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Segment Information
 3 Months Ended
Mar. 31, 2020
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 lines of property and casualty insurance, including private passenger automobile, homeowners’ and personal excess liability 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, group 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 various start-up, developing and run-off businesses. Also included in Corporate & Other are: 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 and enterprise-wide strategic initiative restructuring charges), interest expense related to the majority of the Company’s outstanding debt, expenses associated with certain legal proceedings and income tax audit issues, the elimination of intersegment amounts (which generally relate to affiliated reinsurance, investment expenses and intersegment loans, bearing interest rates commensurate with related borrowings), and the Company’s investment management business (through which the Company provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide).
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 include 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 requirements 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 ended March 31, 2020 and 2019. 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 March 31, 2020

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


(In millions)
Revenues


















Premiums

$
5,674


$
1,636


$
640


$
568


$
904


$
12


$
9,434


$
32


$
9,466

Universal life and investment-type product policy fees

275


430


270


116


294


—


1,385


46


1,431

Net investment income

1,766


937


218


69


1,315


16


4,321


(1,260
)

3,061

Other revenues

240


14


11


13


35


84


397


42


439

Net investment gains (losses)

—


—


—


—


—


—


—


(288
)

(288
)
Net derivative gains (losses)

—


—


—


—


—


—


—


4,201


4,201

Total revenues

7,955

 
3,017

 
1,139

 
766

 
2,548

 
112

 
15,537

 
2,773

 
18,310

Expenses









 



 



 
Policyholder benefits and claims and policyholder dividends

5,435


1,321


610


310


1,661


26


9,363


(49
)

9,314

Interest credited to policyholder account balances

458


445


70


27


218


—


1,218


(1,138
)

80

Capitalization of DAC

(112
)

(421
)

(100
)

(130
)

(5
)

(3
)

(771
)

(3
)

(774
)
Amortization of DAC and VOBA

119


315


74


130


100


1


739


49


788

Amortization of negative VOBA

—


(8
)

—


(2
)

—


—


(10
)

—


(10
)
Interest expense on debt

2


—


1


—


2


217


222


—


222

Other expenses

1,066


874


345


332


228


136


2,981


66


3,047

Total expenses

6,968

 
2,526

 
1,000

 
667

 
2,204

 
377

 
13,742

 
(1,075
)
 
12,667

Provision for income tax expense (benefit)

207


141


44


21


67


(166
)

314


928


1,242

Adjusted earnings

$
780

 
$
350

 
$
95

 
$
78

 
$
277

 
$
(99
)

1,481





Adjustments to:













 



 
Total revenues













2,773




 
Total expenses













1,075




 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 

(928
)



 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 

$
4,401




$
4,401


 
 

 
 
 
 
Three Months Ended March 31, 2019
 
U.S.
 
Asia
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
5,567

 
$
1,699

 
$
646

 
$
542

 
$
927

 
$
24

 
$
9,405

 
$
—

 
$
9,405

Universal life and investment-type product policy fees
 
270

 
406

 
284

 
103

 
274

 
1

 
1,338

 
27

 
1,365

Net investment income
 
1,719

 
880

 
296

 
74

 
1,287

 
25

 
4,281

 
627

 
4,908

Other revenues
 
221

 
16

 
12

 
14

 
67

 
94

 
424

 
70

 
494

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
15

 
15

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
115

 
115

Total revenues
 
7,777

 
3,001

 
1,238

 
733

 
2,555

 
144

 
15,448

 
854

 
16,302

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
5,373

 
1,319

 
597

 
284

 
1,648

 
20

 
9,241

 
131

 
9,372

Interest credited to policyholder account balances
 
501

 
403

 
94

 
24

 
226

 
—

 
1,248

 
713

 
1,961

Capitalization of DAC
 
(114
)
 
(479
)
 
(94
)
 
(117
)
 
(6
)
 
(2
)
 
(812
)
 
—

 
(812
)
Amortization of DAC and VOBA
 
114

 
307

 
78

 
92

 
63

 
1

 
655

 
(31
)
 
624

Amortization of negative VOBA
 
—

 
(9
)
 
—

 
(1
)
 
—

 
—

 
(10
)
 
—

 
(10
)
Interest expense on debt
 
2

 
—

 
1

 
—

 
2

 
229

 
234

 
—

 
234

Other expenses
 
993

 
955

 
366

 
338

 
227

 
222

 
3,101

 
88

 
3,189

Total expenses
 
6,869

 
2,496

 
1,042

 
620

 
2,160

 
470

 
13,657

 
901

 
14,558

Provision for income tax expense (benefit)
 
184

 
149

 
62

 
27

 
78

 
(165
)
 
335

 
24

 
359

Adjusted earnings
 
$
724

 
$
356

 
$
134

 
$
86

 
$
317

 
$
(161
)
 
1,456

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
854

 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
(901
)
 
 
 
 
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
 
 
 
 
(24
)
 
 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,385

 
 
 
$
1,385


The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
 
March 31, 2020
 
December 31, 2019
 
 
(In millions)
U.S.
 
$
273,341

 
$
266,174

Asia
 
160,442

 
161,018

Latin America
 
61,526

 
75,069

EMEA
 
24,365

 
27,281

MetLife Holdings
 
172,347

 
175,199

Corporate & Other
 
45,720

 
35,722

Total
 
$
737,741

 
$
740,463