Closed Block

12 Months Ended

Dec. 31, 2024

10. 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. Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience.

The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years from the Demutualization Date.

The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities over closed block assets at the Demutualization Date (adjusted to eliminate the impact of related amounts in AOCI) represents the estimated maximum future earnings from the closed block expected to result from operations, attributed net of income tax, to the closed block. Earnings of the closed block are recognized in income over the period the policies and contracts in the closed block remain in-force.

If, over the period the closed block remains in existence, the actual cumulative earnings of the closed block are greater than the expected cumulative earnings of the closed block, the Company will pay the excess to closed block policyholders as additional policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed block are less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However, the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual cumulative earnings equal the expected cumulative earnings.

At least annually, management performs a premium deficiency test using best estimate assumptions to determine whether the projected future earnings of the closed block are sufficient to support the payment of future closed block contractual benefits. The most recent deficiency test demonstrated that the projected future earnings of the closed block are sufficient to support the payment of future closed block contractual benefits.

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 policy count within 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 liabilities and assets designated to the closed block was as follows at:


	December 31,
	2024		2023
	(In millions)
Closed Block Liabilities
FPBs	$	35,015	$	36,142
Other policy-related balances	315		319
Policyholder dividends payable	174		174
Current income tax payable	6		—
Other liabilities	854		668
Total closed block liabilities	36,364		37,303
Assets Designated to the Closed Block
Investments:
Fixed maturity securities AFS, at estimated fair value	18,958		19,939
Equity securities, at estimated fair value	11		10
Mortgage loans	5,720		6,151
Policy loans	3,829		3,960
Real estate and REJV	659		668
Other invested assets	512		496
Total investments	29,689		31,224
Cash and cash equivalents	930		717
Accrued investment income	367		383
Premiums, reinsurance and other receivables	45		54
Current income tax recoverable	—		3
Deferred income tax asset	470		312
Total assets designated to the closed block	31,501		32,693
Excess of closed block liabilities over assets designated to the closed block	4,863		4,610
AOCI:
Unrealized investment gains (losses), net of income tax	(1,256)		(820)
Unrealized gains (losses) on derivatives, net of income tax	183		130
Total amounts included in AOCI	(1,073)		(690)
Maximum future earnings to be recognized from closed block assets and liabilities	$	3,790	$	3,920

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


	Years Ended December 31,
	2024		2023		2022
	(In millions)
Balance at January 1,	$	—	$	—	$	1,682
Change in unrealized investment and derivative gains (losses)	—		—		(1,682)
Balance at December 31,	$	—	$	—	$	—

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


	Years Ended December 31,
	2024		2023		2022
	(In millions)
Revenues
Premiums	$	874	$	922	$	1,104
Net investment income	1,362		1,362		1,382
Net investment gains (losses)	(28)		7		(51)
Net derivative gains (losses)	15		—		33
Total revenues	2,223		2,291		2,468
Expenses
Policyholder benefits and claims	1,621		1,706		1,890
Policyholder dividends	354		366		458
Other expenses	82		86		90
Total expenses	2,057		2,158		2,438
Revenues, net of expenses before provision for income tax expense (benefit)	166		133		30
Provision for income tax expense (benefit)	36		28		6
Revenues, net of expenses and provision for income tax expense (benefit)	$	130	$	105	$	24

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.