Closed Block

6 Months Ended

Jun. 30, 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:


	June 30, 2022		December 31, 2021
	(In millions)
Closed Block Liabilities
Future policy benefits	$	37,593	$	38,046
Other policy-related balances	274		290
Policyholder dividends payable	250		253
Policyholder dividend obligation	—		1,682
Deferred income tax liability	—		210
Other liabilities	368		263
Total closed block liabilities	38,485		40,744
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	21,257		25,669
Equity securities, at estimated fair value	14		21
Mortgage loans	6,624		6,417
Policy loans	4,120		4,191
Real estate and real estate joint ventures	583		565
Other invested assets	712		535
Total investments	33,310		37,398
Cash and cash equivalents	201		126
Accrued investment income	379		384
Premiums, reinsurance and other receivables	43		50
Current income tax recoverable	91		81
Deferred income tax asset	196		—
Total assets designated to the closed block	34,220		38,039
Excess of closed block liabilities over assets designated to the closed block	4,265		2,705
AOCI:
Unrealized investment gains (losses), net of income tax	(460)		2,562
Unrealized gains (losses) on derivatives, net of income tax	257		107
Allocated to policyholder dividend obligation, net of income tax	—		(1,329)
Total amounts included in AOCI	(203)		1,340
Maximum future earnings to be recognized from closed block assets and liabilities	$	4,062	$	4,045

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


	Six Months Ended June 30, 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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Revenues
Premiums	$	274	$	325	$	549	$	645
Net investment income	352		382		713		775
Net investment gains (losses)	(16)		(11)		(48)		(5)
Net derivative gains (losses)	8		6		11		7
Total revenues	618		702		1,225		1,422
Expenses
Policyholder benefits and claims	462		520		945		1,066
Policyholder dividends	128		173		261		351
Other expenses	23		24		46		49
Total expenses	613		717		1,252		1,466
Revenues, net of expenses before provision for income tax expense (benefit)	5		(15)		(27)		(44)
Provision for income tax expense (benefit)	1		(3)		(6)		(9)
Revenues, net of expenses and provision for income tax expense (benefit)	$	4	$	(12)	$	(21)	$	(35)

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.