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Related Party Transactions
 9 Months Ended
Sep. 30, 2013
Related Party Transactions [Abstract]  
Related Party Transactions
11.  Related Party Transactions
Service Agreements
The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include management, policy administrative functions, personnel, investment advice and distribution services. For certain agreements, charges are based on various performance measures or activity-based costing. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $329 million and $1.1 billion for the three months and nine months ended September 30, 2013, respectively, and $361 million and $1.2 billion for the three months and nine months ended September 30, 2012, respectively. Revenues received from affiliates related to these agreements, recorded in universal life and investment-type product policy fees, were $53 million and $155 million for the three months and nine months ended September 30, 2013, respectively, and $46 million and $132 million for the three months and nine months ended September 30, 2012, respectively. Revenues received from affiliates related to these agreements, recorded in other revenues, were $46 million and $138 million for the three months and nine months ended September 30, 2013, respectively, and $43 million and $123 million for the three months and nine months ended September 30, 2012, respectively.
The Company had net receivables from affiliates, related to the items discussed above, of $73 million and $107 million at September 30, 2013 and December 31, 2012, respectively. These amounts exclude affiliated reinsurance balances discussed below.
See Note 4 for additional information on related party transactions.
Related Party Reinsurance Transactions
The Company has reinsurance agreements with certain MetLife subsidiaries, including MLIC, MetLife Reinsurance Company of South Carolina, Exeter, General American Life Insurance Company, MetLife Investors Insurance Company, MetLife Reinsurance Company of Vermont and MetLife Reinsurance Company of Delaware (“MRD”), all of which are related parties.
Information regarding the significant effects of affiliated reinsurance included in the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:
 
Three Months
Ended
September 30,
 
Nine Months
Ended
September 30,
 
2013
 
2012
 
2013
 
2012
 
(In millions)
Premiums:
 
 
 
 
 
 
 
Reinsurance assumed
$
3

 
$
4

 
$
9

 
$
10

Reinsurance ceded
(163
)
 
(126
)
 
(466
)
 
(323
)
Net premiums
$
(160
)
 
$
(122
)
 
$
(457
)
 
$
(313
)
Universal life and investment-type product policy fees:
 
 
 
 
 
 
 
Reinsurance assumed
$
25

 
$
22

 
$
57

 
$
66

Reinsurance ceded
(128
)
 
(101
)
 
(430
)
 
(306
)
Net universal life and investment-type product policy fees
$
(103
)
 
$
(79
)
 
$
(373
)
 
$
(240
)
Other revenues:
 
 
 
 
 
 
 
Reinsurance assumed
$
—

 
$
—

 
$
—

 
$
—

Reinsurance ceded
81

 
79

 
248

 
213

Net other revenues
$
81

 
$
79

 
$
248

 
$
213

Policyholder benefits and claims:
 
 
 
 
 
 
 
Reinsurance assumed
$
5

 
$
5

 
$
10

 
$
11

Reinsurance ceded
(216
)
 
(174
)
 
(602
)
 
(494
)
Net policyholder benefits and claims
$
(211
)
 
$
(169
)
 
$
(592
)
 
$
(483
)
Interest credited to policyholder account balances:
 
 
 
 
 
 
 
Reinsurance assumed
$
19

 
$
18

 
$
55

 
$
53

Reinsurance ceded
(31
)
 
(27
)
 
(92
)
 
(79
)
Net interest credited to policyholder account balances
$
(12
)
 
$
(9
)
 
$
(37
)
 
$
(26
)
Other expenses:
 
 
 
 
 
 
 
Reinsurance assumed
$
8

 
$
7

 
$
20

 
$
28

Reinsurance ceded
20

 
28

 
53

 
126

Net other expenses
$
28

 
$
35

 
$
73

 
$
154

 
Information regarding the significant effects of affiliated reinsurance included in the interim condensed consolidated balance sheets was as follows at:
 
September 30, 2013
 
December 31, 2012
 
Assumed
 
Ceded
 
Assumed
 
Ceded
 
(In millions)
Assets:
 
 
 
 
 
 
 
Premiums, reinsurance and other receivables
$
32

 
$
12,942

 
$
35

 
$
14,171

Deferred policy acquisition costs and value of business acquired
137

 
(684
)
 
121

 
(642
)
Total assets
$
169

 
$
12,258

 
$
156

 
$
13,529

Liabilities:
 
 
 
 
 
 
 
Other policy-related balances
$
1,641

 
$
820

 
$
1,592

 
$
855

Other liabilities
9

 
4,550

 
10

 
4,894

Total liabilities
$
1,650

 
$
5,370

 
$
1,602

 
$
5,749


In October 2012, MLI-USA entered into a reinsurance agreement to cede two blocks of business to MRD, on a 90% coinsurance with funds withheld basis. This agreement covers certain term and certain universal life policies issued in 2012 by MLI-USA. This agreement transfers risk to MRD and, therefore, is accounted for as reinsurance. As a result of the agreement, affiliated reinsurance recoverables, included in premiums, reinsurance and other receivables, were $339 million and $407 million at September 30, 2013 and December 31, 2012, respectively. MLI-USA also recorded a funds withheld liability and other reinsurance payables, included in other liabilities, which were $213 million and $438 million at September 30, 2013 and December 31, 2012, respectively. Certain contractual features of this agreement qualify as embedded derivatives, which are separately accounted for at fair value on the Company’s consolidated balance sheets. The embedded derivative related to this cession is included within other liabilities and was ($10) million and $6 million at September 30, 2013 and December 31, 2012, respectively. For the three months and nine months ended September 30, 2013, the Company’s consolidated statements of operations and comprehensive income (loss) reflects a loss for this agreement of $6 million and $36 million, respectively.
The Company ceded risks to affiliates related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value are also included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were assets of $1.8 billion and $3.6 billion at September 30, 2013 and December 31, 2012, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($607) million and ($2.0) billion for the three months and nine months ended September 30, 2013, respectively, and ($344) million and ($357) million for the three months and nine months ended September 30, 2012, respectively.
MLI-USA ceded two blocks of business to an affiliate on a 90% coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as embedded derivatives, which are separately accounted for at estimated fair value on the Company’s consolidated balance sheets. The embedded derivative related to the funds withheld associated with this reinsurance agreement is included within other liabilities and increased the funds withheld balance by $85 million and $546 million at September 30, 2013 and December 31, 2012, respectively. Net derivative gains (losses) associated with the embedded derivatives were $48 million and $477 million for the three months and nine months ended September 30, 2013, respectively, and ($37) million and ($186) million for the three months and nine months ended September 30, 2012, respectively.