MET-2014.3.31-10Q

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________
Form 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number: 001-15787
 ________________________________________
MetLife, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
13-4075851
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
200 Park Avenue, New York, N.Y.
 
10166-0188
(Address of principal executive offices)
 
(Zip Code)
(212) 578-2211
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
 
Accelerated filer o
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
At April 30, 2014, 1,125,577,419 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
 
 


Table of Contents
 
 
 
Page
 
Item 1.
Financial Statements (at March 31, 2014 (Unaudited) and December 31, 2013 and for the Three Months Ended March 31, 2014 and 2013 (Unaudited))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.  
Item 4.  
 
 
 
 
Item 1.  
Item 1A.
Item 2.  
Item 6.  
 
 
 
 
 
 

Table of Contents

As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates.
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, including 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. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) increased volatility and disruption of the capital and credit markets, which may affect our ability to meet liquidity needs and access capital, including through our credit facilities, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets, including assets supporting risks ceded to certain of our captive reinsurers or hedging arrangements associated with those risks; (3) exposure to financial and capital market risks, including as a result of the disruption in Europe; (4) impact of comprehensive financial services regulation reform on us, as a potential non-bank systemically important financial institution, or otherwise; (5) numerous rulemaking initiatives required or permitted by the Dodd-Frank Wall Street Reform and Consumer Protection Act which may impact how we conduct our business, including those compelling the liquidation of certain financial institutions; (6) regulatory, legislative or tax changes relating to our insurance, international, or other operations that may affect the cost of, or demand for, our products or services, or increase the cost or administrative burdens of providing benefits to employees; (7) adverse results or other consequences from litigation, arbitration or regulatory investigations; (8) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (9) investment losses and defaults, and changes to investment valuations; (10) changes in assumptions related to investment valuations, 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 institutions that could adversely affect us; (14) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (15) downgrades in our claims paying ability, financial strength or credit ratings; (16) a deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (17) availability and effectiveness of reinsurance or indemnification arrangements, as well as any default or failure of counterparties to perform; (18) differences between actual claims experience and underwriting and reserving assumptions; (19) ineffectiveness of risk management policies and procedures; (20) catastrophe losses; (21) increasing cost and limited market capacity for statutory life insurance reserve financings; (22) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, and for personnel; (23) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (24) our ability to address difficulties, unforeseen liabilities, asset impairments, or rating agency actions arising from business acquisitions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company, and integrating and managing the growth of such acquired businesses, or arising from dispositions of businesses or legal entity reorganizations; (25) the dilutive impact on our stockholders resulting from the settlement of our outstanding common equity units; (26) regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (27) MetLife, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (28) the possibility that MetLife, Inc.’s Board of Directors may influence the outcome of stockholder votes through the voting provisions of the MetLife Policyholder Trust; (29) changes in accounting standards, practices and/or policies; (30) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (31) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (32) inability to attract and retain sales representatives; (33) provisions of laws and our incorporation documents may delay, deter or prevent takeovers and corporate combinations involving MetLife; (34) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on the value of our investment portfolio, our disaster recovery systems, cyber- or other information security systems and management continuity planning; (35) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (36) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.
Note Regarding Reliance on Statements in Our Contracts
See “Exhibit Index — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.

2
Table of Contents
MetLife, Inc.
Interim Condensed Consolidated Balance Sheets
March 31, 2014 (Unaudited) and December 31, 2013
(In millions, except share and per share data)

Part I — Financial Information
Item 1. Financial Statements
 
 
March 31, 2014
 
December 31, 2013
Assets
 
 
 
 
Investments:
 
 
 
 
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $332,542 and $ 333,599, respectively; includes $4,152 and $4,005, respectively, relating to variable interest entities)
 
$
355,069

 
$
350,187

Equity securities available-for-sale, at estimated fair value (cost: $3,241 and $3,012, respectively)
 
3,693

 
3,402

Fair value option and trading securities, at estimated fair value (includes $628 and $662, respectively, of actively traded securities; and $88 and $92, respectively, relating to variable interest entities)
 
17,494

 
17,423

Mortgage loans (net of valuation allowances of $326 and $322, respectively; includes $1,140 and $1,621, respectively, at estimated fair value, relating to variable interest entities; includes $352 and $338, respectively, under the fair value option)
 
57,139

 
57,706

Policy loans (includes $3 and $2, respectively, relating to variable interest entities)
 
11,762

 
11,764

Real estate and real estate joint ventures (includes $9 and $1,141, respectively, relating to variable interest entities, includes $1 and $186, respectively, of real estate held-for-sale)
 
9,930

 
10,712

Other limited partnership interests (includes $53 and $53, respectively, relating to variable interest entities)
 
7,819

 
7,401

Short-term investments, principally at estimated fair value (includes $6 and $8, respectively, relating to variable interest entities)
 
13,908

 
13,955

Other invested assets, principally at estimated fair value (includes $71 and $78, respectively, relating to variable interest entities)
 
16,433

 
16,229

Total investments
 
493,247

 
488,779

Cash and cash equivalents, principally at estimated fair value (includes $45 and $70, respectively, relating to variable interest entities)
 
8,573

 
7,585

Accrued investment income (includes $28 and $26, respectively, relating to variable interest entities)
 
4,446

 
4,255

Premiums, reinsurance and other receivables (includes $27 and $22, respectively, relating to variable interest entities)
 
23,031

 
21,859

Deferred policy acquisition costs and value of business acquired (includes $263 and $255, respectively, relating to variable interest entities)
 
26,352

 
26,706

Goodwill
 
10,433

 
10,542

Other assets (includes $139 and $152, respectively, relating to variable interest entities)
 
8,387

 
8,369

Separate account assets (includes $1,099 and $1,033, respectively, relating to variable interest entities)
 
316,434

 
317,201

Total assets
 
$
890,903

 
$
885,296

Liabilities and Equity
 
 
 
 
Liabilities
 
 
 
 
Future policy benefits (includes $591 and $516, respectively, relating to variable interest entities)
 
$
189,970

 
$
187,942

Policyholder account balances (includes $63 and $56, respectively, relating to variable interest entities)
 
209,498

 
212,885

Other policy-related balances (includes $125 and $123, respectively, relating to variable interest entities)
 
15,369

 
15,214

Policyholder dividends payable
 
656

 
675

Policyholder dividend obligation
 
2,463

 
1,771

Payables for collateral under securities loaned and other transactions
 
32,469

 
30,411

Short-term debt
 
100

 
175

Long-term debt (includes $996 and $1,868, respectively, at estimated fair value, relating to variable interest entities)
 
16,793

 
18,653

Collateral financing arrangements
 
4,196

 
4,196

Junior subordinated debt securities
 
3,193

 
3,193

Current income tax payable
 
239

 
186

Deferred income tax liability
 
8,906

 
6,643

Other liabilities (includes $79 and $88, respectively, relating to variable interest entities)
 
24,178

 
23,168

Separate account liabilities (includes $1,099 and $1,033, respectively, relating to variable interest entities)
 
316,434

 
317,201

Total liabilities
 
824,464

 
822,313

Contingencies, Commitments and Guarantees (Note 13)
 

 

Redeemable noncontrolling interests
 
107

 
887

Equity
 
 
 
 
MetLife, Inc.’s stockholders’ equity:
 
 
 
 
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference
 
1

 
1

Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,127,994,116 and 1,125,224,024 shares issued at March 31, 2014 and December 31, 2013, respectively; 1,124,800,229 and 1,122,030,137 shares outstanding at March 31, 2014 and December 31, 2013, respectively
 
11

 
11

Additional paid-in capital
 
29,384

 
29,277

Retained earnings
 
28,319

 
27,332

Treasury stock, at cost; 3,193,887 shares at March 31, 2014 and December 31, 2013
 
(172
)
 
(172
)
Accumulated other comprehensive income (loss)
 
8,215

 
5,104

Total MetLife, Inc.’s stockholders’ equity
 
65,758

 
61,553

Noncontrolling interests
 
574

 
543

Total equity
 
66,332

 
62,096

Total liabilities and equity
 
$
890,903

 
$
885,296

See accompanying notes to the interim condensed consolidated financial statements.

3
Table of Contents

MetLife, Inc.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended March 31, 2014 and 2013 (Unaudited)
(In millions, except per share data)

 
Three Months 
 Ended 
 March 31,
 
2014
 
2013
Revenues
 
 
 
Premiums
$
9,219

 
$
9,151

Universal life and investment-type product policy fees
2,421

 
2,291

Net investment income
5,035

 
6,077

Other revenues
478

 
480

Net investment gains (losses):

 
 
Other-than-temporary impairments on fixed maturity securities
(14
)
 
(29
)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)
4

 
(31
)
Other net investment gains (losses)
(401
)
 
374

Total net investment gains (losses)
(411
)
 
314

Net derivative gains (losses)
343

 
(630
)
Total revenues
17,085

 
17,683

Expenses
 
 
 
Policyholder benefits and claims
9,324

 
9,395

Interest credited to policyholder account balances
1,469

 
2,590

Policyholder dividends
303

 
313

Other expenses
4,163

 
4,138

Total expenses
15,259

 
16,436

Income (loss) from continuing operations before provision for income tax
1,826

 
1,247

Provision for income tax expense (benefit)
484

 
252

Income (loss) from continuing operations, net of income tax
1,342

 
995

Income (loss) from discontinued operations, net of income tax
(3
)
 
(3
)
Net income (loss)
1,339

 
992

Less: Net income (loss) attributable to noncontrolling interests
11

 
6

Net income (loss) attributable to MetLife, Inc.
1,328

 
986

Less: Preferred stock dividends
30

 
30

Net income (loss) available to MetLife, Inc.’s common shareholders
$
1,298

 
$
956

Comprehensive income (loss)
$
4,482

 
$
178

Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax
43

 
9

Comprehensive income (loss) attributable to MetLife, Inc.
$
4,439

 
$
169

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
 
 
 
Basic
$
1.15

 
$
0.87

Diluted
$
1.14

 
$
0.87

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
 
 
 
Basic
$
1.15

 
$
0.87

Diluted
$
1.14

 
$
0.87

Cash dividends declared per common share
$
0.275

 
$
0.185

See accompanying notes to the interim condensed consolidated financial statements.


4
Table of Contents

MetLife, Inc.
Interim Condensed Consolidated Statements of Equity
For the Three Months Ended March 31, 2014 (Unaudited)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Net
Unrealized
Investment
Gains 
(Losses)
 
Other-Than-
Temporary
Impairments
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit Plans
Adjustment
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests (1)
 
Total
Equity
Balance at December 31, 2013
$
1

 
$
11

 
$
29,277

 
$
27,332

 
$
(172
)
 
$
8,553

 
$
(139
)
 
$
(1,659
)
 
$
(1,651
)
 
$
61,553

 
$
543

 
$
62,096

Stock-based compensation
 
 
 
 
107

 
 
 
 
 
 
 
 
 
 
 
 
 
107

 
 
 
107

Dividends on preferred stock
 
 
 
 
 
 
(30
)
 
 
 
 
 
 
 
 
 
 
 
(30
)
 
 
 
(30
)
Dividends on common stock
 
 
 
 
 
 
(311
)
 
 
 
 
 
 
 
 
 
 
 
(311
)
 
 
 
(311
)
Change in equity of noncontrolling interests
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(12
)
 
(12
)
Net income (loss)
 
 
 
 
 
 
1,328

 
 
 
 
 
 
 
 
 
 
 
1,328

 
11

 
1,339

Other comprehensive income (loss), net of income tax
 
 
 
 
 
 
 
 
 
 
3,242

 
24

 
(184
)
 
29

 
3,111

 
32

 
3,143

Balance at March 31, 2014
$
1

 
$
11

 
$
29,384

 
$
28,319

 
$
(172
)
 
$
11,795

 
$
(115
)
 
$
(1,843
)
 
$
(1,622
)
 
$
65,758

 
$
574

 
$
66,332

__________________
(1)
Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests of less than $1 million.
See accompanying notes to the interim condensed consolidated financial statements.

5
Table of Contents


MetLife, Inc.
Interim Condensed Consolidated Statements of Equity — (Continued)
For the Three Months Ended March 31, 2013 (Unaudited)
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional Paid-in Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Net
Unrealized
Investment
Gains
(Losses)
 
Other-Than-
Temporary
Impairments
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit Plans
Adjustment
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests (1)
 
Total
Equity
Balance at December 31, 2012
$
1

 
$
11

 
$
28,011

 
$
25,205

 
$
(172
)
 
$
14,642

 
$
(223
)
 
$
(533
)
 
$
(2,489
)
 
$
64,453

 
$
384

 
$
64,837

Stock-based compensation
 
 
 
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
100

 
 
 
100

Dividends on preferred stock
 
 
 
 
 
 
(30
)
 
 
 
 
 
 
 
 
 
 
 
(30
)
 
 
 
(30
)
Dividends on common stock
 
 
 
 
 
 
(203
)
 
 
 
 
 
 
 
 
 
 
 
(203
)
 
 
 
(203
)
Change in equity of noncontrolling interests
 
 
 
 
(39
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(39
)
 
29

 
(10
)
Net income (loss)
 
 
 
 
 
 
986

 
 
 
 
 
 
 
 
 
 
 
986

 
6

 
992

Other comprehensive income (loss), net of income tax
 
 
 
 
 
 
 
 
 
 
(241
)
 
59

 
(672
)
 
37

 
(817
)
 
3

 
(814
)
Balance at March 31, 2013
$
1

 
$
11

 
$
28,072

 
$
25,958

 
$
(172
)
 
$
14,401

 
$
(164
)
 
$
(1,205
)
 
$
(2,452
)
 
$
64,450

 
$
422

 
$
64,872

__________________
(1)
Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests of less than $1 million.
See accompanying notes to the interim condensed consolidated financial statements.


6
Table of Contents
MetLife, Inc.
Interim Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2014 and 2013 (Unaudited)
(In millions)

 
Three Months 
 Ended 
 March 31,
 
2014
 
2013
Net cash provided by (used in) operating activities
$
2,484

 
$
2,733

Cash flows from investing activities
 
 
 
Sales, maturities and repayments of:
 
 
 
Fixed maturity securities
27,904

 
30,024

Equity securities
72

 
249

Mortgage loans
2,973

 
2,510

Real estate and real estate joint ventures
260

 
86

Other limited partnership interests
220

 
225

Purchases of:
 
 
 
Fixed maturity securities
(24,954
)
 
(34,698
)
Equity securities
(209
)
 
(389
)
Mortgage loans
(2,483
)
 
(1,764
)
Real estate and real estate joint ventures
(578
)
 
(426
)
Other limited partnership interests
(485
)
 
(481
)
Cash received in connection with freestanding derivatives
395

 
330

Cash paid in connection with freestanding derivatives
(1,045
)
 
(2,428
)
Sales of businesses (1)
—

 
373

Sale of bank deposits
—

 
(6,395
)
Net change in policy loans
(2
)
 
(52
)
Net change in short-term investments
47

 
3,303

Net change in other invested assets
115

 
(226
)
Other, net
(66
)
 
40

Net cash provided by (used in) investing activities
2,164

 
(9,719
)
Cash flows from financing activities
 
 
 
Policyholder account balances:
 
 
 
Deposits
19,004

 
21,370

Withdrawals
(22,628
)
 
(20,034
)
Net change in payables for collateral under securities loaned and other transactions
2,058

 
528

Net change in bank deposits
—

 
8

Net change in short-term debt
(75
)
 
—

Long-term debt repaid
(1,460
)
 
(240
)
Dividends on preferred stock
(30
)
 
(30
)
Dividends on common stock
(311
)
 
(203
)
Other, net
(217
)
 
(75
)
Net cash provided by (used in) financing activities
(3,659
)
 
1,324

Effect of change in foreign currency exchange rates on cash and cash equivalents balances
(1
)
 
(93
)
Change in cash and cash equivalents
988

 
(5,755
)
Cash and cash equivalents, beginning of period
7,585

 
15,738

Cash and cash equivalents, end of period
$
8,573

 
$
9,983

Supplemental disclosures of cash flow information:
 
 
 
Net cash paid (received) for:
 
 
 
Interest
$
245

 
$
264

Income tax
$
97

 
$
217

Non-cash transactions:
 
 
 
Real estate and real estate joint ventures acquired in satisfaction of debt
$
—

 
$
55

Deconsolidation of MetLife Core Property Fund (see Note 6):
 
 
 
Reduction of redeemable noncontrolling interests
$
774

 
$
—

Reduction of long-term debt
$
413

 
$
—

Reduction of real estate and real estate joint ventures
$
1,132

 
$
—

__________________
(1)
See Note 3 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report.
See accompanying notes to the interim condensed consolidated financial statements.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)


1. Business, Basis of Presentation and Summary of Significant Accounting Policies
Business
“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. 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. 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: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively, the “Americas”); Asia; and Europe, the Middle East and Africa (“EMEA”).
Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from estimates.
The accompanying interim condensed consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.
Certain international subsidiaries have a fiscal year-end of November 30. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of such subsidiaries as of February 28, 2014 and November 30, 2013 and the operating results of such subsidiaries for the three months ended February 28, 2014 and 2013.
The Company uses the equity method of accounting for investments in equity securities when it has significant influence or at least 20% interest and for investments in real estate joint ventures and other limited partnership interests (“investees”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations, but does not have a controlling financial interest. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. The Company uses the cost method of accounting for investments in which it has virtually no influence over the investee’s operations.
Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2014 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements.
The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2013 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2013 Annual Report.

8
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Adoption of New Accounting Pronouncements
Effective January 1, 2014, the Company adopted new guidance regarding reporting of discontinued operations and disclosures of disposals of components of an entity. The guidance increases the threshold for a disposal to qualify as a discontinued operation, expands the disclosures for discontinued operations and requires new disclosures for certain disposals that do not meet the definition of a discontinued operation. Disposals must now represent a strategic shift that has or will have a major effect on the entity’s operations and financial results to qualify as discontinued operations. As discussed in Note 3, the Company has entered into a definitive agreement to sell its wholly-owned subsidiary, MetLife Assurance Limited (“MAL”). As a result of the adoption of this new guidance, the results of operations of MAL and the estimated loss on sale have been included in income from continuing operations.
Effective January 1, 2014, the Company adopted new guidance regarding the presentation of an unrecognized tax benefit. The new guidance requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. However, when the carryforwards are not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position or the applicable tax law does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit will be presented in the financial statements as a liability and will not be combined with the related deferred tax asset. The adoption was prospectively applied and resulted in a reduction to other liabilities and a corresponding increase to deferred income tax liability in the amount of $277 million.
Effective January 1, 2014, the Company adopted new guidance regarding foreign currency that requires an entity that ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. The new guidance did not have a material impact on the financial statements upon adoption.
Effective January 1, 2014, the Company adopted new guidance regarding liabilities that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. In addition, the amendments require an entity to disclose the nature and amount of the obligation, as well as other information about the obligation. The new guidance did not have a material impact on the financial statements upon adoption.
Effective January 1, 2014, the Company adopted new guidance on other expenses which address how health insurers should recognize and classify in their income statements fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. The amendments in this standard specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using the straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. In accordance with the adoption of the new accounting pronouncement on January 1, 2014, the Company recorded $57 million in other liabilities, and a corresponding deferred cost, in other assets.
Future Adoption of New Accounting Pronouncements
In January 2014, the Financial Accounting Standards Board issued new guidance regarding investments (Accounting Standards Update 2014-01, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects). This guidance is applicable to investments in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. Under the guidance, an entity that meets certain conditions is permitted to make an accounting policy election to amortize the initial cost of its investment in proportion to the tax credits and other tax benefits received and recognize the net investment performance on the statement of operations as a component of income tax expense (benefit). The new guidance is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014, and should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

9
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information
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 EMEA. In addition, the Company reports certain of its results of operations in Corporate & Other.
Americas
The Americas consists of the following segments:
Retail
The Retail segment offers a broad range of protection products and services and a variety of annuities to individuals and employees of corporations and other institutions, and is organized into two businesses: Life & Other and Annuities. Life & Other insurance products and services include variable life, universal life, term life and whole life products. Additionally, through broker-dealer affiliates, the Company offers a full range of mutual funds and other securities products. Life & Other products and services also include individual disability income products and personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance. Annuities includes a variety of variable and fixed annuities which provide for both asset accumulation and asset distribution needs.
Group, Voluntary & Worksite Benefits
The Group, Voluntary & Worksite Benefits segment offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into two businesses: Group and Voluntary & Worksite. Group insurance 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 (“AD&D”) coverages. The Voluntary & Worksite business includes personal lines property & casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance offered to employees on a voluntary basis. The Voluntary & Worksite business also includes long-term care, prepaid legal plans and critical illness products.
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, AD&D 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.

10
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information (continued)

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 business activities including 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 the investment management business through which the Company offers 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 (“Divested Businesses”). 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 guaranteed minimum income benefits (“GMIBs”) 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.

11
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information (continued)

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 policyholder account balances (“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 deferred policy acquisition costs (“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;
•
Amortization of negative VOBA excludes amounts related to Market Value Adjustments;
•
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
•
Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and (iii) acquisition and integration costs.
Operating earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
In the first quarter of 2014, MetLife, Inc. began reporting the operations of MAL as divested business. See Note 3. Consequently, the results for Corporate Benefit Funding and Corporate & Other have decreased by $5 million, net of $3 million of income tax, and $3 million, net of $2 million of income tax, respectively, for the three months ended March 31, 2013.
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 ended March 31, 2014 and 2013. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for operating 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 the Company’s business.
The Company’s economic capital model 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 and applying an industry standard method for the inclusion of diversification benefits among risk types.
For the Company’s domestic segments, 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, operating earnings or income (loss) from continuing operations, net of income tax.
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.

12
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information (continued)

 
 
Operating Earnings
 
 
 
 

 
Americas
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
 
Retail
 
Group,
Voluntary
& Worksite
Benefits
 
Corporate
Benefit
Funding
 
Latin
America
 
Total
 
Asia
 
EMEA
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
1,724

 
$
4,002

 
$
301

 
$
668

 
$
6,695

 
$
1,890

 
$
597

 
$
35

 
$
9,217

 
$
2

 
$
9,219

Universal life and investment-type product policy fees
 
1,247

 
177

 
57

 
311

 
1,792

 
389

 
109

 
33

 
2,323

 
98

 
2,421

Net investment income
 
2,014

 
453

 
1,410

 
325

 
4,202

 
693

 
123

 
67

 
5,085

 
(50
)
 
5,035

Other revenues
 
245

 
107

 
68

 
7

 
427

 
27

 
16

 
21

 
491

 
(13
)
 
478

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(411
)
 
(411
)
Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
343

 
343

Total revenues
 
5,230

 
4,739

 
1,836

 
1,311

 
13,116

 
2,999

 
845

 
156

 
17,116

 
(31
)
 
17,085

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
2,407

 
3,781

 
888

 
604

 
7,680

 
1,397

 
261

 
35

 
9,373

 
254

 
9,627

Interest credited to policyholder account balances
 
555

 
40

 
278

 
98

 
971

 
387

 
34

 
9

 
1,401

 
68

 
1,469

Capitalization of DAC
 
(234
)
 
(34
)
 
(1
)
 
(89
)
 
(358
)
 
(494
)
 
(176
)
 
(18
)
 
(1,046
)
 
—

 
(1,046
)
Amortization of DAC and VOBA
 
429

 
36

 
4

 
79

 
548

 
338

 
164

 
—

 
1,050

 
8

 
1,058

Amortization of negative VOBA
 
—

 
—

 
—

 
—

 
—

 
(94
)
 
(9
)
 
—

 
(103
)
 
(12
)
 
(115
)
Interest expense on debt
 
—

 
—

 
2

 
—

 
2

 
—

 
—

 
292

 
294

 
18

 
312

Other expenses
 
1,142

 
628

 
120

 
402

 
2,292

 
990

 
456

 
213

 
3,951

 
3

 
3,954

Total expenses
 
4,299

 
4,451

 
1,291

 
1,094

 
11,135

 
2,524

 
730

 
531

 
14,920

 
339

 
15,259

Provision for income tax expense (benefit)
 
319

 
100

 
190

 
34

 
643

 
147

 
27

 
(213
)
 
604

 
(120
)
 
484

Operating earnings
 
$
612

 
$
188

 
$
355

 
$
183

 
$
1,338

 
$
328

 
$
88

 
$
(162
)
 
1,592

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(31
)
 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(339
)
 
 
 
 
Provision for income tax (expense) benefit
 
120

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
$
1,342

 
 
 
$
1,342


13
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information (continued)

 
 
Operating Earnings
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2013
 
Retail
 
Group,
Voluntary
& Worksite
Benefits
 
Corporate
Benefit
Funding
 
Latin
America
 
Total
 
Asia
 
EMEA
 
Corporate
& Other
 
Total
 
Adjustments
 
Total
Consolidated
 
 
(In millions)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 
$
1,547

 
$
3,874

 
$
416

 
$
675

 
$
6,512

 
$
1,998

 
$
567

 
$
26

 
$
9,103

 
$
48

 
$
9,151

Universal life and investment-type product policy fees
 
1,167

 
180

 
68

 
225

 
1,640

 
444

 
91

 
36

 
2,211

 
80

 
2,291

Net investment income
 
1,961

 
453

 
1,390

 
277

 
4,081

 
732

 
128

 
141

 
5,082

 
995

 
6,077

Other revenues
 
243

 
108

 
73

 
4

 
428

 
13

 
27

 
13

 
481

 
(1
)
 
480

Net investment gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
314

 
314

Net derivative gains (losses)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(630
)
 
(630
)
Total revenues
 
4,918

 
4,615

 
1,947

 
1,181

 
12,661

 
3,187

 
813

 
216

 
16,877

 
806

 
17,683

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policyholder benefits and claims and policyholder dividends
 
2,153

 
3,640

 
1,017

 
554

 
7,364

 
1,415

 
237

 
9

 
9,025

 
683

 
9,708

Interest credited to policyholder account balances
 
579

 
39

 
343

 
104

 
1,065

 
442

 
35

 
12

 
1,554

 
1,036

 
2,590

Capitalization of DAC
 
(374
)
 
(33
)
 
(17
)
 
(105
)
 
(529
)
 
(546
)
 
(177
)
 
(4
)
 
(1,256
)
 
—

 
(1,256
)
Amortization of DAC and VOBA
 
331

 
34

 
11

 
74

 
450

 
401

 
165

 
—

 
1,016

 
(192
)
 
824

Amortization of negative VOBA
 
—

 
—

 
—

 
(1
)
 
(1
)
 
(113
)
 
(17
)
 
—

 
(131
)
 
(15
)
 
(146
)
Interest expense on debt
 
—

 
—

 
2

 
(1
)
 
1

 
—

 
1

 
286

 
288

 
33

 
321

Other expenses
 
1,278

 
588

 
139

 
372

 
2,377

 
1,094

 
448

 
164

 
4,083

 
312

 
4,395

Total expenses
 
3,967

 
4,268

 
1,495

 
997

 
10,727

 
2,693

 
692

 
467

 
14,579

 
1,857

 
16,436

Provision for income tax expense (benefit)
 
325

 
117

 
158

 
41

 
641

 
161

 
34

 
(195
)
 
641

 
(389
)
 
252

Operating earnings
 
$
626

 
$
230

 
$
294

 
$
143

 
$
1,293

 
$
333

 
$
87

 
$
(56
)
 
1,657

 
 
 
 
Adjustments to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
806

 
 
 
 
Total expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,857
)
 
 
 
 
Provision for income tax (expense) benefit
 
389

 
 
 
 
Income (loss) from continuing operations, net of income tax
 
$
995

 
 
 
$
995



14
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

2. Segment Information (continued)

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 
March 31, 2014
 
December 31, 2013
 
(In millions)
Retail
$
354,461

 
$
349,516

Group, Voluntary & Worksite Benefits
44,346

 
43,404

Corporate Benefit Funding
223,163

 
220,612

Latin America
71,778

 
69,874

Asia
121,088

 
119,717

EMEA
30,522

 
33,382

Corporate & Other
45,545

 
48,791

Total
$
890,903

 
$
885,296

3. Pending Disposition
On February 14, 2014, the Company entered into a definitive agreement to sell its wholly-owned subsidiary, MAL, for an expected gross consideration of $705 million (£424 million) in cash. The transaction is expected to close in the second quarter of 2014, subject to regulatory approvals and satisfaction of other closing conditions. As a result of this agreement, an expected loss of $495 million ($343 million, net of income tax), which includes a reduction to goodwill of $60 million, was recorded for the three months ended March 31, 2014, and is reflected within net investment gains (losses) on the consolidated statement of operations and comprehensive income (loss). MAL’s results of operations are included in continuing operations and were historically reported in the Corporate Benefit Funding segment. See Note 2.
The carrying amount of major classes of assets and liabilities related to the MAL disposition were as follows at:
 
March 31, 2014
 
(In millions)
Total investments
$
5,028

Total assets
$
5,347

 
 
Other liabilities (1)
$
741

Future policy benefits
$
3,645

Total liabilities
$
4,508

__________________
(1)
Includes an estimate of $435 million ($292 million, net of income tax) related to the loss on sale.
4. Insurance
Guarantees
As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report, the Company issues variable annuity products with guaranteed minimum benefits. The non-life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that does not require annuitization are accounted for as embedded derivatives in PABs and are further discussed in Note 7.
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 the contractholder elects to annuitize (“two tier annuities”). These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit.
Based on the 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.

15
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

4. Insurance (continued)

Variable Annuity Guarantees
In the Event of Death
Defined as the death benefit less the total contract account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
At Annuitization
Defined as the amount (if any) that would be required to be added to the total contract account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved.
Two Tier Annuities
Defined as the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date. These contracts apply a lower rate on funds if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize.
Universal and Variable Life Contracts
Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.
Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts was as follows at:
 
March 31, 2014
 
December 31, 2013
 
In the
Event of Death
 
At
Annuitization
 
In the
Event of Death
 
At
Annuitization
 
(In millions)
Annuity Contracts (1)
 
 
 
 
 
 
 
Variable Annuity Guarantees
 
 
 
 
 
 
 
Total contract account value (2)
$
200,796

 
$
100,746

 
$
201,395

 
$
100,527

Separate account value
$
164,767

 
$
96,749

 
$
164,500

 
$
96,459

Net amount at risk
$
4,336

 
$
1,305

 
$
4,203

 
$
1,219

Average attained age of contractholders
64 years

 
64 years

 
63 years

 
63 years

Two Tier Annuities
 
 
 
 
 
 
 
General account value
N/A

 
$
1,021

 
N/A

 
$
880

Net amount at risk
N/A

 
$
313

 
N/A

 
$
234

Average attained age of contractholders
N/A

 
49 years

 
N/A

 
50 years

 
March 31, 2014
 
December 31, 2013
 
Secondary
Guarantees
 
Paid-Up
Guarantees
 
Secondary
Guarantees
 
Paid-Up
Guarantees
 
(In millions)
Universal and Variable Life Contracts (1)
 
 
 
 
 
 
 
Account value (general and separate account)
$
16,355

 
$
3,669

 
$
16,048

 
$
3,700

Net amount at risk
$
184,884

 
$
21,387

 
$
185,920

 
$
21,737

Average attained age of policyholders
56 years

 
60 years

 
55 years

 
60 years

__________________
(1)
The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.
(2)
Includes amounts, which are not reported in the consolidated balance sheets, from assumed reinsurance of certain variable annuity products from the Company’s former operating joint venture in Japan.

16
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

5. Closed Block
On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.
Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.
Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item.
Information regarding the closed block liabilities and assets designated to the closed block was as follows at:
 
March 31, 2014
 
December 31, 2013
 
(In millions)
Closed Block Liabilities
 
 
 
Future policy benefits
$
41,929

 
$
42,076

Other policy-related balances
328

 
298

Policyholder dividends payable
470

 
456

Policyholder dividend obligation
2,463

 
1,771

Current income tax payable
15

 
18

Other liabilities
608

 
582

Total closed block liabilities
45,813

 
45,201

Assets Designated to the Closed Block
 
 
 
Investments:
 
 
 
Fixed maturity securities available-for-sale, at estimated fair value
28,810

 
28,374

Equity securities available-for-sale, at estimated fair value
90

 
86

Mortgage loans
6,117

 
6,155

Policy loans
4,647

 
4,669

Real estate and real estate joint ventures
509

 
492

Other invested assets
935

 
814

Total investments
41,108

 
40,590

Cash and cash equivalents
375

 
238

Accrued investment income
496

 
477

Premiums, reinsurance and other receivables
67

 
98

Deferred income tax assets
292

 
293

Total assets designated to the closed block
42,338

 
41,696

Excess of closed block liabilities over assets designated to the closed block
3,475

 
3,505

Amounts included in accumulated other comprehensive income (loss) (“AOCI”):
 
 
 
Unrealized investment gains (losses), net of income tax
1,931

 
1,502

Unrealized gains (losses) on derivatives, net of income tax
(3
)
 
(3
)
Allocated to policyholder dividend obligation, net of income tax
(1,601
)
 
(1,151
)
Total amounts included in AOCI
327

 
348

Maximum future earnings to be recognized from closed block assets and liabilities
$
3,802

 
$
3,853


17
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

5. Closed Block (continued)

Information regarding the closed block policyholder dividend obligation was as follows:
 
Three Months 
 Ended 
 March 31, 2014
 
Year 
 Ended 
 December 31, 2013
 
(In millions)
Balance, beginning of period
$
1,771

 
$
3,828

Change in unrealized investment and derivative gains (losses)
692

 
(2,057
)
Balance, end of period
$
2,463

 
$
1,771

Information regarding the closed block revenues and expenses was as follows:
 
 
Three Months 
 Ended 
 March 31,
 
 
2014
 
2013
 
 
(In millions)
Revenues
 
 
 
 
Premiums
 
$
446

 
$
464

Net investment income
 
530

 
533

Net investment gains (losses)
 
—

 
3

Net derivative gains (losses)
 
(1
)
 
8

Total revenues
 
975

 
1,008

Expenses
 
 
 
 
Policyholder benefits and claims
 
624

 
643

Policyholder dividends
 
233

 
242

Other expenses
 
41

 
42

Total expenses
 
898

 
927

Revenues, net of expenses before provision for income tax expense (benefit)
 
77

 
81

Provision for income tax expense (benefit)
 
27

 
27

Revenues, net of expenses and provision for income tax expense (benefit)
 
$
50

 
$
54

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.

18
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

6. Investments
Fixed Maturity and Equity Securities Available-for-Sale
Fixed Maturity and Equity Securities Available-for-Sale by Sector
The following table presents the fixed maturity and equity securities available-for-sale (“AFS”) by sector. 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 residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”).
 
March 31, 2014
 
December 31, 2013
 
Cost or
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair
Value
 
Cost or
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair
Value
 

Gains
 
Temporary
Losses
 
OTTI
Losses
 

Gains
 
Temporary
Losses
 
OTTI
Losses
 
 
(In millions)
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. corporate
$
100,806

 
$
9,133

 
$
739

 
$
—

 
$
109,200

 
$
100,203

 
$
7,495

 
$
1,229

 
$
—

 
$
106,469

Foreign corporate
59,963

 
4,543

 
329

 
—

 
64,177

 
59,778

 
3,939

 
565

 
—

 
63,152

Foreign government
50,691

 
4,313

 
297

 
—

 
54,707

 
50,717

 
4,107

 
387

 
—

 
54,437

U.S. Treasury and agency
41,931

 
3,352

 
474

 
—

 
44,809

 
43,928

 
2,251

 
1,056

 
—

 
45,123

RMBS
36,047

 
1,728

 
405