MetLife 2013 Annual Report Download - page 109

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
2. Segment Information (continued)
Corporate Benefit Funding
The Corporate Benefit Funding segment offers a broad range of annuity and investment products, including guaranteed interest products and other
stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution
plan assets. This segment also includes structured settlements and certain products to fund postretirement benefits and company-, bank- or trust-
owned life insurance used to finance non-qualified benefit programs for executives.
Latin America
The Latin America segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective
employees, which include life insurance, accident and health insurance, group medical, dental, credit insurance, endowment and retirement & savings
products written in Latin America. Starting in the first quarter of 2013, the Latin America segment includes U.S. sponsored direct business, comprised
of group and individual products sold through sponsoring organizations and affinity groups. Products included are life, dental, group short- and long-
term disability, accidental death & dismemberment coverages, property & casualty and other accident and health coverages, as well as non-insurance
products such as identity protection.
Asia
The Asia segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective employees,
which include whole life, term life, variable life, universal life, accident and health insurance, fixed and variable annuities, credit insurance and endowment
products.
EMEA
The EMEA segment offers a broad range of products to both individuals and corporations, as well as other institutions and their respective
employees, which include life insurance, accident and health insurance, credit insurance, annuities, endowment and retirement & savings products.
Corporate & Other
Corporate & Other contains the excess capital not allocated to the segments, external integration costs, internal resource costs for associates
committed to acquisitions, enterprise-wide strategic initiative restructuring charges, and various start-up and certain run-off businesses. Start-up
businesses include expatriate benefits insurance, as well as direct and digital marketing products. Corporate & Other also includes assumed
reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan. Under this in-force reinsurance agreement,
the Company reinsures living and death benefit guarantees issued in connection with variable annuity products. Corporate & Other also includes our
investment management business through which we offer fee-based investment management services to institutional clients. Additionally, Corporate &
Other includes interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and
income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, which generally relate to intersegment loans, which
bear interest rates commensurate with related borrowings.
Financial Measures and Segment Accounting Policies
Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources.
Consistent with GAAP guidance for segment reporting, operating earnings is the Company’s measure of segment performance and is reported below.
Operating earnings should not be viewed as a substitute for income (loss) from continuing operations, net of income tax. The Company believes the
presentation of operating 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.
Operating earnings is defined as operating revenues less operating expenses, both net of income tax.
Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or
exited by MetLife. Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes
goodwill impairments.
The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating 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 GMIB fees (“GMIB Fees”);
‰Net investment income: (i) includes amounts for scheduled periodic settlement payments 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) includes income
from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for
under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain
amounts related to securitization entities that are VIEs consolidated under GAAP; and
‰Other revenues are adjusted for settlements of foreign currency earnings hedges.
The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:
‰Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment
gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed
investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets
and other pass through adjustments, (iii) benefits and hedging costs 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
on derivatives that are hedges of PABs but do not qualify for hedge accounting treatment and excludes amounts related to net investment income
earned on contractholder-directed unit-linked investments;
‰Amortization of DAC and 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;
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