Condensed Financial Information (Parent Company)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information (Parent Company) [Abstract]

Condensed Financial Information (Parent Company)

MetLife, Inc.

Schedule II

Condensed Financial Information

(Parent Company Only)

December 31, 2012 and 2011

(In millions, except share and per share data)

	2012			2011
Condensed Balance Sheets
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $4,867 and $4,350, respectively)	$	4,967		$	4,419
Equity securities available-for-sale, at estimated fair value (cost: $15 and $17, respectively)		13			13
Short-term investments, principally at estimated fair value		295			667
Other invested assets, at estimated fair value		155			275
Total investments		5,430			5,374
Cash and cash equivalents		188			309
Accrued investment income		37			44
Investment in subsidiaries		81,769			74,281
Loans to subsidiaries		750			—
Receivables from subsidiaries		7			165
Other assets		1,369			1,201
Total assets	$	89,550		$	81,374
Liabilities and Stockholders’ Equity
Liabilities
Payables for collateral under securities loaned and other transactions	$	—		$	1,180
Long-term debt — unaffiliated		15,669			15,666
Long-term debt — affiliated		3,250			500
Collateral financing arrangements		2,797			2,797
Junior subordinated debt securities		1,748			1,748
Other liabilities		1,633			1,964
Total liabilities		25,097			23,855
Stockholders’ Equity
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference		1			1
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,094,880,623 and 1,061,150,915 shares issued at December 31, 2012 and 2011, respectively; 1,091,686,736 and 1,057,957,028 shares outstanding at December 31, 2012 and 2011, respectively		11			11
Additional paid-in capital		28,011			26,782
Retained earnings		25,205			24,814
Treasury stock, at cost; 3,193,887 shares at December 31, 2012 and 2011		(172	)		(172	)
Accumulated other comprehensive income (loss)		11,397			6,083
Total stockholders’ equity		64,453			57,519
Total liabilities and stockholders’ equity	$	89,550		$	81,374

See accompanying notes to the condensed financial information.

	2012			2011			2010
Condensed Statements of Operations
Revenues
Equity in earnings of subsidiaries	$	3,444		$	6,979		$	3,318
Net investment income		94			121			144
Other income		159			155			144
Net investment gains (losses)		29			(146	)		31
Net derivative gains (losses)		(259	)		82			(81	)
Expenses
Interest expense		(985	)		(1,007	)		(882	)
Goodwill impairment		(1,384	)		—			—
Other expenses		(167	)		(149	)		(319	)
Income (loss) before provision for income tax		931			6,035			2,355
Provision for income tax expense (benefit)		(393	)		(388	)		(312	)
Net income (loss)		1,324			6,423			2,667
Less:  Preferred stock dividends		122			122			122
Preferred stock redemption premium		—			146			—
Net income (loss) available to common shareholders	$	1,202		$	6,155		$	2,545
Comprehensive income (loss)	$	6,638		$	11,361		$	6,861

See accompanying notes to the condensed financial information.

	2012			2011			2010
Condensed Statements of Cash Flows
Cash flows from operating activities
Net income (loss)	$	1,324		$	6,423		$	2,667
Earnings of subsidiaries		(3,444	)		(6,979	)		(3,318	)
Dividends from subsidiaries		3,177			2,578			916
Goodwill impairment		1,384			—			—
Other, net		177			697			376
Net cash provided by operating activities		2,618			2,719			641
Cash flows from investing activities
Sales of fixed maturity securities		5,645			3,265			7,422
Purchases of fixed maturity securities		(6,200	)		(4,787	)		(6,542	)
Sales of equity securities		2			1			5
Cash received in connection with freestanding derivatives		197			257			200
Cash paid in connection with freestanding derivatives		(203	)		(276	)		(450	)
Sales of businesses		—			180			—
Purchases of businesses		—			—			(7,196	)
Expense paid on behalf of subsidiaries		(80	)		(75	)		(72	)
Repayments of loans to subsidiaries		175			1,275			300
Issuances of loans to subsidiaries		(175	)		—			—
Investment in preferred stock of subsidiary		—			(250	)		(50	)
Returns of capital from subsidiaries		9			591			54
Capital contributions to subsidiaries		(1,223	)		(1,439	)		(374	)
Net change in short-term investments		372			(620	)		271
Other, net		(48	)		(10	)		(35	)
Net cash used in investing activities		(1,529	)		(1,888	)		(6,467	)
Cash flows from financing activities
Net change in payables for collateral under securities loaned and other transactions		(1,180	)		520			233
Long-term debt issued		750			—			2,987
Long-term debt repaid		(797	)		(750	)		—
Cash received (paid) in connection with collateral financing arrangements		(44	)		37			—
Common stock issued, net of issuance costs		1,000			2,950			3,576
Redemption of convertible preferred stock		—			(2,805	)		—
Preferred stock redemption premium		—			(146	)		—
Dividends on preferred stock		(122	)		(122	)		(122	)
Dividends on common stock		(811	)		(787	)		(784	)
Other, net		(6	)		(43	)		(119	)
Net cash (used in) provided by financing activities		(1,210	)		(1,146	)		5,771
Change in cash and cash equivalents		(121	)		(315	)		(55	)
Cash and cash equivalents, beginning of year		309			624			679
Cash and cash equivalents, end of year	$	188		$	309		$	624

	2012		2011			2010
Supplemental disclosures of cash flow information:
Net cash paid (received) for:
Interest	$	937	$	997		$	808
Income tax	$	24	$	(659	)	$	(474	)
Non-cash transactions:
Business acquisitions:
Assets acquired	$	—	$	—		$	125,728
Liabilities assumed		—		—			(109,306	)
Redeemable and non-redeemable noncontrolling interests assumed		—		—			(130	)
Net assets acquired		—		—			16,292
Cash paid, excluding transaction costs of $0, $0 and $88, respectively		—		—			(7,196	)
Other purchase price adjustments		—		—			98
Securities issued	$	—	$	—		$	9,194
Dividends from subsidiaries	$	203	$	170		$	874
Returns of capital from subsidiaries	$	356	$	47		$	—
Capital contributions to subsidiaries	$	559	$	316		$	—
Assumption of long-term debt from subsidiary	$	2,000	$	—		$	—
Investment in preferred stock of subsidiary	$	2,000	$	—		$	—
Issuance of long-term debt to subsidiary	$	750	$	—		$	—
Issuance of loan to subsidiary	$	750	$	—		$	—
Allocation of interest expense to subsidiary	$	33	$	29		$	30
Allocation of interest income to subsidiary	$	76	$	68		$	46

MetLife, Inc.

Schedule II

Notes to the Condensed Financial Information

(Parent Company Only)

1.  Basis of Presentation

The condensed financial information of MetLife, Inc. (the “Parent Company”) should be read in conjunction with the consolidated financial statements of MetLife, Inc. and its subsidiaries and the notes thereto (the “Consolidated Financial Statements”). These condensed unconsolidated financial statements reflect the results of operations, financial position and cash flows for MetLife, Inc. Investments in subsidiaries are accounted for using the equity method of accounting.

The preparation of these condensed unconsolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make certain estimates and assumptions. The most important of these estimates and assumptions relate to the fair value measurements, the accounting for goodwill and identifiable intangible assets and the provision for potential losses that may arise from litigation and regulatory proceedings and tax audits, which may affect the amounts reported in the condensed unconsolidated financial statements and accompanying notes. Actual results could differ from these estimates.

2.  Acquisition

On November 1, 2010, MetLife, Inc. acquired all of the issued and outstanding capital stock of American Life Insurance Company (“American Life”) and Delaware American Life Insurance Company (“DelAm”) (collectively, “ALICO”). See Notes 3, 11, 12, 15 and 16 of the Notes to the Consolidated Financial Statements for further information on this acquisition.

3.  Investment in Subsidiaries

During 2012, MetLife, Inc. assumed debt from Exeter Reassurance Company, Ltd. (“Exeter”), a subsidiary, as described in Note 5, in exchange for $2.0 billion of preferred stock of Exeter. In September 2012, MetLife Inc. subscribed to 75,000 shares of Exeter’s Series A Non-Cumulative Perpetual Preferred Shares which bears an annual rate of 7.69% that is payable semi-annually. In December 2012, MetLife Inc. subscribed to 125,000 shares of Exeter’s Series B Non-Cumulative Perpetual Preferred Shares which bears an annual rate of 7.75% that is payable semi-annually.

4.  Loans to Subsidiaries

MetLife, Inc. lends funds, as necessary, to its subsidiaries, some of which are regulated, to meet their capital requirements. Payments of interest and principal on surplus notes of regulated subsidiaries, which are subordinate to all other obligations of the issuing company, may be made only with the prior approval of the insurance department of the state of domicile.

In December 2012, MetLife Reinsurance Company of Delaware (“MRD”), issued a $750 million surplus note to MetLife, Inc. due September 30, 2032. The surplus note bears interest at a fixed rate of 5.13% payable semi-annually. MetLife, Inc. issued a $750 million senior note to MRD in exchange for the surplus note (see Note 5).

In December 2011, Metropolitan Life Insurance Company (“MLIC”) repaid in cash the $500 million capital notes issued to MetLife, Inc. In April 2011, MLIC repaid in cash a $775 million surplus note issued to MetLife, Inc. and due December 2011. The early redemption was approved by the New York Superintendent of Insurance. In December 2010, MLIC repaid at maturity and in cash a $300 million surplus note issued to MetLife, Inc.

Interest income earned on loans to subsidiaries of $1 million, $40 million and $63 million for the years ended December 31, 2012, 2011 and 2010, respectively, is included in net investment income.

5.  Long-term Debt

Long-term debt outstanding was as follows:

	Interest Rates (1)			December 31,
	Range	Weighted Average	Maturity	2012		2011
				(In millions)
Senior notes — unaffiliated	0.79% - 7.72%	4.83 %	2013 - 2045	$	15,669	$	15,666
Senior notes — affiliated	3.57% - 7.44%	5.57 %	2014 - 2032		2,750		—
Other affiliated debt	1.06% - 1.28%	1.17 %	2015 - 2016		500		500
Total				$	18,919	$	16,166

(1) Range of interest rates and weighted average interest rates are for the year ended December 31, 2012.

The aggregate maturities of long-term debt at December 31, 2012 for the next five years and thereafter are $750 million in 2013, $1.8 billion in 2014, $1.3 billion in 2015, $1.7 billion in 2016, $500 million in 2017 and $12.8 billion thereafter.

Senior Notes – Affiliated

In September 2012, $750 million of Exeter senior notes payable to MLIC were reassigned to MetLife, Inc. MetLife, Inc. received $750 million of preferred stock of Exeter in exchange for the assumption of this affiliated debt (see Note 3). On September 30, 2012, $250 million of the assumed senior notes matured and subsequently, in October 2012, a new $250 million senior note was issued by MetLife, Inc. to MLIC. The new $250 million senior note matures on October 1, 2019 and bears interest at a fixed rate of 3.57%, payable semi-annually. The remaining $500 million senior note matures on June 30, 2014 and bears interest at a fixed rate of 6.44%, payable semi-annually.

In December 2012, $1.25 billion of Exeter senior notes payable to affiliates, which are comprised of three notes, were reassigned to MetLife, Inc. MetLife, Inc. received $1.25 billion of preferred stock of Exeter in exchange for the assumption of this affiliated debt (see Note 3). A $250 million senior note matures on September 30, 2016 and bears interest at a fixed rate of 7.44%, payable semi-annually. A $500 million senior note matures on July 15, 2021 and bears interest at a fixed rate of 5.64%, payable semi-annually. A $500 million senior note matures on December 16, 2021 and bears interest at a fixed rate of 5.86%, payable semi-annually.

In December 2012, MetLife, Inc. issued a $750 million senior note to MRD due September 30, 2032. The senior note bears interest at a fixed rate of 4.21%, payable semi-annually. MRD issued a $750 million surplus note to MetLife, Inc. in exchange for the senior note.

Interest Expense

Interest expense was comprised of the following:

	Years Ended December 31,
	2012		2011		2010
	(In millions)
Long-term debt — unaffiliated	$	779	$	806	$	689
Long-term debt — affiliated		28		16		15
Collateral financing arrangements		42		43		44
Junior subordinated debt securities		134		134		134
Stock purchase contracts		2		8		—
Total	$	985	$	1,007	$	882

6.  Support Agreements

MetLife, Inc. is party to various capital support commitments and guarantees with certain of its subsidiaries. Under these arrangements, MetLife, Inc. has agreed to cause each such entity to meet specified capital and surplus levels or has guaranteed certain contractual obligations.

In December 2012, MetLife, Inc., in connection with MRD’s reinsurance of certain universal life and term life risks, entered into a capital maintenance agreement pursuant to which MetLife, Inc. agreed, without limitation as to amount, to cause the initial protected cell of MRD to maintain total adjusted capital equal to or greater than 200% of such protected cell’s company action level risk-based capital (“RBC”), as defined in state insurance statutes.

In July 2012, in connection with an operating agreement with the Comptroller of the Currency (the “OCC”) governing MetLife Bank, National Association’s (“MetLife Bank”) operations during its wind-down process, MetLife Bank and MetLife, Inc. entered into a capital support agreement with the OCC and MetLife, Inc. and MetLife Bank entered into an indemnification and capital maintenance agreement under which agreements MetLife, Inc. will provide financial and other support to MetLife Bank to ensure that MetLife Bank can wind down its operations in a safe and sound manner. Pursuant to the agreements, MetLife, Inc. is required to ensure that MetLife Bank meets or exceeds certain minimum capital and liquidity requirements once its Federal Deposit Insurance Corporation insurance has been terminated and make indemnification payments to MetLife Bank in connection with MetLife Bank’s obligation under the April 2011 consent decree between MetLife Bank and the OCC. In February 2013, MetLife Bank’s Federal Deposit Insurance Corporation insurance was terminated. During the year ended December 31, 2012, MetLife, Inc. invested $34 million in cash in MetLife Bank in connection with these agreements. See Note 7.

MetLife, Inc. guarantees the obligations of its subsidiary, DelAm, under a stop loss reinsurance agreement with RGA Reinsurance (Barbados) Inc. (“RGARe”), pursuant to which RGARe retrocedes to DelAm a portion of the whole life medical insurance business that RGARe assumed from American Life on behalf of its Japan operations.

Prior to the sale in April 2011 of its 50% interest in Mitsui Sumitomo MetLife Insurance Co., Ltd (‘MSI MetLife’) to a third party, MetLife, Inc. guaranteed the obligations of its subsidiary, Exeter, under a reinsurance agreement with MSI MetLife, under which Exeter reinsures variable annuity business written by MSI MetLife. This guarantee will remain in place until such time as the reinsurance agreement between Exeter and MSI MetLife is terminated, notwithstanding the April 2011 disposition of MetLife, Inc.’s interest in MSI MetLife as described in Note 3 of the Notes to the Consolidated Financial Statements.

MetLife, Inc. guarantees the obligations of its subsidiary, Missouri Reinsurance, Inc. (“MoRe”), under a retrocession agreement with RGARe, pursuant to which MoRe retrocedes a portion of the closed block liabilities associated with industrial life and ordinary life insurance policies that it assumed from MLIC.

MetLife, Inc. guarantees the obligations of Exeter in an aggregate amount up to $1.0 billion, under a reinsurance agreement with MetLife Europe Limited (“MEL”), under which Exeter reinsures the guaranteed living benefits and guaranteed death benefits associated with certain unit-linked annuity contracts issued by MEL.

MetLife, Inc. guarantees the obligations of MoRe, under a retrocession agreement with RGARe, pursuant to which MoRe retrocedes certain group term life insurance liabilities that it assumed from MLIC.

MetLife, Inc., in connection with MetLife Reinsurance Company of Vermont’s (“MRV”) reinsurance of certain universal life and term life insurance risks, committed to the Vermont Department of Banking, Insurance, Securities and Health Care Administration to take necessary action to cause the three protected cells of MRV to maintain total adjusted capital in an amount that is equal to or greater than 200% of each such protected cell’s authorized control level RBC, as defined in Vermont state insurance statutes. See Note 12 of the Notes to the Consolidated Financial Statements.

MetLife, Inc., in connection with the collateral financing arrangement associated with MetLife Reinsurance Company of Charleston’s (“MRC”) reinsurance of a portion of the liabilities associated with the closed block, committed to the South Carolina Department of Insurance to make capital contributions, if necessary, to MRC so that MRC may at all times maintain its total adjusted capital in an amount that is equal to or greater than 200% of the company action level RBC, as defined in South Carolina state insurance statutes as in effect on the date of determination or December 31, 2007, whichever calculation produces the greater capital requirement, or as otherwise required by the South Carolina Department of Insurance. See Note 13 of the Notes to the Consolidated Financial Statements.

MetLife, Inc., in connection with the collateral financing arrangement associated with MetLife Reinsurance Company of South Carolina’s (“MRSC”) reinsurance of universal life secondary guarantees, committed to the South Carolina Department of Insurance to take necessary action to cause MRSC to maintain the greater of capital and surplus of $250,000 or total adjusted capital in an amount that is equal to or greater than 100% of authorized control level RBC, as defined in South Carolina state insurance statutes. See Note 13 of the Notes to the Consolidated Financial Statements.

MetLife, Inc. has net worth maintenance agreements with two of its insurance subsidiaries, MetLife Investors Insurance Company and First MetLife Investors Insurance Company. Under these agreements, as amended, MetLife, Inc. agreed, without limitation as to the amount, to cause each of these subsidiaries to have capital and surplus of $10 million, total adjusted capital in an amount that is equal to or greater than 150% of the company action level RBC, as defined by applicable state insurance statutes, and liquidity necessary to enable it to meet its current obligations on a timely basis.

MetLife, Inc. guarantees obligations arising from derivatives of the following subsidiaries: Exeter, MetLife Bank, MetLife International Holdings, Inc. and MetLife Worldwide Holdings, Inc. These subsidiaries are exposed to various risks relating to their ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. These subsidiaries use a variety of strategies to manage these risks, including the use of derivatives. Further, all of the subsidiaries’ derivatives are subject to industry standard netting agreements and collateral agreements that limit the unsecured portion of any open derivative position. On a net counterparty basis at December 31, 2012 and 2011, derivative transactions with positive mark-to-market values (in-the-money) were $3.2 billion and $4.9 billion, respectively, and derivative transactions with negative mark-to-market values (out-of-the-money) were $22 million and $51 million, respectively. To secure the obligations represented by the out of-the-money transactions, the subsidiaries had provided collateral to their counterparties with an estimated fair value of $12 million and $47 million at December 31, 2012 and 2011, respectively. Accordingly, unsecured derivative liabilities guaranteed by MetLife, Inc. were $10 million and $4 million at December 31, 2012 and 2011, respectively.

MetLife, Inc. also guarantees the obligations of certain of its subsidiaries under committed facilities with third-party banks. See Note 12 of the Notes to the Consolidated Financial Statements.

7.  Subsequent Events

On January 9, 2013, MetLife, Inc. entered into an 18-month agreement with MetLife Bank to lend up to $500 million to MetLife Bank on a revolving basis. On February 11, 2013, the agreement was amended to reduce borrowing capacity to $100 million, at which date there were no borrowings outstanding.