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ANNUAL REPORT
MetLife, Inc. 2013

Table of contents

  • Page 1
    ANNUAL REPORT MetLife, Inc. 2013

  • Page 2

  • Page 3
    ... MetLife's risk profile. And most important, operating return on equity in 2013 came in at 12%, hitting the low end of our 2016 target range three years ahead of schedule. The four cornerstones of MetLife's strategy have held constant: Refocus the U.S. Business; Grow Emerging Markets; Build a Global...

  • Page 4
    .... As MetLife's Chief Investment Officer from 2005 through April 2011, my goal was to maximize investment returns within well-defined risk limits. Achieving that goal required an attractive portfolio of securities. Now, as CEO, my job is to develop and manage an attractive portfolio of businesses. ii...

  • Page 5
    ... the product mix generally has a more favorable risk-return profile than products sold in mature markets. Focus on Cash One of the tangible ways our strategy will demonstrate success is by generating an increasing amount of free cash flow.2 We currently anticipate that the ratio of free cash flow...

  • Page 6
    ... the direction of more capital will limit access to the kinds of financial protection that only life insurers can provide. If federal capital rules for life insurers do not appropriately reflect the business model of insurance, we could be forced to raise prices to consumers or exit markets entirely...

  • Page 7
    ... and Financial Disclosure ...Management's Annual Report on Internal Control Over Financial Reporting ...Attestation Report of the Company's Registered Public Accounting Firm ...Financial Statements and Supplementary Data ...Board of Directors ...Executive Officers ...Contact Information ...Corporate...

  • Page 8
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 9
    ..., deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (11) impairments of goodwill and realized losses or market value impairments to illiquid assets; (12) defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial...

  • Page 10
    ... financial statements and related notes included elsewhere herein. Years Ended December 31, 2013 2012 2011 2010 2009 (In millions, except per share data) Statement of Operations Data (1) Revenues Premiums ...$ 37,674 $ 37,975 $ 36,361 $ 27,071 $ 26,157 Universal life and investment-type product...

  • Page 11
    ... stockholders' equity. Business MetLife has grown to become a leading global provider of insurance, annuities and employee benefit programs. Through our subsidiaries and affiliates, we hold leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. Over...

  • Page 12
    ... 30, 2013, 2012 and 2011. In the U.S., we provide a variety of insurance and financial services products, including life, dental, disability, property & casualty, guaranteed interest, stable value and annuities, through both proprietary and independent retail distribution channels, as well as at...

  • Page 13
    ... by the Board of Governors of the Federal Reserve System ("Federal Reserve Board") and to enhanced supervision and prudential standards. See "Business - Enhanced Prudential Standards for Non-Bank SIFIs" in MetLife's Annual Report on Form 10-K for the year ended December 31, 2013 (the "2013 Form 10...

  • Page 14
    ... Forward-Looking Statements and Other Financial Information ...Executive Summary ...Industry Trends ...Summary of Critical Accounting Estimates ...Economic Capital ...Acquisitions and Dispositions ...Results of Operations ...Effects of Inflation ...Investments ...Derivatives ...Off-Balance Sheet...

  • Page 15
    ... are life, dental, group short- and long-term disability, accidental death & dismemberment ("AD&D") coverages, property & casualty and other accident and health coverages, as well as non-insurance products such as identity protection. See Note 2 of the Notes to the Consolidated Financial Statements...

  • Page 16
    ...-state examination payment related to unclaimed property and our use of the U.S. Social Security Administration's Death Master File to identify potential life insurance claims, as well as the acceleration of benefit payments to policyholders under the settlements of such claims. Year Ended December...

  • Page 17
    ... Services for Executive Life Insurance Company of New York ("ELNY"). Results for 2012 include a $52 million, net of income tax, charge representing a multi-state examination payment related to unclaimed property and MetLife's use of the U.S. Social Security Administration's Death Master File...

  • Page 18
    ... Interest Rate Environment As a global insurance company, we are affected by the monetary policy of central banks around the world, as well as the monetary policy of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") in the United States. The Federal Reserve Board has...

  • Page 19
    ... Balances" for information regarding the account values subject to minimum guaranteed crediting rates. Retail Life & Other - Our interest rate sensitive products include traditional life, universal life, and retained asset accounts. Because the majority of our traditional life insurance business...

  • Page 20
    ... Worksite Benefits Group - In general, most of our group life insurance products in this segment are renewable term insurance and, therefore, have significant repricing flexibility. Interest rate risk arises mainly from minimum interest rate guarantees on retained asset accounts. These accounts have...

  • Page 21
    ... mortgage loans. In 2012 and 2013, MetLife Bank sold its residential mortgage servicing portfolios, and in 2013 wound down its mortgage servicing business. See Note 3 of the Notes to the Consolidated Financial Statements for information regarding the MetLife Bank Divestiture. In August 2013, MetLife...

  • Page 22
    ... of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation. Future policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity contracts are based on estimates of the expected value of benefits...

  • Page 23
    ... the changes to DAC and VOBA amortization in 2013: ‰ The increase in equity markets during the year increased separate account balances, which led to higher actual and expected future gross profits on variable universal life contracts and variable deferred annuity contracts resulting in a decrease...

  • Page 24
    ...a spread over the risk free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These...

  • Page 25
    ...to support the mix of business, long-term growth rates, comparative market multiples, the account value of in-force business, projections of new and renewal business, as well as margins on such business, the level of interest rates, credit spreads, equity market levels, and the discount rate that we...

  • Page 26
    ... used in measuring liabilities relating to our employee benefit plans. Income Taxes We provide for federal, state and foreign income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Our accounting...

  • Page 27
    ... products through the distribution network of AMMB's banking subsidiaries in Malaysia. On September 26, 2013, MetLife, Inc., Bank for Investment & Development of Vietnam ("BIDV"), and Bank for Investment and Development of Vietnam Insurance Corporation ("BIC") signed an agreement to establish a life...

  • Page 28
    ... current and expected market conditions and expectations for changes within our specific mix of products and business segments. In addition, the general account investment portfolio includes, within fair value option ("FVO") and trading securities, contractholder-directed unit-linked 20 MetLife...

  • Page 29
    ...net of income tax) in 2013 was comprised of a loss of $337 million due to a decrease in our own credit spread, as well as a loss of $615 million due to the impact of changes in capital market inputs, such as long-term interest rates and key equity index levels, on the variable annuity guarantees. We...

  • Page 30
    ... ($1.6 billion, net of income tax) non-cash charge for goodwill impairment associated with our U.S. Retail annuities business. Our 2013 results include a $101 million ($69 million, net of income tax) charge associated with the global review of assumptions related to reserves and DAC, of which $138...

  • Page 31
    ... program derivatives and VA program derivatives: Years Ended December 31, 2012 2011 (In millions) Non-VA program derivatives Interest rate ...Foreign currency exchange rate ...Credit ...Equity ...Non-VA embedded derivatives ...Total non-VA program derivatives ...VA program derivatives Market risks...

  • Page 32
    ... fewer new annuity products available and as the value of the rider guarantees has increased over time relative to actual equity performance and low interest rates. ‰ Decreases to our general account earned rate as well as the expected future performance in the separate accounts due to current and...

  • Page 33
    ... to common shareholders Year Ended December 31, 2013 Group, Voluntary & Worksite Benefits Corporate Benefit Funding Latin America Corporate & Other Retail Asia EMEA Total (In millions) Income (loss) from continuing operations, net of income tax ...Less: Net investment gains (losses) ...Less...

  • Page 34
    ...expenses Year Ended December 31, 2013 Group, Voluntary & Worksite Benefits Corporate Benefit Funding Latin America Corporate & Other Retail Asia EMEA Total (In millions) Total revenues ...Less: Net investment gains (losses) ...Less: Net derivative gains (losses) ...Less: Adjustments related to...

  • Page 35
    ...by market conditions, generated higher policy fee income of $382 million. Deposits and funding agreement issuances in 2013 in our Corporate Benefit Funding segment, combined with positive net flows from our universal life business resulted in growth in our investment portfolio which generated higher...

  • Page 36
    ... multi-state examination payment related to unclaimed property and our use of the U.S. Social Security Administration's Death Master File to identify potential life insurance claims, as well as the expected acceleration of benefit payments to policyholders under the settlements. In addition, changes...

  • Page 37
    ..., determined by separate account balances and higher costs associated with our variable annuity guaranteed minimum death benefits ("GMDBs"). The sustained low interest rate environment resulted in a decline in net investment income on our fixed maturity securities and mortgage loans as proceeds from...

  • Page 38
    ... 2011 sales. Positive net flows from life products, as well as higher allocated equity for annuities increased net investment income. These positive net flows also contributed to higher DAC amortization. Business growth, mainly in our traditional life products, generated higher interest credited...

  • Page 39
    ... Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...OPERATING EXPENSES Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of DAC...

  • Page 40
    ... rates in 2012, and resulted in a $3 million decrease in operating earnings. Corporate Benefit Funding Years Ended December 31, 2013 2012 (In millions) 2011 OPERATING REVENUES Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total...

  • Page 41
    ... current interest rates and availability of capital. During 2012, the conversion of an existing contract involving the transfer of funds from the separate account to the general account resulted in a significant increase in premiums in our domestic closeout business. Structured settlement sales...

  • Page 42
    ... Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...OPERATING EXPENSES Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of DAC...

  • Page 43
    ... Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...OPERATING EXPENSES Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of DAC...

  • Page 44
    ... Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...OPERATING EXPENSES Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of DAC...

  • Page 45
    ... Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...OPERATING EXPENSES Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of DAC...

  • Page 46
    ... insurance, as well as direct and digital marketing products. Corporate & Other also includes assumed reinsurance of certain variable annuity products from our former operating joint venture in Japan. Under this in-force reinsurance agreement, we reinsure living and death benefit guarantees issued...

  • Page 47
    ... risk, relating to the market price and cash flow variability associated with changes in market interest rates. Changes in market interest rates will impact the net unrealized gain or loss position of our fixed income investment portfolio and the rates of return we receive on both new funds invested...

  • Page 48
    ...preferred stock) are invested in a diversified portfolio of primarily non-financial services securities, which comprised $24.8 billion, or 74% of European Region total corporate securities, at estimated fair value, at December 31, 2013. Of these European Region sovereign fixed maturity and corporate...

  • Page 49
    ..., at December 31, 2013. (2) Comprised of equity securities, mortgage loans, other limited partnership interests, cash, cash equivalents and short-term investments, and other invested assets at carrying value. See Note 1 of the Notes to the Consolidated Financial Statements for an explanation of...

  • Page 50
    ...hybrid securities and mutual fund interests, were $3.4 billion and $2.9 billion, at estimated fair value, or 0.7% and 0.5% of total cash and invested assets, at December 31, 2013 and 2012, respectively. Publicly-traded equity securities represented $2.4 billion and $1.8 billion, at 42 MetLife, Inc...

  • Page 51
    ... sources of information: market standard internal matrix pricing, market standard internal discounted cash flow techniques, or independent pricing services after we determine the independent pricing services' use of available observable market data. For publicly-traded securities, the number of...

  • Page 52
    ... securities with very limited trading activity or where less price transparency exists around the inputs to the valuation methodologies. Level 3 fixed maturity securities include: alternative residential mortgage loan ("Alt-A") and sub-prime RMBS; certain below investment grade private securities...

  • Page 53
    ... presented using the NAIC methodologies as described above: Fixed Maturity Securities - by Sector & Credit Quality Rating NAIC Designation: Rating Agency Rating: 1 Aaa/Aa/A 2 Baa 3 Ba 4 B (In millions) 5 Caa and Lower 6 In or Near Default Total Estimated Fair Value December 31, 2013: U.S. corporate...

  • Page 54
    ...-through securities. The majority of our RMBS holdings were rated Aaa/AAA by Moody's, S&P or Fitch; and were rated NAIC 1 by the NAIC at December 31, 2013 and 2012. Agency RMBS were guaranteed or otherwise supported by Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or...

  • Page 55
    ... of fixed rate mortgage loans (94% at both December 31, 2013 and 2012). Historically, we have managed our exposure to sub-prime RMBS holdings by acquiring older vintage year securities that benefit from better underwriting, improved credit enhancement and higher levels of residential property price...

  • Page 56
    ... unit-linked variable annuity type liabilities which do not qualify for presentation as separate account summary total assets and liabilities. These investments are primarily mutual funds and, to a lesser extent, fixed maturity and equity securities, short-term investments and cash and cash...

  • Page 57
    ...Financial Statements for financial information regarding our securities lending program. Mortgage Loans Our mortgage loans held-for-investment are principally collateralized by commercial real estate, agricultural real estate and residential properties. Mortgage loans held-for-investment and related...

  • Page 58
    ...income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average loan-to-value ratio was 55% and 57% at December 31, 2013 and 2012...

  • Page 59
    ...of total cash and invested assets, at December 31, 2013 and 2012, respectively. Derivatives Derivative Risks We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. We use a variety of strategies...

  • Page 60
    ... 2013 and 2012. See "Quantitative and Qualitative Disclosures About Market Risk - Management of Market Risk Exposures - Hedging Activities" for more information about our use of derivatives by major hedge program. Fair Value Hierarchy See Note 10 of the Notes to the Consolidated Financial Statements...

  • Page 61
    ...; mortgage loan commitments; and commitments to fund bank credit facilities, bridge loans and private corporate bond investments. See "Net Investment Income" and "Net Investment Gains (Losses)" in Note 8 of the Notes to the Consolidated Financial Statements for information on the investment income...

  • Page 62
    ... for traditional life, endowment, annuity and accident & health contracts. They are also held for total return pass-through provisions included in certain universal life and savings products. They include certain liabilities for variable annuity and variable life guarantees of minimum death benefits...

  • Page 63
    ... type of contract, and can be fixed or variable. Variable interest crediting rates are generally tied to an external index, most commonly (1-month or 3-month) LIBOR. We are exposed to interest rate risks, as well as foreign currency exchange rate risk when guaranteeing payment of interest and return...

  • Page 64
    ... strategies. Liabilities for unit-linked-type funds are impacted by changes in the fair value of the associated investments, as the return on assets is generally passed directly to the policyholder. Corporate & Other PABs in Corporate & Other are held for variable annuity guaranteed minimum benefits...

  • Page 65
    ...contractholders. The table below presents GMDBs, by benefit type, at December 31, 2013: Total Contract Account Value (1) Americas Corporate & Other (In millions) Return of premium or five to seven year step-up ...Annual step-up ...Roll-up and step-up combination ...Total ... $105,940 32,346 39,638...

  • Page 66
    ... total contract account value, GMIBs are our most significant living benefit guarantee. Our primary risk management strategy for our GMIB products is our derivatives hedging program as discussed below. Additionally, we have engaged in certain reinsurance agreements covering some of our GMIB business...

  • Page 67
    ... at December 31, 2013 and 2012, respectively. Liquid assets include cash and cash equivalents, short-term investments and publicly-traded securities, excluding: (i) amounts related to cash collateral received under our securities lending program; (ii) amounts related to cash collateral received from...

  • Page 68
    ... in the credit ratings or insurer financial strength ratings of MetLife, Inc. or its subsidiaries would likely impact us in the following ways: ‰ impact our ability to generate cash flows from the sale of funding agreements and other capital market products offered by our Corporate Benefit Funding...

  • Page 69
    ... agreements with affiliated captive reinsurers for risk and capital management purposes, as well as to manage statutory reserve requirements related to universal life and term life insurance policies and other business. Various subsidiaries of MetLife, Inc. cede variable annuity guaranteed...

  • Page 70
    ... activities come from insurance premiums, annuity considerations and deposit funds. The principal cash outflows relate to the liabilities associated with various life insurance, property & casualty, annuity and group pension products, operating expenses and income tax, as well as interest on...

  • Page 71
    ... the commercial paper programs fluctuate in line with changes to affiliates' financing arrangements. Federal Home Loan Bank Funding Agreements, Reported in PABs Certain of our domestic insurance subsidiaries are members of a regional FHLB. During the years ended December 31, 2013, 2012 and 2011, we...

  • Page 72
    ..., financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.'s common stock compared to management's assessment of the stock's underlying value and applicable regulatory approvals, as well as other legal and accounting factors. See "Business - U.S. Regulation...

  • Page 73
    ... of business. In each of the years ended December 31, 2013 and 2012, general account surrenders and withdrawals from annuity products were $4.3 billion. In the Corporate Benefit Funding segment, which includes pension closeouts, bank-owned life insurance and other fixed annuity contracts, as well as...

  • Page 74
    ... 31, 2013 and 2012, respectively, were on open, meaning that the related loaned security could be returned to us on the next business day requiring the immediate return of cash collateral we hold. The estimated fair value of the securities on loan related to the cash collateral on open at December...

  • Page 75
    ... to the Consolidated Financial Statements. Investment Commitments To enhance the return on our investment portfolio, we commit to lend funds under mortgage loans, bank credit facilities, bridge loans and private corporate bond investments and we commit to fund partnership investments. In the table...

  • Page 76
    ... of American Life's business in Japan. Subsequently, $1.5 billion was remitted to American Life. See Note 3 of the Notes to the Consolidated Financial Statements. Of this approved amount, $1.3 billion was paid to MetLife, Inc., as an extraordinary dividend. (6) During June 2012, MICC distributed...

  • Page 77
    ... dividend payments to the parent to a portion of the prior year's statutory income, as determined by the local accounting principles. The regulators of our non-U.S. operations, including Japan's Financial Services Agency, may also limit or not permit profit repatriations or other transfers of funds...

  • Page 78
    ... Financial Statements for information regarding dispositions. Liquidity and Capital Uses The primary uses of liquidity of MetLife, Inc. include debt service, cash dividends on common and preferred stock, capital contributions to subsidiaries, payment of general operating expenses and acquisitions...

  • Page 79
    ... Exeter reinsures the guaranteed living benefits and guaranteed death benefits associated with certain unit-linked annuity contracts issued by MEL. MetLife, Inc., in connection with MetLife Reinsurance Company of Vermont's ("MRV") reinsurance of certain universal life and term life insurance risks...

  • Page 80
    ... related to GMIBs ("GMIB Costs"), and (iv) 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...

  • Page 81
    ..., PABs related to certain investment type contracts, and net embedded derivatives on variable annuities with guaranteed minimum benefits which have the same type of interest rate exposure (medium- and long-term interest rates) as fixed maturity securities. We employ product design, pricing and ALM...

  • Page 82
    ... of loss and financial statement volatility associated with our investments in foreign subsidiaries, foreign currency denominated fixed income investments and the sale of certain insurance products. Equity Market Risk Management Equity market risk exposure through the issuance of variable annuities...

  • Page 83
    ...maturity securities ...Equity securities ...Fair value option and trading securities ...Mortgage loans: Held-for-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Short-term investments ...Other invested assets ...Cash and cash equivalents ...Accrued investment income ...Premiums...

  • Page 84
    ...maturity securities ...Equity securities ...Fair value option and trading securities ...Mortgage loans: Held-for-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Short-term investments ...Other invested assets ...Cash and cash equivalents ...Accrued investment income ...Premiums...

  • Page 85
    ... represent those financial instruments solely subject to equity price risk. Additionally, separate account assets and liabilities and contractholder-directed unit-linked investments and associated PABs, which are equity market sensitive, are not included herein as any equity market risk is borne...

  • Page 86
    ... effective internal control over financial reporting at December 31, 2013. Deloitte & Touche LLP, an independent registered public accounting firm, has audited the consolidated financial statements and consolidated financial statement schedules included in the Annual Report on Form 10-K for the year...

  • Page 87
    ... express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable...

  • Page 88
    ... Income (Loss) ...Consolidated Statements of Equity ...Consolidated Statements of Cash Flows ...Notes to the Consolidated Financial Statements ...Note 1 - Business, Basis of Presentation and Summary of Significant Accounting Policies ...Note 2 - Segment Information ...Note 3 - Acquisitions...

  • Page 89
    ...audited the accompanying consolidated balance sheets of MetLife, Inc. and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December...

  • Page 90
    ... securities loaned and other transactions ...Bank deposits ...Short-term debt ...Long-term debt (includes $1,868 and $2,527, respectively, at estimated fair value, relating to variable interest entities) ...Collateral financing arrangements ...Junior subordinated debt securities ...Current income...

  • Page 91
    MetLife, Inc. Consolidated Statements of Operations For the Years Ended December 31, 2013, 2012 and 2011 (In millions, except per share data) 2013 2012 2011 Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Net investment gains...

  • Page 92
    ... interests and net income (loss) exclude gains (losses) of redeemable noncontrolling interests of less than $1 million, $9 million and ($13) million for the years ended December 31, 2013, 2012 and 2011, respectively. See accompanying notes to the consolidated financial statements. 84 MetLife, Inc.

  • Page 93
    ..., Inc. Consolidated Statements of Equity For the Year Ended December 31, 2013 (In millions) Accumulated Other Comprehensive Income (Loss) Net Foreign Defined Total Additional Treasury Unrealized Other-Than- Currency Benefit MetLife, Inc.'s Paid-in Retained Stock Investment Temporary Translation...

  • Page 94
    ... Benefit MetLife, Inc.'s Paid-in Retained Stock Investment Temporary Translation Plans Stockholders' Noncontrolling Total Capital Earnings at Cost Gains (Losses) Impairments Adjustments Adjustment Equity Interests (1) Equity Preferred Common Stock Stock Balance at December 31, 2011 ...Common stock...

  • Page 95
    ... of Equity - (Continued) For the Year Ended December 31, 2011 (In millions) Accumulated Other Comprehensive Income (Loss) Net Unrealized Foreign Defined Total Convertible Additional Treasury Investment Other-Than- Currency Benefit MetLife, Inc.'s Preferred Preferred Common Paid-in Retained Stock...

  • Page 96
    ... of businesses, net ...(Income) loss from equity method investments, net of dividends or distributions ...Interest credited to policyholder account balances ...Interest credited to bank deposits ...Universal life and investment-type product policy fees ...Goodwill impairment ...Change in fair value...

  • Page 97
    ...For the Years Ended December 31, 2013, 2012 and 2011 (In millions) 2013 2012 2011 Cash flows from financing activities Policyholder account balances: Deposits ...Withdrawals ...Net change in payables for collateral under securities loaned and other transactions ...Net change in bank deposits ...Net...

  • Page 98
    ... and employee benefit programs throughout the United States, Japan, Latin America, Asia, Europe and the Middle East. MetLife offers life insurance, annuities, property & casualty insurance, and other financial services to individuals, as well as group insurance and retirement & savings products and...

  • Page 99
    ... investment income is considered in the calculation of premium deficiency losses for short duration contracts. Liabilities for universal and variable life secondary guarantees and paid-up guarantees are determined by estimating the expected value of death benefits payable when the account balance...

  • Page 100
    ...annuities, the amount of expected future policy benefit payments. Premiums related to short-duration non-medical health and disability, accident and health, and certain credit insurance contracts are recognized on a pro rata basis over the applicable contract term. Deposits related to universal life...

  • Page 101
    ... health insurance ‰ Accident and health insurance ‰ Participating, dividend-paying traditional contracts ‰ Fixed and variable universal life contracts ‰ Fixed and variable deferred annuity contracts ‰ Credit insurance contracts ‰ Property and casualty insurance contracts ‰ Other short...

  • Page 102
    ... unit-linked variable annuity type liabilities which do not qualify for presentation and reporting as separate account summary total assets and liabilities. These investments are primarily mutual funds and, to a lesser extent, fixed maturity and equity securities, short-term investments and cash...

  • Page 103
    ... fair value, which is generally computed using the present value of expected future cash flows discounted at a rate commensurate with the underlying risks. Real estate for which the Company commits to a plan to sell within one year and actively markets in its current condition for a reasonable price...

  • Page 104
    ... Economic hedges of variable annuity guarantees included in future policy benefits ‰ Economic hedges of equity method investments in joint ventures ‰ All derivatives held in relation to trading portfolios ‰ Derivatives held within contractholder-directed unit-linked investments Other revenues...

  • Page 105
    ... in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable annuities and issues certain insurance products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives...

  • Page 106
    ... to the Consolidated Financial Statements - (Continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Income Tax MetLife, Inc. and its includable life insurance and non-life insurance subsidiaries file a consolidated U.S. federal income tax return in...

  • Page 107
    ... changes in account value relating to corporate-owned life insurance ("COLI"). Such fees and commissions are recognized in the period in which services are performed. Under certain COLI contracts, if the Company reports certain unlikely adverse results in its financial statements, withdrawals would...

  • Page 108
    ... products and services include variable life, universal life and term life products. Group insurance products and services also include dental, group short- and long-term disability and accidental death & dismemberment coverages. The Voluntary & Worksite business includes personal lines property...

  • Page 109
    ... sold through sponsoring organizations and affinity groups. Products included are life, dental, group short- and longterm disability, accidental death & dismemberment coverages, property & casualty and other accident and health coverages, as well as non-insurance products such as identity protection...

  • Page 110
    ... financial information with respect to the Company's segments, as well as Corporate & Other, for the years ended December 31, 2013, 2012 and 2011 and at December 31, 2013 and 2012. The segment accounting policies are the same as those used to prepare the Company's consolidated financial statements...

  • Page 111
    ...Benefit Latin Benefits Funding America Year Ended December 31, 2013 Retail Total Asia EMEA Corporate & Other Total Total Adjustments Consolidated (In millions) Revenues Premiums ...$ 6,528 $15,250 $2,859 $2,824 $27,461 $ 7,801 $2,297 $ 116 $37,675 Universal life and investment-type product...

  • Page 112
    ... Benefit Latin Benefits Funding America Year Ended December 31, 2012 Retail Total Asia EMEA Corporate & Other Total Total Adjustments Consolidated (In millions) Revenues Premiums ...$ 6,532 $14,794 $3,237 $2,578 $27,141 $ 8,344 $2,370 $ 56 $37,911 Universal life and investment-type product...

  • Page 113
    ... presents total premiums, universal life and investment-type product policy fees and other revenues by major product groups of the Company's segments, as well as Corporate & Other: Years Ended December 31, 2013 2012 (In millions) 2011 Life insurance (1) ...Accident and health insurance ...Property...

  • Page 114
    ...of consolidated premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31, 2013, 2012 and 2011. The following table presents total premiums, universal life and investment-type product policy fees and other revenues associated with the Company...

  • Page 115
    ... borrowing opportunities with the Federal Home Loan Bank ("FHLB") of New York ("FHLB of NY"). In January 2012, MetLife Bank discontinued taking advances from the FHLB of NY. In April 2012, MetLife Bank transferred cash to Metropolitan Life Insurance Company ("MLIC") related to $3.8 billion of...

  • Page 116
    ...'s life insurance and annuity contracts ("Covered Payments") for any tax periods beginning on January 1, 2005 and ending on December 31, 2013 (the "Deferral Period"). The Closing Agreement required that American Life submit a plan to the IRS within 90 days after the close of the ALICO Acquisition...

  • Page 117
    ... December 31, 2013, 2012 and 2011, respectively. PABs are equal to: (i) policy account values, which consist of an accumulation of gross premium payments and investment performance; (ii) credited interest, ranging from 1% to 13% for domestic business and 1% to 12% for international business, less...

  • Page 118
    ... in a contract year do not exceed a certain limit. Å Certain contracts include guaranteed withdrawals that are life contingent. The Company also issues annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if...

  • Page 119
    ... at December 31, 2013, 2012 and 2011, respectively. Account balances of contracts with insurance guarantees were invested in separate account asset classes as follows at: December 31, 2013 2012 (In millions) Fund Groupings: Equity ...Balanced ...Bond ...Money Market ...Total ...MetLife, Inc. $ 79...

  • Page 120
    ... type of guarantee, the Company defines net amount at risk as listed below. These amounts include direct and assumed business, but exclude offsets from hedging or reinsurance, if any. Variable Annuity Guarantees In the Event of Death Defined as the death benefit less the total contract account value...

  • Page 121
    ...to certain special purpose entities ("SPEs") that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. During the years ended December 31, 2013, 2012 and 2011, the Company issued $37.7 billion, $35.1 billion and $39...

  • Page 122
    ...-Dividend-Paying Traditional Contracts The Company amortizes DAC and VOBA related to these contracts (term insurance, nonparticipating whole life insurance, traditional group life insurance, non-medical health insurance, and accident and health insurance) over the appropriate premium paying period...

  • Page 123
    ...in proportion to historic and future earned premium over the applicable contract term. Factors Impacting Amortization Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period...

  • Page 124
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (continued) Information regarding DAC and VOBA was as follows: Years Ended December 31, 2013 2012 (In millions) 2011 DAC ...

  • Page 125
    ... Financial Statements - (Continued) 5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (continued) Information regarding other policy-related intangibles was as follows: Years Ended December 31, 2013 2012 (In millions) 2011 Deferred Sales...

  • Page 126
    ... business written by MetLife Insurance Company of Connecticut ("MICC"). Corporate & Other also has a reinsurance agreement, whereby it assumes the living and death benefit guarantees issued in connection with certain variable annuity products. Under this agreement, the Company receives reinsurance...

  • Page 127
    ...: Years Ended December 31, 2013 2012 (In millions) 2011 Premiums Direct premiums ...$38,476 $38,719 $37,185 Reinsurance assumed ...1,472 1,488 1,484 Reinsurance ceded ...(2,274) (2,232) (2,308) Net premiums ...$37,674 $37,975 $36,361 Universal life and investment-type product policy fees Direct...

  • Page 128
    ... guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years. The Company uses the same accounting...

  • Page 129
    ... estimated fair value ...Equity securities available-for-sale, at estimated fair value ...Mortgage loans ...Policy loans ...Real estate and real estate joint ventures ...Other invested assets ...Total investments ...Cash and cash equivalents ...Accrued investment income ...Premiums, reinsurance and...

  • Page 130
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 7. Closed Block (continued) Information regarding the closed block revenues and expenses was as follows: Years Ended December 31, 2013 2012 (In millions) 2011 Revenues Premiums ...Net investment income ...Net investment ...

  • Page 131
    ... Investment Gains (Losses)." The Company held non-income producing fixed maturity securities with an estimated fair value of $74 million and $85 million with unrealized gains (losses) of $23 million and $11 million at December 31, 2013 and 2012, respectively. Methodology for Amortization of Premium...

  • Page 132
    ... concentrations and information obtained from regulators and rating agencies. The methodology and significant inputs used to determine the amount of credit loss on fixed maturity securities are as follows: ‰ The Company calculates the recovery value by performing a discounted cash flow analysis...

  • Page 133
    ... The carrying value prior to valuation allowance ("recorded investment") in mortgage loans held-for-investment, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, were as follows at: December 31, 2013 Commercial Agricultural...

  • Page 134
    ... income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. The Company also reviews the loan-to-value ratio of its commercial mortgage loan portfolio. Loan-to-value...

  • Page 135
    ... a higher risk of experiencing a credit loss. Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans held-for-investment, were as follows at: Recorded Investment Debt Service Coverage Ratios > 1.20x 1.00x - 1.20x < 1.00x Total % of Total Estimated Fair Value (In...

  • Page 136
    ... Financial Statements - (Continued) 8. Investments (continued) Past Due and Interest Accrual Status of Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both December 31, 2013 and 2012. The Company...

  • Page 137
    ... of net unrealized investment gains (losses), included in AOCI, were as follows: Years Ended December 31, 2013 2012 (In millions) 2011 Fixed maturity securities ...Fixed maturity securities with noncredit OTTI losses in AOCI ...Total fixed maturity securities ...Equity securities ...Derivatives...

  • Page 138
    ...fixed income securities of the Japanese government and its agencies with an estimated fair value of $21.7 billion and $22.4 billion at December 31, 2013 and 2012, respectively. The Company's investment in fixed maturity and equity securities to counterparties that primarily conduct business in Japan...

  • Page 139
    ... policies and annuity contracts in New York. Also effective January 1, 2014, MICC reinsured with an affiliate all existing New York insurance policies and annuity contracts that include a separate account feature; on December 31, 2013, MICC deposited investments with an estimated fair market value...

  • Page 140
    ... information about PCI investments acquired during the periods indicated: Years Ended December 31, 2013 2012 2013 2012 Fixed Maturity Securities (In millions) Mortgage Loans Contractually required payments (including interest) ...Cash flows expected to be collected (1) ...Fair value of investments...

  • Page 141
    ..., 2012 and 2011 respectively. The Company consolidated an open ended core real estate fund formed in the fourth quarter of 2013, which represented the majority of the balances at December 31, 2013. Assets of the real estate fund are a real estate investment trust which holds primarily traditional...

  • Page 142
    ...other limited partnership interests, mortgage loans and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. For certain of its investments in other invested assets, the Company's return is in the form of income tax credits which are guaranteed by...

  • Page 143
    ... net investment income were as follows: Years Ended December 31, 2013 2012 (In millions) 2011 Investment income: Fixed maturity securities ...Equity securities ...FVO and trading securities - Actively Traded Securities and FVO general account securities (1) ...Mortgage loans ...Policy loans ...Real...

  • Page 144
    ... sector: Non-redeemable preferred stock ...Common stock ...OTTI losses on equity securities recognized in earnings ...Equity securities - net gains (losses) on sales and disposals ...Total gains (losses) on equity securities ...FVO and trading securities - FVO general account securities ...Mortgage...

  • Page 145
    ...information about the fair value hierarchy for derivatives. Derivative Strategies The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage...

  • Page 146
    ... hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or...

  • Page 147
    ... its exposure to equity market risk, including equity index options, variance swaps, exchange-traded equity futures and total rate of return swaps ("TRRs"). Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the...

  • Page 148
    ... at both December 31, 2013 and 2012. The Company's use of derivatives includes (i) derivatives that serve as macro hedges of the Company's exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives...

  • Page 149
    ...Investment Income (1) Policyholder Benefits and Claims (2) Other Revenues (3) (In millions) Year Ended December 31, 2013: Interest rate derivatives ...Foreign currency exchange rate derivatives ...Credit derivatives - purchased ...Credit derivatives - written ...Equity derivatives ...Total ...Year...

  • Page 150
    ... hedges of variable annuity guarantees included in future policy benefits. (3) Changes in estimated fair value related to derivatives held in connection with the Company's mortgage banking activities prior to the MetLife Bank Divestiture. Fair Value Hedges The Company designates and accounts for the...

  • Page 151
    ... maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed seven years and eight years, respectively. At December 31, 2013 and 2012, the balance in AOCI associated with cash flow hedges was $375 million and...

  • Page 152
    ... billion at December 31, 2013 and 2012, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current fair value of the credit default swaps. At December 31, 2013 and 2012, the Company would have received $165...

  • Page 153
    ... Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. (3) Cash collateral received is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included...

  • Page 154
    ... reinsurance of guaranteed minimum benefits related to GMWBs and GMABs; funding agreements with equity or bond indexed crediting rates; funds withheld on assumed and ceded reinsurance; and certain debt and equity securities. The following table presents the estimated fair value and balance sheet...

  • Page 155
    ...) million, ($1.7) billion and $1.8 billion for the years ended December 31, 2013, 2012 and 2011, respectively. 10. Fair Value When developing estimated fair values, the Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach...

  • Page 156
    ... stock ...Total equity securities ...FVO and trading securities: Actively Traded Securities ...FVO general account securities ...FVO contractholder-directed unit-linked investments ...FVO securities held by CSEs ...Total FVO and trading securities ...Short-term investments (1) ...Mortgage loans...

  • Page 157
    ... stock ...Total equity securities ...FVO and trading securities: Actively Traded Securities ...FVO general account securities ...FVO contractholder-directed unit-linked investments ...FVO securities held by CSEs ...Total FVO and trading securities ...Short-term investments (1) ...Mortgage loans...

  • Page 158
    ... a pricing and valuation committee that is independent of the trading and investing functions and comprised of senior management, provides oversight of control systems and valuation policies for securities, mortgage loans and derivatives. On a quarterly basis, this committee reviews and approves new...

  • Page 159
    ... independent pricing services using observable inputs. FVO and trading securities, short-term investments and other investments within this level are of a similar nature and class to the Level 2 fixed maturity securities and equity securities. Contractholder-directed unit-linked investments reported...

  • Page 160
    ... based on the estimated fair value of the underlying assets. Separate account assets include: mutual funds, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. Level 2 Valuation Techniques...

  • Page 161
    ... principally include certain direct, assumed and ceded variable annuity guarantees and equity or bond indexed crediting rates within certain funding agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. MetLife, Inc. 153

  • Page 162
    ... publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance...

  • Page 163
    ...and existing issuances that, over time, the Company was able to obtain pricing from, or corroborate pricing received from, independent pricing services with observable inputs (such as observable spreads used in pricing securities) or increases in market activity and upgraded credit ratings. MetLife...

  • Page 164
    ... 31, 2012 Range Weighted Average (1) Impact of Increase in Input on Estimated Fair Value (2) Fixed maturity securities: (3) U.S. corporate and foreign corporate • Matrix pricing Delta spread adjustments (4) Illiquidity premium (4) Credit spreads (4) Offered quotes (5) Offered quotes (5) (10...

  • Page 165
    ... amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes...

  • Page 166
    .... The residential mortgage loans - FVO and long-term debt of CSEs - FVO are valued using independent non-binding broker quotations and internal models including matrix pricing and discounted cash flow methodologies using current interest rates. The sensitivity of the estimated fair value to changes...

  • Page 167
    ...Trading Securities: FVO General Account Securities FVO Contractholderdirected Unit-linked Investments Mortgage Loans: Common Stock Actively Traded Securities Short-term Investments Residential Mortgage Loans - FVO Mortgage Loans Heldfor-sale (In millions) Year Ended December 31, 2013: Balance...

  • Page 168
    ...Separate Account Assets (8) Long-term Debt of CSEs-FVO Interest Rate Credit Equity Market (In millions) Year Ended December 31, 2013: Balance at January 1, ...$ Total realized/unrealized gains (losses) included in: Net income (loss): (1), (2) Net investment income ...Net investment gains (losses...

  • Page 169
    ...Fixed Maturity Securities: U.S. Corporate Foreign Corporate Foreign Government U.S Treasury and Agency (In millions) State and Political Subdivision RMBS CMBS ABS Year Ended December 31, 2012: Balance at January 1, ...$ 6,784 Total realized/unrealized gains (losses) included in: Net income (loss...

  • Page 170
    ... Trading Securities: FVO General Account Securities FVO Contractholderdirected Unit-linked Investments (In millions) Mortgage Loans: Common Stock Actively Traded Securities Short-term Investments Residential Mortgage Loans - FVO Mortgage Loans Heldfor-sale Year Ended December 31, 2012: Balance...

  • Page 171
    ...Rate Credit Equity Market Net Embedded Derivatives (7) Separate Account Assets (8) Long-term Debt of CSEs - FVO MSRs (9) (In millions) Year Ended December 31, 2012: Balance at January 1, ...$ 300 Total realized/unrealized gains (losses) included in: Net income (loss): (1), (2) Net investment...

  • Page 172
    ...) Year Ended December 31, 2011: Balance at January 1, ...$ 7,149 Total realized/unrealized gains (losses) included in: Net income (loss): (1), (2) Net investment income ...11 Net investment gains (losses) ...17 Net derivative gains (losses) ...- Other revenues ...- Policyholder benefits and claims...

  • Page 173
    ...linked Investments (In millions) Mortgage Loans: Common Stock Actively Traded Securities Short-term Investments Residential Mortgage Loans - FVO Mortgage Loans Heldfor-sale Year Ended December 31, 2011: Balance at January 1, ...$ Total realized/unrealized gains (losses) included in: Net income...

  • Page 174
    ...: (6) Liability Related to Securitized Reverse Mortgage Loans (9) Interest Rate Foreign Currency Exchange Rate Credit Equity Market Net Embedded Derivatives (7) Separate Account Assets (8) Long-term Debt of CSEs - FVO MSRs (9) (In millions) Year Ended December 31, 2011: Balance at January...

  • Page 175
    ..., 2013 2012 2011 2013 Carrying Value After Measurement (In millions) Years Ended December 31, 2012 Gains (Losses) 2011 Mortgage loans: (1) Held-for-investment ...Held-for-sale ...Other limited partnership interests (2) ...Real estate joint ventures (3) ...Goodwill (4) ...Other assets (5) ...MetLife...

  • Page 176
    ... fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities, such as time deposits, and...

  • Page 177
    ... studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance...

  • Page 178
    ... guaranteed annuities, fixed term payout annuities and total control accounts. The valuation of these investment contracts is based on discounted cash flow methodologies using significant unobservable inputs. The estimated fair value is determined using current market risk-free interest rates...

  • Page 179
    ... support the mix of business, long-term growth rates, comparative market multiples, the account value of in-force business, projections of new and renewal business, as well as margins on such business, the level of interest rates, credit spreads, equity market levels, and the discount rate that the...

  • Page 180
    ...part of the ALICO Acquisition related to Japan which is included in the Asia segment. (5) In 2011, the Company performed a goodwill impairment test on MetLife Bank, which was a separate reporting unit in Corporate & Other. A comparison of the fair value of the reporting unit, using a market multiple...

  • Page 181
    ... are used for general corporate purposes, to support the borrowers' commercial paper programs and for the issuance of letters of credit. Total fees expensed associated with these credit facilities were $24 million, $30 million and $35 million for the years ended December 31, 2013, 2012 and 2011...

  • Page 182
    ... 31, 2013 and 2012, the estimated fair value of assets held in trust by the Company was $1.7 billion and $1.6 billion, respectively. The assets are principally invested in fixed maturity securities and are presented as such within the Company's consolidated balance sheets, with the related income...

  • Page 183
    ... statutory obligations associated with the reinsurance of secondary guarantees. The trusts are VIEs which are consolidated by the Company. The unaffiliated financial institution is entitled to the return on the investment portfolio held by the trusts. At both December 31, 2013 and 2012, the Company...

  • Page 184
    ...the fair value of the Purchase Contracts discussed below. On March 8, 2011, AM Holdings sold, in a public offering, all the common equity units it received as consideration from MetLife in connection with the ALICO Acquisition. The common equity units are listed on the New York Stock Exchange ("NYSE...

  • Page 185
    ... related Series E Purchase Contract. Remarketing of Senior Debt Securities and Settlement of Stock Purchase Contracts In both September 2013 and October 2012, MetLife, Inc. closed the successful remarketings of senior debt securities underlying the common equity units. The Series D Debt Securities...

  • Page 186
    ..., its financial strength and credit ratings, general market conditions and the market price of MetLife, Inc.'s common stock compared to management's assessment of the stock's underlying value and applicable regulatory approvals, as well as other legal and accounting factors. 178 MetLife, Inc...

  • Page 187
    ... American Life, a U.S. insurance subsidiary of the Company. In addition, the payment of dividends by MetLife, Inc. to its shareholders is also subject to restrictions. See "- Dividend Restrictions - MetLife, Inc." Stock-Based Compensation Plans Description of Plans for Employees and Agents - General...

  • Page 188
    ... expense related to the 2005 Directors Stock Plan. Those components were: Years Ended December 31, 2013 2012 (In millions) 2011 Stock Options and Unit Options ...Performance Shares and Units (1) ...Restricted Stock Units and Restricted Units ...Total compensation expense ...Income tax benefit...

  • Page 189
    ... value of Stock Options issued: Years Ended December 31, 2013 2012 2011 Dividend yield ...Risk-free rate of return ...Expected volatility ...Exercise multiple ...Post-vesting termination rate ...Contractual term (years) ...Expected life (years) ...Weighted average exercise price of stock options...

  • Page 190
    ...,888 478,699 Statutory Equity and Income Each of MetLife, Inc.'s 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"). American Life does not write business in Delaware or any...

  • Page 191
    ...financial statements as filed with the insurance regulators. Statutory net income (loss) was as follows: Years Ended December 31, Company State of Domicile 2013 2012 (In millions) 2011 Metropolitan Life Insurance Company ...American Life Insurance Company ...MetLife Insurance Company of Connecticut...

  • Page 192
    ...) 16. Equity (continued) The Company's domestic captive life reinsurance subsidiaries, which reinsure risks including the closed block, level premium term life and universal life with secondary guarantees assumed from other MetLife subsidiaries, have no material state prescribed accounting practices...

  • Page 193
    ... could adversely affect MetLife, Inc.'s ability to pay dividends to its stockholders, as well as repurchase its common stock. MetLife, Inc. has been designated as a global systemically important insurer by the Financial Stability Board. As such, it could be subject to policy measures which could...

  • Page 194
    ... defer payment of interest without giving rise to an event of default for periods of up to 10 years (although after five years MetLife, Inc. would be obligated to use commercially reasonable efforts to sell equity securities to raise proceeds to pay the interest), with no limitation on the number of...

  • Page 195
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 16. Equity (continued) Information regarding amounts reclassified out of each component of AOCI, was as follows: Amounts Reclassified from AOCI AOCI Components Years Ended December 31, 2013 2012 (In millions) 2011 Statement ...

  • Page 196
    ... severance, as well as lease and asset impairments, through the year ending December 31, 2015. However, such restructuring plans were not sufficiently developed to enable management to make an estimate of such restructuring charges at December 31, 2013. ALICO Acquisition Integration-Related Expenses...

  • Page 197
    ...credited service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the average annual rate...

  • Page 198
    ..., withdrawal rates and mortality. Management, in consultation with its external consulting actuarial firms, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data and expected benefit payout...

  • Page 199
    ... Plans 2013 2012 2011 2013 Other Postretirement Benefits U.S. Plans 2012 2011 Non-U.S. Plans 2013 2012 2011 Years Ended December 31, (In millions) Net periodic benefit costs: Service costs ...$ 236 $ 224 $ 187 $ Interest costs ...389 406 404 Settlement and curtailment costs ...- - - Expected return...

  • Page 200
    ...the three-level fair value hierarchy presented below. Level 1 This category includes separate accounts that are invested in fixed maturity securities, equity securities, derivative assets and short-term investments which have unadjusted quoted market prices in active markets for identical assets and...

  • Page 201
    ...agency, foreign bonds, mortgage-backed securities, municipals, preferred stocks and U.S. government bonds. (2) Equity securities primarily include common stock of U.S. companies. (3) Alternative securities primarily include derivative assets, money market securities, short-term investments and other...

  • Page 202
    ...: Corporate ...U.S. government bonds ...Foreign bonds ...Federal agencies ...Municipals ...Other (1) ...Total fixed maturity securities ...Equity securities: Common stock - domestic ...Common stock - foreign ...Total equity securities ...Other investments ...Short-term investments ...Money market...

  • Page 203
    ...Pension Benefits Fixed Maturity Securities: Foreign Bonds Equity Securities: Common Stock Domestic Other Investments Derivative Assets Corporate Other (1) (In millions) Year Ended December 31, 2013: Balance at January 1, ...Realized gains (losses) ...Unrealized gains (losses) ...Purchases, sales...

  • Page 204
    ... are comprised of short-term investments, equity and fixed maturity securities, real estate and hedge fund investments. The assets of the non-U.S. pension plans, other than those held in participant directed investment accounts, are managed in accordance with investment policies consistent with the...

  • Page 205
    ... -% 100% 100% -% -% 100% (1) Fixed maturity securities include corporate and foreign bonds. (2) Equity securities primarily include common stock of non-U.S. companies. (3) Alternative securities include derivative assets, real estate, short-term investments, and other investments. The pension and...

  • Page 206
    ...the years ended December 31, 2013, 2012 and 2011, respectively, and included policy charges and net investment income from investments backing the contracts and administrative fees. Total investment income (loss), including realized and unrealized gains (losses), credited to the account balances was...

  • Page 207
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 19. Income Tax The provision for income tax from continuing operations was as follows: Years Ended December 31, 2013 2012 (In millions) 2011 Current: Federal ...State and local ...Foreign ...Subtotal ...Deferred: Federal ......

  • Page 208
    ... In accordance with the Closing Agreement, the Company completed its plan to transfer foreign branch assets to various MetLife foreign subsidiaries during 2013. As a result of these asset transfers and the filing of various foreign branch and U.S. income tax returns, the Company revised the estimate...

  • Page 209
    ... with the Closing Agreement. In December 2012, the Tokyo District Court ruled in favor of the Japan branch of American Life in a tax case related to the deduction of unrealized foreign exchange losses on certain securities held by American Life prior to its acquisition by MetLife. During the...

  • Page 210
    ... deduction ("DRD"), related to variable life insurance and annuity contracts. The DRD reduces the amount of dividend income subject to tax and is a significant component of the difference between the actual tax expense and expected amount determined using the federal statutory tax rate of 35%. Any...

  • Page 211
    ... net of income tax, available to MetLife, Inc.'s common shareholders ...Basic ...Diluted ...Net Income (Loss): Net income (loss) ...Less: Net income (loss) attributable to noncontrolling interests ...Less: Preferred stock dividends ...Preferred stock redemption premium ...Net income (loss) available...

  • Page 212
    ... the approximate total settlement payments made to resolve asbestos personal injury claims at or during those years are set forth in the following table: December 31, 2013 2012 2011 (In millions, except number of claims) Asbestos personal injury claims at year end ...Number of new claims during the...

  • Page 213
    ...issued by the Department of Financial Services regarding hazard insurance and flood insurance that MetLife Bank obtained to protect the lienholder's interest when the borrower's insurance has lapsed. In April and May 2012, MetLife Bank received two subpoenas issued by the Office of Inspector General...

  • Page 214
    ... relating to sales of individual life insurance policies or annuities or other products by MLIC, MICC, New England Life Insurance Company ("NELICO") and General American Life Insurance Company ("GALIC"), and broker-dealers MetLife Securities, Inc. and New England Securities Corporation. These...

  • Page 215
    ... Life Insurance Company (D. Nev., filed November 3, 2011) These putative class action lawsuits, which have been consolidated, raise breach of contract claims arising from MLIC's use of the TCA to pay life insurance benefits under the Federal Employees' Group Life Insurance program. On March 8, 2013...

  • Page 216
    ...have such damages trebled. Sales Practices Claims Over the past several years, the Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. Some of the current cases seek...

  • Page 217
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 21. Contingencies, Commitments and Guarantees (continued) On September 1, 2011, the Department of Financial Services filed a liquidation plan for Executive Life Insurance Company of New York ("ELNY"), which had been under ...

  • Page 218
    ... ...Net income (loss) ...Less: Net income (loss) attributable to noncontrolling interests ...Net income (loss) attributable to MetLife, Inc...Less: Preferred stock dividends ...Net income (loss) available to MetLife, Inc.'s common shareholders ...Basic earnings per common share: Income (loss) from...

  • Page 219
    ... the aggregate dividend payment to be $310 million. Disposition On February 14, 2014, the Company entered into a definitive agreement to sell its wholly-owned subsidiary, MetLife Assurance Limited. The Company expects to record a charge of between $350 million and $390 million, net of income tax...

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    ... Technology and Operations MARIA R. MORRIS Chief Executive Officer and Founder, Tupelo Capital Management, LLC Member, Governance and Corporate Responsibility Committee Member, Investment Committee of Metropolitan Life Insurance Company Executive Vice President and Head of Global Employee Benefits...

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    ...-room CORPORATE INFORMATION Corporate Profile MetLife, through its subsidiaries and affiliates, is a leading global provider of insurance, annuities and employee benefit programs. MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East...

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    CUMULATIVE TOTAL RETURN Based upon an initial investment of $100 on December 31, 2008 with dividends reinvested $250 $200 $150 $100 $50 $0 31-Dec-08 31-Dec-09 31-Dec-10 S&P 500 31-Dec-11 S&P 500 Insurance 31-Dec-12 31-Dec-13 MetLife Inc. S&P 500 Financials Source: Capital IQ 214 MetLife, ...

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    MetLife, Inc. 200 Park Avenue New York, NY 10166-0188 www.metlife.com PEANUTS © 2014 Peanuts Worldwide