Condensed Financial Information (Parent Company)

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information (Parent Company)

MetLife, Inc.

Schedule II

Condensed Financial Information

(Parent Company Only)

December 31, 2018 and 2017

(In millions, except share and per share data)

	2018			2017
Condensed Balance Sheets
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $2,745 and $4,520, respectively)	$	2,726		$	4,510
Fair value option securities, at estimated fair value	—			1,357
Short-term investments, principally at estimated fair value	16			30
Other invested assets, at estimated fair value	87			127
Total investments	2,829			6,024
Cash and cash equivalents	376			516
Accrued investment income	53			24
Investment in subsidiaries	66,567			73,274
Loans to subsidiaries	100			100
Other assets	843			1,153
Total assets	$	70,768		$	81,091
Liabilities and Stockholders’ Equity
Liabilities
Payables for collateral under derivatives transactions	$	9		$	36
Long-term debt — unaffiliated	11,844			14,599
Long-term debt — affiliated	1,957			2,000
Junior subordinated debt securities	2,456			2,454
Other liabilities	1,761			3,326
Total liabilities	18,027			22,415
Stockholders’ Equity
Preferred stock, par value $0.01 per share; $3,405 and $2,100 aggregate liquidation preference, respectively	—			—
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,171,824,242 and 1,168,710,101 shares issued, respectively; 958,613,542 and 1,043,588,396 shares outstanding, respectively	12			12
Additional paid-in capital	32,474			31,111
Retained earnings	28,926			26,527
Treasury stock, at cost; 213,210,700 and 125,121,705 shares, respectively	(10,393		)	(6,401		)
Accumulated other comprehensive income (loss)	1,722			7,427
Total stockholders’ equity	52,741			58,676
Total liabilities and stockholders’ equity	$	70,768		$	81,091

See accompanying notes to the condensed financial information.

MetLife, Inc.

Schedule II

Condensed Financial Information — (continued)

(Parent Company Only)

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)

	2018			2017			2016
Condensed Statements of Operations
Revenues
Equity in earnings of subsidiaries	$	6,466		$	7,162		$	1,833
Net investment income	87			101			129
Other revenues	19			59			151
Net investment gains (losses)	(277		)	(1,142		)	86
Net derivative gains (losses)	(56		)	(186		)	(68		)
Total revenues	6,239			5,994			2,131
Expenses
Interest expense	1,009			1,108			1,152
Goodwill impairment	—			—			147
Termination of financing arrangements	—			294			2
Other expenses	158			657			388
Total expenses	1,167			2,059			1,689
Income (loss) before provision for income tax	5,072			3,935			442
Provision for income tax expense (benefit)	(51		)	(75		)	(408		)
Net income (loss)	5,123			4,010			850
Less: Preferred stock dividends	141			103			103
Net income (loss) available to common shareholders	$	4,982		$	3,907		$	747
Comprehensive income (loss)	$	(1,494	)	$	7,391		$	1,449

See accompanying notes to the condensed financial information.

MetLife, Inc.

Schedule II

Condensed Financial Information — (continued)

(Parent Company Only)

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)

	2018			2017			2016
Condensed Statements of Cash Flows
Cash flows from operating activities
Net income (loss)	$	5,123		$	4,010		$	850
Earnings of subsidiaries	(6,466		)	(7,162		)	(1,833		)
Dividends from subsidiaries	7,367			6,745			4,470
(Gains) losses on investments and from sales of businesses, net	277			1,142			(86		)
Goodwill impairment	—			—			147
Tax separation agreement charge	—			1,093			—
Other, net	(807		)	634			199
Net cash provided by (used in) operating activities	5,494			6,462			3,747
Cash flows from investing activities
Sales of fixed maturity securities available-for-sale	9,635			7,217			8,603
Purchases of fixed maturity securities available-for-sale	(8,178		)	(7,733		)	(7,409		)
Cash received in connection with freestanding derivatives	227			452			311
Cash paid in connection with freestanding derivatives	(237		)	(629		)	(561		)
Sales of businesses	—			—			291
Expense paid on behalf of subsidiaries	(14		)	(42		)	(68		)
Receipts on loans to subsidiaries	—			—			140
Issuances of loans to subsidiaries	—			—			(140		)
Returns of capital from subsidiaries	87			610			80
Capital contributions to subsidiaries	(767		)	(339		)	(1,733		)
Net change in short-term investments	14			118			120
Other, net	(3		)	(14		)	(18		)
Net cash provided by (used in) investing activities	764			(360		)	(384		)
Cash flows from financing activities
Net change in payables for collateral under derivative transactions	(27		)	(111		)	(80		)
Long-term debt repaid	(1,759		)	(1,000		)	(1,250		)
Fees paid for the termination of a committed facility related to Separation	—			(244		)	(2		)
Treasury stock acquired in connection with share repurchases	(3,992		)	(2,927		)	(372		)
Preferred stock issued, net of issuance costs	1,274			—			—
Dividends on preferred stock	(141		)	(103		)	(103		)
Dividends on common stock	(1,678		)	(1,717		)	(1,736		)
Other, net	(75		)	182			93
Net cash provided by (used in) financing activities	(6,398		)	(5,920		)	(3,450		)
Change in cash and cash equivalents	(140		)	182			(87		)
Cash and cash equivalents, beginning of year	516			334			421
Cash and cash equivalents, end of year	$	376		$	516		$	334

MetLife, Inc.

Schedule II

Condensed Financial Information — (continued)

(Parent Company Only)

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)

	2018			2017			2016
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	1,040		$	1,096		$	1,146
Income tax:
Amounts paid to (received from) subsidiaries, net	$	(33	)	$	(1,552	)	$	(569	)
Amounts paid to Brighthouse in accordance with the tax separation agreement	909			729			—
Income tax paid (received) by MetLife, Inc., net	1			(37		)	136
Total income tax, net	$	877		$	(860	)	$	(433	)
Non-cash transactions:
Dividends from subsidiary	$	—		$	—		$	2,652
Returns of capital from subsidiaries	$	3,844		$	17,518		$	372
Capital contributions to subsidiaries	$	3,844		$	15,655		$	157
Distribution of Brighthouse	$	—		$	10,346		$	—
Allocation of interest expense to subsidiary	$	—		$	15		$	39
Allocation of interest income to subsidiary	$	—		$	4		$	54
Brighthouse common stock exchange transaction (Note 3):
Reduction of long-term debt	$	944		$	—		$	—
Reduction of fair value option securities	$	1,030		$	—		$	—

MetLife, Inc.

Schedule II

Notes to the Condensed Financial Information

(Parent Company Only)

1. Basis of Presentation

The condensed financial information of MetLife, Inc. (the “Parent Company”) should be read in conjunction with the consolidated financial statements of MetLife, Inc. and its subsidiaries and the notes thereto (the “Consolidated Financial Statements”). These condensed unconsolidated financial statements reflect the results of operations, financial position and cash flows for MetLife, Inc. Investments in subsidiaries are accounted for using the equity method of accounting.

The preparation of these condensed unconsolidated financial statements in conformity with GAAP requires management to adopt accounting policies and make certain estimates and assumptions. The most important of these estimates and assumptions relate to the fair value measurements, the accounting for goodwill and identifiable intangible assets and the provision for potential losses that may arise from litigation and regulatory proceedings and tax audits, which may affect the amounts reported in the condensed unconsolidated financial statements and accompanying notes. Actual results could differ from these estimates.

2. Investment in Subsidiaries

On August 3, 2017, Brighthouse Financial, Inc. paid a cash dividend to MetLife, Inc. of $1.8 billion in connection with the Separation.

In December 2016, MLIC transferred the issued and outstanding shares of the common stock of each of NELICO and GALIC to MetLife, Inc. in the form of a non-cash extraordinary dividend of $2.7 billion.

In February 2016, MetLife, Inc. paid a cash capital contribution of $1.5 billion to Brighthouse Insurance in connection with the Separation.

In December 2015, MetLife, Inc. accrued $50 million, $45 million and $25 million in capital contributions payable to the following captive reinsurers: MRV, MetLife Reinsurance Company of Delaware (“MRD”) and MRSC, respectively, which were included in payables to subsidiaries at December 31, 2015. The payables were settled for cash in February 2016.

3. Loans to Subsidiaries

MetLife, Inc. lends funds as necessary, through credit agreements or otherwise to its subsidiaries, some of which are regulated, to meet their capital requirements or to provide liquidity. Payments of interest and principal on surplus notes of regulated subsidiaries, which are subordinate to all other obligations of the issuing company, may be made only with the prior approval of the insurance department of the state of domicile.

In April 2017, in connection with the Separation, MetLife, Inc. repaid $750 million and $350 million senior notes to MRD due September 2032 and December 2033, respectively, in an exchange transaction. The $750 million senior note bore interest at a fixed rate of 4.21% and the $350 million senior note bore interest at a fixed rate of 5.10%. Simultaneously, MRD repaid $750 million and $350 million surplus notes to MetLife, Inc. The $750 million surplus note bore interest at a fixed rate of 5.13% and the $350 million surplus note bore interest at a fixed rate of 6.00% (the “MRD Notes Exchange”).

In April 2016, American Life issued a $140 million short-term note to MetLife, Inc. which was repaid in July 2016. The short-term note bore interest at six-month LIBOR plus 1.00%.

Interest income earned on loans to subsidiaries of $3 million, $44 million and $64 million for the years ended December 31, 2018, 2017 and 2016, respectively, is included in net investment income.

4. Long-term Debt

Long-term debt outstanding was as follows:

	Interest Rates (1)							December 31,
	Range			Weighted Average	Maturity			2018		2017
	(Dollars in millions)
Senior notes — unaffiliated (2)	3.00%	-	6.50%	4.96%	2020	-	2046	$	11,844	$	14,599
Senior notes — affiliated	0.82%	-	3.14%	2.16%	2019	-	2021	1,957		2,000
Total								$	13,801	$	16,599

__________________

(1) Range of interest rates and weighted average interest rates are for the year ended December 31, 2018.

(2) Net of $79 million and $86 million of unamortized issuance costs and net premiums and discounts at December 31, 2018 and 2017, respectively.

See Note 12 of the Notes to the Consolidated Financial Statements.

The aggregate maturities of long-term debt at December 31, 2018 for the next five years and thereafter are $728 million in 2019, $750 million in 2020, $1.4 billion in 2021, $500 million in 2022, $1.0 billion in 2023 and $9.5 billion thereafter.

Credit Facility – Affiliated

In June 2016, MetLife, Inc. entered into a five-year agreement with an indirect wholly-owned subsidiary, MetLife Ireland Treasury d.a.c. (formerly known as MetLife Ireland Treasury Limited) (“MIT”), to borrow up to $1.3 billion on a revolving basis, at interest rates based on the IRS safe harbor interest rate in effect at the time of the borrowing. MetLife, Inc. may borrow funds under the agreement at MIT’s discretion and subject to the availability of funds. There were no outstanding borrowings at December 31, 2018.

Long-term Debt – Affiliated

In June 2016 and March 2016, MetLife, Inc. repaid$204 millionand$10 million, respectively, of affiliated long-term debt to MetLife Exchange Trust I at maturity in exchange for a return of capital. The long-term notes bore interest atthree-month LIBOR plus 0.7%.

Senior Notes – Affiliated

In May 2018, $500 million in senior notes previously issued by MetLife, Inc. to MLIC and other subsidiaries were redenominated to new 54.6 billion Japanese yen senior notes. The 54.6 billion Japanese yen senior notes mature in December 2021 and bear interest at a rate per annum of 3.14%, payable semi-annually.

In April 2018, $500 million in senior notes previously issued by MetLife, Inc. to MLIC and other subsidiaries were redenominated to new 53.7 billion Japanese yen senior notes. The 53.7 billion Japanese yen senior notes mature in July 2021 and bear interest at a rate per annum of 2.97%, payable semi-annually.

In March 2018, three senior notes previously issued by MetLife, Inc. to MLIC were redenominated to Japanese yen. A $500 million senior note was redenominated to a new 53.3 billion Japanese yen senior note. The 53.3 billion Japanese yen senior note matures in June 2019 and bears interest at a rate per annum of 1.45%, payable semi-annually. A $250 million senior note was redenominated to a new 26.5 billion Japanese yen senior note. The 26.5 billion Japanese yen senior note matures in October 2019 and bears interest at a rate per annum of 1.72%, payable semi-annually. A $250 million senior note was also redenominated to a new 26.5 billion Japanese yen senior note. The 26.5 billion Japanese yen senior note matures in September 2020 and bears interest at a rate per annum of 0.82%, payable semi-annually.

In September 2016, a $250 million senior note issued to MLIC matured and, subsequently, in September 2016 MetLife, Inc. issued a new $250 million senior note to MLIC. The senior note matures in September 2020 and bears interest at a rate per annum of 3.03%, payable semi-annually.

See Note 3 for information on the MRD Notes Exchange in 2017.

Interest Expense

Interest expense was comprised of the following:

	Years Ended December 31,
	2018		2017		2016
	(In millions)
Long-term debt — unaffiliated	$	755	$	774	$	811
Long-term debt — affiliated	45		112		160
Collateral financing arrangements	6		27		47
Junior subordinated debt securities	203		195		134
Total	$	1,009	$	1,108	$	1,152

See Notes 13 and 14 of the Notes to the Consolidated Financial Statements for information about the collateral financing arrangement and junior subordinated debt securities. See also Note 3 of the Notes to the Consolidated Financial Statements regarding the termination of the MRSC collateral financing arrangement.

5. Junior Subordinated Debt Securities

In February 2017, in connection with the Separation, MetLife, Inc. exchanged$750 millionaggregate principal amount of its9.250%Fixed-to-Floating Rate Junior Subordinated Debentures due2068for$750 millionaggregate liquidation preference of the9.250%Fixed-to-Floating Rate Exchangeable Surplus Trust Securities of the Trust. As a result of the exchange, MetLife, Inc. became the sole beneficial owner of the Trust, a SPE, which issued the exchangeable surplus trust securities to third party investors. In March 2017, MetLife, Inc. dissolved the Trust and became the direct holder of$750 million8.595%surplus notes previously held by the Trust that were issued by Brighthouse Insurance. In June 2017, MetLife, Inc. forgave Brighthouse Insurance’s obligation to pay the principal amount of such surplus notes.

6. Support Agreements

MetLife, Inc. is party to various capital support commitments and guarantees with certain of its subsidiaries. Under these arrangements, MetLife, Inc. has agreed to cause each such entity to meet specified capital and surplus levels or has guaranteed certain contractual obligations.

MetLife, Inc. guarantees the obligations of its subsidiary, Missouri Reinsurance, Inc. (“MoRe”), under a retrocession agreement with RGA Reinsurance (Barbados) Inc., pursuant to which MoRe retrocedes a portion of the closed block liabilities associated with industrial life and ordinary life insurance policies that it assumed from MLIC.

MetLife, Inc. guarantees the obligations of MetLife Reinsurance Company of Bermuda, Ltd. (“MrB”), a Bermuda insurance affiliate and an indirect, wholly-owned subsidiary of MetLife, Inc. under a reinsurance agreement with Mitsui Sumitomo Primary Life Insurance Co., Ltd. (“Mitsui”), a former affiliate that is now an unaffiliated third party, under which MrB reinsures certain variable annuity business written by Mitsui.

MetLife, Inc. guarantees the obligations of MrB in an aggregate amount up to $1.0 billion, under a reinsurance agreement with MetLife Europe d.a.c. (“MEL”) (formerly known as MetLife Europe Limited), under which MrB reinsured the guaranteed living benefits and guaranteed death benefits associated with certain unit-linked variable annuity type liability contracts issued by MEL.

MetLife, Inc., in connection with MRV’s reinsurance of certain universal life and term life insurance risks, committed to the Vermont Department of Banking, Insurance, Securities and Health Care Administration to take necessary action to cause the two protected cells of MRV to maintain total adjusted capital in an amount that is equal to or greater than 200% of each such protected cell’s authorized control level RBC, as defined in Vermont state insurance statutes. See Note 12 of the Notes to the Consolidated Financial Statements.

MetLife, Inc., in connection with the collateral financing arrangement associated with MRC’s reinsurance of a portion of the liabilities associated with the closed block, committed to the South Carolina Department of Insurance to make capital contributions, if necessary, to MRC so that MRC may at all times maintain its total adjusted capital in an amount that is equal to or greater than 200% of the Company Action Level RBC, as defined in South Carolina state insurance statutes as in effect on the date of determination or December 31, 2007, whichever calculation produces the greater capital requirement, or as otherwise required by the South Carolina Department of Insurance. See Note 13 of the Notes to the Consolidated Financial Statements.

MetLife, Inc. guarantees obligations arising from OTC-bilateral derivatives of the following subsidiaries: MrB, MetLife International Holdings, LLC and MetLife Worldwide Holdings, LLC. These subsidiaries are exposed to various risks relating to their ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. These subsidiaries use a variety of strategies to manage these risks, including the use of derivatives. Further, all of the subsidiaries’ derivatives are subject to industry standard netting agreements and collateral agreements that limit the unsecured portion of any open derivative position. On a net counterparty basis at December 31, 2018 and 2017, derivative transactions with positive mark-to-market values (in-the-money) were $302 million and $515 million, respectively, and derivative transactions with negative mark-to-market values (out-of-the-money) were $84 million and $126 million, respectively. To secure the obligations represented by the out of-the-money transactions, the subsidiaries had provided collateral to their counterparties with an estimated fair value of $84 million and $114 million at December 31, 2018 and 2017, respectively. Accordingly, unsecured derivative liabilities guaranteed by MetLife, Inc. were $0 and $12 million at December 31, 2018 and 2017, respectively.

MetLife, Inc. also guarantees the obligations of certain of its subsidiaries under committed facilities with third-party banks. See Note 12 of the Notes to the Consolidated Financial Statements.