MetLife 2013 Annual Report Download - page 15

Forward-Looking Statements and Other Financial Information
For purposes of this discussion, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999,
its subsidiaries and affiliates. Following this summary is a discussion addressing the consolidated results of operations and financial condition of the
Company for the periods indicated. This discussion should be read in conjunction with “Note Regarding Forward-Looking Statements,” “Selected
Financial Data,” “Quantitative and Qualitative Disclosures About Market Risk” and the Company’s consolidated financial statements included elsewhere
herein, and “Risk Factors” included in the 2013 Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain or incorporate by reference information
that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or
current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar
meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include
statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products,
sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results. Any or all forward-looking
statements may turn out to be wrong. Actual results could differ materially from those expressed or implied in the forward-looking statements. See “Note
Regarding Forward-Looking Statements.”
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes references to our performance measures,
operating earnings and operating earnings available to common shareholders, that are not based on accounting principles generally accepted in the
United States of America (“GAAP”). Operating earnings is the measure of segment profit or loss we use to evaluate segment performance and allocate
resources. Consistent with GAAP guidance for segment reporting, operating earnings is our measure of segment performance. Operating earnings is
also a measure by which senior management’s and many other employees’ performance is evaluated for the purposes of determining their
compensation under applicable compensation plans. See “— Non-GAAP and Other Financial Disclosures” for definitions of such measures.
Executive Summary
MetLife is a leading global provider of insurance, annuities and employee benefit programs throughout the United States, Japan, Latin America, Asia,
Europe and the Middle East. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, property & casualty insurance, and other
financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.
MetLife is organized into six segments, reflecting three broad geographic regions: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit
Funding; and Latin America (collectively, the “Americas”); Asia; and Europe, the Middle East and Africa (“EMEA”). In addition, the Company reports
certain of its results of operations in Corporate & Other, which includes MetLife Home Loans LLC (“MLHL”), the surviving, non-bank entity of the merger
of MetLife Bank, National Association (“MetLife Bank”) with and into MLHL. See Note 3 of the Notes to the Consolidated Financial Statements for
information regarding MetLife Bank’s exit from substantially all of its businesses (the “MetLife Bank Divestiture”) and other business activities. See
“Business” in the 2013 Form 10-K for further information on the Company’s segments and Corporate & Other.
On October 1, 2013, MetLife, Inc. completed its previously announced acquisition of Administradora de Fondos de Pensiones Provida S.A.
(“ProVida”), the largest private pension fund administrator in Chile based on assets under management and number of pension fund contributors. The
acquisition of ProVida supports the Company’s growth strategy in emerging markets and further strengthens the Company’s overall position in Chile.
See Note 3 of the Notes to the Consolidated Financial Statements for further information on the acquisition of ProVida.
In the second quarter of 2013, MetLife, Inc. announced its plans to merge three U.S.-based life insurance companies and an offshore reinsurance
subsidiary to create one larger U.S.-based and U.S.-regulated life insurance company (the “Mergers”). The companies to be merged are MetLife
Insurance Company of Connecticut (“MICC”), MetLife Investors USA Insurance Company (“MLI-USA”) and MetLife Investors Insurance Company
(“MLIIC”), each a U.S. insurance company that issues variable annuity products in addition to other products, and Exeter Reassurance Company, Ltd.
(“Exeter”), a reinsurance company that mainly reinsures guarantees associated with variable annuity products. MICC, which is expected to be renamed
and domiciled in Delaware, will be the surviving entity. Exeter, formerly a Cayman Islands company, was re-domesticated to Delaware in October 2013,
resulting in a redistribution of assets held in trust and the cancellation of outstanding letters of credit which were no longer required. See “— Liquidity
and Capital Resources — The Company — Liquidity and Capital Sources — Credit and Committed Facilities.” Effective January 1, 2014, following
receipt of New York State Department of Financial Services (“Department of Financial Services”) approval, MICC withdrew its license to issue insurance
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 of
$6.3 billion into a custodial account, which became restricted on January 1, 2014, to secure MICC’s remaining New York policyholder liabilities not
covered by such reinsurance. The Mergers are expected to occur in the fourth quarter of 2014, subject to regulatory approvals.
The Mergers (i) may mitigate to some degree the impact of any restrictions on the use of captive reinsurers that could be adopted by the Department
of Financial Services or other state insurance regulators by reducing our exposure to and use of captive reinsurers; (ii) will alleviate the need to use
holding company cash to fund derivative collateral requirements; (iii) will increase transparency relative to our capital allocation and variable annuity risk
management; and (iv) may impact the aggregate amount of dividends permitted to be paid without insurance regulatory approval. See “Business —
U.S. Regulation — Holding Company Regulation — Insurance Regulatory Examinations” in the 2013 Form 10-K and “— Liquidity and Capital Resources
— MetLife, Inc. — Liquidity and Capital Sources — Dividends from Subsidiaries” and Note 8 of the Notes to the Consolidated Financial Statements
elsewhere herein for further information on the impact of these Mergers and see “— Liquidity and Capital Resources — The Company — Capital —
Affiliated Captive Reinsurance Transactions” for information on our use of captive reinsurers. See also “Risk Factors — Acquisition-Related Risks —We
Could Face Difficulties, Unforeseen Liabilities, Asset Impairments or Rating Actions Arising from Business Acquisitions or Integrating and Managing
Growth of Such Businesses, Dispositions of Businesses, or Legal Entity Reorganizations” in the 2013 Form 10-K for information regarding the potential
impact on our operations if the Mergers or related regulatory approvals are prevented or delayed.
Management continues to evaluate the Company’s segment performance and allocated resources and may adjust related measurements in the
future to better reflect segment profitability. For example, 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 (“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 for further
information on the Company’s segments and Corporate & Other.
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