Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions

9.  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 $529million and $1,363million for the three months and nine months ended September 30, 2011, respectively, and $327 million and $965 million for the three months and nine months ended September 30, 2010, respectively. The aforementioned expenses and fees incurred with affiliates were comprised of the following:

		Three Months				Nine Months
		Ended				Ended
		September 30,				September 30,
		2011		2010		2011		2010
		(In millions)
Compensation		$	65	$	35	$	192	$	109
Commissions			319		142		745		399
Volume-related costs			56		76		165		231
Professional services			5		0		14		0
Rent			7		0		19		0
Other			77		74		228		226
	Total other expenses	$	529	$	327	$	1,363	$	965

Revenues received from affiliates related to these agreements were recorded as follows:

	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2011		2010		2011		2010
	(In millions)
Universal life and investment-type product policy fees	$	37	$	29	$	106	$	83
Other revenues	$	35	$	26	$	100	$	73

The Company had net receivablesfromaffiliatesof $55million and $60 million at September 30, 2011 and December 31, 2010, respectively, related to the items discussed above. These amounts exclude affiliated reinsurance balances discussed below. See Note 2 for expenses related to investment advice under these agreements, recorded in net investment income.

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 and MetLife Reinsurance Company of Vermont, all of which are related parties.

Information regarding the effect of affiliated reinsurance included in the interim condensed consolidated statements of operations was as follows:

		Three Months				Nine Months
		Ended				Ended
		September 30,				September 30,
		2011		2010		2011		2010
		(In millions)
Premiums:
Reinsurance assumed		$	2	$	3	$	6	$	10
Reinsurance ceded			(89)		(63)		(198)		(174)
	Net premiums	$	(87)	$	(60)	$	(192)	$	(164)
Universal life and investment-type product policy fees:
Reinsurance assumed		$	29	$	19	$	72	$	49
Reinsurance ceded			(115)		(69)		(303)		(202)
	Net universal life and investment-type product policy fees	$	(86)	$	(50)	$	(231)	$	(153)
Other revenues:
Reinsurance assumed		$	0	$	0	$	0	$	0
Reinsurance ceded			71		73		229		212
	Net other revenues	$	71	$	73	$	229	$	212
Policyholder benefits and claims:
Reinsurance assumed		$	5	$	5	$	17	$	11
Reinsurance ceded			(165)		(80)		(393)		(253)
	Net policyholder benefits and claims	$	(160)	$	(75)	$	(376)	$	(242)
Interest credited to policyholder account balances:
Reinsurance assumed		$	17	$	16	$	50	$	47
Reinsurance ceded			(23)		(17)		(60)		(41)
	Net interest credited to policyholder account balances	$	(6)	$	(1)	$	(10)	$	6
Other expenses:
Reinsurance assumed		$	16	$	11	$	44	$	36
Reinsurance ceded			40		57		122		117
	Net other expenses	$	56	$	68	$	166	$	153

Information regarding the effect of affiliated reinsurance included in the interim condensed consolidated balance sheets was as follows at:

		September 30, 2011				December 31, 2010
		Assumed		Ceded		Assumed		Ceded
		(In millions)
Assets:
Premiums, reinsurance and other receivables		$	36	$	12,099	$	40	$	9,826
Deferred policy acquisition costs and value of business acquired			139		(568)		164		(484)
	Total assets	$	175	$	11,531	$	204	$	9,342
Liabilities:
Future policy benefits		$	46	$	0	$	41	$	0
Other policy-related balances			1,488		650		1,435		508
Other liabilities			12		3,481		12		3,200
	Total liabilities	$	1,546	$	4,131	$	1,488	$	3,708

The Company ceded risks to affiliates related to guaranteed minimum benefit guarantees written directly by the Company through December 31, 2010. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value arealso 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 $3,032 million and $936 million atSeptember 30, 2011and December 31, 2010, respectively. Net derivative gains (losses)associated with the embedded derivatives were $2,129 million and $1,881 millionfor the three months and nine months ended September 30,2011, respectively,and($31) millionand $1,016 millionfor the three months and nine months ended September 30, 2010, respectively.

MLI-USA cedes 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 sheet. The embedded derivative related to the funds withheld associated with this reinsurance agreement is included within other liabilities and increasedthe funds withheld balance by $394 million and $5 million at September 30, 2011 and December 31, 2010, respectively.Net derivative gains (losses)associated with the embedded derivatives were ($365) million and ($390) million for the three months and nine months ended September 30, 2011, respectively, and ($71) million and ($161) million for the three months and nine months ended September 30, 2010, respectively. The reinsurance agreement also includes an experience refund provision, whereby some or all of the profits on the underlying reinsurance agreement are returned to MLI-USA from the affiliated reinsurer during the first several years of the reinsurance agreement. The experience refundreduced the funds withheld by MLI-USA from the affiliated reinsurer by $88 million and $186 million for the three months and nine months ended September 30, 2011, respectively, and $68 million and $185 million for the three months and nine months ended September 30, 2010, respectively, and are considered unearned revenue, amortized over the life of the contract using the same assumptions as used for the DAC associated with the underlying policies. Amortization and interest of the unearned revenue associated with the experience refund was $12 million and $49 million for the three months and nine months ended September 30, 2011, respectively, and $21 million and $66 million for the three months and nine months ended September 30, 2010, respectively, and is includedin premiums and universal life and investment-type product policy fees in the consolidated statements of operations. At September 30, 2011 and December 31, 2010, unearned revenue related to the experience refund was $698 million and $560million, respectively, and is included in other policy-related balances in the interim condensed consolidated balance sheets.