44,733       100.0 %
                                 
By risk profile:
                               
Agency
  $ 31,386       74.9 %   $ 34,254       76.6 %
Prime
    5,935       14.2       6,258       14.0  
Alternative residential mortgage loans
    4,572       10.9       4,221       9.4  
                                 
Total RMBS
  $ 41,893       100.0 %   $ 44,733       100.0 %
                                 
Rated Aaa/AAA
  $ 32,452       77.5 %   $ 36,085       80.7 %
                                 
Rated NAIC 1
  $ 36,543       87.2 %   $ 38,984       87.1 %
                                 
 
See Note 3 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for a description of the security types and risk profile.
 
The following tables present information on the Company’s investment in alternative residential mortgage loans (“Alt-A”) RMBS at:
 
                                 
    September 30, 2011     December 31, 2010  
    Estimated
          Estimated
       
    Fair
    % of
    Fair
    % of
 
    Value     Total     Value     Total  
    (In millions)           (In millions)        
 
Vintage Year:
                               
2005 & Prior
  $ 1,632       35.7 %   $ 1,576       37.3 %
2006
    1,294       28.3       1,013       24.0  
2007
    997       21.8       922       21.8  
2008
                7       0.2  
2009 (1)
    615       13.5       671       15.9  
2010 (1)
    34       0.7       32       0.8  
2011
                       
                                 
Total
  $ 4,572       100.0 %   $ 4,221       100.0 %
                                 
 
 
(1) All of the Company’s Alt-A RMBS holdings in the 2009 and 2010 vintage years are resecuritization of real estate mortgage investment conduit (“Re-REMIC”) Alt-A RMBS that were purchased in 2009 and 2010 and are comprised of original issue vintage year 2005 through 2007 Alt-A RMBS. All of the Company’s Re-REMIC Alt-A RMBS holdings are NAIC 1 rated.
 


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
                                 
    September 30, 2011     December 31, 2010  
          % of
          % of
 
    Amount     Total     Amount     Total  
    (In millions)           (In millions)        
 
Net unrealized gains (losses)
  $ (824 )           $ (670 )        
Rated Aa/AA or better
            12.7 %             15.9 %
Rated NAIC 1
            47.1 %             39.5 %
Distribution of holdings — at estimated fair value — by collateral type:
                               
Fixed rate mortgage loans collateral
            92.7 %             90.7 %
Hybrid adjustable rate mortgage loans collateral
            7.3               9.3  
                                 
Total Alt-A RMBS
            100.0 %             100.0 %
                                 
 
Concentrations of Credit Risk (Fixed Maturity Securities) — CMBS.  The following tables present the Company’s holdings of CMBS by rating agency designation and by vintage year at:
 
                                                                                                 
    September 30, 2011  
                            Below
       
                            Investment
       
    Aaa     Aa     A     Baa     Grade     Total  
          Estimated
          Estimated
          Estimated
          Estimated
          Estimated
          Estimated
 
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
 
    Cost     Value     Cost     Value     Cost     Value     Cost     Value     Cost     Value     Cost     Value  
    (In millions)  
 
2003 & Prior
  $ 5,936       6,040       178       176       105       101       58       55       21       20     $ 6,298     $ 6,392  
2004
    3,698       3,823       447       455       134       126       92       89       33       26       4,404       4,519  
2005
    3,117       3,316       400       401       324       311       168       153       37       26       4,046       4,207  
2006
    1,733       1,813       229       217       91       87       147       135       157       137       2,357       2,389  
2007
    700       714       439       362       163       137       39       38       126       117       1,467       1,368  
2008
                                                    24       29       24       29  
2009
    2       2                                                       2       2  
2010
    2       3                   60       66                               62       69  
2011
    505       513                   94       97                               599       610  
                                                                                                 
Total
  $ 15,693     $ 16,224     $ 1,693     $ 1,611     $ 971     $ 925     $ 504     $ 470     $ 398     $ 355     $ 19,259     $ 19,585  
                                                                                                 
Ratings Distribution
            82.8 %             8.3 %             4.7 %             2.4 %             1.8 %             100.0 %
                                                                                                 
 
                                                                                                 
    December 31, 2010  
                            Below
       
                            Investment
       
    Aaa     Aa     A     Baa     Grade     Total  
          Estimated
          Estimated
          Estimated
          Estimated
          Estimated
          Estimated
 
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
    Amortized
    Fair
 
    Cost     Value     Cost     Value     Cost     Value     Cost     Value     Cost     Value     Cost     Value  
    (In millions)  
 
2003 & Prior
  $ 7,411     $ 7,640     $ 282     $ 282     $ 228     $ 227     $ 74     $ 71     $ 28     $ 24     $ 8,023     $ 8,244  
2004
    3,489       3,620       277       273       216       209       181       175       91       68       4,254       4,345  
2005
    3,113       3,292       322       324       286       280       263       255       73       66       4,057       4,217  
2006
    1,463       1,545       159       160       168       168       385       398       166       156       2,341       2,427  
2007
    840       791       344       298       96       95       119       108       122       133       1,521       1,425  
2008
    2       2                                                       2       2  
2009
    3       3                                                       3       3  
2010
    8       8                   4       4                               12       12  
                                                                                                 
Total
  $ 16,329     $ 16,901     $ 1,384     $ 1,337     $ 998     $ 983     $ 1,022     $ 1,007     $ 480     $ 447     $ 20,213     $ 20,675  
                                                                                                 
Ratings Distribution
            81.7 %             6.4 %             4.8 %             4.9 %             2.2 %             100.0 %
                                                                                                 

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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
The tables above reflect rating agency designations assigned by nationally recognized rating agencies including Moody’s, S&P, Fitch and Realpoint, LLC.
 
The NAIC rating distribution of the Company’s holdings of CMBS was as follows at:
 
                 
    September 30, 2011   December 31, 2010
 
NAIC 1
    94.3 %     93.7 %
NAIC 2
    4.1 %     3.2 %
NAIC 3
    0.5 %     1.8 %
NAIC 4
    0.7 %     1.0 %
NAIC 5
    %     0.3 %
NAIC 6
    0.4 %     %
 
Concentrations of Credit Risk (Fixed Maturity Securities) — ABS.  The Company’s ABS are diversified both by collateral type and by issuer. The following table presents information about ABS held by the Company at:
 
                                 
    September 30, 2011     December 31, 2010  
    Estimated
          Estimated
       
    Fair
    % of
    Fair
    % of
 
    Value     Total     Value     Total  
    (In millions)           (In millions)        
 
By collateral type:
                               
Credit card loans
  $ 4,444       30.8 %   $ 6,027       42.2 %
Student loans
    2,645       18.4       2,416       16.9  
Collateralized debt obligations
    2,578       17.9       1,798       12.6  
Automobile loans
    1,039       7.2       605       4.2  
RMBS backed by sub-prime mortgage loans
    997       6.9       1,119       7.8  
Other loans
    2,715       18.8       2,322       16.3  
                                 
Total
  $ 14,418       100.0 %   $ 14,287       100.0 %
                                 
Rated Aaa/AAA
  $ 9,250       64.2 %   $ 10,411       72.9 %
                                 
Rated NAIC 1
  $ 13,324       92.4 %   $ 13,133       91.9 %
                                 
 
The Company had ABS supported by sub-prime mortgage loans with estimated fair values of $997 million and $1,119 million and unrealized losses of $350 million and $317 million at September 30, 2011 and December 31, 2010, respectively. Approximately 24% of this portfolio was rated Aa or better, of which 71% was in vintage year 2005 and prior at September 30, 2011. Approximately 54% of this portfolio was rated Aa or better, of which 88% was in vintage year 2005 and prior at December 31, 2010. These older vintages from 2005 and prior benefit from better underwriting, improved credit enhancement levels and higher residential property price appreciation. Approximately 68% and 66% of this portfolio was rated NAIC 2 or better at September 30, 2011 and December 31, 2010, respectively.
 
Concentrations of Credit Risk (Equity Securities).  The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company’s equity or 1% of total investments at September 30, 2011 and December 31, 2010.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Maturities of Fixed Maturity Securities.  The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows at:
 
                                 
    September 30, 2011     December 31, 2010  
          Estimated
          Estimated
 
    Amortized
    Fair
    Amortized
    Fair
 
    Cost     Value     Cost     Value  
    (In millions)  
 
Due in one year or less
  $ 13,713     $ 13,813     $ 8,580     $ 8,702  
Due after one year through five years
    68,498       70,234       65,143       66,796  
Due after five years through ten years
    83,338       88,497       76,508       79,571  
Due after ten years
    93,637       105,487       87,983       90,033  
                                 
Subtotal
    259,186       278,031       238,214       245,102  
RMBS, CMBS and ABS
    74,823       75,896       79,403       79,695  
                                 
Total fixed maturity securities
  $ 334,009     $ 353,927     $ 317,617     $ 324,797  
                                 
 
Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity.
 
Evaluating Available-for-Sale Securities for Other-Than-Temporary Impairment
 
As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Net Unrealized Investment Gains (Losses)
 
The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), were as follows:
 
                 
    September 30, 2011     December 31, 2010  
    (In millions)  
 
Fixed maturity securities
  $ 20,703     $ 7,817  
Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss)
    (678 )     (601 )
                 
Total fixed maturity securities
    20,025       7,216  
Equity securities
    (95 )     (3 )
Derivatives
    1,486       (59 )
Other
    63       42  
                 
Subtotal
    21,479       7,196  
                 
Amounts allocated from:
               
Insurance liability loss recognition
    (3,946 )     (672 )
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)
    41       38  
DAC and VOBA
    (2,070 )     (1,205 )
Policyholder dividend obligation
    (2,782 )     (876 )
                 
Subtotal
    (8,757 )     (2,715 )
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)
    220       197  
Deferred income tax benefit (expense)
    (4,504 )     (1,692 )
                 
Net unrealized investment gains (losses)
    8,438       2,986  
Net unrealized investment gains (losses) attributable to noncontrolling interests
    9       4  
                 
Net unrealized investment gains (losses) attributable to MetLife, Inc. 
  $ 8,447     $ 2,990  
                 
 
The changes in fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), were as follows:
 
                 
    September 30, 2011     December 31, 2010  
    (In millions)  
 
Balance, beginning of period
  $ (601 )   $ (859 )
Noncredit OTTI losses recognized (1)
    5       (212 )
Transferred to retained earnings (2)
          16  
Securities sold with previous noncredit OTTI loss
    99       137  
Subsequent changes in estimated fair value
    (181 )     317  
                 
Balance, end of period
  $ (678 )   $ (601 )
                 
 
 
(1) Noncredit OTTI losses recognized, net of DAC, were $6 million and ($202) million for the periods ended September 30, 2011 and December 31, 2010, respectively.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
(2) Amounts transferred to retained earnings were in connection with the adoption of guidance related to the consolidation of VIEs as described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report.
 
The changes in net unrealized investment gains (losses) were as follows:
 
         
    Nine Months
 
    Ended
 
    September 30, 2011  
    (In millions)  
 
Balance, beginning of period
  $ 2,990  
Fixed maturity securities on which noncredit OTTI losses have been recognized
    (77 )
Unrealized investment gains (losses) during the period
    14,360  
Unrealized investment gains (losses) relating to:
       
Insurance liability gain (loss) recognition
    (3,274 )
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)
    3  
DAC and VOBA
    (865 )
Policyholder dividend obligation
    (1,906 )
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)
    23  
Deferred income tax benefit (expense)
    (2,812 )
         
Net unrealized investment gains (losses)
    8,442  
Net unrealized investment gains (losses) attributable to noncontrolling interests
    5  
         
Balance, end of period
  $ 8,447  
         
Change in net unrealized investment gains (losses)
  $ 5,452  
Change in net unrealized investment gains (losses) attributable to noncontrolling interests
    5  
         
Change in net unrealized investment gains (losses) attributable to MetLife, Inc. 
  $ 5,457  
         


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Continuous Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale by Sector
 
The following tables present the estimated fair value and gross unrealized losses of the Company’s fixed maturity and equity securities in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being “less than 12 months” or “equal to or greater than 12 months” in a continuous unrealized loss position based on the point in time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.
 
                                                 
    September 30, 2011  
          Equal to or Greater
       
    Less than 12 Months     than 12 Months     Total  
    Estimated
    Gross
    Estimated
    Gross
    Estimated
    Gross
 
    Fair
    Unrealized
    Fair
    Unrealized
    Fair
    Unrealized
 
    Value     Losses     Value     Losses     Value     Losses  
    (In millions, except number of securities)  
 
Fixed Maturity Securities:
                                               
U.S. corporate securities
  $ 18,303     $ 597     $ 4,981     $ 879     $ 23,284     $ 1,476  
Foreign corporate securities
    16,560       846       1,480       261       18,040       1,107  
Foreign government securities
    8,092       208       158       12       8,250       220  
RMBS
    3,761       324       4,501       965       8,262       1,289  
U.S. Treasury and agency securities
    8,937       9       39       2       8,976       11  
CMBS
    4,974       200       620       109       5,594       309  
ABS
    4,670       189       2,087       480       6,757       669  
State and political subdivision securities
    416       6       981       163       1,397       169  
Other fixed maturity securities
                                   
                                                 
Total fixed maturity securities
  $ 65,713     $ 2,379     $ 14,847     $ 2,871     $ 80,560     $ 5,250  
                                                 
Equity Securities:
                                               
Common stock
  $ 416     $ 41     $ 23     $ 1     $ 439     $ 42  
Non-redeemable preferred stock
    227       30       386       156       613       186  
                                                 
Total equity securities
  $ 643     $ 71     $ 409     $ 157     $ 1,052     $ 228  
                                                 
Total number of securities in an unrealized loss position
    4,414               1,340                          
                                                 
 


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
                                                 
    December 31, 2010  
          Equal to or Greater
       
    Less than 12 Months     than 12 Months     Total  
    Estimated
    Gross
    Estimated
    Gross
    Estimated
    Gross
 
    Fair
    Unrealized
    Fair
    Unrealized
    Fair
    Unrealized
 
    Value     Losses     Value     Losses     Value     Losses  
    (In millions, except number of securities)  
 
Fixed Maturity Securities:
                                               
U.S. corporate securities
  $ 22,954     $ 447     $ 8,319     $ 1,155     $ 31,273     $ 1,602  
Foreign corporate securities
    22,415       410       3,976       515       26,391       925  
Foreign government securities
    26,659       585       189       17       26,848       602  
RMBS
    7,588       212       6,700       1,175       14,288       1,387  
U.S. Treasury and agency securities
    13,401       530       118       29       13,519       559  
CMBS
    3,787       29       1,363       249       5,150       278  
ABS
    2,713       42       3,026       667       5,739       709  
State and political subdivision securities
    5,061       246       988       272       6,049       518  
Other fixed maturity securities
    1                         1        
                                                 
Total fixed maturity securities
  $ 104,579     $ 2,501     $ 24,679     $ 4,079     $ 129,258     $ 6,580  
                                                 
Equity Securities:
                                               
Common stock
  $ 89     $ 12     $ 1     $     $ 90     $ 12  
Non-redeemable preferred stock
    191       9       824       220       1,015       229  
                                                 
Total equity securities
  $ 280     $ 21     $ 825     $ 220     $ 1,105     $ 241  
                                                 
Total number of securities in an unrealized loss position
    5,609               1,704                          
                                                 

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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Aging of Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale
 
The following tables present the cost or amortized cost, gross unrealized losses, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized losses as a percentage of cost or amortized cost and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:
 
                                                 
    September 30, 2011  
    Cost or Amortized Cost     Gross Unrealized Losses     Number of Securities  
    Less than
    20% or
    Less than
    20% or
    Less than
    20% or
 
    20%     more     20%     more     20%     more  
    (In millions, except number of securities)  
 
Fixed Maturity Securities:
                                               
Less than six months
  $ 50,785     $ 5,026     $ 1,365     $ 1,377       2,871       290  
Six months or greater but less than nine months
    1,747       349       68       106       200       23  
Nine months or greater but less than twelve months
    13,543       147       367       41       1,126       9  
Twelve months or greater
    11,858       2,355       1,018       908       971       181  
                                                 
Total
  $ 77,933     $ 7,877     $ 2,818     $ 2,432                  
                                                 
Percentage of amortized cost
                    4 %     31 %                
                                                 
Equity Securities:
                                               
Less than six months
  $ 571     $ 304     $ 36     $ 89       168       54  
Six months or greater but less than nine months
    10             1             7       3  
Nine months or greater but less than twelve months
    46       1       4       1       14       9  
Twelve months or greater
    125       223       12       85       11       13  
                                                 
Total
  $ 752     $ 528     $ 53     $ 175                  
                                                 
Percentage of cost
                    7 %     33 %                
                                                 
 


29


Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
                                                 
    December 31, 2010  
    Cost or Amortized Cost     Gross Unrealized Losses     Number of Securities  
    Less than
    20% or
    Less than
    20% or
    Less than
    20% or
 
    20%     more     20%     more     20%     more  
    (In millions, except number of securities)  
 
Fixed Maturity Securities:
                                               
Less than six months
  $ 105,301     $ 1,403     $ 2,348     $ 368       5,320       121  
Six months or greater but less than nine months
    1,125       376       29       102       104       29  
Nine months or greater but less than twelve months
    371       89       28       27       50       9  
Twelve months or greater
    21,627       5,546       1,863       1,815       1,245       311  
                                                 
Total
  $ 128,424     $ 7,414     $ 4,268     $ 2,312                  
                                                 
Percentage of amortized cost
                    3 %     31 %                
                                                 
Equity Securities:
                                               
Less than six months
  $ 247     $ 94     $ 10     $ 22       106       33  
Six months or greater but less than nine months
    29       65       5       16       3       2  
Nine months or greater but less than twelve months
    6       47             16       3       2  
Twelve months or greater
    518       340       56       116       35       14  
                                                 
Total
  $ 800     $ 546     $ 71     $ 170                  
                                                 
Percentage of cost
                    9 %     31 %                
                                                 
 
Equity securities with gross unrealized losses of 20% or more for twelve months or greater decreased from $116 million at December 31, 2010 to $85 million at September 30, 2011. As shown in the section “— Evaluating Temporarily Impaired Available-for-Sale Securities” below, all of the equity securities with gross unrealized losses of 20% or more for twelve months or greater at September 30, 2011 were financial services industry investment grade non-redeemable preferred stock, of which 72% were rated A or better.

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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Concentration of Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale
 
The Company’s gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI losses on fixed maturity securities recognized in accumulated other comprehensive income (loss) were $5.5 billion and $6.8 billion at September 30, 2011 and December 31, 2010, respectively. The concentration, calculated as a percentage of gross unrealized losses (including OTTI losses), by sector and industry was as follows at:
 
                 
    September 30, 2011     December 31, 2010  
 
Sector:
               
U.S. corporate securities
    27 %     23 %
RMBS
    24       20  
Foreign corporate securities
    20       14  
ABS
    12       10  
CMBS
    6       4  
Foreign government securities
    4       9  
State and political subdivision securities
    3       8  
U.S. Treasury and agency securities
          8  
Other
    4       4  
                 
Total
    100 %     100 %
                 
Industry:
               
Mortgage-backed
    30 %     24 %
Finance
    25       21  
Asset-backed
    12       10  
Utility
    8       5  
Consumer
    7       4  
Foreign government securities
    4       9  
Communications
    4       2  
State and political subdivision securities
    3       8  
Industrial
    3       2  
U.S. Treasury and agency securities
          8  
Other
    4       7  
                 
Total
    100 %     100 %
                 


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Evaluating Temporarily Impaired Available-for-Sale Securities
 
The following table presents the Company’s fixed maturity and equity securities, each with gross unrealized losses of greater than $10 million, the number of securities, total gross unrealized losses and percentage of total gross unrealized losses at:
 
                                 
    September 30, 2011   December 31, 2010
    Fixed Maturity
  Equity
  Fixed Maturity
  Equity
    Securities   Securities   Securities   Securities
    (In millions, except number of securities)
 
Number of securities
    86       5       107       6  
Total gross unrealized losses
  $ 1,612     $ 79     $ 2,014     $ 103  
Percentage of total gross unrealized losses
    31 %     34 %     31 %     43 %
 
Fixed maturity and equity securities, each with gross unrealized losses greater than $10 million, decreased $426 million during the nine months ended September 30, 2011. The decline in, or improvement in, gross unrealized losses for the nine months ended September 30, 2011 was primarily attributable to a decrease in interest rates, partially offset by increasing credit spreads. These securities were included in the Company’s OTTI review process. Based upon the Company’s current evaluation of these securities and other available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired.
 
In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities are given greater weight and consideration than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company’s evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration are given by the Company to a decline in market value and the likelihood such market value decline will recover.
 
The following table presents certain information about the Company’s equity securities available-for-sale with gross unrealized losses of 20% or more at September 30, 2011:
 
                                                                 
          Non-Redeemable Preferred Stock  
          All Types of
             
    All Equity
    Non-Redeemable
    Investment Grade  
    Securities     Preferred Stock     All Industries     Financial Services Industry  
    Gross
    Gross
    % of All
    Gross
    % of All
    Gross
          % A
 
    Unrealized
    Unrealized
    Equity
    Unrealized
    Non-Redeemable
    Unrealized
    % of All
    Rated or
 
    Losses     Losses     Securities     Losses     Preferred Stock     Losses     Industries     Better  
    (In millions)           (In millions)           (In millions)              
 
Less than six months
  $ 89     $ 67       75 %   $ 52       78 %   $ 52       100 %     52 %
Six months or greater but less than twelve months
    1             %           %           %     %
Twelve months or greater
    85       85       100 %     85       100 %     85       100 %     72 %
                                                                 
All equity securities with gross unrealized losses of 20% or more
  $ 175     $ 152       87 %   $ 137       90 %   $ 137       100 %     64 %
                                                                 
 
In connection with the equity securities impairment review process, the Company evaluated its holdings in non-redeemable preferred stock, particularly those in the financial services industry. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred stock with a severe or an extended unrealized loss. The Company


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
also considered whether any issuers of non-redeemable preferred stock with an unrealized loss held by the Company, regardless of credit rating, have deferred any dividend payments. No such dividend payments had been deferred.
 
With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of less than 20% in an extended unrealized loss position (i.e., 12 months or greater).
 
Future OTTIs will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, changes in collateral valuation, changes in interest rates and changes in credit spreads. If economic fundamentals and any of the above factors deteriorate, additional OTTIs may be incurred in upcoming quarters.
 
Trading and Other Securities
 
The table below presents certain information about the Company’s trading securities that are actively purchased and sold (“Actively Traded Securities”) and other securities for which the fair value option (“FVO”) has been elected:
 
                 
    September 30, 2011     December 31, 2010  
    (In millions)  
 
Actively Traded Securities
  $ 415     $ 463  
FVO general account securities
    269       131  
FVO contractholder-directed unit-linked investments
    17,874       17,794  
FVO securities held by CSEs
    140       201  
                 
Total trading and other securities — at estimated fair value
  $ 18,698     $ 18,589  
                 
Actively Traded Securities — at estimated fair value
  $ 415     $ 463  
Short sale agreement liabilities — at estimated fair value
    (67 )     (46 )
                 
Net long/short position — at estimated fair value
  $ 348     $ 417  
                 
Investments pledged to secure short sale agreement liabilities
  $ 467     $ 465  
                 
 
See Note 1 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for discussion of FVO contractholder-directed unit-linked investments and “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”) included in the table above. See “— Net Investment Income” and “— Net Investment Gains (Losses)” for the net investment income recognized on trading and other securities and the related changes in estimated fair value subsequent to purchase included in net investment income and net investment gains (losses), as applicable.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Net Investment Gains (Losses)
 
The components of net investment gains (losses) were as follows:
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
    (In millions)  
 
Total gains (losses) on fixed maturity securities:
                               
Total OTTI losses recognized
  $ (95 )   $ (143 )   $ (525 )   $ (538 )
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)
    (189 )     24       (5 )     181  
                                 
Net OTTI losses on fixed maturity securities recognized in earnings
    (284 )     (119 )     (530 )     (357 )
Fixed maturity securities — net gains (losses) on sales and disposals
    101       54       79       99  
                                 
Total gains (losses) on fixed maturity securities
    (183 )     (65 )     (451 )     (258 )
                                 
Other net investment gains (losses):
                               
Equity securities
    (3 )     (1 )     (37 )     100  
Trading and other securities — FVO general account securities — changes in estimated fair value
    (3 )           (3 )      
Mortgage loans
    45       37       160       20  
Real estate and real estate joint ventures
    139       (1 )     144       (50 )
Other limited partnership interests
          (4 )     8       (15 )
Other investment portfolio gains (losses)
          (67 )     (2 )     9  
                                 
Subtotal — investment portfolio gains (losses)
    (5 )     (101 )     (181 )     (194 )
                                 
FVO CSEs — changes in estimated fair value:
                               
Commercial mortgage loans
    (64 )     114       (39 )     767  
Securities
    2       (26 )     1       (47 )
Long-term debt — related to commercial mortgage loans
    56       (109 )     48       (744 )
Long-term debt — related to securities
    (1 )     37       (8 )     48  
Other gains (losses) (1)
    (43 )     (257 )     (130 )     (154 )
                                 
Subtotal FVO CSEs and other gains (losses)
    (50 )     (241 )     (128 )     (130 )
                                 
Total net investment gains (losses)
  $ (55 )   $ (342 )   $ (309 )   $ (324 )
                                 
 
 
(1) Other gains (losses) for the three months and nine months ended September 30, 2011 includes a loss of $0 and $87 million, respectively, related to the sale of the Company’s investment in MSI MetLife. See Note 2. Other gains (losses) for both the three months and nine months ended September 30, 2011 includes a loss of $65 million related to goodwill impairment. See Note 6.
 
See “— Variable Interest Entities” for discussion of CSEs included in the table above.
 
Gains (losses) from foreign currency transactions included within net investment gains (losses) were $94 million and $80 million for the three months and nine months ended September 30, 2011, respectively, and ($37) million and $169 million for the three months and nine months ended September 30, 2010, respectively.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown below. Investment gains and losses on sales of securities are determined on a specific identification basis.
 
                                                 
    Three Months Ended September 30,  
    2011     2010     2011     2010     2011     2010  
    Fixed Maturity Securities     Equity Securities     Total  
    (In millions)  
 
Proceeds
  $ 19,368     $ 10,747     $ 169     $ 96     $ 19,537     $ 10,843  
                                                 
Gross investment gains
  $ 252     $ 190     $ 9     $ 7     $ 261     $ 197  
                                                 
Gross investment losses
    (151 )     (136 )     (7 )     (7 )     (158 )     (143 )
                                                 
Total OTTI losses recognized in earnings:
                                               
Credit-related
    (269 )     (107 )                 (269 )     (107 )
Other (1)
    (15 )     (12 )     (5 )     (1 )     (20 )     (13 )
                                                 
Total OTTI losses recognized in earnings
    (284 )     (119 )     (5 )     (1 )     (289 )     (120 )
                                                 
Net investment gains (losses)
  $ (183 )   $ (65 )   $ (3 )   $ (1 )   $ (186 )   $ (66 )
                                                 
 
                                                 
    Nine Months Ended September 30,  
    2011     2010     2011     2010     2011     2010  
    Fixed Maturity Securities     Equity Securities     Total  
    (In millions)  
 
Proceeds
  $ 55,216     $ 32,585     $ 974     $ 539     $ 56,190     $ 33,124  
                                                 
Gross investment gains
  $ 680     $ 568     $ 83     $ 114     $ 763     $ 682  
                                                 
Gross investment losses
    (601 )     (469 )     (62 )     (11 )     (663 )     (480 )
                                                 
Total OTTI losses recognized in earnings:
                                               
Credit-related
    (382 )     (339 )                 (382 )     (339 )
Other (1)
    (148 )     (18 )     (58 )     (3 )     (206 )     (21 )
                                                 
Total OTTI losses recognized in earnings
    (530 )     (357 )     (58 )     (3 )     (588 )     (360 )
                                                 
Net investment gains (losses)
  $ (451 )   $ (258 )   $ (37 )   $ 100     $ (488 )   $ (158 )
                                                 
 
 
(1) Other OTTI losses recognized in earnings include impairments on equity securities, impairments on perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Fixed maturity security OTTI losses recognized in earnings related to the following sectors and industries within the U.S. and foreign corporate securities sector:
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
          (In millions)        
 
Sector:
                               
U.S. and foreign corporate securities — by industry:
                               
Finance
  $ 7     $ 54     $ 48     $ 82  
Consumer
    6       8       35       31  
Communications
    12       9       26       12  
Utility
    6             7       3  
                                 
Total U.S. and foreign corporate securities
    31       71       116       128  
Foreign government securities
    206             295        
RMBS
    34       19       88       76  
ABS
    8       26       23       89  
CMBS
    5       3       8       64  
                                 
Total
  $ 284     $ 119     $ 530     $ 357  
                                 
 
Equity security OTTI losses recognized in earnings related to the following sectors and industries:
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
    (In millions)  
 
Sector:
                               
Non-redeemable preferred stock
  $     $     $ 38     $  
Common stock
    5       1       20       3  
                                 
Total
  $ 5     $ 1     $ 58     $ 3  
                                 
Industry:
                               
Financial services industry — perpetual hybrid securities
  $     $     $ 38     $  
Other industries
    5       1       20       3  
                                 
Total
  $ 5     $ 1     $ 58     $ 3  
                                 


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Table of Contents

MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Credit Loss Rollforward — Rollforward of the Cumulative Credit Loss Component of OTTI Loss Recognized in Earnings on Fixed Maturity Securities Still Held for Which a Portion of the OTTI Loss Was Recognized in Other Comprehensive Income (Loss)
 
The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held by the Company for which a portion of the OTTI loss was recognized in other comprehensive income (loss):
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
    (In millions)  
 
Balance, beginning of period
  $ 401     $ 491     $ 443     $ 581  
Additions:
                               
Initial impairments — credit loss OTTI recognized on securities not previously impaired
    6       13       32       94  
Additional impairments — credit loss OTTI recognized on securities previously impaired
    39       34       79       104  
Reductions:
                               
Due to sales (maturities, pay downs or prepayments) during the period of securities previously impaired as credit loss OTTI
    (8 )     (97 )     (63 )     (231 )
Due to securities de-recognized in connection with the adoption of new guidance related to the consolidation of VIEs
                      (100 )
Due to securities impaired to net present value of expected future cash flows
    (1 )           (45 )      
Due to increases in cash flows — accretion of previous credit loss OTTI
          (2 )     (9 )     (9 )
                                 
Balance, end of period
  $ 437     $ 439     $ 437     $ 439  
                                 


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
 
Net Investment Income
 
The components of net investment income were as follows:
 
                                 
    Three Months
    Nine Months
 
    Ended
    Ended
 
    September 30,     September 30,  
    2011     2010     2011     2010  
    (In millions)  
 
Investment income:
                               
Fixed maturity securities
  $ 3,770     $ 3,060     $ 11,244     $ 9,126  
Equity securities
    28       19       106       83  
Trading and other securities — Actively Traded Securities and FVO general account securities (1)
    (38 )     45       6       56  
Mortgage loans
    806       713       2,331       2,081  
Policy loans
    162       155       482       488  
Real estate and real estate joint ventures
    213       131       557       300  
Other limited partnership interests
    180       170       582       596  
Cash, cash equivalents and short-term investments
    41       26       131       64  
International joint ventures (2)
    7       19       (3 )     (61 )
Other
    82       (7 )     151       181  
                                 
Subtotal
    5,251       4,331       15,587       12,914  
Less: Investment expenses
    271       222       774       654  
                                 
Subtotal, net
    4,980       4,109       14,813       12,260  
                                 
Trading and other securities — FVO contractholder-directed unit-linked investments (1)
    (824 )     149       (437 )     161  
FVO CSEs:
                               
Commercial mortgage loans
    95       102       286       312  
Securities
    6       4       7       12  
                                 
Subtotal
    (723 )     255       (144 )     485  
                                 
Net investment income
  $ 4,257     $ 4,364     $ 14,669     $ 12,745  
                                 
 
 
(1) Changes in estimated fair value subsequent to purchase included in net investment income were:
 
                                 
Trading and other securities — Actively Traded Securities and FVO general account securities
  $ (46 )   $ 29     $ (25 )   $ 16  
Trading and other securities — FVO contractholder-directed unit-linked investments
  $ (873 )   $ 124     $ (641 )   $ 111  
 
(2) Amounts are presented net of changes in estimated fair value of derivatives related to economic hedges of the Company’s investment in these equity method international joint venture investments that do not qualify for hedge accounting of $0 and ($23) million for the three months and nine months ended September 30, 2011, respectively, and ($12) million and $65 million for the three months and nine months ended September 30, 2010, respectively.
 
See “— Variable Interest Entities” for discussion of CSEs included in the table above.


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MetLife, Inc.
 
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)
 
Securities Lending
 
The Company participates in a securities lending program whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, primarily brokerage firms and commercial banks. The Company obtains collateral, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned, which is obtained at the inception of a loan and maintained at a level greater than or equal to 100% for the duration of the loan. Securities loaned under such transactions may be sold or repledged by the transferee. The Company is liable to return to its counterparties the cash collateral under its control. These transactions are treated as financing arrangements and the associated liability is recorded at the amount of the cash received.
 
Elements of the securities lending program are presented below at:
 
<
                 
    September 30, 2011     December 31, 2010  
    (In millions)  
 
Securities on loan:
               
Amortized cost
  $ 22,488     $ 23,715  
Estimated fair value
  $ 26,040     $ 24,230  
Aging of cash collateral liability:
               
Open (1)
  $ 2,440     $ 2,752  
Less than thirty days
    14,993       12,301  
Thirty days or greater but less than sixty days
    5,405       4,399  
Sixty days or greater but less than ninety days
    2,057       2,291  
Ninety days or greater
    908       2,904  
                 
Total cash collateral liability
  $ 25,803     $ 24,647