Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

2. Segment Information

The Company is organized into two segments: U.S. and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other.

U.S.

The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of customers throughout their lives. These products are sold to corporations and their respective employees, other institutions and their respective members, as well as individuals. The U.S. segment is organized into two businesses: Group Benefits and Retirement and Income Solutions (“RIS”).

•The Group Benefits business offers life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, vision and accident & health coverages, as well as prepaid legal plans. This business also sells administrative services-only arrangements to some employers.

•The RIS business offers a broad range of life and annuity-based insurance and investment products, including stable value and pension risk transfer products, institutional income annuities, tort settlements, and capital markets investment products, as well as solutions for funding postretirement benefits and company-, bank- or trust-owned life insurance.

MetLife Holdings

The MetLife Holdings segment consists of operations relating to products and businesses, previously included in MLIC’s former retail business, that the Company no longer actively markets, such as variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-term care insurance.

Corporate & Other

Corporate & Other contains various start-up, developing and run-off businesses. Also included in Corporate & Other are: the excess capital, as well as certain charges and activities, not allocated to the segments (including enterprise-wide strategic initiative restructuring charges), the Company’s ancillary non-U.S. operations, interest expense related to the majority of the Company’s outstanding debt, expenses associated with certain legal proceedings and income tax audit issues, and the elimination of intersegment amounts (which generally relate to affiliated reinsurance and intersegment loans, bearing interest rates commensurate with related borrowings).

Financial Measures and Segment Accounting Policies

Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is also the Company’s GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed as a substitute for net income (loss). The Company believes the presentation of adjusted 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.

Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax.

The financial measures of adjusted revenues and adjusted expenses focus on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MLIC but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also include the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MLIC that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net derivative gains (losses).

The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted 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 adjustments for earned income on derivatives 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) excludes post-tax adjusted earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (iv) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) under GAAP.

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

•Policyholder benefits and claims and policyholder dividends excludes: (i) amortization of basis adjustments associated with de-designated fair value hedges of future policy benefits, (ii) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (iii) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments, (iv) benefits and hedging costs related to GMIBs (“GMIB costs”) and (v) market value adjustments associated with surrenders or terminations of contracts (“Market value adjustments”);

•Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment;

•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 excludes: (i) noncontrolling interests, (ii) acquisition, integration and other costs, and (iii) goodwill impairments.

The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.

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, 2020 and 2019. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for adjusted 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, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-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 while applying an industry standard method for the inclusion of diversification benefits among risk types. MetLife’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.

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, net income (loss), or adjusted earnings.

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

Three Months Ended September 30, 2020	U.S.		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	4,578	$	711	$	1	$	5,290	$	—	$	5,290
Universal life and investment-type product policy fees	256		217		—		473		21		494
Net investment income	1,673		1,279		(6)		2,946		(172)		2,774
Other revenues	209		58		144		411		—		411
Net investment gains (losses)	—		—		—		—		30		30
Net derivative gains (losses)	—		—		—		—		(549)		(549)
Total revenues	6,716		2,265		139		9,120		(670)		8,450
Expenses
Policyholder benefits and claims and policyholder dividends	4,509		1,398		—		5,907		233		6,140
Interest credited to policyholder account balances	367		172		—		539		(1)		538
Capitalization of DAC	(11)		4		—		(7)		—		(7)
Amortization of DAC and VOBA	17		162		—		179		65		244
Interest expense on debt	1		2		21		24		—		24
Other expenses	759		198		145		1,102		(3)		1,099
Total expenses	5,642		1,936		166		7,744		294		8,038
Provision for income tax expense (benefit)	228		64		(83)		209		(202)		7
Adjusted earnings	$	846	$	265	$	56	1,167
Adjustments to:
Total revenues							(670)
Total expenses							(294)
Provision for income tax (expense) benefit							202
Net income (loss)							$	405			$	405

Three Months Ended September 30, 2019	U.S.		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	5,588	$	767	$	1	$	6,356	$	—	$	6,356
Universal life and investment-type product policy fees	252		238		—		490		23		513
Net investment income	1,660		1,167		(6)		2,821		(72)		2,749
Other revenues	206		45		121		372		—		372
Net investment gains (losses)	—		—		—		—		88		88
Net derivative gains (losses)	—		—		—		—		732		732
Total revenues	7,706		2,217		116		10,039		771		10,810
Expenses
Policyholder benefits and claims and policyholder dividends	5,701		1,559		—		7,260		13		7,273
Interest credited to policyholder account balances	492		182		—		674		(6)		668
Capitalization of DAC	(14)		1		—		(13)		—		(13)
Amortization of DAC and VOBA	13		71		—		84		—		84
Interest expense on debt	3		2		22		27		—		27
Other expenses	721		194		287		1,202		(3)		1,199
Total expenses	6,916		2,009		309		9,234		4		9,238
Provision for income tax expense (benefit)	164		39		(131)		72		161		233
Adjusted earnings	$	626	$	169	$	(62)	733
Adjustments to:
Total revenues							771
Total expenses							(4)
Provision for income tax (expense) benefit							(161)
Net income (loss)							$	1,339			$	1,339

Nine Months Ended September 30, 2020	U.S.		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	13,069	$	2,189	$	1	$	15,259	$	—	$	15,259
Universal life and investment-type product policy fees	778		659		—		1,437		64		1,501
Net investment income	4,646		3,302		(131)		7,817		(394)		7,423
Other revenues	638		152		397		1,187		—		1,187
Net investment gains (losses)	—		—		—		—		(96)		(96)
Net derivative gains (losses)	—		—		—		—		2,213		2,213
Total revenues	19,131		6,302		267		25,700		1,787		27,487
Expenses
Policyholder benefits and claims and policyholder dividends	13,176		4,250		—		17,426		310		17,736
Interest credited to policyholder account balances	1,210		518		—		1,728		(8)		1,720
Capitalization of DAC	(43)		13		—		(30)		—		(30)
Amortization of DAC and VOBA	44		235		—		279		52		331
Interest expense on debt	5		5		65		75		—		75
Other expenses	2,295		606		460		3,361		1		3,362
Total expenses	16,687		5,627		525		22,839		355		23,194
Provision for income tax expense (benefit)	520		127		(322)		325		301		626
Adjusted earnings	$	1,924	$	548	$	64	2,536
Adjustments to:
Total revenues							1,787
Total expenses							(355)
Provision for income tax (expense) benefit							(301)
Net income (loss)							$	3,667			$	3,667

Nine Months Ended September 30, 2019	U.S.		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	14,270	$	2,291	$	1	$	16,562	$	—	$	16,562
Universal life and investment-type product policy fees	780		690		—		1,470		67		1,537
Net investment income	4,999		3,497		(89)		8,407		(219)		8,188
Other revenues	612		159		405		1,176		—		1,176
Net investment gains (losses)	—		—		—		—		100		100
Net derivative gains (losses)	—		—		—		—		630		630
Total revenues	20,661		6,637		317		27,615		578		28,193
Expenses
Policyholder benefits and claims and policyholder dividends	14,661		4,413		—		19,074		143		19,217
Interest credited to policyholder account balances	1,467		540		—		2,007		(14)		1,993
Capitalization of DAC	(48)		6		—		(42)		—		(42)
Amortization of DAC and VOBA	40		178		—		218		(74)		144
Interest expense on debt	8		6		66		80		—		80
Other expenses	2,168		600		733		3,501		(3)		3,498
Total expenses	18,296		5,743		799		24,838		52		24,890
Provision for income tax expense (benefit)	490		173		(385)		278		111		389
Adjusted earnings	$	1,875	$	721	$	(97)	2,499
Adjustments to:
Total revenues							578
Total expenses							(52)
Provision for income tax (expense) benefit							(111)
Net income (loss)							$	2,914			$	2,914

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

	September 30, 2020		December 31, 2019
	(In millions)
U.S.	$	265,337	$	246,319
MetLife Holdings	161,475		156,327
Corporate & Other	34,311		28,171
Total	$	461,123	$	430,817