Edgar Filing: METLIFE INC

e10vq

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 SEPTEMBER 30, 2010
OR
o		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 (State or other jurisdiction of incorporation or organization)		13-4075851 (I.R.S. Employer Identification No.)

200 Park Avenue, New York, N.Y. (Address of principal executive offices)		10166-0188 (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 o

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 o

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 o (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 o No þ

At November 1, 2010, 985,254,724 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Table of Contents


	Page

Part I — Financial Information
Item 1. Financial Statements (at September 30, 2010 (Unaudited) and December 31, 2009 and for the Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited))		5
Interim Condensed Consolidated Balance Sheets		5
Interim Condensed Consolidated Statements of Operations		6
Interim Condensed Consolidated Statements of Stockholders’ Equity		7
Interim Condensed Consolidated Statements of Cash Flows		9
Notes to the Interim Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		123
Item 3. Quantitative and Qualitative Disclosures About Market Risk		199
Item 4. Controls and Procedures		209
Part II — Other Information		209
Item 1. Legal Proceedings		209
Item 1A. Risk Factors		213
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		219
Item 6. Exhibits		219
Signatures		221
Exhibit Index		E-1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”).

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the 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 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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 MetLife’s actual future results. 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) the imposition of onerous conditions following the acquisition of American Life Insurance Company (“ALICO”), a subsidiary of ALICO Holdings LLC (“ALICO Holdings”) and Delaware American Life Insurance Company (“DelAm”) (collectively, the “Acquisition”); (2) difficulties in integrating the business acquired in the Acquisition (the “Alico Business”); (3) uncertainty with respect to the outcome of the closing agreement entered into between ALICO and the United States Internal Revenue Service in connection with the Acquisition; (4) uncertainty with respect to the making of elections under Section 338 of the U.S. Internal Revenue Code of 1986, as amended, and any benefits therefrom; (5) an inability to manage the growth of the Alico Business; (6) a writedown of the goodwill established in connection with the Acquisition; (7) exchange rate fluctuations; (8) an inability to predict the financial impact of the Acquisition on MetLife’s business and financial results; (9) events relating to American International Group, Inc. (“AIG”) that could adversely affect the Alico Business or MetLife; (10) the dilutive impact on MetLife, Inc.’s stockholders resulting from the issuance of equity securities to ALICO Holdings in connection with the Acquisition; (11) a decrease in MetLife, Inc.’s stock price as a result of ALICO Holdings’ ability to sell its equity securities; (12) the conditional payment obligation of approximately $300 million to ALICO Holdings if the conversion of the Series B Contingent Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock (“Series B Preferred Stock”) issued to ALICO Holdings in connection with the Acquisition into MetLife, Inc.’s common stock is not approved; (13) change of control provisions in the Alico Business’ agreements; (14) effects of guarantees within certain of the Alico Business’ variable life and annuity products; (15) regulatory action in the financial services industry affecting the combined business; (16) financial instability in Europe and possible writedowns of sovereign debt of European nations; (17) difficult conditions in the global capital markets; (18) increased volatility and disruption of the capital and credit markets, which may affect MetLife’s ability to seek financing or access its credit facilities; (19) uncertainty about the effectiveness of the U.S. government’s programs to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (20) impact of comprehensive financial services regulation reform on MetLife; (21) exposure to financial and capital market risk; (22) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect MetLife’s ability to raise capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require MetLife to pledge collateral or make payments related to declines in value of specified assets; (23) potential liquidity and other risks resulting from MetLife’s participation in a securities lending program and other transactions; (24) investment losses and defaults, and changes to investment valuations; (25) impairments of goodwill and realized losses or market value impairments to illiquid assets; (26) defaults on MetLife’s mortgage loans; (27) the impairment of other financial institutions; (28) MetLife’s ability to address unforeseen liabilities, asset impairments, or rating actions arising from any future acquisitions or dispositions, and to successfully

integrate acquired businesses with minimal disruption; (29) economic, political, currency and other risks relating to MetLife’s international operations; (30) 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; (31) downgrades in MetLife, Inc.’s and its affiliates’ claims paying ability, financial strength or credit ratings; (32) ineffectiveness of risk management policies and procedures; (33) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (34) discrepancies between actual claims experience and assumptions used in setting prices for MetLife’s products and establishing the liabilities for MetLife’s obligations for future policy benefits and claims; (35) catastrophe losses; (36) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, distribution of amounts available under U.S. government programs, and for personnel; (37) unanticipated changes in industry trends; (38) changes in accounting standards, practices and/or policies; (39) changes in assumptions related to deferred policy acquisition costs (“DAC”), deferred sales inducements (“DSI”), value of business acquired (“VOBA”) or goodwill; (40) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (41) 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; (42) deterioration in the experience of the “closed block” established in connection with the reorganization of MLIC; (43) adverse results or other consequences from litigation, arbitration or regulatory investigations; (44) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (45) regulatory, legislative or tax changes relating to MetLife’s insurance, banking, international, or other operations that may affect the cost of, or demand for, MetLife’s products or services, impair its ability to attract and retain talented and experienced management and other employees, or increase the cost or administrative burdens of providing benefits to employees; (46) the effects of business disruption or economic contraction due to terrorism, other hostilities, or natural catastrophes; (47) the effectiveness of MetLife’s programs and practices in avoiding giving its associates incentives to take excessive risks; (48) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC; and (49) any of the foregoing factors as they relate to the Alico Business and its operations.

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

In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife, Inc., its subsidiaries or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:


	•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

	•	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

	•	may apply standards of materiality in a way that is different from what may be viewed as material to investors; and

	•	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about MetLife, Inc. and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife, Inc.’s other public filings, which are available without charge through the SEC website at www.sec.gov.

Part I — Financial Information


Item 1.	*Financial Statements*

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets
September 30, 2010 (Unaudited) and December 31, 2009

(In millions, except share and per share data)


	September 30,			December 31,
	2010			2009

Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $245,659 and $229,709, respectively; includes $3,283 and $3,171, respectively, relating to variable interest entities)	$	260,564		$	227,642
Equity securities available-for-sale, at estimated fair value (cost: $2,936 and $3,187, respectively)		2,865			3,084
Trading securities, at estimated fair value (cost: $3,870 and $2,249, respectively; includes $231 and $0, respectively, relating to variable interest entities)		3,987			2,384
Mortgage loans:
Held-for-investment, principally at amortized cost (net of valuation allowances of $666 and $721, respectively; includes $7,093 and $0, respectively, at estimated fair value, relating to variable interest entities)		57,098			48,181
Held-for-sale, principally at estimated fair value		2,840			2,728

Mortgage loans, net		59,938			50,909
Policy loans		10,230			10,061
Real estate and real estate joint ventures held-for-investment (includes $18 and $18, respectively, relating to variable interest entities)		6,981			6,852
Real estate held-for-sale		9			44
Other limited partnership interests (includes $197 and $236, respectively, relating to variable interest entities)		5,948			5,508
Short-term investments		11,590			8,374
Other invested assets (includes $102 and $137, respectively, relating to variable interest entities)		16,571			12,709

Total investments		378,683			327,567
Cash and cash equivalents (includes $62 and $68, respectively, relating to variable interest entities)		14,557			10,112
Accrued investment income (includes $37 and $0, respectively, relating to variable interest entities)		3,469			3,173
Premiums, reinsurance and other receivables		18,654			16,752
Deferred policy acquisition costs and value of business acquired		17,463			19,256
Current income tax recoverable		178			316
Deferred income tax assets		—			1,228
Goodwill		4,966			5,047
Other assets (includes $7 and $16, respectively, relating to variable interest entities)		6,913			6,822
Separate account assets		172,372			149,041

Total assets	$	617,255		$	539,314

Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits	$	143,686		$	135,879
Policyholder account balances		145,360			138,673
Other policyholder funds		8,912			8,446
Policyholder dividends payable		834			761
Policyholder dividend obligation		2,014			—
Payables for collateral under securities loaned and other transactions		31,891			24,196
Bank deposits		9,362			10,211
Short-term debt		2,057			912
Long-term debt (includes $7,130 and $64, respectively, at estimated fair value, relating to variable interest entities)		24,512			13,220
Collateral financing arrangements		5,297			5,297
Junior subordinated debt securities		3,191			3,191
Deferred income tax liability		3,543			—
Other liabilities (includes $100 and $26, respectively, relating to variable interest entities)		17,455			15,989
Separate account liabilities		172,372			149,041

Total liabilities		570,486			505,816

Contingencies, Commitments and Guarantees (Note 8)
Stockholders’ 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; 910,103,484 and 822,359,818 shares issued at September 30, 2010 and December 31, 2009, respectively; 906,909,597 and 818,833,810 shares outstanding at September 30, 2010 and December 31, 2009, respectively		9			8
Additional paid-in capital		20,451			16,859
Retained earnings		22,096			19,501
Treasury stock, at cost; 3,193,887 and 3,526,008 shares at September 30, 2010 and December 31, 2009, respectively		(172	)		(190	)
Accumulated other comprehensive income (loss)		4,030			(3,058	)

Total MetLife, Inc.’s stockholders’ equity		46,415			33,121
Noncontrolling interests		354			377

Total equity		46,769			33,498

Total liabilities and stockholders’ equity	$	617,255		$	539,314

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited)

(In millions, except per share data)


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009

Revenues
Premiums	$	6,562		$	6,601		$	20,078		$	19,299
Universal life and investment-type product policy fees		1,453			1,251			4,345			3,650
Net investment income		4,391			3,923			12,822			10,914
Other revenues		624			602			1,681			1,728
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(143	)		(650	)		(538	)		(1,769	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)		24			245			181			479
Other net investment gains (losses)		(223	)		(327	)		33			(1,500	)

Total net investment gains (losses)		(342	)		(732	)		(324	)		(2,790	)
Net derivatives gains (losses)		(244	)		(1,407	)		1,278			(4,084	)

Total revenues		12,444			10,238			39,880			28,717

Expenses
Policyholder benefits and claims		7,397			7,173			21,952			20,701
Interest credited to policyholder account balances		1,266			1,258			3,458			3,655
Policyholder dividends		392			439			1,157			1,297
Other expenses		2,996			2,543			9,358			7,576

Total expenses		12,051			11,413			35,925			33,229

Income (loss) from continuing operations before provision for income tax		393			(1,175	)		3,955			(4,512	)
Provision for income tax expense (benefit)		71			(551	)		1,259			(1,884	)

Income (loss) from continuing operations, net of income tax		322			(624	)		2,696			(2,628	)
Income (loss) from discontinued operations, net of income tax		(2	)		(1	)		5			37

Net income (loss)		320			(625	)		2,701			(2,591	)
Less: Net income (loss) attributable to noncontrolling interests		4			(5	)		(7	)		(25	)

Net income (loss) attributable to MetLife, Inc.		316			(620	)		2,708			(2,566	)
Less: Preferred stock dividends		30			30			91			91

Net income (loss) available to MetLife, Inc.’s common shareholders	$	286		$	(650	)	$	2,617		$	(2,657	)

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.33		$	(0.79	)	$	3.10		$	(3.30	)

Diluted	$	0.32		$	(0.79	)	$	3.08		$	(3.30	)

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.33		$	(0.79	)	$	3.11		$	(3.25	)

Diluted	$	0.32		$	(0.79	)	$	3.09		$	(3.25	)

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Stockholders’ Equity

For the Nine Months Ended September 30, 2010 (Unaudited)

(In millions)


													Accumulated Other Comprehensive Income (Loss)
													Net						Foreign			Defined			Total
					Additional					Treasury			Unrealized			Other-Than-			Currency			Benefit			MetLife, Inc.’s
	Preferred		Common		Paid-in		Retained			Stock			Investment			Temporary			Translation			Plans			Stockholders’			Noncontrolling			Total
	Stock		Stock		Capital		Earnings			at Cost			Gains (Losses)			Impairments			Adjustments			Adjustment			Equity			Interests			Equity

Balance at December 31, 2009	$	1	$	8	$	16,859	$	19,501		$	(190	)	$	(817	)	$	(513	)	$	(183	)	$	(1,545	)	$	33,121		$	377		$	33,498
Cumulative effect of change in accounting principle, net of income tax (Note 1)								(12	)					31			11									30						30

Balance at January 1, 2010		1		8		16,859		19,489			(190	)		(786	)		(502	)		(183	)		(1,545	)		33,151			377			33,528
Cumulative effect of change in accounting principle, net of income tax (Note 1)								(10	)					10												—						—
Common stock issuance — newly issued shares				1		3,528																				3,529						3,529
Stock-based compensation						64					18															82						82
Dividends on preferred stock								(91	)																	(91	)					(91	)
Change in equity of noncontrolling interests																													(22	)		(22	)
Comprehensive income (loss):
Net income (loss)								2,708																		2,708			(7	)		2,701
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax														409												409						409
Unrealized investment gains (losses), net of related offsets and income tax														6,268			357									6,625			(1	)		6,624
Foreign currency translation adjustments, net of income tax																				(92	)					(92	)		7			(85	)
Defined benefit plans adjustment, net of income tax																							94			94						94

Other comprehensive income (loss)																										7,036			6			7,042

Comprehensive income (loss)																										9,744			(1	)		9,743

Balance at September 30, 2010	$	1	$	9	$	20,451	$	22,096		$	(172	)	$	5,901		$	(145	)	$	(275	)	$	(1,451	)	$	46,415		$	354		$	46,769

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Stockholders’ Equity — (Continued)
For the Nine Months Ended September 30, 2009 (Unaudited)
(In millions)


														Accumulated Other Comprehensive Income (Loss)
														Net						Foreign			Defined			Total
					Additional						Treasury			Unrealized			Other-Than-			Currency			Benefit			MetLife, Inc.’s
	Preferred		Common		Paid-in			Retained			Stock			Investment			Temporary			Translation			Plans			Stockholders’			Noncontrolling			Total
	Stock		Stock		Capital			Earnings			at Cost			Gains (Losses)			Impairments			Adjustments			Adjustment			Equity			Interests			Equity

Balance at December 31, 2008	$	1	$	8	$	15,811		$	22,403		$	(236	)	$	(12,564	)	$	—		$	(246	)	$	(1,443	)	$	23,734		$	251		$	23,985
Cumulative effect of change in accounting principle, net of income tax									76									(76	)								—						—
Common stock issuance — newly issued shares						1,035																					1,035						1,035
Treasury stock transactions, net						20						42															62						62
Deferral of stock-based compensation						(1	)																				(1	)					(1	)
Dividends on preferred stock									(91	)																	(91	)					(91	)
Change in equity of noncontrolling interests																														109			109
Comprehensive income (loss):
Net loss									(2,566	)																	(2,566	)		(25	)		(2,591	)
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax															—												—						—
Unrealized investment gains (losses), net of related offsets and income tax															12,092			(251	)								11,841			(10	)		11,831
Foreign currency translation adjustments, net of income tax																					134						134						134
Defined benefit plans adjustment, net of income tax																								120			120						120

Other comprehensive income (loss)																											12,095			(10	)		12,085

Comprehensive income (loss)																											9,529			(35	)		9,494

Balance at September 30, 2009	$	1	$	8	$	16,865		$	19,822		$	(194	)	$	(472	)	$	(327	)	$	(112	)	$	(1,323	)	$	34,268		$	325		$	34,593

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2010 and 2009 (Unaudited)

(In millions)


	Nine Months
	Ended
	September 30,
	2010			2009

Net cash provided by operating activities	$	5,193		$	2,718

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		55,618			48,802
Equity securities		1,002			1,900
Mortgage loans		4,474			5,145
Real estate and real estate joint ventures		135			23
Other limited partnership interests		311			824
Purchases of:
Fixed maturity securities		(69,997	)		(63,363	)
Equity securities		(638	)		(1,543	)
Mortgage loans		(5,888	)		(4,204	)
Real estate and real estate joint ventures		(474	)		(466	)
Other limited partnership interests		(745	)		(570	)
Cash received in connection with freestanding derivatives		1,717			3,062
Cash paid in connection with freestanding derivatives		(1,949	)		(4,672	)
Sales of businesses, net of cash disposed of $0 and $180, respectively		—			(50	)
Disposal of subsidiary		—			(19	)
Net change in policy loans		(169	)		(199	)
Net change in short-term investments		(3,152	)		7,022
Net change in other invested assets		501			1,080
Other, net		(115	)		(129	)

Net cash used in investing activities		(19,369	)		(7,357	)

Cash flows from financing activities
Policyholder account balances:
Deposits		53,709			62,229
Withdrawals		(50,126	)		(64,382	)
Net change in payables for collateral under securities loaned and other transactions		7,695			(6,696	)
Net change in bank deposits		(959	)		1,368
Net change in short-term debt		1,145			(528	)
Long-term debt issued		4,590			2,625
Long-term debt repaid		(689	)		(244	)
Collateral financing arrangements issued		—			105
Cash received in connection with collateral financing arrangements		—			400
Cash paid in connection with collateral financing arrangements		—			(400	)
Junior subordinated debt securities issued		—			500
Debt issuance costs		(14	)		(22	)
Common stock issued, net of issuance costs		3,557			—
Common stock issued to settle stock forward contracts		—			1,035
Dividends on preferred stock		(91	)		(91	)
Other, net		(188	)		(25	)

Net cash provided by (used in) financing activities		18,629			(4,126	)

Effect of change in foreign currency exchange rates on cash balances		(8	)		88

Change in cash and cash equivalents		4,445			(8,677	)
Cash and cash equivalents, beginning of period		10,112			24,239

Cash and cash equivalents, end of period	$	14,557		$	15,562

Cash and cash equivalents, subsidiaries held-for-sale, beginning of period	$	—		$	32

Cash and cash equivalents, subsidiaries held-for-sale, end of period	$	—		$	—

Cash and cash equivalents, from continuing operations, beginning of period	$	10,112		$	24,207

Cash and cash equivalents, from continuing operations, end of period	$	14,557		$	15,562

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Interest	$	997		$	611

Income tax	$	109		$	298

Non-cash transactions during the period:
Remarketing of debt securities:
Fixed maturity securities redeemed	$	—		$	32

Long-term debt issued	$	—		$	1,035

Junior subordinated debt securities redeemed	$	—		$	1,067

Real estate and real estate joint ventures acquired in satisfaction of debt	$	92		$	211

Purchase money mortgages on sales of real estate joint ventures	$	—		$	74

See accompanying notes to the interim condensed consolidated financial statements.

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 (the “Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”). MetLife is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin America, Asia Pacific and Europe, Middle East and India regions. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, auto and homeowners insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.

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.

On November 1, 2010, the Holding Company acquired all of the issued and outstanding capital stock of American Life Insurance Company (“ALICO”), and Delaware American Life Insurance Company (“DelAm”) from ALICO Holdings LLC (“ALICO Holdings”), a subsidiary of American International Group, Inc., (collectively, the “Acquisition”) which is more fully described in Note 15. The assets acquired and liabilities assumed, the consideration paid for the acquired business (the “Alico Business”) and the results of operations of the Alico Business, are not reflected in the accompanying interim condensed consolidated financial statements. However, the Company has issued senior debt and common stock, as well as incurred certain costs through September 30, 2010 associated with the transaction prior to the Acquisition closing date that are reflected in the accompanying interim condensed consolidated financial statements, which are more fully described in Notes 7, 10 and 11.

In applying the Company’s accounting policies, management makes subjective and complex judgments that frequently require estimates 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 businesses and operations. Actual results could differ from these estimates.

The accompanying interim condensed consolidated financial statements include the accounts of the Holding Company 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. See “— Adoption of New Accounting Pronouncements.” 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. See Note 6. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for investments in equity securities in which it has a significant influence or more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture’s or partnership’s operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture’s or the partnership’s operations.

Certain amounts in the prior year periods’ interim condensed consolidated financial statements have been reclassified to conform with the 2010 presentation. Such reclassifications include ($1,407) million and ($4,084) million reclassified from other net investment gains (losses), to net derivatives gains (losses) in the interim condensed consolidated statements of operations for the three months and nine months ended

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2009, respectively. In addition, $1,368 million was reclassified from policyholder account balances to net change in bank deposits within cash flows from financing activities and $3,062 million and ($4,672) million were reclassified from net change in other invested assets to cash received in connection with freestanding derivatives and cash paid in connection with freestanding derivatives, respectively, within cash flows from investing activities, all in the interim condensed consolidated statement of cash flows for the nine months ended September 30, 2009. See also Note 14 for reclassifications related to discontinued operations.

The accompanying interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at September 30, 2010, its consolidated results of operations for the three months and nine months ended September 30, 2010 and 2009, its consolidated cash flows for the nine months ended September 30, 2010 and 2009, and its consolidated statements of stockholders’ equity for the nine months ended September 30, 2010 and 2009, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2009 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), which includes 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 2009 Annual Report.

Adoption of New Accounting Pronouncements

Financial Instruments

Effective July 1, 2010, the Company adopted new guidance regarding accounting for embedded credit derivatives within structured securities. This guidance clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, embedded credit derivatives resulting only from subordination of one financial instrument to another continue to qualify for the scope exception. Embedded credit derivative features other than subordination must be analyzed to determine if they require bifurcation and separate accounting.

As a result of the adoption of this guidance, the Company elected the fair value option for certain structured securities that were previously accounted for as fixed maturity securities. Upon adoption, the Company reclassified $50 million of securities from fixed maturity securities to trading securities. These securities had cumulative unrealized losses of $10 million, net of income tax, which was recognized as a cumulative effect adjustment to decrease retained earnings with a corresponding increase to accumulated other comprehensive income (loss) as of July 1, 2010.

Effective January 1, 2010, the Company adopted new guidance related to financial instrument transfers and consolidation of VIEs. The financial instrument transfer guidance eliminates the concept of a qualified special purpose entity (“QSPE”), eliminates the guaranteed mortgage securitization exception, changes the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. The new consolidation guidance changes the definition of the primary beneficiary as well as the method of determining whether an entity is a primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered to be the primary beneficiary of the VIE. The guidance requires a quarterly reassessment, as well as enhanced disclosures, including the effects of a company’s involvement with VIEs on its financial statements.

As a result of the adoption of this guidance, the Company consolidated certain former QSPEs that were previously accounted for as fixed maturity commercial mortgage-backed securities and equity security collateralized debt obligations. The Company also elected the fair value option for all of the consolidated assets and liabilities of these entities. Upon consolidation, the Company recorded $278 million of securities

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

classified as trading securities, $6,769 million of commercial mortgage loans and $6,822 million of long-term debt based on estimated fair values at January 1, 2010 and de-recognized $179 million in fixed maturity securities and less than $1 million in equity securities. The consolidation also resulted in a decrease in retained earnings of $12 million, net of income tax, and an increase in accumulated other comprehensive income (loss) of $42 million, net of income tax, at January 1, 2010. For the three months and nine months ended September 30, 2010, the Company recorded $106 million and $324 million, respectively, of net investment income on the consolidated assets, $103 million and $312 million, respectively, of interest expense in other expenses on the related long-term debt, and $16 million and $24 million, respectively, in net investment gains (losses) to remeasure the assets and liabilities at their estimated fair values at September 30, 2010.

In addition, the Company also deconsolidated certain partnerships for which the Company does not have the power to direct activities and for which the Company has concluded it is no longer the primary beneficiary. These deconsolidations did not result in a cumulative effect adjustment to retained earnings and did not have a material impact on the Company’s consolidated financial statements.

Also effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company’s interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain real estate joint ventures and other limited partnership interests held by the Company.

Fair Value

Effective January 1, 2010, the Company adopted new guidance that requires new disclosures about significant transfers in and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about level of disaggregation and inputs and valuation techniques. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Future Adoption of New Accounting Pronouncements

In October 2010, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding accounting for deferred acquisition costs (Accounting Standards Update (“ASU”) 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts) effective for the first quarter of 2012. This guidance clarifies the costs that should be deferred by insurance entities when issuing and renewing insurance contracts. The guidance also specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized. All other acquisition-related costs should be expensed as incurred. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In July 2010, the FASB issued new guidance regarding disclosures about the credit quality of financing receivables and the allowance for credit losses (ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses). This guidance requires additional disclosures about the credit quality of financing receivables, such as aging information and credit quality indicators. In addition, disclosures must be disaggregated by portfolio segment or class based on how a company develops its allowance for credit losses and how it manages its credit exposure. Most of the requirements are effective for the fourth quarter of 2010 with certain additional disclosures required for the first quarter of 2011. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2010, the FASB issued new guidance regarding accounting for investment funds determined to be VIEs (ASU 2010-15, How Investments Held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments). Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer’s evaluation of its economics in a VIE, unless the separate account contract holder is a related party. The guidance is effective for the first quarter of 2011. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements.


2.	Pending Disposition

In October 2010, the Company and its joint venture partner, MS&AD Insurance Group Holdings, Inc. (“MS&AD”) reached an agreement under which the Company intends to sell its 50% interest in Mitsui Sumitomo MetLife Insurance Co., Ltd. (“MSI MetLife”), a Japan domiciled life insurance company, to MS&AD for approximately $275 million (¥22.5 billion). During the three months ended September 30, 2010, the Company recorded a net investment loss of $141 million, net of income tax, as a result of recording its investment in MSI MetLife at its estimated recoverable amount. It is anticipated that the sale will close on or about April 1, 2011, subject to customary closing conditions, including obtaining required regulatory approvals.

During the second quarter of 2010, the Company entered into a definitive agreement with a third party to sell MetLife Taiwan Insurance Company Limited (“MetLife Taiwan”). On October 5, 2010, the Taiwan Financial Supervising Commission rejected the third party’s application for approval of the sale of MetLife Taiwan to such third party. Following the rejection, the agreement with the third party was terminated. The Company continues to explore strategic options with respect to MetLife Taiwan.


3.	Investments

Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized gain and loss, estimated fair value of the Company’s fixed maturity and equity securities and the percentage that each sector represents by the respective total holdings for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairment (“OTTI”) loss:


	September 30, 2010
	Cost or		Gross Unrealized							Estimated
	Amortized				Temporary		OTTI			Fair		% of
	Cost		Gain		Loss		Loss			Value		Total
					(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	75,648	$	6,615	$	1,243	$	—		$	81,020		31.1	%
Residential mortgage-backed securities (“RMBS”)		45,358		1,945		1,193		210			45,900		17.6
Foreign corporate securities (1)		41,614		3,909		554		(1	)		44,970		17.2
U.S. Treasury, agency and government guaranteed securities (2)		31,325		3,062		27		—			34,360		13.2
Commercial mortgage-backed securities (“CMBS”)		15,082		794		343		—			15,533		6.0
Foreign government securities		12,632		2,232		20		—			14,844		5.7
Asset-backed securities (“ABS”)		14,797		344		801		34			14,306		5.5
State and political subdivision securities		9,186		596		168		—			9,614		3.7
Other fixed maturity securities		17		1		1		—			17		—

Total fixed maturity securities (3),(4)	$	245,659	$	19,498	$	4,350	$	243		$	260,564		100.0	%

Equity Securities:
Common stock	$	1,508	$	73	$	10	$	—		$	1,571		54.8	%
Non-redeemable preferred stock (3)		1,428		85		219		—			1,294		45.2

Total equity securities (5)	$	2,936	$	158	$	229	$	—		$	2,865		100.0	%

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	December 31, 2009
	Cost or		Gross Unrealized						Estimated
	Amortized				Temporary		OTTI		Fair		% of
	Cost		Gain		Loss		Loss		Value		Total
					(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	72,075	$	2,821	$	2,699	$	10	$	72,187		31.7	%
RMBS		45,343		1,234		1,957		600		44,020		19.3
Foreign corporate securities		37,254		2,011		1,226		9		38,030		16.7
U.S. Treasury, agency and government guaranteed securities (2)		25,712		745		1,010		—		25,447		11.2
CMBS		16,555		191		1,106		18		15,622		6.9
Foreign government securities		11,010		1,076		139		—		11,947		5.2
ABS		14,272		189		1,077		222		13,162		5.8
State and political subdivision securities		7,468		151		411		—		7,208		3.2
Other fixed maturity securities		20		1		2		—		19		—

Total fixed maturity securities (3),(4)	$	229,709	$	8,419	$	9,627	$	859	$	227,642		100.0	%

Equity Securities:
Common stock	$	1,537	$	92	$	8	$	—	$	1,621		52.6	%
Non-redeemable preferred stock (3)		1,650		80		267		—		1,463		47.4

Total equity securities (5)	$	3,187	$	172	$	275	$	—	$	3,084		100.0	%


(1)		OTTI loss as presented above, represents the noncredit portion of OTTI loss that is included in accumulated other comprehensive income (loss). OTTI loss includes both the initial recognition of noncredit losses, and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that were previously noncredit loss impaired. The noncredit loss component of OTTI loss for foreign corporate securities was in an unrealized gain position of $1 million at September 30, 2010 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “Net Unrealized Investment Gains (Losses).”

(2)		The Company has classified within the U.S. Treasury, agency and government guaranteed securities caption certain corporate fixed maturity securities issued by U.S. financial institutions that were guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) pursuant to the FDIC’s Temporary Liquidity Guarantee Program of $357 million and $407 million at estimated fair value with unrealized gains of $5 million and $2 million at September 30, 2010 and December 31, 2009, respectively.

(3)		Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics. The Company classifies perpetual securities with an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more equity-like characteristics, as equity securities within non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


		capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” The following table presents the perpetual hybrid securities held by the Company at:

September 30, 2010

December 31, 2009

Estimated

Classification

Fair

Consolidated Balance Sheets

Sector Table

Primary Issuers

Value

(In millions)

Equity securities

Non-redeemable preferred stock

Non-U.S. financial institutions

1,030

988

Equity securities

Non-redeemable preferred stock

U.S. financial institutions

238

349

Fixed maturity securities

Foreign corporate securities

Non-U.S. financial institutions

2,427

2,626

Fixed maturity securities

U.S. corporate securities

U.S. financial institutions


(4)		Redeemable preferred stock with stated maturity dates are included in the U.S. corporate securities sector within fixed maturity securities. These securities, commonly referred to as “capital securities,” are primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $2.4 billion and $2.5 billion at estimated fair value of such securities at September 30, 2010 and December 31, 2009, respectively.

(5)		Equity securities primarily consist of investments in common and preferred stocks, including certain perpetual hybrid securities and mutual fund interests. Privately-held equity securities were $1.2 billion and $1.0 billion at estimated fair value at September 30, 2010 and December 31, 2009, respectively.

The below investment grade and non-income producing amounts presented below are based on rating agency designations and equivalent designations of the National Association of Insurance Commissioners (“NAIC”), with the exception of non-agency RMBS held by the Company’s domestic insurance subsidiaries. Non-agency RMBS, including RMBS backed by sub-prime mortgage loans reported within ABS, held by the Company’s domestic insurance subsidiaries are presented based on final ratings from the revised NAIC rating methodology (i.e., NAIC 1 — 6) which became effective December 31, 2009 (which may not correspond to rating agency designations). All NAIC designation amounts and percentages presented herein are based on the revised NAIC methodology described above. All rating agency designation (i.e., Aaa/AAA) amounts and percentages presented herein are based on rating agency designations without adjustment for the revised NAIC methodology described above. Rating agency designations are based on availability of applicable ratings from rating agencies on the NAIC acceptable rating organization list, including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”).

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents selected information about certain fixed maturity securities held by the Company at:


	September 30, 2010			December 31, 2009
	(In millions)

Below investment grade or non-rated fixed maturity securities:
Estimated fair value	$	21,448		$	20,201
Net unrealized loss	$	539		$	2,609
Non-income producing fixed maturity securities:
Estimated fair value	$	302		$	312
Net unrealized loss	$	—		$	31
Fixed maturity securities credit enhanced by financial guarantor insurers — by sector — at estimated fair value:
State and political subdivision securities	$	2,284		$	2,154
U.S. corporate securities		1,901			1,750
ABS		822			803
Other		51			43

Total fixed maturity securities credit enhanced by financial guarantor insurers	$	5,058		$	4,750

Ratings of the financial guarantor insurers providing the credit enhancement:
Portion rated Aa/AA		20	%		18	%

Portion rated A		2	%		2	%

Portion rated Baa/BBB		36	%		36	%

Concentrations of Credit Risk (Fixed Maturity Securities) — Summary. The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings.

The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s stockholders’ equity, other than the U.S. and Mexican government securities described below. The Company’s holdings in U.S. Treasury, agency and government guaranteed fixed maturity securities at estimated fair value were $34.4 billion and $25.4 billion at September 30, 2010 and December 31, 2009, respectively. The Company’s holdings in Mexican government and certain Mexican government agency fixed maturity securities at estimated fair value were $4.9 billion and $4.8 billion at September 30, 2010 and December 31, 2009, respectively.

Concentrations of Credit Risk (Fixed Maturity Securities) — U.S. and Foreign Corporate Securities. The Company maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. This portfolio does not have exposure to any single issuer in excess of 1% of total investments. The tables below present

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

the major industry types that comprise the corporate fixed maturity securities holdings, the largest exposure to a single issuer and the combined holdings in the ten issuers to which it had the largest exposure at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
			(In millions)

Corporate fixed maturity securities — by industry type:
Foreign (1)	$	44,970		35.7	%	$	38,030		34.5	%
Industrial		20,293		16.1			17,246		15.6
Consumer		20,113		16.0			16,924		15.4
Utility		17,044		13.5			14,785		13.4
Finance		13,452		10.7			13,756		12.5
Communications		6,730		5.3			6,580		6.0
Other		3,388		2.7			2,896		2.6

Total	$	125,990		100.0	%	$	110,217		100.0	%


(1)		Includes U.S. dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity security investments.


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of Total			Fair		% of Total
	Value		Investments			Value		Investments
			(In millions)

Concentrations within corporate fixed maturity securities:
Largest exposure to a single issuer	$	937		0.2	%	$	1,038		0.3	%
Holdings in ten issuers with the largest exposures	$	7,269		1.9	%	$	7,506		2.3	%

Concentrations of Credit Risk (Fixed Maturity Securities) — RMBS. The table below presents the Company’s RMBS holdings and portion rated Aaa/AAA and portion rated NAIC 1 at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
			(In millions)

By security type:
Collateralized mortgage obligations	$	23,131		50.4	%	$	24,480		55.6	%
Pass-through securities		22,769		49.6			19,540		44.4

Total RMBS	$	45,900		100.0	%	$	44,020		100.0	%

By risk profile:
Agency	$	35,139		76.6	%	$	33,334		75.7	%
Prime		6,393		13.9			6,775		15.4
Alternative residential mortgage loans		4,368		9.5			3,911		8.9

Total RMBS	$	45,900		100.0	%	$	44,020		100.0	%

Portion rated Aaa/AAA	$	36,982		80.6	%	$	35,626		80.9	%

Portion rated NAIC 1	$	40,394		88.0	%	$	38,464		87.4	%

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Collateralized mortgage obligations are a type of mortgage-backed security structured by dividing the cash flows of mortgages into separate pools or tranches of risk that create multiple classes of bonds with varying maturities and priority of payments. Pass-through mortgage-backed securities are a type of asset-backed security that is secured by a mortgage or collection of mortgages. The monthly mortgage payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments, and for a fee, remits or passes these payments through to the holders of the pass-through securities.

Prime residential mortgage lending includes the origination of residential mortgage loans to the most creditworthy borrowers with high quality credit profiles. Alternative residential mortgage loans (“Alt-A”) are a classification of mortgage loans where the risk profile of the borrower falls between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.

The following tables present the Company’s investment in Alt-A RMBS by vintage year (vintage year refers to the year of origination and not to the year of purchase) and certain other selected data:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
			(In millions)

Vintage Year:
2004 & Prior	$	100		2.3	%	$	109		2.8	%
2005		1,569		35.9			1,395		35.7
2006		1,033		23.6			825		21.1
2007		930		21.3			814		20.8
2008		6		0.1			—		—
2009		697		16.0			768		19.6
2010		33		0.8			—		—

Total	$	4,368		100.0	%	$	3,911		100.0	%


	September 30, 2010					December 31, 2009
			% of					% of
	Amount		Total			Amount		Total
			(In millions)

Net unrealized loss	$	758				$	1,248
Rated Aa/AA or better				17.2	%				26.3	%
Rated NAIC 1				35.3	%				31.3	%
By collateral type:
Fixed rate mortgage loans collateral				90.8	%				89.3	%
Hybrid adjustable rate mortgage loans collateral				9.2					10.7

Total Alt-A RMBS				100.0	%				100.0	%

Concentrations of Credit Risk (Fixed Maturity Securities) — CMBS. The Company’s holdings in CMBS were $15.5 billion and $15.6 billion at estimated fair value at September 30, 2010 and December 31, 2009, respectively. The Company had no exposure to CMBS index securities at September 30, 2010 and December 31, 2009. The Company held commercial real estate collateralized debt obligations securities of $123 million and $111 million at estimated fair value at September 30, 2010 and December 31, 2009, respectively.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The following tables present the Company’s holdings of CMBS by rating agency designation and by vintage year at:


	September 30, 2010
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
													(In millions)

2003 & Prior	$	6,989	$	7,266		$	241	$	242		$	133	$	130		$	60	$	56		$	28	$	24		$	7,451	$	7,718
2004		1,944		2,101			113		109			52		44			79		72			78		56			2,266		2,382
2005		2,517		2,731			30		25			58		47			58		39			—		—			2,663		2,842
2006		1,508		1,599			20		19			22		22			56		47			89		71			1,695		1,758
2007		683		586			126		102			62		40			121		93			11		8			1,003		829
2008		—		—			—		—			—		—			—		—			—		—			—		—
2009		2		2			—		—			—		—			—		—			—		—			2		2
2010		2		2			—		—			—		—			—		—			—		—			2		2

Total	$	13,645	$	14,287		$	530	$	497		$	327	$	283		$	374	$	307		$	206	$	159		$	15,082	$	15,533

Ratings Distribution				92.0	%				3.2	%				1.8	%				2.0	%				1.0	%				100.0	%

The September 30, 2010 table reflects ratings assigned by nationally recognized rating agencies including Moody’s, S&P, Fitch and Realpoint, LLC.


	December 31, 2009
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
													(In millions)

2003 & Prior	$	6,836	$	6,918		$	394	$	365		$	162	$	140		$	52	$	41		$	36	$	18		$	7,480	$	7,482
2004		2,240		2,255			200		166			114		71			133		87			88		58			2,775		2,637
2005		2,956		2,853			144		108			85		65			39		24			57		51			3,281		3,101
2006		1,087		1,009			162		139			380		323			187		129			123		48			1,939		1,648
2007		432		314			13		12			361		257			234		153			35		13			1,075		749
2008		5		5			—		—			—		—			—		—			—		—			5		5
2009		—		—			—		—			—		—			—		—			—		—			—		—

Total	$	13,556	$	13,354		$	913	$	790		$	1,102	$	856		$	645	$	434		$	339	$	188		$	16,555	$	15,622

Ratings Distribution				85.4	%				5.1	%				5.5	%				2.8	%				1.2	%				100.0	%

The December 31, 2009 table reflects ratings assigned by nationally recognized rating agencies including Moody’s, S&P and Fitch.

Concentrations of Credit Risk (Fixed Maturity Securities) — ABS. The Company’s holdings in ABS were $14.3 billion and $13.2 billion at estimated fair value at September 30, 2010 and December 31, 2009, respectively. The Company’s ABS are diversified both by collateral type and by issuer.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents the collateral type and certain other information about ABS held by the Company at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

By collateral type:
Credit card loans	$	6,783		47.4	%	$	7,057		53.6	%
Student loans		2,528		17.7			1,855		14.1
RMBS backed by sub-prime mortgage loans		1,082		7.6			1,044		7.9
Automobile loans		721		5.0			963		7.3
Other loans		3,192		22.3			2,243		17.1

Total	$	14,306		100.0	%	$	13,162		100.0	%

Portion rated Aaa/AAA	$	10,570		73.9	%	$	9,354		71.1	%

Portion rated NAIC 1	$	12,883		90.1	%	$	11,573		87.9	%

RMBS backed by sub-prime mortgage loans — portion credit enhanced by financial guarantor insurers				39.0	%				37.6	%
Of the 39.0% and 37.6% credit enhanced, the financial guarantor insurers were rated as follows:
By financial guarantor insurers rated Aa/AA				24.3	%				17.2	%
By financial guarantor insurers rated A				8.9	%				7.9	%

The following tables present the Company’s holdings of ABS supported by sub-prime mortgage loans by rating agency designation and by vintage year at:


	September 30, 2010
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
	(In millions)

2003 & Prior	$	44	$	42		$	61	$	52		$	14	$	12		$	6	$	6		$	90	$	56		$	215	$	168
2004		87		71			298		231			29		23			3		2			44		28			461		355
2005		57		46			102		89			23		15			94		87			243		153			519		390
2006		—		—			51		31			12		8			—		—			106		73			169		112
2007		—		—			78		41			—		—			—		—			29		16			107		57
2008 to 2010		—		—			—		—			—		—			—		—			—		—			—		—

Total	$	188	$	159		$	590	$	444		$	78	$	58		$	103	$	95		$	512	$	326		$	1,471	$	1,082

Ratings Distribution				14.7	%				41.0	%				5.4	%				8.8	%				30.1	%				100.0	%

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	December 31, 2009
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
	(In millions)

2003 & Prior	$	57	$	48		$	73	$	58		$	11	$	8		$	7	$	6		$	98	$	56		$	246	$	176
2004		99		68			316		222			39		27			24		15			31		15			509		347
2005		64		45			226		144			40		26			24		18			209		139			563		372
2006		6		6			62		22			—		—			22		5			115		72			205		105
2007		—		—			78		28			—		—			—		—			36		16			114		44
2008 to 2009		—		—			—		—			—		—			—		—			—		—			—		—

Total	$	226	$	167		$	755	$	474		$	90	$	61		$	77	$	44		$	489	$	298		$	1,637	$	1,044

Ratings Distribution				16.0	%				45.4	%				5.8	%				4.2	%				28.6	%				100.0	%

The rating distribution of the Company’s ABS supported by sub-prime mortgage loans was as follows at:


	September 30, 2010			December 31, 2009

NAIC 1		73.9	%		69.1	%
NAIC 2		4.1	%		4.2	%
NAIC 3		11.6	%		12.2	%
NAIC 4		6.3	%		6.2	%
NAIC 5		3.5	%		8.3	%
NAIC 6		0.6	%		—	%

Concentrations of Credit Risk (Equity Securities). The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company’s stockholders’ equity at September 30, 2010 and December 31, 2009.

Maturities of Fixed Maturity Securities. The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows at:


	September 30, 2010				December 31, 2009
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In millions)

Due in one year or less	$	8,883	$	8,989	$	6,845	$	6,924
Due after one year through five years		42,267		44,153		38,408		39,399
Due after five years through ten years		46,925		51,756		40,448		41,568
Due after ten years		72,347		79,927		67,838		66,947

Subtotal		170,422		184,825		153,539		154,838
RMBS, CMBS and ABS		75,237		75,739		76,170		72,804

Total fixed maturity securities	$	245,659	$	260,564	$	229,709	$	227,642

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Evaluating Available-for-Sale Securities for Other-Than-Temporary Impairment

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired. As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, effective April 1, 2009, the Company adopted new OTTI guidance that amends the methodology for determining for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how the amount of the OTTI loss that is charged to earnings is determined. There was no change in the OTTI methodology for equity securities.

With respect to fixed maturity securities, the Company considers, among other impairment criteria, whether it has the intent to sell a particular impaired fixed maturity security. The Company’s intent to sell a particular impaired fixed maturity security considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings. In certain circumstances, the Company may determine that it does not intend to sell a particular security but that it is more likely than not that it will be required to sell that security before recovery of the decline in estimated fair value below amortized cost. In such instances, the fixed maturity security will be deemed other-than-temporarily impaired in the period during which it was determined more likely than not that the security will be required to be sold and an OTTI loss will be recorded in earnings. If the Company does not have the intent to sell (i.e., has not made the decision to sell) and it does not believe that it is more likely than not that it will be required to sell the security before recovery of its amortized cost, an impairment assessment is made, as described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report. Prior to April 1, 2009, the Company’s assessment of OTTI for fixed maturity securities was performed in the same manner as described below for equity securities.

With respect to equity securities, the Company considers in its OTTI analysis its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost. Decisions to sell equity securities are based on current conditions in relation to the same broad portfolio management considerations in a manner consistent with that described above for fixed maturity securities.

With respect to perpetual hybrid securities, some of which are classified as fixed maturity securities and some of which are classified as equity securities, within non-redeemable preferred stock, the Company considers in its OTTI analysis whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of the securities that are in a severe and extended unrealized loss position. The Company also considers whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Net Unrealized Investment Gains (Losses)

The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), were as follows at:


	September 30, 2010			December 31, 2009
	(In millions)

Fixed maturity securities	$	15,148		$	(1,208	)
Fixed maturity securities with noncredit OTTI losses in other comprehensive income (loss)		(243	)		(859	)

Total fixed maturity securities		14,905			(2,067	)
Equity securities		(71	)		(103	)
Derivatives		482			(144	)
Other		48			71

Subtotal		15,364			(2,243	)

Amounts allocated from:
Insurance liability loss recognition		(2,910	)		(118	)
DAC and VOBA related to noncredit OTTI losses recognized in other comprehensive income (loss)		18			71
DAC and VOBA		(1,768	)		145
Policyholder dividend obligation		(2,014	)		—

Subtotal		(6,674	)		98
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in other comprehensive income (loss)		80			275
Deferred income tax benefit (expense)		(3,016	)		539

Net unrealized investment gains (losses)		5,754			(1,331	)
Net unrealized investment gains (losses) attributable to noncontrolling interests		2			1

Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	5,756		$	(1,330	)

Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above, of ($243) million at September 30, 2010, includes ($859) million recognized prior to January 1, 2010, ($24) million and ($181) million (($18) million and ($180) million, net of DAC) of noncredit losses recognized in the three months and nine months ended September 30, 2010, respectively, $16 million transferred to retained earnings in connection with the adoption of new guidance related to the consolidation of VIEs (see Note 1) for the nine months ended September 30, 2010, $46 million and $100 million related to securities sold during the three months and nine months ended September 30, 2010, respectively, for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss) and $541 million and $681 million of subsequent increases in estimated fair value during the three months and nine months ended September 30, 2010, respectively, on such securities for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss).

Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above, of ($859) million at December 31, 2009, includes ($126) million related to the transition adjustment recorded in 2009 upon the adoption of new guidance on the recognition and presentation of OTTI, ($939) million (($857) million, net of DAC) of noncredit losses recognized in the year ended December 31, 2009 (as more fully described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report), $20 million related to securities sold during the year ended December 31, 2009 for which a noncredit loss

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

was previously recognized in accumulated comprehensive income (loss) and $186 million of subsequent increases in estimated fair value during the year ended December 31, 2009 on such securities for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss).

The changes in net unrealized investment gains (losses) were as follows:


	Nine Months
	Ended
	September 30, 2010
	(In millions)

Balance, beginning of period	$	(1,330	)
Cumulative effect of change in accounting principles, net of income tax		52
Fixed maturity securities on which noncredit OTTI losses have been recognized		600
Unrealized investment gains (losses) during the period		16,927
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition		(2,792	)
DAC and VOBA related to noncredit OTTI losses recognized in other comprehensive income (loss)		(53	)
DAC and VOBA		(1,913	)
Policyholder dividend obligation		(2,014	)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in other comprehensive income (loss)		(190	)
Deferred income tax benefit (expense)		(3,532	)

Net unrealized investment gains (losses)		5,755
Net unrealized investment gains (losses) attributable to noncontrolling interests		1

Balance, end of period	$	5,756

Change in net unrealized investment gains (losses)	$	7,085
Change in net unrealized investment gains (losses) attributable to noncontrolling interests		1

Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	7,086

Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following tables present the estimated fair value and gross unrealized loss of the Company’s fixed maturity and equity securities in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being “less than 12 months” or “equal to or greater than 12 months” in a continuous unrealized loss position based on the point in

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.


	September 30, 2010
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	2,718	$	120	$	9,855	$	1,123	$	12,573	$	1,243
RMBS		1,939		54		7,440		1,349		9,379		1,403
Foreign corporate securities		1,611		73		4,483		480		6,094		553
U.S. Treasury, agency and government guaranteed securities		2,035		10		150		17		2,185		27
CMBS		399		5		1,497		338		1,896		343
Foreign government securities		181		3		220		17		401		20
ABS		1,851		44		3,365		791		5,216		835
State and political subdivision securities		288		5		1,083		163		1,371		168
Other fixed maturity securities		—		—		5		1		5		1

Total fixed maturity securities	$	11,022	$	314	$	28,098	$	4,279	$	39,120	$	4,593

Equity Securities:
Common stock		46		9		8		1		54		10
Non-redeemable preferred stock		27		9		877		210		904		219

Total equity securities	$	73	$	18	$	885	$	211	$	958	$	229

Total number of securities in an unrealized loss position		2,101				1,937

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	December 31, 2009
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	8,641	$	395	$	18,004	$	2,314	$	26,645	$	2,709
RMBS		5,623		119		10,268		2,438		15,891		2,557
Foreign corporate securities		3,786		139		7,282		1,096		11,068		1,235
U.S. Treasury, agency and government guaranteed securities		15,051		990		51		20		15,102		1,010
CMBS		2,052		29		5,435		1,095		7,487		1,124
Foreign government securities		2,318		55		507		84		2,825		139
ABS		1,259		143		5,875		1,156		7,134		1,299
State and political subdivision securities		2,086		94		1,843		317		3,929		411
Other fixed maturity securities		6		2		—		—		6		2

Total fixed maturity securities	$	40,822	$	1,966	$	49,265	$	8,520	$	90,087	$	10,486

Equity Securities:
Common stock		56		7		14		1		70		8
Non-redeemable preferred stock		66		41		930		226		996		267

Total equity securities	$	122	$	48	$	944	$	227	$	1,066	$	275

Total number of securities in an unrealized loss position		2,210				3,333

Aging of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized loss, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized loss as a

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

percentage of cost or amortized cost and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:


	September 30, 2010
	Cost or Amortized Cost				Gross Unrealized Loss						Number of Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	9,447	$	1,137	$	134		$	285			1,431		159
Six months or greater but less than nine months		767		145		39			43			91		18
Nine months or greater but less than twelve months		796		228		47			77			101		20
Twelve months or greater		24,627		6,566		1,817			2,151			1,448		383

Total	$	35,637	$	8,076	$	2,037		$	2,556

Percentage of amortized cost						6	%		32	%

Equity Securities:
Less than six months	$	56	$	84	$	7		$	25			330		90
Six months or greater but less than nine months		8		47		1			17			61		3
Nine months or greater but less than twelve months		11		1		2			—			20		—
Twelve months or greater		629		351		57			120			42		19

Total	$	704	$	483	$	67		$	162

Percentage of cost						10	%		34	%

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	December 31, 2009
	Cost or Amortized Cost				Gross Unrealized Loss						Number of Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	35,163	$	2,658	$	933		$	713			1,725		186
Six months or greater but less than nine months		4,908		674		508			194			124		49
Nine months or greater but less than twelve months		1,723		1,659		167			517			106		79
Twelve months or greater		41,721		12,067		3,207			4,247			2,369		724

Total	$	83,515	$	17,058	$	4,815		$	5,671

Percentage of amortized cost						6	%		33	%

Equity Securities:
Less than six months	$	66	$	63	$	7		$	14			199		8
Six months or greater but less than nine months		6		1		1			1			15		2
Nine months or greater but less than twelve months		13		94		2			39			8		6
Twelve months or greater		610		488		73			138			50		24

Total	$	695	$	646	$	83		$	192

Percentage of cost						12	%		30	%

Equity securities with a gross unrealized loss of 20% or more for twelve months or greater decreased from $138 million at December 31, 2009 to $120 million at September 30, 2010. As shown in the section “Evaluating Temporarily Impaired Available-for-Sale Securities” below, the $120 million of equity securities with a gross unrealized loss of 20% or more for twelve months or greater at September 30, 2010 were investment grade non-redeemable preferred stock, of which $116 million were financial services industry investment grade non-redeemable preferred stock, of which 78% were rated A or better.

Concentration of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The Company’s gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss) of

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

$4.8 billion and $10.8 billion at September 30, 2010 and December 31, 2009, respectively, were concentrated, calculated as a percentage of gross unrealized loss and OTTI loss, by sector and industry as follows:


	September 30, 2010			December 31, 2009

Sector:
RMBS		29	%		24	%
U.S. corporate securities		26			25
ABS		17			12
Foreign corporate securities		11			11
CMBS		7			10
State and political subdivision securities		4			4
U.S. Treasury, agency and government guaranteed securities		1			9
Other		5			5

Total		100	%		100	%

Industry:
Mortgage-backed		36	%		34	%
Finance		24			22
Asset-backed		17			12
Consumer		5			4
State and political subdivision securities		4			4
Utility		3			4
Communications		2			2
Industrial		2			1
U.S. Treasury, agency and government guaranteed securities		1			9
Other		6			8

Total		100	%		100	%

Evaluating Temporarily Impaired Available-for-Sale Securities

The following table presents the Company’s fixed maturity and equity securities, each with a gross unrealized loss of greater than $10 million, the number of securities, total gross unrealized loss and percentage of total gross unrealized loss at:


	September 30, 2010						December 31, 2009
	Fixed Maturity			Equity			Fixed Maturity			Equity
	Securities			Securities			Securities			Securities
	(In millions, except number of securities)

Number of securities		97			7			223			9
Total gross unrealized loss	$	1,715		$	112		$	4,465		$	132
Percentage of total gross unrealized loss		37	%		49	%		43	%		48	%

Fixed maturity and equity securities, each with a gross unrealized loss greater than $10 million, decreased $2.8 billion during the nine months ended September 30, 2010. The cause of the decline in, or improvement in, gross unrealized losses for the nine months ended September 30, 2010, was primarily attributable to a decrease in interest rates. These securities were included in the Company’s OTTI review process. Based upon the Company’s current evaluation of these securities and other available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired.

In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities is given greater weight and consideration than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company’s evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration is given by the Company to a decline in market value and the likelihood such market value decline will recover.

The following table presents certain information about the Company’s equity securities available-for-sale with a gross unrealized loss of 20% or more at September 30, 2010:


			Non-Redeemable Preferred Stock
			All Types of
	All Equity		Non-Redeemable					Investment Grade
	Securities		Preferred Stock					All Industries					Financial Services Industry
	Gross		Gross		% of All			Gross		% of All			Gross					% A
	Unrealized		Unrealized		Equity			Unrealized		Non-Redeemable			Unrealized		% of All			Rated or
	Loss		Loss		Securities			Loss		Preferred Stock			Loss		Industries			Better
	(In millions)

Less than six months	$	25	$	20		80	%	$	20		100	%	$	20		100	%		10	%
Six months or greater but less than twelve months		17		17		100	%		17		100	%		17		100	%		94	%
Twelve months or greater		120		120		100	%		120		100	%		116		97	%		78	%

All equity securities with a gross unrealized loss of 20% or more	$	162	$	157		97	%	$	157		100	%	$	153		97	%		71	%

In connection with the equity securities impairment review process, the Company evaluated its holdings in non-redeemable preferred stock, particularly those companies in the financial services industry. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred stock with a severe or an extended unrealized loss. The Company also considered whether any issuers of non-redeemable preferred stock with an unrealized loss held by the Company, regardless of credit rating, have deferred any dividend payments. No such dividend payments were deferred.

With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of less than 20% in an extended unrealized loss position (i.e., 12 months or greater).

Future OTTIs will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit rating, changes in collateral valuation, changes in interest rates and changes in credit spreads. If economic fundamentals and any of the above factors deteriorate, additional OTTIs may be incurred in upcoming quarters.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Net Investment Gains (Losses)

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, effective April 1, 2009, the Company adopted new guidance on the recognition and presentation of OTTI that amends the methodology to determine for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how OTTI losses that are charged to earnings are measured. There was no change in the methodology for identification and measurement of OTTI losses charged to earnings for impaired equity securities.

The components of net investment gains (losses) were as follows:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
				(In millions)

Total losses on fixed maturity securities:
Total OTTI losses recognized	$	(143	)	$	(650	)	$	(538	)	$	(1,769	)
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)		24			245			181			479

Net OTTI losses on fixed maturity securities recognized in earnings		(119	)		(405	)		(357	)		(1,290	)
Fixed maturity securities — net gains (losses) on sales and disposals		54			(50	)		99			(152	)

Total losses on fixed maturity securities		(65	)		(455	)		(258	)		(1,442	)

Other net investment gains (losses):
Equity securities		(1	)		(53	)		100			(430	)
Mortgage loans		37			(129	)		20			(400	)
Real estate and real estate joint ventures		(1	)		(70	)		(50	)		(163	)
Other limited partnership interests		(4	)		(12	)		(15	)		(356	)
Other investment portfolio gains (losses)		(67	)		(26	)		9			(36	)

Subtotal — investment portfolio gains (losses)		(101	)		(745	)		(194	)		(2,827	)

Consolidated securitization entities:
Trading securities — fair value option		(26	)		—			(47	)		—
Commercial mortgage loans — fair value option		114			—			767			—
Long-term debt — related to trading securities — fair value option		37			—			48			—
Long-term debt — related to commercial mortgage loans — fair value option		(109	)		—			(744	)		—
Other gains (losses) (1)		(257	)		13			(154	)		37

Subtotal consolidated securitization entities and other gains (losses)		(241	)		13			(130	)		37

Total net investment gains (losses)	$	(342	)	$	(732	)	$	(324	)	$	(2,790	)


(1)		Other gains (losses) for the three months and nine months ended September 30, 2010 includes a loss of $217 million related to recording the Company’s investment in MSI MetLife at its estimated recoverable amount (see Note 2).

See “— Variable Interest Entities” for discussion of consolidated securitization entities included in the table above.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown below. Investment gains and losses on sales of securities are determined on a specific identification basis.


	Three Months Ended September 30,
	2010			2009			2010			2009			2010			2009
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)

Proceeds	$	10,747		$	11,041		$	102		$	334		$	10,849		$	11,375

Gross investment gains		190			228			7			41			197			269

Gross investment losses		(136	)		(278	)		(7	)		(58	)		(143	)		(336	)

Total OTTI losses recognized in earnings:
Credit-related		(107	)		(223	)		—			—			(107	)		(223	)
Other (1)		(12	)		(182	)		(1	)		(36	)		(13	)		(218	)

Total OTTI losses recognized in earnings		(119	)		(405	)		(1	)		(36	)		(120	)		(441	)

Net investment gains (losses)	$	(65	)	$	(455	)	$	(1	)	$	(53	)	$	(66	)	$	(508	)


	Nine Months Ended September 30,
	2010			2009			2010			2009			2010			2009
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)

Proceeds	$	32,625		$	30,392		$	547		$	587		$	33,172		$	30,979

Gross investment gains		569			773			114			61			683			834

Gross investment losses		(470	)		(925	)		(11	)		(125	)		(481	)		(1,050	)

Total OTTI losses recognized in earnings:
Credit-related		(339	)		(966	)		—			—			(339	)		(966	)
Other (1)		(18	)		(324	)		(3	)		(366	)		(21	)		(690	)

Total OTTI losses recognized in earnings		(357	)		(1,290	)		(3	)		(366	)		(360	)		(1,656	)

Net investment gains (losses)	$	(258	)	$	(1,442	)	$	100		$	(430	)	$	(158	)	$	(1,872	)


(1)		Other OTTI losses recognized in earnings include impairments on equity securities, impairments on perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Fixed maturity security OTTI losses recognized in earnings related to the following sectors and industries within the U.S. and foreign corporate securities sector:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Sector:
U.S. and foreign corporate securities — by industry:
Finance	$	54	$	241	$	82	$	429
Consumer		8		42		31		206
Communications		9		29		12		232
Utility		—		8		3		84
Industrial		—		7		—		27
Other industries		—		—		—		26

Total U.S. and foreign corporate securities		71		327		128		1,004
ABS		26		17		89		111
RMBS		19		40		76		118
CMBS		3		20		64		56
Foreign government securities		—		1		—		1

Total	$	119	$	405	$	357	$	1,290

Equity security OTTI losses recognized in earnings related to the following sectors and industries:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Sector:
Common stock	$	1	$	2	$	3	$	52
Non-redeemable preferred stock		—		34		—		314

Total	$	1	$	36	$	3	$	366

Industry:
Financial services industry:
Perpetual hybrid securities	$	—	$	34	$	—	$	294
Common and remaining non-redeemable preferred stock		—		—		—		30

Total financial services industry		—		34		—		324
Other industries		1		2		3		42

Total	$	1	$	36	$	3	$	366

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Credit Loss Rollforward — Rollforward of the Cumulative Credit Loss Component of OTTI Loss Recognized in Earnings on Fixed Maturity Securities Still Held for Which a Portion of the OTTI Loss Was Recognized in Other Comprehensive Income (Loss)

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held by the Company at September 30, 2010 for which a portion of the OTTI loss was recognized in other comprehensive income (loss):


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Balance, beginning of period	$	491		$	380		$	581		$	—
Credit loss component of OTTI loss not reclassified to other comprehensive income (loss) in the cumulative effect transition adjustment		—			—			—			230
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired		13			53			94			205
Additional impairments — credit loss OTTI recognized on securities previously impaired		34			50			104			55
Reductions:
Due to sales (maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired		(97	)		(15	)		(231	)		(22	)
Due to securities de-recognized in connection with the adoption of new guidance related to the consolidation of VIEs		—			—			(100	)		—
Due to increases in cash flows — accretion of previous credit loss OTTI		(2	)		—			(9	)		—

Balance, end of period	$	439		$	468		$	439		$	468

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Net Investment Income

The components of net investment income were as follows:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Fixed maturity securities	$	3,081	$	2,955	$	9,187	$	8,709
Equity securities		19		37		83		130
Trading securities		194		163		217		310
Trading securities held by consolidated securitization entities		4		—		12		—
Mortgage loans		713		677		2,082