MetLife 2012 Annual Report Download - page 121

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
Information regarding the closed block revenues and expenses was as follows:
Years Ended December 31,
2012 2011 2010
(In millions)
Revenues
Premiums ....................................................................................... $2,139 $2,306 $2,461
Net investment income ............................................................................. 2,188 2,231 2,292
Net investment gains (losses) ........................................................................ 61 32 39
Net derivative gains (losses) ......................................................................... (12) 8 (27)
Total revenues ............................................................................... 4,376 4,577 4,765
Expenses
Policyholder benefits and claims ...................................................................... 2,783 2,991 3,115
Policyholder dividends ............................................................................. 1,072 1,137 1,235
Other expenses .................................................................................. 179 193 199
Total expenses .............................................................................. 4,034 4,321 4,549
Revenues, net of expenses before provision for income tax expense (benefit) .................................. 342 256 216
Provision for income tax expense (benefit) .............................................................. 120 89 71
Revenues, net of expenses and provision for income tax expense (benefit) from continuing operations ............... 222 167 145
Revenues, net of expenses and provision for income tax expense (benefit) from discontinued operations ............. 10 1 1
Revenues, net of expenses and provision for income tax expense (benefit) .................................... $ 232 $ 168 $ 146
MLIC charges the closed block with federal income taxes, state and local premium taxes and other additive state or local taxes, as well as
investment management expenses relating to the closed block as provided in the Plan. MLIC also charges the closed block for expenses of maintaining
the policies included in the closed block.
8. Investments
See Note 10 for information about the fair value hierarchy for investments and the related valuation methodologies.
Investment Risks and Uncertainties
Investments are exposed to the following primary sources of risk: credit, interest rate, liquidity, market valuation, currency and real estate risk. The
financial statement risks, stemming from such investment risks, are those associated with the determination of estimated fair values, the diminished
ability to sell certain investments in times of strained market conditions, the recognition of impairments, the recognition of income on certain investments
and the potential consolidation of VIEs. The use of different methodologies, assumptions and inputs relating to these financial statement risks may have
a material effect on the amounts presented within the consolidated financial statements.
The determination of valuation allowances and impairments is highly subjective and is based upon periodic evaluations and assessments of known
and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information
becomes available.
The recognition of income on certain investments (e.g. structured securities, including mortgage-backed securities, asset-backed securities (“ABS”),
certain structured investment transactions and FVO and trading securities) is dependent upon certain factors such as prepayments and defaults, and
changes in such factors could result in changes in amounts to be earned.
Fixed Maturity and Equity Securities AFS
Fixed Maturity and Equity Securities AFS by Sector
The following table presents the fixed maturity and equity securities AFS by sector. The unrealized loss amounts presented below include the
noncredit loss component of OTTI losses. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities
and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including
RMBS, CMBS and ABS.
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