Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

2. Segment Information

The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

The Annuities segment offers a variety of variable, fixed, index-linked and income annuities designed to address contractholders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.

Life

The Life segment previously offered insurance products and services, including term and universal life, designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis.

Corporate & Other

Corporate & Other contains the excess capital, as well as certain charges and activities, not allocated to the segments, ancillary U.S. term life business sold direct to consumer and expenses associated with income tax audit issues.

Financial Measures and Segment Accounting Policies

Operating earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is also the Company’s GAAP measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for net income (loss). 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 allows analysis of the Company’s performance and facilitates comparisons to industry results.Operating earnings focuses on our primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products.

The following are excluded from total revenues in calculating operating earnings:

• Net investment gains (losses);

• Net derivative gains (losses) except earned income on derivatives that are hedges of investments but do not qualify for hedge accounting treatment; and

• 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”).

The following are excluded from total expenses in calculating operating earnings:

• Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, benefits and hedging costs related to GMIBs (“GMIB Costs”) and market value adjustments associated with surrenders or terminations of contracts; and

• Amounts related to: (i) net investment gains (losses) and net derivative gains (losses) and (ii) GMIB Fees and GMIB Costs included in amortization of deferred policy acquisition costs (“DAC”) and value of business acquired.

The tax impact of the adjustments mentioned above are calculated net of the U.S. statutory tax rate, which could differ from the Company’s effective tax rate.

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, 2017 and 2016. The segment accounting policies are the same as those used to prepare the Company’s financial statements, except for operating earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.

The internal capital model is a MetLife developed risk capital model that reflects management’s judgment and view of required capital to represent the measurement of the risk profile of the business, to meet the Company’s long term promises to clients, to service long-term obligations and to support the credit ratings of the Company. It accounts for the unique and specific nature of the risks inherent in the Company’s business. Management is responsible for the ongoing production and enhancement of the internal capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards. As such, the internal capital allocation methodology in the future may differ from MetLife’s historical model.

The Company allocates equity to the segments based on the internal capital model, coupled with considerations of local capital requirements, and aligns 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 net investment income or net income (loss).

Net investment income is based upon the actual results within a specifically identifiable investment portfolio and is allocated to segments at a rate based upon each product’s net GAAP liability, 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 time incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.

	Operating Results
Three Months Ended March 31, 2017	Annuities			Life			Corporate & Other			Total
	(In thousands)
Pre-tax operating earnings	$	12,054		$	(2,212	)	$	2,670		$	12,512
Provision for income tax expense (benefit)	3,036			(774		)	810			3,072
Operating earnings	$	9,018		$	(1,438	)	$	1,860		9,440
Adjustments for:
Net investment gains (losses)										(737		)
Net derivative gains (losses)										(131,536		)
Other adjustments to net income										30,713
Provision for income tax (expense) benefit										35,546
Net income (loss)										$	(56,574	)
Inter-segment revenues	$	(10,045	)	$	(9,900	)	$	(397	)
Interest revenue	$	15,457		$	3,749		$	2,285

	Operating Results
Three Months Ended March 31, 2016	Annuities			Life			Corporate & Other			Total
	(In thousands)
Pre-tax operating earnings	$	2,433		$	3,575		$	2,119		$	8,127
Provision for income tax expense (benefit)	(545		)	1,290			558			1,303
Operating earnings	$	2,978		$	2,285		$	1,561		6,824
Adjustments for:
Net investment gains (losses)										(1,689		)
Net derivative gains (losses)										50,040
Other adjustments to net income										(9,800		)
Provision for income tax (expense) benefit										(13,492		)
Net income (loss)										$	31,883
Inter-segment revenues	$	(952	)	$	(9,732	)	$	(391	)
Interest revenue	$	5,543		$	4,467		$	3,652

Reconciliation of Company operating revenues to total revenues:

	Three Months Ended March 31,
	2017			2016
	(In thousands)
Annuities	$	27,694		$	29,743
Life	9,928			12,638
Total segment	37,622			42,381
Corporate & Other	2,703			4,148
Net investment gains (losses)	(737		)	(1,689		)
Net derivative gains (losses)	(131,536		)	50,040
Other adjustments	3,437			3,499
Total	$	(88,511	)	$	98,379

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

	March 31, 2017		December 31, 2016
	(In thousands)
Annuities	$	6,845,321	$	6,708,803
Life	634,267		342,592
Corporate & Other	445,420		581,651
Total	$	7,925,008	$	7,633,046