Business Segment Information

9 Months Ended

Sep. 30, 2011

Business Segment Information [Abstract]

Business Segment Information

8.  Business Segment Information

The Company's business is currently divided into three segments: Retirement Products, Corporate Benefit Funding and Insurance Products. In addition, the Company reports certain of its results of operations in Corporate & Other.

Retirement Products offers asset accumulation and income products, including a wide variety of annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. Insurance Products 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 distinct businesses: Individual Life and Non-Medical Health. Individual Life insurance products and services include variable life, universal life, term life and whole life products. Non-Medical Health includes individual disability insurance products.

Corporate & Other contains the excess capital not allocated to the segments, various domestic and international start-up entities and run-off business, the Company's ancillary international operations, 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.

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources and,consistent with GAAP accounting guidance for segment reporting, it is the Company's measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for GAAP 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 exclude net investment gains (losses) and net derivative gains (losses). 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 exclude the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB 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 but do not qualify for hedge accounting treatment, (ii) excludes certain amounts related to contractholder-directed unit-linked investments, and (iii) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP.

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

•       Policyholder benefits and claims exclude: (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 GMIBs (“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 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 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 exclude costs related toimplementation of new insurance regulatory requirements and business combinations.

In the first quarter of 2011, management modified its definition of operating earnings to exclude impacts related to certain variable annuity guarantees and Market Value Adjustments to better conform to the way it manages and assesses its business. Accordingly, such results are no longer reported in operating earnings. Consequently, prior period results for Retirement Products and total consolidated operating earnings have been reduced by $2 million, net of $1 million of income tax, and $5 million, net of $3 million of income tax, for the three months and nine months ended September 30, 2010, respectively.

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 ended September 30, 2011 and 2010. The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in consolidation.

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 business.

Effective January 1, 2011, MetLife updated its economic capital model to align segment allocated equity with emerging standards and consistent risk principles. Such changes to MetLife's economic capital model are applied prospectively. Segment net investment income is also 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.

		Operating Earnings
				Corporate
		Retirement		Benefit		Insurance		Corporate						Total
Three Months Ended September 30, 2011		Products		Funding		Products		& Other		Total		Adjustments		Consolidated
		(In millions)
Revenues
Premiums		$	226	$	219	$	39	$	0	$	484	$	0	$	484
Universal life and investment-type
	product policy fees		296		9		126		8		439		48		487
Net investment income			206		300		153		54		713		(62)		651
Other revenues			88		1		34		0		123		0		123
Net investment gains (losses)			0		0		0		0		0		58		58
Net derivative gains (losses)			0		0		0		0		0		882		882
	Total revenues		816		529		352		62		1,759		926		2,685
Expenses
Policyholder benefits and claims			263		348		86		1		698		39		737
Interest credited to policyholder account balances			193		43		63		0		299		(137)		162
Capitalization of DAC			(329)		0		(40)		(15)		(384)		0		(384)
Amortization of DAC and VOBA			197		1		45		2		245		313		558
Interest expense on debt			0		0		0		17		17		92		109
Other expenses			460		10		169		59		698		9		707
	Total expenses		784		402		323		64		1,573		316		1,889
Provision for income tax expense (benefit)			12		44		11		(24)		43		208		251
Operating earnings		$	20	$	83	$	18	$	22		143
Adjustments to:
	Total revenues										926
	Total expenses										(316)
	Provision for income tax (expense) benefit										(208)
Net income										$	545			$	545

		Operating Earnings
				Corporate
		Retirement		Benefit		Insurance		Corporate						Total
Three Months Ended September 30, 2010		Products		Funding		Products		& Other		Total		Adjustments		Consolidated
		(In millions)
Revenues
Premiums		$	69	$	73	$	33	$	0	$	175	$	0	$	175
Universal life and investment-type
	product policy fees		227		7		142		4		380		22		402
Net investment income			243		274		121		98		736		87		823
Other revenues			81		2		29		1		113		0		113
Net investment gains (losses)			0		0		0		0		0		9		9
Net derivative gains (losses)			0		0		0		0		0		37		37
	Total revenues		620		356		325		103		1,404		155		1,559
Expenses
Policyholder benefits and claims			92		199		58		0		349		35		384
Interest credited to policyholder account balances			170		51		58		69		348		(8)		340
Capitalization of DAC			(151)		(2)		(15)		(14)		(182)		0		(182)
Amortization of DAC and VOBA			88		0		68		3		159		60		219
Interest expense on debt			0		0		0		17		17		101		118
Other expenses			258		11		150		25		444		0		444
	Total expenses		457		259		319		100		1,135		188		1,323
Provision for income tax expense (benefit)			57		34		2		10		103		(12)		91
Operating earnings		$	106	$	63	$	4	$	(7)		166
Adjustments to:
	Total revenues										155
	Total expenses										(188)
	Provision for income tax (expense) benefit										12
Net income										$	145			$	145

		Operating Earnings
				Corporate
		Retirement		Benefit		Insurance		Corporate						Total
Nine Months Ended September 30, 2011		Products		Funding		Products		& Other		Total		Adjustments		Consolidated
		(In millions)
Revenues
Premiums		$	355	$	756	$	150	$	0	$	1,261	$	0	$	1,261
Universal life and investment-type
	product policy fees		859		26		433		28		1,346		89		1,435
Net investment income			620		897		458		146		2,121		114		2,235
Other revenues			272		4		108		0		384		0		384
Net investment gains (losses)			0		0		0		0		0		17		17
Net derivative gains (losses)			0		0		0		0		0		859		859
	Total revenues		2,106		1,683		1,149		174		5,112		1,079		6,191
Expenses
Policyholder benefits and claims			459		1,131		222		1		1,813		69		1,882
Interest credited to policyholder account balances			554		138		186		0		878		(125)		753
Capitalization of DAC			(778)		(6)		(249)		(45)		(1,078)		0		(1,078)
Amortization of DAC and VOBA			441		3		185		5		634		368		1,002
Interest expense on debt			0		0		0		50		50		279		329
Other expenses			1,156		33		636		125		1,950		20		1,970
	Total expenses		1,832		1,299		980		136		4,247		611		4,858
Provision for income tax expense (benefit)			96		134		60		(40)		250		162		412
Operating earnings		$	178	$	250	$	109	$	78		615
Adjustments to:
	Total revenues										1,079
	Total expenses										(611)
	Provision for income tax (expense) benefit										(162)
Net income										$	921			$	921

		Operating Earnings
				Corporate
		Retirement		Benefit		Insurance		Corporate						Total
Nine Months Ended September 30, 2010		Products		Funding		Products		& Other		Total		Adjustments		Consolidated
		(In millions)
Revenues
Premiums		$	217	$	570	$	99	$	0	$	886	$	0	$	886
Universal life and investment-type
	product policy fees		671		22		408		11		1,112		66		1,178
Net investment income			709		822		353		181		2,065		273		2,338
Other revenues			236		4		85		1		326		0		326
Net investment gains (losses)			0		0		0		0		0		96		96
Net derivative gains (losses)			0		0		0		0		0		292		292
	Total revenues		1,833		1,418		945		193		4,389		727		5,116
Expenses
Policyholder benefits and claims			301		954		231		0		1,486		96		1,582
Interest credited to policyholder account balances			534		144		175		93		946		(33)		913
Capitalization of DAC			(417)		(4)		(220)		(39)		(680)		0		(680)
Amortization of DAC and VOBA			337		1		207		5		550		193		743
Interest expense on debt			0		0		0		52		52		305		357
Other expenses			737		28		584		88		1,437		0		1,437
	Total expenses		1,492		1,123		977		199		3,791		561		4,352
Provision for income tax expense (benefit)			119		102		(11)		(24)		186		59		245
Operating earnings		$	222	$	193	$	(21)	$	18		412
Adjustments to:
	Total revenues										727
	Total expenses										(561)
	Provision for income tax (expense) benefit										(59)
Net income										$	519			$	519

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

		September 30, 2011		December 31, 2010
		(In millions)
Retirement Products		$	93,417	$	87,461
Corporate Benefit Funding			30,280		30,491
Insurance Products			20,408		16,296
Corporate & Other			19,666		20,637
	Total	$	163,771	$	154,885

Net investment income is based upon the actual results of each segment's specifically identifiable asset 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.