Fair Value

9 Months Ended

Sep. 30, 2012

Fair Value [Abstract]

Fair Value

5. Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis, including those items for which the Company has elected the FVO, were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:

	September 30, 2012
	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate securities	$	—	$	106,243	$	7,699	$	113,942
Foreign corporate securities		—		59,947		5,310		65,257
Foreign government securities		—		54,815		2,590		57,405
U.S. Treasury and agency securities		28,672		22,702		74		51,448
RMBS		1,009		37,009		2,573		40,591
CMBS		—		18,226		1,214		19,440
ABS		—		12,155		2,850		15,005
State and political subdivision securities		—		14,852		65		14,917
Total fixed maturity securities		29,681		325,949		22,375		378,005
Equity securities:
Common stock		860		947		262		2,069
Non-redeemable preferred stock		—		308		426		734
Total equity securities		860		1,255		688		2,803
Trading and other securities:
Actively Traded Securities		3		548		14		565
FVO general account securities		—		147		31		178
FVO contractholder-directed unit-linked investments		8,565		5,513		1,121		15,199
FVO securities held by CSEs		—		53		—		53
Total trading and other securities		8,568		6,261		1,166		15,995
Short-term investments (1)		7,108		5,590		1,097		13,795
Mortgage loans:
Commercial mortgage loans held by CSEs		—		2,879		—		2,879
Mortgage loans held-for-sale (2), (3)		—		—		64		64
Total mortgage loans		—		2,879		64		2,943
Other invested assets:
Mortgage Servicing Rights (“MSRs”)		—		—		490		490
Other investments		269		127		—		396
Derivative assets: (4)
Interest rate		10		11,106		244		11,360
Foreign currency exchange rate		—		864		62		926
Credit		—		59		41		100
Equity market		65		2,714		563		3,342
Total derivative assets		75		14,743		910		15,728
Total other invested assets		344		14,870		1,400		16,614
Net embedded derivatives within asset host contracts (5)		—		1		428		429
Separate account assets (6)		34,037		201,929		1,407		237,373
Total assets	$	80,598	$	558,734	$	28,625	$	667,957
Liabilities:
Derivative liabilities: (4)
Interest rate	$	20	$	2,730	$	27	$	2,777
Foreign currency exchange rate		—		1,297		4		1,301
Credit		—		40		1		41
Equity market		2		352		238		592
Total derivative liabilities		22		4,419		270		4,711
Net embedded derivatives within liability host contracts (5)		—		19		4,350		4,369
Long-term debt of CSEs		—		2,685		48		2,733
Liability related to securitized reverse residential mortgage loans (3), (7)		—		—		—		—
Trading liabilities (7)		118		3		—		121
Total liabilities	$	140	$	7,126	$	4,668	$	11,934

	December 31, 2011
	Fair Value Measurements at Reporting Date Using						Total Estimated Fair Value
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate securities	$	—	$	99,001	$	6,784	$	105,785
Foreign corporate securities		—		59,648		4,370		64,018
Foreign government securities		76		50,138		2,322		52,536
U.S. Treasury and agency securities		19,911		20,070		31		40,012
RMBS		—		41,035		1,602		42,637
CMBS		—		18,316		753		19,069
ABS		—		11,129		1,850		12,979
State and political subdivision securities		—		13,182		53		13,235
Total fixed maturity securities		19,987		312,519		17,765		350,271
Equity securities:
Common stock		819		1,105		281		2,205
Non-redeemable preferred stock		—		380		438		818
Total equity securities		819		1,485		719		3,023
Trading and other securities:
Actively Traded Securities		—		473		—		473
FVO general account securities		—		244		23		267
FVO contractholder-directed unit-linked investments		7,572		8,453		1,386		17,411
FVO securities held by CSEs		—		117		—		117
Total trading and other securities		7,572		9,287		1,409		18,268
Short-term investments (1)		8,150		8,120		590		16,860
Mortgage loans:
Commercial mortgage loans held by CSEs		—		3,138		—		3,138
Mortgage loans held-for-sale (2)		—		9,302		1,414		10,716
Total mortgage loans		—		12,440		1,414		13,854
Other invested assets:
MSRs		—		—		666		666
Other investments		312		124		—		436
Derivative assets: (4)
Interest rate		32		10,426		338		10,796
Foreign currency exchange rate		1		1,316		61		1,378
Credit		—		301		29		330
Equity market		29		2,703		964		3,696
Total derivative assets		62		14,746		1,392		16,200
Total other invested assets		374		14,870		2,058		17,302
Net embedded derivatives within asset host contracts (5)		—		1		362		363
Separate account assets (6)		28,191		173,507		1,325		203,023
Total assets	$	65,093	$	532,229	$	25,642	$	622,964
Liabilities:
Derivative liabilities: (4)
Interest rate	$	91	$	2,351	$	38	$	2,480
Foreign currency exchange rate		—		1,103		17		1,120
Credit		—		85		28		113
Equity market		12		211		75		298
Total derivative liabilities		103		3,750		158		4,011
Net embedded derivatives within liability host contracts (5)		—		19		4,565		4,584
Long-term debt of CSEs		—		2,952		116		3,068
Liability related to securitized reverse residential mortgage loans (7)		—		6,451		1,175		7,626
Trading liabilities (7)		124		3		—		127
Total liabilities	$	227	$	13,175	$	6,014	$	19,416

(1) Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.

(2) Mortgage loans held-for-sale are comprised of securitized reverse residential mortgage loans and other mortgage loans held-for-sale. The amounts in the preceding tables differ from the amount presented in the consolidated balance sheets as these tables do not include mortgage loans that are stated at lower of amortized cost or estimated fair value.

(3) As described in Note 2, the Company is exiting the businesses of originating forward and reverse residential mortgage loans, intends to dispose of the depository business of MetLife Bank and has sold MetLife Bank’s reverse mortgage servicing rights resulting in the disposition of certain mortgage loans and the de-recognition of its securitized reverse residential mortgage loans and corresponding liabilities presented in the table above and in the related fair value disclosures.

(4) Derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(5) Net embedded derivatives within asset host contracts are presented primarily within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented primarily within PABs in the consolidated balance sheets. At September 30, 2012, fixed maturity securities and equity securities also included embedded derivatives of $0 and ($97) million, respectively. At December 31, 2011, fixed maturity securities and equity securities included embedded derivatives of $2 million and ($72) million, respectively.

(6) Separate account assets are measured at estimated fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets.

(7) The liability related to securitized reverse residential mortgage loans and trading liabilities are presented within other liabilities in the consolidated balance sheets.

Investments

On behalf of the Company’s chief investment officer and chief financial officer, a pricing and valuation committee that is independent of the trading and investing functions and comprised of senior management, provides oversight of control systems and valuation policies for securities, mortgage loans and derivatives. On a monthly basis, this committee reviews and approves new transaction types and markets, ensures that observable market prices and market-based parameters are used for valuation, wherever possible, determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time and provides oversight of the selection of independent third party pricing providers and the controls and procedures to evaluate third party pricing. Periodically, the chief accounting officer reports to the Audit Committee of MetLife, Inc.’s Board of Directors regarding compliance with fair value accounting standards.

The Company reviews its valuation methodologies on an ongoing basis and revises those methodologies when necessary based on changing market conditions. Assurance is gained on the overall reasonableness and consistent application of input assumptions, valuation methodologies and compliance with fair value accounting standards through controls designed to ensure valuations represent an exit price. Several controls are utilized, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, comparing fair value estimates to management’s knowledge of the current market, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. The Company ensures that prices received from independent brokers, also referred to herein as “consensus pricing,” represent a reasonable estimate of fair value by reviewing such pricing with the Company’s knowledge of the current market dynamics and current pricing for similar financial instruments. While independent non-binding broker quotations are utilized, they are not used for a significant portion of the portfolio. For example, fixed maturity securities priced using independent non-binding broker quotations represent less than 0.6% of the total estimated fair value of fixed maturity securities and represent only 9% of the total estimated fair value of Level 3 fixed maturity securities.

The Company also applies a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained, or an internally developed valuation is prepared. Internally developed valuations of current estimated fair value, which reflect internal estimates of liquidity and nonperformance risks, compared with pricing received from the independent pricing services, did not produce material differences in the estimated fair values for the majority of the portfolio; accordingly, overrides were not material. This is, in part, because internal estimates of liquidity and nonperformance risks are generally based on available market evidence and estimates used by other market participants. In the absence of such market-based evidence, management’s best estimate is used.

Securities, Short-term Investments, Other Investments, Long-term Debt of CSEs and Trading Liabilities

When available, the estimated fair value of fixed maturity securities, equity securities, trading and other securities and short-term investments are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management’s judgment.

When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs can be based in large part on management’s judgment or estimation and cannot be supported by reference to market activity. Even though these inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances.

The estimated fair value of FVO securities held by CSEs, other investments, long-term debt of CSEs and trading liabilities is determined on a basis consistent with the methodologies described herein for securities.

The Company consolidates certain securitization entities that hold securities that have been accounted for under the FVO and classified within trading and other securities.

The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings.

Level 2 Measurements:

This level includes fixed maturity securities and equity securities priced principally by independent pricing services using observable inputs. Trading and other securities, short-term investments and other investments within this level are of a similar nature and class to the Level 2 fixed maturity securities and equity securities described below. Contractholder-directed unit-linked investments reported within trading and other securities include mutual fund interests without readily determinable fair values given prices are not published publicly. Valuation of these mutual funds is based upon quoted prices or reported net asset values (“NAVs”) provided by the fund managers, which were based on observable inputs.

U.S. corporate and foreign corporate securities

These securities are principally valued using the market and income approaches. Valuations are based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques that use standard market observable inputs such as benchmark yields, spreads off benchmark yields, new issuances, issuer rating, duration, and trades of identical or comparable securities. Investment grade privately placed securities are valued using discounted cash flow (“DCF”) methodologies using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. This level also includes certain below investment grade privately placed fixed maturity securities priced by independent pricing services that use observable inputs.

Foreign government and state and political subdivision securities

These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market observable inputs including benchmark U.S. Treasury yield or other yields, issuer ratings, broker-dealer quotes, issuer spreads and reported trades of similar securities, including those within the same sub-sector or with a similar maturity or credit rating.

U.S. Treasury and agency securities

These securities are principally valued using the market approach. Valuation is based primarily on quoted prices in markets that are not active or using matrix pricing or other similar techniques using standard market observable inputs such as benchmark U.S. Treasury yield curve, the spread off the U.S. Treasury yield curve for the identical security and comparable securities that are actively traded.

Structured securities comprised of RMBS, CMBS and ABS

These securities are principally valued using the market approach and income approach. Valuation is based primarily on matrix pricing, DCF methodologies or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans.

Common and non-redeemable preferred stock

These securities are principally valued using the market approach where market quotes are available but are not considered actively traded. Valuation is based principally on observable inputs including quoted prices in markets that are not considered active.

Level 3 Measurements:

In general, fixed maturity securities and equity securities classified within Level 3 use many of the same valuation techniques and inputs as described in Level 2 Measurements. However, if key inputs are unobservable, or if the investments are less liquid and there is very limited trading activity, the investments are generally classified as Level 3. The use of independent non-binding broker quotations to value investments generally indicates there is a lack of liquidity or a lack of transparency in the process to develop the valuation estimates generally causing these investments to be classified in Level 3.

Trading and other securities and short-term investments within this level are of a similar nature and class to the Level 3 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below.

U.S. corporate and foreign corporate securities

These securities, including financial services industry hybrid securities classified within fixed maturity securities, are principally valued using the market approach. Valuations are based primarily on matrix pricing or other similar techniques that utilize unobservable inputs or inputs that cannot be derived principally from, or corroborated by, observable market data, including illiquidity premium, delta spread adjustments or spreads over below investment grade curves to reflect industry trends or specific credit-related issues; and inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2. Certain valuations are based on independent non-binding broker quotations.

Foreign government and state and political subdivision securities

These securities are principally valued using the market approach. Valuation is based primarily on independent non-binding broker quotations and inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2.

Structured securities comprised of RMBS, CMBS and ABS

These securities are principally valued using the market approach and income approach. Valuation is based primarily on matrix pricing, DCF methodologies or other similar techniques that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data including spreads over below investment grade curves to reflect industry trends on specific credit-related issues. Below investment grade securities, alternative residential mortgage loan RMBS and RMBS supported by sub-prime mortgage loans included in this level are valued based on inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2. Certain of these valuations are based on independent non-binding broker quotations.

Common and non-redeemable preferred stock

These securities, including privately held securities and financial services industry hybrid securities classified within equity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing, DCF methodologies or other similar techniques using inputs such as comparable credit rating and issuance structure. Certain of these securities are valued based on inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2 and independent non-binding broker quotations.

Mortgage Loans, MSRs and Liability Related to Securitized Reverse Residential Mortgage Loans

The Company has elected the FVO for commercial mortgage loans held by CSEs, residential mortgage loans held-for-sale, securitized reverse residential mortgage loans, MSRs and the liability related to securitized reverse residential mortgage loans. Although MSRs are not financial instruments, the Company has included them in the preceding table as a result of its election to carry them at estimated fair value.

Level 2 Measurements:

Commercial Mortgage Loans Held by CSEs

These investments are principally valued using the market approach. The principal market for these investments is the securitization market. The Company uses the quoted securitization market price of the obligations of the CSEs to determine the estimated fair value of these commercial loan portfolios. These market prices are determined principally by independent pricing services using observable inputs.

Mortgage Loans Held-For-Sale

Residential mortgage loans held-for-sale are principally valued using the market approach. For securitized reverse residential mortgage loans, valuation is based primarily on readily available observable pricing for securities backed by similar fixed-rate loans. For other residential mortgage loans held-for-sale, valuation is based primarily on readily available observable pricing for securities backed by similar loans. The unobservable adjustments to such prices are insignificant.

Liability Related to Securitized Reverse Residential Mortgage Loans

The estimated fair value of this liability is based on quoted prices when traded as assets in active markets or, if not available, based on market standard valuation methodologies consistent with the Company’s methods and assumptions used to estimate the fair value of comparable financial instruments.

Level 3 Measurements:

Mortgage Loans Held-for-Sale

For both securitized reverse residential mortgage loans held-for-sale and other residential mortgage loans held-for-sale, for which pricing for securities backed by similar adjustable-rate loans is not observable, the estimated fair value is determined using unobservable independent broker quotations or valuation models using significant unobservable inputs.

MSRs

MSRs, which are valued using an income approach, are carried at estimated fair value and have multiple significant unobservable inputs including assumptions regarding estimates of discount rates, loan prepayments and servicing costs. Sales of MSRs tend to occur in private transactions where the precise terms and conditions of the sales are typically not readily available and observable market valuations are limited. As such, the Company relies primarily on a DCF model to estimate the fair value of the MSRs. The model requires inputs such as type of loan (fixed vs. variable and agency vs. other), age of loan, loan interest rates and current market interest rates that are generally observable. The model also requires the use of unobservable inputs including assumptions regarding estimates of discount rates, loan prepayments and servicing costs.

Liability Related to Securitized Reverse Residential Mortgage Loans

The estimated fair value of this liability is based on quoted prices when traded as assets in less active markets or, if not available, based on market standard valuation methodologies using unobservable inputs, consistent with the Company’s methods and assumptions used to estimate the fair value of comparable financial instruments.

Separate Account Assets

Separate account assets are carried at estimated fair value and reported as a summarized total on the consolidated balance sheets. The estimated fair value of separate account assets is based on the estimated fair value of the underlying assets. Assets within the Company’s separate accounts include: mutual funds, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents.

Level 2 Measurements:

These assets are comprised of investments that are similar in nature to the instruments described under “— Securities, Short-term Investments, Other Investments, Long-term Debt of CSEs and Trading Liabilities” and “— Freestanding Derivatives.” Also included are certain mutual funds and hedge funds without readily determinable fair values given prices are not published publicly. Valuation of the mutual funds and hedge funds is based upon quoted prices or reported NAVs provided by the fund managers.

Level 3 Measurements:

These assets are comprised of investments that are similar in nature to the instruments described under “— Securities, Short-term Investments, Other Investments, Long-term Debt of CSEs and Trading Liabilities” and “— Freestanding Derivatives.” Separate account assets within this level also include other limited partnership interests. Other limited partnership interests are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables which may impact the exit value of the particular partnership interest.

Derivatives

The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives and interest rate forwards to sell certain to be announced securities, or through the use of pricing models for OTC derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. The valuation process for derivatives is described above in “— Investments.”

The significant inputs to the pricing models for most OTC derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, certain OTC derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant inputs that are unobservable generally include references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its derivative positions using the standard swap curve which includes a spread to the risk free rate. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with the standard swap curve. As the Company and its significant derivative counterparties consistently execute trades at such pricing levels, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Most inputs for OTC derivatives are mid-market inputs but, in certain cases, bid level inputs are used when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

Freestanding Derivatives

Level 2 Measurements:

This level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded derivatives and interest rate forwards to sell certain to-be-announced securities included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. These derivatives are principally valued using the income approach.

Interest rate

Non-option-based. — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and LIBOR basis curves.

Option-based. — Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves and interest rate volatility.

Foreign currency exchange rate

Non-option-based. — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates and cross currency basis curves.

Option-based. — Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates, cross currency basis curves and currency volatility.

Credit

Non-option-based. — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves and recovery rates.

Equity market

Non-option-based. — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels and dividend yield curves.

Option-based. — Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves and equity volatility.

Level 3 Measurements:

These derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. These valuation methodologies generally use the same inputs as described in the corresponding sections above for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data.

Interest rate

Non-option-based. — Significant unobservable inputs may include pull through rates on interest rate lock commitments and the extrapolation beyond observable limits of the swap yield curve and LIBOR basis curves.

Option-based. — Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves and interest rate volatility.

Foreign currency exchange rate

Non-option-based. — Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves, cross currency basis curves and currency correlation.

Option-based. — Significant unobservable inputs may include currency correlation and the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves, cross currency basis curves and currency volatility.

Credit

Non-option-based. — Significant unobservable inputs may include credit spreads, repurchase rates and the extrapolation beyond observable limits of the swap yield curve and credit curves. Certain of these derivatives are valued based on independent non-binding broker quotations.

Equity market

Non-option-based. — Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves and equity volatility.

Option-based. — Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves, equity volatility and unobservable correlation between model inputs.

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees and equity or bond indexed crediting rates within certain funding agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The Company issues and assumes certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs are embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within PABs in the consolidated balance sheets.

The fair value of these embedded derivatives, estimated as the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk free rates.

Capital market assumptions, such as risk free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience.

The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc.

Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income.

The Company ceded the risk associated with certain of the GMIBs and GMABs previously described. These reinsurance agreements contain embedded derivatives which are included within premiums, reinsurance and other receivables in the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses) or policyholder benefits and claims depending on the statement of operations classification of the direct risk. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer.

The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as previously described in “— Securities, Short-term Investments, Other Investments, Long-term Debt of CSEs and Trading Liabilities.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities in the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

The estimated fair value of the embedded equity and bond indexed derivatives contained in certain funding agreements is determined using market standard swap valuation models and observable market inputs, including a nonperformance risk adjustment. The estimated fair value of these embedded derivatives are included, along with their funding agreements host, within PABs with changes in estimated fair value recorded in net derivative gains (losses). Changes in equity and bond indices, interest rates and the Company’s credit standing may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

Embedded Derivatives Within Asset and Liability Host Contracts

Level 3 Measurements:

Direct and Assumed Guaranteed Minimum Benefits

These embedded derivatives are principally valued using the income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curve, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of capital for purposes of calculating the risk margin.

Reinsurance Ceded on Certain Guaranteed Minimum Benefits

These embedded derivatives are principally valued using the income approach. The valuation techniques and significant market standard unobservable inputs used in their valuation are similar to those described above in “— Direct and Assumed Guaranteed Minimum Benefits” and also include counterparty credit spreads.

Transfers between Levels:

Overall, transfers between levels occur when there are changes in the observability of inputs and market activity. Transfers into or out of any level are assumed to occur at the beginning of the period.

Transfers between Levels 1 and 2:

For assets and liabilities measured at estimated fair value and still held at September 30, 2012, transfers from Level 1 to Level 2 and from Level 2 to Level 1 were $11 million and $0, respectively. Transfers were comprised of fixed maturity securities. Transfers between Levels 1 and 2 for assets and liabilities measured at estimated fair value and still held at December 31, 2011 were not significant.

Transfers into or out of Level 3:

Transfers into or out of Level 3 are presented in the tables which follow. Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

Transfers into Level 3 for fixed maturity securities and separate account assets were due primarily to a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade) which have resulted in decreased transparency of valuations and an increased use of independent non-binding broker quotations and unobservable inputs to determine estimated fair value.

Transfers out of Level 3 for fixed maturity securities and separate account assets resulted primarily from increased transparency of both new issuances that subsequent to issuance and establishment of trading activity, became priced by independent pricing services and existing issuances that, over time, the Company was able to obtain pricing from, or corroborate pricing received from, independent pricing services with observable inputs or increases in market activity and upgraded credit ratings. With respect to derivatives, transfers out of Level 3 resulted primarily from increased transparency related to the observable portion of the swap yield curve or the observable portion of the equity volatility surface.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	Valuation Techniques	Significant Unobservable Inputs	Range						Weighted Average
Fixed maturity securities:
U.S. corporate and foreign corporate securities	• Matrix pricing	• Delta spread adjustments (1)		(100	)	–	512			91
		• Illiquidity premium (1)		30		–	30
		• Spreads from below investment grade curves (1)		(179	)	–	879			231
		• Offered quotes (2)		—		–	255
	• Market pricing	• Quoted prices (2)		(1,411	)	–	826			141
	• Consensus pricing	• Offered quotes (2)		—		–	600
Foreign government securities	• Matrix pricing	• Spreads from below investment grade curves (1)		(69	)	–	150			64
	• Market pricing	• Quoted prices (2)		—			143			100
	• Consensus pricing	• Offered quotes (2)		82		–	189
RMBS	• Matrix pricing and DCF	• Spreads from below investment grade curves (1)		—		–	4,537			470
	• Market pricing	• Quoted prices (2)		13		–	109			104
	• Consensus pricing	• Offered quotes (2)		45		–	100
CMBS	• Matrix pricing and DCF	• Spreads from below investment grade curves (1)		—		–	9,069			366
	• Market pricing	• Quoted prices (2)		11		–	106			98
ABS	• Matrix pricing and DCF	• Spreads from below investment grade curves (1)		—		–	1,830			131
	• Market pricing	• Quoted prices (2)		40		–	102			100
	• Consensus pricing	• Offered quotes (2)		—		–	111
Derivatives:
Interest rate	• Present value techniques	•Swap yield (1)		227		–	352
Foreign currency exchange rate	• Present value techniques	• Swap yield (1)		194		–	231
		• Currency correlation		41	%	–	57	%
Credit	• Present value techniques	•Credit spreads (1)		—		–	100
	• Consensus pricing	•Offered quotes (3)
Equity market	• Present value techniques	• Volatility		13	%	–	34	%
	or option pricing models	• Correlation		65	%	–	65	%
Embedded derivatives:
Direct and assumed guaranteed minimum benefits	• Option pricing techniques	• Mortality rates:
		Ages 0 - 40		0	%	–	0.13	%
		Ages 41 - 60		0.05	%	–	0.88	%
		Ages 61 – 115		0.26	%	–	100	%
		• Lapse rates:
		Durations 1 - 10		0.50	%	–	100	%
		Durations 11 - 20		2.00	%	–	100	%
		Durations 21 - 116		1.25	%	–	100	%
		• Utilization rates (4)		20	%	–	50	%
		• Withdrawal rates		0.07	%	–	20	%
		• Long-term equity volatilities		15.18	%	–	40	%
		• Nonperformance risk spread		0.15	%	–	2.05	%

(1) For this unobservable input, range and weighted average are presented in basis points.

(2) For this unobservable input, range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.

(3) At September 30, 2012, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.

(4) This range is attributable to certain GMIB and lifetime withdrawal benefits.

The following is a summary of the valuation techniques and significant unobservable inputs used in the fair value measurement for other types of financial instruments classified within Level 3. These financial instruments are subject to the controls described under “— Investments.” Generally, all other classes of securities including those within separate account assets use the same valuation techniques and significant unobservable inputs as previously described for Level 3 fixed maturity securities. This includes matrix pricing and DCF methodologies, inputs such as quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, as well as independent non-binding broker quotations. Mortgage loans held-for-sale are valued using independent non-binding broker quotations and internal models such as DCF methodologies using current interest rates. MSRs are valued using DCF methodologies using inputs such as discount rates, loan prepayments and servicing costs. The long-term debt of CSEs is valued using independent non-binding broker quotations and internal models including matrix pricing and DCF methodologies using current interest rates. The liability related to securitized reverse residential mortgage loans is valued using quoted prices. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other types of financial instruments is similar in nature to that described below.

A description of the sensitivity of the estimated fair value to changes in the significant unobservable inputs for certain of the major asset and liability classes described above is as follows:

U.S. corporate and foreign corporate securities

Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation would result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations. Significant increases (decreases) in offered quotes in isolation would result in substantially higher (lower) valuations.

Foreign government securities

Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations. Significant increases (decreases) in offered quotes in isolation would result in substantially higher (lower) valuations.

Structured securities comprised of RMBS, CMBS and ABS

Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in offered quotes in isolation would result in substantially higher (lower) valuations. In general, changes in the assumptions used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

Interest rate

Significant increases (decreases) in the unobservable portion of the swap yield curve in isolation will result in substantial valuation changes.

Foreign currency exchange rate

Significant increases (decreases) in the unobservable portion of the swap yield curve in isolation will result in substantial valuation changes. Increases (decreases) in currency correlation in isolation will increase (decrease) the significance of the change in valuations. 

Credit

Credit contracts with significant unobservable inputs are primarily comprised of credit default swaps written by the Company. Significant credit spread widening in isolation will result in substantially higher adverse valuations, while significant spread tightening will result in substantially lower adverse valuations. Significant increases (decreases) in offered quotes in isolation will result in substantially higher (lower) valuations.

Equity market

Significant decreases in the equity volatility in isolation will adversely impact overall valuation, while significant increases in equity volatility will result in substantial valuation increases. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.

Direct and assumed guaranteed minimum benefits

For any increase (decrease) in mortality and lapse rates, the fair value of the guarantees will decrease (increase). For any increase (decrease) in utilization and volatility, the fair value of the guarantees will increase (decrease). Specifically for GMWBs, for any increase (decrease) in withdrawal rates, the fair value of the guarantees will increase (decrease). Specifically for GMABs and GMIBs, for any increase (decrease) in withdrawal rates, the fair value of the guarantees will decrease (increase).

The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3), including realized and unrealized gains (losses) of all assets and (liabilities) and realized and unrealized gains (losses) of all assets and (liabilities) still held at the end of the respective periods:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate Securities			Foreign Corporate Securities			Foreign Government Securities			U.S. Treasury and Agency Securities		RMBS			CMBS			ABS			State and Political Subdivision Securities			Other Fixed Maturity Securities
	(In millions)
Three Months Ended September 30, 2012:
Balance, beginning of period	$	7,394		$	4,813		$	2,386		$	74	$	2,363		$	1,038		$	2,680		$	76		$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		5			5			4			—		8			—			4			—			—
Net investment gains (losses)		(6	)		(13	)		6			—		(3	)		(1	)		—			—			—
Net derivative gains (losses)		—			—			—			—		—			—			—			—			—
Other revenues		—			—			—			—		—			—			—			—			—
Policyholder benefits and claims		—			—			—			—		—			—			—			—			—
Other expenses		—			—			—			—		—			—			—			—			—
Other comprehensive income (loss)		323			135			43			—		108			7			32			1			—
Purchases (3)		442			630			370			—		249			416			215			15			—
Sales (3)		(348	)		(276	)		(254	)		—		(114	)		(249	)		(47	)		(6	)		—
Issuances (3)		—			—			—			—		—			—			—			—			—
Settlements (3)		—			—			—			—		—			—			—			—			—
Transfers into Level 3 (4)		128			172			51			—		11			26			2			—			—
Transfers out of Level 3 (4)		(239	)		(156	)		(16	)		—		(49	)		(23	)		(36	)		(21	)		—
Balance, end of period	$	7,699		$	5,310		$	2,590		$	74	$	2,573		$	1,214		$	2,850		$	65		$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	3		$	5		$	5		$	—	$	8		$	—		$	4		$	—		$	—
Net investment gains (losses)	$	(3	)	$	(10	)	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						Trading and Other Securities:
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities			FVO General Account Securities			FVO Contractholder- directed Unit-linked Investments			Short-term Investments			Mortgage Loans Held- for-sale			MSRs (5)
	(In millions)
Three Months Ended September 30, 2012:
Balance, beginning of period	$	282		$	432		$	13		$	26		$	1,096		$	717		$	211		$	564
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			7			32			1			—			—
Net investment gains (losses)		8			1			—			—			—			—			—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			(23	)		(37	)
Policyholder benefits and claims		—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		(2	)		4			—			—			—			15			—			—
Purchases (3)		76			1			14			—			903			515			—			—
Sales (3)		(102	)		(60	)		(11	)		(2	)		(909	)		(337	)		(145	)		—
Issuances (3)		—			—			—			—			—			—			2			4
Settlements (3)		—			—			—			—			—			—			(10	)		(41	)
Transfers into Level 3 (4)		—			48			—			—			1			186			30			—
Transfers out of Level 3 (4)		—			—			(2	)		—			(2	)		—			(1	)		—
Balance, end of period	$	262		$	426		$	14		$	31		$	1,121		$	1,097		$	64		$	490
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	—		$	—		$	—		$	6		$	6		$	—		$	—		$	—
Net investment gains (losses)	$	(1	)	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	(22	)	$	(24	)
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (6)											Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt of CSEs
	Interest Rate			Foreign Currency Exchange Rate			Credit		Equity Market												Liability Related to  Securitized Reverse Residential Mortgage Loans
	(In millions)
Three Months Ended September 30, 2012:
Balance, beginning of period	$	228		$	40		$	24	$	575		$	(3,961	)	$	1,445		$	(81	)	$	(98	)
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—		—			—			—			—			—
Net investment gains (losses)		—			—			—		—			—			18			7			—
Net derivative gains (losses)		(7	)		20			16		(187	)		291			—			—			—
Other revenues		—			—			—		—			—			—			—			—
Policyholder benefits and claims		—			—			—		11			(4	)		—			—			—
Other expenses		—			—			—		—			—			—			—			—
Other comprehensive income (loss)		(16	)		—			—		1			(78	)		—			—			—
Purchases (3)		—			—			—		7			—			144			—			—
Sales (3)		—			—			—		—			—			(74	)		—			97
Issuances (3)		—			—			—		—			—			—			—			—
Settlements (3)		12			(2	)		—		(82	)		(170	)		—			26			1
Transfers into Level 3 (4)		—			—			—		—			—			2			—			—
Transfers out of Level 3 (4)		—			—			—		—			—			(128	)		—			—
Balance, end of period	$	217		$	58		$	40	$	325		$	(3,922	)	$	1,407		$	(48	)	$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—	$	—		$	—		$	—		$	7		$	—
Net derivative gains (losses)	$	(4	)	$	19		$	16	$	(195	)	$	283		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—	$	10		$	(3	)	$	—		$	—		$	—
Other expenses	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate Securities			Foreign Corporate Securities			Foreign Government Securities			U.S. Treasury and Agency Securities			RMBS (9)			CMBS			ABS (9)			State and Political Subdivision Securities			Other Fixed Maturity Securities
	(In millions)
Three Months Ended September 30, 2011:
Balance, beginning of period	$	6,871		$	5,844		$	3,161		$	26		$	1,499		$	781		$	1,386		$	89		$	2
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		4			9			9			—			2			5			6			—			—
Net investment gains (losses)		26			2			(206	)		—			—			(1	)		(5	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		227			(120	)		302			2			(52	)		(1	)		11			(1	)		—
Purchases (3)		455			199			427			—			208			115			431			11			—
Sales (3)		(185	)		(447	)		(30	)		(3	)		(49	)		(57	)		(94	)		(1	)		(2	)
Issuances (3)		—			—			—			—			—			—			—			—			—
Settlements (3)		—			—			—			—			—			—			—			—			—
Transfers into Level 3 (4)		—			172			498			6			1			1			184			—			—
Transfers out of Level 3 (4)		(27	)		(930	)		(272	)		—			—			(11	)		(147	)		(45	)		—
Balance, end of period	$	7,371		$	4,729		$	3,889		$	31		$	1,609		$	832		$	1,772		$	53		$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	4		$	8		$	9		$	—		$	2		$	6		$	6		$	—		$	—
Net investment gains (losses)	$	(3	)	$	(5	)	$	(205	)	$	—		$	—		$	(2	)	$	(7	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						Trading and Other Securities:
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities		FVO General Account Securities			FVO Contractholder- directed Unit-linked Investments			Short-term Investments			Mortgage Loans Held- for-sale			MSRs (5)
	(In millions)
Three Months Ended September 30, 2011:
Balance, beginning of period	$	305		$	654		$	2	$	54		$	623		$	732		$	32		$	964
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—		(12	)		(5	)		(1	)		—			—
Net investment gains (losses)		3			7			—		—			—			(1	)		—			—
Net derivative gains (losses)		—			—			—		—			—			—			—			—
Other revenues		—			—			—		—			—			—			(1	)		(292	)
Policyholder benefits and claims		—			—			—		—			—			—			—			—
Other expenses		—			—			—		—			—			—			—			—
Other comprehensive income (loss)		(25	)		(69	)		—		—			—			(1	)		—			—
Purchases (3)		14			—			—		—			1,026			266			2			—
Sales (3)		(14	)		(84	)		—		—			(297	)		(368	)		—			—
Issuances (3)		—			—			—		—			—			—			—			46
Settlements (3)		—			—			—		—			—			—			(2	)		(32	)
Transfers into Level 3 (4)		—			1			—		—			—			—			4			—
Transfers out of Level 3 (4)		(44	)		—			—		(15	)		(84	)		(1	)		(5	)		—
Balance, end of period	$	239		$	509		$	2	$	27		$	1,263		$	626		$	30		$	686
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	—		$	—		$	—	$	(11	)	$	(4	)	$	(1	)	$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—	$	—		$	—		$	(1	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—	$	—		$	—		$	—		$	(1	)	$	(280	)
Policyholder benefits and claims	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (6)											Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt of CSEs
	Interest Rate			Foreign Currency Exchange Rate		Credit			Equity Market
	(In millions)
Three Months Ended September 30, 2011:
Balance, beginning of period	$	(67	)	$	49	$	42		$	55		$	(2,074	)	$	1,836		$	(134	)
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—		—			—			—			—			—
Net investment gains (losses)		—			—		—			—			—			3			(1	)
Net derivative gains (losses)		21			2		(76	)		677			(2,314	)		—			—
Other revenues		68			—		—			—			—			—			—
Policyholder benefits and claims		—			—		—			—			115			—			—
Other expenses		—			—		—			—			—			—			—
Other comprehensive income (loss)		317			—		15			1			(114	)		—			—
Purchases (3)		(1	)		16		—			119			—			187			—
Sales (3)		—			—		—			—			—			(152	)		—
Issuances (3)		—			—		—			(4	)		—			—			—
Settlements (3)		(41	)		—		(11	)		2			(121	)		(1	)		23
Transfers into Level 3 (4)		1			—		—			—			—			11			—
Transfers out of Level 3 (4)		—			—		—			—			—			(176	)		—
Balance, end of period	$	298		$	67	$	(30	)	$	850		$	(4,508	)	$	1,708		$	(112	)
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—	$	—		$	—		$	—		$	—		$	(1	)
Net derivative gains (losses)	$	17		$	2	$	(76	)	$	677		$	(2,319	)	$	—		$	—
Other revenues	$	79		$	—	$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—	$	—		$	—		$	115		$	—		$	—
Other expenses	$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate Securities			Foreign Corporate Securities			Foreign Government Securities			U.S. Treasury and Agency Securities			RMBS			CMBS			ABS			State and Political Subdivision Securities			Other Fixed Maturity Securities
	(In millions)
Nine Months Ended September 30, 2012:
Balance, beginning of period	$	6,784		$	4,370		$	2,322		$	31		$	1,602		$	753		$	1,850		$	53		$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		10			16			4			—			20			7			14			—			—
Net investment gains (losses)		4			(68	)		(1	)		—			(7	)		(37	)		2			—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		351			233			26			—			149			21			19			4			—
Purchases (3)		1,371			1,535			1,003			49			1,060			695			1,293			15			—
Sales (3)		(865	)		(708	)		(467	)		(6	)		(315	)		(253	)		(286	)		(7	)		—
Issuances (3)		—			—			—			—			—			—			—			—			—
Settlements (3)		—			—			—			—			—			—			—			—			—
Transfers into Level 3 (4)		266			254			53			—			76			40			6			—			—
Transfers out of Level 3 (4)		(222	)		(322	)		(350	)		—			(12	)		(12	)		(48	)		—			—
Balance, end of period	$	7,699		$	5,310		$	2,590		$	74		$	2,573		$	1,214		$	2,850		$	65		$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	8		$	18		$	12		$	—		$	20		$	2		$	14		$	—		$	—
Net investment gains (losses)	$	(6	)	$	(27	)	$	—		$	—		$	(3	)	$	(4	)	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						Trading and Other Securities:
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities		FVO General Account Securities			FVO Contractholder- directed Unit- linked Investments			Short-term Investments			Mortgage Loans Held- for-sale			MSRs (5)
	(In millions)
Nine Months Ended September 30, 2012:
Balance, beginning of period	$	281		$	438		$	—	$	23		$	1,386		$	590		$	1,414		$	666
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—		10			12			1			—			—
Net investment gains (losses)		(1	)		1			—		—			—			—			—			—
Net derivative gains (losses)		—			—			—		—			—			—			—			—
Other revenues		—			—			—		—			—			—			(31	)		(122	)
Policyholder benefits and claims		—			—			—		—			—			—			—			—
Other expenses		—			—			—		—			—			—			—			—
Other comprehensive income (loss)		7			23			—		—			—			10			—			—
Purchases (3)		111			5			14		—			918			1,059			1			—
Sales (3)		(126	)		(89	)		—		(2	)		(1,159	)		(455	)		(1,348	)		—
Issuances (3)		—			—			—		—			—			—			6			109
Settlements (3)		—			—			—		—			—			—			(46	)		(163	)
Transfers into Level 3 (4)		3			48			—		—			2			—			72			—
Transfers out of Level 3 (4)		(13	)		—			—		—			(38	)		(108	)		(4	)		—
Balance, end of period	$	262		$	426		$	14	$	31		$	1,121		$	1,097		$	64		$	490
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	—		$	—		$	—	$	9		$	1		$	(1	)	$	—		$	—
Net investment gains (losses)	$	(11	)	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—	$	—		$	—		$	—		$	(25	)	$	(88	)
Policyholder benefits and claims	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (6)
													Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt of CSEs			Liability Related to Securitized Reverse Residential Mortgage Loans
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market
	(In millions)
Nine Months Ended September 30, 2012:
Balance, beginning of period	$	300		$	44		$	1		$	889		$	(4,203	)	$	1,325		$	(116	)	$	(1,175	)
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			—			—			—			—			—
Net investment gains (losses)		—			—			—			—			—			95			(2	)		—
Net derivative gains (losses)		16			30			44			(470	)		802			—			—			—
Other revenues		(67	)		—			—			—			—			—			—			1
Policyholder benefits and claims		—			—			—			22			(9	)		—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		13			—			—			(1	)		(39	)		—			—			—
Purchases (3)		—			—			—			16			—			294			—			—
Sales (3)		—			—			—			—			—			(289	)		—			1,149
Issuances (3)		—			—			(3	)		—			—			1			—			—
Settlements (3)		(45	)		(16	)		(3	)		(131	)		(473	)		(3	)		70			23
Transfers into Level 3 (4)		—			—			—			—			—			25			—			—
Transfers out of Level 3 (4)		—			—			1			—			—			(41	)		—			2
Balance, end of period	$	217		$	58		$	40		$	325		$	(3,922	)	$	1,407		$	(48	)	$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2012 included in net income (loss):
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	(2	)	$	—
Net derivative gains (losses)	$	2		$	10		$	43		$	(474	)	$	781		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	22		$	(7	)	$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate Securities			Foreign Corporate Securities			Foreign Government Securities			U.S. Treasury and Agency Securities			RMBS (9)			CMBS			ABS (9)			State and Political Subdivision Securities			Other Fixed Maturity Securities
	(In millions)
Nine Months Ended September 30, 2011:
Balance, beginning of period	$	7,149		$	5,726		$	3,134		$	79		$	2,541		$	1,011		$	3,026		$	46		$	4
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		8			22			38			—			8			21			18			—			—
Net investment gains (losses)		14			(20	)		(220	)		—			(13	)		67			(22	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		372			44			332			2			(11	)		50			90			(8	)		—
Purchases (3)		1,016			1,571			1,164			—			251			287			754			11			—
Sales (3)		(674	)		(1,770	)		(411	)		(1	)		(247	)		(584	)		(471	)		(4	)		—
Issuances (3)		—			—			—			—			—			—			—			—			—
Settlements (3)		—			—			—			—			—			—			—			—			—
Transfers into Level 3 (4)		43			165			91			6			81			85			123			10			—
Transfers out of Level 3 (4)		(557	)		(1,009	)		(239	)		(55	)		(1,001	)		(105	)		(1,746	)		(2	)		(4	)
Balance, end of period	$	7,371		$	4,729		$	3,889		$	31		$	1,609		$	832		$	1,772		$	53		$	—
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	7		$	22		$	36		$	—		$	8		$	19		$	18		$	—		$	—
Net investment gains (losses)	$	(30	)	$	(20	)	$	(209	)	$	—		$	(13	)	$	(2	)	$	(10	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						Trading and Other Securities:
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities			FVO General Account Securities			FVO Contractholder- directed Unit-linked Investments			Short-term Investments			Mortgage Loans Held- for-sale			MSRs (5)
	(In millions)
Nine Months Ended September 30, 2011:
Balance, beginning of period	$	268		$	905		$	10		$	77		$	735		$	858		$	24		$	950
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			(3	)		61			3			—			—
Net investment gains (losses)		7			(63	)		—			—			—			(2	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			(2	)		(310	)
Policyholder benefits and claims		—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		(12	)		31			—			—			—			7			—			—
Purchases (3)		53			4			—			1			1,032			562			3			—
Sales (3)		(21	)		(379	)		(8	)		(33	)		(447	)		(798	)		—			—
Issuances (3)		—			—			—			—			—			—			1			138
Settlements (3)		—			—			—			—			—			—			(3	)		(92	)
Transfers into Level 3 (4)		1			11			—			—			123			—			9			—
Transfers out of Level 3 (4)		(57	)		—			—			(15	)		(241	)		(4	)		(2	)		—
Balance, end of period	$	239		$	509		$	2		$	27		$	1,263		$	626		$	30		$	686
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	—		$	—		$	—		$	(5	)	$	55		$	(2	)	$	—		$	—
Net investment gains (losses)	$	(4	)	$	(19	)	$	—		$	—		$	—		$	(1	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	(2	)	$	(298	)
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (6)												Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt of CSEs
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market
	(In millions)
Nine Months Ended September 30, 2011:
Balance, beginning of period	$	(86	)	$	73		$	44		$	142		$	(2,438	)	$	1,983		$	(184	)
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			(3	)		—			—			—
Net investment gains (losses)		—			—			—			—			—			48			(8	)
Net derivative gains (losses)		25			(1	)		(70	)		568			(1,722	)		—			—
Other revenues		75			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			107			—			—
Other expenses		—			—			—			—			—			—			—
Other comprehensive income (loss)		325			—			13			—			(116	)		—			—
Purchases (3)		(1	)		21			—			225			—			422			—
Sales (3)		—			—			—			—			—			(502	)		—
Issuances (3)		—			—			(3	)		(4	)		—			—			—
Settlements (3)		(40	)		—			(13	)		(3	)		(339	)		(3	)		80
Transfers into Level 3 (4)		—			—			(1	)		—			—			18			—
Transfers out of Level 3 (4)		—			(26	)		—			(75	)		—			(258	)		—
Balance, end of period	$	298		$	67		$	(30	)	$	850		$	(4,508	)	$	1,708		$	(112	)
Changes in unrealized gains (losses) relating to assets and liabilities still held at September 30, 2011 included in net income (loss):
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	(8	)
Net derivative gains (losses)	$	14		$	(1	)	$	(70	)	$	569		$	(1,738	)	$	—		$	—
Other revenues	$	80		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	107		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—

(1) Amortization of premium/discount is included within net investment income. Impairments charged to earnings on securities and certain mortgage loans are included in net investment gains (losses) while changes in the estimated fair value of certain mortgage loans and MSRs are included in other revenues. Lapses associated with net embedded derivatives are included in net derivative gains (losses).

(2) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(3) The amount reported within purchases, sales, issuances and settlements is the purchase or issuance price and the sales or settlement proceeds based upon the actual date purchased or issued and sold or settled, respectively. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(4) Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and/or out of Level 3 in the same period are excluded from the rollforward.

(5) Other revenues represent the changes in estimated fair value due to changes in valuation model inputs or assumptions. For the three months and nine months ended September 30, 2012 and 2011, there was no other change in estimated fair value affecting MSRs. The additions for purchases, originations and issuances are presented within issuances and the reductions for loan payments, sales and settlements, affecting MSRs are presented within settlements.

(6) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(7) Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(8) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income. For the purpose of this disclosure, these changes are presented within net investment gains (losses).

(9) See Note 3 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report for discussion of a reclassification from the ABS sector to the RMBS sector for securities backed by sub-prime residential mortgage loans.

Fair Value Option

Residential Mortgage Loans Held-For-Sale

The following table presents residential mortgage loans held-for-sale accounted for under the FVO at:

	September 30, 2012			December 31, 2011
	(In millions)
Unpaid principal balance	$	91		$	2,935
Difference between estimated fair value and unpaid principal balance		(27	)		129
Carrying value at estimated fair value	$	64		$	3,064
Loans in non-accrual status	$	3		$	3
Loans more than 90 days past due	$	26		$	20
Loans in non-accrual status or more than 90 days past due, or both — difference between aggregate estimated fair value and unpaid principal balance	$	(11	)	$	(2	)

Residential mortgage loans held-for-sale accounted for under the FVO are initially measured at estimated fair value. Interest income on residential mortgage loans held-for-sale is recorded based on the stated rate of the loan and is recorded in net investment income. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales are recognized in other revenues. Such changes in estimated fair value for these loans were due to the following:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012		2011
	(In millions)
Instrument-specific credit risk based on changes in credit spreads for non-agency loans and adjustments in individual loan quality	$	(2	)	$	—	$	—	$	(3	)
Other changes in estimated fair value		(27	)		174		71		353
Total gains (losses) recognized in other revenues	$	(29	)	$	174	$	71	$	350

Securitized Reverse Residential Mortgage Loans

Securitized reverse residential mortgage loans accounted for under the FVO are initially measured at estimated fair value. Gains and losses from initial measurement and subsequent changes in estimated fair value are recognized in other revenues. The following table presents securitized reverse residential mortgage loans accounted for under the FVO at:

	September 30, 2012		December 31, 2011
	(In millions)
Unpaid principal balance	$	—	$	6,914
Difference between estimated fair value and unpaid principal balance		—		738
Carrying value at estimated fair value	$	—	$	7,652
Loans more than 90 days past due	$	—	$	59
Loans more than 90 days past due — difference between aggregate estimated fair value and unpaid principal balance	$	—	$	—

The liability related to securitized reverse residential mortgage loans accounted for under the FVO is initially measured at estimated fair value. Gains and losses from initial measurement and subsequent changes in estimated fair value are recognized in other revenues. The following table presents the liability related to securitized reverse residential mortgage loans accounted for under the FVO at:

	September 30, 2012		December 31, 2011
	(In millions)
Contractual principal balance	$	—	$	6,914
Difference between estimated fair value and contractual principal balance		—		712
Carrying value at estimated fair value	$	—	$	7,626

Assets and Liabilities Held by CSEs

The Company has elected the FVO for the following assets and liabilities held by CSEs: commercial mortgage loans, securities and long-term debt. Information on the estimated fair value of the securities classified as trading and other securities is presented in Note 3. The following table presents these commercial mortgage loans accounted for under the FVO at:

	September 30, 2012		December 31, 2011
	(In millions)
Unpaid principal balance	$	2,752	$	3,019
Difference between estimated fair value and unpaid principal balance		127		119
Carrying value at estimated fair value	$	2,879	$	3,138

The following table presents the long-term debt accounted for under the FVO related to both the commercial mortgage loans and securities classified as trading and other securities at:

	September 30, 2012		December 31, 2011
	(In millions)
Contractual principal balance	$	2,624	$	2,954
Difference between estimated fair value and contractual principal balance		109		114
Carrying value at estimated fair value	$	2,733	$	3,068

Interest income on both commercial mortgage loans held by CSEs and securities classified as trading and other securities held by CSEs is recorded in net investment income. Interest expense on long-term debt of CSEs is recorded in other expenses. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales of both the commercial mortgage loans and the long-term debt are recognized in net investment gains (losses). See Note 3.

Non-Recurring Fair Value Measurements

Certain assets are measured at estimated fair value on a non-recurring basis and are not included in the tables presented above. The amounts below relate to certain investments measured at estimated fair value during the period and still held at the reporting dates and which are categorized as Level 3 measurements.

	Three Months Ended September 30,
	2012							2011
	Carrying Value Prior to Measurement		Estimated Fair Value After Measurement		Gains (Losses)			Carrying Value Prior to Measurement		Estimated Fair Value After Measurement		Gains (Losses)
	(In millions)
Mortgage loans: (1)
Held-for-investment	$	383	$	379	$	(4	)	$	289	$	245	$	(44	)
Held-for-sale		184		174		(10	)		71		68		(3	)
Mortgage loans, net	$	567	$	553	$	(14	)	$	360	$	313	$	(47	)
Other limited partnership interests (2)	$	36	$	27	$	(9	)	$	5	$	3	$	(2	)
Real estate joint ventures (3)	$	—	$	—	$	—		$	—	$	—	$	—
Goodwill (4)	$	1,868	$	—	$	(1,868	)	$	65	$	—	$	(65	)

	Nine Months Ended September 30,
	2012							2011
	Carrying Value Prior to Measurement		Estimated Fair Value After Measurement		Gains (Losses)			Carrying Value Prior to Measurement		Estimated Fair Value After Measurement		Gains (Losses)
	(In millions)
Mortgage loans: (1)
Held-for-investment	$	370	$	379	$	9		$	273	$	245	$	(28	)
Held-for-sale		213		174		(39	)		72		68		(4	)
Mortgage loans, net	$	583	$	553	$	(30	)	$	345	$	313	$	(32	)
Other limited partnership interests (2)	$	84	$	61	$	(23	)	$	18	$	13	$	(5	)
Real estate joint ventures (3)	$	15	$	10	$	(5	)	$	—	$	—	$	—
Goodwill (4)	$	1,868	$	—	$	(1,868	)	$	65	$	—	$	(65	)

(1) Mortgage loans — These impaired mortgage loans are written down to their estimated fair values which are reported as losses. Subsequent improvements in estimated fair value on previously impaired loans recorded through a reduction in the previously established valuation allowance are reported as gains. Estimated fair values for impaired mortgage loans are based on market prices or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, on the estimated fair value of the underlying collateral, or the present value of the expected future cash flows.

(2) Other limited partnership interests — These impaired investments were accounted for using the cost method. Impairments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities. These investments include private equity and debt funds that typically invest primarily in various strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; and below investment grade debt and mezzanine debt funds. The estimated fair values of these investments have been determined using NAV data. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. Unfunded commitments for these investments were $6 million and $1 million at September 30, 2012 and 2011, respectively.

(3) Real estate joint ventures — These impaired investments were accounted for using the cost method. Impairments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities. These investments include several real estate funds that typically invest primarily in commercial real estate. The estimated fair values of these investments have been determined using NAV data. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. Unfunded commitments for these investments were $10 million at September 30, 2012. There were no unfunded commitments for these investments at September 30, 2011.

(4) Goodwill — As discussed in Note 7, in September 2012, the Company recorded an impairment of goodwill associated with the Retail Annuities reporting unit. In addition, as discussed in Note 7 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report, in September 2011, the Company recorded an impairment of goodwill associated with MetLife Bank. These impairments have been categorized as Level 3 due to the significant unobservable inputs used in the determination of the associated estimated fair value.

Fair Value of Financial Instruments

The tables below exclude certain financial instruments. The excluded financial instruments are as follows: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities, such as time deposits, and are excluded from the preceding three level hierarchy table. The estimated fair value of these financial instruments, which are primarily classified in Level 2, approximate carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. The table below also excludes financial instruments reported at estimated fair value on a recurring basis. See “— Recurring Fair Value Measurements.” All remaining balance sheet amounts excluded from the table below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

	September 30, 2012
	Carrying Value		Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
	(In millions)
Assets:
Mortgage loans:
Held-for-investment	$	55,005	$	—	$	—	$	58,346	$	58,346
Held-for-sale		1,222		—		—		1,222		1,222
Mortgage loans, net	$	56,227	$	—	$	—	$	59,568	$	59,568
Policy loans	$	11,949	$	—	$	1,698	$	12,802	$	14,500
Real estate joint ventures	$	115	$	—	$	—	$	168	$	168
Other limited partnership interests	$	1,203	$	—	$	—	$	1,434	$	1,434
Other invested assets	$	1,467	$	321	$	64	$	1,082	$	1,467
Premiums, reinsurance and other receivables	$	3,064	$	—	$	526	$	2,973	$	3,499
Other assets	$	252	$	—	$	214	$	70	$	284
Liabilities:
PABs	$	151,826	$	—	$	—	$	160,480	$	160,480
Bank deposits	$	6,515	$	—	$	1,982	$	4,533	$	6,515
Long-term debt	$	16,854	$	—	$	19,327	$	—	$	19,327
Collateral financing arrangements	$	4,196	$	—	$	—	$	3,807	$	3,807
Junior subordinated debt securities	$	3,192	$	—	$	3,870	$	—	$	3,870
Other liabilities	$	5,164	$	—	$	3,789	$	1,378	$	5,167
Separate account liabilities	$	62,122	$	—	$	62,122	$	—	$	62,122
Commitments: (1)
Mortgage loan commitments	$	—	$	—	$	—	$	5	$	5
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments	$	—	$	—	$	43	$	—	$	43

	December 31, 2011
	Carrying Value		Estimated Fair Value
	(In millions)
Assets:
Mortgage loans:
Held-for-investment	$	53,777	$	56,422
Held-for-sale		4,462		4,462
Mortgage loans, net	$	58,239	$	60,884
Policy loans	$	11,892	$	14,213
Real estate joint ventures	$	130	$	183
Other limited partnership interests	$	1,318	$	1,656
Other invested assets	$	1,434	$	1,434
Premiums, reinsurance and other receivables	$	4,639	$	5,232
Other assets	$	310	$	308
Liabilities:
PABs	$	146,890	$	153,304
Bank deposits	$	10,507	$	10,507
Long-term debt	$	20,587	$	22,514
Collateral financing arrangements	$	4,647	$	4,136
Junior subordinated debt securities	$	3,192	$	3,491
Other liabilities	$	4,087	$	4,087
Separate account liabilities	$	49,610	$	49,610
Commitments: (1)
Mortgage loan commitments	$	—	$	3
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments	$	—	$	51

(1) Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. See Note 12 for additional information on these off-balance sheet obligations.

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans

Mortgage loans held-for-investment

For commercial and agricultural mortgage loans, the estimated fair value was primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk. For residential mortgage loans, the estimated fair value was primarily determined from pricing for similar loans.

Mortgage loans held-for-sale

For these mortgage loans, estimated fair value is determined using independent non-binding broker quotations or valuation models using significant unobservable inputs.

Policy Loans

Policy loans with fixed interest rates are classified within Level 3. The estimated fair values for these loans are determined using a DCF model applied to groups of similar policy loans determined by the nature of the underlying insurance liabilities. Cash flow estimates are developed by applying a weighted-average interest rate to the outstanding principal balance of the respective group of policy loans and an estimated average maturity determined through experience studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. Policy loans with variable interest rates are classified within Level 2 and the estimated fair value approximates carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates.

Real Estate Joint Ventures and Other Limited Partnership Interests

The amounts disclosed in the preceding tables consist of those investments accounted for using the cost method. The estimated fair values for cost method real estate joint ventures and other limited partnership interests are generally based on the Company’s share of the NAV as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments.

Other Invested Assets

Other invested assets within the preceding tables are principally comprised of funds withheld, various interest-bearing assets held in foreign subsidiaries and certain amounts due under contractual indemnifications. For funds withheld and for the various interest-bearing assets held in foreign subsidiaries, the Company evaluates the specific facts and circumstances of each instrument to determine the appropriate estimated fair values. These estimated fair values were not materially different from the recognized carrying values.

Premiums, Reinsurance and Other Receivables

Premiums, reinsurance and other receivables in the preceding tables are principally comprised of certain amounts recoverable under reinsurance agreements, amounts on deposit with financial institutions to facilitate daily settlements related to certain derivative positions and amounts receivable for securities sold but not yet settled.

Amounts recoverable under ceded reinsurance agreements, which the Company has determined do not transfer significant risk such that they are accounted for using the deposit method of accounting, have been classified as Level 3. The valuation is based on DCF methodologies using significant unobservable inputs. The estimated fair value is determined using interest rates determined to reflect the appropriate credit standing of the assuming counterparty.

The amounts on deposit for derivative settlements, classified within Level 2, essentially represent the equivalent of demand deposit balances and amounts due for securities sold are generally received over short periods such that the estimated fair value approximates carrying value.

Other Assets

Other assets in the preceding tables are primarily composed of a receivable for cash paid to an unaffiliated financial institution under the MetLife Reinsurance Company of Charleston (“MRC”) collateral financing arrangement as described in Note 12 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report. The estimated fair value of the receivable for the cash paid to the unaffiliated financial institution under the MRC collateral financing arrangement is determined by discounting the expected future cash flows using a discount rate that reflects the credit rating of the unaffiliated financial institution.

PABs

PABs in the preceding tables include investment contracts. Embedded derivatives on investment contracts and certain variable annuity guarantees accounted for as embedded derivatives are excluded from this caption in the preceding tables as they are separately presented in “— Recurring Fair Value Measurements.”

The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts. The valuation of these investment contracts is based on DCF methodologies using significant unobservable inputs. The estimated fair value is determined using current market risk-free interest rates adding a spread to reflect the nonperformance risk in the liability.

Bank Deposits

Due to the frequency of interest rate resets on customer bank deposits held in money market accounts, the Company believes that there is minimal risk of a material change in interest rates such that the estimated fair value approximates carrying value. For time deposits, the Company has taken into consideration the sale price for the pending disposition of most of the depository business of MetLife Bank to determine the estimated fair value of bank deposits. See Note 2.

Long-term Debt, Collateral Financing Arrangements and Junior Subordinated Debt Securities

The estimated fair values of long-term debt and junior subordinated debt securities are principally valued using market standard valuation methodologies and DCF methodologies. Valuations classified as Level 2 are based primarily on quoted prices in markets that are not active or using matrix pricing or other similar techniques that use standard market observable inputs such as quoted prices in markets that are not active and observable yields and spreads in the market. Instruments valued using DCF methodologies use standard market observable inputs including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues. Valuations classified as Level 3 are based primarily on DCF methodologies that utilize unobservable discount rates applied to the expected future cash flows that can vary significantly based upon the specific terms of each individual arrangement. The determination of estimated fair values of collateral financing arrangements takes into account valuations obtained from the counterparties to the arrangements, as part of the collateral management process.

Capital leases, which are not required to be disclosed at estimated fair value, are excluded from the preceding tables.

Other Liabilities

Other liabilities consist primarily of interest and dividends payable, amounts due for securities purchased but not yet settled, funds withheld amounts payable, which are contractually withheld by the Company in accordance with the terms of the reinsurance agreements, and amounts payable under certain assumed reinsurance agreements, which are recorded using the deposit method of accounting. The Company evaluates the specific terms, facts and circumstances of each instrument to determine the appropriate estimated fair values, which are not materially different from the carrying values, with the exception of certain deposit type reinsurance payables. For such payables, the estimated fair value is determined as the present value of expected future cash flows, which are discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty.

Separate Account Liabilities

Separate account liabilities included in the preceding tables represent those balances due to policyholders under contracts that are classified as investment contracts.

Separate account liabilities classified as investment contracts primarily represent variable annuities with no significant mortality risk to the Company such that the death benefit is equal to the account balance, funding agreements related to group life contracts and certain contracts that provide for benefit funding.

Since separate account liabilities are fully funded by cash flows from the separate account assets which are recognized at estimated fair value as described in the section “— Recurring Fair Value Measurements,” the value of those assets approximates the estimated fair value of the related separate account liabilities. The valuation techniques and inputs for separate account liabilities are similar to those described for separate account assets.

Mortgage Loan Commitments and Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments

The estimated fair values for mortgage loan commitments that will be held for investment and commitments to fund bank credit facilities, bridge loans and private corporate bonds that will be held for investment reflected in the above tables represent the difference between the discounted expected future cash flows using interest rates that incorporate current credit risk for similar instruments on the reporting date and the principal amounts of the commitments.