Segment Information

9 Months Ended

Sep. 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) amortization of basis adjustments associated with de-designated fair value hedges of future policy benefits, (ii) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (iii) 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, (iv) benefits and hedging costs related to GMIBs (“GMIB costs”) and (v) 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: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirement costs 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 nine months ended September 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 September 30, 2019	U.S.			Asia			Latin America			EMEA			MetLife Holdings			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	6,903		$	1,654		$	703		$	526		$	925		$	35		$	10,746		$	35		$	10,781
Universal life and investment-type product policy fees	264			430			256			117			284			1			1,352			88			1,440
Net investment income	1,760			915			295			73			1,316			114			4,473			150			4,623
Other revenues	224			14			8			13			52			36			347			72			419
Net investment gains (losses)	—			—			—			—			—			—			—			161			161
Net derivative gains (losses)	—			—			—			—			—			—			—			1,254			1,254
Total revenues	9,151			3,013			1,262			729			2,577			186			16,918			1,760			18,678
Expenses
Policyholder benefits and claims and policyholder dividends	6,759			1,264			656			291			1,856			32			10,858			86			10,944
Interest credited to policyholder account balances	507			440			74			25			228			—			1,274			226			1,500
Capitalization of DAC	(131		)	(498		)	(102		)	(128		)	(9		)	(3		)	(871		)	(11		)	(882		)
Amortization of DAC and VOBA	121			353			58			128			94			2			756			41			797
Amortization of negative VOBA	—			(2		)	—			(2		)	—			—			(4		)	—			(4		)
Interest expense on debt	3			—			—			—			2			218			223			—			223
Other expenses	1,004			955			356			341			223			320			3,199			110			3,309
Total expenses	8,263			2,512			1,042			655			2,394			569			15,435			452			15,887
Provision for income tax expense (benefit)	181			152			65			21			34			(192		)	261			340			601
Adjusted earnings	$	707		$	349		$	155		$	53		$	149		$	(191	)	1,222
Adjustments to:
Total revenues																			1,760
Total expenses																			(452		)
Provision for income tax (expense) benefit																			(340		)
Net income (loss)																			$	2,190					$	2,190

Three Months Ended September 30, 2018	U.S.			Asia			Latin America			EMEA			MetLife Holdings			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	6,431		$	1,689		$	692		$	514		$	949		$	(33	)	$	10,242		$	—		$	10,242
Universal life and investment-type product policy fees	252			428			229			105			286			—			1,300			43			1,343
Net investment income	1,787			830			339			73			1,375			58			4,462			24			4,486
Other revenues	206			12			7			15			70			86			396			83			479
Net investment gains (losses)	—			—			—			—			—			—			—			117			117
Net derivative gains (losses)	—			—			—			—			—			—			—			(378		)	(378		)
Total revenues	8,676			2,959			1,267			707			2,680			111			16,400			(111		)	16,289
Expenses
Policyholder benefits and claims and policyholder dividends	6,219			1,354			670			281			1,766			(38		)	10,252			155			10,407
Interest credited to policyholder account balances	457			381			102			24			238			—			1,202			132			1,334
Capitalization of DAC	(116		)	(478		)	(97		)	(109		)	(8		)	(2		)	(810		)	—			(810		)
Amortization of DAC and VOBA	128			366			5			110			13			2			624			108			732
Amortization of negative VOBA	—			(4		)	(1		)	(2		)	—			—			(7		)	—			(7		)
Interest expense on debt	2			—			2			—			2			246			252			15			267
Other expenses	982			943			351			333			264			314			3,187			100			3,287
Total expenses	7,672			2,562			1,032			637			2,275			522			14,700			510			15,210
Provision for income tax expense (benefit)	209			131			65			15			78			(206		)	292			(128		)	164
Adjusted earnings	$	795		$	266		$	170		$	55		$	327		$	(205	)	1,408
Adjustments to:
Total revenues																			(111		)
Total expenses																			(510		)
Provision for income tax (expense) benefit																			128
Net income (loss)																			$	915					$	915

Nine Months Ended September 30, 2019	U.S.			Asia			Latin America			EMEA			MetLife Holdings			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	18,704		$	4,984		$	2,122		$	1,619		$	2,776		$	75		$	30,280		$	35		$	30,315
Universal life and investment-type product policy fees	808			1,255			820			325			844			2			4,054			163			4,217
Net investment income	5,274			2,739			951			220			3,941			183			13,308			916			14,224
Other revenues	668			43			31			40			184			212			1,178			213			1,391
Net investment gains (losses)	—			—			—			—			—			—			—			237			237
Net derivative gains (losses)	—			—			—			—			—			—			—			2,093			2,093
Total revenues	25,454			9,021			3,924			2,204			7,745			472			48,820			3,657			52,477
Expenses
Policyholder benefits and claims and policyholder dividends	18,233			3,862			2,043			867			5,207			70			30,282			329			30,611
Interest credited to policyholder account balances	1,512			1,267			254			72			681			—			3,786			1,190			4,976
Capitalization of DAC	(372		)	(1,449		)	(296		)	(371		)	(23		)	(9		)	(2,520		)	(11		)	(2,531		)
Amortization of DAC and VOBA	352			972			215			327			237			5			2,108			2			2,110
Amortization of negative VOBA	—			(18		)	—			(6		)	—			—			(24		)	—			(24		)
Interest expense on debt	8			—			2			—			6			715			731			—			731
Other expenses	3,006			2,865			1,074			1,029			687			831			9,492			280			9,772
Total expenses	22,739			7,499			3,292			1,918			6,795			1,612			43,855			1,790			45,645
Provision for income tax expense (benefit)	552			458			184			70			185			(538		)	911			600			1,511
Adjusted earnings	$	2,163		$	1,064		$	448		$	216		$	765		$	(602	)	4,054
Adjustments to:
Total revenues																			3,657
Total expenses																			(1,790		)
Provision for income tax (expense) benefit																			(600		)
Net income (loss)																			$	5,321					$	5,321

Nine Months Ended September 30, 2018	U.S.			Asia			Latin America			EMEA			MetLife Holdings			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	22,950		$	5,091		$	2,079		$	1,611		$	2,856		$	(14	)	$	34,573		$	—		$	34,573
Universal life and investment-type product policy fees	772			1,221			786			324			901			—			4,004			101			4,105
Net investment income	5,168			2,464			942			221			4,056			157			13,008			(304		)	12,704
Other revenues	613			40			24			51			205			246			1,179			249			1,428
Net investment gains (losses)	—			—			—			—			—			—			—			(443		)	(443		)
Net derivative gains (losses)	—			—			—			—			—			—			—			(88		)	(88		)
Total revenues	29,503			8,816			3,831			2,207			8,018			389			52,764			(485		)	52,279
Expenses
Policyholder benefits and claims and policyholder dividends	22,590			3,934			1,976			861			5,022			(38		)	34,345			252			34,597
Interest credited to policyholder account balances	1,303			1,094			295			75			709			—			3,476			51			3,527
Capitalization of DAC	(336		)	(1,438		)	(282		)	(348		)	(28		)	(7		)	(2,439		)	(1		)	(2,440		)
Amortization of DAC and VOBA	357			993			136			324			214			5			2,029			103			2,132
Amortization of negative VOBA	—			(31		)	(1		)	(12		)	—			—			(44		)	(1		)	(45		)
Interest expense on debt	8			—			5			—			6			798			817			45			862
Other expenses	2,908			2,871			1,052			1,023			815			805			9,474			336			9,810
Total expenses	26,830			7,423			3,181			1,923			6,738			1,563			47,658			785			48,443
Provision for income tax expense (benefit)	554			437			195			62			248			(599		)	897			(127		)	770
Adjusted earnings	$	2,119		$	956		$	455		$	222		$	1,032		$	(575	)	4,209
Adjustments to:
Total revenues																			(485		)
Total expenses																			(785		)
Provision for income tax (expense) benefit																			127
Net income (loss)																			$	3,066					$	3,066

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

	September 30, 2019		December 31, 2018
	(In millions)
U.S.	$	267,428	$	248,174
Asia	160,798		146,278
Latin America	75,640		70,417
EMEA	26,418		27,829
MetLife Holdings	176,410		166,872
Corporate & Other	36,118		27,968
Total	$	742,812	$	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 nine months ended September 30, 2019. Revenues derived from one U.S. segment customer were $6.0 billion for the nine months ended September 30, 2018, which represented 15% 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 nine months ended September 30, 2018.