Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information [Abstract]

Segment Information

2. Segment Information

MetLife is organized into six segments, reflecting three broad geographic regions: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively, the “Americas”); Asia; and EMEA. In addition, the Company reports certain of its results of operations in Corporate & Other, which included MetLife Bank, National Association (“MetLife Bank”) (see Note 3) and other business activities.

As anticipated, in the third quarter of 2012, the Company continued to realign certain products and businesses among its existing segments. Management realigned certain individual disability income and property & casualty products, which were previously reported in the Group, Voluntary & Worksite Benefits segment and began reporting such product results in the Retail segment. In accordance with this realignment, prior period operating earnings for the Retail segment increased by $61 million, net of $19 million of income tax, with a corresponding decrease in the Group, Voluntary & Worksite Benefits segment, for the three months ended March 31, 2012. Management also realigned the businesses in South Asia and India, which were previously reported in the EMEA segment and began reporting such results in the Asia segment. In accordance with this realignment, prior period operating earnings for the Asia segment increased by $4 million, net of $2 million of income tax, with a corresponding decrease in the EMEA segment, for the three months ended March 31, 2012.

Americas

The Americas consists of the following segments:

Retail

The Retail segment offers a broad range of protection products and services and a variety of annuities to individuals and employees of corporations and other institutions, and is organized into two businesses: Life & Other and Annuities. Life & Other insurance products and services include variable life, universal life, term life and whole life products. Additionally, through broker-dealer affiliates, the Company offers a full range of mutual funds and other securities products. Life & Other products and services also include individual disability income products and personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance. Annuities includes a variety of variable and fixed annuities which provide for both asset accumulation and asset distribution needs.

Group, Voluntary & Worksite Benefits

The Group, Voluntary & Worksite Benefits segment offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into two businesses: Group and Voluntary & Worksite. Group insurance products and services include variable life, universal life and term life products. Group insurance products and services also include dental, group short- and long-term disability and accidental death & dismemberment coverages. The Voluntary & Worksite business includes personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance offered to employees on a voluntary basis. The Voluntary & Worksite business also includes long-term care, prepaid legal plans and critical illness products.

Corporate Benefit Funding

The Corporate Benefit Funding segment offers a broad range of annuity and investment products, including guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets. This segment also includes certain products to fund postretirement benefits and company-, bank- or trust-owned life insurance used to finance non-qualified benefit programs for executives.

Latin America

The Latin America segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident and health insurance, group medical, dental, credit insurance, endowment and retirement & savings products written in Latin America. Starting in the first quarter of 2013, the Latin America segment includes U.S. sponsored direct business, comprised of group products sold through sponsoring organizations and affinity groups. Products included are life, dental, group short- and long-term disability, accidental death & dismemberment coverages, property & casualty and critical illness.

Asia

The Asia segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include whole life, term life, variable life, universal life, accident and health insurance, fixed and variable annuities and endowment products.

EMEA

The EMEA segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees, which include life insurance, accident and health insurance, credit insurance, annuities, endowment and retirement & savings products.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments, external integration costs, internal resource costs for associates committed to acquisitions, enterprise-wide strategic initiative restructuring charges, and various start-up and certain run-off businesses. Start-up businesses include expatriate benefits insurance, as well as direct and digital marketing products. Corporate & Other also includes assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan. Under this in-force reinsurance agreement, the Company reinsures living and death benefit guarantees issued in connection with variable annuity products. Additionally, Corporate & Other includes interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings.

Financial Measures and Segment Accounting Policies

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is the Company’s measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for income (loss) from continuing operations, net of income tax. The Company believes the presentation of operating earnings as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business.

Operating earnings is defined as operating revenues less operating expenses, both net of income tax.

Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by MetLife, Inc. (“Divested Businesses”). Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes goodwill impairments.

The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues:

• Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”);

• Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

• Other revenues are adjusted for settlements of foreign currency earnings hedges.

The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:

• Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (iii) benefits and hedging costs related to GMIBs (“GMIB Costs”), and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);

• Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances (“PABs”) but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-linked investments;

• Amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB Fees and GMIB Costs, and (iii) Market Value Adjustments;

• Amortization of negative VOBA excludes amounts related to Market Value Adjustments;

• Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

• Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii) acquisition and integration costs.

Operating earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.

In the third quarter of 2012, MetLife, Inc. began reporting additional MetLife Bank operations as Divested Businesses. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. Consequently, prior period results for Corporate & Other have increased by $1 million, net of $0 of income tax, for the three months ended March 31, 2012.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months ended March 31, 2013 and 2012. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for operating earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.

Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.

The Company’s economic capital model aligns segment allocated equity with emerging standards and consistent risk principles. Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, operating earnings or income (loss) from continuing operations, net of income tax.

	Operating Earnings
	Americas
Three Months Ended March 31, 2013	Retail		Group, Voluntary   & Worksite   Benefits		Corporate   Benefit Funding		Latin     America		Total		Asia		EMEA		Corporate     & Other		Total		Adjustments		Total   Consolidated
	(In millions)
Revenues
Premiums	$	1,547	$	3,874	$	464	$	675	$	6,560	$	1,998	$	567	$	26	$	9,151	$	—	$	9,151
Universal life and investment-type product policy fees		1,167		180		68		225		1,640		444		91		36		2,211		80		2,291
Net investment income		1,961		453		1,435		277		4,126		732		128		146		5,132		945		6,077
Other revenues		243		108		73		4		428		13		27		13		481		(1)		480
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		314		314
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		(630)		(630)
Total revenues		4,918		4,615		2,040		1,181		12,754		3,187		813		221		16,975		708		17,683
Expenses
Policyholder benefits and claims and policyholder dividends		2,153		3,640		1,098		554		7,445		1,415		237		9		9,106		602		9,708
Interest credited to policyholder account balances		579		39		343		104		1,065		442		35		12		1,554		1,036		2,590
Capitalization of DAC		(374)		(33)		(17)		(105)		(529)		(546)		(177)		(4)		(1,256)		—		(1,256)
Amortization of DAC and VOBA		331		34		11		74		450		401		165		—		1,016		(192)		824
Amortization of negative VOBA		—		—		—		(1)		(1)		(113)		(17)		—		(131)		(15)		(146)
Interest expense on debt		—		—		2		(1)		1		—		1		286		288		33		321
Other expenses		1,278		588		143		372		2,381		1,094		448		164		4,087		308		4,395
Total expenses		3,967		4,268		1,580		997		10,812		2,693		692		467		14,664		1,772		16,436
Provision for income tax expense (benefit)		325		117		161		41		644		161		34		(193)		646		(394)		252
Operating earnings	$	626	$	230	$	299	$	143	$	1,298	$	333	$	87	$	(53)		1,665
Adjustments to:
Total revenues																		708
Total expenses																		(1,772)
Provision for income tax (expense) benefit																		394
Income (loss) from continuing operations, net of income tax																	$	995			$	995

	Operating Earnings
	Americas
Three Months Ended March 31, 2012	Retail		Group, Voluntary   & Worksite   Benefits		Corporate   Benefit Funding		Latin     America		Total		Asia		EMEA		Corporate     & Other		Total		Adjustments		Total   Consolidated
	(In millions)
Revenues
Premiums	$	1,624	$	3,585	$	507	$	686	$	6,402	$	2,039	$	652	$	14	$	9,107	$	22	$	9,129
Universal life and investment-type product policy fees		1,114		166		51		196		1,527		362		80		40		2,009		69		2,078
Net investment income		1,911		436		1,401		299		4,047		681		157		192		5,077		1,123		6,200
Other revenues		209		108		64		5		386		16		36		14		452		145		597
Net investment gains (losses)		—		—		—		—		—		—		—		—		—		(110)		(110)
Net derivative gains (losses)		—		—		—		—		—		—		—		—		—		(1,978)		(1,978)
Total revenues		4,858		4,295		2,023		1,186		12,362		3,098		925		260		16,645		(729)		15,916
Expenses
Policyholder benefits and claims and policyholder dividends		2,228		3,313		1,092		592		7,225		1,360		343		11		8,939		508		9,447
Interest credited to policyholder account balances		596		42		339		100		1,077		429		33		—		1,539		1,018		2,557
Capitalization of DAC		(476)		(31)		(7)		(84)		(598)		(587)		(177)		—		(1,362)		(2)		(1,364)
Amortization of DAC and VOBA		404		30		10		55		499		373		146		—		1,018		(304)		714
Amortization of negative VOBA		—		—		—		(2)		(2)		(131)		(4)		—		(137)		(18)		(155)
Interest expense on debt		—		—		2		1		3		1		—		311		315		43		358
Other expenses		1,397		575		128		326		2,426		1,191		471		155		4,243		525		4,768
Total expenses		4,149		3,929		1,564		988		10,630		2,636		812		477		14,555		1,770		16,325
Provision for income tax expense (benefit)		240		123		161		50		574		161		41		(180)		596		(871)		(275)
Operating earnings	$	469	$	243	$	298	$	148	$	1,158	$	301	$	72	$	(37)		1,494
Adjustments to:
Total revenues																		(729)
Total expenses																		(1,770)
Provision for income tax (expense) benefit																		871
Income (loss) from continuing operations, net of income tax																	$	(134)			$	(134)

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:

	March 31, 2013		December 31, 2012
	(In millions)
Retail	$	342,524	$	332,387
Group, Voluntary & Worksite Benefits		45,158		44,138
Corporate Benefit Funding		227,839		217,352
Latin America		25,640		23,272
Asia		124,510		131,138
EMEA		23,080		23,474
Corporate & Other		52,934		65,020
Total	$	841,685	$	836,781

Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.