Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Equity

13. Equity

Stock-Based Compensation Plans

Overview

In accordance with a service agreement with an affiliate, the Company was allocated a proportionate share of stock-based compensation expenses. The stock-based compensation expenses recognized by the Company are related to awards under MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the “2005 Stock Plan”), payable in shares of MetLife, Inc. common stock (“Shares”), or options to purchase MetLife, Inc. common stock. The Company does not issue any awards payable in its common stock or options to purchase its common stock.

Description of Plan — General Terms

Under the 2005 Stock Plan, awards granted to employees and agents may be in the form of Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Shares or Performance Share Units, Cash-Based Awards and Stock-Based Awards (each as defined in the 2005 Stock Plan with reference to Shares).

Compensation expense related to awards under the 2005 Stock Plan is recognized based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable.

Compensation expense related to awards under the 2005 Stock Plan is principally related to the issuance of Stock Options, Performance Shares and Restricted Stock Units. The majority of the awards granted by MetLife, Inc. each year under the 2005 Stock Plan are made in the first quarter of each year.

The expense related to stock-based compensation included in other expenses was $100 million, $122 million and $127 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Statutory Equity and Income

Each U.S. insurance company’s state of domicile imposes risk-based capital (“RBC”) requirements that were developed by the National Association of Insurance Commissioners (“NAIC”). Regulatory compliance is determined by a ratio of a company’s total adjusted capital, calculated in the manner prescribed by the NAIC (“TAC”) to its authorized control level RBC, calculated in the manner prescribed by the NAIC (“ACL RBC”). Companies below specific trigger levels or ratios are classified by their respective levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is twice ACL RBC (“Company Action RBC”). The RBC ratios for Metropolitan Life Insurance Company and each of its insurance subsidiaries were in excess of 350% for all periods presented.

Metropolitan Life Insurance Company and its insurance subsidiaries prepare statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of their respective state of domicile. The NAIC has adopted the Codification of Statutory Accounting Principles (“Statutory Codification”). Statutory Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. Modifications by the various state insurance departments may impact the effect of Statutory Codification on the statutory capital and surplus of Metropolitan Life Insurance Company and its insurance subsidiaries.

Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt, reporting of reinsurance agreements and valuing securities on a different basis.

In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant assets not admitted by the Company are net deferred income tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within three years.

The Department of Financial Services issues an annual “Special Considerations” circular letter to New York licensed insurers requiring tests to be performed as part of insurers’ year-end asset adequacy testing. The Department of Financial Services issued its 2014 Special Considerations letter on October 10, 2014, which was substantially similar to the 2013 letter. The letter mandates the use of certain assumptions in asset adequacy testing. In 2013, MLIC established a three-year grade-in schedule for the amount of LTC reserves required as a result of the new assumptions. In 2014, MLIC established an additional schedule, reflecting current economic conditions, liabilities and assets. The following table summarizes the two schedules of strengthening:

	2013 Schedule	2014 Schedule	Combined Schedule
	(In millions)
2013 Strengthening	$300	N/A	$300
2014 Strengthening	$200	$100	$300
2015 Strengthening (1)	$100	$100	$200
2016 Strengthening (1)	N/A	$100	$100

______________

(1) The actual 2015 and 2016 amounts may differ from those originally estimated in 2013 and 2014 due to changes in economic conditions, regulations, or policyholder behavior.

The tables below present amounts from Metropolitan Life Insurance Company and its insurance subsidiaries, which are derived from the most recent statutory–basis financial statements as filed with the insurance regulators.

Statutory net income (loss) was as follows:

		Years Ended December 31,
Company	State of Domicile	2014		2013		2012
		(In millions)
Metropolitan Life Insurance Company	New York	$	1,487	$	369	$	1,320
New England Life Insurance Company	Massachusetts	$	303	$	103	$	79
General American Life Insurance Company	Missouri	$	129	$	60	$	19

Statutory capital and surplus was as follows at:

	December 31,
Company	2014		2013
	(In millions)
Metropolitan Life Insurance Company	$	12,008	$	12,428
New England Life Insurance Company	$	675	$	571
General American Life Insurance Company	$	867	$	818

Dividend Restrictions

The table below sets forth dividends permitted to be paid by Metropolitan Life Insurance Company to MetLife, Inc. without insurance regulatory approval and dividends paid:

	2015		2014			2013
Company	Permitted Without Approval		Paid (1)			Paid (1)
	(In millions)
Metropolitan Life Insurance Company	$	1,200	$	821	(2)	$	1,428

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(1) Includes all amounts paid, including those requiring regulatory approval.

(2) During December 2014, Metropolitan Life Insurance Company distributed shares of an affiliate to MetLife, Inc. as an in-kind dividend of $113 million, as calculated on a statutory basis.

Under New York State Insurance Law, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to MetLife, Inc. as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). Metropolitan Life Insurance Company will be permitted to pay a dividend to MetLife, Inc. in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the New York Superintendent of Financial Services (the “Superintendent”) and the Superintendent either approves the distribution of the dividend or does not disapprove the dividend within 30 days of its filing. Under New York State Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

The table below sets forth the dividends permitted to be paid by Metropolitan Life Insurance Company’s insurance subsidiaries without regulatory approval and dividends paid:

	2015		2014			2013
Company	Permitted Without Approval (1)		Paid (2)			Paid (2)
	(In millions)
New England Life Insurance Company	$	199	$	227	(3)	$	77
General American Life Insurance Company	$	88	$	—		$	—

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(1) Reflects dividend amounts that may be paid during 2015 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over a rolling 12-month period, if paid before a specified date during 2015, some or all of such dividends may require regulatory approval.

(2) Includes all amounts paid, including those requiring regulatory approval.

(3) During December 2014, New England Life Insurance Company (“NELICO”) distributed shares of an affiliate to Metropolitan Life Insurance Company as an extraordinary in-kind dividend of $113 million, as calculated on a statutory basis. Also during December 2014, NELICO paid an extraordinary cash dividend to Metropolitan Life Insurance Company in the amount of $114 million.

Under Massachusetts State Insurance Law, NELICO is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to Metropolitan Life Insurance Company as long as the aggregate amount of the dividend, when aggregated with all other dividends paid in the preceding 12 months, does not exceed the greater of: (i) 10 % of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year. NELICO will be permitted to pay a dividend to Metropolitan Life Insurance Company in excess of the greater of such two amounts only if it files notice of the declaration of such a dividend and the amount thereof with the Massachusetts Commissioner of Insurance (the “Massachusetts Commissioner”) and the Massachusetts Commissioner either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined as “unassigned funds (surplus)”) as of the last filed annual statutory statement requires insurance regulatory approval. Under Massachusetts State Insurance Law, the Massachusetts Commissioner has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

Under Missouri State Insurance Law, GALIC is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to Metropolitan Life Insurance Company as long as the amount of such dividend when aggregated with all other dividends in the preceding 12 months, does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding net realized capital gains). GALIC will be permitted to pay a dividend to Metropolitan Life Insurance Company in excess of the greater of such two amounts only if it files notice of the declaration of such a dividend and the amount thereof with the Missouri Director of Insurance (the “Missouri Director”) and the Missouri Director either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In addition, unassigned funds (surplus) as of the last filed annual statutory statement requires insurance regulatory approval. Under Missouri State Insurance Law, the Missouri Director has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

For the years ended December 31, 2014 and 2013, Metropolitan Life Insurance Company received dividends from non-insurance subsidiaries of $95 million and $45 million, respectively.

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI attributable to Metropolitan Life Insurance Company, net of income tax, was as follows:

	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance at December 31, 2011	$	4,028		$	840		$	37		$	(1,851	)	$	3,054
OCI before reclassifications	2,406			(243		)	(30		)	(618		)	1,515
Deferred income tax benefit (expense)	(843		)	87			11			217			(528		)
OCI before reclassifications, net of income tax	5,591			684			18			(2,252		)	4,041
Amounts reclassified from AOCI	96			2			—			(148		)	(50		)
Deferred income tax benefit (expense)	(33		)	(1		)	—			51			17
Amounts reclassified from AOCI, net of income tax	63			1			—			(97		)	(33		)
Balance at December 31, 2012	5,654			685			18			(2,349		)	4,008
OCI before reclassifications	(3,321		)	(677		)	22			1,396			(2,580		)
Deferred income tax benefit (expense)	1,145			237			(9		)	(490		)	883
OCI before reclassifications, net of income tax	3,478			245			31			(1,443		)	2,311
Amounts reclassified from AOCI	(16		)	(14		)	—			(205		)	(235		)
Deferred income tax benefit (expense)	6			5			—			71			82
Amounts reclassified from AOCI, net of income tax	(10		)	(9		)	—			(134		)	(153		)
Balance at December 31, 2013	3,468			236			31			(1,577		)	2,158
OCI before reclassifications	4,095			606			(44		)	(1,181		)	3,476
Deferred income tax benefit (expense)	(1,409		)	(212		)	10			406			(1,205		)
OCI before reclassifications, net of income tax	6,154			630			(3		)	(2,352		)	4,429
Amounts reclassified from AOCI	70			682			—			180			932
Deferred income tax benefit (expense)	(24		)	(239		)	—			(64		)	(327		)
Amounts reclassified from AOCI, net of income tax	46			443			—			116			605
Balance at December 31, 2014	$	6,200		$	1,073		$	(3	)	$	(2,236	)	$	5,034

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(1) See Note 8 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the policyholder dividend obligation.

Information regarding amounts reclassified out of each component of AOCI, was as follows:

AOCI Components	Amounts Reclassified from AOCI									Consolidated Statement of Operations and Comprehensive Income (Loss) Locations
	Years Ended December 31,
	2014			2013			2012
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(103	)	$	(9	)	$	(136	)	Net investment gains (losses)
Net unrealized investment gains (losses)	40			53			56			Net investment income
Net unrealized investment gains (losses)	(7		)	(28		)	(16		)	Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(70		)	16			(96		)
Income tax (expense) benefit	24			(6		)	33
Net unrealized investment gains (losses), net of income tax	$	(46	)	$	10		$	(63	)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	$	41		$	20		$	3		Net derivative gains (losses)
Interest rate swaps	9			8			4			Net investment income
Interest rate forwards	(8		)	1			—			Net derivative gains (losses)
Interest rate forwards	2			2			2			Net investment income
Foreign currency swaps	(725		)	(15		)	(7		)	Net derivative gains (losses)
Foreign currency swaps	(2		)	(3		)	(5		)	Net investment income
Credit forwards	1			1			1			Net investment income
Gains (losses) on cash flow hedges, before income tax	(682		)	14			(2		)
Income tax (expense) benefit	239			(5		)	1
Gains (losses) on cash flow hedges, net of income tax	$	(443	)	$	9		$	(1	)
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)	$	(180	)	$	274		$	246
Amortization of prior service (costs) credit	—			(69		)	(98		)
Amortization of defined benefit plan items, before income tax	(180		)	205			148
Income tax (expense) benefit	64			(71		)	(51		)
Amortization of defined benefit plan items, net of income tax	$	(116	)	$	134		$	97
Total reclassifications, net of income tax	$	(605	)	$	153		$	33

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(1) These AOCI components are included in the computation of net periodic benefit costs. See Note 15.