Closed Block

3 Months Ended

Mar. 31, 2022

5. Closed Block

On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan of Reorganization”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.

Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.

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.

Information regarding the closed block liabilities and assets designated to the closed block was as follows at:


	March 31, 2022		December 31, 2021
	(In millions)
Closed Block Liabilities
Future policy benefits	$	37,787	$	38,046
Other policy-related balances	312		290
Policyholder dividends payable	249		253
Policyholder dividend obligation	—		1,682
Deferred income tax liability	146		210
Other liabilities	337		263
Total closed block liabilities	38,831		40,744
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	23,412		25,669
Equity securities, at estimated fair value	14		21
Mortgage loans	6,462		6,417
Policy loans	4,149		4,191
Real estate and real estate joint ventures	547		565
Other invested assets	551		535
Total investments	35,135		37,398
Cash and cash equivalents	203		126
Accrued investment income	389		384
Premiums, reinsurance and other receivables	38		50
Current income tax recoverable	89		81
Total assets designated to the closed block	35,854		38,039
Excess of closed block liabilities over assets designated to the closed block	2,977		2,705
AOCI:
Unrealized investment gains (losses), net of income tax	970		2,562
Unrealized gains (losses) on derivatives, net of income tax	123		107
Allocated to policyholder dividend obligation, net of income tax	—		(1,329)
Total amounts included in AOCI	1,093		1,340
Maximum future earnings to be recognized from closed block assets and liabilities	$	4,070	$	4,045

Information regarding the closed block policyholder dividend obligation was as follows:


	Three Months Ended March 31, 2022		Year Ended December 31, 2021
	(In millions)
Balance, beginning of period	$	1,682	$	2,969
Change in unrealized investment and derivative gains (losses)	(1,682)		(1,287)
Balance, end of period	$	—	$	1,682

Information regarding the closed block revenues and expenses was as follows:


		Three Months Ended March 31,
		2022		2021
	(In millions)
Revenues
Premiums		$	275	$	320
Net investment income		361		393
Net investment gains (losses)		(32)		6
Net derivative gains (losses)		3		1
Total revenues		607		720
Expenses
Policyholder benefits and claims		483		546
Policyholder dividends		133		178
Other expenses		23		25
Total expenses		639		749
Revenues, net of expenses before provision for income tax expense (benefit)		(32)		(29)
Provision for income tax expense (benefit)		(7)		(6)
Revenues, net of expenses and provision for income tax expense (benefit)		$	(25)	$	(23)

MLIC charges the closed block with federal income taxes, state and local premium taxes and other state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan of Reorganization. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.