Fair Value

12 Months Ended

Dec. 31, 2012

Fair Value [Abstract]

Fair Value

10.  Fair Value

When developing estimated fair values, the Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities.

Level 2 Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the determination of estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company’s ability to sell securities, or the price ultimately realized for these securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities.

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:

	December 31, 2012
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair  Value
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate	$	—	$	106,693	$	7,433	$	114,126
Foreign corporate		—		60,976		6,208		67,184
Foreign government		—		55,522		1,814		57,336
U.S. Treasury and agency		27,441		20,455		71		47,967
RMBS		—		35,442		2,037		37,479
CMBS		—		17,982		1,147		19,129
ABS		—		12,341		3,656		15,997
State and political subdivision		—		14,994		54		15,048
Total fixed maturity securities		27,441		324,405		22,420		374,266
Equity securities:
Common stock		932		1,040		190		2,162
Non-redeemable preferred stock		—		310		419		729
Total equity securities		932		1,350		609		2,891
FVO and trading securities:
Actively Traded Securities		7		646		6		659
FVO general account securities		—		151		32		183
FVO contractholder-directed unit-linked investments		9,103		5,425		937		15,465
FVO securities held by CSEs		—		41		—		41
Total FVO and trading securities		9,110		6,263		975		16,348
Short-term investments (1)		9,426		6,295		429		16,150
Mortgage loans:
Commercial mortgage loans held by CSEs		—		2,666		—		2,666
Mortgage loans held-for-sale (2), (3)		—		—		49		49
Total mortgage loans		—		2,666		49		2,715
Other invested assets:
MSRs (3)		—		—		—		—
Other investments		303		123		—		426
Derivative assets: (4)
Interest rate		1		9,648		206		9,855
Foreign currency exchange rate		4		819		44		867
Credit		—		47		43		90
Equity market		14		2,478		473		2,965
Total derivative assets		19		12,992		766		13,777
Total other invested assets		322		13,115		766		14,203
Net embedded derivatives within asset host contracts (5)		—		1		505		506
Separate account assets (6)		31,620		202,568		1,205		235,393
Total assets	$	78,851	$	556,663	$	26,958	$	662,472
Liabilities:
Derivative liabilities: (4)
Interest rate	$	38	$	3,001	$	29	$	3,068
Foreign currency exchange rate		—		1,521		7		1,528
Credit		—		39		—		39
Equity market		132		424		345		901
Total derivative liabilities		170		4,985		381		5,536
Net embedded derivatives within liability host contracts (5)		—		17		3,667		3,684
Long-term debt of CSEs		—		2,483		44		2,527
Liability related to securitized reverse residential mortgage loans (3), (7)		—		—		—		—
Trading liabilities (7)		163		—		—		163
Total liabilities	$	333	$	7,485	$	4,092	$	11,910

	December 31, 2011
	Fair Value Hierarchy						Total Estimated Fair Value
	Level 1		Level 2		Level 3
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate	$	—	$	99,001	$	6,784	$	105,785
Foreign corporate		—		59,648		4,370		64,018
Foreign government		76		50,138		2,322		52,536
U.S. Treasury and agency		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		—		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
FVO and trading 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 FVO and trading 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 residential mortgage loans held-for-sale. See “— Fair Value Option” for additional information. 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 a result of the MetLife Bank Divestiture described in Note 3, the Company disposed of certain mortgage loans and de-recognized its securitized reverse residential mortgage loans and corresponding liabilities presented in the table above and in the related fair value option 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 December 31, 2012, fixed maturity securities and equity securities also included embedded derivatives of $0 and ($88) million, respectively. At December 31, 2011, fixed maturity securities and equity securities included embedded derivatives of $2 million and ($72) million, respectively.

(6) 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.

The following describes the valuation methodologies used to measure assets and liabilities at fair value. The description includes the valuation techniques and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy.

Investments

Valuation Controls and Procedures

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. This committee also 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 0.5% of the total estimated fair value of fixed maturity securities and 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 these 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 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 FVO and trading securities.

Level 2 Valuation Techniques and Key Inputs:

This level includes fixed maturity securities and equity securities priced principally by independent pricing services using observable inputs. FVO and trading 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. Contractholder-directed unit-linked investments reported within FVO and trading 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 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 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 and income approaches. Valuation is based primarily on matrix pricing, discounted cash flow 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 Valuation Techniques and Key Inputs:

In general, fixed maturity securities and equity securities classified within Level 3 use many of the same valuation techniques and inputs as described in the Level 2 Valuation Techniques and Key Inputs. 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.

FVO and trading 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 and income approaches. Valuation is based primarily on matrix pricing, discounted cash flow 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 sub-prime RMBS 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, discounted cash flow 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, certain 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 Valuation Techniques and Key Inputs:

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 Valuation Techniques and Key Inputs:

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 discounted cash flow 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 Valuation Techniques and Key Inputs:

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 “— Derivatives — Freestanding Derivatives.” Also included are certain mutual funds and hedge funds without readily determinable fair values as 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 Valuation Techniques and Key Inputs:

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 “— Derivatives — 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 controls and procedures for derivatives are described 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 derivatives 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 Valuation Techniques and Key Inputs:

This level includes all types of derivatives 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 derivatives 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 Valuation Techniques and Key Inputs:

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 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 “— Investments — 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 Valuation Techniques and Key Inputs:

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:

Transfers between Levels 1 and 2 were not significant for assets and liabilities measured at estimated fair value and still held at December 31, 2012 and 2011.

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, such as illiquidity premiums, delta spread adjustments, or spreads from below investment grade curves.

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.

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) at December 31, 2012.

	Valuation Techniques	Significant Unobservable Inputs	Range			Weighted Average
Fixed maturity securities:
U.S. corporate and foreign corporate	•  Matrix pricing	•  Delta spread adjustments (1)	(50)	–	500		90
		•  Illiquidity premium (1)	30	–	30
		•  Spreads from below investment grade curves (1)	(157)	–	876		205
		•  Offered quotes (2)	—	–	348
	•  Market pricing	•  Quoted prices (2)	(1,416)	–	830		132
	•  Consensus pricing	•  Offered quotes (2)	—	–	555
Foreign government	•  Matrix pricing	•  Spreads from below investment grade curves (1)	(58)	–	150		72
	•  Market pricing	•  Quoted prices (2)	77		146		99
	•  Consensus pricing	•  Offered quotes (2)	82	–	200
RMBS	•  Matrix pricing and discounted cash flow	•  Spreads from below investment grade curves (1)	9	–	2,980		521
	•  Market pricing	•  Quoted prices (2)	13	–	109		100
	•  Consensus pricing	•  Offered quotes (2)	28	–	100
CMBS	•  Matrix pricing and discounted cash flow	•  Spreads from below investment grade curves (1)	1	–	9,164		374
	•  Market pricing	•  Quoted prices (2)	1	–	106		99
ABS	•  Matrix pricing and discounted cash flow	•  Spreads from below investment grade curves (1)	—	–	1,829		109
	•  Market pricing	•  Quoted prices (2)	40	–	105		100
	•  Consensus pricing	•  Offered quotes (2)	—	–	111
Derivatives:
Interest rate	•  Present value techniques	•  Swap yield (1)	186	–	353
Foreign currency exchange rate	•  Present value techniques	•  Swap yield (1)	228	–	795
		•  Currency correlation	43%	–	57%
Credit	•  Present value techniques	•  Credit spreads (1)	100	–	100
	•  Consensus pricing	•  Offered quotes (3)
Equity market	•  Present value techniques	•  Volatility	13%	–	32%
	or option pricing models	•  Correlation	65%	–	65%
Embedded derivatives:
Direct and assumed guaranteed minimum benefits	•  Option pricing techniques	•  Mortality rates:
		Ages 0 - 40	0%	–	0.14%
		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%	–	100%
		Durations 21 - 116	2%	–	100%
		•  Utilization rates (4)	20%	–	50%
		•  Withdrawal rates	0.07%	–	20%
		•  Long-term equity volatilities	15.18%	–	40%
		•  Nonperformance risk spread	0.10%	–	1.72%

(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 December 31, 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 assets and liabilities classified within Level 3. These assets and liabilities are subject to the controls described under “— Investments – Valuation Controls and Procedures.” 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 discounted cash flow 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 discounted cash flow methodologies using current interest rates. MSRs are valued using discounted cash flow 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 discounted cash flow 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 assets and liabilities is similar in nature to that described below. The valuation techniques and significant unobservable inputs used in the fair value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined using significant unobservable inputs (Level 3) are summarized in “— Nonrecurring Fair Value Measurements” and Note 11.

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:

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. For U.S. and foreign corporate securities, significant increases (decreases) in illiquidity premiums in isolation would result in substantially lower (higher) valuations. For RMBS, CMBS and ABS, 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 assumptions used for prepayment rates.

Interest rate derivatives

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

Foreign currency exchange rate derivatives

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 derivatives

Credit derivatives 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 derivatives

Significant decreases in 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. Significant increases (decreases) in offered quotes in isolation will result in substantially higher (lower) 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			Foreign  Corporate			Foreign  Government			U.S. Treasury  and Agency			RMBS			CMBS			ABS			State and Political   Subdivision			Other
	(In millions)
Year Ended December 31, 2012:
Balance, January 1,	$	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		14			20			14			—			27			8			18			—			—
Net investment gains (losses)		4			(78	)		(3	)		—			(7	)		(42	)		2			—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		328			294			45			—			275			(4	)		(2	)		3			—
Purchases (3)		1,718			2,654			431			48			952			682			2,007			5			—
Sales (3)		(1,207	)		(855	)		(673	)		(8	)		(704	)		(397	)		(177	)		(7	)		—
Issuances (3)		—			—			—			—			—			—			—			—			—
Settlements (3)		—			—			—			—			—			—			—			—			—
Transfers into Level 3 (4)		661			186			28			—			161			177			6			—			—
Transfers out of Level 3 (4)		(869	)		(383	)		(350	)		—			(269	)		(30	)		(48	)		—			—
Balance, December 31,	$	7,433		$	6,208		$	1,814		$	71		$	2,037		$	1,147		$	3,656		$	54		$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	12		$	19		$	16		$	—		$	27		$	2		$	18		$	—		$	—
Net investment gains (losses)	$	(4	)	$	(30	)	$	—		$	—		$	(4	)	$	(1	)	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						FVO and Trading 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 (6)
	(In millions)
Year Ended December 31, 2012:
Balance, January 1,	$	281		$	438		$	—	$	23		$	1,386		$	590		$	1,414		$	666
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—		18			25			2			—			—
Net investment gains (losses)		(1	)		2			—		—			—			—			—			—
Net derivative gains (losses)		—			—			—		—			—			—			—			—
Other revenues		—			—			—		—			—			—			(35	)		(83	)
Policyholder benefits and claims		—			—			—		—			—			—			—			—
Other expenses		—			—			—		—			—			—			—			—
Other comprehensive income (loss)		13			40			—		—			—			(26	)		—			—
Purchases (3)		99			5			6		—			604			425			1			—
Sales (3)		(140	)		(66	)		—		(9	)		(1,040	)		(559	)		(1,348	)		(485	)
Issuances (3)		—			—			—		—			—			—			7			43
Settlements (3)		—			—			—		—			—			—			(43	)		(141	)
Transfers into Level 3 (4)		3			—			—		—			—			5			56			—
Transfers out of Level 3 (4)		(65	)		—			—		—			(38	)		(8	)		(3	)		—
Balance, December 31,	$	190		$	419		$	6	$	32		$	937		$	429		$	49		$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—	$	14		$	25		$	1		$	—		$	—
Net investment gains (losses)	$	(11	)	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—	$	—		$	—		$	—		$	(29	)	$	—
Policyholder benefits and claims	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (7)
	Interest      Rate			Foreign Currency Exchange       Rate			Credit			Equity     Market			Net Embedded    Derivatives (8)			Separate Account   Assets (9)			Long-term Debt of       CSEs			Liability Related to Securitized Reverse Mortgage       Loans
	(In millions)
Year Ended December 31, 2012:
Balance, January 1,	$	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)		—			—			—			—			—			99			(7	)		—
Net derivative gains (losses)		15			10			48			(606	)		1,305			—			—			—
Other revenues		(67	)		—			—			—			—			—			—			1
Policyholder benefits and claims		—			—			—			29			75			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		—			—			—			(3	)		259			—			—			—
Purchases (3)		—			—			—			19			—			244			—			—
Sales (3)		—			—			—			—			—			(443	)		—			1,149
Issuances (3)		—			—			(3	)		(44	)		—			2			—			—
Settlements (3)		(71	)		(17	)		(3	)		(156	)		(598	)		(1	)		79			23
Transfers into Level 3 (4)		—			—			—			—			—			24			—			—
Transfers out of Level 3 (4)		—			—			—			—			—			(45	)		—			2
Balance, December 31,	$	177		$	37		$	43		$	128		$	(3,162	)	$	1,205		$	(44	)	$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	(7	)	$	—
Net derivative gains (losses)	$	—		$	(12	)	$	47		$	(593	)	$	1,275		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	29		$	78		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S.  Corporate			Foreign  Corporate			Foreign  Government			U.S. Treasury  and Agency			RMBS			CMBS			ABS			State and Political   Subdivision			Other
	(In millions)
Year Ended December 31, 2011:
Balance, January 1,	$	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		11			27			18			—			10			25			24			—			—
Net investment gains (losses)		17			(9	)		—			—			(41	)		(16	)		(18	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		327			(66	)		—			3			(5	)		71			81			(8	)		—
Purchases (3)		912			1,740			529			6			393			283			1,033			11			—
Sales (3)		(887	)		(2,094	)		(179	)		(1	)		(213	)		(178	)		(659	)		(4	)		(4	)
Issuances (3)		—			—			—			—			—			—			—			—			—
Settlements (3)		—			—			—			—			—			—			—			—			—
Transfers into Level 3 (4)		169			211			123			—			20			52			14			10			—
Transfers out of Level 3 (4)		(914	)		(1,165	)		(1,303	)		(56	)		(1,103	)		(495	)		(1,651	)		(2	)		—
Balance, December 31,	$	6,784		$	4,370		$	2,322		$	31		$	1,602		$	753		$	1,850		$	53		$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	10		$	19		$	18		$	—		$	11		$	24		$	20		$	—		$	—
Net investment gains (losses)	$	(27	)	$	(31	)	$	(3	)	$	—		$	(41	)	$	(14	)	$	(10	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						FVO and Trading 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 (6)
	(In millions)
Year Ended December 31, 2011:
Balance, January 1,	$	268		$	905		$	10		$	77		$	735		$	858		$	24		$	950
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			(7	)		5			3			—			—
Net investment gains (losses)		14			(71	)		—			—			—			(2	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			5			(314	)
Policyholder benefits and claims		—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		5			5			—			—			—			2			—			—
Purchases (3)		106			3			—			—			1,246			600			3			—
Sales (3)		(46	)		(416	)		(8	)		(33	)		(478	)		(870	)		—			—
Issuances (3)		—			—			—			—			—			—			1,361			173
Settlements (3)		—			—			—			—			—			—			(87	)		(143	)
Transfers into Level 3 (4)		—			12			—			—			121			—			109			—
Transfers out of Level 3 (4)		(66	)		—			(2	)		(14	)		(243	)		(1	)		(1	)		—
Balance, December 31,	$	281		$	438		$	—		$	23		$	1,386		$	590		$	1,414		$	666
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	(8	)	$	(4	)	$	—		$	—		$	—
Net investment gains (losses)	$	(6	)	$	(19	)	$	—		$	—		$	—		$	(1	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	5		$	(282	)
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (7)
	Interest       Rate			Foreign Currency Exchange       Rate			Credit			Equity   Market			Net Embedded    Derivatives (8)			Separate Account   Assets (9)			Long-term Debt of       CSEs			Liability Related to Securitized Reverse Mortgage          Loans
	(In millions)
Year Ended December 31, 2011:
Balance, January 1,	$	(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)		—			—			—			—			—			39			(8	)		—
Net derivative gains (losses)		41			(28	)		(43	)		601			(1,277	)		—			—			—
Other revenues		62			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			7			86			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		329			—			14			1			(119	)		—			—			—
Purchases (3)		(1	)		—			1			228			—			284			—			—
Sales (3)		—			—			—			—			—			(743	)		—			—
Issuances (3)		—			—			(3	)		(4	)		—			—			—			(1,175	)
Settlements (3)		(44	)		(1	)		(12	)		(8	)		(455	)		—			76			—
Transfers into Level 3 (4)		(1	)		—			—			—			—			19			—			—
Transfers out of Level 3 (4)		—			—			—			(75	)		—			(257	)		—			—
Balance, December 31,	$	300		$	44		$	1		$	889		$	(4,203	)	$	1,325		$	(116	)	$	(1,175	)
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	(8	)	$	—
Net derivative gains (losses)	$	24		$	(24	)	$	(42	)	$	601		$	(1,303	)	$	—		$	—		$	—
Other revenues	$	68		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	7		$	94		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S.   Corporate			Foreign   Corporate			Foreign   Government			U.S. Treasury  and Agency			RMBS			CMBS			ABS			State and Political  Subdivision			Other
	(In millions)
Year Ended December 31, 2010:
Balance, January 1,	$	6,694		$	5,244		$	378		$	37		$	2,884		$	139		$	1,659		$	69		$	6
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		22			15			6			—			64			1			9			—			1
Net investment gains (losses)		(13	)		(34	)		(5	)		—			(59	)		(6	)		(40	)		—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—			—
Other comprehensive income (loss)		277			318			(95	)		2			305			89			168			(2	)		2
Purchases, sales, issuances and settlements (3)		(415	)		305			2,965			(6	)		(445	)		684			1,435			9			(5	)
Transfers into Level 3 (4)		898			502			40			46			91			132			28			—			—
Transfers out of Level 3 (4)		(314	)		(624	)		(155	)		—			(299	)		(28	)		(233	)		(30	)		—
Balance, December 31,	$	7,149		$	5,726		$	3,134		$	79		$	2,541		$	1,011		$	3,026		$	46		$	4
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	13		$	15		$	10		$	—		$	63		$	1		$	9		$	—		$	1
Net investment gains (losses)	$	(44	)	$	(43	)	$	—		$	—		$	(29	)	$	(6	)	$	(23	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:						FVO and Trading 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 (6)
	(In millions)
Year Ended December 31, 2010:
Balance, January 1,	$	136		$	1,102		$	32		$	51		$	—		$	23		$	25		$	878
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			8			(15	)		2			—			—
Net investment gains (losses)		5			46			—			—			—			—			—			—
Net derivative gains (losses)		—			—			—			—			—			—			—			—
Other revenues		—			—			—			—			—			—			(2	)		(79	)
Policyholder benefits and claims		—			—			—			—			—			—			—			—
Other expenses		—			—			—			—			—			—			—			—
Other comprehensive income (loss)		7			12			—			—			—			(9	)		—			—
Purchases, sales, issuances and settlements (3)		128			(250	)		(22	)		(1	)		750			842			—			151
Transfers into Level 3 (4)		1			—			—			37			—			—			10			—
Transfers out of Level 3 (4)		(9	)		(5	)		—			(18	)		—			—			(9	)		—
Balance, December 31,	$	268		$	905		$	10		$	77		$	735		$	858		$	24		$	950
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	12		$	(15	)	$	2		$	—		$	—
Net investment gains (losses)	$	(2	)	$	(3	)	$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	(2	)	$	(28	)
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Net Derivatives: (7)
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market			Net Embedded Derivatives  (8)			Separate Account Assets (9)			Long-term Debt of CSEs (10)
	(In millions)
Year Ended December 31, 2010:
Balance, January 1,	$	7		$	108		$	42		$	199		$	(1,455	)	$	1,797		$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income		—			—			—			—			—			—			—
Net investment gains (losses)		—			—			—			—			—			132			48
Net derivative gains (losses)		36			46			4			(88	)		(343	)		—			—
Other revenues		1			—			—			—			—			—			—
Policyholder benefits and claims		—			—			—			—			8			—			—
Other expenses		—			(4	)		—			—			—			—			—
Other comprehensive income (loss)		(107	)		2			13			11			(226	)		—			—
Purchases, sales, issuances and settlements (3)		(23	)		(57	)		(15	)		20			(422	)		242			(232	)
Transfers into Level 3 (4)		—			—			—			—			—			46			—
Transfers out of Level 3 (4)		—			(22	)		—			—			—			(234	)		—
Balance, December 31,	$	(86	)	$	73		$	44		$	142		$	(2,438	)	$	1,983		$	(184	)
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	48
Net derivative gains (losses)	$	36		$	45		$	6		$	(82	)	$	(363	)	$	—		$	—
Other revenues	$	5		$	—		$	—		$	—		$	—		$	—		$	—
Policyholder benefits and claims	$	—		$	—		$	—		$	—		$	8		$	—		$	—
Other expenses	$	—		$	—		$	—		$	—		$	—		$	—		$	—

(1) Amortization of premium/discount is included within net investment income. Impairments charged to net income (loss) 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) Gains and losses, in net income (loss) 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 then out of Level 3 in the same period are excluded from the rollforward.

(5) Relates to assets and liabilities still held at the end of the respective periods.

(6) Other revenues represent the changes in estimated fair value due to changes in valuation model inputs or assumptions. For the years ended December 31, 2012, 2011 and 2010, there were no other changes in estimated fair value affecting MSRs.

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

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

(9) 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).

(10) The long-term debt of the CSEs consolidated as of January 1, 2010 is reported within the purchases, sales, issuances and settlements caption of the rollforward.

Fair Value Option

The following table presents information for certain assets and liabilities accounted for under the FVO. These assets and liabilities are initially measured at fair value.

	Residential Mortgage Loans Held-for-Sale (1)						Securitized Reverse Residential Mortgage Loans (2)				Assets and Liabilities Held by CSEs (3)
	December 31,						December 31,				December 31,
	2012			2011			2012		2011		2012		2011
Assets:		(In millions)
Unpaid principal balance	$	80		$	2,935		$	—	$	6,914	$	2,539	$	3,019
Difference between estimated fair value and unpaid principal balance		(31	)		129			—		738		127		119
Carrying value at estimated fair value	$	49		$	3,064		$	—	$	7,652	$	2,666	$	3,138
Loans in non-accrual status	$	3		$	3		$	—	$	—	$	—	$	—
Loans more than 90 days past due	$	23		$	20		$	—	$	59	$	—	$	—
Loans in non-accrual status or more than 90 days past due, or both — difference between aggregate estimated fair value and unpaid principal balance	$	(14	)	$	(2	)	$	—	$	—	$	—	$	—
Liabilities:
Contractual principal balance							$	—	$	6,914	$	2,430	$	2,954
Difference between estimated fair value and contractual principal balance								—		712		97		114
Carrying value at estimated fair value							$	—	$	7,626	$	2,527	$	3,068

(1) 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:

	Years Ended December 31,
	2012		2011		2010
	(In millions)
Instrument-specific credit risk based on changes in credit spreads for non-agency loans and adjustments in individual loan quality	$	(1)	$	(3)	$	(1)
Other changes in estimated fair value		68		511		487
Total gains (losses) recognized in other revenues	$	67	$	508	$	486

(2) Gains and losses from initial measurement and subsequent changes in estimated fair value are recognized in other revenues for securitized reverse residential mortgage loans and related liabilities.

(3) Assets and liabilities held by CSEs are comprised of the commercial mortgage loans and long-term debt held by CSEs. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales of these assets and liabilities are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs is recognized in net investment income. Interest expense from long-term debt of CSEs is recognized in other expenses.

Nonrecurring Fair Value Measurements

The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods presented; that is, they are not measured at fair value on a recurring basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3).

	Years Ended December 31,
	2012							2011							2010
	Carrying Value Prior to Measurement		Carrying Value After Measurement		Gains (Losses)			Carrying Value Prior to Measurement		Carrying Value After Measurement		Gains (Losses)			Carrying Value Prior to Measurement		Carrying Value After Measurement		Gains (Losses)
	(In millions)
Mortgage loans: (1)
Held-for-investment	$	439	$	428	$	(11	)	$	166	$	151	$	(15	)	$	179	$	164	$	(15	)
Held-for-sale	$	350	$	319	$	(31	)	$	61	$	58	$	(3	)	$	35	$	33	$	(2	)
Other limited partnership interests (2)	$	87	$	54	$	(33	)	$	18	$	13	$	(5	)	$	35	$	23	$	(12	)
Real estate joint ventures (3)	$	16	$	10	$	(6	)	$	—	$	—	$	—		$	33	$	8	$	(25	)
Goodwill (4)	$	1,868	$	—	$	(1,868	)	$	65	$	—	$	(65	)	$	—	$	—	$	—
Other assets (5)	$	109	$	32	$	(77	)	$	—	$	—	$	—		$	—	$	—	$	—

(1) The carrying value after measurement has been adjusted for the excess of the carrying value prior to measurement over the estimated fair value. Estimated fair values for impaired mortgage loans are based on independent broker quotations or valuation models using unobservable inputs or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, are based on the estimated fair value of the underlying collateral or the present value of the expected future cash flows.

(2) These investments were accounted for using the cost method. Estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. 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. 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 at both December 31, 2012 and 2011 were not significant.

(3) These investments were accounted for using the cost method. Estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. These investments include several real estate funds that typically invest primarily in commercial real estate. 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 at both December 31, 2012 and 2011 were not significant.

(4) As discussed in Note 11, in 2012, the Company recorded an impairment of goodwill associated with the Retail Annuities reporting unit. In addition, in 2011, the Company recorded an impairment of goodwill associated with MetLife Bank.

(5) As discussed in Note 5, in 2012, the Company recorded an impairment of VOCRA, which is included in other assets.

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: 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 therefore are not included in the three level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair value of these financial instruments, which are primarily classified in Level 2 and, to a lesser extent, in Level 1, 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 tables below also exclude 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:

	December 31, 2012
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Mortgage loans:
Held-for-investment	$	53,926	$	—	$	—	$	57,381	$	57,381
Held-for-sale		365		—		—		365		365
Mortgage loans, net	$	54,291	$	—	$	—	$	57,746	$	57,746
Policy loans	$	11,884	$	—	$	1,690	$	12,567	$	14,257
Real estate joint ventures	$	113	$	—	$	—	$	171	$	171
Other limited partnership interests	$	1,154	$	—	$	—	$	1,277	$	1,277
Other invested assets	$	815	$	305	$	144	$	366	$	815
Premiums, reinsurance and other receivables	$	3,287	$	—	$	745	$	2,960	$	3,705
Other assets	$	260	$	—	$	214	$	78	$	292
Liabilities:
PABs	$	149,928	$	—	$	—	$	158,040	$	158,040
Bank deposits	$	6,416	$	—	$	2,018	$	4,398	$	6,416
Long-term debt	$	16,502	$	—	$	18,978	$	—	$	18,978
Collateral financing arrangements	$	4,196	$	—	$	—	$	3,839	$	3,839
Junior subordinated debt securities	$	3,192	$	—	$	3,984	$	—	$	3,984
Other liabilities	$	1,913	$	—	$	673	$	1,243	$	1,916
Separate account liabilities	$	58,726	$	—	$	58,726	$	—	$	58,726
Commitments: (1)
Mortgage loan commitments	$	—	$	—	$	—	$	12	$	12
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments	$	—	$	—	$	22	$	—	$	22

	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 21 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 internal 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 discounted cash flow 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 such cost method investments 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 derivatives 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 discounted cash flow 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 described in Note 12. 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 discounted cash flow 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 disposition of the depository business of MetLife Bank to determine the estimated fair value of bank deposits. See Note 3.

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

Valuations classified as Level 2 are based primarily on quoted prices in markets that are not active or using matrix pricing 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 discounted cash flow 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 discounted cash flow methodologies that utilize unobservable discount rates that can vary significantly based upon the specific terms of each individual arrangement. The determination of estimated fair values of collateral financing arrangements incorporates valuations obtained from the counterparties to the arrangements, as part of the collateral management process.

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.