Segment Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Information

2. Segment Information

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

Retail

The Retail segment offers a broad range of protection products and a variety of annuities primarily to individuals, and is organized into two businesses: Annuities and Life & Other. Annuities includes a variety of variable and fixed annuities which provide for both asset accumulation and asset distribution needs. Life & Other insurance products and services include variable life, universal life, term life and whole life products, as well as individual disability income products. Additionally, through broker-dealer affiliates, the Company offers a full range of mutual funds and other securities 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 company-, bank- or trust-owned life insurance used to finance non-qualified benefit programs for executives.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments, various start-up and run-off businesses, the Company’s ancillary international operations, interest expense related to the majority of the Company’s outstanding debt, expenses associated with certain legal proceedings and income tax audit issues. Start-up business includes direct and digital marketing products. Corporate & Other also includes the elimination of intersegment amounts.

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

Operating revenues excludes net investment gains (losses) and net derivative gains (losses). Operating expenses 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”); and

• Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain 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.

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

• Policyholder benefits and claims excludes: (i) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (ii) benefits and hedging costs related to GMIB (“GMIB Costs”), and (iii) 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;

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

• Other expenses excludes costs related to implementation of new insurance regulatory requirements and acquisition and integration costs.

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 and nine months endedSeptember 30, 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 MetLife’s and the Company’s business.

MetLife’s economic capital model aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistical based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon and applying an industry standard method for the inclusion of diversification benefits among risk types.

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 net income (loss).

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.

	Operating Earnings
Three Months Ended September 30, 2013	Retail			Corporate Benefit Funding		Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	85		$	65	$	5		$	155		$	—		$	155
Universal life and investment-type product policy fees	575			9		—			584			40			624
Net investment income	388			276		20			684			(6		)	678
Other revenues	151			1		—			152			—			152
Net investment gains (losses)	—			—		—			—			(51		)	(51		)
Net derivative gains (losses)	—			—		—			—			(199		)	(199		)
Total revenues	1,199			351		25			1,575			(216		)	1,359
Expenses
Policyholder benefits and claims	183			215		(7		)	391			74			465
Interest credited to policyholder account balances	225			33		—			258			(2		)	256
Goodwill impairment	—			—		—			—			66			66
Capitalization of DAC	(108		)	—		(4		)	(112		)	—			(112		)
Amortization of DAC and VOBA	115			1		1			117			(75		)	42
Interest expense on debt	—			—		17			17			30			47
Other expenses	408			9		40			457			—			457
Total expenses	823			258		47			1,128			93			1,221
Provision for income tax expense (benefit)	129			32		(38		)	123			(93		)	30
Operating earnings	$	247		$	61	$	16		324
Adjustments to:
Total revenues									(216		)
Total expenses									(93		)
Provision for income tax (expense) benefit									93
Net income (loss)									$	108					$	108

	Operating Earnings
Three Months Ended September 30, 2012	Retail			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	106		$	178		$	—		$	284		$	—		$	284
Universal life and investment-type product policy fees	527			8			—			535			37			572
Net investment income	369			267			35			671			4			675
Other revenues	136			1			—			137			—			137
Net investment gains (losses)	—			—			—			—			4			4
Net derivative gains (losses)	—			—			—			—			(98		)	(98		)
Total revenues	1,138			454			35			1,627			(53		)	1,574
Expenses
Policyholder benefits and claims	185			311			—			496			54			550
Interest credited to policyholder account balances	240			37			—			277			(1		)	276
Goodwill impairment	—			—			—			—			394			394
Capitalization of DAC	(195		)	(2		)	—			(197		)	—			(197		)
Amortization of DAC and VOBA	173			1			—			174			11			185
Interest expense on debt	—			—			17			17			40			57
Other expenses	492			10			(1		)	501			1			502
Total expenses	895			357			16			1,268			499			1,767
Provision for income tax expense (benefit)	85			34			(18		)	101			(290		)	(189		)
Operating earnings	$	158		$	63		$	37		258
Adjustments to:
Total revenues										(53		)
Total expenses										(499		)
Provision for income tax (expense) benefit										290
Net income (loss)										$	(4	)				$	(4	)

	Operating Earnings
Nine Months Ended September 30, 2013	Retail			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	233		$	162		$	25		$	420		$	—		$	420
Universal life and investment-type product policy fees	1,612			26			—			1,638			106			1,744
Net investment income	1,203			865			88			2,156			(24		)	2,132
Other revenues	443			4			—			447			—			447
Net investment gains (losses)	—			—			—			—			31			31
Net derivative gains (losses)	—			—			—			—			(581		)	(581		)
Total revenues	3,491			1,057			113			4,661			(468		)	4,193
Expenses
Policyholder benefits and claims	494			587			10			1,091			147			1,238
Interest credited to policyholder account balances	681			103			—			784			(5		)	779
Goodwill impairment	—			—			—			—			66			66
Capitalization of DAC	(384		)	(2		)	(13		)	(399		)	—			(399		)
Amortization of DAC and VOBA	387			4			1			392			(320		)	72
Interest expense on debt	—			—			51			51			96			147
Other expenses	1,306			27			57			1,390			—			1,390
Total expenses	2,484			719			106			3,309			(16		)	3,293
Provision for income tax expense (benefit)	349			118			(60		)	407			(141		)	266
Operating earnings	$	658		$	220		$	67		945
Adjustments to:
Total revenues										(468		)
Total expenses										16
Provision for income tax (expense) benefit										141
Net income (loss)										$	634					$	634

	Operating Earnings
Nine Months Ended September 30, 2012	Retail			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	406		$	531		$	133		$	1,070		$	—		$	1,070
Universal life and investment-type product policy fees	1,555			23			14			1,592			99			1,691
Net investment income	1,127			867			145			2,139			84			2,223
Other revenues	381			4			—			385			—			385
Net investment gains (losses)	—			—			—			—			79			79
Net derivative gains (losses)	—			—			—			—			45			45
Total revenues	3,469			1,425			292			5,186			307			5,493
Expenses
Policyholder benefits and claims	588			917			127			1,632			143			1,775
Interest credited to policyholder account balances	715			123			—			838			44			882
Goodwill impairment	—			—			—			—			394			394
Capitalization of DAC	(652		)	(5		)	(34		)	(691		)	—			(691		)
Amortization of DAC and VOBA	550			9			3			562			77			639
Interest expense on debt	—			—			51			51			125			176
Other expenses	1,652			29			81			1,762			5			1,767
Total expenses	2,853			1,073			228			4,154			788			4,942
Provision for income tax expense (benefit)	216			123			(45		)	294			(256		)	38
Operating earnings	$	400		$	229		$	109		738
Adjustments to:
Total revenues										307
Total expenses										(788		)
Provision for income tax (expense) benefit										256
Net income (loss)										$	513					$	513

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

	September 30, 2013		December 31, 2012
	(In millions)
Retail	$	143,426	$	136,333
Corporate Benefit Funding	31,576		33,140
Corporate & Other	11,742		15,323
Total	$	186,744	$	184,796