Closed Block

9 Months Ended

Sep. 30, 2012

Closed Block [Abstract]

Closed Block

9. Closed Block

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

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

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

	September 30, 2012			December 31, 2011
	(In millions)
Closed Block Liabilities
Future policy benefits	$	42,680		$	43,169
Other policy-related balances		325			358
Policyholder dividends payable		561			514
Policyholder dividend obligation		3,909			2,919
Other liabilities		723			613
Total closed block liabilities		48,198			47,573
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value		31,198			30,407
Equity securities available-for-sale, at estimated fair value		44			35
Mortgage loans		6,242			6,206
Policy loans		4,673			4,657
Real estate and real estate joint ventures		344			364
Other invested assets		819			857
Total investments		43,320			42,526
Cash and cash equivalents		254			249
Accrued investment income		519			509
Premiums, reinsurance and other receivables		97			109
Current income tax recoverable		—			53
Deferred income tax assets		341			362
Total assets designated to the closed block		44,531			43,808
Excess of closed block liabilities over assets designated to the closed block		3,667			3,765
Amounts included in accumulated other comprehensive income (loss):
Unrealized investment gains (losses), net of income tax		2,980			2,394
Unrealized gains (losses) on derivative instruments, net of income tax		13			11
Allocated to policyholder dividend obligation, net of income tax		(2,541	)		(1,897	)
Total amounts included in accumulated other comprehensive income (loss)		452			508
Maximum future earnings to be recognized from closed block assets and liabilities	$	4,119		$	4,273

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

	Nine Months Ended September 30, 2012		Year Ended December 31, 2011
	(In millions)
Balance, beginning of period	$	2,919	$	876
Change in unrealized investment and derivative gains (losses)		990		2,043
Balance, end of period	$	3,909	$	2,919

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012			2011
	(In millions)
Revenues
Premiums	$	512		$	554	$	1,538		$	1,657
Net investment income		555			553		1,644			1,697
Net investment gains (losses)		6			22		30			32
Net derivative gains (losses)		(9	)		17		(7	)		3
Total revenues		1,064			1,146		3,205			3,389
Expenses
Policyholder benefits and claims		654			731		2,016			2,166
Policyholder dividends		278			304		821			897
Other expenses		45			48		136			146
Total expenses		977			1,083		2,973			3,209
Revenues, net of expenses before provision for income tax expense (benefit)		87			63		232			180
Provision for income tax expense (benefit)		30			25		82			63
Revenues, net of expenses and provision for income tax expense (benefit) from continuing operations		57			38		150			117
Revenues, net of expenses and provision for income tax expense (benefit) from discontinued operations		—			—		4			1
Revenues, net of expenses and provision for income tax expense (benefit) and discontinued operations	$	57		$	38	$	154		$	118

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