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Segment Information
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment Information 2. Segment Information
MetLife is organized into five segments: U.S.; Asia; Latin America; EMEA; and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other.
U.S.
The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of customers throughout their lives. These products are sold to corporations and their respective employees, other institutions and their respective members, as well as individuals. The U.S. segment is organized into three businesses: Group Benefits, Retirement and Income Solutions (“RIS”) and Property & Casualty.
•
The Group Benefits business offers life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, vision and accident & health coverages, as well as prepaid legal plans. This business also sells administrative services-only arrangements to some employers.
•
The RIS business offers a broad range of life and annuity-based insurance and investment products, including stable value and pension risk transfer products, institutional income annuities, tort settlements, and capital markets investment products, as well as solutions for funding postretirement benefits and company-, bank- or trust-owned life insurance.
•
The Property & Casualty business offers personal and commercial lines of property and casualty insurance, including private passenger automobile, homeowners’ and personal excess liability insurance. In addition, Property & Casualty offers to small business owners property, liability and business interruption insurance.
Asia
The Asia segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include whole and term life, endowments, universal and variable life, accident & health insurance and fixed and variable annuities.
Latin America
The Latin America segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, retirement and savings products, accident & health insurance and credit insurance.
EMEA
The EMEA segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, accident & health insurance, retirement and savings products and credit insurance.
MetLife Holdings
The MetLife Holdings segment consists of operations relating to products and businesses, previously included in MetLife’s former retail business, that the Company no longer actively markets in the United States, such as variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-term care insurance, as well as the assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.
Corporate & Other
Corporate & Other contains the excess capital, as well as certain charges and activities, not allocated to the segments, including external integration and disposition costs, internal resource costs for associates committed to acquisitions and dispositions, enterprise-wide strategic initiative restructuring charges and various start-up and developing businesses (including the investment management business through which the Company, as a manager of assets such as global fixed income and real estate, provides differentiated investment solutions to institutional investors worldwide). Additionally, Corporate & Other includes run-off businesses. Corporate & Other also includes interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. In addition, Corporate & Other includes the elimination of intersegment amounts, which generally relate to affiliated reinsurance, investment expenses and intersegment loans, which bear interest rates commensurate with related borrowings.
Financial Measures and Segment Accounting Policies
Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is also the Company’s GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed as a substitute for net income (loss). The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax.
The financial measures of adjusted revenues and adjusted expenses focus on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also includes the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net derivative gains (losses). Adjusted expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
•
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB fees”);
•
Net investment income: (i) includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment, (ii) excludes post-tax adjusted earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed equity securities, (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (v) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) under GAAP; and
•
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in association with services provided under transition service agreements (“TSA fees”).
The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses:
•
Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments, (iii) benefits and hedging costs related to GMIBs (“GMIB costs”) and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market value adjustments”);
•
Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes certain amounts related to net investment income earned on contractholder-directed equity securities;
•
Amortization of DAC and value of business acquired (“VOBA”) excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB fees and GMIB costs and (iii) Market value adjustments;
•
Amortization of negative VOBA excludes amounts related to Market value adjustments;
•
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
•
Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements and (iii) acquisition, integration and other costs. Other expenses includes TSA fees.
Adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and six months ended June 30, 2019 and 2018. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for adjusted earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.
The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.
Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, net income (loss), or adjusted earnings.
Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.
 
 
 
 
 
 
 
Three Months Ended June 30, 2019
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
6,234

 
$
1,631

 
$
773

 
$
551

 
$
924

 
$
16

 
$
10,129

 
$
—

 
$
10,129

Universal life and investment-type product policy fees
 
274

 
419

 
280

 
105

 
286

 
—

 
1,364

 
48

 
1,412

Net investment income
 
1,795

 
944

 
360

 
73

 
1,338

 
44

 
4,554

 
139

 
4,693

Other revenues
 
223

 
13

 
11

 
13

 
65

 
82

 
407

 
71

 
478

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
61

 
61

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
724

 
724

Total revenues
 
8,526

 
3,007

 
1,424

 
742

 
2,613

 
142

 
16,454

 
1,043

 
17,497

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
6,101

 
1,279

 
790

 
292

 
1,703

 
18

 
10,183

 
112

 
10,295

Interest credited to policyholder account balances
 
504

 
424

 
86

 
23

 
227

 
—

 
1,264

 
251

 
1,515

Capitalization of DAC
 
(127
)
 
(472
)
 
(100
)
 
(126
)
 
(8
)
 
(4
)
 
(837
)
 
—

 
(837
)
Amortization of DAC and VOBA
 
117

 
312

 
79

 
107

 
80

 
2

 
697

 
(8
)
 
689

Amortization of negative VOBA
 
—

 
(7
)
 
—

 
(3
)
 
—

 
—

 
(10
)
 
—

 
(10
)
Interest expense on debt
 
3

 
—

 
1

 
—

 
2

 
268

 
274

 
—

 
274

Other expenses
 
1,009

 
955

 
352

 
350

 
237

 
289

 
3,192

 
82

 
3,274

Total expenses
 
7,607

 
2,491

 
1,208

 
643

 
2,241

 
573

 
14,763

 
437

 
15,200

Provision for income tax expense (benefit)
 
187

 
157

 
57

 
22

 
73

 
(181
)
 
315

 
236

 
551

Adjusted earnings
 
$
732

 
$
359

 
$
159

 
$
77

 
$
299

 
$
(250
)
 
1,376

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
1,043

 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(437
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
(236
)
 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,746

 
 
 
$
1,746

 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
11,302

 
$
1,654

 
$
688

 
$
546

 
$
957

 
$
6

 
$
15,153

 
$
—

 
$
15,153

Universal life and investment-type product policy fees
 
262

 
399

 
275

 
107

 
301

 
—

 
1,344

 
26

 
1,370

Net investment income
 
1,719

 
839

 
327

 
73

 
1,329

 
40

 
4,327

 
146

 
4,473

Other revenues
 
203

 
13

 
9

 
20

 
68

 
79

 
392

 
83

 
475

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(227
)
 
(227
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(59
)
 
(59
)
Total revenues
 
13,486

 
2,905

 
1,299

 
746

 
2,655

 
125

 
21,216

 
(31
)
 
21,185

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
11,233

 
1,237

 
660

 
286

 
1,706

 
3

 
15,125

 
50

 
15,175

Interest credited to policyholder account balances
 
439

 
362

 
95

 
26

 
235

 
—

 
1,157

 
267

 
1,424

Capitalization of DAC
 
(114
)
 
(495
)
 
(91
)
 
(121
)
 
(10
)
 
(3
)
 
(834
)
 
—

 
(834
)
Amortization of DAC and VOBA
 
114

 
313

 
71

 
108

 
101

 
1

 
708

 
(1
)
 
707

Amortization of negative VOBA
 
—

 
(12
)
 
—

 
(4
)
 
—

 
—

 
(16
)
 
—

 
(16
)
Interest expense on debt
 
4

 
—

 
1

 
—

 
2

 
272

 
279

 
30

 
309

Other expenses
 
965

 
976

 
363

 
339

 
275

 
259

 
3,177

 
142

 
3,319

Total expenses
 
12,641

 
2,381

 
1,099

 
634

 
2,309

 
532

 
19,596

 
488

 
20,084

Provision for income tax expense (benefit)
 
174

 
161

 
55

 
26

 
66

 
(234
)
 
248

 
(41
)
 
207

Adjusted earnings
 
$
671

 
$
363

 
$
145

 
$
86

 
$
280

 
$
(173
)
 
1,372

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(31
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(488
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
41

 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
894

 
 
 
$
894









Six Months Ended June 30, 2019

U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated


(In millions)
Revenues


















Premiums

$
11,801


$
3,330


$
1,419


$
1,093


$
1,851


$
40


$
19,534


$
—


$
19,534

Universal life and investment-type product policy fees

544


825


564


208


560


1


2,702


75


2,777

Net investment income

3,514


1,824


656


147


2,625


69


8,835


766


9,601

Other revenues

444


29


23


27


132


176


831


141


972

Net investment gains (losses)

—


—


—


—


—


—


—


76


76

Net derivative gains (losses)

—


—


—


—


—


—


—


839


839

Total revenues

16,303

 
6,008

 
2,662

 
1,475

 
5,168

 
286

 
31,902

 
1,897

 
33,799

Expenses









 



 



 
Policyholder benefits and claims and policyholder dividends

11,474


2,598


1,387


576


3,351


38


19,424


243


19,667

Interest credited to policyholder account balances

1,005


827


180


47


453


—


2,512


964


3,476

Capitalization of DAC

(241
)

(951
)

(194
)

(243
)

(14
)

(6
)

(1,649
)

—


(1,649
)
Amortization of DAC and VOBA

231


619


157


199


143


3


1,352


(39
)

1,313

Amortization of negative VOBA

—


(16
)

—


(4
)

—


—


(20
)

—


(20
)
Interest expense on debt

5


—


2


—


4


497


508


—


508

Other expenses

2,002


1,910


718


688


464


511


6,293


170


6,463

Total expenses

14,476

 
4,987

 
2,250

 
1,263

 
4,401

 
1,043

 
28,420

 
1,338

 
29,758

Provision for income tax expense (benefit)

371


306


119


49


151


(346
)

650


260


910

Adjusted earnings

$
1,456

 
$
715

 
$
293

 
$
163

 
$
616

 
$
(411
)

2,832





Adjustments to:













 



 
Total revenues













1,897




 
Total expenses













(1,338
)



 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 

(260
)



 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 

$
3,131




$
3,131


 
 

 
 
 
 
Six Months Ended June 30, 2018
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
16,519

 
$
3,402

 
$
1,387

 
$
1,097

 
$
1,907

 
$
19

 
$
24,331

 
$
—

 
$
24,331

Universal life and investment-type product policy fees
 
520

 
793

 
557

 
219

 
615

 
—

 
2,704

 
58

 
2,762

Net investment income
 
3,381

 
1,634

 
603

 
148

 
2,681

 
99

 
8,546

 
(328
)
 
8,218

Other revenues
 
407

 
28

 
17

 
36

 
135

 
160

 
783

 
166

 
949

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(560
)
 
(560
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
290

 
290

Total revenues
 
20,827

 
5,857

 
2,564

 
1,500

 
5,338

 
278

 
36,364

 
(374
)
 
35,990

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
16,371

 
2,580

 
1,306

 
580

 
3,256

 
—

 
24,093

 
97

 
24,190

Interest credited to policyholder account balances
 
846

 
713

 
193

 
51

 
471

 
—

 
2,274

 
(81
)
 
2,193

Capitalization of DAC
 
(220
)
 
(960
)
 
(185
)
 
(239
)
 
(20
)
 
(5
)
 
(1,629
)
 
(1
)
 
(1,630
)
Amortization of DAC and VOBA
 
229

 
627

 
131

 
214

 
201

 
3

 
1,405

 
(5
)
 
1,400

Amortization of negative VOBA
 
—

 
(27
)
 
—

 
(10
)
 
—

 
—

 
(37
)
 
(1
)
 
(38
)
Interest expense on debt
 
6

 
—

 
3

 
—

 
4

 
552

 
565

 
30

 
595

Other expenses
 
1,926

 
1,928

 
701

 
690

 
551

 
491

 
6,287

 
236

 
6,523

Total expenses
 
19,158

 
4,861

 
2,149

 
1,286

 
4,463

 
1,041

 
32,958

 
275

 
33,233

Provision for income tax expense (benefit)
 
345

 
306

 
130

 
47

 
170

 
(393
)
 
605

 
1

 
606

Adjusted earnings
 
$
1,324

 
$
690

 
$
285

 
$
167

 
$
705

 
$
(370
)
 
2,801

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
(374
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(275
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,151

 
 
 
$
2,151


The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
 
June 30, 2019
 
December 31, 2018
 
 
(In millions)
U.S.
 
$
263,410

 
$
248,174

Asia
 
157,743

 
146,278

Latin America
 
76,881

 
70,417

EMEA
 
27,462

 
27,829

MetLife Holdings
 
172,957

 
166,872

Corporate & Other
 
33,714

 
27,968

Total
 
$
732,167

 
$
687,538



Revenues derived from any customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the three months and six months ended June 30, 2019. Revenues derived from one U.S. segment customer were $6.0 billion for both the three months and six months ended June 30, 2018, which represented 35% and 21%, respectively, of consolidated premiums, universal life and investment-type product policy fees and other revenues. The revenue was from a single premium received for a pension risk transfer. Revenues derived from any other customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the three months and six months ended June 30, 2018.