Closed Block

3 Months Ended

Mar. 31, 2013

Closed Block [Abstract]

Closed Block

5. Closed Block

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

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

Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item.

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

	March 31, 2013		December 31, 2012
	(In millions)
Closed Block Liabilities
Future policy benefits	$	42,366	$	42,586
Other policy-related balances		310		298
Policyholder dividends payable		480		466
Policyholder dividend obligation		3,599		3,828
Current income tax payable		14		—
Other liabilities		646		602
Total closed block liabilities		47,415		47,780
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value		30,109		30,546
Equity securities available-for-sale, at estimated fair value		91		41
Mortgage loans		6,068		6,192
Policy loans		4,661		4,670
Real estate and real estate joint ventures		460		459
Other invested assets		1,198		953
Total investments		42,587		42,861
Cash and cash equivalents		321		381
Accrued investment income		506		481
Premiums, reinsurance and other receivables		85		107
Current income tax recoverable		—		2
Deferred income tax assets		320		319
Total assets designated to the closed block		43,819		44,151
Excess of closed block liabilities over assets designated to the closed block		3,596		3,629
Amounts included in AOCI:
Unrealized investment gains (losses), net of income tax		2,714		2,891
Unrealized gains (losses) on derivatives, net of income tax		17		9
Allocated to policyholder dividend obligation, net of income tax		(2,339)		(2,488)
Total amounts included in AOCI		392		412
Maximum future earnings to be recognized from closed block assets and liabilities	$	3,988	$	4,041

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

	Three Months Ended     March 31, 2013		Year Ended  December 31, 2012
	(In millions)
Balance, beginning of period	$	3,828	$	2,919
Change in unrealized investment and derivative gains (losses)		(229)		909
Balance, end of period	$	3,599	$	3,828

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

	Three Months Ended March 31,
	2013		2012
	(In millions)
Revenues
Premiums	$	464	$	498
Net investment income		533		550
Net investment gains (losses)		3		11
Net derivative gains (losses)		8		(9)
Total revenues		1,008		1,050
Expenses
Policyholder benefits and claims		643		662
Policyholder dividends		242		268
Other expenses		42		45
Total expenses		927		975
Revenues, net of expenses before provision for income tax expense (benefit)		81		75
Provision for income tax expense (benefit)		27		27
Revenues, net of expenses and provision for income tax expense (benefit) from continuing operations		54		48
Revenues, net of expenses and provision for income tax expense (benefit) from discontinued operations		—		4
Revenues, net of expenses and provision for income tax expense (benefit)	$	54	$	52

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