2020 Annual Report
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
Form 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
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)
200 Park Avenue, New York, NY
(Address of principal executive offices)
13-4075851
(I.R.S. Employer
Identification No.)
10166-0188
(Zip Code)
(212) 578-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01
Floating Rate Non-Cumulative Preferred Stock, Series A,
par value $0.01
Depositary Shares each representing a 1/1,000th interest in a
share of 5.625% Non-Cumulative Preferred Stock, Series E
Depositary Shares, each representing a 1/1,000th interest in
a share of 4.75% Non-Cumulative Preferred Stock, Series F
Trading Symbol(s)
Name of each exchange on which registered
MET
MET PRA
MET PRE
MET PRF
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C, par value $0.01
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D, par value $0.01
Fixed Rate Reset Non-Cumulative Preferred Stock, Series G, par value $0.01
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
þ Accelerated filer
☐ Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at June 30, 2020 was approximately $33.1 billion.
At February 12, 2021, 884,399,222 shares of the registrant’s common stock were outstanding.
Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement for the Annual Meeting of Shareholders to
be held on June 15, 2021, to be filed by the registrant with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the year
ended December 31, 2020.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Part I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
Part IV
Exhibit Index
Signatures
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As used in this Form 10-K, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware
corporation incorporated in 1999, its subsidiaries and affiliates.
Note Regarding Forward-Looking Statements
This Annual Report on Form 10‑K, including Management’s Discussion and Analysis of Financial Condition and
Results of Operations, may contain or incorporate by reference information that includes or is based upon forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give
expectations or forecasts of future events and do not relate strictly to historical or current facts. They use words and terms
such as “anticipate,” “aspire to,” “assume,” “become,” “believe,” “can,” “continue,” “could,” “emerge,” “estimate,” “evolve,”
“expect,” “forecast,” “foresee,” “future,” “guideline,” “if,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,”
“predict,” “probable,” “project,” “propose,” “prospect,” “remain,” “risk,” “scheduled,” “should,” “strive to,” “target,”
“ultimate,” “upcoming,” “when,” “will,” “work to,” “would” and other words and terms of similar meaning or that are
otherwise tied to future periods or future performance, in each case in all derivative forms. They include statements relating
to future actions, prospective services or products, future performance or results of current and anticipated services or
products, future sales efforts, future expenses, the outcome of contingencies such as legal proceedings, and future trends in
operations and financial results.
Many factors determine Company results, and they involve unpredictable risks and uncertainties. Our forward-looking
statements depend on our assumptions, our expectations, and our understanding of the economic environment, but they may
be inaccurate and may change. We do not guarantee any future performance. Our results could differ materially from those
we express or imply in forward-looking statements. The risks, uncertainties and other factors identified in MetLife, Inc.’s
filings with the U.S. Securities and Exchange Commission, and others, may cause such differences. These factors include:
(1) economic condition difficulties, including risks relating to public health, interest rates, credit spreads, equity, real estate,
obligors and counterparties, currency exchange rates, derivatives, and terrorism and security;
(2) global capital and credit market adversity;
(3) credit facility inaccessibility;
(4) financial strength or credit ratings downgrades;
(5) unavailability, unaffordability, or inadequate reinsurance
(6) statutory life insurance reserve financing costs or limited market capacity;
(7) legal, regulatory, and supervisory and enforcement policy changes;
(8) tax rate or tax laws changes;
(9) litigation and regulatory investigations;
(10) London Interbank Offered Rate termination and transition to alternative reference rates;
(11) unsuccessful efforts to meet all environmental, social, and governance standards or to enhance our sustainability;
(12) MetLife, Inc.’s inability to pay dividends and repurchase common stock;
(13) MetLife, Inc.’s subsidiaries’ inability to pay it dividends;
(14) investment defaults, downgrades, or volatility;
(15) investment sales or lending difficulties;
(16) collateral or derivative-related payments;
(17) investment valuations, allowances, or impairments changes;
(18) claims or other results that differ from our estimates, assumptions, or models;
(19) global political, legal, or operational risks;
(20) business competition;
(21) technological change;
(22) catastrophes;
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(23) climate changes or responses to it;
(24) amortization of deferred policy acquisition costs, deferred sales inducements, value of business acquired, or value of
customer relationships acquired;
(25) product guarantee volatility, costs, and counterpart risks;
(26) risk management failures;
(27) insufficient protection from operational risks;
(28) confidential information protection or other cybersecurity or disaster recovery failures;
(29) accounting standards changes;
(30) excessive risk-taking;
(31) marketing and distribution difficulties;
(32) pension and other postretirement benefit assumption changes;
(33) inability to protect our intellectual property or avoid infringement claims;
(34) acquisition, integration, growth, disposition, or reorganization difficulties;
(35) Brighthouse separation risks;
(36) MetLife, Inc.’s Board of Directors influence over the outcome of stockholder votes through the voting provisions of the
MetLife Policyholder Trust; and
(37) legal- and corporate governance-related effects on business combinations.
The Company will not publicly correct or update any forward-looking statements if we believe we are not likely to
achieve them or for any other reasons. Please consult any further disclosures MetLife, Inc. makes on related subjects in
subsequent reports to the U.S. Securities and Exchange Commission.
Note Regarding Reliance on Statements in Our Contracts
See “Exhibit Index — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements
included as exhibits to this Annual Report on Form 10-K.
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Part I
Item 1. Business
Index to Business
Table of Contents
Business Overview & Strategy
Segments and Corporate & Other
Policyholder Liabilities
Underwriting and Pricing
Reinsurance Activity
Regulation
Competition
Human Capital Resources
Information About Our Executive Officers
Trademarks
Available Information
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Business Overview & Strategy
As used in this Form 10-K, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware
corporation incorporated in 1999, its subsidiaries and affiliates.
MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits
and asset management. We hold leading market positions in the United States, Japan, Latin America, Asia, Europe and the
Middle East.
We are also one of the largest institutional investors in the United States with a general account portfolio invested
primarily in fixed income securities (corporate, structured products, municipals, and government and agency) and mortgage
loans, as well as real estate, real estate joint ventures, other limited partnerships and equity securities.
Our well-recognized brand, globally diversified and market-leading businesses, competitive and innovative product
offerings and financial strength and expertise should help drive future growth and enhance shareholder value. Over the
course of the next several years, we will continue to execute on our Next Horizon strategy, creating value focusing on the
following three pillars:
● Focus
–
Generate strong free cash flow by deploying capital and resources to the highest value opportunities.
● Simplify
–
Simplify our business to deliver operational efficiency and an outstanding customer experience.
● Differentiate
–
Drive competitive advantage through our brand, scale, talent, and innovation.
MetLife is organized into five segments: U.S.; Asia; Latin America; Europe, the Middle East and Africa (“EMEA”);
and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other. See “—
Segments and Corporate & Other” and Note 2 of the Notes to the Consolidated Financial Statements for further information
on the Company’s segments and Corporate & Other.
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In the United States, we provide a variety of insurance and financial services products, including life, dental, disability,
vision, accident & health, capital market investment, property and casualty, guaranteed interest, stable value and annuities.
Outside the United States, we provide life, medical, dental, credit and other accident & health insurance, as well as
annuities, endowment and retirement & savings products. We believe these businesses will generally continue to grow more
quickly than our United States businesses.
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Segments and Corporate & Other
U.S.
Our businesses in the U.S. segment offer a broad range of protection products and services aimed at serving the financial
needs of our customers throughout their lives. These products are sold to corporations and their respective employees, other
institutions and their respective members, as well as individuals. Our U.S. segment is organized into three businesses: Group
Benefits, Retirement and Income Solutions (“RIS”) and Property & Casualty.
Group Benefits
We have built a leading position in the United States group insurance market through long-standing relationships with
many of the largest corporate employers in the United States.
Our Group Benefits business offers life insurance, dental, group short- and long-term disability (“LTD”), individual
disability, accidental death and dismemberment (“AD&D”) insurance, vision, and accident & health insurance, as well as
prepaid legal plans. We also sell administrative services-only (“ASO”) arrangements to some employers. See Note 3 of the
Notes to the Consolidated Financial Statements for information regarding the Company's acquisition of Versant Health,
Inc. (“Versant Health”), a managed vision care company.
We distribute Group Benefits products and services through a sales force primarily comprised of MetLife employees
that is segmented by the size of the target customer. Account executives sell either directly to corporate and other group
customers or through an intermediary, such as a broker or consultant. Employers have been emphasizing voluntary
products and, as a result, we have increased our focus on communicating and marketing to employees in order to further
foster sales of those products.
We have entered into several operating joint ventures and other arrangements with third parties to expand
opportunities to market and distribute Group Benefits products and services. We also sell our Group Benefits products and
services through sponsoring associations and affinity groups and provide life, dental, accident & health, and vision
coverage to certain employees of the U.S. Government. We have longstanding relationships with these employees and
continue to cultivate and expand them through additional product offerings.
Group Benefits business quarterly claims experience may vary, as seasonal illnesses effect mortality and morbidity and
due to utilization rate fluctuation in our non-medical health businesses. Annual benefit renewal implementation,
enrollment, and marketing costs normally elevate Group Benefits business’ expenses in the fourth quarter.
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Major Products
Term Life Insurance
Variable Life Insurance
A guaranteed benefit upon the death of the insured for a specified time period in return for the
periodic payment of premiums. Premiums may be guaranteed at a level amount for the coverage
period or may be non-level and non-guaranteed. Term contracts expire without value at the end
of the coverage period when the insured party is still living.
Insurance coverage through a contract that gives the policyholder flexibility in investment
choices and, depending on the product, in premium payments and coverage amounts, with certain
guarantees. Premiums and account balances can be directed by the policyholder into a variety of
separate account investment options or directed to the Company’s general account. In the
separate account investment options, the policyholder bears the entire risk of the investment
results. With some products, by maintaining certain premium level, policyholders may have the
advantage of various guarantees that may protect the death benefit from adverse investment
experience.
Universal Life Insurance Insurance coverage on the same basis as variable life, except that premiums, and the resulting
accumulated balances, are allocated only to the Company’s general account. With some products,
by maintaining a certain premium level, policyholders may have the advantage of various
guarantees that may protect the death benefit from adverse investment experience.
Dental
Disability
Accident & Health
Insurance
Vision
Insurance and ASO arrangements that assist employees, retirees and their families in maintaining
oral health while reducing out-of-pocket expenses.
Insurance and ASO arrangements for groups and individuals to provide benefits for income
replacement, payment of business overhead expenses or mortgage protection, in the event of the
disability of the insured.
Accident, critical illness or hospital indemnity coverage to the insured.
Insurance, (and effective with our acquisition of Versant Health through ASO arrangements,
managed eye health and vision care solutions) to assist employees, retirees and their families in
maintaining vision health while reducing out-of-pocket expenses. Offered to commercial groups,
individuals, health plans and government sponsored programs through a nationwide provider
network, retail optical chains and online eyewear providers.
Retirement and Income Solutions
Our RIS business provides funding and financing solutions that help institutional customers mitigate and manage
liabilities primarily associated with their employee benefit programs using a spectrum of life and annuity-based insurance
and investment products.
We distribute RIS products and services through dedicated sales teams and relationship managers primarily comprised
of MetLife employees. We may sell products directly to benefit plan sponsors and advisors or through brokers, consultants
or other intermediaries. In addition, these sales professionals work with individual, group and global distribution areas to
better reach and service customers, brokers, consultants and other intermediaries.
Major Products
Stable Value Products
• General account guaranteed interest contracts (“GICs”) are designed to provide stable value
investment options within tax-qualified defined contribution plans by offering a fixed
maturity investment with a guarantee of liquidity at contract value for participant
transactions.
• Separate account GICs are available to defined contribution plan sponsors by offering
market value returns on separate account investments with a general account guarantee of
liquidity at contract value.
• Synthetic GICs or “wraps” are contracts available only to the sponsor of a participant-
directed defined contribution plan. The contract “wraps” a portfolio of investments owned
by the plan to provide a guarantee that plan participants will always be able to transact in
their accounts at contract value. Generally, a wrap contract means that participants will not
experience negative returns.
• Private floating rate funding agreements are generally privately-placed, unregistered
investment contracts issued as general account obligations with interest credited based on a
specified rate, such as the three-month London Interbank Offered Rate (“LIBOR”). These
agreements are used for money market funds, securities lending cash collateral portfolios
and short-term investment funds.
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Pension Risk Transfers
General account and separate account annuities are offered in connection with defined
benefit pension plans which include single premium buyouts allowing for full or partial
transfers of pension liabilities.
• General account annuities include nonparticipating group contract benefits purchased for
retired employees or active employees covered under terminating or ongoing pension plans.
They also include longevity reinsurance contracts associated with the United Kingdom (the
“U.K.”) risk transfer market, which provide fee income (including risk fees) in exchange for
assuming longevity risk from pension plans insured by third parties. Premiums for U.K.
longevity products (which incorporate this fee) are generally paid over the duration of the
contract as opposed to a lump sum.
• Separate account annuities include both participating and non-participating group contract
benefits. Participating contract benefits are purchased for retired, terminated, or active
employees covered under active or terminated pension plans. The assets supporting the
guaranteed benefits for each contract are held in a separate account, however, the Company
fully guarantees all benefit payments. Non-participating contracts have economic features
similar to our general account product, but offer the added protection of an insulated
separate account. Under accounting principles generally accepted in the United States of
America (“GAAP”), these annuity contracts are treated as general account products.
Institutional Income
Annuities
General account contracts that are guaranteed payout annuities purchased for employees upon
retirement or termination of employment. Contracts can be life or non-life contingent non-
participating contracts which do not provide for any loan or cash surrender value and, with
few exceptions, do not permit future considerations.
Structured Settlements
Capital Markets Investment
Products
Customized annuities designed to serve as an alternative to a lump sum payment in a lawsuit
initiated because of personal injury, wrongful death, or a workers’ compensation claim or
other claim for damages. Surrenders are generally not allowed, although commutations are
permitted in certain circumstances. Guaranteed payments consist of life contingent annuities,
term certain annuities and lump sums.
• Funding agreement-backed notes are offered in medium term note programs, under which
funding agreements are issued to special-purpose trusts that issue marketable notes in U.S.
dollars or foreign currencies. The proceeds of these note issuances are used to acquire
funding agreements with matching interest and maturity payment terms from certain
subsidiaries of MetLife, Inc. The notes are underwritten and marketed by major investment
banks’ broker-dealer operations and are sold to institutional investors.
• Funding agreement-backed commercial paper is issued by a special-purpose limited liability
company which deposits the proceeds under a master funding agreement issued to it by
Metropolitan Life Insurance Company (“MLIC”). The commercial paper is issued in U.S.
dollars or foreign currencies, receives the same short-term credit rating as MLIC and is
marketed by major investment banks’ broker-dealer operations.
• Funding agreements are issued by certain of our insurance subsidiaries to regional Federal
Home Loan Banks (“FHLB”) and to a subsidiary of the Federal Agricultural Mortgage
Corporation (“Farmer Mac.”)
Other Products and
Services
Specialized life insurance products and funding agreements designed specifically to provide
solutions for funding postretirement benefits and company-, bank- or trust-owned life
insurance used to finance nonqualified benefit programs for executives.
Property & Casualty
Our Property & Casualty business offers personal lines of property and casualty insurance, including private passenger
automobile, homeowners’ and personal excess liability insurance. In December 2020, the Company entered into a
definitive agreement to sell its wholly-owned subsidiary, Metropolitan Property and Casualty Insurance Company and
certain of its wholly-owned subsidiaries (collectively “MetLife P&C”) to Farmers Group, Inc. Also, the Company and the
Farmers Exchanges have established a 10-year strategic partnership through which the Farmers Insurance Group will offer
its personal line products on MetLife’s U.S. Group Benefits platform which will commence when the transaction closes.
For further information on the pending disposition, reported as held-for-sale, see Notes 1 and 3 of the Notes to the
Consolidated Financial Statements.
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We market and sell Property & Casualty products through independent agents, property and casualty specialists and
brokers.
We are a leading provider of personal lines property and casualty insurance products offered to employees at their
employer’s worksite. Marketing representatives market personal lines property and casualty insurance products to
employers through a variety of means, including broker referrals and cross-selling to group customers. Once permitted by
the employer, MetLife commences marketing efforts to employees, enabling them to purchase coverage and to request
payroll deduction over the telephone.
Major Products
Personal Auto
Insurance
Homeowners’
Insurance
Asia
Coverage for private passenger automobiles, utility automobiles and vans, motorcycles, motor
homes, antique or classic automobiles, trailers, liability, uninsured motorist, no fault or personal
injury protection, as well as collision and comprehensive insurance.
Protection for homeowners, renters, condominium owners and residential landlords against losses
arising out of damage to dwellings and contents from a wide variety of perils, as well as coverage
for liability arising from ownership or occupancy.
Our Asia segment offers a broad range of products to both individuals and corporations, as well as to other institutions,
and their respective employees.
We operate in nine jurisdictions throughout Asia, with our largest operation in Japan. See Note 3 of the Notes to the
Consolidated Financial Statements for information regarding the Company's sale of its two wholly-owned subsidiaries,
MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”).
Our Asia operations are geographically diverse encompassing both developed and emerging markets. We market our
products and services through a range of proprietary and third-party distribution channels.
In Japan, our digitally-enabled face-to-face channels, along with bancassurance and direct marketing, continue to be
critical to our overall distribution strategy. Our competitive advantage in bancassurance is based on robust distribution
relationships with Japan’s very large banks, trust banks and various regional banks. Outside of Japan, our distribution
strategies vary by market and leverage a combination of career and independent agencies, bancassurance and direct
marketing (including inbound and outbound telemarketing, online lead generation and sales). In select markets, we also use
independent brokers and our employee sales force to sell group products.
Major Products
Life Insurance
Whole and term life, endowments, universal and variable life, as well as group life products.
Accident & Health
Insurance
Full range of accident & health products, including medical reimbursement, hospitalization,
cancer, critical illness, disability, income protection, personal accident coverage and group health
products.
Retirement and
Savings
Fixed and variable annuities, as well as regular savings products.
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Latin America
Our Latin America segment offers a broad range of products to both individuals and corporations and other institutions
(including local, state and federal governments) and their respective employees. We offer government employees life,
medical insurance, as well as retirement and savings, and other products, and periodically submit bids to do so.
Our largest operations are in Mexico and Chile. We market our products and services through a multi-channel
distribution strategy which varies by geographic region and stage of market development.
We have an exclusive and captive agency distribution network which sells a variety of individual life, accident & health,
and pension products. Our direct marketing channel includes sponsors and telesales representatives selling mainly accident &
health and individual life products directly to consumers. We also work with brokers and independent agents on sales of
group and individual life, accident & health, group medical, dental and pension products, and worksite marketing.
Major Products
Life Insurance
Retirement and
Savings
Whole and term life, endowments, universal and variable life, as well as group life products.
Fixed annuities and pension products. Fixed income annuities provide for both asset accumulation
and asset distribution needs. Our savings-oriented pension products are primarily offered in Chile
under a mandatory privatized social security system. See Note 3 of the Notes to the Consolidated
Financial Statements for information regarding the Company's sale of one of its wholly-owned
Argentinian subsidiaries, MetLife Seguros de Retiro S.A. (“MetLife Seguros de Retiro”).
Accident & Health
Insurance
Group and individual major medical, accidental, and supplemental health products, including
AD&D, hospital indemnity, medical reimbursement, and medical coverage for serious medical
conditions, as well as dental products.
Credit Insurance
Policies designed to fulfill certain loan obligations in the event of the policyholder’s death.
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EMEA
Our EMEA segment offers products to individuals, corporations, other institutions, and their respective employees. See
Note 3 of the Notes to the Consolidated Financial Statements for information regarding the Company's disposition of Joint-
stock Company MetLife Insurance Company (“MetLife Russia”).
We operate across EMEA in both developed (Western Europe) and emerging (Central and Eastern Europe, Middle East
and Africa) markets. Our largest operations are in the U.K., Turkey and the Gulf region. In more mature markets, we focus
our strategy on our preferred market segments to play a “niche” role. We also have a strong market presence in emerging
markets leveraging a multi-channel distribution strategy.
Our businesses in EMEA use captive and independent agency, independent brokerage, bancassurance, corporate
solutions and direct-to-consumer distribution channels.
Major Products
Life Insurance
Accident & Health
Insurance
Traditional and non-traditional life insurance products, such as whole and term life, mortgage
protection, endowments and variable life products, as well as group term life programs in most
markets.
Individual and group personal accident and supplemental health products, including AD&D,
hospital indemnity, scheduled medical reimbursement plans, and coverage for serious medical
conditions. In addition, we provide individual and group major medical coverage in select
markets.
Retirement and
Savings
Variable and fixed annuities, micro constant proportion portfolio insurance and pension
products, including group pension programs in select markets.
Credit Insurance
Designed to fulfill certain loan obligations in the event of the policyholder’s death. Non-life
coverage is also provided for involuntary loss of employment coverage in certain markets.
MetLife Holdings
This segment consists of operations relating to products and businesses that we no longer actively market in the United
States. These include variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-
term care insurance. It also includes assumed variable annuity guarantees from our former operating joint venture in Japan.
Similar to products offered by our Group Benefits business, except that these products were
historically marketed to individuals through various retail distribution channels. For a
description of these products, see “— U.S. — Group Benefits.”
Major Products
Variable, Universal
and Term Life
Insurance
Whole Life Insurance A benefit upon the death of the insured in return for the periodic payment of a fixed premium
over a predetermined period. Whole life insurance includes policies that provide a participation
feature in the form of dividends. Policyholders may receive dividends in cash, or apply them to
increase death benefits, increase cash values available upon surrender or reduce the premiums
required to maintain the contract in-force.
Variable Annuities
Asset accumulation and asset distribution needs. Variable annuities allow the contractholder to
allocate deposits into various investment options in a separate account, as determined by the
contractholder. In certain variable annuity products, contractholders may also choose to allocate
all or a portion of their account to the Company’s general account and are credited with interest
at rates we determine, subject to specified minimums. Contractholders may also elect certain
minimum death benefit and minimum living benefit guarantees for which additional fees are
charged and where asset allocation restrictions may apply.
Fixed and Indexed-
Linked Annuities
Fixed annuities provide for asset accumulation and asset distribution needs. Deposits made into
deferred annuity contracts are allocated to the Company’s general account and are credited with
interest at rates we determine, subject to specified minimums. Fixed income annuities provide a
guaranteed monthly income for a specified period of years and/or for the life of the annuitant.
Additionally, the Company has issued indexed-linked annuities which allow the contractholder
to participate in returns from equity indices.
Long-term Care
Protection against the potentially high costs of long-term health care services. Generally pay
benefits to insureds who need assistance with activities of daily living or have a cognitive
impairment.
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Corporate & Other
Corporate & Other contains various start-up, developing and run-off businesses. Also included in Corporate & Other are:
the excess capital, as well as certain charges and activities, not allocated to the segments (including external integration and
disposition costs, internal resource costs for associates committed to acquisitions and dispositions and enterprise-wide
strategic initiative restructuring charges), interest expense related to the majority of the Company’s outstanding debt,
expenses associated with certain legal proceedings and income tax audit issues, the elimination of intersegment amounts
(which generally relate to affiliated reinsurance, investment expenses and intersegment loans, bearing interest rates
commensurate with related borrowings), and the Company’s investment management business (through which the Company
provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide).
Policyholder Liabilities
We establish, and carry as liabilities, actuarially determined amounts that are calculated to meet policy obligations when
a policy matures or is surrendered, an insured dies or becomes disabled or upon the occurrence of other covered events, or to
provide for future annuity payments. Our liabilities for future policy benefits and claims are established based on estimates by
actuaries of how much we will need to pay for future benefits and claims. For life insurance and annuity products, we
calculate these liabilities based on assumptions and estimates, including estimated premiums to be received over the assumed
life of the policy, the timing of the event covered by the insurance policy, the amount of benefits or claims to be paid and the
investment returns on the investments we make with the premiums we receive. We establish liabilities for claims and benefits
based on assumptions and estimates of losses and liabilities incurred. Amounts for actuarial liabilities are computed and
reported on the consolidated financial statements in conformity with GAAP. For more details on policyholder liabilities see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical
Accounting Estimates — Liability for Future Policy Benefits” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Policyholder Liabilities.”
MetLife, Inc.’s insurance subsidiaries, including affiliated captive reinsurers, establish statutory reserves under methods
prescribed by insurance laws. These reserves are reported as liabilities, and we expect them to be sufficient to meet policy
and contract obligations, when taken together with expected future premiums and interest at assumed rates. Statutory reserves
and actuarial liabilities for future policy benefits reported under GAAP generally differ due to the difference in accounting
requirements.
U.S. state insurance laws and regulations require certain MetLife entities to submit an annual opinion and memorandum
of a qualified actuary. In it, the qualified actuary states that the statutory reserves and related actuarial amounts recorded in
support of specified policies and contracts, and the assets supporting such statutory reserves and related actuarial amounts,
adequately provide for the anticipated cash flow required to meet contractual obligations and related expenses.
Insurance regulators in many of the non-U.S. jurisdictions in which we operate require certain MetLife entities to prepare
and submit a sufficiency analysis of the reserves presented in the locally required regulatory financial statements. See “—
Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis.”
Underwriting and Pricing
We use a variety of underwriting and pricing management controls. Our Global Risk Management Department develops
product pricing standards and oversees underwriting practices in MetLife’s insurance businesses. We also regularly conduct
experience studies to monitor assumptions against expectations, impose formal new product approval processes, periodically
update product profitability studies, and use reinsurance to manage our exposures, as appropriate. See “— Reinsurance
Activity.”
Underwriting
Our underwriters and actuaries use detailed underwriting policies, guidelines and procedures to assess and quantify
insurance risks, and determine the type and the amount of risk we are willing to accept.
Insurance underwriters consider an applicant’s medical history and other factors such as financial profile, foreign travel,
vocations and alcohol, drug and tobacco use. Group insurance underwriters generally evaluate the risk characteristics of the
prospective insured group, but may underwrite members of a group on an individual basis for certain voluntary products and
coverages. Our own employees generally perform our underwriting, but intermediaries review certain policies under
guidelines established by us. Generally, we are not obligated to accept any risk or group of risks from, or to issue a policy or
group of policies to, any employer or intermediary. We review requests for coverage on their merits and issue policies only
after we have examined and approved the particular risk or group under our underwriting guidelines.
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We periodically review all our underwriting to maintain high standards of quality and consistency. Our reinsurers
generally have the right to audit our underwriting.
We use underwriting policies, guidelines, philosophies, and strategies that we intend to be competitive and suitable for
the customer, the agent and us, to facilitate quality sales, and to serve our customers’ needs while supporting our financial
strength and business objectives. We aim to ensure that underwriting risk levels are appropriately reflected in our product
pricing.
For our Property & Casualty business, our underwriting function has six principal aspects: evaluating potential voluntary
and worksite employer accounts and independent agencies; establishing guidelines for the binding of risks; reviewing
coverage bound by agents; underwriting potential insureds, on a case by case basis, presented by agents outside the scope of
their binding authority; pursuing information necessary in certain cases to enable issuance of a policy within our guidelines;
and ensuring that renewal policies continue to be written at rates commensurate with risk. Subject to very few exceptions,
agents in each of the distribution channels have binding authority for risks which fall within our published underwriting
guidelines. Risks falling outside the underwriting guidelines may be submitted for approval to the underwriting department;
alternatively, agents in such a situation may call the underwriting department to obtain authorization to bind the risk
themselves. In most states, we generally have the right within a specified period (usually the first 60 days) to cancel any
policy.
We continually review our underwriting guidelines in light of applicable regulations and to ensure that our policies
remain competitive, support our marketing strategies and profitability goals, and otherwise remain appropriate.
Pricing
Product pricing reflects our globally-consistent standards. Global Risk Management and regional finance and product
teams’ price and oversee all of our insurance businesses. We base our pricing on the expected benefits payout which we
calculate through the use of assumptions for mortality, morbidity, expenses, persistency and investment returns and
macroeconomic factors such as inflation. We price investment-oriented products based on factors such as investment returns,
expenses, persistency, optionality, and possible variability of results.
Our pricing of certain products may include prospective and retrospective experience rating features. For prospective
experience rating, we evaluate past experience to determine future premium rates and we bear all prior year gains and losses.
For retrospective experience rating, we evaluate past experience to determine our cost of providing insurance for the
customer in light of any features that allow us to recoup certain losses or distribute certain gains back to the policyholder
based on prior years’ experience.
We base our rates for group benefit products on anticipated earnings and expenses for the book of business. We
generally re-evaluate renewals annually or biannually and re-price products to reflect our experience on such products.
We price RIS products on demand. Our pricing reflects our expected investment returns, as well as mortality, longevity
and expense assumptions. RIS business is generally nonparticipating and illiquid, as policyholders have few or no options or
contractual rights to cash values. However for our stable value business, pricing reflects the contractholders ability to
withdraw at book value over a period of time as well as our ability to reset rates periodically.
We generally must receive regulatory approval of rates for individual life insurance products. Such rates are highly
regulated, even where we are not required to obtain advance regulatory approval. We generally renew such products
annually, and they may include pricing terms that are guaranteed for a certain period of time.
We price individual disability income products based on anticipated results by occupation.
Our rates for fixed and variable annuity products are also highly regulated, and we also generally must receive regulatory
approval of them. Such products generally include penalties for early withdrawals and policyholder benefit elections to tailor
benefits to policyholder needs. We periodically reevaluate the costs of such options and adjust pricing levels on our
guarantees. We may also reevaluate the type and level of guarantee features we offer.
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For our Property & Casualty business, our ability to set and change rates is subject to regulatory oversight. Rates for our
major lines of property and casualty insurance are based on our proprietary database, rather than relying on rating bureaus.
We determine prices in part from a number of variables specific to each risk. The pricing of personal lines insurance products
takes into account, among other things, the expected frequency and severity of losses, the costs of providing coverage
(including the costs of acquiring policyholders and administering policy benefits and other administrative and overhead costs
such as reinsurance), competitive factors and profit considerations. The major pricing variables for personal lines insurance
include characteristics of the insured property, such as age, make and model or construction type, as well as characteristics of
the insureds, such as driving record and loss experience, and the insured’s personal financial management. As a condition of
our license to do business in each state, we, like all other personal lines insurers, are required to write or share the cost of
private passenger automobile and homeowners insurance for higher risk individuals who would otherwise be unable to obtain
such insurance. This “involuntary” market, also called the “shared market,” is governed by the applicable laws and
regulations of each state, and policies written in this market are generally written at rates higher than standard rates and
typically afford less coverage.
We continually review our pricing guidelines in light of applicable regulations and to ensure that our policies remain
competitive, support our marketing strategies and profitability goals, and otherwise remain appropriate.
Reinsurance Activity
We enter into reinsurance agreements primarily as a purchaser of reinsurance for our various insurance products. We
also provide reinsurance for some third parties’ insurance products. We participate in reinsurance in order to limit losses,
minimize exposure to significant risks, and provide additional capacity for future growth. Our reinsurance covers individual
risks, group risks, or defined blocks of business, primarily on a coinsurance, yearly renewable term, excess, or catastrophe
excess basis. The extent of our retained risks depends on our risk evaluation, subject, in certain circumstances, to maximum
retention limits based on our risk appetite. We also cede first dollar mortality risk under certain contracts. We reinsure both
mortality and other risks. We obtain reinsurance for capital requirement purposes and when its economic impact makes it
appropriate to do so.
We also reinsure for risk and capital management purposes among affiliates, including affiliated captive reinsurers.
Captive reinsurers are affiliated insurance companies licensed as such under the Special Purpose Financial Captive law
adopted by several states, including Vermont and South Carolina. Captive insurers’ very narrow business plans restrict most
or all of their activity to reinsuring business from their affiliates. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources — The Company — Capital — Affiliated Captive
Reinsurance Transactions.”
For information regarding reinsurance by segment, our catastrophic coverage, and ceded reinsurance recoverable
balances, included in premiums, reinsurance and other receivables on the consolidated balance sheets, see Note 6 of the Notes
to the Consolidated Financial Statements.
Regulation
Overview
In the United States (“U.S.”), state regulators primarily regulate our life insurance companies, with additional federal
regulation of some products and services. The insurance holding company laws of various U.S. jurisdictions apply to
MetLife, Inc. and its U.S. insurance subsidiaries. Furthermore, consumer protection laws, privacy, anti-money laundering,
securities, broker-dealer and investment adviser regulations, environmental and unclaimed property laws and regulations, and
the Employee Retirement Income Security Act of 1974 (“ERISA”) also apply to some of MetLife’s operations, products and
services.
Outside of the U.S., insurance regulatory authorities in the jurisdictions in which our insurance businesses are located or
operate principally regulate those businesses. In addition, securities, pension, and other authorities oversee our investment
and pension companies where they operate. Regulators also subject our non-U.S. insurance businesses to current and
developing solvency regimes, which impose various capital and other requirements. Additionally, regulators may enhance
their capital standards, enhance their supervision, and impose additional non-U.S. and global regulatory initiatives.
We expect the scope and extent of regulation and regulatory oversight generally to continue to increase. The regulatory
environment and changes in laws in the jurisdictions in which we operate could materially harm our results of operations.
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Insurance Regulation
Insurance regulation generally aims to protect policyholders and ensure insurance company solvency. Insurance
regulators increasingly seek information about the potential impact of activities on holding company systems as a whole, and
some jurisdictions have asserted “group-wide” supervision, including model laws and regulations developed through the
National Association of Insurance Commissioners’ (“NAIC”) Solvency Modernization Initiative. See “— National
Association of Insurance Commissioners” regarding group-wide supervision.
Each of MetLife’s insurance subsidiaries is licensed and regulated in each jurisdiction where it conducts insurance
business. The extent of such regulation varies, but most jurisdictions regulate the financial aspects and business conduct of
insurers through broad administrative powers with respect to, amongst other things:
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licensing companies and agents to transact business;
calculating the value of assets to determine compliance with statutory requirements;
• mandating certain insurance benefits;
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regulating certain premium rates;
reviewing and approving certain policy forms, including required policyholder disclosures;
regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales
practices, distribution arrangements and payment of inducements, and identifying and paying to the states or local
authorities benefits and other property that is not claimed by the owners;
regulating advertising;
protecting and safeguarding personal information and other sensitive data, including through cybersecurity
standards;
establishing statutory capital and reserve requirements and solvency standards;
specifying the conditions under which a ceding company can take credit for reinsurance in its statutory financial
statements (i.e., reduce its reserves by the amount of reserves ceded to a reinsurer);
fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life
insurance policies and annuity contracts;
adopting and enforcing sales standards with respect to the sale of annuities and other insurance products;
approving changes in control of insurance companies;
restricting the payment of dividends and other transactions between affiliates; and
regulating the types and amounts of investments.
Each insurance subsidiary must file reports, generally including detailed annual financial statements, with insurance
regulatory authorities in each of the jurisdictions in which it does business. Such authorities also periodically examine its
operations and accounts. These subsidiaries must also file, and in many jurisdictions and in some lines of insurance obtain
regulatory approval of, rules, rates, and policy forms relating to the insurance written in the jurisdictions in which they
operate.
Insurance, securities, and other regulatory authorities, other law enforcement agencies, and attorneys general, review
MetLife, Inc. and its insurance subsidiaries for compliance with laws and regulations regarding the conduct of our insurance
and securities businesses. We cooperate with such inquiries and take corrective action when warranted. See Note 21 of the
Notes to the Consolidated Financial Statements.
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In 2020, many government actors and insurance regulators issued regulations, bulletins, directives and guidance in
connection with the novel coronavirus COVID-19 pandemic (the “COVID-19 Pandemic”), some of which have since
expired. These encourage, request or direct health, life, and property and casualty insurance companies to waive cost-sharing
for coronavirus COVID-19 testing, cover telehealth services, provide extended grace periods for premium payments, forbear
on the cancellation or non-renewal of policies due to non-payment of premium, expand coverage for state-mandated
disability and family leave benefits to address COVID-19-related events, and provide other policyholder accommodations.
For example, the New York State Department of Financial Services ("NYDFS") required life insurance- or annuity-
authorized insurers to extend premium and fee payment grace periods to 90 days for policyholders who demonstrated
COVID-19 Pandemic-related financial hardship. The NYDFS also prohibited New York licensed insurers from imposing any
late fees on or reporting policyholders to a credit reporting or debt collection agency for failure to timely pay any life or
annuity premiums, and required such insurers to allow policyholders to pay the premium over a 12-month period. Insurers
were required to accept a policyholder’s written attestation as proof of financial hardship as a result of the COVID-19
Pandemic.
U.S. Federal Initiatives
U.S. federal initiatives often affect our business in a variety of ways, including regulation of financial services,
securities, derivatives, pensions, health care, money laundering, foreign sanctions and corrupt practices, and taxation. In
addition, legislators and policymakers propose various forms of direct and indirect federal regulation of insurance from
time to time, including proposals for the establishment of an optional federal charter for insurance companies. See “Risk
Factors — Regulatory and Legal Risks — Changes in Laws or Regulation, or in Supervisory and Enforcement Policies,
May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) increased the potential federal role
in regulating businesses such as ours, including in the following ways:
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The Financial Stability Oversight Council may designate certain financial companies as non-bank systemically
important financial institutions (“non-bank SIFI”) subject to supervision by the Board of Governors of the Federal
Reserve System (“Federal Reserve Board”) and the Federal Reserve Bank of New York (collectively with the
Federal Reserve Board, the “Federal Reserve”).
The Federal Insurance Office within the Department of the Treasury may participate in the negotiations of
international insurance agreements with foreign regulators for the U.S., collect information about the insurance
industry, and recommend prudential standards.
If an insurance holding company such as MetLife, Inc. or another non-insurance financial institution were to become
insolvent or were in danger of defaulting on its obligations, and regulators determined that this would have serious
adverse effects on financial stability in the U.S., then the Federal Deposit Insurance Corporation (“FDIC”) may
liquidate such a company as receiver. In that case, the Bankruptcy Code, which ordinarily governs liquidations,
would not apply. The FDIC’s purpose would be to mitigate the systemic risks the institution’s failure poses. This is a
different objective from that of a bankruptcy trustee under the Bankruptcy Code. In such a liquidation, the holders of
such company’s debt could in certain respects be treated differently than under the Bankruptcy Code. The FDIC has
established rules relating to the priority of creditors’ claims and the potentially dissimilar treatment of similarly
situated creditors. These provisions could apply to some financial institutions whose outstanding debt securities we
hold in our investment portfolios. However, state insurance laws would continue to apply to an insurance company
resolution.
•
Dodd-Frank provisions may also affect the investments and investment activities of MetLife, Inc. and its
subsidiaries, including imposing federal regulation of such activities.
Dodd-Frank and its implementing regulations have changed since the law was adopted. As a result of these changes,
and potential changes, we cannot identify all the risks and opportunities, if any, they pose to our businesses. See “Risk
Factors — Regulatory and Legal Risks — Changes in Laws or Regulation, or in Supervisory and Enforcement Policies,
May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.”
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The federal government's 2020 response to the COVID-19 pandemic has affected us. For example, the U.S. federal
government established paid sick leave and expanded other leave laws to cover certain COVID-19 Pandemic related
events. The U.S. federal government also added certain tax-favored withdrawals and increased loan withdrawal limitations
from eligible retirement plans, and temporarily waived required minimum distribution rules for qualified retirement plan
participants and Individual Retirement Accounts (“IRA”) owners. We also granted concessions to certain of our
commercial, agricultural and residential mortgage loan borrowers, including payment deferrals and other loan
modifications, as well as to certain of our lessees (operating and direct financing leases), primarily in the form of rent
deferrals. In addition, we have made certain accounting elections regarding loan and lease concessions related to the
Federal Government’s pandemic relief efforts. See “Investments — Mortgage Loans — Mortgage Loan Concessions” and
“Investments — Leases — Lease Concessions” in Note 8 of the Notes to the Condensed Consolidated Financial
Statements.
Until January 2021, the McCarran–Ferguson Act largely exempted insurance from U.S. antitrust laws. At that time, the
Competitive Health Insurance Reform Act applied U.S. antitrust laws to the “business of health insurance” and expanded
U.S. regulatory authority accordingly. We expect regulatory oversight and litigation risk for U.S. products, including dental
and vision, to increase.
Health Care Regulation
The U.S. excise tax known as the “health insurer fee” was in force for the 2020 calendar year (though not for 2019).
The health insurer fee no longer applies for calendar years beginning after December 31, 2020. However, demand for and
pricing of products remain subject to tax uncertainty. Federal health care statutes and related regulation have imposed
increased and unpredictable costs on certain products and may have additional adverse effects. They have also harmed our
competitive position, as these rules have a disparate impact on our products compared to products offered by our not-for-
profit competitors. See “Risk Factors — Regulatory and Legal Risks — Changes in Laws or Regulation, or in Supervisory
and Enforcement Policies, May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.”
Guaranty Associations and Similar Arrangements
Many jurisdictions in which our insurance subsidiaries transact business require life, health and property and casualty
insurers to participate in guaranty or similar associations. These arrangements pay certain insurance benefits owed by
impaired, insolvent or failed insurers. We have established liabilities for guaranty fund assessments that we consider
adequate. See Note 21 of the Notes to the Consolidated Financial Statements for additional information on the guaranty
association assessments.
Insurance Regulatory Examinations and Other Activities
U.S. state insurance departments periodically examine the books, records, accounts, and business practices of their
domiciled insurers. State insurance departments may also conduct examinations of non-domiciliary insurers licensed in
their states.
In 2019, MetLife entered into a consent order with the NYDFS relating to the open market conduct quinquennial exam
and paid a fine and customer restitution and submitted remediation plans for approval. Except for this consent order or as
described in Note 21 of the Notes to the Consolidated Financial Statements, during the years ended December 31, 2020,
2019 and 2018, MetLife did not receive any material adverse findings resulting from state insurance department
examinations of its insurance subsidiaries.
In 2018, Pennsylvania, California, Florida, North Dakota and New Hampshire insurance regulators scheduled a
multistate market conduct re-examination of MetLife and its affiliates relating to compliance with a regulatory settlement
agreement on unclaimed proceeds. This examination is ongoing.
Regulatory authorities in a small number of states, the Financial Industry Regulatory Authority (“FINRA”) and,
occasionally, the U.S. Securities and Exchange Commission (the “SEC”) have conducted investigations or made inquiries
relating to sales of individual life insurance policies, annuities or other products written by our insurance or broker-dealer
subsidiaries. These investigations often focus on the conduct and/or supervision of particular financial services
representatives, the sale of unregistered or unsuitable products, the misuse of client assets, or sales and replacements of
annuities and certain riders on such annuities. Over the past several years, we resolved these (and a number of
investigations by other regulators) for monetary payments and certain other relief, including restitution payments. We may
continue to receive, and may resolve, further investigations and actions on these matters in a similar manner.
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Insurance standard-setting and regulatory support organizations, including the NAIC, encourage insurance supervisors
to establish Supervisory Colleges. These organizations facilitate cooperation and coordination among insurance supervisors
to enhance their understanding of the risk profile of U.S.-based insurance groups with international operations. MetLife’s
lead state regulator, the NYDFS, regularly chairs Supervisory College meetings that MetLife’s key U.S. and non-U.S.
regulators attend.
Regulators supervise our non-U.S. insurance and pension businesses through periodic examinations of insurance
company books and records, financial reporting requirements, market conduct examinations and policy filing requirements.
The European Insurance and Occupational Pensions Authority (“EIOPA”), along with European legislation, requires
European regulators, such as the Central Bank of Ireland, to establish Supervisory Colleges for European Economic Area
(“EEA”)-based insurance groups with significant European operations, including MetLife. These colleges facilitate
cooperation and coordination among European supervisors to enhance their understanding of an insurance group’s risk
profile.
In 2019, we and other insurance and pension fund companies provided annuities sales practices information to the
Chilean insurance and pension regulators. The regulators found that non-employee sales agents of MetLife Chile and other
insurers had engaged in improper sales practices and that ProVida S.A. and other pension fund companies provided
improper advice to customers. MetLife Chile and ProVida S.A. are contesting the regulators’ proposed fines.
In addition, regulators have scrutinized insurers’ claims payment practices. See Note 21 of the Notes to the
Consolidated Financial Statements for further information regarding group annuity benefits, retained asset accounts and
unclaimed property inquiries, including pension benefits.
Policy and Contract Reserve Adequacy Analysis
Our U.S. insurance subsidiaries, including affiliated captive reinsurers, must annually analyze their statutory reserves
adequacy. In each case, a qualified actuary must submit an opinion that states that the statutory reserves make adequate
provision, according to accepted actuarial standards of practice, for the anticipated cash flows required by the contractual
obligations and related expenses of the U.S. insurance subsidiary. The actuary considers the adequacy of the statutory
reserves in light of the assets held by the insurer with respect to such reserves and related actuarial items, such as the
investment earnings on such assets and the consideration the insurer anticipates receiving and retaining under the related
policies and contracts. We may increase reserves in order to submit such an opinion without qualification. Our U.S.
insurance subsidiaries that must provide these opinions have done so without qualifications since this requirement began.
Many of our non-U.S. insurance operations must also analyze the adequacy of their statutory reserves. In most of those
cases, a locally qualified actuary must submit an analysis of the likelihood that the reserves make adequate provision for
the insurer’s associated contractual obligations and related expenses. Regulatory and actuarial analytic standards vary
widely.
National Association of Insurance Commissioners
The NAIC assists U.S. state insurance regulatory authorities to serve the public interest and achieve their regulatory
goals. State insurance regulators may act independently or adopt regulations proposed by the NAIC. State insurance
regulators and the NAIC regularly re-examine existing insurance laws and regulations. State insurance regulators establish
standards and best practices, conduct peer reviews, and coordinate their regulatory oversight through the NAIC. The NAIC
also provides standardized insurance industry accounting and reporting guidance through its Accounting Practices and
Procedures Manual (the “Manual”), which states have largely adopted by regulation. However, individual states establish
statutory accounting principles, which may differ from the Manual. Changes to the Manual or modifications by the various
state insurance departments may affect the statutory capital and surplus of MetLife, Inc.’s U.S. insurance subsidiaries.
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U.S. state insurance holding company laws and regulations are generally based on the NAIC Model Holding Company
Act and Regulation. These vary from jurisdiction to jurisdiction, but generally require a controlled insurance company (i.e.,
insurers that are subsidiaries of insurance holding companies) to register and file reports with state regulatory authorities on
its capital structure, ownership, financial condition, intercompany transactions and general business operations. They
require the ultimate controlling person of a U.S. insurer to file an annual enterprise risk report with the lead state of the
insurance holding company system. This report identifies risks likely to have a material adverse effect upon the financial
condition or liquidity of the insurer or its insurance holding company system as a whole. Each of our insurance
subsidiaries’ domiciliary states has enacted laws to implement these requirements, including the enterprise risk reporting
requirement. The holding company laws also authorize state insurance commissioners to act as global group-wide
supervisors for internationally active insurance groups (“IAIGs”), as well as other insurers that choose to opt in for the
group-wide supervision. These laws provide confidentiality protection for communications with the group-wide supervisor.
Nearly all states have adopted laws and regulations enhancing group-wide supervision. In 2020, the NYDFS amended its
laws to permit the New York Superintendent of Financial Services (“Superintendent”) to act as a group-wide supervisor for
IAIGs.
In furtherance of the NAIC’s “Solvency Modernization Initiative,” the NAIC has updated model acts and regulations
to address insurance company financial regulation, and in particular capital requirements; corporate governance and risk
management practices; group supervision; liquidity stress testing, statutory accounting and financial reporting; and
reinsurance.
The NAIC’s Corporate Governance Annual Disclosure Model Act requires insurers to annually file detailed
information regarding their corporate governance policies. As of December 31, 2020, it had been substantially adopted by
most states.
Each of our insurance subsidiaries’ domiciliary states has also adopted the Risk Management and Own Risk and
Solvency Assessment Model Act, which requires insurers to maintain a risk management framework and to document an
internal own risk and solvency assessment (“ORSA”) of its material risks in normal and stressed environments. MetLife,
Inc. has submitted on behalf of the enterprise an ORSA summary report to the NYDFS annually since this requirement
became effective.
The NAIC has also approved a valuation manual containing a principle-based approach to the calculation of life
insurance reserves (the “Valuation Manual”). Principle-based reserving (“PBR”) is designed to better address reserving for
life insurance and annuity products. Principle-based reserving has been adopted by all the domiciliary states of MetLife’s
insurance subsidiaries. The NYDFS promulgated a regulation in 2019 that affirms the Superintendent’s authority to deviate
from the Valuation Manual to adjust the reserves of a New York domestic life insurance company, such as MLIC, if the
NYDFS determines that an alternative requirement would be in the best interest of New York policyholders. In February
2020, the NYDFS amended the regulation. As a result, as of December 31, 2020, we increased our statutory reserves by
approximately $700 million and our statutory capital requirements by approximately $300 million over the prior reserve
and capital requirements. We graded these effects into our statutory financial statements over a one year period so the full
impact is reflected as of December 31, 2020.
The NAIC has been focused on a macro-prudential initiative since 2017, which is intended to enhance risk
identification efforts by building on the state-based regulation system. In furtherance of this initiative, the NAIC adopted
changes to its Statutory Annual Statement reporting, effective for year-end 2019, to improve liquidity risk monitoring. In
December 2020, the NAIC adopted amendments to the Model Holding Company Holding Act and Regulation that
implement requirements related to a liquidity stress-testing framework, consistent with MetLife’s liquidity risks policies
and procedures, for certain large U.S. life insurers and insurance groups, to be used as a regulatory tool, based on amounts
of certain types of business written or material exposure to certain investment transactions, such as derivatives and
securities lending. These amendments now have to be adopted by state legislatures to become effective.
We use capital markets solutions to finance a portion of our statutory reserve requirements for several products. These
include level premium term life product subject to the NAIC’s Valuation of Life Insurance Policies Model Regulation
(commonly referred to as Regulation XXX), universal and variable life policies with secondary guarantees (“ULSG”)
subject to NAIC Actuarial Guideline 38 (commonly referred to as Guideline AXXX), and MLIC’s closed block. The NAIC
created a regulatory framework applicable to the use of captive insurers in connection with Regulation XXX and Guideline
AXXX transactions which has enhanced statutory financial statement disclosure of an insurer's use of captives. The
framework narrowed the types of assets permitted to back statutory reserves that are required to support the insurer’s future
obligations.
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The NAIC also requires the actuary of a ceding insurer to opine on the insurer’s reserves and to issue a qualified
opinion if the framework described above, as set forth in Actuarial Guideline 48 (“AG 48”), is not followed. The NAIC’s
Term and Universal Life Insurance Reserve Financing Model Regulation contains the same substantive requirements as
AG 48, as amended by the NAIC in 2016, and it establishes uniform, national standards governing reserve financing
arrangements pertaining to the term life and universal life insurance policies with secondary guarantees. This model
regulation has only been adopted by a few states, including one of our insurance subsidiaries’ domiciliary states.
We cannot predict the capital and reserve impacts, compliance costs, or other effects these initiatives will have on our
business, financial condition or results of operations.
Surplus and Capital
Insurers must maintain their capital and surplus at or above minimum levels prescribed by the laws of their respective
jurisdictions. Regulators generally have discretionary authority to limit or prohibit an insurer’s sales to policyholders if the
insurer has not maintained a minimum surplus or capital or if they find that the further transaction of business will be
hazardous to policyholders.
State insurance statutes also typically restrict the dividends or other distributions an insurance company subsidiary may
pay to its parent companies and limit the transactions between an insurer and its affiliates. Dividends in excess of
prescribed limits and transactions above a specified size between an insurer and its affiliates require the approval of the
insurance regulator in the insurer’s state of domicile. See “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Liquidity and Capital Resources — MetLife, Inc. — Liquidity and Capital Sources —
Dividends from Subsidiaries.” See also “Dividend Restrictions” in Note 16 of the Notes to the Consolidated Financial
Statements for further information regarding such limitations.
Non-U.S. jurisdictions also restrict the amount of such dividends and other distributions. For example, a portion of the
annual earnings of our Japan operations may be repatriated each year, and may further be distributed to MetLife, Inc. as a
dividend. We may determine not to repatriate profits from the Japan operations or to repatriate a reduced amount in order
to maintain or improve the solvency of the Japan operations or for other reasons. In addition, the Financial Services
Agency in Japan (“FSA”) may limit or not permit profit repatriations or other transfers of funds to the U.S. if such transfers
would be detrimental to the solvency or financial strength of our Japan operations or for other reasons.
Several non-U.S. insurance regulators urged insurance companies to preserve funds during the COVID-19 Pandemic.
For example, the EIOPA suggested that insurance companies temporarily suspend discretionary dividends during the
COVID-19 Pandemic.
For developments that could affect our ratio of free cash flow to adjusted earnings results, and thus our surplus and
capital, see “Risk Factors.”
Risk-Based Capital
Most of our U.S. insurance subsidiaries are subject to risk-based capital (“RBC”) requirements developed by the
NAIC and adopted by their respective domiciliary states. Insurers calculate RBC annually based on a formula that
applies factors to various asset, premium, claim, expense and statutory reserve items, taking into account asset,
insurance, interest rate, and market and business risk characteristics. Regulators use the formula as an early warning tool
to identify insurers that may be inadequately capitalized for purposes of initiating regulatory action, and not as a means
to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by,
or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. We
expect our statutory financial statements to reflect that the total adjusted capital of each of our subsidiaries subject to
these requirements was in excess of each of those RBC levels at year-end 2020, as they did for year-end 2019. See
“Statutory Equity and Income” in Note 16 of the Notes to the Consolidated Financial Statements and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The
Company — Capital — Statutory Capital and Dividends.”
The NYDFS issues annual letters on Special Considerations (“SCL”) to New York-licensed insurance companies,
including MLIC, that affect year-end asset adequacy testing. An SCL could require assumptions that require us to
increase or release certain asset adequacy reserves, which could materially impact our statutory capital and surplus. We
did not change our statutory capital and surplus in either 2019 or 2020 as a result of the SCL. See “Statutory Equity and
Income” in Note 16 of the Notes to the Consolidated Financial Statements.
We calculate our internally-defined “Statement-Based Combined RBC Ratio” by dividing the sum of total adjusted
capital for MetLife, Inc.’s principal U.S. insurance subsidiaries, excluding American Life Insurance Company
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(“American Life”), by the sum of company action level RBC for such subsidiaries, including SCL considerations. Our
Statement-Based Combined RBC Ratio was in excess of 350% at December 31, 2020 and in excess of 360% at
December 31, 2019. By contrast, we calculate an “NAIC-Based Combined RBC Ratio” based on such subsidiaries’
statutory-based filed financial statements and NAIC capital and reserving standards. This NAIC-Based Combined RBC
Ratio was in excess of 380% at both December 31, 2020 and 2019. We are not aware of any upcoming NAIC adoptions
or state insurance department regulation changes that would have a material impact on our NAIC-Based Combined RBC
Ratio.
The NAIC adopted revisions to certain factors used to calculate Life RBC, which is the denominator of the RBC
ratios, in light of changes to U.S. tax laws in recent years. These revisions have resulted in increased RBC charges and
reduced the RBC ratios of our insurance subsidiaries. The NAIC is also studying RBC revisions for real estate equity,
bonds and longevity risk, but it is premature to project the impact of any potential regulatory changes resulting from such
proposals.
The NAIC developed a group capital calculation tool using an RBC aggregation methodology for all entities within
the insurance holding company system, including non-U.S. entities. In December 2020, the NAIC adopted the Group
Capital Calculation Template and Instructions, as well as amendments to the Model Holding Company Act and
Regulation. The amendments implement the annual filing requirement for the group capital calculation that now have to
be adopted by state legislatures or regulatory agencies to become effective. We cannot predict what impact such
regulatory tool may have on our business.
In 2020, the NAIC issued guidance on RBC addressing debt restructuring due to the economic impact of the
COVID-19 Pandemic, where the counterparty might seek concessions. The guidance provides that an insurer does not
need to reclassify the RBC category of some loans or other assets on which it has granted a concession. This may avoid a
higher capital charge for the asset. The NAIC extended this guidance through January 1, 2022 in further support of the
use of prudent loan modifications to mitigate the impact of the COVID-19 Pandemic.
Solvency Regimes
Our insurance business throughout the EEA is subject to the Solvency II Directive and its implementing rules. These
cover the capital adequacy, risk management and regulatory reporting for insurers and reinsurers. Solvency II harmonizes
insurance regulation across the European Union (“EU”). Each EEA member state has transposed the Solvency II Directive
into its regulatory architecture. Its capital requirements are forward-looking and based on the risk profile of each individual
insurance company in order to promote comparability, transparency and competitiveness. In line with the requirements,
impacted MetLife entities calculate and report their solvency capital requirement using a standard formula prescribed by
the Solvency II Directive and further regulation by the European Commission.
The U.K. ceased to be a member of the EU in January 2020, and following the expiry of a transition period on
December 31, 2020, the U.K. is no longer subject to EU law. The relationship between the U.K. and the EU is now
governed by the terms and conditions of a Trade and Cooperation Agreement (the “Trade Agreement”). The Trade
Agreement does not contain many substantive provisions relating to financial services and, therefore, there is currently no
change to capital adequacy, risk management and regulatory reporting requirements for U.K. authorized insurers and
reinsurers. However, it is possible that the U.K.’s domestic prudential regime may begin to diverge from the Solvency II
Directive over time. The U.K. is currently undertaking a review of the Solvency II Directive and of the regulatory regime
that is applicable to U.K. authorized insurers and reinsurers. We expect to maintain our existing operating model, including
as an inbound EEA-insurer, under the U.K.’s Temporary Permissions Regime (“TPR”), which is due to last for at least
three years and will permit MetLife to carry on its insurance business in the U.K. during that period.
Mexico has adopted a Solvency II-type regulatory framework which imposes reserve and capital requirements and
corporate governance to foster transparency. In line with the requirements of the local Solvency II, insurance companies
calculate and report their capital requirement using a standard formula designed by the local regulators (“CNSF”). In
addition, as required, certain MetLife entities must submit annual ORSA reports to the CNSF on an ongoing basis.
In Chile, the law implementing Solvency II-like regulation continues in the studies stage. The implementation date for
the new solvency regime has not yet been set; however, it could be in force within four years after the final regulation is
published. MetLife Chile timely implemented governance changes and risk policies to comply with prior regulatory
changes. MetLife Chile also submitted its most recent risk appetite framework and ORSA reports to the regulator in
December 2020.
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The Superintendence of Private Insurance, the Brazilian insurance regulator, has established an insurance framework
for minimum capital requirements based on risk, criteria for investment activities, a formal risk management function, and
a formal enterprise risk management framework. MetLife Brazil has formalized the designation of a local risk manager and
implemented governance structures and risk management framework components in accordance with local regulatory
requirements.
Japanese law requires insurers to maintain solvency standards to protect policyholders and to support their own
financial strength. Most Japanese life insurers maintain a solvency margin ratio well in excess of the legally mandated
minimum. In addition, we expect Japan to introduce an economic value-based solvency regime within the next few years.
In China, the business of our joint venture (as well as the industry) has been implementing China Risk Oriented
Solvency System (“C-ROSS”), a risk-based solvency regime. Like Solvency II, C-ROSS focuses on risk management and
has three pillars (strengthen quantitative capital requirements, enhance qualitative supervision and establish a governance
and market discipline process).
The Korea Financial Supervisory Service plans to implement a new solvency system by 2023. We expect this system
to reflect the International Association of Insurance Supervisors (“IAIS”) global Insurance Capital Standard and
incorporate certain product portfolio and other features specific to the Korean market. We also expect this system to
include mark-to-market valuation, which would generally increase capital requirements.
IAIS
The IAIS is an association of insurance supervisors and regulators and a member of the Financial Stability Board
(“FSB”), an international entity established to coordinate, develop and promote regulatory, supervisory and other financial
sector policies in the interest of financial stability. The IAIS participates in the FSB’s initiative to identify and manage
systemic risk globally. The IAIS has adopted a holistic framework for the assessment and mitigation of systemic risk in the
global insurance sector (the “Holistic Framework”). The framework monitors the build-up of vulnerabilities at
jurisdictional and global levels to address any such risk through the application of enhanced supervisory measures based on
existing insurance core principles and the common framework for supervision of IAIGs. The FSB annually designated
MetLife, Inc. a globally systemically important insurer (“G-SII”) from 2016 to 2019, but the FSB suspended our G-SII
identification beginning in 2020. The FSB may discontinue or re-establish the G-SII designation system based on the
implementation results of the Holistic Framework.
An IAIS proposal becomes effective when it is enacted through legislation or regulation in the applicable jurisdiction.
As MetLife, Inc. is not a U.S. non-bank SIFI, the impact on MetLife, Inc. of the IAIS’s global proposals is uncertain.
New York Insurance Regulation 210
Insurance Regulation 210 establishes standards for the determination and any readjustment of non-guaranteed elements
(“NGEs”) that may vary at the insurer’s discretion for life insurance policies and annuity contracts delivered or issued for
delivery in New York. NGEs include cost of insurance for universal life insurance policies, as well as interest crediting
rates for annuities and universal life insurance policies. The regulation requires insurers to notify policyholders at least 60
days in advance of any change in NGEs that is adverse to policyholders and, with respect to life insurance, to notify the
NYDFS at least 120 days prior to any such changes. The regulation also requires insurers to inform the NYDFS annually of
any changes adverse to policyholders made in the prior year. The regulation generally prohibits insurers from increasing
profit margins for in-force policies or adjusting NGEs in order to recoup past losses.
Cybersecurity and Privacy Regulation
Various U.S. federal and state government agencies protect the privacy and security of personal information. A number
of jurisdictions outside the U.S. safeguard the privacy and security of personal information. These laws and rules vary
significantly from jurisdiction to jurisdiction. Insurance and other regulators are also increasingly focused on cybersecurity.
New York’s cybersecurity regulation for financial services institutions, including banking and insurance entities under its
jurisdiction, requires these entities to establish and maintain a cybersecurity program designed to protect consumers’ private
data. The regulation requires covered entities to assess risks associated with their information systems and establish and
maintain a cybersecurity program designed to protect the confidentiality, integrity, and availability of such systems and data.
Specifically, it provides for: (i) controls relating to the governance framework for a cybersecurity program; (ii) risk-based
minimum standards for technology systems for data protection; (iii) minimum standards for cyber breach responses,
including notice to the NYDFS of material events; and (iv) identification and documentation of material deficiencies,
remediation plans and annual certifications of regulatory compliance to the NYDFS.
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The NAIC’s Insurance Data Security Model Law (the “Cybersecurity Model Law”) established standards for data
security and for the investigation of and notification of insurance commissioners of cybersecurity events involving
unauthorized access to, or the misuse of, certain nonpublic information. The Cybersecurity Model Law imposes regulatory
requirements intended to protect the confidentiality, integrity, and availability of information systems. Several states have
adopted the Cybersecurity Model Law, including some of our insurance subsidiaries’ domiciliary states.
California residents have the right to know what information a business has collected from them and the sourcing and
sharing of that information. They also have a right to have a business delete their personal information (with some
exceptions), and in certain instances, to limit the use of their personal information. Regulators may impose fines for
violations, and individuals have a private right of action for any unauthorized disclosure of personal information as a result of
failure to maintain reasonable security procedures. While a significant portion of our business is exempted from these specific
requirements, Health Insurance Portability and Accountability Act and the insurance laws of several states grant similar rights
to insureds.
The General Data Protection Regulation (“GDPR”) establishes uniform data privacy laws across the EU. The U.K. Data
Protection Act of 2018 (“U.K. GDPR”) implements provisions of the GDPR with respect to personal data originating from
within the U.K. GDPR and the U.K. GDPR apply to EU and U.K. entities, respectively, as well as entities not established in
the EU and/or the U.K., that offer goods or services to data subjects in the EU and/or the U.K., or monitor consumer behavior
that takes place in the EU and/or the U.K. Regulators may impose fines for non-compliance. Following the U.K.’s exit from
the EU, the U.K. GDPR may diverge from GDPR over time.
ERISA, Fiduciary Considerations, and Other Pension and Retirement Regulation
We provide products and services to certain employee benefit plans that are subject to ERISA and the Internal Revenue
Code of 1986, as amended (the “Code”). ERISA and the Code impose restrictions, including fiduciary duties to perform
solely in the interests of ERISA plan participants and beneficiaries, and to avoid certain prohibited transactions. The
applicable provisions of ERISA and the Code are subject to enforcement by the U.S. Department of Labor (“DOL”), the
Internal Revenue Service (“IRS”) and the Pension Benefit Guaranty Corporation.
The prohibited transaction rules of ERISA and the Code generally restrict the provision of investment advice to ERISA
plans and participants and IRAs if the investment recommendation results in fees paid to an individual advisor, the firm that
employs the advisor or their affiliates that vary according to the investment recommendation chosen, unless an exemption or
exception is available. Similarly, without an exemption or exception, fiduciary advisors are prohibited from receiving
compensation from third parties in connection with their advice. ERISA also affects certain of our in-force insurance policies
and annuity contracts, as well as insurance policies and annuity contracts we may sell in the future.
The SEC adopted Regulation Best Interest in 2020, requiring broker-dealers to act in the best interest of individual
investor retail clients when recommending securities or investment strategies, including recommendations to IRA owners, as
well as non-benefit plan retail clients. In addition, broker-dealers and investment advisers to retail clients must describe their
services and conflicts of interest to their retail customers in client relationship summary disclosure and deliver a copy of the
Form to their retail customers. In December 2020, the DOL released the final version of the prohibited transaction exemption
(“PTE”) 2020-02 to allow investment advice fiduciaries to receive compensation without violating ERISA, subject to
impartial conduct standards and disclosure obligations aligned with the new SEC rules. In the preamble to PTE 2020-02, the
DOL also provided its final interpretation of the five-part test used to determine whether a person is acting as an ERISA
investment advice fiduciary. PTE 2020-02 became effective on February 16, 2021. The new US presidential administration
has ordered a pause on regulatory changes initiated before it took office. As a result, it may delay, change, or withdraw this
rule.
State regulators and legislatures in Nevada, New Jersey, Maryland and New York have proposed measures that would
make broker-dealers, sales agents, and investment advisers and their representatives subject to a fiduciary duty when
providing products and services to customers, including pension plans and IRAs, and Massachusetts has enacted a law to that
effect. The NYDFS’s regulation incorporates the “best interest” standard and expands the scope of the regulation beyond
annuity transactions to include sales of life insurance policies to consumers. This Regulation Best Interest under the
Securities Exchange Act of 1934, as amended (“Exchange Act”) does not include a private right of action, although the SEC
did not indicate an intent to pre-empt state regulation in this area, and some of the state proposals and adopted regulations
would allow for a private right of action. As a result of these developments, it is possible that it may become more costly to
provide our products and services in the states subject to the new rules.
In 2020, the Chilean Congress approved two bills, each one of which allowed individuals to withdraw up to 10% of
pension accounts or the account balance if it is below a certain amount. ProVida S.A. and other companies in the industry
continue to process such payments. Chile also continues to consider further pension reforms that could affect our business.
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Consumer Protection Laws
Numerous federal and state laws affect our earnings and activities, including federal and state consumer protection laws.
As part of Dodd-Frank, Congress established the Consumer Financial Protection Bureau (“CFPB”) to supervise and regulate
institutions that provide certain financial products and services to consumers. Although the consumer financial services
subject to the CFPB’s jurisdiction generally exclude insurance business of the kind in which we engage, the CFPB does have
authority to regulate non-insurance consumer services we provide. Consumer protection laws in non-U.S. jurisdictions may
also affect us.
Investments Regulation
State laws and regulations limit the amount of investments that our U.S. insurance subsidiaries may have in certain asset
categories, such as below investment grade fixed income securities, real estate equity, other equity investments, and
derivatives, and require diversification of investment portfolios. Investments exceeding regulatory limitations are not
admitted for purposes of measuring surplus. In some instances, laws require us to divest any non-qualifying investments. In
addition, many of our non-U.S. insurance subsidiaries and pension companies are subject to other investment laws and
regulations.
Changing global financial and economic environments, and the fiscal and monetary policy of governments and central
banks around the world, continue to affect our global insurance business. These may affect interest rates, and thereby the
pricing levels of risk-bearing investments, as well as our business operations, investment portfolio, and derivatives.
Derivatives Regulation
Dodd-Frank includes a framework of regulation of the over-the-counter (“OTC”) derivatives markets requiring clearing
of certain types of interest rate and credit default swap transactions and imposes additional costs, including reporting and
margin requirements. Our costs of risk mitigation are increasing under Dodd-Frank. For example, Dodd-Frank imposes
requirements to pledge variation and/or initial margin (i) for “OTC-cleared” transactions (OTC derivatives that are cleared
and settled through central clearing counterparties), and (ii) for “OTC-bilateral” transactions (OTC derivatives that are
bilateral contracts between two counterparties); the margin requirements for OTC-cleared transactions and the variation
margin requirements for OTC-bilateral derivatives are already in effect, while the initial margin requirements for OTC-
bilateral swap transactions are expected to become applicable to us in September 2021.
We expect increased margin requirements, and capital charges for our counterparties and central clearinghouses related
to holding non-cash collateral, to continue to increase our required holdings of cash and government securities. This may
cause lower yields and reduce our income due to less favorable pricing for OTC-cleared and OTC-bilateral transactions.
Centralized clearing of certain OTC derivatives exposes us to the risk of a default by a clearing member or clearinghouse
with respect to our cleared derivative transactions. We use derivatives to mitigate a wide range of risks in connection with our
businesses, including the impact of increased benefit exposures from certain of our annuity products that offer guaranteed
benefits. We have always been subject to the risk that hedging and other management procedures might prove ineffective in
reducing the risks to which insurance policies expose us, or that unanticipated policyholder behavior or mortality, combined
with adverse market events, could produce economic losses beyond the scope of the risk management techniques employed.
Any such losses could be increased by higher costs of writing derivatives (including customized derivatives) and the reduced
availability of customized derivatives that might result from the implementation of Dodd-Frank and comparable international
derivatives regulations.
Dodd-Frank also expanded the definition of “swap” and mandated the SEC and U.S. Commodity Futures Trading
Commission (“CFTC”) to study whether “stable value contracts” should be treated as swaps. Pursuant to the new definition
and the SEC’s and CFTC’s interpretive regulations, products offered by our insurance subsidiaries other than stable value
contracts might also be treated as swaps. Should such products become regulated as swaps, we cannot predict how the rules
would be applied to them or the effect on such products’ profitability or attractiveness to our clients. Special federal banking
rules apply to certain qualified financial contracts, including many derivatives contracts, securities lending agreements and
repurchase agreements, with banking institutions and certain of their affiliates. These rules generally require the banking
institutions and their applicable affiliates to limit or delay their counterparties default rights (such as the right to terminate the
contracts or foreclose on collateral) and restrict assignments and transfers of credit enhancements (such as guarantees) in
connection with the banking institution or affiliate bankruptcy, insolvency, resolution or similar proceeding. These rules
could limit our recovery in the event of a default, limit our ability to close-out transactions upon the bankruptcy of an affiliate
of our counterparty, and increase our counterparty risk.
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We expect the amount of collateral we are required to pledge and the payments we are required to make under our OTC
swaps transactions to increase as a result of the requirement to pledge initial margin for OTC-bilateral transactions, based on
the final margin requirements for non-centrally cleared derivatives.
The SEC’s Capital Requirements for Swap Dealers and Major Swap Participants are scheduled to take effect in October
2021. However, we do not expect these requirements to affect our business significantly.
Securities, Broker-Dealer and Investment Adviser Regulation
U.S. federal and state securities laws and regulations apply to insurance products that are also “securities,” including
variable annuity contracts and variable life insurance policies, and certain fixed interest rate or index-linked contracts with
features that require them to be deemed as securities or sold through private placement issuances. As a result, some of our
subsidiaries and their activities in offering and selling variable insurance contracts and policies are subject to extensive
regulation under these securities laws.
Federal and state securities laws and regulations generally grant regulatory agencies broad rulemaking and enforcement
powers, including the power to adopt new rules impacting new or existing products, regulate the issuance, sale and
distribution of our products and limit or restrict the conduct of business for failure to comply with such laws and regulations.
In some non-U.S. jurisdictions, some of our insurance products are considered “securities” under local law, and we may be
subject to local securities regulations and oversight by local securities regulators.
Some of our subsidiaries and their activities in offering and selling variable insurance products are subject to extensive
regulation under the federal securities laws and regulations administered by the SEC. These subsidiaries issue variable
annuity contracts and variable life insurance policies through separate accounts that are registered with the SEC as investment
companies under the Investment Company Act of 1940, amended (the “Investment Company Act”) or are exempt from
registration under the Investment Company Act. Such separate accounts are generally divided into sub-accounts, each of
which invests in an underlying mutual fund which is itself a registered investment company under the Investment Company
Act. In addition, the variable annuity contracts and variable life insurance policies associated with these registered separate
accounts are registered with the SEC under the Securities Act of 1933, as amended (the “Securities Act”) or are exempt from
registration under the Securities Act. One insurance subsidiary issues a fixed interest rate contract with features that require it
to be registered as a security under the Securities Act.
Some of our subsidiaries are registered with the SEC as broker-dealers under the Exchange Act and are members of, and
subject to regulation by, FINRA. Certain variable contract separate accounts sponsored by our subsidiaries are exempt from
registration but may be subject to other provisions of the federal securities laws. The SEC, CFTC and FINRA from time to
time propose rules and regulations that impact products deemed to be securities.
One of our U.S. subsidiaries is registered as an investment adviser with the SEC under the Investment Advisers Act of
1940, as amended, and is also registered as an investment adviser in various states and non-U.S. jurisdictions, as applicable.
In addition, we have other non-U.S. subsidiaries that are registered or licensed in non-U.S. jurisdictions to conduct our
investment management business. We may also be subject to similar laws and regulations in non-U.S. jurisdictions where we
provide investment advisory services or conduct other activities.
Under SEC rules, broker-dealers recommending our variable products and other securities offerings to retail customers
are required to comply with a “best interest” standard. The rule also requires broker-dealers to disclose the nature of services,
their standard of conduct, and their conflicts of interest to their retail customers. With regard to insurance products, the NAIC
revised its Suitability in Annuity Transactions Model Regulation to add a “best interest” standard for the sale of annuities, but
only one of our insurance subsidiaries’ domiciliary states has adopted it and it is under consideration in another domiciliary
state.
Federal and state securities regulatory authorities and FINRA from time to time make inquiries and conduct
examinations regarding compliance by MetLife, Inc. and its subsidiaries with securities and other laws and regulations. We
cooperate with such inquiries and examinations and take corrective action when warranted.
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Environmental Laws and Regulations
As an owner and operator of real property in many jurisdictions, we are subject to extensive environmental laws and
regulations in such jurisdictions. Inherent in such ownership and operation is also the risk that there may be environmental
liabilities and costs in connection with any required remediation of such properties. In addition, we hold equity interests in
companies that could potentially be subject to environmental liabilities. We routinely have environmental assessments
performed with respect to real estate being acquired for investment and real property to be acquired through foreclosure.
Unexpected environmental liabilities may arise. However, based on information currently available to us, we believe that any
costs associated with compliance with environmental laws and regulations or any remediation of such properties will not
have a material adverse effect on our business, results of operations or financial condition.
The NYDFS announced that it expects insurers to integrate financial risks from climate change into their governance
frameworks, risk management processes, and business strategies. The NYDFS will also publish detailed guidance on climate-
related financial supervision and will integrate questions on this topic into their examinations in 2021.
Unclaimed Property
We are subject to the laws and regulations of states and other jurisdictions concerning identification, reporting and
escheatment of unclaimed or abandoned funds, and are subject to audit and examination for compliance with these
requirements. See “— Insurance Regulation — Insurance Regulatory Examinations and Other Activities,” which references
the regulatory settlement agreement relating to unclaimed proceeds. See also “Controls and Procedures” and Note 21 of the
Notes to the Consolidated Financial Statements.
Brighthouse Separation Tax Treatment
Prior to the spin-off distribution of Brighthouse Financial, Inc. (together with its subsidiaries, “Brighthouse”) common
stock in 2017, we received a private letter ruling from the IRS regarding certain significant issues under the Code, as well as
an opinion from tax counsel that the distribution qualified for non-recognition of gain or loss to us and our shareholders
pursuant to Sections 355 and 361 of the Code, except to the extent of cash received in lieu of fractional shares, each subject to
the accuracy of and compliance with certain representations, assumptions and covenants therein.
Notwithstanding the receipt of the private letter ruling and the tax opinion, the IRS could determine that the distribution
should be treated as a taxable transaction, for example, if it determines that any of the representations, assumptions or
covenants on which the private letter ruling is based are untrue or have been violated. Similarly, the IRS could determine that
our disposal of the fair value option of Brighthouse Financial, Inc.’s common stock in the debt-for-equity exchange should be
treated as a taxable transaction to MetLife, Inc. Furthermore, as part of the IRS’s policy, the IRS did not determine whether
the distribution or the debt-for-equity exchange satisfies certain conditions that are necessary to qualify for non-recognition
treatment. Rather, the private letter ruling is based on representations by us and Brighthouse that these conditions have been
satisfied. The tax opinion addressed the satisfaction of these conditions. The tax opinion is not binding on the IRS or the
courts, and the IRS or a court may take a contrary position. In addition, the tax counsel relied on certain representations and
covenants delivered by us and Brighthouse.
If the IRS ultimately determines that the distribution is taxable, the distribution could be treated as a taxable dividend or
capital gain to MetLife shareholders who received shares of Brighthouse Financial, Inc. common stock in the distribution for
U.S. federal income tax purposes, and such shareholders could incur significant U.S. federal income tax liabilities. In
addition, if the IRS ultimately determines that the distribution is taxable, we and Brighthouse could incur significant U.S.
federal income tax liabilities, and either we or Brighthouse could have an indemnification obligation to the other, depending
on the circumstances.
Even if the spin-off distribution otherwise qualifies for non-recognition of gain or loss under Section 355 of the Code, it
may be taxable to us, but not our shareholders, under Section 355(e) of the Code if 50% or more (by vote or value) of our
common stock or Brighthouse Financial, Inc.’s common stock is acquired as part of a plan or series of related transactions
that include the distribution. Under the tax separation agreement with Brighthouse, we are restricted from certain activities
and have indemnity obligations which may limit our ability to pursue strategic transactions or engage in new business or
other transactions that may maximize the value of our business, and might discourage or delay a strategic transaction that our
shareholders may consider favorable.
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Cross-Border Trade and Investments
Our U.K. business model utilizes certain rights to operate cross-border insurance and investment operations, which were
eliminated as a result of the U.K. exiting the EU. In particular, our EEA insurance entities have lost the right to “passport”
insurance services into the U.K. Nevertheless, MetLife expects to maintain its existing operating model, including as an
inbound EEA-insurer under the U.K.’s TPR, which is due to last for at least three years and will permit MetLife to carry on
its insurance business in the U.K. during that period. Operating expenses within our businesses could increase as a result of
such changes.
Further, MetLife Investment Management Limited (“MIML”), our third-party investment manager in the U.K., has lost
its passporting rights in the EU. We are arranging a means to continue our third-party investment management business in the
EU.
The United States-Mexico-Canada Agreement came into effect in 2020. The U.S. and Chinese governments may
continue to negotiate the terms of the bilateral economic relationship, including with respect to the imposition of tariffs.
While tariffs do not generally affect us directly, the economic impact of continued uncertainty could impact the growth
of the insurance market in China or other markets. A U.S. presidential executive order prohibited U.S. persons transacting in
the publicly traded securities of (or derivatives or securities designed to provide investment exposure to) any Communist
Chinese military companies, effective January 11, 2021. U.S. persons who held such investments as of that date (or do,
whenever a company is later designated under the rule) may transact in such securities for the sole purpose of divesting them.
The new U.S. presidential administration is reviewing the prior administration’s policies on China. As a result, it may delay,
change, or withdraw all or part of these policies.
London Interbank Offered Rate
The Financial Conduct Authority (“FCA”), the U.K. regulator of LIBOR, previously indicated that it intends to stop
persuading or compelling panel banks to submit quotes used to determine LIBOR after 2021. On November 30, 2020, the
Intercontinental Exchange (“ICE”) Benchmark Administration (“IBA”), the administrator of LIBOR, announced a
consultation regarding its intention to cease the publication of one week and two-month U.S. Dollar LIBOR settings at the
end of December 2021, but to extend the publication of the remaining U.S. Dollar LIBOR settings (overnight and one, three,
six and 12 month U.S. Dollar LIBOR) until the end of June 2023. The IBA intends to share the results of the consultation
with the FCA and publish a summary of the responses. U.S. bank regulators acknowledged the announcement and, subject to
certain limited exceptions, advised banks to cease writing new U.S. Dollar LIBOR contracts by the end of 2021.
We use LIBOR and other interbank offered rates as interest reference rates in many of our financial instruments. Existing
contract fallback provisions, and whether, how, and when we and others develop and adopt alternative reference rates, will
influence the effect of any changes to or discontinuation of LIBOR on us. We are identifying, assessing and monitoring
market and regulatory developments, assessing agreement terms, and evaluating operational readiness. The SEC’s Division
of Examinations (formerly Office of Compliance Inspections and Examinations) expects to assess registrants’ efforts to
prepare for LIBOR discontinuation and their transition to alternatives. We actively participate in the New York Federal
Reserve Bank convened Alternative Reference Rate Committee and other industry association efforts on the transition to
alternative reference rates. The Company is utilizing the International Swaps and Derivatives Association, Inc. (“ISDA”)
2020 IBOR Fallbacks Protocol to address the transition from LIBOR and other interbank offered rates to other risk-free rates
in its OTC bilateral ISDA derivatives contracts. We also monitor the Financial Accounting Standards Board’s, International
Accounting Standards Board’s, and U.S. Treasury Department’s updates on the accounting and tax implications of reference
rate reform. We continue to assess current and alternative reference rates’ merits, limitations, risks and suitability for our
investment and insurance processes.
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Competition
The life insurance industry remains highly competitive. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Industry Trends — Competitive Pressures.” We face competition based on factors
such as service, product features, scale, price, financial strength, claims-paying ratings, credit ratings, e-business capabilities
and name recognition. We compete globally with a large number of insurance companies and non-insurance financial
services companies such as banks, broker-dealers and asset managers. We compete for individual consumers, employer and
other group customers, as well as agents and other distributors of insurance and investment products. Some of our
competitors offer a broader array of products, have more competitive pricing or, with respect to other insurance companies,
have higher claims paying ability ratings. In the United States and Japan, we compete with a large number of domestic and
foreign-owned life insurance companies, many of which offer products in categories on which we focus. Elsewhere, we
compete with the foreign insurance operations of large U.S. insurers and with global insurance groups and local companies.
Because we and others underwrite many group insurance products annually, our group purchasers may be able to obtain more
favorable terms from competitors rather than renewing coverage with us.
Insurers are focused on their core businesses, specifically in markets where they can achieve scale. They are increasingly
seeking alternative sources of revenue focusing on monetization of assets, and fee-based services. They are also looking for
opportunities to offer comprehensive solutions which include value-added services along with traditional products.
Financial market volatility will impact insurers’ capital positions, which may strain the competitive environment and
lead to industry consolidation. We believe adaptability to market changes (such as those from pandemics), as well as financial
strength, technological efficiency and organizational agility, will most significantly differentiate competitors in our industry.
We believe we are well positioned to succeed in any environment.
The Company distributes many of its products through a variety of third-party distribution channels, including banks and
broker-dealers. We believe potential distribution partners carefully consider the financial strength of the company whose
products they sell. Bank and broker-dealer consolidation could increase competition for access to distributors.
We face intense competition for employees. We must attract and retain highly skilled people with knowledge of our
business and industry experience to support our business. We continue to seek to grow our career agency forces in selected
global markets. We also continue efforts to enhance the efficiency and production of our sales representatives. These
initiatives may not succeed in attracting and retaining productive agents. See “— Segments and Corporate & Other” for
information on sales distribution.
Numerous aspects of our business are heavily regulated. Legislative and other changes affecting the regulatory
environment can affect our competitive position within the life insurance industry and within the broader financial services
industry.
Human Capital Resources
At October 1, 2020, we had approximately 46,500 employees, calculated consistent with Regulation S-K Item 402(u)
without exempting any employees under Regulation S-K Item 402(u)(4).
We strive to build a purpose-driven and inclusive culture where our employees are energized to make a difference. As a
financial services company, we rely significantly on our global workforce, leveraging a wide variety of professional,
scientific, management, business, and other skills and expertise, to create value for all of our stakeholders. To continue
strengthening and cultivating a diverse workforce that can thrive now and, in the future, we will focus on the following:
•
•
Purpose, employee engagement and well-being: We aspire to empower our employees to feel a sense of purpose,
belonging and impact from their work contributions to execute our strategy, focus on our priorities, and achieve our
goals. We will encourage our employees to prioritize health by connecting our purpose, our work, and the
importance of overall health and well-being. We will also continue to apply these principles to strive to meet our
employees’ needs during the COVID-19 Pandemic and beyond. We will monitor our progress in part by our annual
employee survey, which measures purpose, engagement, and satisfaction.
Diversity, equity and inclusion: We will cultivate an inclusive culture where our diversity of talent will position us
to meet the needs of our customers, our shareholders, and the communities we serve around the world and to meet
our people commitment. We will monitor our progress in part by measuring the representation across our workforce,
including our leadership, against appropriate benchmarks. We will also monitor our progress by our annual
employee survey and will review our practices and policies for equity and fairness.
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•
Talent development: We will work to develop a highly skilled workforce of the future with the right capabilities to
deliver on our strategic goals. Employees will leverage our digitally enabled learning platform to continuously learn
and build core skills they need in a dynamic environment. Through holistic development and succession planning,
we will continue to prepare our workforce for the future. We will also continue to cultivate an adaptable sales force,
as customer relationships are crucial to our success. We will monitor our progress in part by engagement with our
learning content and skills application, and through valuable insights from our annual employee survey.
Information About Our Executive Officers
Set forth below is information regarding the executive officers of MetLife, Inc. MLIC and MetLife Group, Inc. are
affiliates of MetLife, Inc.:
Name
Michel A. Khalaf
Age
57
Position with MetLife and Business Experience
•
President, Chief Executive Officer and Director of MetLife, Inc. (May 2019 – present)
•
•
President, U.S. Business, of MetLife, Inc. (July 2017 – April 2019)
President, EMEA, of MetLife, Inc. (November 2011 – July 2017)
John D. McCallion
47
• Executive Vice President and Chief Financial Officer of MetLife, Inc. (August 2018 – July 2019)
(November 2019 – present)
• Executive Vice President and Chief Financial Officer and Treasurer of MetLife, Inc. (May 2018 – August
2018) (July 2019 – November 2019)
• Executive Vice President and Treasurer of MetLife, Inc. (July 2016 – May 2018)
•
Senior Vice President and Chief Financial Officer, EMEA, of MetLife Group, Inc. (August 2014 – June
2016)
Marlene Debel
54
• Executive Vice President and Chief Risk Officer of MetLife, Inc. (May 2019 – present)
• Executive Vice President and Head of Retirement & Income Solutions of MetLife, Inc. (March 2018 –
May 2019)
• Executive Vice President and Chief Financial Officer, U.S. Business, of MetLife, Inc. (July 2016 – March
2018)
• Executive Vice President and Treasurer of MetLife, Inc. (June 2011 – July 2016)
Stephen W. Gauster
50
• Executive Vice President and General Counsel of MetLife, Inc. (May 2018 – present)
•
•
Senior Vice President and Interim General Counsel of MetLife, Inc. (July 2017 – May 2018)
Senior Vice President and Chief Counsel, General Corporate Section of the Law Department of MetLife
Group, Inc. (January 2016 – June 2017)
Steven J. Goulart
62
• Executive Vice President and Chief Investment Officer of MetLife, Inc. (May 2011 – present)
• Head of the Portfolio Management Unit as Senior Managing Director of MLIC (January 2011 – April
2011)
Esther S. Lee
62
• Executive Vice President and Global Chief Marketing Officer of MetLife, Inc. (January 2015 – present)
Bill Pappas
51
• Executive Vice President, Global Technology and Operations, of MetLife, Inc. (November 2019 – present)
•
Senior Vice President, Brand Marketing, Advertising and Sponsorships of AT&T, Inc., a communications
company (August 2011 – December 2014)
• Head of Global Operations, Bank of America, a financial services company (February 2016 – November
2019)
• Chief Information Officer, Bank of America (February 2010 – February 2016)
Susan M. Podlogar
57
• Executive Vice President and Chief Human Resources Officer of MetLife, Inc. (July 2017 – present)
• Vice President, Human Resources, Global Medical Devices, Johnson & Johnson, a medical devices,
pharmaceutical and consumer products company (May 2016 – June 2017)
• Vice President, Human Resources, EMEA, Global Total Rewards, Johnson & Johnson (January 2015 –
May 2016)
Kishore Ponnavolu
56
•
President, Asia, of MetLife, Inc. (September 2018 – present)
Ramy Tadros
45
• Executive Vice President and President, U.S. Business, of MetLife, Inc. (May 2019 – present)
• Executive Vice President, Property & Casualty, of MetLife Group, Inc (November 2013 – August 2018)
• Executive Vice President and Chief Risk Officer of MetLife, Inc. (September 2017 – April 2019)
• Management Consultant, Oliver Wyman, Inc., a consulting company (September 1997 – July 2017)
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Trademarks
We have a worldwide trademark portfolio that we consider important in the marketing of our products and services,
including, among others, the trademark “MetLife.” We also have trademarks, such as the “PROVIDA” trademark, we have
acquired with businesses. We believe that our rights in our trademarks are well protected.
Available Information
MetLife encourages investors and others to frequently visit its website (www.metlife.com), including its Investor
Relations web pages (https://investor.metlife.com). MetLife announces significant financial and other information to its
investors and the public on its Investor Relations web pages in news releases, public conference calls and webcasts, fact
sheets, and other documents and media. MetLife, Inc. makes available free of charge on its Investor Relations web pages the
reports and other information it publicly discloses with the SEC, including annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, any amendments to each of those reports, proxy statements, and other disclosure.
The SEC maintains an internet website (https://www.sec.gov) that contains this and other information regarding issuers that
file electronically with the SEC, including MetLife, Inc.
The information on MetLife’s website is not incorporated by reference into this Annual Report on Form 10-K or in any
other report or document MetLife submits to the SEC, and any references to MetLife’s website are intended to be inactive
textual references only.
Item 1A. Risk Factors
Any or each of the events described below may (or may continue to) adversely affect the global economy, global
financial markets, our reputation, our regulatory, customer, or other relationships, our results of operations, our liquidity or
cash flows, our statutory capital position, our ability to meet our obligations, our credit and financial strength ratings, our
financial condition, or the market price of our common stock. The effects may vary widely from time to time, product to
product, market to market, region to region, or segment to segment.
Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence
of any of them may cause others to emerge or worsen. Such combinations could materially increase the severity of the
cumulative or separate impact of these risks.
These risk factors are not a complete set of all potential risks that could affect MetLife. You should carefully consider the
risk factors together with other information contained in this Annual Report on Form 10-K, including “Business,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial
statements and accompanying notes in “Financial Statements and Supplementary Data,” and other reports and materials
MetLife submits to the SEC.
Economic Environment and Capital Markets Risks
We May Face Difficult Economic Conditions
Market factors, including interest rates, credit spreads, equity prices, derivative prices and availability, real estate
conditions, foreign currency exchange rates, consumer and government spending, business investment, volatility, disruptions
and strength of the capital markets, deflation and inflation, and government actions may result in investment losses,
derivative losses, changes in insurance liabilities, impairments, increased valuation allowances, increases in reserves, reduced
net investment income and changes in unrealized gain or loss positions.
Higher unemployment, changes to inflation, lower family income, lower corporate earnings, lower business investment,
lower consumer spending, elevated incidence of claims, adverse utilization of benefits relative to our best estimate
expectations, lapses or surrenders of policies, reduced demand for our products, and deferred or canceled payments of
insurance premiums may negatively affect our earnings and capitalization.
Declining equity markets may decrease the account value of our products, reducing certain fees generated by these
products, which may increase the level of insurance liabilities we carry, accelerate the amortization of deferred policy
acquisition costs (“DAC”), and increase funding to our captive reinsurers. Additionally, lower interest rates may reduce
returns in fixed income investments.
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Public Health Risks
Pandemics and other public health issues (such as the ongoing COVID-19 Pandemic), and governmental, business, and
consumer reactions to them, have affected and may continue to affect economic conditions. They have and may continue to
cause illnesses and deaths, changes in consumer or business confidence and activity, changes to interest rates, and
governmental or other restrictions on economic activity for prolonged periods. Any of these issues may cause or exacerbate
any of the difficult economic conditions we describe in these risk factors.
Interest Rate Risks
Some of our products and investments expose us to interest rate risks, including changes in the difference between
short-term and long-term interest rates, which may reduce or eliminate our investment spread and net income.
Low interest rates and risk asset returns may reduce income from our investment portfolio, increase our liabilities for
claims and future benefits, and increase the cost of risk transfer measures, decreasing our profit margins. During certain
market events, such as a global credit crisis, a market downturn, or sustained low market returns, we may incur significant
losses due to, among other reasons, losses incurred in our general account and the impact of guarantees, including increases
in liabilities, capital maintenance obligations and collateral requirements. In addition, during periods of sustained lower
interest rates, we may need to reinvest proceeds from certain investments at lower yields, reducing our investment spread.
Moreover, borrowers may prepay or redeem the fixed income securities and loans in our investment portfolio with greater
frequency. Although we may be able to lower interest crediting rates to help offset decreases in spreads, our ability to lower
these rates is limited to our products that have adjustable interest crediting rates, which could be limited by competition or
contractually guaranteed minimum rates and may not match the timing or magnitude of changes in asset yields. As a result,
our investment spread may decrease or become negative.
Lower spreads may accelerate the amortization of DAC, reducing net income and in turn, harming our credit
instrument covenants or rating agency assessment of our financial condition. During periods of declining interest rates, life
insurance and annuity products may be more attractive investments to consumers, resulting in increased premium payments
on certain products, repayment of policy loans and increased persistency, while our new investments carry lower returns. A
market interest rate decline could also reduce our return on investments that do not support particular policy obligations.
During periods of sustained lower interest rates, we may need to increase our reserves.
Interest rate increases may also harm our profitability. During rapidly increasing interest rates, we may not be able to
replace the investments in our general account with higher yielding investments needed to fund the higher crediting rates
required to stay competitive. This could result in a lower spread, lower profitability, decreased sales, and greater loss of
existing contracts and related assets. In addition, policy loans, surrenders and withdrawals may increase as policyholders
seek investments with higher perceived returns. This may result in cash outflows requiring the sale of investments on less
favorable terms, resulting in investment losses. We may accelerate the amortization of DAC and value of business acquired
(“VOBA”), reducing net income, harming our credit instrument covenants and rating agency assessment of our financial
condition. Interest rate increases may harm the value of our investment portfolio, for example, by decreasing the estimated
fair values of fixed income securities, and may increase our daily settlement payments on interest rate futures and cleared
swaps, resulting in increased cash outflows and liquidity needs. Furthermore, if interest rates rise, our unrealized gains on
fixed income securities may decrease and our unrealized losses may increase. We would recognize the accumulated change
in estimated fair value of these fixed income securities in net income when we realize a gain or loss upon the sale of the
security or we determine that the decline in estimated fair value is due to a credit loss. Finally, an increase in interest rates
may decrease fee income associated with a decline in the value of variable annuity account balances invested in fixed
income funds.
Federal Reserve Board monetary policy (and that of other central banks) may also impact the pricing levels of risk-
bearing investments and may harm our investment income or product sales.
The measures we take to mitigate the risks of investing in a changing interest rate environment, such as mitigating our
fixed income investments relative to our interest rate sensitive liabilities, may not be sufficient. For some of our liability
portfolios, we may not be able to invest assets at the full liability duration, thereby creating some asset/liability mismatch.
In addition, asymmetrical and non-economic accounting may cause material changes to our net income and stockholders’
equity because we record our non-qualified derivatives at fair value through earnings, while the related hedged items either
follow an accrual-based accounting model or are recorded at fair value through other comprehensive income.
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Credit Spread Risks
Changes in credit spreads may result in market price volatility and cash flow variability. Market price volatility can
make valuations of our securities difficult if trading becomes less frequent, which may require us to add to our reserves.
Market volatility may cause changes in credit spreads, defaults and a lack of pricing transparency. An increase in credit
spreads relative to U.S. Treasury benchmarks may increase our borrowing costs and decrease certain product fee income. A
sustained decrease in credit spreads could reduce the yield on our future investments.
Equity Risks
Downturns and volatility in equity markets may harm our savings and investment products’ revenues and investment
returns, where fee income is earned based upon the estimated fair value of our managed assets. Our variable annuity
business is highly sensitive to equity markets, and a sustained weakness or stagnation in the equity markets may decrease
these products’ revenues and earnings. Furthermore, certain of our variable annuity products offer guaranteed benefits that
increase our potential benefit exposure should equity markets decline or stagnate.
Sustained declines in long-term equity returns or interest rates may harm the funding of our pension plans and other
post-retirement benefit obligations. An increase in equity markets could increase settlement payments on equity futures and
total rate of return swaps (“TRRs”), which may increase our cash outflows and liquidity needs.
The timing of distributions from and valuations of our investments in leveraged buy-out funds, hedge funds and other
private equity funds depends on the performance of the underlying investments, distribution schedules, and the funds’ need
for cash. The amount of net investment income from these investments can vary substantially from period to period and
significant volatility may harm our returns and net investment income. In addition, downturns or volatility in the equity
markets may decrease the estimated fair value of our alternative investments and equity securities.
Real Estate Risks
Changes in leasable commercial space supply and demand, pandemics and other public health issues (such as the
ongoing COVID-19 Pandemic), creditworthiness of tenants and partners, capital markets volatility, interest rate
fluctuations, commodity prices, farm incomes, housing and commercial property market conditions, and real estate
investment supply and demand may adversely impact our investments in commercial, agricultural and residential mortgage
loans, and real estate and real estate joint ventures.
Obligor and Counterparty Risks
Our general account investments in certain countries could be adversely affected by volatility resulting from local
economic and political concerns, as well as volatility in specific sectors. Government entities may face budget deficits and
other financial difficulties, which may harm the value of securities we hold issued by or under the auspices of such
governments.
The issuers or guarantors of fixed income securities and mortgage loans we own may default on principal and interest
payments they owe us. Additionally, the change in value of underlying collateral within asset-backed securities (“ABS”),
including mortgage-backed securities, may result in a default on principal and interest payments, reducing our cash flows.
The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit spreads, or other adverse
events may reduce the estimated fair value of our portfolio of fixed income securities and mortgage loans and increase the
default rate of the fixed income securities and mortgage loans in our investment portfolio.
Many of our transactions with counterparties such as brokers and dealers, central clearinghouses, commercial banks,
investment banks, hedge funds, investment funds, reinsurers and other financial institutions expose us to the risk of
counterparty default. Such credit risk may be exacerbated if we cannot realize on the collateral held by us in secured
transactions or cannot liquidate such collateral at prices sufficient to recover the full amount of the loan or derivative
exposure due to us. Furthermore, potential action by governments and regulatory bodies, such as controlling investment,
nationalization, conservatorship, receivership and other intervention, or lack of action by governments and central banks, as
well as deterioration in the banks’ credit standing, could negatively impact these instruments, securities, transactions and
investments or limit our ability to trade with them. These may cause losses or impairments to the carrying value of our
investments.
Our efforts to manage our total exposure to a single counterparty or limited number of counterparties within or among
any of our investment, derivative, treasury, and reinsurance relationships, which we adjust from time to time, may not
completely or adequately mitigate counterparty risks.
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Currency Exchange Rate Risks
Fluctuations in foreign currency exchange rates against the U.S. dollar may adversely affect our non-U.S. dollar
denominated investments, investments in non-U.S. subsidiaries, net income from non-U.S. operations and issuance of non-
U.S. dollar denominated instruments. Fluctuations in foreign currency exchange rates may also make certain of our
products less attractive to customers, which may increase levels of early policy terminations and decrease sales volume and
our in-force business. Such negative effects may be exacerbated if international markets experience severe economic or
financial disruptions or significant currency devaluations, if a foreign economy is determined to be “highly inflationary,” or
if a country withdraws from the Euro zone. Fluctuations in foreign currency exchange rates may harm our operations,
earnings or investments in the affected countries.
We may be unable to mitigate the risk of such changes in exchange rates due to unhedged positions, asymmetrical and
non-economic accounting resulting from derivative gains (losses) on non-qualifying hedges, the failure of hedges to
effectively offset the impact of the foreign currency exchange rate fluctuation, or other factors. Fluctuations in currency
exchange rates may adversely affect the translation of results into our U.S. dollar basis consolidated financial statements.
Derivatives Risks
If our counterparties, clearing brokers or central clearinghouses fail or refuse to honor their obligations under our
derivatives, our risks may not be hedged. A counterparty, clearing broker, or central clearinghouse may become insolvent
or otherwise unable or unwilling to make payments or to return collateral under the terms of derivatives agreements,
increasing our costs. If the net estimated fair value of a derivative to which we are a party declines, we may need to pledge
collateral or make payments. In addition, we may face increased costs to the extent we replace counterparties who suffer
financial difficulties. Furthermore, our derivatives valuations may change based on changes to our valuation methodology
or errors in such valuation or valuation methodology.
Terrorism and Security Risks
The continued threat of terrorism, ongoing or potential military and other actions, and heightened security measures
may cause significant volatility in global financial markets and result in loss of life, property damage, additional
disruptions to commerce and reduced economic activity. The value of our investment portfolio may be adversely affected
by declines in the credit and equity markets and reduced economic activity caused by such threats. Companies in which we
maintain investments may suffer losses as a result of financial, commercial or economic disruptions, and such disruptions
might affect the ability of those companies to pay interest or principal on their securities or mortgage loans. Terrorist or
military actions also could disrupt our operations centers and result in higher than anticipated claims under our insurance
policies.
We May Not Meet Our Liquidity Needs, Access Capital, or May Face Significantly Increased Cost of Capital Due to
Adverse Capital and Credit Market Conditions
In cases of volatility, disruptions, or other conditions in global capital markets we may have to seek additional financing,
the availability and cost of which could be adversely affected by market conditions, regulatory considerations, availability of
credit to our industry generally, our credit ratings and credit capacity, reduced business activity, or investment losses, and the
perception of our financial prospects. Our access to funds may be impaired if regulatory authorities or rating agencies take
negative actions against us. We may not be able to successfully obtain additional financing we need on favorable terms or at
all. We may be required to return significant amounts of cash collateral on short notice under securities lending or derivatives
agreements or post collateral or make payments related to specified counterparty agreements.
Our business and financial results may suffer without sufficient liquidity through impaired ability to pay claims, other
operating expenses, interest on our debt and dividends on our capital stock, cash or collateral to our subsidiaries, maintain our
securities lending, replace certain maturing liabilities, sustain our operations and investments, and repurchase our common
stock. Capital and credit market volatility may limit our access to capital we need to operate, limiting our ability to raise
capital, issue the types of securities we would prefer, timely replace maturing liabilities, satisfy regulatory requirements, and
access capital to grow our business, any of which could decrease our profitability and significantly reduce our financial
flexibility.
We May Be Unable to Access Our Credit Facility, Reducing Our Liquidity and Leading to Downgrades in Our Credit and
Financial Strength Ratings
We may fail to comply with or fulfill all conditions under the unsecured credit facility (the “Credit Facility”) MetLife,
Inc. and MetLife Funding, Inc. (“MetLife Funding”) maintain. Lenders may fail to fund their lending commitments under the
Credit Facility due to insolvency, illiquidity or other reasons.
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We May Lose Business Due to a Downgrade or a Potential Downgrade in Our Financial Strength or Credit Ratings
Nationally Recognized Statistical Rating Organizations (“NRSROs”) and others may, at any time, downgrade our
financial strength ratings or credit ratings, lower our ratings outlooks, increase the scope or frequency of their reviews, or
increase capital or other requirements to maintain ratings. Such changes could reduce our product sales, reduce cash flows
from funding agreements and other capital market products, and force us to change product pricing and increase our
financing costs, policy surrenders or withdrawals, collateral requirements, risk of derivative terminations, cost of reinsurance,
regulatory scrutiny, or various other factors.
We May Not Find Available, Affordable or Adequate Reinsurance to Protect Us Against Losses
Reinsurers may increase our reinsurance costs, or may decline to offer us reinsurance, due to policy changes related to
pandemics or other public health issues (such as the ongoing COVID-19 Pandemic), market conditions, or other factors. Our
risk of loss may increase if we decrease the amount of our reinsurance. Any of these could harm our ability to write future
business or result in the assumption of more risk with respect to the policies we issue.
We may incur costs as a result of a reinsurer’s insolvency, inability or unwillingness to make payments, or inability or
unwillingness to maintain collateral.
Our Statutory Life Insurance Reserve Financings Costs May Increase, and We May Find Limited Market Capacity for
New Financings
If MetLife’s ratings decline, market capacity is limited, or on other repricing occasions, our costs to finance statutory life
insurance reserves may increase. If regulators disallow assets to back statutory reserves, we would not be able to take some or
all related statutory reserve credit, which may harm the statutory capitalization of certain of our insurance subsidiaries.
Regulatory and Legal Risks
Changes in Laws or Regulation, or in Supervisory and Enforcement Policies, May Reduce Our Profitability, Limit Our
Growth, or Otherwise Adversely Affect Us
Insurance or other regulators may change licensing, permit, or approval requirements, or take other actions harmful to us.
They may also take actions that harm our customers and independent sales intermediaries or their operations, which may
affect our business relationships with them and their ability to purchase or distribute our products.
Governments may change regulation of financial services, insurance, variable annuities and variable life insurance,
securities, derivatives, pension, health care, accounting, cybersecurity, privacy and data protection, tort reform legislation,
taxation, benefit plan investment advice and related fiduciary duties, antitrust as applied to the business of health insurance or
otherwise, and other areas. Laws and regulations may also affect customers, sales intermediaries, or others. We or others may
fail to comply with these requirements or suffer adverse regulatory examinations or audits. Regulators may also interpret
rules differently from the way we have, or change interpretations of laws or rules, and legislators may change statutes. Any of
these changes may harm our ability to continue to offer products we do today or to introduce new products.
We may incur costs to comply with laws and regulations and changes to these laws and regulations may increase our
expenses. Our failure to comply with our own policies or with regulatory requirements may harm our reputation or result in
sanctions or legal claims.
Laws, regulations or regulatory actions may limit or change the type, amount or structure of compensation or benefits we
offer our employees or others, which may harm our ability to compete in recruiting and retaining key personnel. We may also
fail to fulfill our fiduciary or other benefit-related obligations completely.
Solvency standards compliance may increase our capital and reserve requirements, risk management costs, and reporting
costs. We may be subject to enhanced capital standards, supervision and additional requirements, such as group capital
standards or insurer capital standards. MetLife, Inc. could be compelled to undergo FDIC liquidation if it becomes insolvent
or is in danger of defaulting on its obligations, imposing greater losses on shareholders and unsecured creditors than under the
Bankruptcy Code. This could also apply to financial institutions whose debt we hold and could harm the value of our
holdings. We could be assessed charges in connection with a financial company liquidation.
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Our ability to react to rapidly changing economic conditions and the dynamic, competitive markets may be impaired if
our product designs do not allow frequent and contemporaneous revisions of key pricing elements, or if we are unable to
work collaboratively with regulators. Changes in regulatory approval processes, rules and other dynamics in the regulatory
process could harm our ability to react to such changing conditions. Rules on defined benefit pension plan funding may
reduce the likelihood or delay corporate plan sponsors in terminating their plans or engaging in transactions to partially or
fully transfer pension obligations. This could affect the mix of our pension risk transfers and increase non-guaranteed funding
products.
Regulators have reacted and may continue to react to pandemics and other public health issues (such as the ongoing
COVID-19 Pandemic). They may require “no lapse” in policy coverage regardless of whether we receive premiums or are
able to assess fees against policyholder account balances. They may extend insurance coverage beyond our policy or contract
terms and may impose premium grace periods, suspend cancellations, lower or freeze premium rates, and extend proof of loss
deadlines, including retroactively, exposing us to risks and costs we are unable to foresee or underwrite. We may also adopt
customer accommodations, such as waiving exclusions, forgoing rate increases or implementing lower rate increases than we
would otherwise, relaxing claim documentation requirements, relaxing eligibility criteria, granting premium credits, or other
accommodations for customers experiencing economic or other distress. Regulators may restrict our underwriting on public
policy or other grounds, excluding factors such as exposure, quarantine, infection, and association with others suffering
public health-related effects.
Our New York regulator's annual SCL for year-end asset adequacy testing may impose unforeseen assumptions or
requirements that require us to increase or release reserves, which could affect our statutory capital and surplus.
Governmental bodies may delay acting on or implementing regulatory or policy changes due to pandemics or other
public health issues, or because they are attending to pandemic or public health issues rather than on other topics. This may
increase uncertainty, prolong deleterious regulations and policies, delay or prevent beneficial regulatory or policy changes,
and create the potential for later, more rapid changes to which we find it more difficult to adjust.
Governments or Others May Increase our Taxes by Changing or Re-Interpreting Tax Laws, Making Some of Our
Products Less Attractive to Consumers
Changes in tax laws or interpretations of such laws could increase our corporate taxes, reduce our earnings, and increase
our deferred income tax liabilities. Changes may increase our effective tax rate or have implications that make our products
less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types
of taxes, and authorities who have not imposed taxes in the past may impose taxes.
Customers shifting away from employee benefits, life insurance and annuity contracts, or other tax-preferred products
would reduce our income from these products and our asset base, reducing our earnings and potentially affecting the value of
our deferred tax assets.
We May Face Increasing Litigation and Regulatory Investigations
Legal or regulatory actions, inquiries or investigations, whether ongoing or yet to come, could harm our reputation,
ability to attract or retain customers or employees, business, financial condition, or results of operations, even if we ultimately
prevail. Regulators or private parties may bring class actions, individual suits, or investigations seeking large recoveries
alleging wrongs relating to sales or underwriting practices, claims payments and procedures, failure to adequately or
appropriately supervise, inappropriate compensation contrary to licensing requirements, product design, disclosure,
administration, investments, denial or delay of benefits, pandemic- or other public health-related practices (such as those
related to the ongoing COVID-19 Pandemic), data security incidents, discriminatory or inequitable practices, and breaches of
fiduciary or other duties. We may be unable to anticipate the outcome of a litigation and the amount or range of loss because
we do not know how adversaries, fact finders, courts, regulators, or others will evaluate evidence, the law, or accounting
principles, and whether they will do so differently than we have.
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We May Face Changes to Interest Rates, the Value of our Financial Instruments, the Competitiveness of our Products,
the Performance of our Investments, and our Relationships Due to LIBOR’s Termination and the Uncertainties in Our
transition to Alternative Reference Rates
Regulators, agencies, or benchmark administrators may change how LIBOR is determined, discontinue reliance on
LIBOR as a benchmark rate as planned, or establish additional alternative reference rates. Any change or discontinuation of
LIBOR (or other benchmark rates) may change interest rates and the value of, return on, and markets for, a broad array of our
products, our financial instruments, the instruments in which we invest, or interest rates on our borrowing or debt. The effects
on our business and investments will vary depending on existing fallback provisions in individual contracts and whether,
how, and when industry participants continue to develop and adopt alternative reference rates and fallbacks for both legacy
and new products or instruments. Uncertainty regarding the continued use and reliability of LIBOR, regarding the calculation
of the applicable interest rate or payment amount depending on the terms of the governing instruments, or regarding the
application or effectiveness of alternative reference rates, could increase our costs, reduce the value of such instruments, or
impair our cash or derivative positions. We may not effectively hedge or manage risks from differences among applicable
fallback rates or when those rates take effect.
We may fail to adequately prepare for or react to LIBOR discontinuation and replacement, or fail to fully protect
ourselves from all the effects of such changes. We may also fail to manage adequately any transition to alternative reference
rates in a way that maintains the competitiveness of our products and the performance of our investment portfolio. Our
transition may not effectively protect other aspects of our business, such as our operations and the accuracy of the financial
models and valuations we use to gauge our risks, for financial reporting, or other purposes.
Any such uncertainties or ineffective management may harm our reputation, our relationships with our investors,
customers, or regulators, financial condition, and our business operations.
Our Efforts to Meet Environmental, Social, and Governance Standards and to Enhance the Sustainability of our
Businesses May Not Meet Investors' or Regulators' Expectations
Some of our shareholders, investors and customers, or those considering such a relationship with us, evaluate our
business or other practices according to a variety of environmental, social, and governance (“ESG”) standards and
expectations. Some of our regulators have proposed ESG rules or announced that they intend to review our practices against
ESG standards; others may yet do so. Further, we define our own corporate purpose, in part, by the sustainability of our
practices and our impact on all our stakeholders.
Our investors or others may evaluate our practices by ESG criteria that are continually evolving and not always clear.
These standards and expectations may also, as a whole, reflect contrasting or conflicting values or agendas. Our decisions or
priorities must also necessarily, and simultaneously, take account of several business goals and interests. Our practices may
also not change in the particulars or at the rate stakeholders expect. As a result, our efforts to conduct our business in
accordance with some or all these expectations may involve trade-offs. We may fail to meet our commitments or targets, and
our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not
prove completely effective or satisfy investors, regulators, or others. We may face adverse regulatory, investor, media, or
public scrutiny leading to business, reputational, or legal challenges.
Capital Risks
We May not be Able to Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer
Needs
Our financial condition, results of operations, cash requirements, future prospects, capital position, liquidity, financial
strength and credit ratings, as well as regulatory restrictions on the payment of dividends by MetLife, Inc.’s insurance
subsidiaries, general market conditions, the market price of our common stock compared to management’s assessment of the
stock’s underlying value, applicable regulatory approvals, other legal and accounting factors, and any other factors our Board
deems relevant may preclude us from paying dividends or repurchasing our common stock.
Other factors may affect our ability to pay dividends or repurchase our common stock. Governments, investors or media
may pressure us not to repurchase shares of our common stock or other securities, or prohibit us from doing so. Our use of
other means to return excess capital to shareholders may be less tax-efficient than repurchases. We maintain a buffer of cash
and other liquid assets, and may increase it. As a result, we may have less capital to devote to other uses, such as innovation,
acquisitions, development and return of capital to shareholders. We may also be restricted from repurchasing shares or
entering into share repurchase programs at times, such as when we are aware of material non-public information.
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If we do not pay dividends on our preferred stock or pay interest on our junior subordinated debentures or trust securities,
terms of those instruments may restrict our ability to pay dividends on or repurchase our common stock. Further, terms
applicable to our Floating Rate Non-Cumulative Preferred Stock, Series A (the “Series A preferred stock”), junior
subordinated debentures and trust securities may prevent us from paying dividends or interest on those instruments. We may
not be able to eliminate these restrictions through the repayment, redemption or purchase of junior subordinated debentures or
other securities.
Our Subsidiaries May be Unable to Pay Dividends, a Major Component of Holding Company Free Cash Flow
If the cash MetLife, Inc. receives from its subsidiaries through dividends and other payments is insufficient for it to fund
its debt service and other holding company obligations, MetLife, Inc. may have to issue debt or equity, or sell assets.
MetLife, Inc. may also not meet our free cash flow or shareholder cash distribution goals.
Insurance regulators may restrict dividends or other payments above certain amounts where their approval is required if
they determine payments could be adverse to our policyholders or contract holders. Business conditions, rating agency
considerations, taxation, dividend and repatriation rules, and monetary transfer and foreign currency exchange rules may limit
our insurance subsidiaries’ dividends and other payments. We may need to transfer capital among our companies to comply
with net worth maintenance or other support agreements, limiting capital available for other purposes.
Investment Risks
We May Face Defaults, Downgrades, Volatility or Other Events That Adversely Affect the Investments We Hold
In case of a major economic downturn, acts of corporate malfeasance, widening credit risk spreads, ratings downgrades
or other events, our estimated fair value of our fixed income securities and loan portfolios and corresponding earnings may
decline, and the default rate of our investment portfolio may increase. These changes could harm the issuers or guarantors of
securities or the underlying collateral of structured securities that we hold. We may have to hold more capital to support our
securities to maintain our RBC levels if securities we hold suffer a ratings downgrade. Our intent to sell, or our assessment of
the likelihood that we will be required to sell, fixed income securities may increase our write-downs or impairments. Our
realized losses or impairments on these securities may harm our net income.
The default rate, loss severity or other performance of our mortgage loan investments may change. Any concentration of
our mortgage loans by geography, tenancy or property type may have an adverse effect on our investment portfolio, the
prices we can obtain when we sell assets, and our results of operations or financial condition. Legislation or regulations that
would allow or require modifications to the terms of, or impact the value of, mortgage loans could harm our investment
portfolio.
Pandemics and other major public health issues (such as the ongoing COVID-19 Pandemic) have affected and may
continue to affect financial markets and our investment portfolio. These have increased and may continue to increase our risk
of investment defaults, downgrades and volatility, and lower variable investment income and returns, and may cause or
exacerbate any of the investment risks we describe in these risk factors.
Market volatility affects the value of or return on our investments. It may slow or prevent us from reacting to market
events as effectively as we otherwise could. When we sell our investment holdings, we may not receive the prices we seek,
and may sell at a price lower than our carrying value, due to reduced liquidity during periods of market volatility or
disruption, or other reasons. Borrowers may delay or fail to pay principal and interest when due, or may demand loan
modifications. Tenants may delay paying rent, or fail to pay it, or demand lease modifications. We may face moratoriums on
foreclosures and other enforcement actions impairments, and loan or lease modifications, due to government action or market
conditions. We may also encounter credit spreads changes, increasing our borrowing costs and decreasing our product fee
income. Issuer or guarantor default rates may increase.
We May Have Difficulty Selling Holdings in Our Investment Portfolio or in Our Securities Lending Program in a Timely
Manner to Realize Their Full Value
When we sell holdings in our investment portfolio, we may not receive the price we seek and may sell at a price lower
than our carrying value. We may face unfavorable conditions in privately-placed fixed income securities, private structured
credit, certain derivative instruments, mortgage loans, policy loans, direct financing and leveraged leases, other limited
partnership interests, tax credit and renewable energy partnerships, and real estate equity, including real estate joint ventures
and funds. Our investments may suffer reduced liquidity during periods of market volatility or disruption or for other reasons.
In addition, central banks' efforts to provide market liquidity or otherwise address market conditions may not be successful or
sufficient. We may realize losses that harm our financial metrics, which could harm our compliance with our credit
instruments and rating agency capital adequacy measures.
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We may face similar risks if we are required under our securities lending program to return significant amounts of cash
collateral that we have invested. Our securities lending activities and profitability may decrease.
We May Have to Pledge Collateral or Make Payments in Derivatives Transactions
We may have to pledge additional collateral and increase payments we make under our derivatives transactions.
Regulators, clearinghouses, or counterparties may restrict or eliminate eligible collateral, increase our collateral requirements,
or charge us to pledge such collateral, which would increase our costs, reduce our investment income, and harm our liquidity.
We May Change Our Securities and Investments Valuation, or Take Allowances and Impairments on Our Investments, or
Change Our Methodologies, Estimations, and Assumptions
During periods of market disruption or rapidly changing market conditions, such as significantly rising or high interest
rates, rapidly widening credit spreads or illiquidity, or infrequent trading, or when market data is limited, our assets may
become less liquid. We may base our asset valuations on less observable and more subjective judgments, assumptions, or
methods that may result in estimated fair values that significantly vary by period, and may exceed the investment’s sale price.
The estimated fair value of our securities may also decrease due to changes in valuation methods and assumptions.
Business Risks
Our Actual Claims or Other Results May Differ From Our Estimates, Assumptions, or Models
If our actual claims experience is less favorable than the underlying underwriting, reserving, and other assumptions we
used in establishing claim liabilities, we could be required to reduce DAC or VOBA, increase our liabilities, or incur higher
costs.
The amounts that we will ultimately pay to settle our liabilities, particularly when those payments may not occur until
well into the future, may vary from what we expect. We may change our liability assumptions and increase our liabilities
based on actual experience and accounting requirements. Our operating practices and procedures that support our
policyholders and contractholder obligation assumptions, such as obtaining, accumulating, and filtering data, and our use of
technology, such as database analysis and electronic communications, may affect our reserve estimates. If these practices and
procedures do not accurately produce the data to support our assumptions or cause us to change our assumptions, or if
enhanced technological tools become available to us, we may change those assumptions and procedures, as well as our
reserves. If any of our operating practices and procedures do not accurately produce, or reproduce, data that we use to
conduct any or all aspects of our business, such deviations or errors may negatively impact our business, reputation, results of
operations, or financial condition. We may change our assumptions, models, or reserves due to changes in longevity.
Increases in the prevalence and accuracy of genetic testing, or restrictions on its use, may exacerbate adverse selection risks.
Pandemics and other public health issues (such as the ongoing COVID-19 Pandemic) have caused and may continue to
cause increased claims under many of our policies (for example, life, disability, leave, long-term care, and supplemental
health products), raising our resulting costs. Governments or others may fail to produce accurate population and impact data
that we use in our estimates, assumptions, models, or reserves, such as death rates, infections, morbidity, hospitalization, or
illness. This may cause or exacerbate any of the risks related to our estimates or assumptions. Pandemics and other public
health issues may cause related or consequential long-term economic, social, political, policy, regulatory, business,
demographic, or other changes to our claims or other areas subject to estimates, assumptions, models, or reserves. We may
not accurately predict, prepare, and adjust to these changes.
We May Face a Variety of Political, Legal, Operational, Economic and Other Risks Globally
The global nature of our business operations exposes us to a wide range of political, legal, operational, economic and
other risks, including but not limited to: nationalization or expropriation of assets; imposition of limits on foreign ownership
of local companies; changes in laws, their application or interpretation; political instability; economic or trade sanctions;
sanctions on cross-border exchange listing, investment or other securities transactions; dividend limitations; price controls;
currency exchange controls or other transfer or exchange restrictions; difficulty enforcing contracts; regulatory restrictions;
and public or political criticism of our business and operations. Some of these actions may affect us more harshly than our
peers. Some of our businesses operate in emerging markets, where many of these risks are heightened.
We face other risks that may affect our global operations and investments, including those related to international trade
agreements, uncertainties in intergovernmental organizations, pension system reforms, labor problems with workers’
associations or trade unions.
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Expanding our operations to new businesses or jurisdictions may require considerable management time and expenses
before significant, if any, revenues and earnings are generated, which may reduce management and financial resources
available for other uses. Our operations in new or existing markets may be unprofitable or achieve low margins.
We May Face Competition for Business
Competitive pressures, based on a number of factors including service, product features, scale, price, financial strength,
claims-paying ratings, credit ratings, e-business capabilities, name recognition, performance against ESG metrics,
technology, adaptation in light of pandemics and other public health issues (such as the ongoing COVID-19 Pandemic), and
other factors, may adversely affect the persistency of our products and our ability to sell products in the future. We may be
harmed by competition from other insurance companies, as well as non-insurance financial services companies, which may
have a broader array of products, more competitive pricing, higher claims paying ability ratings, greater financial resources
with which to compete, or pre-existing customer bases for financial services products. Additionally, we may lose purchasers
of group insurance products that are underwritten annually due to more favorable terms from competitors. Furthermore, the
investment management and securities brokerage businesses have relatively low barriers to entry and continually attract new
entrants. Our customers and clients may engage other financial service providers, resulting in our loss of business.
An increase in consolidation activity among banks and broker-dealers may negatively impact the insurance industry’s
sales. It may increase competition for access to distributors, resulting in greater distribution expenses, and may impair our
ability to market insurance products to or expand our current customer base. Consolidation and other industry changes may
also increase the likelihood that distributors will renegotiate agreements on terms less favorable to us.
In addition, legislative and other changes affecting the regulatory environment for our business may not impact all
activities and companies equally, which could adversely affect our competitive position within the insurance industry and the
broader financial services industry.
We May Face Technological Changes That Present New and Intensified Challenges
Technological changes may present us with new or intensified challenges. We may be unable to accurately, timely, or
completely process the increased volume and variety of information relating to our businesses, including information related
to deaths, that new technological tools for data collection and analysis make available. We may modify our assumptions,
models, or reserves as a result of our review of such information. Changes in collection and analysis of data could expose us
to regulatory or legal actions.
Technological changes may change how we interact with existing or prospective customers, who may expect increased
choices, and we may have to redesign our products as a result. Our distribution channels may become more automated to
increase flexibility of access to our services and products. We may incur significant costs to implement these changes. If we
are unsuccessful, our competitive position and distribution relationships may be harmed.
Technological advances may also change our investments composition and results. For example, changes in energy
technology and increasing consumer preferences for e-commerce may harm the profitability of some businesses. We may fail
to adjust our investments accordingly or suffer stranded assets.
We May Face Catastrophes That Affect Liabilities for Policyholder Claims and Reinsurance Availability
Catastrophic events could increase claims, impair assets in or otherwise harm our investment portfolio, and could harm
our reinsurers’ financial condition, increasing reinsurance defaults. Catastrophic events may also reduce economic activity in
affected areas, which could harm our existing business or prospects for new business, or the value of our investments. The
severity of claims from catastrophic events may be higher if property values increase due to inflation or other factors or our
insured lives or property are geographically concentrated.
Pandemics and other public health issues (such as the ongoing COVID-19 Pandemic) or other events may continue to
cause a large number of illnesses or deaths. Hurricanes, windstorms, earthquakes, hail, tornadoes, explosions, severe winter
weather, fires and man-made events such as riot, insurrection, or terrorist attacks may also cause catastrophic losses. An event
that affects the workforce of one or more of our customers could increase our mortality or morbidity claims. Governmental
and non-governmental organizations may not effectively mitigate catastrophes' effects.
Consistent with industry practice and accounting standards, we establish liabilities for claims arising from a catastrophe
only after assessing the probable losses arising from the event. The liabilities we have established may not be adequate to
cover our actual claim liabilities. Our efforts to manage risks may be impeded by restrictions on our ability to withdraw from
catastrophe-prone areas or on internal reinsurance transactions. We may be unable to obtain catastrophe reinsurance at rates
we find acceptable, or at all. We may also be called upon to make contributions to guaranty associations or similar
organizations as a result of catastrophes.
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We May Face Direct or Indirect Effects of Climate Change or Responses to It
Climate change may increase the frequency and severity of near- or long-term weather-related disasters. public health
incidents, and pandemics, and their affects may increase over time. Climate change regulation may harm the value of
investments we hold or harm our counterparties, including reinsurers. Our regulators may also increasingly focus their
examinations on climate-related risks.
We May Need to Fund Deficiencies in Our Closed Block, and May Not Re-Allocate Closed Block Assets
The closed block assets established in connection with the MLIC demutualization, their cash flows, and the revenue from
the closed block policies may not be sufficient to provide for the policies’ guaranteed benefits. If they are not, we must fund
the shortfall. We may choose, for competitive or other reasons, to support policyholder dividend payments with our general
account funds. Such actions may reduce funds otherwise available for other uses.
We May Be Required to Recognize an Impairment of Our Goodwill or Other Long-Lived Assets or to Establish a
Valuation Allowance Against Our Deferred Income Tax Assets
We may reduce our estimated fair value of business units, impairing our goodwill and charging net income, if prolonged
market declines or other factors negatively impact the performance of our businesses.
We may write down long-lived assets if we conclude we will be unable to recover their carrying amount.
We may charge net income because we determine that it is more likely than not that we will not realize a deferred
income tax asset based on the performance of the business and its ability to generate future taxable income. In addition, we
may need to write off deferred tax assets if tax rates change.
We May Be Required to Accelerate the Amortization of or Impair DAC, DSI, VOBA or VOCRA
Adverse changes to investment returns, mortality, morbidity, persistency, interest crediting rates, dividends paid to
policyholders, expenses to administer the business, creditworthiness of reinsurance counterparties, significant or sustained
equity market declines, significantly lower spreads, and certain other economic variables, such as inflation, may harm the
gross profit or margins that we use to amortize DAC, deferred sales inducements (“DSI”) and VOBA. These factors could
cause an impairment of the value of customer relationship assets (“VOCRA”) acquired. We may accelerate amortization in
the period these occur.
We May Face Volatility, Higher Risk Management Costs, and Increased Counterparty Risk Due to Guarantees Within
Certain of Our Products
Our liabilities for guaranteed benefits, including but not limited to no-lapse guarantee benefits, guaranteed minimum
death benefits (“GMDBs”), guaranteed minimum withdrawal benefits (“GMWBs”), guaranteed minimum accumulation
benefits (“GMABs”), guaranteed minimum income benefits (“GMIBs”), and minimum crediting rate features could increase
if equity or fixed income funds decline or become more volatile, or interest rates remain low or decrease.
Our derivatives and other risk management strategies to hedge our economic exposure to these liabilities may harm our
results. Our use of reinsurance, derivatives, or other risk management techniques may not sufficiently offset the costs of
guarantees or protect us against losses from changes in policyholder behavior, mortality, or market events.
Policyholders may also change their behavior in unexpected ways. For example, policyholders and contractholders
seeking liquidity due to economic uncertainty or challenges may withdraw or surrender, change their premium payment
practices, exercise product options, or take other actions at rates different from those than we expect.
Operational Risks
Our Risk Management Policies and Procedures, or Our Models, May Leave Us Exposed to Unidentified or Unanticipated
Risk
Our enterprise risk management and business continuity policies and procedures may not be sufficiently comprehensive
and may not identify or adequately protect us from every risk to which we are exposed.
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Pandemics and other public health issues (such as the ongoing COVID-19 Pandemic) have caused and may continue to
cause extended remote work periods and other unusual conditions. These may strain our risk management and our business
continuity plans, introduce or increase our operational and cybersecurity risks, and otherwise impair our ability to manage our
business. They may increase the frequency and sophistication of attempts at unauthorized access to our technology systems.
They may hinder our efforts to prevent money-laundering or other fraud, whether due to limited abilities to “know our
customers,” strains on our programs to avoid and deter foreign corrupt practices, or otherwise, and may both increase our
compliance costs and our risk of violations.
The assumptions, projections and data on which our risk management models are based may be inaccurate, and our
models may not be suitable for their purpose, be misused, not operate properly, and contain errors. Our decisions and model
adjustments, including determination of reserves, are based on such model output and reports and may be flawed. We may
fail to identify or remediate model errors adequately. Our models may not fully predict future exposures or correctly reflect
past experience.
Our evaluation of markets, clients, catastrophe occurrence or other matters may not always be accurate, complete, up-to-
date or properly evaluated. We may not effectively identify and monitor all risks or appropriately limit our exposures and our
associates, vendors or non-employee sales agents may not follow our risk management policies and procedures. Past or future
misconduct by our associates, vendors or non-employee sales agents could result in investigations, violations of law,
regulatory sanctions, and litigation. We may have to implement more extensive or different risk management policies and
procedures due to legal and regulatory requirements.
Our Policies and Procedures May Be Insufficient to Protect Us From Operational Risks
We may make errors in any of the large number of transactions we process through our complex administrative systems.
Our controls and procedures to prevent such errors may not be effective. Our controls and procedures to comply with and
enforce contractual obligations may not always be effective. Mistakes can subject us to claims from our customers.
If we are unable to obtain necessary and accurate information from our customers or their employees, we may be unable
to provide or verify coverage and pay claims, or we may pay claims without sufficient documentation.
Pandemics and other public health issues (such as the ongoing COVID-19 Pandemic) have increased, and may continue
to increase, our administrative expenses and the reliability and efficacy of our processes. They may affect our employees,
agents, brokers and distribution partners, vendors, other service providers and counterparties. We may have difficulties
conducting our business, including continued challenges in selling some of our products, such as those traditionally sold in
person. We may find it difficult or impossible to obtain required or appropriate signatures from our representatives,
customers, or others for a variety of purposes, including property title-related or other governmental filings, increasing the
uncertainties and risks from a variety of transactions, such as product sales, regulatory matters, or real estate-related
transactions. We may face increased workplace safety costs and risks, lose access to critical employees, and face increased
employment-related claims and employee-relations challenges. Any of the third parties to whom we outsource certain critical
business activities may fail to perform due to a force majeure or otherwise.
The controls of our vendors on whom we rely may not meet our standards or be adequate. Our vendors could fail to
perform their services accurately or timely. Our exchange of information with vendors may be imperfect, or our vendors may
suffer financial or reputational distress. Each of these may cause errors, misconduct, or discontinuation of services.
We may fail to escheat property timely and completely. As a result, we may incur charges, reserve strengthening, and
expenses, regulatory examinations, or penalties.
Our practices and procedures may, at times, limit our efforts to contact all our customers, which may result in delayed,
untimely, or missed customer payments.
Our associates, vendors, non-employee sales agents, customers, or others may commit fraud against us. Our policies and
procedures may be ineffective in preventing, detecting or mitigating fraud and other illegal or improper acts.
We may fail to attract, motivate and retain employees, develop talent, and plan for management succession.
We may identify internal control deficiencies, disclosure control deficiencies, or material weaknesses. Pandemics and
other public health issues (such as the ongoing COVID-19 Pandemic) may affect our internal controls or disclosure controls
by imposing new, less-seasoned processes, procedures, and controls to respond to changes in our business environment. If
any employees who are key to our controls become ill or are unable to work effectively, this may also affect our internal or
disclosure controls.
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We May Fail to Protect Confidential Information Due to a Failure in Our Cybersecurity or Other Information Security
Systems or Our Disaster Recovery Plans or Those of Our Vendors
We and our vendors may suffer computer viruses or other malicious codes, unauthorized or fraudulent access, human
errors, cyber-attacks or other penetrations of our computer systems. Our efforts to reduce the risk of cyber-incidents and
protect our information technology may be insufficient to prevent break-ins, attacks, fraud, security breaches or other
unauthorized access to our and our vendors’ systems. We may not timely detect such incidents.
We or our vendors may fail to maintain adequate internal controls, fail to comply with relevant policies and procedures,
or policies, procedures and controls may not be sufficient. As a result, we may intentionally or unintentionally disclose or
misuse confidential personal information, or others may misappropriate it.
We, our vendors, and our customers may suffer disasters such as a natural catastrophe, epidemic, pandemic, industrial
accident, blackout, computer virus, terrorist attack, cyber-attack or war, and our disaster recovery systems may be
insufficient, particularly if these affect computer-based data processing, transmission, storage and retrieval systems and
destroy valuable data. Our ability to conduct business effectively and maintain the security, integrity, confidentiality or
privacy of sensitive data could be severely compromised if key personnel are unavailable, our vendors’ ability to provide
goods and services, and our associates’ ability to perform their job responsibilities, are impaired by a disaster. Any insurance
for liability, operational and other risks may be insufficient to protect us against such losses or may become less readily
available or more expensive.
We may not be able to reliably access all the documents and records in the information storage systems we use, whether
electronic or physical. We may fail to obtain or maintain all the records we need to administer and establish appropriate
reserves for benefits and claims accurately and timely. If a breach released any of our sensitive financial information, then
customers, investors, or regulators may develop an inaccurate perception of our financial condition or results of operations.
We could be compelled to publicly disclose information prematurely in order to dispel such inaccurate perceptions, or in
order to fulfill our disclosure obligations, even if we do not believe the information is yet completely reliable or confirmed
per our usual internal controls and disclosure controls.
Regulators’ or others’ scrutiny of cybersecurity, including new laws or regulations, could increase our compliance costs.
Regulators, customers, or others may act against us for any cybersecurity failures. Our continuous technological evaluations
and enhancements, including changes designed to update our protective measures, may increase our risk of a breach or gap in
our security. We may incur higher costs to comply with laws on, or regulators’ scrutiny of, our use, collection, management,
or transfer of data and other privacy practices.
We May Face Changes in Accounting Standards
Authorities may change accounting standards that apply to us, and we may adopt changes earlier than required. We may
not be able to predict or assess the effects of these changes.
Our Associates May Take Excessive Risks
Our associates, including executives and others who manage sales, investments, products, wholesaling, underwriting, and
others, may take excessive risks. Our compensation programs and practices, and our other controls, may not effectively deter
excessive risk-taking or misconduct.
We May Have Difficulty in or Complications from Marketing and Distributing Our Products
Our product distributors may suspend, alter, reduce or terminate their distribution relationships with us if we change our
strategy, if our business performance declines, as a result of rating agency actions or concerns about market-related risks, or
for other reasons. Our distributors may merge, change their business models in ways that affect us, or terminate their
distribution contracts with us, and new distribution channels could emerge, harming our distribution efforts. Distributors may
try to renegotiate the terms of any existing selling agreements to less favorable terms due to consolidation or other industry
changes or for other reasons. Disruption or changes to our relationships with our distributors could harm our ability to market
our products.
Our employees or unaffiliated firms or agents may distribute our products in an inappropriate manner, or our customers
may not understand them or whether they are suitable.
We May Change Our Pension and Other Postretirement Benefit Plans Assumptions
We may change our discount rate, rate of return on plan assets, mortality rate, compensation level or medical inflation
assumptions, harming our benefit plan estimates.
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We May be Unable to Protect Our Intellectual Property and May Face Infringement Claims
We may be unable to prevent third parties from infringing on or misappropriating our intellectual property. We may
incur litigation costs to enforce and protect it or to determine its scope or validity, and we may not be successful.
In addition, we may be subject to claims by third parties for infringement of intellectual property, breach of license usage
rights, or misappropriation of trade secrets. We may incur significant expenses for any such claims. If we are found to have
infringed or misappropriated a third-party intellectual property right, we may be enjoined from providing certain products or
services to our customers or from utilizing and benefiting from certain intellectual property. Alternatively, we could be
required to enter into costly licensing arrangements with third parties or implement a costly alternative.
Risks Related to Acquisitions, Dispositions or Other Structural Changes
We May Face Difficulties, Unforeseen Liabilities, Asset Impairments or Rating Actions from Business Acquisitions or
Integrating and Managing Growth of Such Businesses, Dispositions of Businesses, or Legal Entity Reorganizations
Acquisitions and dispositions of businesses, joint ventures, and other structural changes expose us to a number of risks
arising from, among other factors, economic, operational, strategic, financial, tax, legal, regulatory, and compliance. As a
result, there can be no assurance that any acquisition, disposition or reorganization will be completed as contemplated, or at
all. We may not realize the anticipated economic, strategic or other benefits of any transaction. Effecting these transactions
may result in unforeseen expenditures and liabilities or a performance different than we expected. The areas where we face
risks include, among others, rights to indemnification for losses, regulatory, liquidity and capital requirements, loss of
customers, distributors, vendors and key personnel, diversion of management time and resources to acquisition integration
challenges or growth strategies from maximizing business value, and inability to realize anticipated efficiencies. Our success
in conducting business through joint ventures will depend on our ability to manage a variety of issues, including: (i) our
exposure to additional operational, financial, legal or compliance risks as a result of entry into certain joint ventures; (ii) our
dependence on a joint venture counterparty given limits on our ownership or distribution requirements, as well as for
resources, including capital and product distribution, may reduce our control over, financial returns from, or the value of a
joint venture; and (iii) our counterparties' cooperation or their ability to meet obligations, or election to alter, modify or
terminate a relationship.
Reorganizing or consolidating the legal entities through which we conduct business may raise similar risks. Our success
in realizing the benefits from legal entity reorganizations will also depend on our management of various issues, including
regulatory approvals, modification of our operations and changes to our investment portfolios or derivatives hedging
activities.
Any of these risks, if realized, could prevent us from achieving the benefits we expect from such transactions.
We May Face Risks Related to Our Separation from and Continuing Relationship with Brighthouse
We may not realize any or all the expected tax or other benefits of the Brighthouse separation. Brighthouse may not
succeed, causing litigation or regulatory claims against us.
Governance Risks
MetLife, Inc.’s Board of Directors May Influence the Outcome of Stockholder Votes on Matters Due to the Voting
Provisions of the MetLife Policyholder Trust
Our Board of Directors may be able to influence stockholder votes by virtue of the provisions of the MetLife
Policyholder Trust and the number of shares of MetLife, Inc. common stock held by it. Trust beneficiary vote instructions are
likely to have disproportionate weight on votes concerning certain fundamental corporate actions because the trustee will vote
all the shares of common stock held by the trust in proportion to those instructions actually received.
We may incur regulatory, mailing, or other costs related to the termination of the trust, distribution of the common stock
held in trust to beneficiaries and the resulting increase in the number of shareholders. The increase to our shareholder base
with full voting rights may affect the outcome of matters brought to a stockholder vote and other aspects of our corporate
governance.
State or Federal Laws, or MetLife, Inc.’s Certificate of Incorporation and By-Laws, May Delay, Deter or Prevent
Takeovers and Business Combinations
State laws, federal laws and MetLife, Inc.’s certificate of incorporation and by-laws may delay, deter or prevent a
takeover attempt that stockholders might consider favorable. These provisions may adversely affect the price of MetLife,
Inc.’s common stock if they discourage takeover attempts.
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Table of Contents
Stockholders’ changes to MetLife, Inc.’s corporate governance may make it more difficult for the Board of Directors to
protect stockholders’ interests.
Item 1B. Unresolved Staff Comments
MetLife has no unresolved comments from the SEC staff regarding its periodic or current reports under the Exchange
Act.
Not applicable.
Item 2. Properties
Item 3. Legal Proceedings
See Note 21 of the Notes to the Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not applicable.
45
Table of Contents
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Issuer Common Equity
MetLife, Inc.’s common stock, par value $0.01 per share, began trading on the New York Stock Exchange under the
symbol “MET” on April 5, 2000.
At February 12, 2021, there were 73,246 stockholders of record of our common stock.
See Item 12 for information about our equity compensation plans.
Issuer Purchases of Equity Securities
Purchases of MetLife, Inc. common stock made by or on behalf of MetLife, Inc. or its affiliates during the quarter ended
December 31, 2020 are set forth below:
Period
October 1 - October 31, 2020
November 1 - November 30, 2020
December 1 - December 31, 2020
Total
__________________
Total Number of
Shares
Purchased (1)
Average Price
Paid per Share
Total Number of
Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number (or
Approximate Dollar Value)
of Shares that May Yet
Be Purchased Under the
Plans or Programs (2)
5,655,304
4,302,912
3,596,807
13,555,023
$38.90
$43.06
$46.02
5,655,304
4,302,912
3,596,807
13,555,023
$185,344,456
$43,883
$2,834,532,414
(1)
(2)
During the periods October 1 through October 31, 2020, November 1 through November 30, 2020 and December 1
through December 31, 2020, there were no purchases by separate account index funds of MetLife, Inc. common stock
on the open market in non-discretionary transactions.
In December 2020, MetLife, Inc. announced that its Board of Directors authorized $3.0 billion of common stock
repurchases. At December 31, 2020, MetLife, Inc. had $2.8 billion of common stock repurchases remaining under the
authorization. For more information on common stock repurchases, see “Risk Factors — Capital Risks — We May not
be Able to Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer Needs,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital
Resources — The Company — Liquidity and Capital Uses — Common Stock Repurchases” and Note 16 of the Notes
to the Consolidated Financial Statements.
Purchases of MetLife, Inc. preferred stock made by or on behalf of MetLife, Inc. or its affiliates during the quarter ended
December 31, 2020 are set forth below:
Period
October 1 - October 31, 2020
November 1 - November 30, 2020
December 1 - December 31, 2020
Total
__________________
Total Number of
Shares
Purchased (1)
Average Price
Paid per Share
Total Number of
Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number (or
Approximate Dollar Value)
of Shares that May Yet
Be Purchased Under the
Plans or Programs
1,000,000 $
1,000.00
1,000,000 $
— $
— $
1,000,000
—
—
— $
— $
1,000,000
—
—
—
(1)
On September 10, 2020, MetLife, Inc. delivered a notice of partial redemption to the holders of Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series C (“Series C preferred stock”) pursuant to which it would redeem 1,000,000
of its 1,500,000 shares of Series C preferred stock at a redemption price of $1,000 per share, plus an amount equal to
accrued but unpaid dividends on the Series C preferred stock to, but excluding, October 10, 2020, the redemption date.
On October 13, 2020, MetLife, Inc. redeemed and canceled 1,000,000 shares of Series C preferred stock for an
aggregate redemption price of $1.0 billion in cash. See Note 16 of the Notes to the Consolidated Financial Statements.
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Table of Contents
Common Stock Performance Graph
The graph and table below compare the total return on our common shares with the total return on the S&P Global
Ratings (“S&P”) 500, S&P 500 Insurance, and S&P 500 Financials indices, respectively, for the five-year period ended on
December 31, 2020. The graph and table show the total return on a hypothetical $100 investment in our common shares and
in each index, respectively, on December 31, 2015, including the reinvestment of all dividends. The graph and table below
shall not be deemed to be “soliciting material” or to be “filed,” or to be incorporated by reference in future filings with the
SEC, or to be subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate
it by reference into a document filed under the Securities Act or the Exchange Act.
2015
2016
2017
2018
2019
2020
MetLife, Inc. common stock
$
100.00 $
115.86 $
125.20 $
105.47 $
135.88 $
S&P 500
S&P 500 Insurance
S&P 500 Financials
100.00
100.00
100.00
111.96
117.58
122.80
136.40
136.62
150.04
130.42
121.31
130.49
171.49
156.95
172.41
131.24
203.04
156.26
169.49
As of December 31,
47
MetLife, Inc.S&P 500S&P 500 InsuranceS&P 500 Financials$0$50$100$150$200$250$300
Table of Contents
Reserved.
Item 6. Selected Financial Data
48
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements and Other Financial Information
Executive Summary
Industry Trends
Summary of Critical Accounting Estimates
Economic Capital
Acquisitions and Dispositions
Results of Operations
Effects of Inflation
Investments
Derivatives
Off-Balance Sheet Arrangements
Insolvency Assessments
Policyholder Liabilities
Liquidity and Capital Resources
Adoption of New Accounting Pronouncements
Future Adoption of New Accounting Pronouncements
Non-GAAP and Other Financial Disclosures
Page
50
50
54
60
67
67
69
87
88
108
110
111
111
119
136
136
137
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Table of Contents
Forward-Looking Statements and Other Financial Information
For purposes of this discussion, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware
corporation incorporated in 1999, its subsidiaries and affiliates. This discussion should be read in conjunction with “Note
Regarding Forward-Looking Statements,” “Risk Factors,” “Quantitative and Qualitative Disclosures About Market Risk” and
the Company’s consolidated financial statements included elsewhere herein.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain or
incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. See “Note Regarding Forward-Looking Statements” for cautionary
language regarding forward-looking statements.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes references to our
performance measures, adjusted earnings and adjusted earnings available to common shareholders, that are not based on
GAAP. See “— Non-GAAP and Other Financial Disclosures” for definitions and a discussion of these and other financial
measures, and “— Results of Operations” for reconciliations of historical non-GAAP financial measures to the most directly
comparable GAAP measures.
For information relating to the Company’s financial condition and results of operations as of and for the year ended
December 31, 2018, as well as for the year ended December 31, 2019 compared with the year ended December 31, 2018, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in MetLife, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2019.
Executive Summary
Overview
MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits
and asset management. MetLife is organized into five segments: U.S.; Asia; Latin America; EMEA; and MetLife Holdings.
In addition, the Company reports certain of its results of operations in Corporate & Other. See “Business — Segments and
Corporate & Other” and Note 2 of the Notes to the Consolidated Financial Statements for further information on the
Company’s segments and Corporate & Other.
See “— Consolidated Company Outlook” for a discussion of the impact of the COVID-19 Pandemic on the Company.
Current Year Highlights
During 2020, adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased compared to
2019 in many of our segments, and most significantly in our U.S. segment, despite the negative impacts of the COVID-19
Pandemic and related restrictions. Positive net flows drove an increase in our investment portfolio; however, investment
yields declined. Expenses, including interest credited expenses, also declined. Underwriting experience was favorable
compared to 2019, and reflected impacts from the COVID-19 Pandemic and related restrictions. In addition, our annual
actuarial assumption review resulted in a charge that was higher than the 2019 charge. A favorable change in net derivative
gains (losses) over 2019 was primarily the result of a decline in long-term interest rates.
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The following represents segment level results and percentage contributions to total segment level adjusted earnings
available to common shareholders for the year ended December 31, 2020:
_______________
(1) Excludes Corporate & Other adjusted loss available to common shareholders of $749 million.
(2) Consistent with GAAP guidance for segment reporting, adjusted earnings is our GAAP measure of segment performance.
For additional information, see Note 2 of the Notes to the Consolidated Financial Statements.
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Table of Contents
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Consolidated Results - Highlights
Net income (loss) available to MetLife, Inc.’s
common shareholders down $530 million:
• Unfavorable change in net investment gains
(losses) of $554 million ($438 million, net of
income tax)
• Unfavorable change from annual actuarial
assumption reviews of $177 million ($139
million, net of income tax) (2)
• Favorable change in net derivative gains (losses)
of $721 million ($570 million, net of income
tax) (3)
• Adjusted earnings available to common
shareholders down $144 million
(1) See “— Results of Operations — Consolidated Results” and “— Non-GAAP and Other Financial Disclosures” for
reconciliations and definitions of non-GAAP financial measures.
(2) Includes amounts recognized in net derivative gains (losses) and adjusted earnings available to common shareholders.
See “— Results of Operations — Consolidated Results — Year Ended December 31, 2020 Compared with the Year
Ended December 31, 2019 — Actuarial Assumption Review and Certain Other Insurance Adjustments” for
additional information.
(3) Includes amounts relating to investment hedge adjustments, which are also included in adjusted earnings available to
common shareholders. See “— Investments — Investment Portfolio Results” for additional information.
Consolidated Results - Adjusted Earnings Highlights
Adjusted earnings available to common shareholders down $144 million:
• The primary drivers of the decrease in adjusted earnings were lower investment yields and a higher effective tax rate.
These declines were partially offset by higher net investment income due to a larger asset base, and a decrease in
expenses, including interest credited expenses.
• Our results for 2020 included the unfavorable impact from our annual actuarial assumption review of
$203 million, net of income tax.
• Our results for 2019 included the following:
• unfavorable impact from our annual actuarial assumption review of $143 million, net of income tax
• a $17 million, net of income tax, charge due to an increase in our incurred but not reported (“IBNR”) long-term care
reserves, reflecting enhancements to our methodology related to potential claims
• expenses associated with our previously announced unit cost initiative of $332 million, net of income tax
• a $317 million tax benefit related to the resolution of an uncertainty regarding the deemed repatriation transition tax
enacted as a part of the Tax Cuts and Jobs Act of 2017 (“U.S. Tax Reform”)
• a $222 million benefit from the IRS audit settlement related to the tax treatment of a wholly-owned U.K. investment
subsidiary of MLIC, which was comprised of a $158 million tax benefit and a $64 million interest benefit
For a more in-depth discussion of our consolidated results, see “— Results of Operations — Consolidated Results,”
“— Results of Operations — Consolidated Results — Adjusted Earnings” and “— Results of Operations — Segment
Results and Corporate & Other.”
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Table of Contents
Consolidated Company Outlook
We continue to closely monitor developments relating to the COVID-19 Pandemic and assess its impact on our business.
The COVID-19 Pandemic continues to impact the global economy and financial markets and has caused volatility in the
global equity, credit and real estate markets. Governments and businesses have taken numerous measures to try to contain the
virus, such as travel bans and restrictions, quarantines, social distancing, shelter in place or total lock down orders, and
business limitations and shutdowns. Some governments and businesses have begun to ease some restrictions. Others have
reinstated restrictions they previously lifted. Nevertheless, these measures have disrupted and will continue to disrupt
business activity and have resulted in an economic slowdown and volatility in the financial markets, to which governments
and central banks around the world have responded with unprecedented fiscal and monetary policies. Although vaccines have
become available, distribution and access are expected to take time before a significant percentage of the population is
vaccinated. See “— Industry Trends — Financial and Economic Environment.”
In addition, a prolonged low or near zero interest rate environment remains possible. The economic projections of the
Federal Reserve Board suggest that the current low interest rate environment will continue until 2023, and potentially longer.
We believe that our investment portfolio is highly diversified and well positioned to withstand economic downturns;
however, we expect that the market-related effects of the COVID-19 Pandemic, as well as the sustained low interest rate
environment, will continue to have an impact across our investment portfolio. See “— Industry Trends — Impact of a
Sustained Low Interest Rate Environment” for discussion of the mitigating actions the Company has taken to reduce interest
rate sensitivity as market interest rates are a key driver of our results.
Events related to the COVID-19 Pandemic may continue to adversely affect certain of our business operations,
investment portfolio, derivatives, financial results or financial condition. See “Risk Factors.” We have implemented risk
management and business continuity plans and taken preventive measures and other precautions, such as employee business
travel restrictions and remote work arrangements which, to date, have enabled us to maintain our critical business processes,
customer service levels, relationships with key vendors, financial reporting systems, internal controls over financial reporting
and disclosure controls and procedures.
We granted and continue to grant certain accommodations to our customers, borrowers and lessees, including (i) waiving
exclusions, such as deferred rate increases, extending premium grace periods, waiving late payment fees, and relaxing claim
documentation requirements, (ii) credits on auto and insured dental premiums, (iii) payment deferrals and other loan
modifications on certain commercial, agricultural and residential mortgage loans, and (iv) certain operating and direct
financing lease concessions. See Note 8 of the Notes to the Consolidated Financial Statements for further information
regarding COVID-19 Pandemic-related mortgage loan and lease concessions. See also, “— Results of Operations —
Segment Results and Corporate & Other — U.S.”
As of December 31, 2020, we had $4.5 billion of cash and liquid assets at the holding companies which is above the high
end of our $3.0 billion to $4.0 billion holding company cash target. In 2021, we expect to maintain this holding company
cash target and expect to be within or above the high end of this range.
Our capital stress testing and longstanding commitment to liquidity position us to withstand the current crisis. We have,
and may continue to maintain, a higher than normal level of short-term liquidity, which may adversely affect net investment
income if the reinvestment process occurs over an extended period of time. We do not expect any material liquidity
deficiencies, and we expect to remain able to comply with the financial covenants of our credit agreements. See “— Liquidity
and Capital Resources.” We will continue reviewing accounting estimates, asset valuations and various financial scenarios
for capital and liquidity implications. See “— Investments — Current Environment” and “Risk Factors” for additional
information.
Assuming (i) interest rates following the observable forward yield curves as of December 31, 2020, including a 10-year
U.S. Treasury rate of 0.91% at December 31, 2020, and 1.12% at December 31, 2021, and (ii) a mid-single digit S&P 500
equity index increase for the full year 2021, we expect the average annual ratio of free cash flow to adjusted earnings over the
two-year period of 2020 and 2021 to be 65% to 75%. In addition, we remain on track to generate approximately $20.0 billion
of free cash flow over the time period of 2020 through 2024.
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We continue to target an adjusted return on equity, excluding accumulated other comprehensive income (“AOCI”) other
than foreign currency translation adjustments (“FCTA”) of 12% to 14% over the near-term assuming non-recessionary
market conditions. However, (i) given the possible effects of the COVID-19 Pandemic and other events, (ii) given our
exclusion of MetLife P&C from adjusted earnings because we expect to close its disposition in the second quarter 2021, and
(iii) assuming (a) interest rates follow the observable forward yield curves as of December 31, 2020, including our updated
assumptions for the 10-year U.S. Treasury rates noted in the paragraph above, (b) a mid-single digit S&P 500 equity index
increase for the full year 2021, and (c) positive low double digit private equity returns in 2021, we could be below the low
end of the target range in 2021.
We are fully committed to achieving a direct expense ratio, excluding total notable items related to direct expenses and
pension risk transfers below 12.3%. We expect pressure on this ratio in 2021 due to the pending disposition of MetLife P&C
with its lower direct expense ratio, but we intend to continue to exercise expense discipline and be below 12.3% for 2022.
Furthermore, we also remain fully committed to our Next Horizon Strategy, which was introduced at our December 2019
Investor Day.
Our outlook relies on the accuracy of our assumptions about future economic and business conditions, which can be
affected by known and unknown risks and other uncertainties, such as those posed by the COVID-19 Pandemic. Due to the
evolving and highly uncertain nature of the COVID-19 Pandemic and other factors, we will continually review our
assumptions, implementing mitigation plans, and taking precautions. We may revise our outlook as we obtain more
information regarding the effects of the COVID-19 Pandemic, the effect and efficacy of efforts taken to respond to it,
economic conditions, regulatory changes, and other events, and the impact of these events on our business operations,
investment portfolio, derivatives, financial results and financial condition.
Industry Trends
We continue to be impacted by the changing global financial and economic environment that has been affecting the
industry.
Financial and Economic Environment
Our business and results of operations are materially affected by conditions in the global capital markets and the
economy generally. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial
asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance
liabilities and derivatives are sensitive to changing market factors. See “Risk Factors — Economic Environment and Capital
Markets Risks — We May Face Difficult Economic Conditions.”
We have market presence in numerous countries and, therefore, our business operations are exposed to risks posed by
local and regional economic conditions. See “Risk Factors — Economic Environment and Capital Markets Risks — We May
Face Difficult Economic Conditions — Currency Exchange Rate Risks.”
We are closely monitoring political and economic conditions that might contribute to global market volatility and impact
our business operations, investment portfolio and derivatives. For example, certain measures taken by governments and
businesses as a result of the COVID-19 Pandemic to respond to the spread of the virus have disrupted business activity and
have resulted in an economic slowdown and volatility in financial markets. Governmental and non-governmental
organizations may not effectively respond to the spread and severity of the COVID-19 Pandemic, increasing the magnitude
and longevity of the potential negative economic impacts. We cannot yet determine or estimate the actions that will be taken,
including governmental laws, regulations or orders, and the extent to which these actions have affected or will affect our
business operations, investment portfolio, financial results, or financial condition. See “— Executive Summary —
Consolidated Company Outlook” and “— Investments — Current Environment.”
We are also monitoring the imposition of tariffs or other barriers to international trade, changes to international trade
agreements, and their potential impacts on our business, results of operations and financial condition, including the impact of
the trade agreement reached by the U.K. and the EU in December 2020. See “Business — Regulation — Cross-Border Trade
and Investments.” See also “Risk Factors — Business Risks — We May Face a Variety of Political, Legal, Operational,
Economic and Other Risks Globally.”
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Governments and central banks around the world are responding to the COVID-19 Pandemic with unprecedented fiscal
and monetary policies, which are expected to have significant and ongoing effects on financial markets and the global
economy. In the United States, the Federal Reserve Board continues to expand its balance sheet and board members’
forecasts suggest the policy rate is likely to remain near zero through 2023. Separately, another COVID-related stimulus
package has been passed. The European Central Bank has significantly increased the size of its asset purchase program, and
extended its commitment to undertake purchases through 2021, reduced constraints on what and how much it can purchase,
and launched new funding facilities for euro area banks, while the Bank of England significantly lowered interest rates and
relaunched quantitative easing. Additionally, a number of European countries, including the U.K., have implemented large
fiscal stimulus programs, as well as the provision of guarantees and loans for private sector companies. The EU approved a
stimulus package comprised of grants and low interest financing to member states, which is expected to become operational
in 2021.
In Japan, the Bank of Japan has accelerated its purchases of interests in index-linked securities and real estate
investments, increased the annual limit on purchases of commercial paper and bonds, and introduced new measures to
facilitate corporate financing, including a new lending program for businesses impacted by the COVID-19 Pandemic. In
addition, the Japanese government approved additional stimulus measures, including provisions for cash payouts to
individuals and business owners, tax reform, and zero-interest loans.
We cannot predict with certainty the actions that will be taken, effect of these actions or the impact on our business
operations, investment portfolio, financial results, or financial condition. See “— Investments — Current Environment.”
Impact of a Sustained Low Interest Rate Environment
Market interest rates are a key driver of our results. Sustained periods of low U.S. interest rates may cause us to:
•
•
•
•
•
•
Reduce the difference between interest credited to policyholders and interest earned on supporting assets (“gross
margin”);
Reinvest investment proceeds in lower yielding assets and experience higher frequency prepayment or redemption
of assets in our portfolio;
Increase our reserves or trigger loss recognition events related to policy liabilities, accelerate amortization of DAC
and VOBA, and potentially impair intangible assets;
Reduce interest expense, change pension and other post-retirement benefit calculations, and change derivative cash
flows and market values;
Change our product offerings, design features, crediting rates and sales mix; and
Experience changing policyholder behavior, including surrender or withdrawal activity.
For additional discussion on gross margin and interest rate assumptions, as well as the potential impact of low interest
rates, see “— Results of Operations — Consolidated Results — Year Ended December 31, 2020 Compared with the Year
Ended December 31, 2019 — Actuarial Assumption Review and Certain Other Insurance Adjustments.” See also “Risk
Factors — Economic Environment and Capital Markets Risks — We May Face Difficult Economic Conditions — Interest
Rate Risks;” “Risk Factors — Business Risks — We May Be Required to Accelerate the Amortization of or Impair DAC,
DSI, VOBA or VOCRA;” “Risk Factors — Business Risks — We May Be Required to Recognize an Impairment of Our
Goodwill or Other Long-Lived Assets or to Establish a Valuation Allowance Against Our Deferred Income Tax Assets;” and
“Risk Factors — Business Risks — We May Face Volatility, Higher Risk Management Costs, and Increased Counterparty
Risk Due to Guarantees Within Certain of Our Products.”
Mitigating Actions
To mitigate unfavorable impacts of a low U.S. interest rate environment, we maintain diversification across products,
distribution channels, and geographies while proactively evaluating interest rate and product strategies. In addition, we
apply disciplined asset/liability management (“ALM”) strategies, including the use of derivatives, and may take
management actions such as:
•
•
•
Lowering interest crediting rates or adjusting the dividend scale on products;
Limiting or closing certain products to new sales to manage exposures; and
Shifting sales focus to less interest rate sensitive products.
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Our ability to take such actions may be limited by competition, regulatory approval requirements, or minimum
crediting rate guarantees and may not match the timing or magnitude of interest rate changes.
In addition to proactive mitigation strategies, businesses within our Latin America, EMEA, and Asia (exclusive of our
Japan business) segments help mitigate unfavorable impacts to our consolidated results given their limited U.S. interest rate
sensitivity.
For additional discussion on interest rate risk management and our ability to change interest crediting rates or dividend
scales, see “Risk Factors — Economic Environment and Capital Markets Risks — We May Face Difficult Economic
Conditions — Interest Rate Risks;” “— Policyholder Liabilities;” and “Quantitative and Qualitative Disclosures About
Market Risk — Management of Market Risk Exposures.”
Low Interest Rate Scenarios
To illustrate our sensitivity to low U.S. interest rates, we compared the outcome of two hypothetical low interest rate
environments (the “Flat Interest Rate Scenario” and “Declining Interest Rate Scenario”) relative to our baseline economic
assumptions (the “Base Scenario”) through 2023. The impact of these scenarios are evaluated for certain of our segments,
as well as Corporate & Other.
The Flat Interest Rate Scenario assumes U.S. interest rates for all maturities remain at their December 31, 2020 levels
and are unchanged through 2023. The Declining Interest Rate Scenario assumes (i) short-term U.S. interest rates remain
through 2023 at their December 31, 2020 levels; and (ii) long-term U.S. interest rates decline immediately on January 1,
2021 with the 10-year interest rate remaining unchanged thereafter and interest rates beyond 10-years gradually falling
through 2023. Other than changing U.S. interest rates through 2023, all other economic assumptions are equivalent in the
Base Scenario, Flat Interest Rate Scenario and Declining Interest Rate Scenario.
The following table compares the most relevant interest rate assumptions for the dates indicated:
2021
2022
2023
Years Ended December 31,
Base
Scenario
Flat
Interest Rate
Scenario
Declining
Interest Rate
Scenario
Base
Scenario
Flat
Interest Rate
Scenario
Declining
Interest Rate
Scenario
Base
Scenario
Flat
Interest Rate
Scenario
Declining
Interest Rate
Scenario
Three-month
LIBOR
10-year U.S.
Treasury
30-year U.S.
Treasury
0.20%
0.24%
0.24%
0.32%
0.24%
0.24%
0.56%
0.24%
0.24%
1.12%
0.91%
0.50%
1.31%
0.91%
0.50%
1.49%
0.91%
0.50%
1.72%
1.65%
0.77%
1.80%
1.65%
0.69%
1.88%
1.65%
0.63%
Hypothetical Impact to Net Derivative Gains (Losses) and Adjusted Earnings
We estimate a net favorable impact to net derivative gains (losses) from non-VA program derivatives through 2023
in both hypothetical low interest rate scenarios. We hold significant positions in long-duration receive-fixed U.S. interest
rate swaps, which are most sensitive to the 10-year and 30-year swap rates, to hedge reinvestment risk. For purposes of
the two hypothetical low interest rate scenarios, we have excluded all VA program derivatives. For information
regarding our VA and non-VA program derivatives, see “— Results of Operations — Consolidated Results.”
We estimate a net unfavorable impact to consolidated adjusted earnings through 2023 in both hypothetical low
interest rate scenarios. The negative impact of reinvesting cash flows in lower yielding assets is partially offset by
lowering interest crediting rates and dividend scales on products, and additional derivative income. This negative impact
is more severe in the Declining Interest Rate Scenario given that reinvestment of cash flows would be at much lower
rates relative to the Flat Interest Rate Scenario.
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The following table summarizes the hypothetical impact on net derivative gains (losses) and adjusted earnings for
certain of our segments, as well as Corporate & Other, for the Flat Interest Rate Scenario:
Net Derivative Gains (Losses):
Non-VA Program Derivatives
Adjusted Earnings:
U.S.
Group Benefits
RIS
Asia (Japan only)
MetLife Holdings
Corporate & Other
$
$
Years Ended December 31,
2021
2022
(In millions)
2023
220
$
390
$
500
(5) $
(15) $
—
(5)
—
(5)
5
(5)
(10)
(5)
(10)
5
—
(5)
5
(20)
(15)
5
(30)
Total Adjusted Earnings Impact
$
(5) $
(25) $
The following table summarizes the hypothetical impact on net derivative gains (losses) and adjusted earnings for
certain of our segments, as well as Corporate & Other, for the Declining Interest Rate Scenario:
Net Derivative Gains (Losses):
Non-VA Program Derivatives
Adjusted Earnings:
U.S.
Group Benefits
RIS
Asia (Japan only)
MetLife Holdings
Corporate & Other
$
$
Years Ended December 31,
2021
2022
(In millions)
2023
1,510
$
290
$
285
(20) $
(35) $
(5)
(15)
(5)
(10)
30
(15)
(20)
(15)
(35)
10
(40)
(30)
(10)
(35)
(55)
(10)
Total Adjusted Earnings Impact
$
(5) $
(75) $
(140)
Segments and Corporate & Other
The primary drivers impacting certain of our segments, as well as Corporate & Other, in the hypothetical low
interest rate scenarios are summarized below. MetLife P&C is excluded due to the pending disposition. See Note 3 of the
Notes to the Consolidated Financial Statements for further information. Our Latin America, EMEA, and Asia (exclusive
of our Japan business) segments are excluded given their limited U.S. interest rate sensitivity. For additional information
regarding account values subject to minimum crediting rate guarantees, the maturity profile of fixed maturity securities
available-for-sale (“AFS”), and the yield on invested assets, see “— Investments;” “— Policyholder Liabilities —
Policyholder Account Balances;” and Note 8 of the Notes to the Consolidated Financial Statements.
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U.S.
Group Benefits
Our group life insurance products are primarily renewable term policies. This provides repricing flexibility to
mitigate the negative impact of reinvesting in lower yielding assets.
Our retained asset accounts experience gross margin compression due to minimum crediting rate guarantees. All
of these accounts are at their minimum crediting rates. Additionally, we experience gross margin compression from
our disability policy claim reserves for which crediting rates cannot be reduced. We use interest rate derivatives to
mitigate gross margin compression for both products.
Gross margin compression is limited for our group disability products, which are generally renewable term
policies allowing for crediting rate adjustments at renewal based on the retrospective experience rating and the
prevailing interest rate assumptions.
Retirement and Income Solutions
This business contains both short- and long-duration products consisting of capital market products, pension
risk transfers, structured settlements, and other benefit funding products. Based on our investment portfolios and
expected cash flows, only a small portion of invested assets are subject to reinvestment risk through 2023.
A significant portion of short-duration products are managed on a floating rate basis, which mitigates gross
margin compression. The two hypothetical low interest rate scenarios do not assume any additional ALM actions we
may take in our capital markets business.
Our long-duration products have very predictable cash flows and we use both interest rate derivatives and asset/
liability duration matching to mitigate gross margin compression. These mitigating strategies partially offset the
negative impact of reinvesting in lower yielding assets.
Asia
Our Japan business offers traditional life insurance and accident & health products, many of which are U.S. dollar
denominated. We experience gross margin compression to the extent our investment portfolios are U.S. interest rate
sensitive and we are unable to offset the impact by lowering interest crediting rates. Additionally, we manage interest
rate risk on our life products through a combination of product design features and ALM strategies.
Our Japan business also offers U.S. dollar denominated annuities which are predominantly single premium
products with crediting rates set upon issuance. This allows for tightly managing product ALM, cash flows and net
spreads, which mitigates interest rate risk.
MetLife Holdings
Our interest rate sensitive life products include traditional and universal life products. Since most of our traditional
life insurance is participating, we can mitigate gross margin compression by adjusting the applicable dividend scale.
For our universal life products, we manage interest rate risk through a combination of product design features and
ALM strategies, including the use of interest rate derivatives. Although we are able to mitigate gross margin
compression by lowering interest crediting rates on certain in-force universal life policies, these actions may be
partially offset by increased liabilities for policies with secondary guarantees.
Our annuity products experience gross margin compression primarily from deferred annuities with minimum
crediting rate guarantees. Most of these contracts are at their minimum crediting rate, and, therefore we use interest
rate derivatives to partially mitigate gross margin compression.
Our long-term care business experiences gross margin compression as we cannot reduce interest crediting rates for
established claim reserves. Long-term care policies are guaranteed renewable, and rates may be adjusted on a class
basis with regulatory approval to reflect emerging experience. We review the discount rate assumptions and other
assumptions associated with our long-term care claim reserves no less frequently than annually and, with respect to
interest rates, set the discount rate based on the prevailing interest rate environment.
Our retained asset accounts experience gross margin compression due to minimum crediting rate guarantees. Most
of these accounts are at their minimum crediting rates and therefore we use interest rate derivatives to mitigate gross
margin compression.
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Based on our investment portfolios and cash flow estimates, approximately 6% of our invested assets each year
are subject to reinvestment risk through 2023.
Corporate & Other
Corporate & Other contains the surplus investment portfolios used to fund capital and liquidity needs, certain
reinsurance agreements, collateral financing arrangements, and our outstanding debt and preferred securities. For
purposes of the two hypothetical low interest rate scenarios, the preferred stock dividend impact is excluded and the
impact on pension and postretirement plan expenses is included within Corporate & Other and not allocated across
segments. The negative impact of reinvesting in lower yielding assets is more than offset by the positive impact of
lower interest expense on debt and lower pension expense.
Although low interest rates result in pension and other postretirement benefit liabilities increasing, the impact is
more than offset by the corresponding returns on fixed income investments and results in lower expenses.
Competitive Pressures
The life insurance industry remains highly competitive. See “Business — Competition.” Product development is focused
on differentiation leading to more intense competition with respect to product features and services. Certain of the industry’s
products can be quite homogeneous and subject to intense price competition. Cost reduction efforts are a priority for industry
players, with benefits resulting in price adjustments to favor customers and reinvestment capacity. Larger companies have the
ability to invest in brand equity, product development, technology optimization, risk management, and innovation, which are
among the fundamentals for sustained profitable growth in the life insurance industry. Insurers are focused on their core
businesses, specifically in markets where they can achieve scale. Insurers are increasingly seeking alternative sources of
revenue; there is a focus on monetization of assets, fee-based services, and opportunities to offer comprehensive solutions,
which include providing value-added services along with traditional products. Financial strength and flexibility and
technology modernization are prerequisites for sustainable growth in the life insurance industry. Larger market participants
tend to have the capacity to invest in analytics, distribution, and information technology and have the ability to leverage the
capabilities of new digital entrants. There is a shift in distribution from proprietary to third party models in mature markets,
due to the lower cost structure. Evolving customer expectations are having a significant impact on the competitive
environment as insurers strive to offer the superior customer service demanded by an increasingly sophisticated industry
client base. Legislative and other changes affecting the regulatory environment can also affect the competitive environment
within the life insurance industry and within the broader financial services industry. See “Business — Regulation.” We
believe that the current low interest rate environment and increased volatility of the financial markets, as a result of the
COVID-19 Pandemic, will continue to strain the life insurance industry, as well as the broader financial services industry. In
addition to financial strength, technological efficiency and organizational agility, we believe that the ability to adapt to
changes in the competitive environment as a result of the COVID-19 Pandemic is a significant differentiator to success in the
life insurance industry and the broader financial services industry, and we are well positioned to compete in this environment.
Regulatory Developments
In the United States, our life insurance companies are regulated primarily at the state level, with some products and
services also subject to federal regulation. As life insurers introduce new and often more complex products, regulators refine
capital requirements and introduce new reserving standards for the life insurance industry. Regulations recently adopted or
currently under review can potentially impact the statutory reserve and capital requirements of the industry. See “Risk Factors
— Regulatory and Legal Risks — Changes in Laws or Regulation, or in Supervisory and Enforcement Policies, May Reduce
Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.” Regulators have also undertaken market and sales
practices reviews of several markets or products, including equity-indexed annuities, variable annuities and group products
and, in some states, instituted a moratorium on new reserve financing transactions. See “Business — Regulation,” “Risk
Factors — Economic Environment and Capital Markets Risks — Our Statutory Life Insurance Reserve Financings Costs
May Increase, and We May Find Limited Market Capacity for New Financings,” “Risk Factors — Regulatory and Legal
Risks — Changes in Laws or Regulation, or in Supervisory and Enforcement Policies, May Reduce Our Profitability, Limit
Our Growth, or Otherwise Adversely Affect Us” and “— Liquidity and Capital Resources — The Company — Capital —
Affiliated Captive Reinsurance Transactions.”
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Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and
make estimates and assumptions that affect amounts reported on the Consolidated Financial Statements. For a discussion of
our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements. The most critical
estimates include those used in determining:
(i) liabilities for future policy benefits and the accounting for reinsurance;
(ii) capitalization and amortization of DAC and the establishment and amortization of VOBA;
(iii) estimated fair values of investments in the absence of quoted market values;
(iv) investment allowance for credit loss (“ACL”) and impairments;
(v) estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives
requiring bifurcation;
(vi) measurement of goodwill and related impairment;
(vii) measurement of employee benefit plan liabilities;
(viii) measurement of income taxes and the valuation of deferred tax assets; and
(ix) liabilities for litigation and regulatory matters.
In addition, the application of acquisition accounting requires the use of estimation techniques in determining the
estimated fair values of assets acquired and liabilities assumed — the most significant of which relate to the aforementioned
critical accounting estimates. In applying these policies and estimates, management makes subjective and complex judgments
that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related
judgments are common in the insurance and financial services industries; others are specific to our business and operations.
Actual results could differ from these estimates.
Liability for Future Policy Benefits
Generally, future policy benefits are payable over an extended period of time and related liabilities are calculated as the
present value of future expected benefits to be paid, reduced by the present value of future expected premiums. Such
liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial
standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity,
policy lapse, renewal, retirement, disability incidence, disability terminations, investment returns, inflation, expenses and
other contingent events as appropriate to the respective product type and geographical area. These assumptions are
established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are
payable. Utilizing these assumptions, liabilities are established on a block of business basis. If experience is less favorable
than assumed, additional liabilities may be established, resulting in a charge to policyholder benefits and claims.
Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and experience
assumptions as to claim terminations, expenses and interest.
Liabilities for unpaid claims are estimated based upon our historical experience and other actuarial assumptions that
consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated
salvage and subrogation.
Future policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity contracts are
based on estimates of the expected value of benefits in excess of the projected account balance, recognizing the excess ratably
over the accumulation period based on total expected assessments. Liabilities for ULSG and paid-up guarantees are
determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and
recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used
in estimating the secondary and paid-up guarantee liabilities are consistent with those used for amortizing DAC, and are thus
subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are
consistent with historical experience of the appropriate underlying equity index, such as the S&P 500 Index.
We regularly review our estimates of liabilities for future policy benefits and compare them with our actual experience.
Differences between actual experience and the assumptions used in pricing these policies and guarantees, as well as in the
establishment of the related liabilities, result in variances in profit and could result in losses.
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See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our liability for future
policy benefits.
Reinsurance
Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future
performance of the underlying business and the potential impact of counterparty credit risks. We periodically review actual
and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to
ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using
criteria similar to that evaluated in our security impairment process. See “— Investment Allowance for Credit Loss and
Impairments.” Additionally, for each of our reinsurance agreements, we determine whether the agreement provides
indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We
review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or
features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the
reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit
method of accounting.
See Note 6 of the Notes to the Consolidated Financial Statements for additional information on our reinsurance
programs.
Deferred Policy Acquisition Costs and Value of Business Acquired
We incur significant costs in connection with acquiring new and renewal insurance business. Costs that relate directly to
the successful acquisition or renewal of insurance contracts are capitalized as DAC. In addition to commissions, certain
direct-response advertising expenses and other direct costs, deferrable costs include the portion of an employee’s total
compensation and benefits related to time spent selling, underwriting or processing the issuance of new and renewal
insurance business only with respect to actual policies acquired or renewed. We utilize various techniques to estimate the
portion of an employee’s time spent on qualifying acquisition activities that result in actual sales, including surveys,
interviews, representative time studies and other methods. These estimates include assumptions that are reviewed and
updated on a periodic basis to reflect significant changes in processes or distribution methods.
VOBA represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-
type contracts in force at the acquisition date. For certain acquired blocks of business, the estimated fair value of the in-force
contract obligations exceeded the book value of assumed in-force insurance policy liabilities, resulting in negative VOBA,
which is presented separately from VOBA as an additional insurance liability included in other policy-related balances. The
estimated fair value of the acquired obligations is based on projections, by each block of business, of future policy and
contract charges, premiums, mortality and morbidity, separate account performance, surrenders, expenses, investment
returns, nonperformance risk adjustment and other factors. Actual experience on the purchased business may vary from these
projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business.
Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force
account balances on such contracts each reporting period, which can result in significant fluctuations in amortization of DAC
and VOBA. Our practice to determine the impact of gross profits resulting from returns on separate accounts assumes that
long-term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when
sustained interim deviations are expected. We monitor these events and only change the assumption when our long-term
expectation changes. The effect of an increase (decrease) by 100 basis points in the assumed future rate of return is
reasonably likely to result in a decrease (increase) in the DAC and VOBA amortization with an offset to our unearned
revenue liability which nets to approximately $30 million. We use a mean reversion approach to separate account returns
where the mean reversion period is five years with a long-term separate account return after the five-year reversion period is
over. The current long-term rate of return assumption for the variable universal life contracts and variable deferred annuity
contracts is 6.0%.
We periodically review long-term assumptions underlying the projections of estimated gross margins and profits. These
assumptions primarily relate to investment returns, policyholder dividend scales, interest crediting rates, mortality,
persistency, and expenses to administer business. Assumptions used in the calculation of estimated gross margins and profits
which may have significantly changed are updated annually. If the update of assumptions causes expected future gross
margins and profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to
earnings. The opposite result occurs when the assumption update causes expected future gross margins and profits to
decrease.
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Our most significant assumption updates resulting in a change to expected future gross margins and profits and the
amortization of DAC and VOBA are due to revisions to expected future investment returns, expenses, in-force or persistency
assumptions and policyholder dividends on participating traditional life contracts, variable and universal life contracts and
annuity contracts. We expect these assumptions to be the ones most reasonably likely to cause significant changes in the
future. Changes in these assumptions can be offsetting and we are unable to predict their movement or offsetting impact over
time.
At December 31, 2020 and 2019, DAC and VOBA for the Company was $16.4 billion and $17.8 billion, respectively.
The following illustrates the effect on DAC and VOBA of changing each of the respective assumptions, as well as updating
estimated gross margins or profits with actual gross margins or profits during the years ended December 31, 2020 and 2019.
Increases (decreases) in DAC and VOBA balances, as presented below, resulted in a corresponding decrease (increase) in
amortization.
General account investment return
Separate account investment return
Net investment/Net derivative gains (losses) and GMIB
In-force/Persistency
Policyholder dividends, expense and other
Total
Years Ended December 31,
2020
2019
(In millions)
$
(285) $
40
(28)
(32)
(29)
$
(334) $
(116)
31
(106)
39
(81)
(233)
Items contributing to the changes to DAC and VOBA amortization in 2020 consisted of the following:
•
Net increase in amortization of $285 million mostly due to the annual actuarial assumption review relating to the
general account long-term investment rates of return.
Items contributing to the changes to DAC and VOBA amortization in 2019 consisted of the following:
•
Net increase in amortization of $106 million associated with net investment/net derivative gains (losses) and GMIB,
primarily driven by the following:
◦
◦
◦
An increase in amortization of $25 million from net derivative gains from freestanding derivatives hedging the
variable annuity guarantees, partially offset by a decrease in amortization of approximately $10 million from net
derivative losses resulting from the increases in variable annuity guarantee obligations.
A decrease in amortization of approximately $10 million associated with gains from GMIB hedges and the
decreases in GMIB obligations.
Net increase in amortization of approximately $100 million from other investment activities.
•
Net increase in general account investment return mostly due to net investment income assumption unlocking and an
update to the yield curve for market value adjustment.
Our DAC and VOBA balance is also impacted by unrealized investment gains (losses) and the amount of amortization
which would have been recognized if such gains and losses had been realized. The increase in unrealized investment gains
(losses) decreased the DAC and VOBA balance by $1.3 billion and $1.5 billion in 2020 and 2019, respectively. See Notes 5
and 8 of the Notes to the Consolidated Financial Statements for information regarding the DAC and VOBA offset to
unrealized investment gains (losses).
Estimated Fair Value of Investments
In determining the estimated fair value of our investments, fair values are based on unadjusted quoted prices for identical
investments in active markets that are readily and regularly obtainable. When such unadjusted quoted prices are not available,
estimated fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical
investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable,
unobservable inputs and/or adjustments to observable inputs requiring management judgment are used to determine the
estimated fair value of investments.
The methodologies, assumptions and inputs utilized are described in Note 10 of the Notes to the Consolidated Financial
Statements.
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Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a
reduction in asset liquidity. Our ability to sell investments, or the price ultimately realized for investments, depends upon the
demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain
investments.
Investment Allowance for Credit Loss and Impairments
The significant estimates related to our evaluation of credit loss and impairments on our investment portfolio are
summarized below. In addition, information about the evaluation processes and measurement methodologies and changes
thereto from the implementation of new credit loss guidance on January 1, 2020, is contained in Notes 1 and 8 of the Notes to
the Consolidated Financial Statements.
Fixed Maturity Securities
The assessment of whether a credit loss has occurred is based on our case-by-case evaluation of whether the net
amount expected to be collected is less than the amortized cost basis. We consider a wide range of factors about the
security issuer and use our best judgment in evaluating the cause of the decline in the estimated fair value of the security
and in assessing the prospects for near-term recovery. In accordance with new credit loss guidance adopted January 1,
2020, we evaluate credit loss by considering information about past events, current and forecasted economic conditions,
and we measure credit loss by estimating recovery value using a discounted cash flow analysis. In accordance with this
new credit loss guidance, we record an ACL for the amount of the credit loss instead of recording a reduction of the
amortized cost as an impairment. We revise these evaluations as conditions change and new information becomes
available.
Prior to adopting the new credit loss guidance, we used the incurred loss model. The credit loss evaluation process and
the measurement of credit loss are generally similar under the new credit loss guidance and the incurred loss model.
Mortgage Loans
The ACL is established both for pools of loans with similar risk characteristics and for loans with dissimilar risk
characteristics, collateral dependent loans and reasonably expected troubled debt restructurings, individually on a loan
specific basis. We record an allowance for expected lifetime credit loss in an amount that represents the portion of the
amortized cost basis of mortgage loans that we do not expect to collect, resulting in mortgage loans being presented at the
net amount expected to be collected. In accordance with new credit loss guidance adopted January 1, 2020, to determine
the mortgage loan ACL, we estimate expected lifetime credit loss over the contractual term of our mortgage loans adjusted
for expected prepayments and any extensions; and we consider past events and current and forecasted economic conditions.
Our estimates are revised as conditions change and new information becomes available.
Prior to adopting the new credit loss guidance, we used the incurred loss model. The credit loss evaluation process and
the measurement of credit loss are generally similar under the new credit loss guidance and the incurred loss model, except
that the new credit loss guidance requires recording an ACL for expected lifetime credit loss.
Real Estate, Leases and Other Asset Classes
The determination of the amount of ACL and impairments on real estate, leases and the remaining invested asset
classes is highly subjective and is based upon our quarterly evaluation and assessment of known and inherent risks
associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new
information becomes available.
Derivatives
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is
based on market standard valuation methodologies and inputs that management believes are consistent with what other
market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest
rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity
and changes in estimates and assumptions used in the pricing models. See Note 10 of the Notes to the Consolidated Financial
Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
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We issue variable annuity products with guaranteed minimum benefits, some of which are embedded derivatives
measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value
reported in net derivative gains (losses). The estimated fair values of these embedded derivatives are determined based on the
present value of projected future benefits minus the present value of projected future fees. The projections of future benefits
and future fees require capital market and actuarial assumptions, including expectations concerning policyholder behavior. A
risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple
capital market scenarios using observable risk-free rates. The valuation of these embedded derivatives also includes an
adjustment for our nonperformance risk and risk margins for non-capital market inputs. The nonperformance risk adjustment,
which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability,
is determined by taking into consideration publicly available information relating to spreads in the secondary market for
MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to
reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife,
Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional
compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial
assumptions. The establishment of risk margins requires the use of significant management judgment, including assumptions
of the amount and cost of capital needed to cover the guarantees.
The table below illustrates the impact that a range of reasonably likely variances in credit spreads would have on our
consolidated balance sheet, excluding the effect of income tax, related to the embedded derivative valuation on certain
variable annuity products measured at estimated fair value. In determining the ranges, we have considered current market
conditions, as well as the market level of spreads that can reasonably be anticipated over the near term. The ranges do not
reflect extreme market conditions such as those experienced during the 2008-2009 financial crisis, as we do not consider
those to be reasonably likely events in the near future.
The impact of the range of reasonably likely variances in credit spreads decreased as compared to prior periods.
However, these estimated effects do not take into account potential changes in other variables, such as equity price levels and
market volatility, which can also contribute significantly to changes in carrying values. Therefore, the table does not
necessarily reflect the ultimate impact on the consolidated financial statements under the credit spread variance scenarios
presented below.
100% increase in our credit spread
As reported
50% decrease in our credit spread
Changes in Balance Sheet Carrying Value
At December 31, 2020
Policyholder
Account Balances
DAC and VOBA
$
$
$
(In millions)
800 $
934 $
1,009 $
74
105
121
The accounting for derivatives is complex and interpretations of accounting standards continue to evolve in practice. If it
is determined that hedge accounting designations were not appropriately applied, reported net income could be materially
affected. Assessments of the effectiveness of hedging relationships are also subject to interpretations and estimations and
different interpretations or estimates may have a material effect on the amount reported in net income.
Variable annuities with guaranteed minimum benefits may be more costly than expected in volatile or declining equity
markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and
foreign currency exchange rates, changes in our nonperformance risk, variations in actuarial assumptions regarding
policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations
in the estimated fair value of the guarantees that could materially affect net income. If interpretations change, there is a risk
that features previously not bifurcated may require bifurcation and reporting at estimated fair value on the consolidated
financial statements and respective changes in estimated fair value could materially affect net income.
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Additionally, we ceded the risk associated with certain of the variable annuities with guaranteed minimum benefits
described in the preceding paragraphs. The value of the embedded derivatives on the ceded risk is determined using a
methodology consistent with that described previously for the guarantees directly written by us with the exception of the
input for nonperformance risk that reflects the credit of the reinsurer. Because certain of the direct guarantees do not meet the
definition of an embedded derivative and, thus are not accounted for at fair value, significant fluctuations in net income may
occur since the change in fair value of the embedded derivative on the ceded risk is being recorded in net income without a
corresponding and offsetting change in fair value of the direct guarantee.
See Note 9 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and
hedging programs.
Goodwill
Goodwill is tested for impairment at least annually or more frequently if events or circumstances that management deems
a triggering event indicate that there may be justification for conducting an interim test. Examples of such events or
circumstances are changes in business climate, including disruptions in global capital markets. Effective January 1, 2020, the
Company adopted a new accounting pronouncement related to simplifying the test for goodwill impairment, as described in
Note 1 of the Notes to the Consolidated Financial Statements.
For purposes of goodwill impairment testing, if the carrying value of a reporting unit exceeds its estimated fair value, an
impairment charge would be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value;
however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the
Company will consider income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when
measuring the goodwill impairment loss, if applicable. The key inputs, judgments and assumptions necessary in determining
estimated fair value of the reporting units include projected adjusted earnings, current book value, the level of economic
capital required to support the mix of business, long-term growth rates, comparative market multiples, the account value of
in-force business, projections of new and renewed business, as well as margins on such business, interest rate levels, credit
spreads, equity market levels, and the discount rate that we believe is appropriate for the respective reporting unit.
In the third quarter of 2020, the Company performed its annual goodwill impairment tests on all of its reporting units
using quantitative assessments under the market multiple, embedded value and discounted cash flow valuation approaches
based on best available data as of June 30, 2020. The Company concluded that the estimated fair values of all its reporting
units were substantially in excess of their carrying values and, therefore, goodwill was not impaired.
We apply significant judgment when determining the estimated fair value of our reporting units and when assessing the
relationship of market capitalization to the aggregate estimated fair value of our reporting units. The valuation methodologies
utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently
uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the
judgments and assumptions upon which the estimates are based will, in all likelihood differ in some respects from actual
future results. Declines in the estimated fair value of our reporting units could result in goodwill impairments in future
periods which could materially adversely affect our results of operations or financial position.
See Note 12 of the Notes to the Consolidated Financial Statements for additional information on our goodwill.
Employee Benefit Plans
Certain subsidiaries of MetLife, Inc. sponsor defined benefit pension plans and other postretirement benefit plans
covering eligible employees. See Note 18 of the Notes to the Consolidated Financial Statements for information on
amendments to our U.S. benefit plans. The calculation of the obligations and expenses associated with these plans requires an
extensive use of assumptions such as the discount rate, expected rate of return on plan assets, rate of future compensation
increases and healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of
retirement, withdrawal rates and mortality. In consultation with external actuarial firms, we determine these assumptions
based upon a variety of factors such as historical experience of the plan and its assets, currently available market and industry
data, and expected benefit payout streams.
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We determine the expected rate of return on plan assets based upon an approach that considers inflation, real return, term
premium, credit spreads, equity risk premium and capital appreciation, as well as expenses, expected asset manager
performance, asset weights and the effect of rebalancing. Given the amount of plan assets as of December 31, 2019, the
beginning of the measurement year, if we had assumed an expected rate of return for both our pension and other
postretirement benefit plans that was 100 basis points higher or 100 basis points lower than the rates we assumed, the change
in our net periodic benefit costs would have been a decrease of $114 million and an increase of $114 million, respectively, in
2020. This considers only changes in our assumed long-term rate of return given the level and mix of invested assets at the
beginning of the year, without consideration of possible changes in any of the other assumptions described above that could
ultimately accompany any changes in our assumed long-term rate of return.
We determine the discount rates used to value the Company’s pension and postretirement obligations, based upon rates
commensurate with current yields on high quality corporate bonds. Given our pension and postretirement obligations as of
December 31, 2019, the beginning of the measurement year, if we had assumed a discount rate for both our pension and
postretirement benefit plans that was 100 basis points higher or 100 basis points lower than the rates we assumed, the change
in our net periodic benefit costs would have been a decrease of $93 million and an increase of $88 million, respectively, in
2020. This considers only changes in our assumed discount rates without consideration of possible changes in any of the
other assumptions described above that could ultimately accompany any changes in our assumed discount rate. The
assumptions used may differ materially from actual results due to, among other factors, changing market and economic
conditions and changes in participant demographics. These differences may have a significant impact on the Company’s
consolidated financial statements and liquidity.
See Note 18 of the Notes to the Consolidated Financial Statements for additional discussion of assumptions used in
measuring liabilities relating to our employee benefit plans.
Income Taxes
We provide for federal, state and foreign income taxes currently payable, as well as those deferred due to temporary
differences between the financial reporting and tax bases of assets and liabilities. Our accounting for income taxes represents
our best estimate of various events and transactions. Tax laws are often complex and may be subject to differing
interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax
expense, we must make judgments and interpretations about the application of inherently complex tax laws. We must also
make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions in which we
conduct business.
In establishing a liability for unrecognized tax benefits, assumptions may be made in determining whether, and to what
extent, a tax position may be sustained. Once established, unrecognized tax benefits are adjusted when there is more
information available or when events occur requiring a change.
Valuation allowances are established against deferred tax assets when management determines, based on available
information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is
required in determining whether valuation allowances should be established, as well as the amount of such allowances. See
Note 1 of the Notes to the Consolidated Financial Statements for additional information relating to our determination of such
valuation allowances.
We may be required to change our provision for income taxes when estimates used in determining valuation allowances
on deferred tax assets significantly change, or when receipt of new information indicates the need for adjustment in valuation
allowances. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or
regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could
significantly affect the amounts reported on the consolidated financial statements in the year these changes occur.
See also Notes 1 and 19 of the Notes to the Consolidated Financial Statements for additional information on our income
taxes.
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Litigation Contingencies
We are a defendant in a large number of litigation matters and are involved in a number of regulatory investigations.
Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation,
it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s
consolidated net income or cash flows in particular quarterly or annual periods. Liabilities are established when it is probable
that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities related to certain lawsuits,
including our asbestos-related liability, are especially difficult to estimate due to the limitation of reliable data and uncertainty
regarding numerous variables that can affect liability estimates. On a quarterly and annual basis, we review relevant
information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be
reflected in our consolidated financial statements. It is possible that an adverse outcome in certain of our litigation and
regulatory investigations, including asbestos-related cases, or the use of different assumptions in the determination of
amounts recorded could have a material effect upon our consolidated net income or cash flows in particular quarterly or
annual periods.
See Note 21 of the Notes to the Consolidated Financial Statements for additional information regarding our assessment
of litigation contingencies.
Economic Capital
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the
business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and
specific nature of the risks inherent in our business. Our economic capital model, coupled with considerations of local capital
requirements, aligns segment allocated equity with emerging standards and consistent risk principles. Economic capital-based
risk estimation is an evolving science and industry best practices have emerged and continue to evolve. Areas of evolving
industry best practices include stochastic liability valuation techniques, alternative methodologies for the calculation of
diversification benefits, and the quantification of appropriate shock levels. MetLife’s management is responsible for the
ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it
remains consistent with emerging industry practice standards. For further information, see “Financial Measures and Segment
Accounting Policies” in Note 2 of the Notes to the Consolidated Financial Statements.
Acquisitions and Dispositions
Acquisitions
Acquisition of Versant Health
For information regarding the Company's acquisition of Versant Health, see Note 3 of the Notes to the Consolidated
Financial Statements.
Acquisition of PetFirst
In January 2020, the Company completed the acquisition of PetFirst Healthcare, LLC (“PetFirst”), a fast-growing pet
health insurance administrator.
Acquisition of Willing
In November 2019, the Company completed the acquisition of Bequest, Inc. (“Willing”), a leading digital estate
planning service. This transaction brings new digital capabilities to the Company and reinforces its commitment to
providing simple and easy-to-use benefits that respond to consumer needs.
Dispositions
Pending Disposition of MetLife P&C
For information regarding the Company's pending disposition of MetLife P&C, reported as held-for-sale, see Notes 1
and 3 of the Notes to the Consolidated Financial Statements.
Disposition of MetLife Russia
For information regarding the Company's disposition of MetLife Russia, see Note 3 of the Notes to the Consolidated
Financial Statements.
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Disposition of MetLife Seguros de Retiro
For information regarding the Company's disposition of MetLife Seguros de Retiro, see Note 3 of the Notes to the
Consolidated Financial Statements.
Disposition of MetLife Hong Kong
For information regarding the Company’s disposition of MetLife Hong Kong, see Note 3 of the Notes to the
Consolidated Financial Statements.
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Results of Operations
Consolidated Results
Revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Total expenses
Income (loss) before provision for income tax
Provision for income tax expense (benefit)
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to MetLife, Inc.
Less: Preferred stock dividends
Preferred stock redemption premium
Years Ended December 31,
2020
2019
(In millions)
$
42,034 $
5,603
17,117
1,849
(110)
1,349
67,842
42,551
5,214
(3,013)
3,160
(45)
913
12,135
60,915
6,927
1,509
5,418
11
5,407
202
14
42,235
5,603
18,868
1,842
444
628
69,620
42,672
6,464
(3,358)
2,896
(33)
955
13,229
62,825
6,795
886
5,909
10
5,899
178
—
Net income (loss) available to MetLife, Inc.’s common shareholders
$
5,191 $
5,721
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
During 2020, net income (loss) decreased $491 million from 2019, primarily driven by unfavorable changes in net
investment gains (losses) and adjusted earnings, as well as the impact of our actuarial assumption review, largely offset by
a favorable change in net derivative gains (losses), net of investment hedge adjustments.
Management of Investment Portfolio and Hedging Market Risks with Derivatives. We manage our investment portfolio
using disciplined ALM principles, focusing on cash flow and duration to support our current and future liabilities. Our
intent is to match the timing and amount of liability cash outflows with invested assets that have cash inflows of
comparable timing and amount, while optimizing risk-adjusted investment income and risk-adjusted total return. Our
investment portfolio is heavily weighted toward fixed income investments, with over 80% of our portfolio invested in fixed
maturity securities AFS and mortgage loans. These securities and loans have varying maturities and other characteristics
which cause them to be generally well suited for matching the cash flow and duration of insurance liabilities. In addition,
our general account investment portfolio includes, within contractholder-directed equity securities and fair value option
securities (“FVO Securities”) (collectively, “Unit-linked and FVO Securities”), contractholder-directed equity securities
supporting unit-linked variable annuity type liabilities (“Unit-linked investments”), which do not qualify as separate
account assets. Returns on these Unit-linked investments, which can vary significantly from period to period, include
changes in estimated fair value subsequent to purchase, inure to contractholders and are offset in earnings by a
corresponding change in policyholder account balances through interest credited to policyholder account balances.
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We purchase investments to support our insurance liabilities and not to generate net investment gains and losses.
However, net investment gains and losses are incurred and can change significantly from period to period due to changes in
external influences, including changes in market factors such as interest rates, foreign currency exchange rates, credit
spreads and equity markets; counterparty specific factors such as financial performance, credit rating and collateral
valuation; and internal factors such as portfolio rebalancing. Changes in these factors from period to period can
significantly impact the levels of provision for credit loss and impairments on our investment portfolio, as well as realized
gains and losses on investments sold.
We also use derivatives as an integral part of our management of the investment portfolio and insurance liabilities to
hedge certain risks, including changes in interest rates, foreign currency exchange rates, credit spreads and equity market
levels. We use freestanding interest rate, equity, credit and currency derivatives to hedge certain invested assets and
insurance liabilities. A portion of these hedges are designated and qualify as accounting hedges, which reduce volatility in
earnings. For those hedges not designated as accounting hedges, changes in market factors lead to the recognition of fair
value changes in net derivative gains (losses) generally without an offsetting gain or loss recognized in earnings for the
item being hedged, which creates volatility in earnings. We actively evaluate market risk hedging needs and strategies to
ensure our free cash flow and capital objectives are met under a range of market conditions.
Certain variable annuity products with guaranteed minimum benefits contain embedded derivatives that are measured
at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value recorded in
net derivative gains (losses). We use freestanding derivatives to hedge the market risks inherent in these variable annuity
guarantees. We continuously review and refine our strategy and ongoing refinement of the strategy may be required to take
advantage of the NAIC rules related to a statutory accounting election for derivatives that mitigate interest rate sensitivity
related to variable annuity guarantees. Our macro hedge program, included in the non-VA program derivatives section of
the table below, protects our overall statutory capital from significant adverse economic conditions. The valuation of these
embedded derivatives includes a nonperformance risk adjustment, which is unhedged, and can be a significant driver of net
derivative gains (losses) and volatility in earnings, but does not have an economic impact on us.
Net Derivative Gains (Losses). The variable annuity embedded derivatives and associated freestanding derivative
hedges are collectively referred to as “VA program derivatives.” All other derivatives that are economic hedges of certain
invested assets and insurance liabilities are referred to as “non-VA program derivatives.” The table below presents the
impact on net derivative gains (losses) from non-VA program derivatives and VA program derivatives:
Years Ended December 31,
2020
2019
(In millions)
$
2,880 $
1,384
(148)
(76)
(1,005)
(80)
1,571
139
(10)
(159)
(30)
(192)
(222)
$
1,349 $
(67)
282
(403)
(162)
1,034
851
(116)
(301)
434
(840)
(406)
628
Non-VA program derivatives
Interest rate
Foreign currency exchange rate
Credit
Equity
Non-VA embedded derivatives
Total non-VA program derivatives
VA program derivatives
Market risks in embedded derivatives
Nonperformance risk adjustment on embedded derivatives
Other risks in embedded derivatives
Total embedded derivatives
Freestanding derivatives hedging embedded derivatives
Total VA program derivatives
Net derivative gains (losses)
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The favorable change in net derivative gains (losses) on non-VA program derivatives was $537 million ($424 million,
net of income tax). This was primarily due to the impact of certain derivative transactions after long-term rates declined
during 2020, favorably impacting interest rate options and receive-fixed interest rate swaps acquired primarily as part of
our macro hedge program. These favorable impacts were partially offset by key equity index increases in 2020 unfavorably
impacting equity TRRs acquired in 2020 primarily as part of our macro hedge program. Also, certain credit spreads
widened in 2020 and narrowed in 2019, unfavorably impacting written credit default swaps used in replications. Because
certain of these hedging strategies are not designated or do not qualify as accounting hedges, the changes in the estimated
fair value of these freestanding derivatives are recognized in net derivative gains (losses) without an offsetting gain or loss
recognized in earnings for the items being hedged.
The favorable change in net derivative gains (losses) on VA program derivatives was $184 million ($145 million, net
of income tax). This was due to a favorable change of $106 million ($84 million, net of income tax) in the nonperformance
risk adjustment on embedded derivatives and a favorable change of $142 million ($112 million, net of income tax) in other
risks in embedded derivatives. These favorable changes were partially offset by an unfavorable change of $64 million
($51 million, net of income tax) in market risks in embedded derivatives net of freestanding derivatives hedging market
risks in embedded derivatives. Other risks relate primarily to the impact of policyholder behavior and other non-market
risks that generally cannot be hedged.
The aforementioned $106 million ($84 million, net of income tax) favorable change in the nonperformance risk
adjustment on embedded derivatives resulted from a favorable change of $58 million, before income tax, related to changes
in our own credit spread and a favorable change of $48 million, before income tax, related to model changes and changes
in capital market inputs, such as long-term interest rates and key equity index levels, on variable annuity guarantees.
The aforementioned $142 million ($112 million, net of income tax) favorable change in other risks in embedded
derivatives reflects actuarial assumption updates and a combination of factors, which include fees deducted from accounts,
changes in the benefit base, premiums, lapses, withdrawals and deaths, in addition to changes in cross-effect, basis
mismatch, risk margin and fund allocation.
The aforementioned $64 million ($51 million, net of income tax) unfavorable change reflects a $712 million
($563 million, net of income tax) unfavorable change in market risks in embedded derivatives, partially offset by a
$648 million ($512 million, net of income tax) favorable change in freestanding derivatives hedging market risks in
embedded derivatives.
The primary change in market factors affecting VA program derivatives is summarized as follows:
•
Key equity index levels either increased less or decreased in 2020 compared to 2019, contributing to an unfavorable
change in our embedded derivatives and a favorable change in our freestanding derivatives. For example, the S&P
500 equity index increased 16% in 2020 and increased 29% in 2019.
When equity index levels decrease in isolation, the variable annuity guarantees become more valuable to
policyholders, which results in an increase in the undiscounted embedded derivative liability. Discounting this unfavorable
change by the risk adjusted rate yields a smaller loss than by discounting at the risk-free rate, thus creating a gain from
including an adjustment for nonperformance risk.
When the risk-free interest rate decreases in isolation, discounting the embedded derivative liability produces a higher
valuation of the liability than if the risk-free interest rate had remained constant. Discounting this unfavorable change by
the risk adjusted rate yields a smaller loss than by discounting at the risk-free interest rate, thus creating a gain from
including an adjustment for nonperformance risk.
When our own credit spread increases in isolation, discounting the embedded derivative liability produces a lower
valuation of the liability than if our own credit spread had remained constant. As a result, a gain is created from including
an adjustment for nonperformance risk. For each of these primary market drivers, the opposite effect occurs when the
driver moves in the opposite direction.
Net Investment Gains (Losses). The unfavorable change in net investment gains (losses) of $554 million ($438 million,
net of income tax) primarily reflects 2019 gains on sales of real estate joint ventures, mark-to-market losses in 2020 on
equity securities, which are measured at estimated fair value through net income (loss), higher provisions for credit loss on
mortgage loans in 2020, losses incurred in connection with the dispositions of MetLife Seguros de Retiro and MetLife
Russia and a 2019 gain on a renewable energy partnership. These unfavorable changes were partially offset by higher
foreign currency transaction gains in 2020, a 2020 recovery on a leveraged lease that was previously impaired, a 2019 tax
credit partnership impairment and a loss in 2019 as a result of the disposition of MetLife Hong Kong.
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Divested Businesses. Income (loss) before provision for income tax related to the divested businesses, excluding net
investment gains (losses) and net derivative gains (losses), increased $74 million ($61 million, net of income tax) to a loss
of $30 million ($23 million, net of income tax) in 2020 from a loss of $104 million ($84 million, net of income tax) in
2019. Included in this increase was a decrease in total revenues of $22 million, before income tax, and a decrease in total
expenses of $96 million, before income tax. Divested businesses primarily include activity related to the separation of
Brighthouse Financial, Inc. and its subsidiaries, as well as the dispositions of MetLife Hong Kong and MetLife Seguros de
Retiro.
Taxes. Our 2020 effective tax rate on income (loss) before provision for income tax was 22%. Our effective tax rate
differed from the U.S. statutory rate of 21% primarily due to tax charges from foreign earnings taxed at different rates than
the U.S. statutory rate and the dispositions of MetLife Seguros de Retiro and MetLife Russia, partially offset by tax
benefits related to non-taxable investment income, tax credits, the finalization of bankruptcy proceedings for a leveraged
lease investment and the impact from an IRS audit matter. Our 2019 effective tax rate on income (loss) before provision for
income tax was 13%. Our effective tax rate differed from the U.S. statutory rate of 21% primarily due to tax benefits
related to non-taxable investment income, tax credits, tax benefits related to the resolution of an uncertainty regarding the
deemed repatriation transition tax enacted as a part of U.S. Tax Reform and the settlement of certain tax audits, partially
offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate and the disposition of
MetLife Hong Kong.
Actuarial Assumption Review and Certain Other Insurance Adjustments. Results for 2020 include a $378 million
($301 million, net of income tax) charge associated with our annual review of actuarial assumptions related to reserves and
DAC, of which a $44 million gain ($34 million, net of income tax) was recognized in net derivative gains (losses).
Of the $378 million charge, $120 million ($94 million, net of income tax) was related to DAC and $258 million
($207 million, net of income tax) was associated with reserves. The portion of the $378 million charge that is included in
adjusted earnings is $255 million ($203 million, net of income tax).
The $44 million gain ($34 million, net of income tax) recognized in net derivative gains (losses) associated with our
annual review of actuarial assumptions is included within the other risks in embedded derivatives line in the table above.
As a result of our annual review of actuarial assumptions, changes were made to economic, biometric, policyholder
behavior, and operational assumptions. The most significant impacts were in the MetLife Holdings segment, driven by
economic assumption updates, including changes to interest rate projections. The breakdown of total 2020 results is
summarized as follows:
•
•
•
•
Economic assumption updates resulted in unfavorable impacts to reserves and DAC for a net charge of $352 million
($278 million, net of income tax).
Changes in biometric assumptions resulted in favorable impacts to reserves and DAC for a net gain of $45 million
($31 million, net of income tax).
Changes in policyholder behavior assumptions resulted in unfavorable impacts to reserves and DAC for a net charge
of $30 million ($28 million, net of income tax).
Changes in operational assumptions resulted in slightly favorable impacts to reserves and unfavorable impacts to
DAC for a net charge of $41 million ($26 million, net of income tax).
Results for 2019 include a $201 million ($162 million, net of income tax) charge associated with our annual review of
actuarial assumptions related to reserves and DAC, of which a $31 million ($27 million, net of income tax) loss was
recognized in net derivative gains (losses). Of the $201 million charge, $49 million ($37 million, net of income tax) was
related to DAC and $152 million ($125 million, net of income tax) was associated with reserves. The portion of the
$201 million charge that is included in adjusted earnings is $179 million ($143 million, net of income tax). Certain other
insurance adjustments recorded in 2019 include a $22 million ($17 million, net of income tax) charge due to a 2019
increase in our IBNR long-term care reserves reflecting enhancements to our methodology related to potential claims in our
MetLife Holdings segment. This adjustment is included in adjusted earnings.
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Adjusted Earnings. As more fully described in “— Non-GAAP and Other Financial Disclosures,” we use adjusted
earnings, which does not equate to net income (loss), as determined in accordance with GAAP, to analyze our performance,
evaluate segment performance, and allocate resources. We believe that the presentation of adjusted earnings and other
financial measures based on adjusted earnings, as we measure it for management purposes, enhances the understanding of
our performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted
earnings and other financial measures based on adjusted earnings allow analysis of our performance relative to our business
plan and facilitate comparisons to industry results. Adjusted earnings should not be viewed as a substitute for net income
(loss). Adjusted earnings available to common shareholders and adjusted earnings available to common shareholders on a
constant currency basis should not be viewed as substitutes for net income (loss) available to MetLife, Inc.’s common
shareholders. Adjusted earnings available to common shareholders decreased $144 million, net of income tax, to
$5.6 billion, net of income tax, for 2020 from $5.8 billion, net of income tax, for 2019.
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Reconciliation of net income (loss) to adjusted earnings available to common shareholders and premiums, fees and
other revenues to adjusted premiums, fees and other revenues
Year Ended December 31, 2020
U.S.
Asia
Latin
America
EMEA
MetLife
Holdings
Corporate
& Other
Total
Net income (loss) available to MetLife, Inc.'s common shareholders $ 3,136 $ 1,684 $
Add: Preferred stock dividends
—
—
Add: Net income (loss) attributable to noncontrolling interests
Add: Preferred stock redemption premium
Net income (loss)
Less: adjustments from net income (loss) to adjusted earnings
—
—
1
—
3,136
1,685
(In millions)
27 $
280 $ 1,277 $
(1,213) $ 5,191
—
4
—
31
—
5
—
285
—
—
—
202
1
14
202
11
14
1,277
(996)
5,418
available to common shareholders:
Revenues:
Net investment gains (losses)
Net derivative gains (losses)
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Expenses:
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Goodwill impairment
Provision for income tax (expense) benefit
Adjusted earnings
Less: Preferred stock dividends
Adjusted earnings available to common shareholders
61
202
—
—
(340)
—
(44)
9
—
—
—
—
—
—
24
261
226
52
39
(7)
—
(109)
(107)
5
(53)
—
—
(24)
—
(163)
(103)
(159)
(9)
75
—
(2)
(1)
—
(170)
(43)
—
—
—
—
(9)
—
4
30
—
17
428
—
1,149
—
84
(284)
—
75
(444)
(400)
—
2
—
—
(7)
—
(28)
—
—
(115)
—
—
—
—
(80)
(161)
(333)
—
—
(7)
159
—
—
—
—
—
—
(110)
1,349
52
138
(211)
159
(692)
(541)
5
(166)
—
—
(223)
(263)
—
116
—
(127)
$ 3,224 $ 1,565 $
280 $
327 $
976
(547)
5,825
202
202
$
(749) $ 5,623
Premiums, fees and other revenues
Less: adjustments to premiums, fees and other revenues
Adjusted premiums, fees and other revenues
$ 29,292 $ 8,615 $ 3,295 $ 2,761 $ 4,995 $
528 $ 49,486
—
91
(2)
17
84
159
349
$ 29,292 $ 8,524 $ 3,297 $ 2,744 $ 4,911 $
369 $ 49,137
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Year Ended December 31, 2019
U.S.
Asia
Latin
America
EMEA
MetLife
Holdings
Corporate
& Other
Total
Net income (loss) available to MetLife, Inc.'s common shareholders $ 3,148 $ 1,755 $
Add: Preferred stock dividends
—
—
Add: Net income (loss) attributable to noncontrolling interests
Add: Preferred stock redemption premium
Net income (loss)
Less: adjustments from net income (loss) to adjusted earnings
available to common shareholders:
—
—
—
—
3,148
1,755
Revenues:
Net investment gains (losses)
Net derivative gains (losses)
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Expenses:
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Goodwill impairment
Provision for income tax (expense) benefit
Adjusted earnings
Less: Preferred stock dividends
Adjusted earnings available to common shareholders
44
566
—
—
(200)
—
(37)
19
—
—
—
—
—
—
(82)
232
467
71
105
229
11
(83)
(293)
20
(92)
—
—
(54)
—
(263)
(In millions)
403 $
272 $
780 $
(637) $ 5,721
—
8
—
411
(22)
(11)
—
—
(9)
—
(202)
(53)
—
—
—
—
11
—
88
—
3
—
275
(1)
(24)
—
15
1,151
—
15
(1,108)
—
8
—
—
(29)
—
(34)
—
—
—
780
294
(273)
—
88
(141)
—
(177)
—
—
(25)
—
—
(87)
—
67
178
(1)
—
178
10
—
(460)
5,909
(103)
(97)
—
—
8
246
4
—
—
—
—
—
(292)
—
(3)
(223)
178
444
628
71
208
1,038
257
(480)
(1,435)
20
(109)
—
—
(451)
—
(227)
5,945
178
$
(401) $ 5,767
$ 2,838 $ 1,405 $
609 $
282 $ 1,034
Adjusted earnings available to common shareholders on a constant
currency basis (1)
$ 2,838 $ 1,404 $
535 $
271 $ 1,034 $
(401) $ 5,681
Premiums, fees and other revenues
$ 28,766 $ 8,549 $ 3,861 $ 2,669 $ 5,213 $
622 $ 49,680
Less: adjustments to premiums, fees and other revenues
—
187
—
15
88
246
536
Adjusted premiums, fees and other revenues
$ 28,766 $ 8,362 $ 3,861 $ 2,654 $ 5,125 $
376 $ 49,144
Adjusted premiums, fees and other revenues on a constant currency
basis (1)
__________________
$ 28,766 $ 8,473 $ 3,428 $ 2,629 $ 5,125 $
376 $ 48,797
(1) Amounts for U.S., MetLife Holdings and Corporate & Other are shown on a reported basis, as constant currency
impact is not significant.
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Consolidated Results — Adjusted Earnings
Business Overview. Adjusted premiums, fees and other revenues for 2020 decreased $7 million, or less than 1%,
compared to 2019. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $340 million,
or 1%, compared to 2019, primarily due to an increase in our U.S. segment, despite negative impacts from the COVID-19
Pandemic and related restrictions. Growth in core and voluntary products in our Group Benefits business was partially offset
by a decline in our RIS business and a decrease in exposures in our Property & Casualty (“P&C”) business. The decrease in
RIS was mainly driven by decreases in our structured settlement and institutional income annuity businesses, due to market
conditions, partially offset by an increase in our pension risk transfer business. An increase in our EMEA segment was due to
business growth across the region. In addition, an increase in our Asia segment reflects the impact in both years of our annual
actuarial assumption review, which resulted in higher fees from foreign currency-denominated life products in 2020, partially
offset by lower premiums from yen-denominated life products in Japan and the disposition of MetLife Hong Kong in 2019. A
decrease in our Latin America segment was mainly driven by lower annuitizations in Chile due to the COVID-19 Pandemic.
Our MetLife Holdings segment consists of operations relating to products and businesses, previously included in our former
retail business, that we no longer actively market in the United States. We anticipate an average decline in adjusted
premiums, fees and other revenues of approximately 5% to 7% per year in our MetLife Holdings segment from expected
business run-off.
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Overview. The primary drivers of the decrease in adjusted earnings were lower investment yields and a higher
effective tax rate. These declines were partially offset by higher net investment income due to a larger asset base, and a
decrease in expenses, including interest credited expenses.
Foreign Currency. Changes in foreign currency exchange rates had an $86 million negative impact on adjusted
earnings for 2020 compared to 2019. Unless otherwise stated, all amounts discussed below are net of foreign currency
fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.
Business Growth. We benefited from positive net flows from many of our businesses, which increased our invested
asset base. Growth in the investment portfolios of all of our segments and Corporate & Other resulted in higher net
investment income. However, consistent with the growth in average invested assets, interest credited expenses on certain
insurance-related liabilities increased. Also, an increase in expenses was primarily due to the 2020 reinstatement of the
annual health insurer fee under the Patient Protection and Affordable Care Act (“PPACA”) and was more than offset by a
corresponding increase in adjusted premiums, fees and other revenues. In addition, lower fee income in our MetLife
Holdings segment was partially offset by increases in our other segments. The combined impact of the items affecting our
business growth, in addition to lower DAC amortization, resulted in a $451 million increase in adjusted earnings.
Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency
fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these
risks. Excluding the impact of changes in foreign currency exchange rates on net investment income in our non-U.S.
segments and changes in inflation rates on our inflation-indexed investments, investment yields decreased. Investment
yields were negatively affected by lower yields on fixed income securities and mortgage loans, and lower returns on FVO
Securities and real estate investments. These decreases in net investment income were partially offset by higher net
investment income on derivatives. The impact of interest rate fluctuations resulted in a decline in our average interest
credited rates on deposit-type and long-duration liabilities, which drove a decrease in interest credited expenses. The
changes in market factors discussed above resulted in a $349 million decrease in adjusted earnings.
Underwriting, Actuarial Assumption Review and Other Insurance Adjustments. Favorable underwriting experience
resulted in an $82 million increase in adjusted earnings and reflected impacts from the COVID-19 Pandemic and related
restrictions. Favorable morbidity in our U.S., MetLife Holdings and EMEA segments, as well as a decrease in non-
catastrophe claims in our P&C business were partially offset by unfavorable mortality in our U.S., Latin America and
MetLife Holdings segments, as well as higher catastrophe-related claims in our Property & Casualty business. The impact
in both years of our annual actuarial assumption review resulted in a net decrease of $60 million in adjusted earnings,
primarily due to changes in economic assumptions. Refinements to DAC and certain insurance-related liabilities in both
years resulted in an $88 million decrease in adjusted earnings, which included the impact of favorable insurance
adjustments in 2019 resulting from enhancements to our claim-related processes, as well as a 2019 charge due to an
increase in our IBNR long-term care reserves reflecting enhancements to our methodology related to potential claims.
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Expenses. Expenses decreased compared to 2019, primarily due to declines in costs associated with corporate
initiatives and projects, certain corporate-related expenses and employee-related costs. The decrease in expenses resulted in
a $567 million increase in adjusted earnings.
Taxes. Our 2020 effective tax rate on adjusted earnings was 19%. Our effective tax rate differed from the U.S.
statutory rate of 21% primarily due to tax benefits from non-taxable investment income, tax credits and the finalization of
bankruptcy proceedings for a leveraged lease investment, partially offset by tax charges from foreign earnings taxed at
different rates than the U.S. statutory rate. Our 2019 effective tax rate on adjusted earnings was 10%. Our effective tax rate
differed from the U.S. statutory rate of 21% primarily due to tax benefits from non-taxable investment income and tax
credits, the resolution of an uncertainty regarding the deemed repatriation transition tax enacted as a part of U.S. Tax
Reform and the settlement of certain tax audits, partially offset by tax charges from foreign earnings taxed at different rates
than the U.S. statutory rate.
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Segment Results and Corporate & Other
U.S.
Business Overview. Adjusted premiums, fees and other revenues for 2020 increased $526 million, or 2%, compared to
2019, attributable to higher premiums in our Group Benefits business, partially offset by decreases in our RIS and P&C
businesses. The increase in Group Benefits was primarily due to growth in core and voluntary products despite negative
pressures from the economic impact of the COVID-19 Pandemic. Growth in our core products was driven by increases in
our group life and vision businesses. In our dental business, higher premiums due to business growth were more than offset
by premium credits granted to customers due to COVID-19 Pandemic restrictions. Growth in our voluntary products
increased across the segment, driven by the impact of new sales and growth in membership in our accident & health and
legal plans businesses. The decrease in RIS was mainly driven by decreases in our structured settlement and institutional
income annuity businesses, due to market conditions, partially offset by an increase in our pension risk transfer business.
Changes in RIS premiums are mostly offset by a corresponding change in policyholder benefits. The decrease in P&C was
primarily driven by a decrease in exposures in both the auto and homeowners businesses, as well as the impact of premium
credits granted to customers as a result of COVID-19 Pandemic restrictions, partially offset by the impact of pricing
actions, mainly in the homeowners business.
Growth in RIS’s capital market investments and stable value businesses resulted in higher fees and interest margins.
For information regarding the Company's pending disposition of MetLife P&C and the acquisition of Versant Health,
see Note 3 of the Notes to the Consolidated Financial Statements.
Years Ended December 31,
2020
2019
(In millions)
$
27,265 $
26,801
1,070
6,903
957
36,195
26,309
1,622
(453)
471
7
4,162
32,118
853
3,224 $
1,078
7,021
887
35,787
26,165
1,984
(484)
475
10
4,075
32,225
724
2,838
29,292 $
28,766
$
$
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Interest expense on debt
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjusted premiums, fees and other revenues
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Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. The impact of positive flows from pension risk transfer transactions in 2019, funding agreement
issuances and structured settlements resulted in higher average invested assets, improving net investment income.
However, consistent with the growth in average invested assets, interest credited expenses on long-duration and deposit-
type liabilities increased. Higher volume-related, premium tax and direct expenses, driven by business growth, coupled
with the increase due to the 2020 reinstatement of the annual health insurer fee under the PPACA, were more than offset
by a corresponding increase in adjusted premiums, fees and other revenues and lower pension and post-retirement
expenses. The combined impact of the items affecting our business growth increased adjusted earnings by $156 million.
Market Factors. Market factors, including interest rate levels, variability in equity market returns and foreign
currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to
hedge these risks. Investment yields decreased primarily driven by lower yields on fixed income securities and mortgage
loans, as well as lower returns on real estate investments. These decreases were partially offset by increases in net
investment income on derivatives and securities lending income. The impact of interest rate fluctuations resulted in a
decrease in our average interest credited rates on deposit-type and long-duration liabilities, which drove a decrease in
interest credited expenses. The changes in market factors discussed above resulted in a $116 million increase in adjusted
earnings.
Underwriting and Other Insurance Adjustments. Favorable claims experience, coupled with the impact of growth in
our Group Benefits business, resulted in a $363 million increase in adjusted earnings. This increase was primarily driven
by: (i) favorable dental results, driven by the impact of COVID-19 Pandemic restrictions which limited availability of
services and reduced utilization in the current period; (ii) the impact of business growth and favorable claims experience
in our accident & health business; and (iii) favorable claims experience in our group disability business, partially offset
by less favorable individual disability results. Favorable mortality in our RIS business resulted in an increase in adjusted
earnings of $154 million, driven by our pension risk transfer, institutional income annuity and structured settlement
businesses. Unfavorable mortality in our Group Benefits business resulted in a decrease in adjusted earnings of
$407 million. This was primarily driven by the impact of COVID-19 claims experience across our life businesses, as
well as the impact of lower incidence in 2019 in our term life business, partially offset by favorable results in our
accidental death & dismemberment business due to lower incidence as a result of COVID-19 Pandemic restrictions. In
our P&C business, adjusted earnings increased $62 million due to a decrease in non-catastrophe claims costs of
$197 million, partially offset by a $108 million increase in catastrophe-related claims costs, primarily driven by
Northeast and Midwest storms, and the impact of adverse prior year development of $27 million. The decrease in non-
catastrophe claims costs was the result of lower frequencies, primarily in our auto business, driven by the impact of
lower mileage driven due to the impact of COVID-19 Pandemic restrictions, partially offset by higher severity.
Refinements to certain insurance and other liabilities in both years resulted in a $59 million decrease in adjusted
earnings, which included the impact of favorable insurance adjustments in 2019 resulting from enhancements to our
claim-related processes.
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Asia
Business Overview. Adjusted premiums, fees and other revenues for 2020 increased $162 million, or 2%, compared to
2019. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $51 million, or 1%,
compared to 2019, mainly due to the impact in both periods of our annual actuarial assumption review, which resulted in
higher fees from foreign currency-denominated life products in 2020, partially offset by lower premiums from yen-
denominated life products in Japan and the disposition of MetLife Hong Kong in 2019.
Years Ended December 31,
2020
2019
(In millions)
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjusted earnings on a constant currency basis
Adjusted premiums, fees and other revenues
Adjusted premiums, fees and other revenues on a constant currency basis
$
6,571 $
1,892
3,938
61
12,462
5,213
1,834
(1,652)
1,415
(37)
3,481
10,254
643
1,565 $
6,632
1,674
3,691
56
12,053
5,185
1,710
(1,913)
1,288
(25)
3,818
10,063
585
1,405
$
$
$
$
1,565 $
1,404
8,524 $
8,524 $
8,362
8,473
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings slightly for 2020
compared to 2019, primarily due to the weakening of the Australian dollar and Korean won, essentially offset by the
strengthening of the Japanese Yen against the U.S. dollar. Unless otherwise stated, all amounts discussed below are net
of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial
statement line items.
Business Growth. Positive net flows in Japan and Korea resulted in higher average invested assets, which improved
net investment income. The increase in net investment income was partially offset by a corresponding increase in interest
credited expenses on certain insurance liabilities. The decrease in Asia’s adjusted premiums, fees and other revenues
from yen-denominated life products in Japan and the disposition of MetLife Hong Kong in 2019 was partially offset by a
related decline in policyholder benefits. Lower commissions and other variable expenses, net of DAC capitalization,
resulted in an increase to adjusted earnings. The combined impact of the items affecting our business growth improved
adjusted earnings by $132 million.
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Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to
impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields
were unfavorably impacted by lower yields on fixed income securities supporting products sold in Japan denominated in
Australian dollar, U.S. dollar and, to a lesser extent, Japanese yen. These unfavorable impacts were partially offset by
increased net investment income on derivatives and higher returns on private equity funds. The changes in market factors
discussed above increased adjusted earnings by $20 million.
Underwriting, Actuarial Assumption Review and Other Insurance Adjustments. Lower claims, primarily in Japan
and Korea, increased adjusted earnings by $16 million. The impact in both years of our annual actuarial assumption
review resulted in a net decrease of $9 million in adjusted earnings. Refinements to certain insurance liabilities and other
liabilities in both years resulted in a $10 million decrease in adjusted earnings.
Expenses and Taxes. Lower expenses in Japan, including advertising, printing, consulting and travel costs, partially
offset by higher corporate overhead, resulted in a $14 million increase in adjusted earnings. Tax-related impacts in both
periods resulted in a net decrease in adjusted earnings of $2 million.
Latin America
Business Overview. Adjusted premiums, fees and other revenues for 2020 decreased $564 million, or 15%, compared
to 2019. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, decreased $131 million, or 4%,
compared to 2019, mainly driven by lower annuitizations in Chile due to the COVID-19 Pandemic.
Years Ended December 31,
2020
2019
(In millions)
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Interest expense on debt
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjusted earnings on a constant currency basis
Adjusted premiums, fees and other revenues
Adjusted premiums, fees and other revenues on a constant currency basis
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
$
$
$
$
$
2,265 $
994
992
38
4,289
2,406
240
(362)
276
4
1,318
3,882
127
280 $
2,723
1,094
1,271
44
5,132
2,623
332
(396)
291
3
1,443
4,296
227
609
280 $
535
3,297 $
3,297 $
3,861
3,428
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $74 million for 2020
compared to 2019, mainly due to the weakening of foreign currencies against the U.S. dollar, primarily the Mexican and
Chilean pesos. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign
currency fluctuations can result in significant variances in the financial statement line items.
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Business Growth. Despite the aforementioned decrease in annuity premiums in Chile driven by the COVID-19
Pandemic, Latin America experienced growth in Mexico. The decrease in premiums in Chile was offset by related
changes in policyholder benefits. An increase in average invested assets, primarily in Chile, generated higher net
investment income. In addition, interest credited expenses on certain insurance liabilities decreased and policy fee
income increased in our universal life business in Mexico. Business growth also drove an increase in commissions and
other variable expenses, net of DAC capitalization. The combined impact of the items affecting business growth
increased adjusted earnings by $55 million.
Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to
impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields
decreased driven by lower yields on fixed income securities and mortgage loans, the unfavorable impact of equity
market returns on our Chilean encaje within FVO Securities, as well as lower returns on private equity funds and lower
net investment income on derivatives. The changes in market factors discussed above, partially offset by a decrease in
interest credited expenses, decreased adjusted earnings by $94 million.
Underwriting, Actuarial Assumption Review and Other Insurance Adjustments. Unfavorable underwriting drove a
$197 million decrease in adjusted earnings which includes impacts from COVID-19-related life claims, primarily in
Mexico. The impact in both years of our annual actuarial assumption review resulted in a net decrease of $19 million in
adjusted earnings. Refinements to certain insurance liabilities and other liabilities in both years resulted in a $9 million
increase in adjusted earnings.
Expenses and Taxes. Adjusted earnings increased by $16 million, primarily driven by lower expenses due to
COVID-19 Pandemic restrictions. Adjusted earnings decreased by $17 million primarily driven by reduced tax charges
in 2019 as a result of tax regulations related to U.S. Tax Reform. Other tax-related adjustments in both years resulted in a
net decrease in adjusted earnings of $7 million.
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EMEA
Business Overview. Adjusted premiums, fees and other revenues for 2020 increased $90 million, or 3%, compared to
2019. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $115 million, or 4%,
compared to 2019 due to growth across the region, mainly in our accident & health business, our credit life business in
Turkey and Europe and our corporate solutions business in Egypt and the U.K. These improvements were partially offset
by a decrease in our retirement business in the U.K., as well as the impact in both years of our annual actuarial assumption
review.
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjusted earnings on a constant currency basis
Adjusted premiums, fees and other revenues
Adjusted premiums, fees and other revenues on a constant currency basis
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Years Ended December 31,
2020
2019
(In millions)
$
2,259 $
2,177
433
269
52
3,013
1,196
109
(491)
454
(8)
1
1,344
2,605
81
327 $
423
291
54
2,945
1,176
98
(505)
428
(8)
—
1,399
2,588
75
282
327 $
271
2,744 $
2,744 $
2,654
2,629
$
$
$
$
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $11 million for 2020
as compared to 2019, primarily driven by the strengthening of the U.S. dollar against the Turkish lira. Unless otherwise
stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in
significant variances in the financial statement line items.
Business Growth. Growth across the region, mainly in our credit life business in Turkey, our accident & health
business in Europe and our pension business in Romania increased adjusted earnings by $19 million.
Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to
impact our results. DAC amortization increased in our variable life business. In addition, investment yields were lower
across the region. The changes in market factors discussed above resulted in a $25 million decrease in adjusted earnings.
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Underwriting, Actuarial Assumption Review and Other Insurance Adjustments. Adjusted earnings increased by
$22 million as a result of favorable underwriting experience in our corporate solutions business across the majority of the
region, partially offset by unfavorable underwriting in our accident & health business in Greece and in our ordinary life
business in France. Underwriting results reflect impacts of the COVID-19 Pandemic and related restrictions. The impact
in both years of our annual actuarial assumption review resulted in a net decrease of $18 million in adjusted earnings.
Refinements to certain insurance-related assets and liabilities in both years resulted in an $8 million decrease in adjusted
earnings.
Expenses and Taxes. Adjusted earnings increased by $64 million, mainly driven by lower compensation-related
expenses, lower costs associated with enterprise-wide initiatives, and various other expense decreases. Tax-related
adjustments in both years slightly increased adjusted earnings.
MetLife Holdings
Business Overview. Our MetLife Holdings segment consists of operations relating to products and businesses,
previously included in our former retail business, that we no longer actively market in the United States. We anticipate an
average decline in adjusted premiums, fees and other revenues of approximately 5% to 7% per year from expected business
run-off. A significant portion of our adjusted earnings is driven by separate account balances. Most directly, these balances
determine asset-based fee income but they also impact DAC amortization and asset-based commissions. Separate account
balances are driven by movements in the market, surrenders, deposits, withdrawals, benefit payments, transfers and policy
charges. Although we have discontinued selling our long-term care product, we continue to collect premiums and
administer the existing block of business, which contributed to asset growth in the segment, and we expect the related
reserves to grow as this block matures. Our future policyholder benefit liability for our long-term care business was
$14.3 billion and $12.5 billion as of December 31, 2020 and 2019, respectively.
Years Ended December 31,
2020
2019
(In millions)
$
3,600 $
1,073
5,184
238
10,095
3,748
1,124
5,281
253
10,406
6,738
6,970
868
(39)
370
6
942
8,885
234
976 $
905
(28)
299
8
969
9,123
249
1,034
4,911 $
5,125
$
$
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Interest expense on debt
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjusted premiums, fees and other revenues
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Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. Negative net flows from our deferred annuities business and a decrease in universal life deposits
resulted in lower fee income. Also, in our deferred annuity business, higher costs associated with our variable annuity
GMDBs resulted in a decrease in adjusted earnings. These decreases were partially offset by higher net investment
income, resulting from a higher invested asset base, as well as lower DAC amortization. The higher invested asset base
was primarily the result of positive net flows in our long-term care business. The combined impact of the items affecting
our business growth resulted in a $34 million decrease in adjusted earnings.
Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign
currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to
hedge these risks. Investment yields decreased primarily due to lower yields on fixed income securities and mortgage
loans, as well as lower returns on real estate investments. These decreases were partially offset by higher net investment
income on derivatives. In our deferred annuity business, higher costs associated with our variable annuity GMDBs
resulted in a decrease in adjusted earnings. These unfavorable earnings impacts were partially offset by an increase in
asset-based fee income and lower DAC amortization. The changes in market factors discussed above resulted in a
$76 million decrease in adjusted earnings.
Underwriting, Actuarial Assumption Review, and Other Insurance Adjustments. Favorable underwriting, mainly in
our long-term care and universal life businesses, partially offset by unfavorable underwriting in our traditional life
business resulted in a $63 million increase in adjusted earnings, which reflects the impact of the COVID-19 Pandemic.
The impact in both years of our annual actuarial assumption review resulted in a net decrease of $14 million in adjusted
earnings. Changes mainly in economic assumptions, including interest rate projections, and updates to the closed block
projections, were slightly more unfavorable in 2020 when compared to 2019. Refinements to DAC and certain
insurance-related liabilities in both years resulted in a $20 million decrease in adjusted earnings. This includes a 2019
charge due to an increase in our IBNR long-term care reserves reflecting enhancements to our methodology related to
potential claims. A reduction in our dividend scale as a result of the sustained low interest rate environment, as well as
run-off in MLIC’s closed block, contributed to lower dividend expense and resulted in an increase of $106 million in
adjusted earnings. The impact of this dividend action was more than offset by lower net investment income, as well as a
$97 million increase in DAC amortization.
Expenses. Adjusted earnings increased by $16 million mainly due to lower operational costs, as well as lower
pension and post-retirement benefits.
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Corporate & Other
Adjusted revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Total adjusted revenues
Adjusted expenses
Policyholder benefits and claims and policyholder dividends
Capitalization of DAC
Amortization of DAC and VOBA
Interest expense on debt
Other expenses
Total adjusted expenses
Provision for income tax expense (benefit)
Adjusted earnings
Less: Preferred stock dividends
Years Ended December 31,
2020
2019
(In millions)
$
22 $
3
42
344
411
(3)
(11)
8
895
625
1,514
(556)
(547)
202
(749) $
83
2
275
291
651
73
(12)
6
934
1,074
2,075
(1,201)
(223)
178
(401)
Adjusted earnings available to common shareholders
Adjusted premiums, fees and other revenues
$
$
The table below presents adjusted earnings available to common shareholders by source:
369 $
376
Years Ended December 31,
2020
2019
(In millions)
Business activities
Net investment income
Interest expense on debt
Corporate initiatives and projects
Other
Provision for income tax (expense) benefit and other tax-related items
Preferred stock dividends
$
96 $
54
(943)
(159)
(151)
556
(202)
Adjusted earnings available to common shareholders
$
(749) $
Year Ended December 31, 2020 Compared with the Year Ended December 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
70
290
(978)
(563)
(330)
1,288
(178)
(401)
Business Activities. Adjusted earnings from business activities increased $21 million. This was primarily related to
improved results from certain of our businesses.
Net Investment Income. Net investment income declined $186 million, primarily due to decreased returns on our
equity market sensitive investments, including private equity funds, as well as lower yields on our fixed income
securities.
Interest Expense on Debt. Interest expense on debt decreased by $28 million, primarily due to the excess premium
associated with redeemed debt in 2019, as well as the impact of a decrease in three-month LIBOR on our surplus notes,
partially offset by the issuance of senior notes at lower interest rates in March 2020 and May 2019.
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Corporate Initiatives and Projects. Adjusted earnings increased $319 million due to lower expenses associated with
corporate initiatives and projects, primarily due to 2019 costs related to our unit cost initiative.
Provision for Income Tax (Expense) Benefit and Other Tax-Related Items. An unfavorable change in Corporate &
Other’s taxes was primarily due to 2019 tax benefits related to the resolution of an uncertainty regarding the deemed
repatriation transition tax enacted as a part of U.S. Tax Reform and the settlement of certain tax audits related to the tax
treatment of a wholly-owned U.K. investment subsidiary of MLIC. In addition, lower utilization of tax preferenced
items, which include non-taxable investment income, tax credits, foreign earnings taxed at different rates than the U.S.
statutory rate and taxes on stock compensation, was partially offset by the finalization of bankruptcy proceedings for a
leveraged lease investment.
Other. Adjusted earnings increased $141 million, primarily as a result of decreases in certain corporate-related
expenses, lower employee-related costs, and a 2019 loss related to the sale of a run-off business that was previously
reinsured, partially offset by higher interest expenses on tax positions due to 2019 audit settlements and higher legal
expenses.
Preferred Stock Dividends. Adjusted earnings available to common shareholders decreased $24 million as a result of
dividends paid on the 4.75% Non-Cumulative Preferred Stock, Series F we issued in January 2020, partially offset by
changes in dividend payments on and the partial redemption of the Series C preferred stock.
Effects of Inflation
Management believes that inflation has not had a material effect on the Company’s consolidated results of operations,
except insofar as inflation may affect interest rates.
An increase in inflation could affect our business in several ways. During inflationary periods, the value of fixed income
investments falls which could increase realized and unrealized losses. Inflation also increases expenses for labor and other
costs, potentially putting pressure on profitability if such costs cannot be passed through in our product prices. Inflation could
also lead to increased costs for losses and loss adjustment expenses in certain of our businesses, which could require us to
adjust our pricing to reflect our expectations for future inflation. Prolonged and elevated inflation could adversely affect the
financial markets and the economy generally, and dispelling it may require governments to pursue a restrictive fiscal and
monetary policy, which could constrain overall economic activity, inhibit revenue growth and reduce the number of attractive
investment opportunities.
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Investments
Investment Risks
Our primary investment objective is to optimize, net of income tax, risk-adjusted investment income and risk-adjusted
total return while ensuring that assets and liabilities are managed on a cash flow and duration basis. The Investments
Department, led by the Chief Investment Officer, manages investment risks using a risk control framework comprised of
policies, procedures and limits, as discussed further below. The Investment Risk Committee and Asset-Liability Steering
Committee review and monitor investment risk limits and tolerances.
We are exposed to the following primary sources of investment risks:
•
•
credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely
payments of principal and interest;
interest rate risk, relating to the market price and cash flow variability associated with changes in market interest
rates. Changes in market interest rates will impact the net unrealized gain (loss) position of our fixed income
investment portfolio and the rates of return we receive on both new funds invested and reinvestment of existing
funds;
•
liquidity risk, relating to the diminished ability to sell certain investments, in times of strained market conditions;
• market valuation risk, relating to the variability in the estimated fair value of investments associated with changes in
market factors such as credit spreads and equity market levels. A widening of credit spreads will adversely impact
the net unrealized gain (loss) position of the fixed income investment portfolio, will increase losses associated with
credit-based non-qualifying derivatives where we assume credit exposure, and, if credit spreads widen significantly
or for an extended period of time, will likely result in higher credit losses. Credit spread tightening will reduce net
investment income associated with purchases of fixed income investments and will favorably impact the net
unrealized gain (loss) position of the fixed income investment portfolio;
•
•
currency risk, relating to the variability in currency exchange rates for foreign denominated investments including as
a result of the U.K.’s withdrawal from the EU. This risk relates to potential decreases in estimated fair value and net
investment income resulting from changes in currency exchange rates versus the U.S. dollar. In general, the
weakening of foreign currencies versus the U.S. dollar will adversely affect the estimated fair value of our foreign
denominated investments; and
real estate risk, relating to commercial, agricultural and residential real estate, and stemming from factors, which
include, but are not limited to, market conditions, including the supply and demand of leasable commercial space,
creditworthiness of borrowers, tenants and our joint venture partners, capital markets volatility, changes in market
interest rates, commodity prices, farm incomes and U.S. housing market conditions.
We manage investment risk through in-house fundamental credit analysis of the underlying obligors, issuers, transaction
structures and real estate properties. We also manage credit, market and liquidity risk through industry and issuer
diversification and asset allocation. These risk limits, approved annually by the Investment Risk Committee, promote
diversification by asset sector, avoid concentrations in any single issuer and limit overall aggregate credit and equity risk
exposure, as measured by our economic capital framework. For real estate assets, we manage credit and market risk through
asset allocation and by diversifying by geography, property and product type. We manage interest rate risk as part of our
ALM strategies which are reviewed and approved by the Asset-Liability Steering Committee. These strategies include
maintaining an investment portfolio with diversified maturities that has a weighted average duration that reflects the duration
of our estimated liability cash flow profile, and utilizing product design, such as the use of market value adjustment features
and surrender charges, to manage interest rate risk. We also manage interest rate risk through proactive monitoring and
management of certain NGEs of our products, such as the resetting of credited interest and dividend rates for policies that
permit such adjustments. In addition to hedging with foreign currency derivatives, we manage currency risk by matching
much of our foreign currency liabilities in our foreign subsidiaries with their respective foreign currency assets, thereby
reducing our risk to foreign currency exchange rate fluctuation. We also use certain derivatives in the management of credit,
interest rate, and market valuation risk.
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We enter into market standard purchased and written credit default swap contracts. Payout under such contracts is
triggered by certain credit events experienced by the referenced entities. For credit default swaps covering North American
corporate issuers, credit events typically include bankruptcy and failure to pay on borrowed money. For European corporate
issuers, credit events typically also include involuntary restructuring. With respect to credit default contracts on sovereign
debt, credit events typically include failure to pay debt obligations, repudiation, moratorium, or involuntary restructuring. In
each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the
International Swaps and Derivatives Association determines that a credit event has occurred.
We use purchased credit default swaps to mitigate credit risk in our investment portfolio. Generally, we purchase credit
protection by entering into credit default swaps referencing the issuers of specific assets we own. In certain cases, basis risk
exists between these credit default swaps and the specific assets we own. For example, we may purchase credit protection on
a macro basis to reduce exposure to specific industries or other portfolio concentrations. In such instances, the referenced
entities and obligations under the credit default swaps may not be identical to the individual obligors or securities in our
investment portfolio. In addition, our purchased credit default swaps may have shorter tenors than the underlying investments
they are hedging, which gives us more flexibility in managing our credit exposures. We believe that our purchased credit
default swaps serve as effective economic hedges of our credit exposure.
Current Environment
As a global insurance company, we continue to be impacted by the changing global financial and economic environment,
the fiscal and monetary policy of governments and central banks around the world and other governmental measures. The
COVID-19 Pandemic continues to impact the global economy and financial markets and has caused volatility in the global
equity, credit and real estate markets. See “— Industry Trends — Financial and Economic Environment.”
Governments and central banks around the world are responding to the COVID-19 Pandemic with unprecedented fiscal
and monetary policies, which are expected to have significant and ongoing effects on financial markets and the global
economy. These policy responses include fiscal and monetary stimulus measures, including, but not limited to, financial
assistance, liquidity programs, new financing facilities and reductions in the level of interest rates. As time progresses, we
will know more about the efficacy of these policies and what they may mean for the outlook for the global economy and
financial markets, but currently the number of factors makes reliably estimating the duration and severity of the impact of the
COVID-19 Pandemic on our business operations, investment portfolio and derivatives difficult.
As a result of the impact of the COVID-19 Pandemic, during the year ended December 31, 2020, there was an economic
slowdown and volatility in the financial markets, including liquidity driven price dislocation and credit spread widening. As a
result, during the year ended December 31, 2020, the value of certain investments within our portfolio decreased; however,
some of those effects were mitigated by an increase in the value of certain freestanding derivatives that hedge such market
risks. These conditions may persist for some time and may continue to impact pricing levels of risk-bearing investments, as
well as our business operations, investment portfolio and derivatives.
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Selected Country and Sector Investments
Selected Country: We have a market presence in numerous countries and, therefore, our investment portfolio, which
supports our insurance operations and related policyholder liabilities, as well as our global portfolio diversification
objectives, is exposed to risks posed by local political and economic conditions, as well as those resulting from the
COVID-19 Pandemic. Our investment portfolios in the countries in the table below are currently the most affected by these
conditions. The following table presents a summary of selected country fixed maturity securities AFS, at estimated fair
value. The information below is presented on a “country of risk basis” (e.g. where the issuer primarily conducts business).
In the second quarter of 2020, Argentina defaulted on its foreign currency denominated sovereign fixed maturity
securities. In the third quarter of 2020, Argentina exchanged new sovereign fixed maturity securities for substantially all of
its defaulted foreign currency denominated sovereign fixed maturity securities. As a result of the economic conditions prior
to the default, the Company impaired its holdings of such securities initially in the fourth quarter of 2019 and then, in the
first quarter of 2020, recorded an ACL. Through June 30, 2020, the prior impairment and ACL on the defaulted securities
totaled $155 million. In the third quarter of 2020, the Company exchanged securities with a par value and amortized cost
net of ACL of $361 million and $146 million, respectively, plus accrued investment income of $11 million, for new
securities with an estimated fair value of $182 million which resulted in a net gain of $25 million recorded in net
investment gain (loss). In connection with the disposition of MetLife Seguros de Retiro in October 2020, the Company
reduced its exposure to Argentina sovereign fixed maturity securities, as the assets disposed included $132 million of such
securities at amortized cost. See Note 3 of the Notes to the Consolidated Financial Statements.
Country
United Kingdom
Mexico
China
Italy
Turkey
Hong Kong SAR
Argentina (3)
Lebanon (3)
Total
Investment grade %
__________________
Selected Country Fixed Maturity Securities AFS at December 31, 2020
Sovereign
(1)
Financial
Services
Non-
Financial
Services
Structured
Total (2)
$
333
$ 6,714
(Dollars in millions)
$ 13,069
$ 105
$ 20,221
2,729
933
2,335
41
6,038
278
45
149
44
72
2
85
2
34
1
569
658
16
57
20
3
$ 3,653
—
$ 7,771
—
$ 16,724
—
—
—
—
—
—
$ 146
849
788
167
135
93
3
$ 28,294
89.8 %
99.2 %
93.1 %
81.9 %
94.3 %
(1)
(2)
(3)
Sovereign includes government and agency.
The par value and amortized cost net of ACL of these selected country fixed maturity securities AFS were
$24.4 billion and $25.0 billion, respectively, at December 31, 2020.
The sovereign securities amounts for Argentina and Lebanon were net of ACL of $19 million and $2 million,
respectively, at December 31, 2020. See “— Investment Allowance for Credit Loss and Impairments - Overview.”
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Selected Sector: As a result of current economic conditions, including the effects on the global economy and financial
markets from the COVID-19 Pandemic, certain sectors of our investment portfolio experienced stress during the year
ended December 31, 2020. Our fixed maturity securities AFS exposure to stressed sectors is summarized below:
Sectors
Energy
Airports
Cruise Lines / Leisure
Airlines
Restaurants
Lodging
Fixed Maturity Securities AFS Exposure to Stressed Sectors (2)
Total Investments (3)
__________________
Selected Sectors at December 31, 2020
Book Value (1)
Investment
Grade %
% of Total
Investments
(Dollars in millions)
$
$
$
7,936
3,219
680
424
418
247
12,924
528,314
86 %
83 %
95 %
70 %
95 %
60 %
1.5 %
0.6 %
0.1 %
0.1 %
0.1 %
— %
2.4 %
(1)
(2)
(3)
Fixed maturity securities AFS at amortized cost, net of ACL.
The estimated fair value of these fixed maturity securities AFS was $14.6 billion at December 31, 2020.
Represents total cash, cash equivalents and invested assets.
We maintain a portfolio of energy sector fixed maturity securities AFS that is diversified across sub-sectors and
issuers. This portfolio is primarily invested in higher quality, highly rated investment grade securities and is defensively
positioned in sub-sectors which are less impacted by lower oil prices. During the year ended December 31, 2020, we
reduced our exposure to such securities by 13%. Through our energy sector securities, we have exposure to the volatility in
oil prices. During 2020, largely as a result of the COVID-19 Pandemic, there were wide fluctuations in oil prices. As a
result of recovering oil prices and credit spread tightening in the fourth quarter of 2020, this securities portfolio increased in
value during the year ended December 31, 2020, from an unrealized gain at December 31, 2019 of $849 million to an
unrealized gain of $1.1 billion at December 31, 2020.
Additional asset types within our investment portfolio may be impacted by the COVID-19 Pandemic, including fixed
maturity securities AFS (including below investment grade securities and structured products), equity securities, Unit-
linked investments, FVO Securities, mortgage loans, real estate and real estate joint ventures, private equity funds, hedge
funds and lease investments. See “— Executive Summary — Consolidated Company Outlook.”
We manage direct and indirect investment exposure in the selected countries, sectors and asset types through
fundamental analysis and we continually monitor and adjust our level of investment exposure.
Investment Allowance for Credit Loss and Impairments - Overview
On January 1, 2020, we adopted the new credit loss guidance. See “— Summary of Critical Accounting Estimates —
Investment Allowance for Credit Loss and Impairments.” For our mortgage loans and leveraged and direct financing
leases, this new credit loss guidance requires that we incorporate the impact of both current and forecasted economic
conditions and estimate expected lifetime credit loss in determining the ACL. Upon adoption of this new credit loss
guidance, our ACL reflected the then current and forecasted economic conditions and our estimate of expected lifetime
credit loss. Subsequently, we incorporated the effects of the COVID-19 Pandemic into our economic forecast, using
available information, to reflect our best estimate, in determining the level of our ACL for mortgage loans and leveraged
and direct financing leases.
Upon adoption of the new credit loss guidance, we increased our mortgage loan and lease ACL and liability for
unfunded mortgage loan commitments by $141 million, or 40%. During the year ended December 31, 2020, we increased
our mortgage loan and lease ACL and liability for unfunded mortgage loan commitments by another $150 million, or 42%.
Our mortgage loan and lease ACL and liability for unfunded mortgage loan commitments totaled $643 million at
December 31, 2020, an increase of 82% from December 31, 2019.
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In accordance with this new credit loss guidance, an ACL is recorded for fixed maturity securities AFS for the amount
of the credit loss instead of recording a reduction of the amortized cost as an impairment. During the year ended
December 31, 2020, we recorded an ACL for our fixed maturity securities AFS of $81 million. As a result, our total
investments-related ACL and liability for unfunded mortgage loan commitments totaled $724 million at December 31,
2020. During the year ended December 31, 2020, we recorded a charge for provisions for credit loss and impairments of
$488 million, prior to the release of the ACL for securities subsequently sold or exchanged of $133 million. In addition,
there was an additional $11 million decrease in the ACL during the year ended December 31, 2020, in connection with the
disposition of MetLife Seguros de Retiro.
The determination of the amount of our ACL and impairments on our investment portfolio is highly subjective. Our
ACL is revised as conditions change and new information becomes available. Provisions for credit loss and impairments
recognized in future quarters on our investment portfolio will depend primarily on future economic fundamentals,
including the evolving impact of the COVID-19 Pandemic, performance of our issuers, borrowers, tenants and lessees,
changes in credit ratings, collateral valuation and changes in estimated fair value. In upcoming periods, if there are changes
in the above factors, provisions for credit loss and impairments may be recorded, as well as changes in the ACL for which
a provision for credit loss was previously recorded.
Investment Portfolio Results
The reconciliation of net investment income under GAAP to adjusted net investment income is presented below.
Net investment income — GAAP basis
Investment hedge adjustments
Unit-linked investment income
Other
Adjusted net investment income (1)
__________________
For the Years Ended December 31,
2020
2019
(In millions)
$
$
17,117 $
815
(568)
(36)
17,328 $
18,868
469
(1,475)
(32)
17,830
(1)
See “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Consolidated Financial
Statements for a discussion of the adjustments made to net investment income under GAAP in calculating adjusted net
investment income.
The following yield table presentation is consistent with how we measure our investment performance for management
purposes, and we believe it enhances understanding of our investment portfolio results.
Asset Class
Fixed maturity securities (2), (3)
Mortgage loans (3)
Real estate and real estate joint ventures (4)
Policy loans
Equity securities
Other limited partnership interests (4)
Cash and short-term investments
Other invested assets
Investment income
Investment fees and expenses
Net investment income including divested businesses (5)
Less: net investment income from divested businesses (5)
Adjusted net investment income
__________________
For the Years Ended December 31,
2020
2019
Yield% (1)
Amount
Yield% (1)
Amount
(Dollars in millions)
3.88 % $
11,356
4.22 % $
11,743
4.27
1.56
5.18
4.83
12.17
1.35
3,518
178
498
50
1,010
140
1,162
4.82
3.20
5.29
5.25
11.81
2.47
3,782
327
512
61
840
256
901
4.22 % $
17,912
4.56 % $
18,422
(0.13)
(538)
(0.14)
(545)
4.09 % $
17,374
4.42 % $
17,877
46
$
17,328
47
$
17,830
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(1) We calculate yields using adjusted net investment income as a percent of average quarterly asset carrying values.
Adjusted net investment income excludes recognized gains (losses) and includes the impact of changes in foreign
currency exchange rates. Average quarterly asset carrying values exclude unrealized gains (losses), collateral received
in connection with our securities lending program, annuities funding structured settlement claims, freestanding
derivative assets, collateral received from derivative counterparties, the effects of consolidating under GAAP certain
variable interest entities that are treated as consolidated securitization entities (“CSEs”) and contractholder-directed
equity securities. In addition, average quarterly asset carrying values include invested assets reclassified to held-for-
sale. A yield is not presented for other invested assets, as it is not considered a meaningful measure of performance for
this asset class.
(2)
(3)
(4)
(5)
Investment income from fixed maturity securities includes amounts from FVO Securities of $140 million and
$184 million for the years ended December 31, 2020 and 2019, respectively.
Investment income from fixed maturity securities AFS and mortgage loans includes prepayment fees.
See “— Real Estate and Real Estate Joint Ventures” and “— Other Limited Partnership Interests” for discussion of
results for the year ended December 31, 2020.
See “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Consolidated Financial
Statements for discussion of divested businesses.
See “— Results of Operations — Consolidated Results — Adjusted Earnings” for an analysis of the period over period
changes in investment portfolio results.
Fixed Maturity Securities AFS and Equity Securities
The COVID-19 Pandemic contributed to financial market volatility, credit spread widening and equity market volatility
during the year ended December 31, 2020. Governments and central banks around the world have responded with
unprecedented fiscal and monetary policies, including reductions in the level of interest rates. See “— Current
Environment.”
As a result of the interest rate reductions, partially offset by credit spread widening, during the year ended December 31,
2020, the net unrealized gain on our fixed maturity securities AFS increased $13.9 billion, from $30.2 billion at
December 31, 2019 to $44.1 billion at December 31, 2020. As a result of the equity market volatility during the year ended
December 31, 2020, the value of our equity securities decreased, resulting in a mark-to-market loss of $153 million in net
investment gains (losses), as the change in estimated fair value is recorded in net income.
The following table presents fixed maturity securities AFS and equity securities by type (public or private) and
information about perpetual and redeemable securities held at:
Fixed maturity securities AFS:
Publicly-traded
Privately-placed
Total fixed maturity securities AFS
Percentage of cash and invested assets
Equity securities:
Publicly-traded
Privately-held
Total equity securities
Percentage of cash and invested assets
Perpetual and redeemable securities:
Perpetual securities included within fixed maturity securities AFS and
equity securities
Redeemable preferred stock with a stated maturity included within
fixed maturity securities AFS
December 31, 2020
December 31, 2019
Estimated Fair
Value
% of
Total
Estimated Fair
Value
% of
Total
(Dollars in millions)
$ 284,083
70,726
$ 354,809
80.1 % $ 267,617
19.9
60,203
100.0 % $ 327,820
81.6 %
18.4
100.0 %
67.2 %
851
228
1,079
0.2 %
344
912
$
$
$
$
78.9 % $
21.1
100.0 % $
66.8 %
1,156
186
1,342
0.3 %
86.1 %
13.9
100.0 %
$
$
363
960
See Note 8 of the Notes to the Consolidated Financial Statements for information about fixed maturity securities AFS by
sector, contractual maturities and continuous gross unrealized losses.
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Included within fixed maturity securities AFS are structured securities, including residential mortgage-backed securities
(“RMBS”), ABS and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Products”).
Perpetual securities are included within fixed maturity securities AFS and equity securities. Upon acquisition, we classify
perpetual securities that have attributes of both debt and equity as fixed maturity securities AFS if the securities have an
interest rate step-up feature which, when combined with other qualitative factors, indicates that the securities have more debt-
like characteristics; while those with more equity-like characteristics are classified as equity securities. Many of such
securities, commonly referred to as “perpetual hybrid securities,” have been issued by non-U.S. financial institutions that are
accorded the highest two capital treatment categories by their respective regulatory bodies (i.e. core capital, or “Tier 1
capital” and perpetual deferrable securities, or “Upper Tier 2 capital”).
Redeemable preferred stock with a stated maturity is included within fixed maturity securities AFS. These securities,
which are commonly referred to as “capital securities,” primarily have cumulative interest deferral features and are primarily
issued by U.S. financial institutions.
Valuation of Securities. We are responsible for the determination of the estimated fair value of our investments. We
determine the estimated fair value of publicly-traded securities after considering one of three primary sources of information:
quoted market prices in active markets, independent pricing services, or independent broker quotations. We determine the
estimated fair value of privately-placed securities after considering one of three primary sources of information: market
standard internal matrix pricing, market standard internal discounted cash flow techniques, or independent pricing services
(after we determine the independent pricing services’ use of available observable market data). For publicly-traded securities,
the number of quotations obtained varies by instrument and depends on the liquidity of the particular instrument. Generally,
we obtain prices from multiple pricing services to cover all asset classes and obtain multiple prices for certain securities, but
ultimately utilize the price with the highest placement in the fair value hierarchy. Independent pricing services that value
these instruments use market standard valuation methodologies based on data about market transactions and inputs from
multiple pricing sources that are market observable or can be derived principally from or corroborated by observable market
data. See Note 10 of the Notes to the Consolidated Financial Statements for a discussion of the types of market standard
valuation methodologies utilized and key assumptions and observable inputs used in applying these standard valuation
methodologies. When a price is not available in the active market or through an independent pricing service, management
values the security primarily using market standard internal matrix pricing or discounted cash flow techniques, and non-
binding quotations from independent brokers who are knowledgeable about these securities. Independent non-binding broker
quotations utilize inputs that may be difficult to corroborate with observable market data. As shown in the following section,
less than 1% of our fixed maturity securities AFS were valued using non-binding quotations from independent brokers at
December 31, 2020.
Senior management, independent of the trading and investing functions, is responsible for the oversight of control
systems and valuation policies for securities, mortgage loans and derivatives. On a quarterly basis, new transaction types and
markets are reviewed and approved to ensure that observable market prices and market-based parameters are used for
valuation, wherever possible, and for determining that valuation adjustments, when applied, are based upon established
policies and are applied consistently over time. Senior management oversees the selection of independent third-party pricing
providers and the controls and procedures to evaluate third-party pricing.
We review our valuation methodologies on an ongoing basis and revise those methodologies when necessary based on
changing market conditions. Assurance is gained on the overall reasonableness and consistent application of input
assumptions, valuation methodologies and compliance with fair value accounting standards through controls designed to
ensure valuations represent an exit price. Several controls are utilized, including certain monthly controls, which include, but
are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of
securities sold to the fair value estimates, comparing fair value estimates to management’s knowledge of the current market,
reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing
due diligence to confirm that independent pricing services use market-based parameters. The process includes a
determination of the observability of inputs used in estimated fair values received from independent pricing services or
brokers by assessing whether these inputs can be corroborated by observable market data. We ensure that prices received
from independent brokers, also referred to herein as “consensus pricing,” are representative of estimated fair value by
considering such pricing relative to our knowledge of the current market dynamics and current pricing for similar financial
instruments. While independent non-binding broker quotations are utilized, they are not used for a significant portion of the
portfolio.
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We also apply a formal process to challenge any prices received from independent pricing services that are not
considered representative of estimated fair value. If prices received from independent pricing services are not considered
reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are
obtained, or an internally developed valuation is prepared. Internally developed valuations of current estimated fair value,
compared with pricing received from the independent pricing services, did not produce material differences in the estimated
fair values for the majority of the portfolio; accordingly, overrides were not material. This is, in part, because internal
estimates are generally based on available market evidence and estimates used by other market participants. In the absence of
such market-based evidence, management’s best estimate is used.
We have reviewed the significance and observability of inputs used in the valuation methodologies to determine the
appropriate fair value hierarchy level for each of our securities. Based on the results of this review and investment class
analysis, each instrument is categorized as Level 1, 2 or 3 based on the lowest level significant input to its valuation. See
Note 10 of the Notes to the Consolidated Financial Statements for valuation approaches and key inputs by major category of
assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy.
Fair Value of Fixed Maturity Securities AFS and Equity Securities
Fixed maturity securities AFS and equity securities measured at estimated fair value on a recurring basis and their
corresponding fair value pricing sources are as follows:
Level
Level 1
December 31, 2020
Fixed Maturity
Securities AFS
Equity
Securities
(Dollars in millions)
Quoted prices in active markets for identical assets
$
23,180
6.5 % $
Level 2
Independent pricing sources
Internal matrix pricing or discounted cash flow techniques
Significant other observable inputs
Level 3
Independent pricing sources
Internal matrix pricing or discounted cash flow techniques
Independent broker quotations
Significant unobservable inputs
Total estimated fair value
300,989
1,133
302,122
23,745
5,110
652
29,507
354,809
$
84.9
0.3
85.2
6.7
1.4
0.2
8.3
636
213
80
293
11
139
—
150
58.9 %
19.8
7.4
27.2
1.0
12.9
—
13.9
100.0 % $
1,079
100.0 %
See Note 10 of the Notes to the Consolidated Financial Statements for the fixed maturity securities AFS and equity
securities fair value hierarchy.
The majority of the Level 3 fixed maturity securities AFS and equity securities were concentrated in three sectors at
December 31, 2020: foreign corporate securities, U.S. corporate securities and RMBS. During the year ended
December 31, 2020, Level 3 fixed maturity securities AFS increased by $10.7 billion, or 57%. The increase was driven by
transfers into Level 3 in excess of transfers out of Level 3, purchases in excess of sales and by an increase in estimated fair
value recognized in other comprehensive income (loss). The increase in transfers into Level 3 for the year ended December
31, 2020, in part, was from market conditions including decreased liquidity, decreased transparency of valuations and an
increased use of unobservable inputs, principally for U.S. and foreign corporate securities.
See Note 10 of the Notes to the Consolidated Financial Statements for a rollforward of the fair value measurements for
securities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs; transfers
into and/or out of Level 3; and further information about the valuation approaches and inputs by level by major classes of
invested assets that affect the amounts reported above.
Fixed Maturity Securities AFS
See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for information about fixed maturity
securities AFS by sector, contractual maturities and continuous gross unrealized losses.
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Fixed Maturity Securities AFS Credit Quality — Ratings
The Securities Valuation Office of the NAIC evaluates the fixed maturity security investments of insurers for
regulatory reporting and capital assessment purposes. Historically, the NAIC assigned securities to one of six credit quality
categories called “NAIC designations.” If no designation is available from the NAIC, then, as permitted by the NAIC, an
internally developed designation is used. NAIC designations are generally similar to the credit quality ratings of the
NRSRO for fixed maturity securities, except for certain non-agency RMBS and CMBS as described below.
Effective with year-end 2020 NAIC reporting, the NAIC implemented an expansion of the fixed maturity security
rating classification from six to 20 categories. The NAIC retained the six NAIC designations and expanded with 20 “NAIC
designation categories.” The NAIC designation categories correspond more closely to the NRSROs alpha-numeric credit
quality ratings. The NAIC’s goal is to better align RBC charges on fixed maturity securities with the instruments’ actual
credit risk. Effective with year-end 2020 regulatory reporting, insurers are required to report both the NAIC designation
and NAIC designation category for each fixed maturity security. The NAIC maintained the current RBC factors for NAIC
designations 1-6 until the NAIC completes an impact analysis to confirm or refine the NAIC’s proposed new RBC factors
for the 20 NAIC designation categories.
Rating agency ratings are based on availability of applicable ratings from rating agencies on the NAIC credit rating
provider list, including Moody’s Investor Service (“Moody’s”), S&P, Fitch Ratings (“Fitch”), Dominion Bond Rating
Service, A.M. Best Company (“A.M. Best”), Kroll Bond Rating Agency, Egan Jones Ratings Company and Morningstar
Credit Ratings, LLC (“Morningstar”). If no rating is available from a rating agency, then an internally developed rating is
used.
The NAIC has adopted revised methodologies for non-agency RMBS and CMBS. The NAIC’s objective with the
revised methodologies for non-agency RMBS and CMBS was to increase the accuracy in assessing expected losses, and to
use the improved assessment to determine a more appropriate capital requirement for non-agency RMBS and CMBS. The
revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory input into the
assumptions used to estimate expected losses from non-agency RMBS and CMBS. We apply the revised NAIC
methodologies to non-agency RMBS and CMBS held by MetLife, Inc.’s insurance subsidiaries that maintain the NAIC
statutory basis of accounting. The NAIC’s present methodology is to evaluate non-agency RMBS and CMBS held by
insurers using the revised NAIC methodologies on an annual basis. If MetLife, Inc.’s insurance subsidiaries acquire non-
agency RMBS and CMBS that have not been previously evaluated by the NAIC, but are expected to be evaluated by the
NAIC in the upcoming annual review, an internally developed designation is used until a NAIC designation becomes
available. NAIC designations may not correspond to NRSRO ratings.
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The following table presents total fixed maturity securities AFS by NRSRO rating and the applicable NAIC
designation from the NAIC published comparison of NRSRO ratings to NAIC designations, except for non-agency RMBS
and CMBS, held by MetLife, Inc.'s insurance subsidiaries that maintain the NAIC statutory basis of accounting, which are
presented using revised NAIC methodologies. NRSRO ratings are as of the dates shown below. Over time, credit ratings
can migrate, up or down, through the NRSRO continuous monitoring process. As of December 31, 2020, securities are
presented net of ACL, reflecting the adoption of new credit loss guidance on January 1, 2020. As of December 31, 2019,
securities are presented at amortized cost in accordance with prior guidance. See Notes 1 and 8 of the Notes to the
Consolidated Financial Statements for further information.
2020
2019
December 31,
NAIC
Designation
NRSRO Rating
Amortized
Cost net of
ACL
Unrealized
Gains (Losses)
(1)
Estimated
Fair
Value
% of
Total
Amortized
Cost
Unrealized
Gains (Losses)
(Dollars in millions)
Estimated
Fair
Value
% of
Total
$ 218,252 $
31,761 $ 250,013
70.5 % $ 207,742 $
22,966 $ 230,708
70.4 %
Subtotal investment grade
294,594
43,121
337,715
76,342
11,360
87,702
24.7
95.2
74,568
282,310
6,857
81,425
29,823
312,133
11,840
3,688
536
72
972
14
(33)
5
12,812
3,702
503
77
16,136
958
17,094
3.6
1.1
0.1
—
4.8
11,210
3,297
832
6
442
40
(139)
(1)
11,652
3,337
693
5
15,345
342
15,687
$ 310,730 $
44,079 $ 354,809
100.0 % $ 297,655 $
30,165 $ 327,820
100.0 %
24.8
95.2
3.6
1.0
0.2
—
4.8
1
2
3
4
5
6
Aaa/Aa/A
Baa
Ba
B
Caa and lower
In or near default
Subtotal below
investment grade
Total fixed maturity
securities AFS
(1) Excludes gross unrealized gains (losses) related to assets held-for-sale. See Note 3 of the Notes to the Consolidated
Financial Statements for information on the pending disposition of MetLife P&C.
As a result of current economic conditions, including the effects of the COVID-19 Pandemic which caused increased
concerns over more highly leveraged issuers and downgrade risk, our below investment grade securities initially decreased
in value but, as a result of credit spread tightening in the fourth quarter of 2020, these securities increased in value from an
unrealized gain position at December 31, 2019 of $342 million to an unrealized gain position of $958 million at
December 31, 2020. Foreign government securities, acquired to support our local insurance operations and related
policyholder liabilities, represented $3.7 billion, or 22% of our $17.1 billion below investment grade securities, at
estimated fair value, at December 31, 2020. U.S. corporate and foreign corporate securities comprise the vast majority of
the remaining below investment grade securities. We have been actively repositioning our corporate below investment
grade portfolios, including our syndicated bank loan portfolio, into higher quality, higher rated securities and with an
increased allocation to privately-placed securities that include covenant protections.
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The following tables present total fixed maturity securities AFS, based on estimated fair value, by sector and by
NRSRO rating and the applicable NAIC designations from the NAIC published comparison of NRSRO ratings to NAIC
designations, except for non-agency RMBS and CMBS, which are presented using the revised NAIC methodologies:
NAIC Designation
1
2
NRSRO Rating
Aaa/Aa/A
Baa
3
Ba
4
B
5
6
Caa and
Lower
In or Near
Default
Total
Estimated
Fair Value
(Dollars in millions)
Fixed Maturity Securities AFS — by Sector & Credit Quality Rating
$ 46,847
$ 39,552
$ 4,649
$ 2,018
$
326
$
24
$ 93,416
Total fixed maturity securities AFS
$ 250,013
$ 87,702
$ 12,812
$ 3,702
$
503
$
70.5 %
24.7 %
3.6 %
1.1 %
0.1 %
— %
100.0 %
December 31, 2020
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
Percentage of total
December 31, 2019
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
61,322
6,678
3,161
26,812
37,884
3,984
46,543
29,347
557
706
15,328
1,496
13,240
10,574
460
369
—
197
197
22
602
456
648
—
153
96
—
331
77
74
—
14
1
—
11
$ 41,504
$ 37,915
$ 5,760
$ 2,199
$
58,325
5,866
2,383
26,078
34,674
2,810
41,577
27,957
12,727
12,397
10,143
507
403
1,339
624
97
—
102
448
32
117
392
556
—
75
25
—
90
$
374
263
47
—
7
2
—
—
5
6
—
18
1
—
23
77
71,699
69,408
47,100
30,435
17,119
13,722
11,910
$ 354,809
1
—
—
—
3
1
—
—
5
$ 87,753
67,229
64,165
42,084
28,547
14,542
13,053
10,447
$ 327,820
Total fixed maturity securities AFS
$ 230,708
$ 81,425
$ 11,652
$ 3,337
$
693
$
Percentage of total
70.4 %
24.8 %
3.6 %
1.0 %
0.2 %
— %
100.0 %
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U.S. and Foreign Corporate Fixed Maturity Securities AFS
We maintain a diversified portfolio of corporate fixed maturity securities AFS across industries and issuers. This
portfolio did not have any exposure to any single issuer in excess of 1% of total investments at December 31, 2020. The
top 10 holdings comprised 2% of total investments at both December 31, 2020 and 2019. The table below presents our U.S.
and foreign corporate securities holdings by industry at:
Industry
Industrial
Finance
Consumer
Utility
Communications
Other
Total
December 31,
2020
2019
Estimated
Fair
Value
% of
Total
Estimated
Fair
Value
% of
Total
(Dollars in millions)
$
47,472
29.2 % $
46,018
30.3 %
37,645
33,384
29,984
12,107
2,232
23.1
20.5
18.4
7.4
1.4
34,776
31,952
25,763
11,471
1,938
22.9
21.0
17.0
7.5
1.3
$
162,824
100.0 % $
151,918
100.0 %
As a result of current economic conditions, including the effects of the COVID-19 Pandemic, we have experienced
stress within certain sub-sectors of our industrial and consumer corporate securities portfolios, principally in Energy,
Airports, Cruise Lines / Leisure, Airlines, Restaurants and Lodging. See “— Current Environment — Selected Country and
Sector Investments.”
Structured Products
We held $59.5 billion and $53.5 billion of Structured Products, at estimated fair value, at December 31, 2020 and
2019, respectively, as presented in the RMBS, ABS and CMBS sections below.
RMBS
Our RMBS portfolio is diversified by security type and risk profile. The following table presents our RMBS
portfolio by security type, risk profile and ratings profile at:
Estimated
Fair
Value
2020
% of
Total
December 31,
Net
Unrealized
Gains (Losses) (1)
Estimated
Fair
Value
(Dollars in millions)
2019
% of
Total
Net
Unrealized
Gains (Losses)
$
17,342
57.0 % $
1,468 $
16,315
57.2 % $
13,093
43.0
552
$
30,435
100.0 % $
2,020 $
12,232
28,547
42.8
100.0 % $
$
20,408
67.1 % $
1,314 $
19,563
68.5 % $
1,637
3,809
4,581
5.4
12.5
15.0
38
306
362
1,142
3,323
4,519
4.0
11.7
15.8
1,185
311
1,496
797
48
347
304
$
30,435
100.0 % $
2,020 $
28,547
100.0 % $
1,496
$
$
22,555
29,347
74.1 %
96.4 %
$
$
21,122
27,957
74.0 %
97.9 %
Security type
Collateralized mortgage obligations
Pass-through mortgage-backed
securities
Total RMBS
Risk profile
Agency
Prime
Alt-A
Sub-prime
Total RMBS
Ratings profile
Rated Aaa/AAA
Designated NAIC 1
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Table of Contents
(1) Excludes gross unrealized gains (losses) related to assets held-for-sale. See Note 3 of the Notes to the Consolidated
Financial Statements for information on the pending disposition of MetLife P&C.
Collateralized mortgage obligations are structured by dividing the cash flows of mortgage loans 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 secured by a mortgage loan or collection of mortgage loans. The monthly mortgage loan
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.
The majority of our RMBS holdings were rated Aaa/AAA and were designated NAIC 1 at December 31, 2020 and
2019. Agency RMBS were guaranteed or otherwise supported by Federal National Mortgage Association, Federal Home
Loan Mortgage Corporation or Government National Mortgage Association. Non-agency RMBS include prime,
alternative residential mortgage loans (“Alt-A”) and sub-prime RMBS. Prime residential mortgage lending includes the
origination of residential mortgage loans to the most creditworthy borrowers with high quality credit profiles. Alt-A is a
classification of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime
mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.
Historically, we have managed our exposure to sub-prime RMBS holdings by focusing primarily on senior tranche
securities, stress testing the portfolio with severe loss assumptions and closely monitoring the performance of the
portfolio. Our sub-prime RMBS portfolio consists predominantly of securities that were purchased after 2012 at
significant discounts to par value and discounts to the expected principal recovery value of these securities. The vast
majority of these securities are investment grade under the NAIC designations (e.g., NAIC 1 and NAIC 2).
Our RMBS holdings were comprised of 67% Agency securities that were all designated NAIC 1 and 33% of non-
agency securities, of which 93% were designated NAIC 1, at December 31, 2020. As result of current economic
conditions, including increased unemployment levels as result of the COVID-19 Pandemic, the unrealized gain on our
non-agency RMBS holdings initially decreased but, as a result of credit spread tightening in the fourth quarter of 2020,
these securities increased in value from an unrealized gain of $699 million at December 31, 2019 to an unrealized gain of
$706 million at December 31, 2020. Our non-agency RMBS portfolio is defensively positioned with most of the
portfolio concentrated in senior tranches with strong structural protections including credit enhancement in the form of
capital structure subordination that is available to absorb losses before they impact the securities we own.
ABS
Our ABS portfolio is diversified by collateral type and issuer. The following table presents our ABS portfolio by
collateral type and ratings profile at:
Estimated
Fair
Value
2020
% of
Total
December 31,
Net
Unrealized
Gains (Losses) (1)
Estimated
Fair
Value
(Dollars in millions)
2019
% of
Total
Net
Unrealized
Gains (Losses)
Collateral type
Collateralized obligations (2)
$
Consumer loans
Student loans
Credit card loans
Automobile loans
Foreign residential loans
Other loans
Total
Ratings profile
Rated Aaa/AAA
Designated NAIC 1
8,946
1,535
1,174
1,006
976
956
2,526
52.2 % $
(16) $
9.0
6.9
5.9
5.7
5.5
14.8
46
7
13
20
15
71
7,974
1,181
1,350
454
813
1,088
1,682
54.8 % $
8.1
9.3
3.1
5.6
7.5
11.6
$
17,119
100.0 % $
156 $
14,542
100.0 % $
$
$
9,164
15,328
53.5 %
89.5 %
$
$
7,711
12,727
53.0 %
87.5 %
(54)
9
(5)
4
7
14
20
(5)
(1) Excludes gross unrealized gains (losses) related to assets held-for-sale. See Note 3 of the Notes to the Consolidated
Financial Statements for information on the pending disposition of MetLife P&C.
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(2) Includes primarily collateralized loan obligations.
As a result of current economic conditions, including the effects of the COVID-19 Pandemic, causing increased
concerns over leveraged lending, our $8.9 billion collateralized obligations securities portfolio, at estimated fair value,
initially decreased in value but, as a result of credit spread tightening in the fourth quarter of 2020, these securities
increased in value from an unrealized loss position of $54 million at December 31, 2019 to an unrealized loss position of
$16 million at December 31, 2020. We have been actively repositioning this portfolio into higher quality, higher rated
securities primarily collateralized by first lien senior secured loans. As a result, this portfolio includes strong structural
protections, primarily credit enhancement in the form of capital structure subordination that is available to absorb losses
before they impact the securities we own. We do not own equity tranches of such securities or combination notes in this
portfolio. As we invest primarily in securities rated AAA, AA or A, 98% of this portfolio was investment grade rated at
December 31, 2020.
CMBS
Our CMBS portfolio is comprised primarily of securities collateralized by multiple commercial mortgage loans and
is diversified by property type, borrower, geography and vintage year. The following tables present our CMBS portfolio
by NRSRO rating and vintage year. As of December 31, 2020, securities are presented net of ACL, reflecting the
adoption of new credit loss guidance on January 1, 2020. As of December 31, 2019, securities are presented at amortized
cost in accordance with the prior guidance. See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for
further information.
December 31, 2020
Aaa
Aa
A
Baa
Below
Investment
Grade
Total
Amortized
Cost net of
ACL
Estimated
Fair
Value
Amortized
Cost net of
ACL
Estimated
Fair
Value
Amortized
Cost net of
ACL
Estimated
Fair
Value
Amortized
Cost net of
ACL
Estimated
Fair
Value
Amortized
Cost net of
ACL
Estimated
Fair
Value
Amortized
Cost net of
ACL
Estimated
Fair
Value
(Dollars in millions)
$
958
$ 1,011
$
898
$
917
$
373
$ 355
$
105
$
96
$
114
$
98
$
2,448
$ 2,477
451
462
282
757
480
492
310
807
1,704
1,891
1,048
1,100
734
748
429
65
56
432
592
138
280
449
69
60
463
647
141
293
169
38
54
150
205
596
186
171
40
53
150
214
610
191
10
7
—
—
9
—
29
9
6
—
—
9
—
30
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,059
1,109
572
392
607
423
1,339
1,420
2,510
2,761
1,782
1,851
1,229
1,262
$
6,396
$ 6,839
$
2,890
$ 3,039
$
1,771
$ 1,784
$
160
$ 150
$
114
$
98
$ 11,331
$ 11,910
Vintage Year
2003 - 2013
2014
2015
2016
2017
2018
2019
2020
Total
Ratings
Distribution
57.4 %
25.5 %
15.0 %
1.3 %
0.8 %
100.0 %
Aaa
Aa
A
Baa
Below
Investment
Grade
Total
December 31, 2019
Vintage Year
Amortized
Cost
Estimated
Fair
Value
Amortized
Cost
Estimated
Fair
Value
Amortized
Cost
Estimated
Fair
Value
Amortized
Cost
Estimated
Fair
Value
Amortized
Cost
Estimated
Fair
Value
Amortized
Cost
Estimated
Fair
Value
2003 - 2013
$
1,109
$ 1,169
$
973
$ 1,007
$
368
$
376
$
(Dollars in millions)
372
419
285
668
389
436
298
689
1,713
1,804
744
754
486
65
71
589
704
143
502
67
73
608
739
143
114
31
55
181
240
652
119
33
56
182
249
655
$
5,310
$ 5,539
$
3,031
$ 3,139
$
1,641
$ 1,670
$
2014
2015
2016
2017
2018
2019
Total
Ratings
Distribution
37
—
—
—
—
22
—
59
$
36
$
—
—
—
—
22
—
$
58
$
52
—
—
—
—
—
—
52
$
41
$
2,539
$ 2,629
—
—
—
—
—
—
972
1,010
515
411
536
427
1,438
1,479
2,679
2,814
1,539
1,552
$
41
$ 10,093
$ 10,447
53.0 %
30.0 %
16.0 %
0.6 %
0.4 %
100.0 %
The tables above reflect NRSRO ratings including Moody’s, S&P, Fitch and Morningstar, Inc. CMBS designated
NAIC 1 were 88.8% and 97.1% of total CMBS at December 31, 2020 and 2019, respectively.
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Evaluation of Fixed Maturity Securities AFS for Credit Loss, Rollforward of Allowance for Credit Loss and Credit Loss
on Fixed Maturity Securities AFS Recognized in Earnings
See Note 8 of the Notes to the Consolidated Financial Statements for information about the evaluation of fixed maturity
securities AFS for credit loss, rollforward of the ACL, net provision (release) for credit loss, as well as gross gains and gross
losses on fixed maturity securities AFS sold at and for the years ended December 31, 2020 and 2019.
Overview of Credit Loss on Fixed Maturity Securities AFS
Excluding the impact of securities with an ACL that were subsequently sold or exchanged and the related release of the
ACL, the provision for credit loss on fixed maturity securities AFS was $225 million for the year ended December 31, 2020,
as compared to $129 million for the year ended December 31, 2019. The provision for credit loss on foreign government
securities was $134 million for the year ended December 31, 2020, which was concentrated in Argentine foreign currency
denominated sovereign securities, as a result of their default in 2020. The provision for credit loss on U.S. corporate
securities and foreign corporate securities was $91 million for the year ended December 31, 2020, which were concentrated
in industrial and consumer securities, as a result of market driven and issuer specific factors, primarily in the
communications, energy and transportation sectors in 2020. See “— Current Environment — Selected Country and Sector
Investments.”
The release of the ACL for securities that were subsequently sold or exchanged was $133 million for the year ended
December 31, 2020. Including the impact of these releases and impact of intent-to-sell impairments of $62 million, the net
provision for credit loss on fixed maturity securities AFS was $154 million for the year ended December 31, 2020. In
addition, there was an additional $11 million decrease in the ACL during the year ended December 31, 2020 in connection
with the disposition of MetLife Seguros de Retiro.
See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for information on new credit loss guidance
adopted on January 1, 2020 affecting the credit loss evaluation process and the measurement of credit loss; and a summary of
the similarities and the differences of this new credit loss guidance with the previous guidance.
Future Credit Losses
Provisions for credit loss recognized in future quarters on fixed maturity securities AFS will depend primarily on
future economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to
be collected), changes in credit ratings and collateral valuation. In upcoming periods, if there are changes in the above
factors, provisions for credit loss may be recorded, as well as changes in the ACL on securities for which a provision for
credit loss was previously recorded.
Contractholder-Directed Equity Securities and Fair Value Option Securities
The estimated fair value of these investments, which are primarily comprised of Unit-linked investments, was
$13.3 billion and $13.1 billion, or 2.5% and 2.7% of cash and invested assets, at December 31, 2020 and 2019, respectively.
See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for a description of this portfolio, its fair value
hierarchy and a rollforward of the fair value measurements for these investments measured at estimated fair value on a
recurring basis using significant unobservable (Level 3) inputs.
The COVID-19 Pandemic initially caused volatility in the equity markets and widening of credit spreads decreasing the
estimated fair value of our Unit-linked investments and FVO Securities. However, during the fourth quarter of 2020, equity
markets increased and credit spreads tightened. As a result, the estimated fair value of these securities still held at year end
increased, resulting in a mark-to-market gain of $489 million in net investment income, as the change in estimated fair value
on these securities is recorded in net investment income.
Securities Lending, Repurchase Agreements and FHLB of Boston Advance Agreements
We participate in a securities lending program whereby securities are loaned to third parties, primarily brokerage firms
and commercial banks. We also participate in short-term repurchase agreement transactions with unaffiliated financial
institutions. In addition, a subsidiary of the Company has entered into short-term advance agreements with the FHLB of
Boston. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Securities Lending and
Repurchase Agreements” and Notes 1 and 8 of the Notes to the Consolidated Financial Statements for further information.
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Mortgage Loans
Our mortgage loans held-for-investment are principally collateralized by commercial, agricultural and residential
properties. Mortgage loans held-for-investment are carried at amortized cost and the related ACL are summarized as follows
at:
2020
2019
December 31,
Portfolio Segment
Amortized
Cost
% of
Total
ACL
ACL as % of
Amortized
Cost
Amortized
Cost
% of
Total
ACL
ACL as % of
Amortized
Cost
(Dollars in millions)
Commercial
Agricultural
Residential
Total
$
52,434
62.2 % $
18,128
13,782
21.5
16.3
$
84,344
100.0 % $
252
106
232
590
0.5 % $
49,624
61.5 % $
0.6 %
1.7 %
16,695
14,316
20.7
17.8
0.7 % $
80,635
100.0 % $
246
52
55
353
0.5 %
0.3 %
0.4 %
0.4 %
The carrying value of all mortgage loans, net of ACL, was 15.9% and 16.4% of cash and invested assets at December 31,
2020 and 2019, respectively.
Our commercial, agricultural and residential mortgage loan portfolios are subject to uncertain market conditions,
including the effects of the COVID-19 Pandemic. As a result of the COVID-19 Pandemic, during the year ended
December 31, 2020, we granted concessions (e.g., payment deferrals and other loan modifications) to certain of our
commercial mortgage loan borrowers (principally in the hotel and retail sectors) and residential mortgage loan borrowers and,
to a much lesser extent, some of our agricultural mortgage loan borrowers. See Note 8 of the Notes to the Consolidated
Financial Statements for further information regarding COVID-19 Pandemic-related mortgage loan concessions. See also “—
Commercial Mortgage Loans by Geographic Region and Property Type.”
We diversify our mortgage loan portfolio by both geographic region and property type to reduce the risk of
concentration. Of our commercial and agricultural mortgage loan held-for-investment portfolios, 83% are collateralized by
properties located in the United States, with the remaining 17% collateralized by properties located outside the United States,
which includes 4% of properties located in the U.K. and 4% of properties located in Mexico, at December 31, 2020. The
carrying values of our commercial and agricultural mortgage loans held-for-investment located in California, New York and
Texas were 17%, 10% and 7%, respectively, of total commercial and agricultural mortgage loans held-for-investment at
December 31, 2020. Additionally, we manage risk when originating commercial and agricultural mortgage loans by generally
lending up to 75% of the estimated fair value of the underlying real estate collateral.
We manage our residential mortgage loan held-for-investment portfolio in a similar manner to reduce risk of
concentration, with 92% collateralized by properties located in the United States, and the remaining 8% collateralized by
properties located outside the United States, principally in Chile, at December 31, 2020. The carrying values of our
residential mortgage loans located in California, Florida, and New York were 33%, 9%, and 7%, respectively, of total
residential mortgage loans at December 31, 2020.
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Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest
component of the mortgage loan invested asset class. The tables below present the diversification across geographic regions
and property types of commercial mortgage loans held-for-investment at:
Region
Non-U.S.
Pacific
Middle Atlantic
South Atlantic
West South Central
East North Central
New England
Mountain
East South Central
West North Central
Multi-Region and Other
Total amortized cost
Less: ACL
Carrying value, net of ACL
Property Type
Office
Retail
Apartment
Industrial
Hotel
Other
Total amortized cost
Less: ACL
Carrying value, net of ACL
__________________
December 31,
2020
2019
Amount
% of
Total
Amount
% of
Total
(Dollars in millions)
20.2 % $
19.5
15.7
13.8
7.4
4.8
4.0
3.4
1.3
1.2
8.7
100.0 %
$
10,093
10,169
8,302
6,487
4,255
3,066
1,433
1,602
502
607
3,108
49,624
246
49,378
10,581
10,235
8,233
7,217
3,887
2,494
2,126
1,777
700
609
4,575
52,434
252
52,182
20.3 %
20.5
16.7
13.1
8.6
6.2
2.9
3.2
1.0
1.2
6.3
100.0 %
23,928
45.6 % $
22,925
46.2 %
8,911
8,764
5,365
3,377
2,089
52,434
252
52,182
17.0
16.7
10.2
6.5
4.0
100.0 %
$
9,052
8,212
3,985
3,471
1,979
49,624
246
49,378
18.2
16.6
8.0
7.0
4.0
100.0 %
$
$
$
$
Our commercial mortgage loan portfolio is well positioned with exposures concentrated in high quality underlying
properties located in primary markets typically with institutional investors who are better positioned to manage their assets
during periods of market volatility. Our portfolio is comprised primarily of lower risk loans with higher debt-service coverage
ratios (“DSCR”) and lower loan-to-value (“LTV”) ratios. See “— Mortgage Loan Credit Quality — Monitoring Process” for
further information and Note 8 of the Notes to the Consolidated Financial Statements for a distribution of our commercial
mortgage loans by DSCR and LTV ratios. Excluding loans with a COVID-19 Pandemic-related payment deferral, over 99%
of our commercial mortgage loan portfolio was current and 100% of our hotel and retail commercial mortgage loan portfolio
was current at December 31, 2020. See Note 8 of the Notes to the Consolidated Financial Statements for further information
regarding COVID-19 Pandemic-related mortgage loan concessions.
Mortgage Loan Credit Quality — Monitoring Process. We monitor our mortgage loan investments on an ongoing basis,
including a review of loans by credit quality indicator and loans that are current, past due, restructured and under foreclosure.
See Note 8 of the Notes to the Consolidated Financial Statements for further information regarding mortgage loans by credit
quality indicator, past due and nonaccrual mortgage loans.
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We review our commercial mortgage loans on an ongoing basis. These reviews may include an analysis of the property
financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the
underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans,
which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios
and lower DSCR and loans with a COVID-19 Pandemic-related payment deferral. The monitoring process for agricultural
mortgage loans is generally similar, with a focus on higher risk loans, such as loans with higher LTV ratios. Agricultural
mortgage loans are reviewed on an ongoing basis which include, but are not limited to, property inspections, market analysis,
estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, including reviews on a
geographic and property-type basis. We review our residential mortgage loans on an ongoing basis, with a focus on higher
risk loans, such as nonperforming loans. See Note 8 of the Notes to the Consolidated Financial Statements for information on
our evaluation of residential mortgage loans and related ACL methodology.
LTV ratios and DSCR are common measures in the assessment of the quality of commercial mortgage loans. LTV ratios
are a common measure in the assessment of the quality of agricultural mortgage loans. LTV ratios compare the amount of the
loan to the estimated fair value of the underlying collateral. A LTV ratio greater than 100% indicates that the loan amount is
greater than the collateral value. A LTV ratio of less than 100% indicates an excess of collateral value over the loan amount.
Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR compares a property’s net
operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR,
the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average LTV ratio was 58% and
55% at December 31, 2020 and 2019 respectively, and our average DSCR was 2.5x and 2.4x at December 31, 2020 and
2019, respectively. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio
is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan portfolio.
For our agricultural mortgage loans, our average LTV ratio was 48% and 47% at December 31, 2020 and 2019, respectively.
The values utilized in calculating our agricultural mortgage loan LTV ratio are developed in connection with the ongoing
review of our agricultural loan portfolio and are routinely updated.
Mortgage Loan Allowance for Credit Loss. Our ACL is established for both pools of loans with similar risk
characteristics and for mortgage loans with dissimilar risk characteristics, collateral dependent loans and reasonably expected
troubled debt restructurings, individually on a loan specific basis. We record an allowance for expected lifetime credit loss in
an amount that represents the portion of the amortized cost basis of mortgage loans that the Company does not expect to
collect, resulting in mortgage loans being presented at the net amount expected to be collected.
In determining our ACL, management (i) pools mortgage loans that share similar risk characteristics, (ii) considers
expected lifetime credit loss over the contractual term of our mortgage loans, as adjusted for expected prepayments and any
extensions, and (iii) considers past events and current and forecasted economic conditions. Actual credit loss realized could
be different from the amount of the ACL recorded. These evaluations and assessments are revised as conditions change and
new information becomes available, which can cause the ACL to increase or decrease over time as such evaluations are
revised. Negative credit migration, including an actual or expected increase in the level of problem loans, will result in an
increase in the ACL. Positive credit migration, including an actual or expected decrease in the level of problem loans, will
result in a decrease in the ACL. See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for information on
how the ACL is established and monitored, and activity in and balances of the ACL, as of and for the years ended December
31, 2020 and 2019.
See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for information on the new credit loss guidance
adopted in 2020 affecting the credit loss evaluation process and the measurement of credit loss effective January 1, 2020, as
well as a summary of the similarities and the differences of this new credit loss guidance with the previous guidance.
Real Estate and Real Estate Joint Ventures
Real estate and real estate joint ventures is comprised of wholly-owned real estate and joint ventures with interests in
single property income-producing real estate and, to a lesser extent, joint ventures with interests in multi-property projects
with varying strategies ranging from the development of properties to the operation of income-producing properties, as well
as a runoff portfolio. The carrying value of real estate and real estate joint ventures was $11.9 billion and $10.7 billion, or
2.3% and 2.2% of cash and invested assets, at December 31, 2020 and 2019, respectively.
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As a result of the COVID-19 Pandemic, certain of our real estate investments, principally hotel properties, experienced a
reduction in income during the year ended December 31, 2020 as compared to the year ended December 31, 2019. We lease
investment real estate, principally commercial real estate, for office and retail use, through a variety of operating lease
arrangements. In response to the COVID-19 Pandemic, during the year ended December 31, 2020, we granted lease
concessions (e.g., rent payment deferrals) to some of our lessees. In addition, we have interests in certain unconsolidated real
estate joint ventures which have granted COVID-19 Pandemic-related lease concessions. See Note 8 of the Notes to the
Consolidated Financial Statements for further information regarding COVID-19 Pandemic-related lease concessions.
Our real estate investments are typically stabilized properties that we intend to hold for the longer-term for portfolio
diversification and long-term appreciation. Our real estate investment portfolio has significantly appreciated since acquisition
to a $6.3 billion unrealized gain position at December 31, 2020 that is available to absorb valuation declines from the current
economic conditions. We continuously monitor expected future cash flows of our real estate investments and incorporate
them into our periodic impairment analyses. As a result of the COVID-19 Pandemic, we performed impairment analyses
during the year ended December 31, 2020, which included updated estimates of expected future cash flows. As a result of our
impairment analyses, we recorded one impairment during the year ended December 31, 2020 for $13 million. This
impairment was recorded in net investment income as the investment is in a real estate fund that is accounted for under the
equity method. There were no impairments recognized in net investment gains (losses) on real estate and real estate joint
ventures for the year ended December 31, 2020. There were $10 million in impairments recognized for the year ended
December 31, 2019.
We diversify our real estate investments by both geographic region and property type to reduce risk of concentration. See
Note 8 of the Notes to the Consolidated Financial Statements for a summary of real estate investments, by income type, as
well as income earned.
Geographical diversification: Of our real estate investments, excluding funds, 60% were located in the United States,
with the remaining 40% located outside the United States, at December 31, 2020. The carrying value of our real estate
investments, excluding funds, located in Japan, California and Washington, D.C. were 35%, 10% and 9%, respectively, of
total real estate investments, excluding funds, at December 31, 2020. Real estate funds were 25% of our real estate
investments at December 31, 2020. The majority of these funds hold underlying real estate investments that are well
diversified across the United States.
Property type diversification: Real estate and real estate joint venture investments are categorized by property type as
follows at:
Property Type
Office
Real estate funds
Retail
Apartment
Land
Hotel
Industrial
Agriculture
Other
December 31,
2020
2019
Carrying
Value
% of
Total
Carrying
Value
% of
Total
$
4,082
2,966
1,273
1,260
910
610
448
20
364
(Dollars in millions)
34.2 % $
24.9
10.7
10.6
7.6
5.0
3.8
0.2
3.0
3,678
2,539
1,260
1,211
669
599
393
21
371
34.2 %
23.6
11.7
11.3
6.2
5.6
3.7
0.2
3.5
Total real estate and real estate joint ventures
$
11,933
100.0 % $
10,741
100.0 %
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Other Limited Partnership Interests
Other limited partnership interests are comprised of investments in private funds, including private equity funds and
hedge funds. At December 31, 2020 and 2019, the carrying value of other limited partnership interests was $9.5 billion and
$7.7 billion, which included $643 million and $575 million of hedge funds, respectively. Other limited partnership interests
were 1.79% and 1.57% of cash and invested assets at December 31, 2020 and 2019, respectively. Cash distributions on these
investments are generated from investment gains, operating income from the underlying investments of the funds and
liquidation of the underlying investments of the funds.
We use the equity method of accounting for most of our private equity funds. We generally recognize our share of a
private equity fund’s earnings in net investment income on a three-month lag when the information is reported to us.
Accordingly, declines in the equity markets, which can impact the underlying results of these private equity funds, are
recorded in our net investment income on a three-month lag. As a result of declines in the equity market in the first quarter of
2020, which were reported to us in the second quarter of 2020 by our investees, we recorded negative net investment income
of $607 million on our private equity and hedge fund investments during the three months ended June 30, 2020. As a result of
increases in the equity market in the second quarter of 2020, which were reported to us in the third quarter of 2020 by our
investees, we recorded net investment income of $578 million on our private equity and hedge fund investments during the
three months ended September 30, 2020. As a result of increases in the equity market in the third quarter of 2020, which were
reported to us in the fourth quarter of 2020 by our investees, we recorded net investment income of $709 million on our
private equity and hedge fund investments during the three months ended December 31, 2020. For a discussion of our
expected private equity returns in 2021, see “— Executive Summary — Consolidated Company Outlook.”
Other Invested Assets
The following table presents the carrying value of our other invested assets by type at:
December 31,
2020
2019
Asset Type
Carrying Value
% of Total
Carrying Value
% of Total
Freestanding derivatives with positive estimated fair values
Tax credit and renewable energy partnerships
Direct financing leases
Annuities funding structured settlement claims
Leveraged leases
FHLB common stock
Operating joint ventures
Funds withheld
Other
Total
$
11,866
(Dollars in millions)
57.6 % $
10,084
1,751
1,340
1,263
816
814
733
508
1,502
8.5
6.5
6.1
4.0
4.1
3.6
2.5
7.2
1,993
1,247
1,271
1,052
809
838
470
1,251
53.0 %
10.5
6.6
6.7
5.4
4.3
4.4
2.5
6.6
$
20,593
100 % $
19,015
100 %
Percentage of cash and invested assets
3.9 %
3.9 %
Our direct financing and leveraged lease portfolios are subject to uncertain market conditions, including the effects of the
COVID-19 Pandemic and related economic slowdown. In response to the COVID-19 Pandemic, during the year ended
December 31, 2020, we granted lease concessions, primarily in the form of rent deferrals, to some of our lessees. See Note 8
of the Notes to the Consolidated Financial Statements for further information regarding COVID-19 Pandemic-related direct
financing lease concessions.
See Note 8 of the Notes to the Consolidated Financial Statements for information on the new credit loss guidance
adopted in 2020 affecting the credit loss evaluation process and the measurement of credit loss, including direct financing and
leveraged leases effective January 1, 2020.
See Notes 1, 8 and 9 of the Notes to the Consolidated Financial Statements for information regarding freestanding
derivatives with positive estimated fair values, tax credit and renewable energy partnerships, direct financing and leveraged
leases, annuities funding structured settlement claims, FHLB common stock, operating joint ventures and funds withheld, as
well as, gains (losses) on disposals of, and impairments of, tax credit and renewable energy partnerships, and leveraged lease
impairment losses.
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Derivatives
Derivative Risks
We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency
exchange rate, credit and equity market. We use a variety of strategies to manage these risks, including the use of derivatives.
See Note 9 of the Notes to the Consolidated Financial Statements for:
•
•
•
A comprehensive description of the nature of our derivatives, including the strategies for which derivatives are used
in managing various risks.
Information about the primary underlying risk exposure, gross notional amount, and estimated fair value of our
derivatives by type of hedge designation, excluding embedded derivatives held at December 31, 2020 and 2019.
The statement of operations effects of derivatives in net investments in foreign operations, cash flow, fair value, or
nonqualifying hedge relationships for the years ended December 31, 2020, 2019 and 2018.
See “Quantitative and Qualitative Disclosures About Market Risk — Management of Market Risk Exposures —
Hedging Activities” for more information about our use of derivatives by major hedge program.
Fair Value Hierarchy
See Note 10 of the Notes to the Consolidated Financial Statements for derivatives measured at estimated fair value on a
recurring basis and their corresponding fair value hierarchy.
The valuation of Level 3 derivatives involves the use of significant unobservable inputs and generally requires a higher
degree of management judgment or estimation than the valuations of Level 1 and Level 2 derivatives. Although Level 3
inputs are unobservable, management believes they are consistent with what other market participants would use when
pricing such instruments and are considered appropriate given the circumstances. The use of different inputs or
methodologies could have a material effect on the estimated fair value of Level 3 derivatives and could materially affect net
income.
Derivatives categorized as Level 3 at December 31, 2020 include: interest rate forwards with maturities which extend
beyond the observable portion of the yield curve; interest rate total return swaps with unobservable repurchase rates; foreign
currency swaps and forwards with certain unobservable inputs, including the unobservable portion of the yield curve; credit
default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations; equity
variance swaps with unobservable volatility inputs; and equity index options with unobservable correlation inputs. At
December 31, 2020, less than 1% of the estimated fair value of our derivatives was priced through independent broker
quotations.
See Note 10 of the Notes to the Consolidated Financial Statements for a rollforward of the fair value measurements for
derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.
The gain (loss) on Level 3 derivatives primarily relates to foreign currency derivatives and interest rate forwards that are
valued using an unobservable portion of the swap yield curves and unobservable interest rates, respectively. Other significant
inputs, which are observable, include equity volatility and observable interest rates. We validate the reasonableness of these
inputs by valuing the positions using internal models and comparing the results to broker quotations.
The gain (loss) on Level 3 derivatives, percentage of gain (loss) attributable to observable and unobservable inputs, and
the primary drivers of observable gain (loss) are summarized as follows:
Gain (loss) recognized in net income (loss)
Approximate percentage of gain (loss) attributable to observable
inputs
Year Ended December 31, 2020
$279
48%
Primary drivers of observable gain (loss)
Decreases in interest rates on interest rate total return swaps.
Approximate percentage of gain (loss) attributable to
unobservable inputs
52%
See “— Summary of Critical Accounting Estimates — Derivatives” for further information on the estimates and
assumptions that affect derivatives.
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Credit Risk
See Note 9 of the Notes to the Consolidated Financial Statements for information about how we manage credit risk
related to derivatives and for the estimated fair value of our net derivative assets and net derivative liabilities after the
application of master netting agreements and collateral.
Our policy is not to offset the fair value amounts recognized for derivatives executed with the same counterparty under
the same master netting agreement. This policy applies to the recognition of derivatives on the consolidated balance sheets
and does not affect our legal right of offset.
Credit Derivatives
The following table presents the gross notional amount and estimated fair value of credit default swaps at:
Credit Default Swaps
Purchased
Written
Total
December 31,
2020
2019
Gross
Notional
Amount
Estimated
Fair Value
Gross
Notional
Amount
Estimated
Fair Value
$
$
2,978
$
9,609
12,587
$
(In millions)
(112) $
2,944
$
196
11,520
84
$
14,464
$
(98)
271
173
The following table presents the gross gains, gross losses and net gains (losses) recognized in net derivative gains
(losses) for credit default swaps as follows:
Credit Default Swaps
Purchased (1)
Written (1)
Total
__________________
2020
Gross
Losses
Gross
Gains
Years Ended December 31,
Net
Gains
(Losses)
Gross
Gains
(In millions)
2019
Gross
Losses
Net
Gains
(Losses)
$
$
36 $
(64) $
(28) $
2 $
(40) $
65
(171)
(106)
257
(9)
101 $
(235) $
(134) $
259 $
(49) $
(38)
248
210
(1)
Gains (losses) do not include earned income (expense) on credit default swaps.
The unfavorable change in net gains (losses) on written credit default swaps was $354 million for the year ended
December 31, 2020 as compared to the year ended December 31, 2019 due to certain credit spreads on certain credit default
swaps used as replications widening in the current period and narrowing in the prior period.
The maximum amount at risk related to our written credit default swaps is equal to the corresponding gross notional
amount. In a replication transaction, we pair an asset on our balance sheet with a written credit default swap to synthetically
replicate a corporate bond, a core asset holding of life insurance companies. Replications are entered into in accordance with
the guidelines approved by state insurance regulators and the NAIC and are an important tool in managing the overall
corporate credit risk within the Company. In order to match our long-dated insurance liabilities, we seek to buy long-dated
corporate bonds. In some instances, these may not be readily available in the market, or they may be issued by corporations to
which we already have significant corporate credit exposure. For example, by purchasing Treasury bonds (or other high
quality assets) and associating them with written credit default swaps on the desired corporate credit name, we can replicate
the desired bond exposures and meet our ALM needs. In addition, given the shorter tenor of the credit default swaps
(generally five-year tenors) versus a long-dated corporate bond, we have more flexibility in managing our credit exposures.
Embedded Derivatives
See Note 10 of the Notes to the Consolidated Financial Statements for information about embedded derivatives measured
at estimated fair value on a recurring basis and their corresponding fair value hierarchy and a rollforward of the fair value
measurements for embedded derivatives measured at estimated fair value on a recurring basis using significant unobservable
(Level 3) inputs.
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See Note 9 of the Notes to the Consolidated Financial Statements for information about the nonperformance risk
adjustment included in the valuation of guaranteed minimum benefits accounted for as embedded derivatives.
See “— Summary of Critical Accounting Estimates — Derivatives” for further information on the estimates and
assumptions that affect embedded derivatives.
Off-Balance Sheet Arrangements
Credit and Committed Facilities
We maintain an unsecured revolving credit facility, as well as certain committed facilities (“Committed Facilities”), with
various financial institutions. See Note 13 of the Notes to the Consolidated Financial Statements for descriptions of such
arrangements, the classification of expenses on such credit and committed facilities and the nature of the associated liability
for letters of credit issued and drawdowns on these credit and committed facilities. See also “— Liquidity and Capital
Resources — The Company — Liquidity and Capital Sources — Global Funding Sources — Credit and Committed
Facilities.”
Collateral for Securities Lending, Repurchase Agreements, Third-Party Custodian Administered Repurchase Programs
and Derivatives
We participate in securities lending transactions, repurchase agreements and third-party custodian administered
repurchase programs in the normal course of business for the purpose of enhancing the total return on our investment
portfolio. See Notes 1 and 8 of the Notes to the Consolidated Financial Statements for further discussion of our securities
lending transactions and repurchase agreements, the classification of revenues and expenses, and the nature of the secured
financing arrangements and associated liabilities.
Securities lending and repurchase agreements: Periodically we receive non-cash collateral for securities lending and
repurchase agreements from counterparties, which is not reflected on our consolidated financial statements. The amount of
this non-cash collateral was $1 million and $0 at estimated fair value at December 31, 2020 and 2019, respectively.
Third-party custodian administered repurchase programs: We loan certain of our fixed maturity securities AFS to
unaffiliated financial institutions and, in exchange, non-cash collateral is put on deposit by the unaffiliated financial
institutions on our behalf with third-party custodians. The estimated fair value of securities loaned in connection with these
transactions was $19 million and $85 million at December 31, 2020 and 2019, respectively. Non-cash collateral on deposit
with third-party custodians on our behalf was $20 million and $90 million, at estimated fair value, at December 31, 2020 and
2019, respectively, which cannot be sold or re-pledged, and which is not reflected on our consolidated financial statements.
Derivatives: We enter into derivatives to manage various risks relating to our ongoing business operations. We receive
non-cash collateral from counterparties for derivatives, which can be sold or re-pledged subject to certain constraints, and
which is not reflected on our consolidated balance sheets. The amount of this non-cash collateral was $1.7 billion at estimated
fair value, at both December 31, 2020 and 2019. See “— Liquidity and Capital Resources — The Company — Liquidity and
Capital Uses — Pledged Collateral” and Note 9 of the Notes to the Consolidated Financial Statements for information
regarding the earned income on and the gross notional amount, estimated fair value of assets and liabilities and primary
underlying risk exposure of our derivatives.
Investment Commitments
We enter into the following commitments in the normal course of business for the purpose of enhancing the total return
on our investment portfolio: mortgage loan commitments and commitments to fund partnerships, bank credit facilities, bridge
loans and private corporate bond investments. See Note 21 of the Notes to the Consolidated Financial Statements for further
information about these investment commitments. See “Net Investment Income” and “Net Investment Gains (Losses)” in
Note 8 of the Notes to the Consolidated Financial Statements for information on the investment income, investment expense,
gains and losses from such investments and the liability for credit loss for unfunded mortgage loan commitments. See also
“— Investments — Fixed Maturity Securities AFS and Equity Securities,” “— Investments — Mortgage Loans,” “—
Investments — Real Estate and Real Estate Joint Ventures” and “— Investments — Other Limited Partnership Interests.”
Lease Commitments
As lessee, we have entered into various lease and sublease agreements for office space and equipment. Our commitments
under such lease agreements are included within the contractual obligations table. See “— Liquidity and Capital Resources
— The Company — Contractual Obligations” and Note 11 of the Notes to the Consolidated Financial Statements.
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Guarantees
See “Guarantees” in Note 21 of the Notes to the Consolidated Financial Statements.
Insolvency Assessments
See Note 21 of the Notes to the Consolidated Financial Statements.
Policyholder Liabilities
We establish, and carry as liabilities, actuarially determined amounts that are calculated to meet policy obligations or to
provide for future annuity payments. Amounts for actuarial liabilities are computed and reported on the consolidated financial
statements in conformity with GAAP. For more details on Policyholder Liabilities, see “— Summary of Critical Accounting
Estimates.”
Due to the nature of the underlying risks and the uncertainty associated with the determination of actuarial liabilities, we
cannot precisely determine the amounts that will ultimately be paid with respect to these actuarial liabilities, and the ultimate
amounts may vary from the estimated amounts, particularly when payments may not occur until well into the future.
We periodically review our estimates of actuarial liabilities for future benefits and compare them with our actual
experience. We revise estimates, to the extent permitted or required under GAAP, if we determine that future expected
experience differs from assumptions used in the development of actuarial liabilities. We charge or credit changes in our
liabilities to expenses in the period the liabilities are established or re-estimated. If the liabilities originally established for
future benefit payments prove inadequate, we must increase them. Such an increase could adversely affect our earnings and
have a material adverse effect on our business, results of operations and financial condition.
We have experienced, and will likely in the future experience, catastrophe losses and possibly acts of terrorism, as well
as turbulent financial markets that may have an adverse impact on our business, results of operations and financial condition.
Due to their nature, we cannot predict the incidence, timing, severity or amount of losses from catastrophes and acts of
terrorism, but we make broad use of catastrophic and non-catastrophic reinsurance to manage risk from these perils. We also
use hedging, reinsurance and other risk management activities to mitigate financial market volatility.
See “Business — Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis” for further
information regarding required analyses of the adequacy of statutory reserves of our insurance operations.
Future Policy Benefits
We establish liabilities for amounts payable under insurance policies. See Notes 1 and 4 of the Notes to the Consolidated
Financial Statements for additional information. See also “— Industry Trends — Impact of a Sustained Low Interest Rate
Environment — Low Interest Rate Scenarios” and “— Variable Annuity Guarantees.” A discussion of future policy benefits
by segment (as well as Corporate & Other) follows.
U.S.
Amounts payable under insurance policies for this segment are comprised of group insurance and annuities. For group
insurance, future policyholder benefits are comprised mainly of liabilities for disabled lives under disability waiver of
premium policy provisions, liabilities for survivor income benefit insurance, active life policies and premium stabilization
and other contingency liabilities held under life insurance contracts. For group annuity contracts, future policyholder
benefits are primarily related to payout annuities, including pension risk transfers, structured settlement annuities and
institutional income annuities. There is no interest rate crediting flexibility on these liabilities. As a result, a sustained low
interest rate environment could negatively impact earnings; however, we mitigate our risks by applying various ALM
strategies, including the use of various interest rate derivative positions.
Asia
Future policy benefits for this segment are held primarily for traditional life, endowment, annuity and accident &
health contracts. They are also held for total return pass-through provisions included in certain universal life and savings
products. They include certain liabilities for variable annuity and variable life guarantees of minimum death benefits, and
longevity guarantees. Factors impacting these liabilities include sustained periods of lower than expected yields, lower than
expected asset reinvestment rates, market volatility, actual lapses resulting in lower than expected income, and actual
mortality or morbidity resulting in higher than expected benefit payments. We mitigate our risks by applying various ALM
strategies and by the use of reinsurance.
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Latin America
Future policy benefit liabilities for this segment are held primarily for immediate annuities, traditional life contracts
and total return pass-through provisions included in certain universal life and savings products. There is limited interest rate
crediting flexibility on the immediate annuity and traditional life liabilities. As a result, sustained periods of lower than
expected yields could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies.
Other factors impacting these liabilities are actual mortality resulting in higher than expected benefit payments and actual
lapses resulting in lower than expected income.
EMEA
Future policy benefits for this segment include unearned premium reserves for group life and medical and credit
insurance contracts. Future policy benefits are also held for traditional life, endowment and annuity contracts with
significant mortality risk and accident & health contracts. Factors impacting these liabilities include lower than expected
asset reinvestment rates, market volatility, actual lapses resulting in lower than expected income, and actual mortality or
morbidity resulting in higher than expected benefit payments. We mitigate our risks by having premiums which are
adjustable or cancellable in some cases, applying various ALM strategies and by the use of reinsurance.
MetLife Holdings
Future policy benefits for the life insurance business are comprised mainly of liabilities for traditional life insurance
contracts. In order to manage risk, we have often reinsured a portion of the mortality risk on life insurance policies. We
routinely evaluate our reinsurance programs, which may result in increases or decreases to existing coverage. We have
entered into various interest rate derivative positions to mitigate the risk that investment of premiums received and
reinvestment of maturing assets over the life of the policy will be at rates below those assumed in the original pricing of
these contracts. For the annuities business, future policy benefits are comprised mainly of liabilities for life-contingent
income annuities and liabilities for the variable annuity guaranteed minimum benefits that are accounted for as insurance.
For the long-term care business, future policyholder benefits are comprised mainly of liabilities for disabled lives under
disability waiver of premium policy provisions, and active life policies. In addition, for our other products, future
policyholder benefits related to the reinsurance of our former Japan joint venture are comprised of liabilities for the
variable annuity guaranteed minimum benefits that are accounted for as insurance.
Corporate & Other
Future policy benefits primarily include liabilities for other reinsurance business.
Policyholder Account Balances
Policyholder account balances are generally equal to the account value, which includes accrued interest credited, but
excludes the impact of any applicable charge that may be incurred upon surrender. See “— Industry Trends — Impact of a
Sustained Low Interest Rate Environment — Low Interest Rate Scenarios” and “— Variable Annuity Guarantees.” See also
Notes 1 and 4 of the Notes to the Consolidated Financial Statements for additional information. A discussion of policyholder
account balances by segment follows.
U.S.
Policyholder account balances in this segment are comprised of funding agreements, retained asset accounts, universal
life policies, the fixed account of variable life insurance policies and specialized life insurance products for benefit
programs.
Group Benefits
Policyholder account balances in this business are held for retained asset accounts, universal life policies, the fixed
account of variable life insurance policies and specialized life insurance products for benefit programs. Policyholder
account balances are credited interest at a rate we determine, which is influenced by current market rates. A sustained
low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate
guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to
partially mitigate the risks associated with such a scenario.
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The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Group
Benefits:
Guaranteed Minimum Crediting Rate
Greater than 0% but less than 2%
Equal to or greater than 2% but less than 4%
Equal to or greater than 4%
Retirement and Income Solutions
December 31, 2020
Account
Value
Account
Value at
Guarantee
(In millions)
5,029 $
1,629 $
780 $
4,903
1,593
752
$
$
$
Policyholder account balances in this business are held largely for investment-type products, mainly funding
agreements, as well as postretirement benefits and corporate-owned life insurance to fund non-qualified benefit programs
for executives. Interest crediting rates vary by type of contract and can be fixed or variable. Variable interest crediting
rates are generally tied to an external index, most commonly (1-month or 3-month) LIBOR or Secured Overnight
Financing Rate. We are exposed to interest rate risks, as well as foreign currency exchange rate risk, when guaranteeing
payment of interest and return of principal at the contractual maturity date. We may invest in floating rate assets or enter
into receive-floating interest rate swaps, also tied to external indices, as well as interest rate caps, to mitigate the impact
of changes in market interest rates. We also mitigate our risks by applying various ALM strategies and seek to hedge all
foreign currency exchange rate risk through the use of foreign currency hedges, including cross currency swaps.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for RIS:
Guaranteed Minimum Crediting Rate
Greater than 0% but less than 2%
Equal to or greater than 2% but less than 4%
Equal to or greater than 4%
Asia
December 31, 2020
Account
Value
Account
Value at
Guarantee
(In millions)
145 $
1,053 $
4,598 $
—
108
4,379
$
$
$
Policyholder account balances in this segment are held largely for fixed income retirement and savings plans, fixed
deferred annuities, interest sensitive whole life products, universal life and, to a lesser degree, liability amounts for Unit-
linked investments that do not meet the GAAP definition of separate accounts. Also included are certain liabilities for
retirement and savings products sold in certain countries in Asia that generally are sold with minimum credited rate
guarantees. Liabilities for guarantees on certain variable annuities in Asia are accounted for as embedded derivatives and
recorded at estimated fair value and are also included within policyholder account balances. A sustained low interest rate
environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in
most of these policyholder account balances. We mitigate our risks by applying various ALM strategies and with
reinsurance. Liabilities for Unit-linked investments are impacted by changes in the fair value of the associated underlying
investments, as the return on assets is generally passed directly to the policyholder.
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The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Asia:
Guaranteed Minimum Crediting Rate
Annuities
Greater than 0% but less than 2%
Equal to or greater than 2% but less than 4%
Equal to or greater than 4%
Life & Other
Greater than 0% but less than 2%
Equal to or greater than 2% but less than 4%
Equal to or greater than 4%
Latin America
December 31, 2020
Account
Value
Account
Value at
Guarantee
(In millions)
$
$
$
$
$
$
31,552 $
1,920
1,083 $
1 $
420
1
13,186 $
12,687
31,304 $
280 $
9,829
280
Policyholder account balances in this segment are held largely for investment-type products, universal life products,
deferred annuities and Unit-linked investments that do not meet the GAAP definition of separate accounts. Liabilities for
Unit-linked investments are impacted by changes in the fair value of the associated investments, as the return on assets is
generally passed directly to the policyholder. Many of the other liabilities have minimum credited rate guarantees, which
could adversely impact liabilities and earnings in a sustained low interest rate environment. We mitigate our risk by
applying various ALM strategies.
EMEA
Policyholder account balances in this segment are held mostly for universal life, deferred annuities, pension products,
and Unit-linked investments that do not meet the GAAP definition of separate accounts. They are also held for endowment
products without significant mortality risk. A sustained low interest rate environment could adversely impact liabilities and
earnings as a result of the minimum credited rate guarantees present in many of these policyholder account balances. We
mitigate our risks by applying various ALM strategies. Liabilities for Unit-linked investments are impacted by changes in
the fair value of the associated investments, as the return on assets is generally passed directly to the policyholder.
MetLife Holdings
Life policyholder account balances in this segment are held for retained asset accounts, universal life policies, the fixed
account of variable life insurance policies, and funding agreements. For annuities, policyholder account balances are held
for fixed deferred annuities, the fixed account portion of variable annuities, non-life contingent income annuities, and
embedded derivatives related to variable annuity guarantees. Interest is credited to the policyholder’s account at interest
rates we determine which are influenced by current market rates, subject to specified minimums. A sustained low interest
rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present
in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the
risks associated with such a scenario. Additionally, for our other products, policyholder account balances are held for
variable annuity guarantees assumed from a former operating joint venture in Japan that are accounted for as embedded
derivatives.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for the
MetLife Holdings segment:
Guaranteed Minimum Crediting Rate
Greater than 0% but less than 2%
Equal to or greater than 2% but less than 4%
Equal to or greater than 4%
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December 31, 2020
Account
Value
Account
Value at
Guarantee
(In millions)
1,280 $
17,806 $
7,619 $
1,238
16,074
6,789
$
$
$
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Variable Annuity Guarantees
We issue, directly and through assumed business, certain variable annuity products with guaranteed minimum benefits
that provide the policyholder a minimum return based on their initial deposit (i.e., the benefit base) less withdrawals. In some
cases, the benefit base may be increased by additional deposits, bonus amounts, accruals or optional market value resets. See
Notes 1 and 4 of the Notes to the Consolidated Financial Statements for additional information.
Certain guarantees, including portions thereof, have insurance liabilities established that are included in future policy
benefits. Guarantees accounted for in this manner include GMDBs, the life-contingent portion of GMWBs, elective GMIB
annuitizations, and the life contingent portion of GMIBs that require annuitization when the account balance goes to zero.
These liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments based
on the level of guaranteed minimum benefits generated using multiple scenarios of separate account returns. The scenarios
are based on best estimate assumptions consistent with those used to amortize DAC. When current estimates of future
benefits exceed those previously projected or when current estimates of future assessments are lower than those previously
projected, liabilities will increase, resulting in a current period charge to net income. The opposite result occurs when the
current estimates of future benefits are lower than those previously projected or when current estimates of future assessments
exceed those previously projected. At the end of each reporting period, we update the actual amount of business remaining
in-force, which impacts expected future assessments and the projection of estimated future benefits resulting in a current
period charge or increase to earnings.
Certain guarantees, including portions thereof, accounted for as embedded derivatives, are recorded at estimated fair
value and included in policyholder account balances. Guarantees accounted for as embedded derivatives include GMABs, the
non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs. The estimated fair values of
guarantees accounted for as embedded derivatives are determined based on the present value of projected future benefits
minus the present value of projected future fees. The projections of future benefits and future fees require capital market and
actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is
used to project the cash flows from the guarantees under multiple capital market scenarios to determine an economic liability.
The reported estimated fair value is then determined by taking the present value of these risk-free generated cash flows using
a discount rate that incorporates a spread over the risk-free rate to reflect our nonperformance risk and adding a risk margin.
For more information on the determination of estimated fair value, see Note 10 of the Notes to the Consolidated Financial
Statements.
The table below presents the carrying value for guarantees at:
Asia
GMDB
GMAB
GMWB
EMEA
GMDB
GMAB
GMWB
MetLife Holdings
GMDB
GMIB
GMAB
GMWB
Total
Future Policy
Benefits
December 31,
Policyholder
Account Balances
December 31,
2020
2019
2020
2019
(In millions)
$
6 $
—
3 $
—
35
6
—
31
450
954
—
179
34
3
—
15
335
756
—
125
— $
26
134
—
31
(23)
—
323
—
443
$
1,661 $
1,271 $
934 $
—
34
143
—
25
(62)
—
110
(1)
375
624
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The carrying amounts for guarantees included in policyholder account balances above include nonperformance risk
adjustments of $137 million and $147 million at December 31, 2020 and 2019, respectively. These nonperformance risk
adjustments represent the impact of including a credit spread when discounting the underlying risk neutral cash flows to
determine the estimated fair values. The nonperformance risk adjustment does not have an economic impact on us as it
cannot be monetized given the nature of these policyholder liabilities. The change in valuation arising from the
nonperformance risk adjustment is not hedged.
The carrying values of these guarantees can change significantly during periods of sizable and sustained shifts in equity
market performance, equity volatility, interest rates or foreign currency exchange rates. Carrying values are also impacted by
our assumptions around mortality, separate account returns and policyholder behavior, including lapse rates.
As discussed below, we use a combination of product design, hedging strategies, reinsurance, and other risk management
actions to mitigate the risks related to these benefits. Within each type of guarantee, there is a range of product offerings
reflecting the changing nature of these products over time. Changes in product features and terms are in part driven by
customer demand but, more importantly, reflect our risk management practices of continuously evaluating the guaranteed
benefits and their associated asset-liability matching. We continue to diversify the concentration of income benefits in our
portfolio by focusing on withdrawal benefits, variable annuities without living benefits and index-linked annuities.
The sections below provide further detail by total account value for certain of our most popular guarantees. Total account
values include amounts not reported on the consolidated balance sheets from assumed business, Unit-linked investments that
do not qualify for presentation as separate account assets, and amounts included in our general account. The total account
values and the net amounts at risk include direct and assumed business, but exclude offsets from hedging or ceded
reinsurance, if any.
GMDBs
We offer a range of GMDBs to our contractholders. The table below presents GMDBs, by benefit type, at
December 31, 2020:
Return of premium or five to seven year step-up
Annual step-up
Roll-up and step-up combination
Total
__________________
Total Account Value (1)
Asia & EMEA
MetLife
Holdings
(In millions)
8,075 $
48,037
—
—
3,209
5,617
8,075 $
56,863
$
$
(1)
Total account value excludes $603 million for contracts with no GMDBs. The Company’s annuity contracts with
guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and
for living benefit guarantees are not mutually exclusive.
Based on total account value, less than 18% of our GMDBs included enhanced death benefits such as the annual step-
up or roll-up and step-up combination products at December 31, 2020.
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Living Benefit Guarantees
The table below presents our living benefit guarantees based on total account values at December 31, 2020:
GMIB
GMWB - non-life contingent (2)
GMWB - life-contingent
GMAB
Total
__________________
Total Account Value (1)
Asia & EMEA
MetLife
Holdings
(In millions)
$
— $
21,229
1,153
3,494
1,879
2,397
9,235
186
$
6,526 $
33,047
(1)
(2)
Total account value excludes $26.0 billion for contracts with no living benefit guarantees. The Company’s annuity
contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for
GMDBs and for living benefit guarantee amounts are not mutually exclusive.
The Asia and EMEA segments include the non-life contingent portion of the GMWB total account value of
$1.2 billion with a guarantee at annuitization.
In terms of total account value, GMIBs are our most significant living benefit guarantee. Our primary risk management
strategy for our GMIB products is our derivatives hedging program as discussed below. Additionally, we have engaged in
certain reinsurance agreements covering some of our GMIB business. As part of our overall risk management approach for
living benefit guarantees, we continually monitor the reinsurance markets for the right opportunity to purchase additional
coverage for our GMIB business. We stopped selling GMIBs in February 2016.
The table below presents our GMIB associated total account values, by their guaranteed payout basis, at December 31,
2020:
7-year setback, 2.5% interest rate
7-year setback, 1.5% interest rate
10-year setback, 1.5% interest rate
10-year mortality projection, 10-year setback, 1.0% interest rate
10-year mortality projection, 10-year setback, 0.5% interest rate
Total
Account Value
(In millions)
$
6,249
1,008
4,282
8,234
1,456
$
21,229
The annuitization interest rates on GMIBs have been decreased from 2.5% to 0.5% over time, partially in response to
the low interest rate environment, accompanied by an increase in the setback period from seven years to 10 years and the
introduction of a 10-year mortality projection.
Additionally, 40% of the $21.2 billion of GMIB total account value has been invested in managed volatility funds as
of December 31, 2020. These funds seek to manage volatility by adjusting the fund holdings within certain guidelines
based on capital market movements. Such activity reduces the overall risk of the underlying funds while maintaining their
growth opportunities. These risk mitigation techniques reduce or eliminate the need for us to manage the funds’ volatility
through hedging or reinsurance.
Our GMIB products typically have a waiting period of 10 years to be eligible for annuitization. As of December 31,
2020, only 26% of our contracts with GMIBs were eligible for annuitization. The remaining contracts are not eligible for
annuitization for an average of three years.
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Once eligible for annuitization, contractholders would be expected to annuitize only if their contracts were in-the-
money. We calculate in-the-moneyness with respect to GMIBs consistent with net amount at risk as discussed in Note 4 of
the Notes to the Consolidated Financial Statements, by comparing the contractholders’ income benefits based on total
account values and current annuity rates versus the guaranteed income benefits. The net amount at risk was $614 million at
December 31, 2020, of which $552 million was related to GMIBs. For those contracts with GMIB, the table below presents
details of contracts that are in-the-money and out-of-the-money at December 31, 2020:
In-the-money
Out-of-the-money
In-the-Moneyness
30% or greater
$
20% to less than 30%
10% to less than 20%
0% to less than 10%
-10% to 0%
-20% to less than -10%
Greater than -20%
Total GMIBs
$
Derivatives Hedging Variable Annuity Guarantees
Total
Account Value
(In millions)
% of Total
549
340
538
1,162
2,589
2,319
4,154
12,167
18,640
21,229
3 %
2 %
2 %
5 %
11 %
20 %
57 %
Our risk mitigating hedging strategy uses various OTC and exchange traded derivatives. The table below presents the
gross notional amount, estimated fair value and primary underlying risk exposure of the derivatives hedging our variable
annuity guarantees:
Primary Underlying
Risk Exposure
Interest rate
Foreign currency exchange
rate
Equity market
December 31,
2020
2019
Instrument Type
Amount
Assets
Liabilities
Amount
Assets
Liabilities
Gross Notional
Estimated Fair Value
Gross Notional
Estimated Fair Value
Interest rate swaps
$
14,188 $
85 $
21 $
8,639 $
73 $
(In millions)
Interest rate futures
Interest rate options
Foreign currency
forwards
Currency options
Equity futures
Equity index options
Equity variance swaps
Equity total return
swaps
Total
1,442
637
1,834
—
4,891
5,360
716
—
134
27
—
12
558
15
1,533
3
2
—
13
—
38
408
12
124
1,678
838
1,644
1
4,127
8,775
1,115
3
209
16
—
5
473
23
761
—
$
30,601 $
834 $
618 $
27,578 $
802 $
16
3
—
24
—
8
667
19
70
807
The change in estimated fair values of our derivatives is recorded in policyholder benefits and claims if such
derivatives are hedging guarantees included in future policy benefits, and in net derivative gains (losses) if such derivatives
are hedging guarantees included in policyholder account balances.
Our hedging strategy involves the significant use of static longer-term derivative instruments to avoid the need to
execute transactions during periods of market disruption or higher volatility. We continually monitor the capital markets
for opportunities to adjust our liability coverage, as appropriate. Futures are also used to dynamically adjust the daily
coverage levels as markets and liability exposures fluctuate.
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We remain liable for the guaranteed benefits in the event that reinsurers or derivative counterparties are unable or
unwilling to pay. Certain of our reinsurance agreements and all derivative positions are collateralized and derivatives
positions are subject to master netting agreements, both of which significantly reduce the exposure to counterparty risk. In
addition, we are subject to the risk that hedging and other risk management actions prove ineffective or that unanticipated
policyholder behavior or mortality, combined with adverse market events, produces economic losses beyond the scope of
the risk management techniques employed.
Liquidity and Capital Resources
Overview
Our business and results of operations are materially affected by conditions in the global capital markets and the
economy generally. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial
asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance
liabilities and derivatives are sensitive to changing market factors. Changing conditions in the global capital markets and the
economy may affect our financing costs and market interest for our debt or equity securities. For further information
regarding market factors that could affect our ability to meet liquidity and capital needs, see “— Industry Trends” and “—
Investments — Current Environment.”
Liquidity Management
Based upon the strength of our franchise, diversification of our businesses, strong financial fundamentals and the
substantial funding sources available to us as described herein, we continue to believe we have access to ample liquidity to
meet business requirements under current market conditions and reasonably possible stress scenarios. We continuously
monitor and adjust our liquidity and capital plans for MetLife, Inc. and its subsidiaries in light of market conditions, as well
as changing needs and opportunities.
Short-term Liquidity
We maintain a substantial short-term liquidity position, which was $9.4 billion and $9.8 billion at December 31,
2020 and 2019, respectively. Short-term liquidity includes cash and cash equivalents and short-term investments,
excluding assets that are pledged or otherwise committed, including amounts received in connection with securities
lending, repurchase agreements, derivatives, and secured borrowings, as well as amounts held in the closed block.
Liquid Assets
An integral part of our liquidity management includes managing our level of liquid assets, which was $235.1 billion
and $221.4 billion at December 31, 2020 and 2019, respectively. Liquid assets include cash and cash equivalents, short-
term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed. Assets
pledged or otherwise committed include amounts received in connection with securities lending, repurchase agreements,
derivatives, regulatory deposits, the collateral financing arrangement, funding agreements and secured borrowings, as
well as amounts held in the closed block.
Capital Management
We have established several senior management committees as part of our capital management process. These
committees, including the Capital Management Committee and the Enterprise Risk Committee (“ERC”), regularly review
actual and projected capital levels (under a variety of scenarios including stress scenarios) and our annual capital plan in
accordance with our capital policy. The Capital Management Committee is comprised of members of senior management,
including MetLife, Inc.’s Chief Financial Officer (“CFO”), Treasurer, and Chief Risk Officer (“CRO”). The ERC is also
comprised of members of senior management, including MetLife, Inc.’s CFO, CRO and Chief Investment Officer.
Our Board of Directors and senior management are directly involved in the development and maintenance of our
capital policy. The capital policy sets forth, among other things, minimum and target capital levels and the governance of
the capital management process. All capital actions, including proposed changes to the annual capital plan, capital targets
or capital policy, are reviewed by the Finance and Risk Committee of the Board of Directors prior to obtaining full Board
of Directors approval. The Board of Directors approves the capital policy and the annual capital plan and authorizes capital
actions, as required.
See “Risk Factors — Capital Risks — We May not be Able to Pay Dividends or Repurchase Our Stock Due to Legal
and Regulatory Restrictions or Cash Buffer Needs” for information regarding restrictions on payment of dividends and
stock repurchases. See also Note 16 of the Notes to the Consolidated Financial Statements for information regarding
MetLife, Inc.’s common stock repurchase authorizations.
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The Company
Liquidity
Liquidity refers to the ability to generate adequate amounts of cash to meet our needs. We determine our liquidity
needs based on a rolling 12-month forecast by portfolio of invested assets which we monitor daily. We adjust the asset mix
and asset maturities based on this rolling 12-month forecast. To support this forecast, we conduct cash flow and stress
testing, which include various scenarios of the potential risk of early contractholder and policyholder withdrawal. We
include provisions limiting withdrawal rights on many of our products, including general account pension products sold to
employee benefit plan sponsors. Certain of these provisions prevent the customer from making withdrawals prior to the
maturity date of the product. In the event of significant cash requirements beyond anticipated liquidity needs, we have
various alternatives available depending on market conditions and the amount and timing of the liquidity need. These
available alternatives include cash flows from operations, sales of liquid assets, global funding sources including
commercial paper and various credit and committed facilities.
Under certain stressful market and economic conditions, our access to liquidity may deteriorate, or the cost to access
liquidity may increase. A downgrade in our credit or financial strength ratings could also negatively affect our
liquidity. See “— Rating Agencies.” If we require significant amounts of cash on short notice in excess of anticipated cash
requirements or if we are required to post or return cash collateral in connection with derivatives or our securities lending
program, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise
would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss
position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell
securities prior to recovery, which may negatively impact our financial condition. See “Risk Factors — Investment Risks
— We May Have Difficulty Selling Holdings in Our Investment Portfolio or in Our Securities Lending Program in a
Timely Manner to Realize Their Full Value.”
All general account assets within a particular legal entity — other than those which may have been pledged to a
specific purpose — are generally available to fund obligations of the general account of that legal entity.
Capital
We manage our capital position to maintain our financial strength and credit ratings. See “— Rating Agencies” for
information regarding such ratings. Our capital position is supported by our ability to generate strong cash flows within our
operating companies and borrow funds at competitive rates, as well as by our demonstrated ability to raise additional
capital to meet operating and growth needs despite adverse market and economic conditions.
Statutory Capital and Dividends
Our U.S. insurance subsidiaries have statutory surplus well above levels to meet current regulatory requirements.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to
identify companies that merit regulatory action. RBC is based on a formula calculated by applying factors to various
asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the
insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on an annual
basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for
purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to most of our
U.S. insurance subsidiaries. State insurance laws provide insurance regulators the authority to require various actions by,
or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. As of
the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital
of each of these subsidiaries subject to these requirements was in excess of each of those RBC levels.
As a Delaware corporation, American Life is subject to Delaware law; however, because it does not conduct
insurance business in Delaware or any other U.S. state, it is exempt from RBC requirements under Delaware law.
American Life’s operations are also regulated by applicable authorities of the jurisdictions in which it operates and is
subject to capital and solvency requirements in those jurisdictions.
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The amount of dividends that our insurance subsidiaries can pay to MetLife, Inc. or to other parent entities is
constrained by the amount of surplus we hold to maintain our ratings, which provides an additional margin for risk
protection and investment in our businesses. We proactively take actions to maintain capital consistent with these ratings
objectives, which may include adjusting dividend amounts and deploying financial resources from internal or external
sources of capital. Certain of these activities may require regulatory approval. Furthermore, the payment of dividends
and other distributions to MetLife, Inc. and other parent entities by their respective insurance subsidiaries is governed by
insurance laws and regulations. See “Business — Regulation — Insurance Regulation,” “— MetLife, Inc. — Liquidity
and Capital Sources — Dividends from Subsidiaries” and Note 16 of the Notes to the Consolidated Financial Statements.
Affiliated Captive Reinsurance Transactions
MLIC cedes specific policy classes, including term and universal life insurance, participating whole life insurance,
LTD insurance, group life insurance and other business to various wholly-owned captive reinsurers. The reinsurance
activities among these affiliated companies are eliminated within our consolidated results of operations. The statutory
reserves of such affiliated captive reinsurers are supported by a combination of funds withheld assets, investment assets
and letters of credit issued by unaffiliated financial institutions. MetLife, Inc. has entered into various support
agreements in connection with the activities of these captive reinsurers. See Note 5 of the Notes to the MetLife, Inc.
(Parent Company Only) Condensed Financial Information included in Schedule II of the Financial Statement Schedules
for further details on certain of these support arrangements. MLIC has entered into reinsurance agreements with affiliated
captive reinsurers for risk and capital management purposes, as well as to manage statutory reserve requirements related
to universal life and term life insurance policies and other business.
The NYDFS continues to have a moratorium on new reserve financing transactions involving captive insurers. We
are not aware of any states other than New York and California implementing such a moratorium. While such a
moratorium would not impact our existing reinsurance agreements with captive reinsurers, a moratorium placed on the
use of captives for new reserve financing transactions could impact our ability to write certain products and/or impact
our RBC ratios and ability to deploy excess capital in the future. This could result in our need to increase prices, modify
product features or limit the availability of those products to our customers. While this affects insurers across the
industry, it could adversely impact our competitive position and our results of operations in the future. We continue to
evaluate product modifications, pricing structure and alternative means of managing risks, capital and statutory reserves
and we expect the discontinued use of captive reinsurance on new reserve financing transactions would not have a
material impact on our future consolidated financial results. See Note 6 of the Notes to the Consolidated Financial
Statements for further information on our reinsurance activities.
Rating Agencies
Rating agencies assign insurer financial strength ratings to MetLife, Inc.’s U.S. life insurance subsidiaries and credit
ratings to MetLife, Inc. and certain of its subsidiaries. Financial strength ratings represent the opinion of rating agencies
regarding the ability of an insurance company to pay obligations under insurance policies and contracts in accordance with
their terms and are not evaluations directed toward the protection of investors in MetLife, Inc.’s securities. Insurer financial
strength ratings are not statements of fact nor are they recommendations to purchase, hold or sell any security, contract or
policy. Each rating should be evaluated independently of any other rating.
Rating agencies use an “outlook statement” of “positive,” “stable,” ‘‘negative’’ or “developing” to indicate a medium-
or long-term trend in credit fundamentals which, if continued, may lead to a rating change. A rating may have a “stable”
outlook to indicate that the rating is not expected to change; however, a “stable” rating does not preclude a rating agency
from changing a rating at any time, without notice. Certain rating agencies assign rating modifiers such as “CreditWatch”
or “under review” to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are
generally assigned in connection with certain events such as potential mergers, acquisitions, dispositions or material
changes in a company’s results, in order for the rating agency to perform its analysis to fully determine the rating
implications of the event.
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Our insurer financial strength ratings at the date of this filing are indicated in the following table. Outlook is stable
unless otherwise indicated. Additional information about financial strength ratings can be found on the websites of the
respective rating agencies.
Ratings Structure
American Life Insurance Company
Metropolitan Life Insurance Company
MetLife Insurance K.K. (MetLife Japan)
Metropolitan Tower Life Insurance Company
__________________
NR = Not rated
A.M. Best
Fitch
Moody’s
“A++ (superior)”
to “S (suspended)”
“AAA
(exceptionally
strong)” to “C
(distressed)”
“Aaa (highest
quality)” to “C
(lowest rated)”
S&P
“AAA (extremely
strong)” to “SD
(Selective
Default)” or “D
(Default)”
NR
A+
NR
AA-
2nd of 16
4th of 19
NR
A+
NR
AA-
A1
5th of 21
Aa3
4th of 21
NR
Aa3
2nd of 16
4th of 19
4th of 21
AA-
4th of 22
AA-
4th of 22
AA-
4th of 22
AA-
4th of 22
Credit ratings indicate the rating agency’s opinion regarding a debt issuer’s ability to meet the terms of debt
obligations in a timely manner. They are important factors in our overall funding profile and ability to access certain types
of liquidity. The level and composition of regulatory capital at the subsidiary level and our equity capital are among the
many factors considered in determining our insurer financial strength ratings and credit ratings. Each agency has its own
capital adequacy evaluation methodology, and assessments are generally based on a combination of factors. In addition to
heightening the level of scrutiny that they apply to insurance companies, rating agencies have increased and may continue
to increase the frequency and scope of their credit reviews, may request additional information from the companies that
they rate and may adjust upward the capital and other requirements employed in the rating agency models for maintenance
of certain ratings levels.
A downgrade in the credit ratings or insurer financial strength ratings of MetLife, Inc. or its subsidiaries would likely
impact us in the following ways, including:
• impact our ability to generate cash flows from the sale of funding agreements and other capital market products
offered by our RIS business;
• impact the cost and availability of financing for MetLife, Inc. and its subsidiaries; and
• result in additional collateral requirements or other required payments under certain agreements, which are eligible
to be satisfied in cash or by posting investments held by the subsidiaries subject to the agreements. See “— Liquidity and
Capital Uses — Pledged Collateral.”
See also “Risk Factors — Economic Environment and Capital Markets Risks — We May Lose Business Due to a
Downgrade or a Potential Downgrade in Our Financial Strength or Credit Ratings.”
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Summary of the Company’s Primary Sources and Uses of Liquidity and Capital
Our primary sources and uses of liquidity and capital are summarized as follows:
Sources:
Operating activities, net
Net change in policyholder account balances
Net change in payables for collateral under securities loaned and other transactions
Cash received for other transactions with tenors greater than three months
Long-term debt issued
Preferred stock issued, net of issuance costs
Other, net
Effect of change in foreign currency exchange rates on cash and cash equivalents
Total sources
Uses:
Investing activities, net
Cash paid for other transactions with tenors greater than three months
Long-term debt repaid
Collateral financing arrangement repaid
Financing element on certain derivative instruments and other derivative related transactions, net
Treasury stock acquired in connection with share repurchases
Redemption of preferred stock
Preferred stock redemption premium
Dividends on preferred stock
Dividends on common stock
Other, net
Total uses
Net increase (decrease) in cash and cash equivalents
Cash Flows from Operations
Years Ended December 31,
2020
2019
(In millions)
$
11,639 $
13,786
8,246
3,538
150
1,124
1,961
191
163
6,524
2,019
125
1,382
—
—
9
27,012
23,845
18,569
17,586
175
99
148
46
1,151
989
14
202
1,657
—
23,050
$
3,962 $
200
906
67
126
2,285
—
—
178
1,643
77
23,068
777
The principal cash inflows from our insurance activities come from insurance premiums, net investment income,
annuity considerations and deposit funds. The principal cash outflows are the result of various life insurance,
property and casualty, annuity and pension products, operating expenses and income tax, as well as interest expense. A
primary liquidity concern with respect to these cash flows is the risk of early contractholder and policyholder
withdrawal.
Cash Flows from Investments
The principal cash inflows from our investment activities come from repayments of principal, proceeds from
maturities and sales of investments and settlements of freestanding derivatives. The principal cash outflows relate to
purchases of investments, issuances of policy loans and settlements of freestanding derivatives. Additional cash outflows
relate to purchases of businesses. We typically have a net cash outflow from investing activities because cash inflows
from insurance operations are reinvested in accordance with our ALM discipline to fund insurance liabilities. We closely
monitor and manage these risks through our comprehensive investment risk management process. The primary liquidity
concerns with respect to these cash flows are the risk of default by debtors and market disruption.
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Cash Flows from Financing
The principal cash inflows from our financing activities come from issuances of debt and other securities, deposits
of funds associated with policyholder account balances and lending of securities. The principal cash outflows come from
repayments of debt and the collateral financing arrangement, payments of dividends on and repurchases or redemptions
of MetLife, Inc.’s securities, withdrawals associated with policyholder account balances and the return of securities on
loan. The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early
contractholder and policyholder withdrawal.
Liquidity and Capital Sources
In addition to the general description of liquidity and capital sources in “— Summary of the Company’s Primary
Sources and Uses of Liquidity and Capital,” the Company’s primary sources of liquidity and capital are set forth below.
Global Funding Sources
Liquidity is provided by a variety of global funding sources, including funding agreements, credit and committed
facilities and commercial paper. Capital is provided by a variety of global funding sources, including short-term and
long-term debt, the collateral financing arrangement, junior subordinated debt securities, preferred securities, equity
securities and equity-linked securities. MetLife, Inc. maintains a shelf registration statement with the SEC that permits
the issuance of public debt, equity and hybrid securities. As a “Well-Known Seasoned Issuer” under SEC rules, MetLife,
Inc.’s shelf registration statement provides for automatic effectiveness upon filing and has no stated issuance capacity.
The diversity of our global funding sources enhances our funding flexibility, limits dependence on any one market or
source of funds and generally lowers the cost of funds. Our primary global funding sources include:
Preferred Stock
See Note 16 of the Notes to the Consolidated Financial Statements for information on preferred stock issuances.
Common Stock
See Note 16 of the Notes to the Consolidated Financial Statements.
Commercial Paper, Reported in Short-term Debt
MetLife, Inc. and MetLife Funding each have a commercial paper program that is supported by our unsecured
revolving credit facility (see “— Credit and Committed Facilities”). MetLife Funding raises cash from its commercial
paper program and uses the proceeds to extend loans through MetLife Credit Corp., another subsidiary of MLIC, to
affiliates in order to enhance the financial flexibility and liquidity of these companies.
FHLB Funding Agreements, Reported in Policyholder Account Balances
Certain of our U.S. insurance subsidiaries are members of a regional FHLB. For the years ended December 31,
2020 and 2019, we issued $35.4 billion and $33.0 billion, respectively, and repaid $34.5 billion and $32.8 billion,
respectively, of funding agreements with certain regional FHLBs. At December 31, 2020 and 2019, total obligations
outstanding under these funding agreements were $16.3 billion and $15.3 billion, respectively. See Note 4 of the Notes
to the Consolidated Financial Statements.
FHLB Advance Agreements, Reported in Payables for Collateral Under Securities Loaned and Other Transactions
For the years ended December 31, 2020 and 2019, we borrowed $2.8 billion and $3.0 billion, respectively, and
repaid $2.9 billion and $3.0 billion, respectively, under advance agreements with the FHLB of Boston. At
December 31, 2020, total obligations outstanding under these advance agreements were $700 million and reported in
liabilities held-for-sale. At December 31, 2019, total obligations outstanding under these advance agreements were
$800 million and reported in payables for collateral under securities loaned and other transactions. See Note 3 of the
Notes to the Consolidated Financial Statements for information on the pending disposition of MetLife P&C.
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Special Purpose Entity Funding Agreements, Reported in Policyholder Account Balances
We issue fixed and floating rate funding agreements which are denominated in either U.S. dollars or foreign
currencies, to certain unconsolidated special purpose entities that have issued either debt securities or commercial
paper for which payment of interest and principal is secured by such funding agreements. For the years ended
December 31, 2020 and 2019, we issued $40.4 billion and $37.3 billion, respectively, and repaid $36.7 billion and
$36.4 billion, respectively, under such funding agreements. At December 31, 2020 and 2019, total obligations
outstanding under these funding agreements were $39.9 billion and $34.6 billion, respectively. See Note 4 of the Notes
to the Consolidated Financial Statements.
Federal Agricultural Mortgage Corporation Funding Agreements, Reported in Policyholder Account Balances
We have issued funding agreements to a subsidiary of Farmer Mac which are secured by a pledge of certain
eligible agricultural mortgage loans. For the years ended December 31, 2020 and 2019, we issued $250 million and
$700 million, respectively, and repaid $425 million and $700 million, respectively, under such funding agreements. At
December 31, 2020 and 2019, total obligations outstanding under these funding agreements were $2.4 billion and
$2.6 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements.
Debt Issuances
See “— Liquidity and Capital Uses — Debt Repurchases, Redemptions and Exchanges” and Note 13 of the Notes
to the Consolidated Financial Statements for information on senior note redemptions and issuances.
Credit and Committed Facilities
See Note 13 of the Notes to the Consolidated Financial Statements for information on credit and committed
facilities.
We have no reason to believe that our lending counterparties will be unable to fulfill their respective contractual
obligations under these facilities. As commitments under our credit and committed facilities may expire unused, these
amounts do not necessarily reflect our actual future cash funding requirements.
Outstanding Debt Under Global Funding Sources
The following table summarizes our outstanding debt excluding long-term debt relating to CSEs at:
Short-term debt (1)
Long-term debt (2)
Collateral financing arrangement
Junior subordinated debt securities
__________________
December 31,
2020
2019
(In millions)
$
$
$
$
393 $
235
14,598 $
13,461
845 $
3,153 $
993
3,150
(1)
(2)
Includes $293 million and $136 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary
exceptions, at December 31, 2020 and 2019, respectively. Certain subsidiaries have pledged assets to secure this debt.
Includes $474 million and $403 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary
exceptions, at December 31, 2020 and 2019, respectively. Certain investment subsidiaries have pledged assets to
secure this debt.
Debt and Facility Covenants
Certain of our debt instruments and committed facilities, as well as our unsecured revolving credit facility, contain
various administrative, reporting, legal and financial covenants. We believe we were in compliance with all applicable
financial covenants at December 31, 2020.
Dispositions
For information regarding pending and other dispositions, see Note 3 of the Notes to the Consolidated Financial
Statements.
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Liquidity and Capital Uses
In addition to the general description of liquidity and capital uses in “— Summary of the Company’s Primary Sources
and Uses of Liquidity and Capital” and “— Contractual Obligations,” the Company’s primary uses of liquidity and capital
are set forth below.
Preferred Stock Redemption
See Note 16 of the Notes to the Consolidated Financial Statements for information about the partial redemption of
Series C preferred stock.
Common Stock Repurchases
See Note 16 of the Notes to the Consolidated Financial Statements for information relating to authorizations by the
Board of Directors to repurchase MetLife, Inc. common stock, amounts of common stock repurchased pursuant to such
authorizations for the years ended December 31, 2020 and 2019, and the amount remaining under such authorizations at
December 31, 2020.
Common stock repurchases are subject to the discretion of our Board of Directors and will depend upon our capital
position, liquidity, financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.’s
common stock compared to management’s assessment of the stock’s underlying value, applicable regulatory approvals,
and other legal and accounting factors. Restrictions on the payment of dividends that may arise under so-called
“Dividend Stopper” provisions would also restrict MetLife, Inc.’s ability to repurchase common stock. See “—
Dividends” for information about these restrictions. See also “Risk Factors — Capital Risks — We May not be Able to
Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer Needs.”
Dividends
For the years ended December 31, 2020 and 2019, MetLife, Inc. paid dividends on its preferred stock of
$202 million and $178 million, respectively. For the years ended December 31, 2020 and 2019, MetLife, Inc. paid
dividends on its common stock of $1.7 billion and $1.6 billion, respectively. See Note 16 of the Notes to the
Consolidated Financial Statements for information regarding the calculation and timing of these dividend payments.
The declaration and payment of common stock dividends are subject to the discretion of our Board of Directors, and
will depend on MetLife, Inc.’s financial condition, results of operations, cash requirements, future prospects, regulatory
restrictions on the payment of dividends by MetLife, Inc.’s insurance subsidiaries and other factors deemed relevant by
the Board.
“Dividend Stopper” Provisions in MetLife’s Preferred Stock and Junior Subordinated Debentures
MetLife, Inc.’s preferred stock and junior subordinated debentures contain “dividend stopper” provisions under
which MetLife, Inc. may not pay dividends on instruments junior to those instruments if payments have not been made
on those instruments. Moreover, MetLife, Inc.’s Series A preferred stock and its junior subordinated debentures
contain provisions that would limit the payment of dividends or interest on those instruments if MetLife, Inc. fails to
meet certain tests (“Trigger Events”), to an amount not greater than the net proceeds from sales of common stock and
other specified instruments during a period preceding the dividend declaration date or the interest payment date, as
applicable. If such proceeds were under the circumstances insufficient to make such payments on those instruments,
the dividend stopper provisions affecting common stock (and preferred stock, as applicable) would come into effect.
A “Trigger Event” would occur if:
•
•
the RBC ratio of MetLife’s largest U.S. insurance subsidiaries in the aggregate (as defined in the applicable
instrument) were to be less than 175% of the company action level based on the subsidiaries’ prior year annual
financial statements filed (generally around March 1) with state insurance commissioners; or
at the end of a quarter (“Final Quarter End Test Date”), consolidated GAAP net income for the four-quarter period
ending two quarters before such quarter-end (the “Preliminary Quarter End Test Date”) is zero or a negative amount
and the consolidated GAAP stockholders’ equity, minus AOCI (the “adjusted stockholders’ equity amount”), as of
the Final Quarter End Test Date and the Preliminary Quarter End Test Date, declined by 10% or more from its level
10 quarters before the Final Quarter End Test Date (the “Benchmark Quarter End Test Date”).
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Once a Trigger Event occurs for a Final Quarter End Test Date, the suspension of payments of dividends and
interest (in the absence of sufficient net proceeds from the issuance of certain securities during specified periods)
would continue until there is no Trigger Event at a subsequent Final Quarter End Test Date, and, if the test in the
second paragraph above caused the Trigger Event, the adjusted stockholders’ equity amount is no longer 10% or more
below its level at the Benchmark Quarter End Test Date that is associated with the Trigger Event. In the case of
successive Trigger Events, the suspension would continue until MetLife satisfies these conditions for each of the
Trigger Events.
The junior subordinated debentures further provide that MetLife, Inc. may, at its option and provided that certain
conditions are met, elect to defer payment of interest. See Note 15 of the Notes to the Consolidated Financial
Statements. Any such elective deferral would trigger the dividend stopper provisions.
Further, MetLife, Inc. is a party to certain replacement capital covenants which limit its ability to eliminate these
restrictions through the repayment, redemption or purchase of the junior subordinated debentures by requiring
MetLife, Inc., with some limitations, to receive cash proceeds during a specified period from the sale of specified
replacement securities prior to any repayment, redemption or purchase. See Note 15 of the Notes to the Consolidated
Financial Statements for a description of such covenants.
Debt Repayments
For the years ended December 31, 2020 and 2019, following regulatory approval, MetLife Reinsurance Company of
Charleston, a wholly-owned subsidiary of MetLife, Inc., repurchased and canceled $148 million and $67 million,
respectively, in aggregate principal amount of its surplus notes, which were reported in collateral financing arrangement
on the consolidated balance sheets. See Notes 13 and 14 of the Notes to the Consolidated Financial Statements for
further information on long-term and short-term debt and the collateral financing arrangement, respectively.
Debt Repurchases, Redemptions and Exchanges
We may from time to time seek to retire or purchase our outstanding debt through cash purchases, redemptions and/
or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Any such
repurchases, redemptions, or exchanges will be dependent upon several factors, including our liquidity requirements,
contractual restrictions, general market conditions, and applicable regulatory, legal and accounting factors. Whether or
not to repurchase or redeem any debt and the size and timing of any such repurchases or redemptions will be determined
at our discretion.
See Note 13 of the Notes to the Consolidated Financial Statements for further information on the redemption and
cancellation of senior notes.
Support Agreements
MetLife, Inc. and several of its subsidiaries (each, an “Obligor”) are parties to various capital support commitments
and guarantees with subsidiaries. Under these arrangements, each Obligor has agreed to cause the applicable entity to
meet specified capital and surplus levels or has guaranteed certain contractual obligations. We anticipate that in the event
these arrangements place demands upon us, there will be sufficient liquidity and capital to enable us to meet such
demands. See Note 5 of the Notes to the MetLife, Inc. (Parent Company Only) Condensed Financial Information
included in Schedule II of the Financial Statement Schedules.
Insurance Liabilities
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance,
property and casualty, annuity and group pension products, as well as payments for policy surrenders, withdrawals and
loans. For annuity or deposit type products, surrender or lapse behavior differs somewhat by segment. In the MetLife
Holdings segment, which includes individual annuities, lapses and surrenders tend to occur in the normal course of
business. For the years ended December 31, 2020 and 2019, general account surrenders and withdrawals from annuity
products were $1.3 billion and $1.8 billion, respectively. In the RIS business within the U.S. segment, which includes
pension risk transfers, bank-owned life insurance and other fixed annuity contracts, as well as funding agreements and
other capital market products, most of the products offered have fixed maturities or fairly predictable surrenders or
withdrawals. With regard to the RIS business products that provide customers with limited rights to accelerate payments,
at December 31, 2020, there were funding agreements totaling $132 million that could be put back to the Company.
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Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At
December 31, 2020 and 2019, we had received pledged cash collateral from counterparties of $7.6 billion and
$6.3 billion, respectively. At December 31, 2020 and 2019, we had pledged cash collateral to counterparties of
$266 million and $275 million, respectively. See Note 9 of the Notes to the Consolidated Financial Statements for
additional information about collateral pledged to us, collateral we pledge and derivatives subject to credit contingent
provisions.
We pledge collateral and have had collateral pledged to us, and may be required from time to time to pledge
additional collateral or be entitled to have additional collateral pledged to us, in connection with the collateral financing
arrangement related to the reinsurance of closed block liabilities. See Note 14 of the Notes to the Consolidated Financial
Statements.
We pledge collateral from time to time in connection with funding agreements and advance agreements. See Note 4
of the Notes to the Consolidated Financial Statements.
Securities Lending and Repurchase Agreements
We participate in a securities lending program and in short-term repurchase agreements whereby securities are
loaned to unaffiliated financial institutions. We obtain collateral, usually cash, from the borrower, which must be
returned to the borrower when the loaned securities are returned to us. Through these arrangements, we were liable for
cash collateral under our control of $21.8 billion and $19.7 billion at December 31, 2020 and 2019, respectively,
including a portion that may require the immediate return of cash collateral we hold. See Note 8 of the Notes to the
Consolidated Financial Statements.
Litigation
We establish liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been
incurred and the amount of the loss can be reasonably estimated. For material matters where a loss is believed to be
reasonably possible but not probable, no accrual is made but we disclose the nature of the contingency and an aggregate
estimate of the reasonably possible range of loss in excess of amounts accrued, when such an estimate can be made. It is
not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters
referred to herein, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Given the
large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is
possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our
consolidated net income or cash flows in particular quarterly or annual periods. See Note 21 of the Notes to the
Consolidated Financial Statements.
Acquisitions
See Note 3 of the Notes to the Consolidated Financial Statements for information regarding the acquisition of
Versant Health.
Contractual Obligations
The following table summarizes our major contractual obligations at December 31, 2020:
Insurance liabilities
Policyholder account balances
Payables for collateral under securities loaned
and other transactions
Debt
Investment commitments
Operating leases
Other
Total
Total
One Year
or Less
More than
One Year to
Three Years
(In millions)
More than
Three Years
to Five Years
More than
Five Years
$
354,749 $
22,197 $
12,088 $
13,046 $
307,418
250,482
32,419
30,454
16,703
170,906
29,475
32,052
11,735
1,675
18,222
29,475
1,423
11,408
283
17,848
—
3,428
308
457
—
—
4,986
17
382
—
—
22,215
2
553
374
$
698,390 $
115,053 $
46,735 $
35,134 $
501,468
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Insurance Liabilities
Insurance liabilities include future policy benefits, other policy-related balances, policyholder dividends payable and
the policyholder dividend obligation, which are all reported on the consolidated balance sheet and are more fully
described in Notes 1 and 4 of the Notes to the Consolidated Financial Statements. The amounts presented reflect future
estimated cash payments and (i) are based on mortality, morbidity, lapse and other assumptions comparable with our
experience and expectations of future payment patterns; and (ii) consider future premium receipts on current policies in-
force. All estimated cash payments presented are undiscounted as to interest, net of estimated future premiums on in-
force policies and gross of any reinsurance recoverable. Payment of amounts related to policyholder dividends left on
deposit are projected based on assumptions of policyholder withdrawal activity. Because the exact timing and amount of
the ultimate policyholder dividend obligation is subject to significant uncertainty and the amount of the policyholder
dividend obligation is based upon a long-term projection of the performance of the closed block, we have reflected the
obligation at the amount of the liability, if any, presented on the consolidated balance sheet in the more than five years
category. Additionally, the more than five years category includes estimated payments due for periods extending for
more than 100 years.
The sum of the estimated cash flows of $354.7 billion exceeds the liability amounts of $227.3 billion included on the
consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the
difference; (ii) differences in assumptions, most significantly mortality, between the date the liabilities were initially
established and the current date; and (iii) liabilities related to accounting conventions, or which are not contractually due,
which are excluded.
Actual cash payments may differ significantly from the liabilities as presented on the consolidated balance sheet and
the estimated cash payments as presented due to differences between actual experience and the assumptions used in the
establishment of these liabilities and the estimation of these cash payments.
For the majority of our insurance operations, estimated contractual obligations for future policy benefits and
policyholder account balances, as presented, are derived from the annual asset adequacy analysis used to develop
actuarial opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially
representative of the cash flows under GAAP. See “— Policyholder Account Balances.”
Policyholder Account Balances
See Notes 1 and 4 of the Notes to the Consolidated Financial Statements for a description of the components of
policyholder account balances. See “— Insurance Liabilities” regarding the source and uncertainties associated with the
estimation of the contractual obligations related to future policy benefits and policyholder account balances.
Amounts presented represent the estimated cash payments undiscounted as to interest and including assumptions
related to the receipt of future premiums and deposits; withdrawals, including unscheduled or partial withdrawals; policy
lapses; surrender charges; annuitization; mortality; future interest credited; policy loans and other contingent events as
appropriate for the respective product type. Such estimated cash payments are also presented net of estimated future
premiums on policies currently in-force and gross of any reinsurance recoverable. For obligations denominated in
foreign currencies, cash payments have been estimated using current spot foreign currency rates.
The sum of the estimated cash flows of $250.5 billion exceeds the liability amount of $205.2 billion included on the
consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the
difference; (ii) differences in assumptions, between the date the liabilities were initially established and the current date;
and (iii) liabilities related to accounting conventions, or which are not contractually due, which are excluded.
Payables for Collateral Under Securities Loaned and Other Transactions
We have accepted cash collateral in connection with securities lending, repurchase agreements, FHLB of Boston
short-term advance agreements and derivatives. As these transactions expire within the next year and the timing of the
return of the derivatives collateral is uncertain, the return of the collateral has been included in the one year or less
category in the table above. We also held non-cash collateral, which is not reflected as a liability on the consolidated
balance sheet, of $1.7 billion at December 31, 2020.
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Debt
Amounts presented for debt include short-term debt, long-term debt, the collateral financing arrangement and junior
subordinated debt securities, the total of which differs from the total of the corresponding amounts presented on the
consolidated balance sheet as the amounts presented herein (i) do not include premiums or discounts upon issuance or
purchase accounting fair value adjustments; (ii) include future interest on such obligations for the period from January 1,
2021 through maturity; and (iii) do not include long-term debt relating to CSEs at December 31, 2020 as such debt does
not represent our contractual obligation. Future interest on variable rate debt was computed using prevailing rates at
December 31, 2020 and, as such, does not consider the impact of future rate movements. Future interest on fixed rate
debt was computed using the stated rate on the obligations for the period from January 1, 2021 through maturity, except
with respect to junior subordinated debt which was computed using the stated rates through the scheduled redemption
dates as it is our expectation that such obligations will be redeemed as scheduled. Inclusion of interest payments on
junior subordinated debt securities through the final maturity dates would increase the contractual obligation by
$7.7 billion. Pursuant to the collateral financing arrangement, MetLife, Inc. may be required to deliver cash or pledge
collateral to the unaffiliated financial institution. See Note 14 of the Notes to the Consolidated Financial Statements.
Investment Commitments
To enhance the return on our investment portfolio, we commit to lend funds under mortgage loans, bank credit
facilities, bridge loans and private corporate bond investments and we commit to fund partnership investments. In the
table above, the timing of the funding of mortgage loans and private corporate bond investments is based on the
expiration dates of the corresponding commitments. As it relates to commitments to fund partnerships and bank credit
facilities, we anticipate that these amounts could be invested any time over the next five years; however, as the timing of
the fulfillment of the obligation cannot be predicted, such obligations are generally presented in the one year or less
category. Commitments to fund bridge loans are short-term obligations and, as a result, are presented in the one year or
less category. See Note 21 of the Notes to the Consolidated Financial Statements and “— Off-Balance Sheet
Arrangements.”
Operating Leases
As a lessee, we have various operating leases, primarily for office space. Contractual provisions exist that could
increase or accelerate those lease obligations presented, including various leases with early buyouts and/or escalation
clauses. However, the impact of any such transactions would not be material to our financial position or results of
operations. See Note 11 of the Notes to the Consolidated Financial Statements.
Other
Other obligations presented are principally comprised of amounts due under reinsurance agreements, payables
related to securities purchased but not yet settled, securities sold short, accrued interest on debt obligations, estimated fair
value of derivative obligations, deferred compensation arrangements, guaranty liabilities, and accruals and accounts
payable due under contractual obligations, which are all reported in other liabilities on the consolidated balance sheet. If
the timing of any of these other obligations is sufficiently uncertain, the amounts are included within the one year or less
category. Items reported in other liabilities on the consolidated balance sheet that were excluded from the table represent
accounting conventions or are not liabilities due under contractual obligations. Unrecognized tax benefits and related
accrued interest totaling $323 million were excluded as the timing of payment could not be reliably determined at
December 31, 2020.
Separate account liabilities are excluded as they are fully funded by cash flows from the corresponding separate
account assets and are set equal to the estimated fair value of separate account assets.
We also enter into agreements to purchase goods and services in the normal course of business; however, such
amounts are excluded as these purchase obligations were not material to our consolidated results of operations or
financial position at December 31, 2020.
Additionally, we have agreements in place for services we conduct, generally at cost, between subsidiaries relating
to insurance, reinsurance, loans and capitalization. Intercompany transactions have been eliminated in consolidation.
Intercompany transactions among insurance subsidiaries and affiliates have been approved by the appropriate insurance
regulators as required.
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MetLife, Inc.
Liquidity and Capital Management
Liquidity and capital are managed to preserve stable, reliable and cost-effective sources of cash to meet all current and
future financial obligations and are provided by a variety of sources, including a portfolio of liquid assets, a diversified mix
of short- and long-term funding sources from the wholesale financial markets and the ability to borrow through credit and
committed facilities. Liquidity is monitored through the use of internal liquidity risk metrics, including the composition and
level of the liquid asset portfolio, timing differences in short-term cash flow obligations, access to the financial markets for
capital and debt transactions and exposure to contingent draws on MetLife, Inc.’s liquidity. MetLife, Inc. is an active
participant in the global financial markets through which it obtains a significant amount of funding. These markets, which
serve as cost-effective sources of funds, are critical components of MetLife, Inc.’s liquidity and capital management.
Decisions to access these markets are based upon relative costs, prospective views of balance sheet growth and a targeted
liquidity profile and capital structure. A disruption in the financial markets could limit MetLife, Inc.’s access to liquidity.
MetLife, Inc.’s ability to maintain regular access to competitively priced wholesale funds is fostered by its current
credit ratings from the major credit rating agencies. We view our capital ratios, credit quality, stable and diverse earnings
streams, diversity of liquidity sources and our liquidity monitoring procedures as critical to retaining such credit ratings.
See “— The Company — Rating Agencies.”
Liquidity
For a summary of MetLife, Inc.’s liquidity, see “— The Company — Liquidity.”
Capital
For a summary of MetLife, Inc.’s capital, see “— The Company — Capital.” See also “— The Company — Liquidity
and Capital Uses — Common Stock Repurchases” for information regarding MetLife, Inc.’s common stock repurchases.
Liquid Assets
At December 31, 2020 and 2019, MetLife, Inc. and other MetLife holding companies had $4.5 billion and $4.2 billion,
respectively, in liquid assets. Of these amounts, $3.6 billion and $3.0 billion were held by MetLife, Inc. and $873 million
and $1.2 billion were held by other MetLife holding companies at December 31, 2020 and 2019, respectively. Liquid assets
include cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged
or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with derivatives
and a collateral financing arrangement.
Liquid assets held in non-U.S. holding companies are generated in part through dividends from non-U.S. insurance
operations. Such dividends are subject to local insurance regulatory requirements, as discussed in “— Liquidity and Capital
Sources — Dividends from Subsidiaries.” As a result of U.S. Tax Reform, we expect to repatriate future foreign earnings
back to the U.S. with minimal or no additional U.S. tax. See Note 19 of the Notes to the Consolidated Financial Statements
and “— Risk Factors — Regulatory and Legal Risks — Changes in Laws or Regulation, or in Supervisory and
Enforcement Policies, May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.”
See “— Executive Summary — Consolidated Company Outlook,” for the targeted level of liquid assets at the holding
companies.
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MetLife, Inc. and Other MetLife Holding Companies Sources and Uses of Liquid Assets and Sources and Uses of Liquid
Assets included in Free Cash Flow
MetLife, Inc.’s sources and uses of liquid assets, as well as sources and uses of liquid assets included in free cash
flow are summarized as follows.
Year Ended December 31, 2020
Year Ended December 31, 2019
Sources and Uses
of Liquid Assets
Sources and Uses
of Liquid Assets
Included in Free
Cash Flow
Sources and Uses
of Liquid Assets
Sources and Uses
of Liquid Assets
Included in Free
Cash Flow
(In millions)
MetLife, Inc. (Parent Company Only)
Sources:
Dividends and returns of capital from subsidiaries (1)
$
4,327
$
4,327
$
4,800
$
6,325
5,825
6,493
5,490
Long-term debt issued (2)
Repayments on and (issuances of) loans to subsidiaries and related interest, net (3)
Preferred stock issuance, net of redemption of preferred stock and preferred stock
redemption premium (2)
Other, net (4)
Total sources
Uses:
Capital contributions to subsidiaries
Long-term debt repaid — unaffiliated
Interest paid on debt and financing arrangements — unaffiliated
Dividends on common stock
Treasury stock acquired in connection with share repurchases
Dividends on preferred stock
Issuances of and (repayments on) loans to subsidiaries and related interest, net (3)
Other, net (4), (5)
Total uses
Net increase (decrease) in liquid assets, MetLife, Inc. (Parent Company Only)
Liquid assets, beginning of year
Liquid assets, end of year
Free Cash Flow, MetLife, Inc. (Parent Company Only)
Net cash provided by operating activities, MetLife, Inc. (Parent Company Only)
$
$
990
50
958
—
990
50
458
—
1,373
—
—
320
422
—
763
1,657
1,151
202
—
1,539
5,734
591
3,004
3,595
3,479
422
—
763
—
—
202
—
(249)
1,138
4,687
$
$
75
877
817
1,643
2,285
178
44
—
5,919
574
2,430
3,004
4,177
Other MetLife Holding Companies
Sources:
Dividends and returns of capital from subsidiaries
$
1,301
$
1,301
$
2,199
$
Capital contributions from MetLife, Inc.
Total sources
Uses:
Capital contributions to subsidiaries
Repayments on and (issuance of) loans to subsidiaries and affiliates and related interest,
net
Dividends and returns of capital to MetLife, Inc.
Other, net
Total uses
Net increase (decrease) in liquid assets, Other MetLife Holding Companies
Liquid assets, beginning of year
Liquid assets, end of year
Free Cash Flow, Other MetLife Holding Companies
Net increase (decrease) in liquid assets, All Holding Companies
Free Cash Flow, All Holding Companies (6)
$
$
132
—
1,301
55
111
1,200
247
1,613
(312)
1,185
873
279
—
1,301
55
111
1,200
612
1,978
(677)
$
$
—
2,199
67
16
1,100
444
1,627
572
613
1,185
1,146
$
4,010
$
4,948
4,800
494
—
—
196
75
—
817
—
—
178
44
—
1,114
4,376
2,199
—
2,199
67
16
1,100
444
1,627
572
Table of Contents
__________________
(1)
(2)
(3)
(4)
(5)
(6)
Dividends and returns of capital to MetLife, Inc. included $3.1 billion and $3.7 billion from operating subsidiaries and
$1.2 billion and $1.1 billion from other MetLife holding companies for the years ended December 31, 2020 and 2019,
respectively.
Included in free cash flow is the portion of long-term debt issued and preferred stock issuance, net of redemption of
preferred stock and preferred stock redemption premium that represents incremental debt to be at or below target
leverage ratios.
See MetLife, Inc. (Parent Company Only) Condensed Statements of Cash Flows included in Schedule II of the
Financial Statement Schedules for information regarding the source of liquid assets from receipts on loans to
subsidiaries (excluding interest) and the use of liquid assets related to the issuances of loans to subsidiaries (excluding
interest).
Other, net includes $296 million and $155 million of net receipts (payments) by MetLife, Inc. to and from subsidiaries
under a tax sharing agreement and tax payments to tax agencies for the years ended December 31, 2020 and 2019,
respectively.
Amounts to fund business acquisitions were $1.9 billion (included in other, net) and $0 for the years ended December
31, 2020 and 2019, respectively.
See “— Non-GAAP and Other Financial Disclosures” for the reconciliation of net cash provided by operating
activities of MetLife, Inc. to free cash flow of all holding companies.
Sources and Uses of Liquid Assets of MetLife, Inc.
The primary sources of MetLife, Inc.’s liquid assets are dividends and returns of capital from subsidiaries, issuances
of long-term debt, issuances of common and preferred stock, and net receipts from subsidiaries under a tax sharing
agreement. MetLife, Inc.’s insurance subsidiaries are subject to regulatory restrictions on the payment of dividends
imposed by the regulators of their respective domiciles. See “— Liquidity and Capital Sources — Dividends from
Subsidiaries.”
The primary uses of MetLife, Inc.’s liquid assets are principal and interest payments on long-term debt, dividends on
and repurchases of common and preferred stock, capital contributions to subsidiaries, funding of business acquisitions,
income taxes and operating expenses. MetLife, Inc. is party to various capital support commitments and guarantees with
certain of its subsidiaries. See “— Liquidity and Capital Uses — Support Agreements.”
In addition, MetLife, Inc. issues loans to subsidiaries or subsidiaries issue loans to MetLife, Inc. Accordingly,
changes in MetLife, Inc. liquid assets include issuances of loans to subsidiaries, proceeds of loans from subsidiaries and
the related repayment of principal and payment of interest on such loans. See “— Liquidity and Capital Sources —
Affiliated Long-term Debt” and “— Liquidity and Capital Uses — Affiliated Capital and Debt Transactions.”
Sources and Uses of Liquid Assets of Other MetLife Holding Companies
The primary sources of liquid assets of other MetLife holding companies are dividends, returns of capital and
remittances from their subsidiaries and branches, principally non-U.S. insurance companies; capital contributions
received; receipts of principal and interest on loans to subsidiaries and affiliates and borrowings from subsidiaries and
affiliates. MetLife, Inc.’s non-U.S. operations are subject to regulatory restrictions on the payment of dividends imposed
by local regulators. See “— Liquidity and Capital Sources — Dividends from Subsidiaries.”
The primary uses of liquid assets of other MetLife holding companies are capital contributions paid to their
subsidiaries and branches, principally non-U.S. insurance companies; loans to subsidiaries and affiliates; principal and
interest paid on loans from subsidiaries and affiliates; dividends and returns of capital to MetLife, Inc. and the following
items, which are reported within other, net: business acquisitions; and operating expenses. There were no uses of liquid
assets of other MetLife holding companies to fund business acquisitions during the years ended December 31, 2020 or
2019.
Liquidity and Capital Sources
In addition to the description of liquidity and capital sources in “— The Company — Summary of the Company’s
Primary Sources and Uses of Liquidity and Capital” and “— The Company — Liquidity and Capital Sources,” MetLife,
Inc.’s primary sources of liquidity and capital are set forth below.
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Dividends from Subsidiaries
MetLife, Inc. relies, in part, on dividends from its subsidiaries to meet its cash requirements. MetLife, Inc.’s
insurance subsidiaries are subject to regulatory restrictions on the payment of dividends imposed by the regulators of
their respective domiciles. See Note 16 of the Notes to the Consolidated Financial Statements. The dividend limitation
for U.S. insurance subsidiaries is generally based on the surplus to policyholders at the end of the immediately preceding
calendar year and statutory net gain from operations for the immediately preceding calendar year. Statutory accounting
practices, as prescribed by insurance regulators of various states in which we conduct business, differ in certain respects
from accounting principles used in financial statements prepared in conformity with GAAP. The significant differences
relate to the treatment of DAC, certain deferred income tax, required investment liabilities, statutory reserve calculation
assumptions, goodwill and surplus notes.
The table below sets forth the dividends permitted to be paid by MetLife, Inc.’s primary U.S. insurance subsidiaries
without insurance regulatory approval and the actual dividends paid:
Company
Metropolitan Life Insurance Company
American Life Insurance Company
Metropolitan Property and Casualty Insurance Company (4)
Metropolitan Tower Life Insurance Company
__________________
2021
Permitted
Without
Approval (1)
$
$
$
$
3,392
800
222
82
2020
2019
Paid (2)
Permitted
Without
Approval (1)
(In millions)
Paid (2)
Permitted
Without
Approval (1)
$
$
$
$
2,832
1,200 (3)
250
—
$
$
$
$
3,272
—
114
149
$
$
$
$
3,065
1,100
430
—
$
$
$
$
3,065
—
171
154
(1)
(2)
(3)
(4)
Reflects dividend amounts that may be paid during the relevant year without prior regulatory approval. However,
because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a
specified date during such year, some or all of such dividends may require regulatory approval.
Reflects all amounts paid, including those where regulatory approval was obtained as required.
Includes a $341 million non-cash dividend.
See Note 3 for information regarding the pending disposition of MetLife P&C which may impact the ability of
MetLife P&C to pay a dividend to MetLife, Inc. in 2021.
In addition to the amounts presented in the table above, for the years ended December 31, 2020 and 2019, MetLife,
Inc. also received cash payments of $29 million and $195 million, respectively, representing dividends from certain other
subsidiaries. Additionally, for the years ended December 31, 2020 and 2019, MetLife, Inc. received cash returns of
capital of $16 million and $10 million, respectively.
The dividend capacity of our non-U.S. operations is subject to similar restrictions established by the local regulators.
The non-U.S. regulatory regimes also commonly limit dividend payments to the parent company to a portion of the
subsidiary’s prior year statutory income, as determined by the local accounting principles. The regulators of our non-
U.S. operations, including the FSA, may also limit or not permit profit repatriations or other transfers of funds to the U.S.
if such transfers are deemed to be detrimental to the solvency or financial strength of the non-U.S. operations, or for
other reasons. Most of our non-U.S. subsidiaries are second tier subsidiaries which are owned by various non-U.S.
holding companies. The capital and rating considerations applicable to our first tier subsidiaries may also impact the
dividend flow into MetLife, Inc.
We proactively manage target and excess capital levels and dividend flows and forecast local capital positions as
part of the financial planning cycle. The dividend capacity of certain U.S. and non-U.S. subsidiaries is also subject to
business targets in excess of the minimum capital necessary to maintain the desired rating or level of financial strength in
the relevant market. See “Risk Factors — Capital Risks — Our Subsidiaries May be Unable to Pay Dividends, a Major
Component of Holding Company Free Cash Flow” and Note 16 of the Notes to the Consolidated Financial Statements.
Affiliated Long-term Debt
See “Senior Notes — Affiliated” in Note 4 of the Notes to the MetLife, Inc. (Parent Company Only) Condensed
Financial Information included in Schedule II of the Financial Statement Schedules for information on affiliated long-
term debt.
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Collateral Financing Arrangement and Junior Subordinated Debt Securities
For information on MetLife, Inc.’s collateral financing arrangement and junior subordinated debt securities, see
Notes 14 and 15 of the Notes to the Consolidated Financial Statements, respectively.
Credit and Committed Facilities
See Note 13 of the Notes to the Consolidated Financial Statements for further information regarding the Company’s
unsecured revolving credit facility and certain committed facilities.
Long-term Debt Outstanding
The following table summarizes the outstanding long-term debt of MetLife, Inc. at:
Long-term debt — unaffiliated
Long-term debt — affiliated
Junior subordinated debt securities
Debt and Facility Covenants
December 31,
2020
2019
(In millions)
$
$
$
13,463 $
12,379
2,073 $
2,461 $
1,976
2,458
Certain of MetLife, Inc.’s debt instruments and committed facilities, as well as its unsecured revolving credit
facility, contain various administrative, reporting, legal and financial covenants. MetLife, Inc. believes it was in
compliance with all applicable financial covenants at December 31, 2020.
Dispositions
For information regarding the pending disposition of MetLife P&C, see Note 3 of the Notes to the Consolidated
Financial Statements.
Liquidity and Capital Uses
The primary uses of liquidity of MetLife, Inc. include debt service, cash dividends on common and preferred stock,
capital contributions to subsidiaries, common stock, preferred stock and debt repurchases, payment of general operating
expenses and acquisitions. Based on our analysis and comparison of our current and future cash inflows from the dividends
we receive from subsidiaries that are permitted to be paid without prior insurance regulatory approval, our investment
portfolio and other cash flows and anticipated access to the capital markets, we believe there will be sufficient liquidity and
capital to enable MetLife, Inc. to make payments on debt, pay cash dividends on its common and preferred stock,
contribute capital to its subsidiaries, repurchase its common stock and certain of its other securities, pay all general
operating expenses and meet its cash needs under current market conditions and reasonably possible stress scenarios.
In addition to the description of liquidity and capital uses in “— The Company — Liquidity and Capital Uses” and “—
The Company — Contractual Obligations,” MetLife, Inc.’s primary uses of liquidity and capital are set forth below.
Affiliated Capital and Debt Transactions
For the years ended December 31, 2020 and 2019, excluding acquisitions, MetLife, Inc. invested a net amount of
$425 million and $89 million, respectively, in various subsidiaries.
MetLife, Inc. lends funds, as necessary, through credit agreements or otherwise to its subsidiaries and affiliates,
some of which are regulated, to meet their capital requirements or to provide liquidity. MetLife, Inc. had loans to
subsidiaries outstanding of $0 and $100 million at December 31, 2020 and 2019, respectively. In June 2020, the
$100 million loan was repaid at maturity.
Debt Repayments
For information on MetLife, Inc.’s debt repayments, see “— The Company — Liquidity and Capital Uses — Debt
Repayments.” MetLife, Inc. intends to repay or refinance, in whole or in part, all the debt that is due in 2021.
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Maturities of Senior Notes
The following table summarizes MetLife, Inc.’s outstanding senior notes by year of maturity, excluding any
premium or discount and unamortized issuance costs, at December 31, 2020:
Year of Maturity
Unaffiliated:
2022
2023
2024
2024
2025
2025
2026 - 2046
Affiliated:
2021
2021
2023
2025
2026-2029
Support Agreements
Principal
(In millions)
Interest Rate
$
$
$
$
$
$
$
$
$
$
$
$
500
1,000
1,000
478
500
500
3.05%
4.37%
3.60%
5.38%
3.00%
3.60%
9,570 Ranging from 0.50% - 6.50%
520
529
362
250
2.97%
3.14%
1.60%
2.05%
412 Ranging from 1.64% - 1.81%
MetLife, Inc. is party to various capital support commitments and guarantees with certain of its subsidiaries. See
Note 5 of the Notes to the MetLife, Inc. (Parent Company Only) Condensed Financial Information included in Schedule
II of the Financial Statement Schedules.
Acquisitions
See Note 3 of the Notes to the Consolidated Financial Statements for information regarding the acquisition of
Versant Health.
Adoption of New Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
Future Adoption of New Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
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Non-GAAP and Other Financial Disclosures
In this report, the Company presents certain measures of its performance on a consolidated and segment basis that are not
calculated in accordance with GAAP. We believe that these non-GAAP financial measures enhance the understanding for the
Company and our investors of our performance by highlighting the results of operations and the underlying profitability
drivers of our business. Segment-specific financial measures are calculated using only the portion of consolidated results
attributable to that specific segment.
The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable
financial measures calculated in accordance with GAAP:
Non-GAAP financial measures:
(i)
(ii)
(iii)
adjusted premiums, fees and other revenues
adjusted earnings
adjusted earnings available to common
shareholders
free cash flow of all holding companies
(iv)
(v)
adjusted net investment income
Comparable GAAP financial measures:
(i)
(ii)
(iii) net income (loss) available to MetLife, Inc.’s common
premiums, fees and other revenues
net income (loss)
shareholders
(iv) MetLife, Inc. (parent company only) net cash provided
by (used in) operating activities
(v) net investment income
Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency
exchange rates and are calculated using the average foreign currency exchange rates for the most recent period and applied to
the comparable prior period (“constant currency basis”).
Reconciliations of these non-GAAP financial measures to the most directly comparable historical GAAP financial
measures are included in “— Results of Operations” and “— Investments.” Reconciliations of these non-GAAP measures to
the most directly comparable GAAP measures are not accessible on a forward-looking basis because we believe it is not
possible without unreasonable effort to provide other than a range of net investment gains and losses and net derivative gains
and losses, which can fluctuate significantly within or outside the range and from period to period and may have a material
impact on net income.
Our definitions of non-GAAP and other financial measures discussed in this report may differ from those used by other
companies.
Adjusted earnings and related measures:
•
•
•
adjusted earnings;
adjusted earnings available to common shareholders; and
adjusted earnings available to common shareholders on a constant currency basis.
These measures are used by management to evaluate performance and allocate resources. Consistent with GAAP
guidance for segment reporting, adjusted earnings and components of, or other financial measures based on, adjusted
earnings are also our GAAP measures of segment performance. Adjusted earnings and other financial measures based on
adjusted earnings are also the measures by which senior management’s and many other employees’ performance is evaluated
for the purposes of determining their compensation under applicable compensation plans. Adjusted earnings and other
financial measures based on adjusted earnings allow analysis of our performance relative to our business plan and facilitate
comparisons to industry results.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax. Adjusted loss is defined as
negative adjusted earnings. Adjusted earnings available to common shareholders is defined as adjusted earnings less preferred
stock dividends. For information relating to adjusted revenues and adjusted expenses, see “Financial Measures and Segment
Accounting Policies” in Note 2 of the Notes to the Consolidated Financial Statements.
In addition, adjusted earnings available to common shareholders excludes the impact of preferred stock redemption
premium, which is reported as a reduction to net income (loss) available to MetLife, Inc.’s common shareholders.
Return on equity, allocated equity and related measures:
•
Total MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA, is defined as total MetLife,
Inc.’s common stockholders’ equity, excluding the net unrealized investment gains (losses) and defined benefit plans
adjustment components of AOCI, net of income tax.
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•
•
•
Adjusted return on MetLife, Inc.’s common stockholders’ equity is defined as adjusted earnings available to
common shareholders divided by MetLife, Inc.’s average common stockholders’ equity.
Adjusted return on MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA, is defined as
adjusted earnings available to common shareholders divided by MetLife, Inc.’s average common stockholders’
equity, excluding AOCI other than FCTA.
Allocated equity is the portion of MetLife, Inc.’s common stockholders’ equity that management allocates to each of
its segments and sub-segments based on local capital requirements and economic capital. See “— Economic
Capital.” Allocated equity excludes the impact of AOCI other than FCTA.
The above measures represent a level of equity consistent with the view that, in the ordinary course of business, we do
not plan to sell most investments for the sole purpose of realizing gains or losses. Also, refer to the utilization of adjusted
earnings and components of, or other financial measures based on, adjusted earnings mentioned above.
Expense ratio and direct expense ratio:
•
•
•
Expense ratio: other expenses, net of capitalization of DAC, divided by premiums, fees and other revenues.
Direct expense ratio: adjusted direct expenses divided by adjusted premiums, fees and other revenues. Direct
expenses are comprised of employee-related costs, third party staffing costs, and general and administrative
expenses.
Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers: adjusted
direct expenses excluding total notable items related to direct expenses, divided by adjusted premiums, fees and
other revenues, excluding pension risk transfers.
The following additional information is relevant to an understanding of our performance results and outlook:
• We sometimes refer to sales activity for various products. These sales statistics do not correspond to revenues under
GAAP, but are used as relevant measures of business activity. Further, sales statistics for our Latin America, Asia
and EMEA segments are on a constant currency basis.
•
Near-term represents one to three years.
• We refer to observable forward yield curves as of a particular date in connection with making our estimates for
future results. The observable forward yield curves at a given time are based on implied future interest rates along a
range of interest rate durations. This includes the 10-year U.S. Treasury rate which we use as a benchmark rate to
describe longer-term interest rates used in our estimates for future results.
•
•
Asymmetrical and non-economic accounting refers to: (i) the portion of net derivative gains (losses) on embedded
derivatives attributable to the inclusion of our credit spreads in the liability valuations, (ii) hedging activity that
generates net derivative gains (losses) and creates fluctuations in net income because hedge accounting cannot be
achieved and the item being hedged does not a have an offsetting gain or loss recognized in earnings, (iii) inflation-
indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts
associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of
assets and other pass through adjustments, and (iv) impact of changes in foreign currency exchange rates on the re-
measurement of foreign denominated unhedged funding agreements and financing transactions to the U.S. dollar and
the re-measurement of certain liabilities from non-functional currencies to functional currencies. We believe that
excluding the impact of asymmetrical and non-economic accounting from total GAAP results enhances investor
understanding of our performance by disclosing how these accounting practices affect reported GAAP results.
Notable items represent a positive (negative) impact to adjusted earnings available to common shareholders. Notable
items reflect the unexpected impact of events that affect MetLife’s results, but that were unknown and that MetLife
could not anticipate when it devised its business plan. Notable items also include certain items regardless of the
extent anticipated in the business plan, to help investors have a better understanding of MetLife’s results and to
evaluate and forecast those results.
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•
The Company uses a measure of free cash flow to facilitate an understanding of its ability to generate cash for
reinvestment into its businesses or use in non-mandatory capital actions. The Company defines free cash flow as the
sum of cash available at MetLife’s holding companies from dividends from operating subsidiaries, expenses and
other net flows of the holding companies (including capital contributions to subsidiaries), and net contributions from
debt to be at or below target leverage ratios. This measure of free cash flow is prior to capital actions, such as
common stock dividends and repurchases, debt reduction and mergers and acquisitions. Free cash flow should not be
viewed as a substitute for net cash provided by (used in) operating activities calculated in accordance with GAAP.
The free cash flow ratio is typically expressed as a percentage of annual adjusted earnings available to common
shareholders. A reconciliation of net cash provided by operating activities of MetLife, Inc. (parent company only) to
free cash flow of all holding companies for the years ended December 31, 2020 and 2019 is provided below.
Reconciliation of Net Cash Provided by Operating Activities of MetLife, Inc. to Free Cash
Flow of All Holding Companies
Years Ended December 31,
2020
2019
(In millions, except ratios)
MetLife, Inc. (parent company only) net cash provided by operating activities
$
3,479
$
4,177
Adjustments from net cash provided by operating activities to free cash flow:
Add: Incremental debt to be at or below target leverage ratios
Add: Capital contributions to subsidiaries
Add: Returns of capital from subsidiaries
Add: Repayments on and (issuances of) loans to subsidiaries, net
Add: Investment portfolio and derivatives changes and other, net
MetLife, Inc. (parent company only) free cash flow
Other MetLife, Inc. holding companies:
Add: Dividends and returns of capital from subsidiaries
Add: Capital contributions to subsidiaries
Add: Repayments on and (issuances of) loans to subsidiaries, net
Add: Other expenses
Add: Dividends and returns of capital to MetLife, Inc.
Add: Investment portfolio and derivative changes and other, net
Total other MetLife, Inc. holding companies free cash flow
Free cash flow of all holding companies
Ratio of net cash provided by operating activities to consolidated net income (loss) available to
MetLife, Inc.’s common shareholders:
MetLife, Inc. (parent company only) net cash provided by operating activities
Consolidated net income (loss) available to MetLife, Inc.’s common
shareholders
Ratio of net cash provided by operating activities (parent company only) to
consolidated net income (loss) available to MetLife, Inc.'s common
shareholders (1)
Ratio of free cash flow to adjusted earnings available to common shareholders:
Free cash flow of all holding companies (2)
Consolidated adjusted earnings available to common shareholders (2)
Ratio of free cash flow of all holding companies to consolidated adjusted
earnings available to common shareholders (2)
__________________
1,448
(422)
16
100
66
4,687
1,301
(55)
(111)
(644)
(1,200)
32
(677)
4,010
3,479
5,191
67 %
4,010
5,623
$
$
$
$
$
494
(75)
10
—
(230)
4,376
2,199
(67)
(16)
(720)
(1,100)
276
572
4,948
4,177
5,721
73 %
4,948
5,767
71 %
86 %
$
$
$
$
$
(1) Including the free cash flow of other MetLife, Inc. holding companies of ($677) million and $572 million for the
years ended December 31, 2020 and 2019, respectively, in the numerator of the ratio, this ratio, as adjusted, would
be 54% and 83%, respectively.
(2) i) Consolidated adjusted earnings available to common shareholders for the year ended December 31, 2020 was
negatively impacted by a notable item related to actuarial assumption review and other insurance adjustments of
$203 million, net of income tax. Excluding this notable item from the denominator of the ratio, the adjusted free
cash flow ratio for 2020 would be 69%.
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ii) Consolidated adjusted earnings available to common shareholders for the year ended December 31, 2019 was
positively impacted by notable items, primarily related to tax related adjustments, of $539 million, net of income
tax, partially offset by expense initiative costs of $332 million, net of income tax. Excluding such notable items from
the denominator of the ratio, the adjusted free cash flow ratio for the year ended December 31, 2019 would be 87%.
140
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Risk Management
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We have an integrated process for managing risk, which we conduct through multiple Board and senior management
committees (financial and non-financial) across the Global Risk Management, ALM, Finance, Treasury, Investments and
business segment departments. The risk committee structure is designed to provide a consolidated enterprise-wide assessment
and management of risk. The ERC is responsible for reviewing all material risks to the enterprise and deciding on actions, if
necessary, in the event risks exceed desired tolerances, taking into consideration industry best practices and the current
environment to resolve or mitigate those risks. Additional committees at the MetLife, Inc. and subsidiary company level
manage capital and risk positions and establish corporate business standards.
Global Risk Management
Independent from the lines of business, the centralized Global Risk Management department, led by the CRO,
coordinates across all committees to ensure that all material risks are properly identified, measured, aggregated, managed
and reported across the Company. The CRO reports to the Chief Executive Officer (“CEO”) and is primarily responsible
for maintaining and communicating the Company’s enterprise risk policies and for monitoring and analyzing all material
risks.
Global Risk Management considers and monitors a full range of risks against the Company’s solvency, liquidity,
earnings, business operations and reputation. Global Risk Management’s primary responsibilities consist of:
•
•
•
•
•
implementing an enterprise risk framework, which outlines our enterprise approach for managing risk;
developing policies and procedures for identifying, managing, measuring, monitoring and controlling those risks
identified in the enterprise risk framework;
coordinating ORSAs for Board, senior management and regulator use;
establishing appropriate enterprise risk tolerance levels;
recommending risk appetite statements and investment general authorizations to the Board;
• measuring capital on an economic basis; and
•
reporting to (i) the Finance and Risk Committee of MetLife, Inc.’s Board of Directors; (ii) the Investment
Committee of MetLife, Inc.’s Board of Directors; (iii) the Compensation Committee of MetLife, Inc.’s Board of
Directors; and (iv) the financial and non-financial senior management committees on various aspects of risk.
Asset/Liability Management
We actively manage our assets using an approach that is liability driven and balances quality, diversification, asset/
liability matching, liquidity, concentration and investment return. The goals of the investment process are to optimize, net
of income tax, risk-adjusted investment income and risk-adjusted total return while ensuring that the assets and liabilities
are reasonably aligned on a cash flow and duration basis. The ALM process is the shared responsibility of the ALM,
Global Risk Management, and Investments departments, with the engagement of senior members of the business segments
and Finance, and is governed by the ALM Committees. The ALM Committees’ duties include reviewing and approving
investment guidelines and limits, approving significant portfolio and ALM strategies and providing oversight of the ALM
process. The directives of the ALM Committees are carried out and monitored through ALM Working Groups which are
set up to manage risk by geography, product or portfolio type. The ALM Steering Committee oversees the activities of the
underlying ALM Committees and Working Groups. The ALM Steering Committee reports to the ERC.
We establish portfolio guidelines that define ranges and limits related to asset allocation, interest rate risk, liquidity,
concentration and other risks for each major business segment, legal entity or insurance product group. These guidelines
support implementation of investment strategies used to adequately fund our liabilities within acceptable levels of risk. We
also establish hedging programs and associated investment portfolios for different blocks of business. The ALM Working
Groups monitor these strategies and programs through regular review of portfolio metrics, such as effective duration, yield
curve sensitivity, convexity, value at risk, market sensitivities (to interest rates, equity market levels, equity volatility, and
foreign currency exchange rates), stress scenario payoffs, liquidity, asset sector concentration and credit quality.
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Table of Contents
Market Risk Exposures
We regularly analyze our exposure to interest rate, foreign currency exchange rate and equity market price risk. As a
result of that analysis, we have determined that the estimated fair values of certain assets and liabilities are materially exposed
to changes in interest rates, foreign currency exchange rates and equity markets. We have exposure to market risk through our
insurance operations and investment activities. For purposes of this disclosure, “market risk” is defined as the risk of loss
resulting from changes in interest rates, foreign currency exchange rates and equity markets.
Interest Rates
Our exposure to interest rate changes results most significantly from our holdings of fixed maturity securities and
derivatives, as well as our interest rate sensitive liabilities. The fixed maturity securities AFS include U.S. and foreign
government bonds, securities issued by government agencies, corporate bonds, mortgage-backed securities and ABS, all of
which are mainly exposed to changes in medium- and long-term interest rates. The interest rate sensitive liabilities for
purposes of this disclosure include debt, policyholder account balances related to certain investment type contracts, and
embedded derivatives on variable annuities with guaranteed minimum benefits which have the same type of interest rate
exposure (medium- and long-term interest rates) as fixed maturity securities AFS. The interest rate sensitive liabilities for
purposes of this disclosure exclude a significant portion of the liabilities relating to insurance contracts. See “Risk
Factors — Economic Environment and Capital Markets Risks — We May Face Difficult Economic Conditions.”
Foreign Currency Exchange Rates
Our exposure to fluctuations in foreign currency exchange rates against the U.S. dollar results from our holdings in
non-U.S. dollar denominated fixed maturity and equity securities, mortgage loans, and certain liabilities, as well as through
our investments in foreign subsidiaries. The foreign currency exchange rate liabilities for purposes of this disclosure
exclude a significant portion of the liabilities relating to insurance contracts. The principal currencies that create foreign
currency exchange rate risk in our investment portfolios and liabilities are the Euro, the Japanese yen and the British
pound. Selectively, we use U.S. dollar assets to support certain long-duration foreign currency liabilities. Through our
investments in foreign subsidiaries and joint ventures, we are primarily exposed to the Japanese yen, the Euro, the
Australian dollar, the British pound, the Mexican peso, the Chilean peso and the Korean won. In addition to hedging with
foreign currency swaps, forwards and options, local surplus in some countries may be held entirely or in part in U.S. dollar
assets, which further minimize exposure to foreign currency exchange rate fluctuation risk. We have matched much of our
foreign currency liabilities in our foreign subsidiaries with their respective foreign currency assets, thereby reducing our
risk to foreign currency exchange rate fluctuation. See “Risk Factors — Economic Environment and Capital Markets Risks
— We May Face Difficult Economic Conditions.”
Equity Market
Along with investments in equity securities, we have exposure to equity market risk through certain liabilities that
involve long-term guarantees on equity performance such as embedded derivatives on variable annuities with guaranteed
minimum benefits and certain policyholder account balances. Equity exposures associated with limited partnership interests
are excluded from this discussion as they are not considered financial instruments under GAAP.
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Table of Contents
Management of Market Risk Exposures
We use a variety of strategies to manage interest rate, foreign currency exchange rate and equity market risk, including
the use of derivatives.
Interest Rate Risk Management
To manage interest rate risk, we analyze interest rate risk using various models, including multi-scenario cash flow
projection models that forecast cash flows of the liabilities and their supporting investments, including derivatives. These
projections involve evaluating the potential gain or loss on most of our in-force business under various increasing and
decreasing interest rate environments. The NYDFS regulations require that we perform some of these analyses annually as
part of our review of the sufficiency of our regulatory reserves. For several of our legal entities, we maintain segmented
operating and surplus asset portfolios for the purpose of ALM and the allocation of investment income to product lines. In
the U.S., for each segment, invested assets greater than or equal to the GAAP liabilities net of certain non-invested assets
allocated to the segment are maintained, with any excess allocated to Corporate & Other. The business segments may
reflect differences in legal entity, statutory line of business and any product market characteristic which may drive a
distinct investment strategy with respect to duration, liquidity or credit quality of the invested assets. Certain smaller
entities make use of unsegmented general accounts for which the investment strategy reflects the aggregate characteristics
of liabilities in those entities. We measure relative sensitivities of the value of our assets and liabilities to changes in key
assumptions utilizing internal models. These models reflect specific product characteristics and include assumptions based
on current and anticipated experience regarding lapse, mortality, morbidity and interest crediting rates. In addition, these
models include asset cash flow projections reflecting interest payments, sinking fund payments, principal payments, bond
calls, mortgage loan prepayments and defaults.
We employ product design, pricing and ALM strategies to reduce the potential effects of interest rate movements.
Product design and pricing strategies include the use of surrender charges or restrictions on withdrawals in some products
and the ability to reset crediting rates for certain products. ALM strategies include the use of derivatives. We also use
reinsurance to mitigate interest rate risk.
We also use common industry metrics, such as duration and convexity, to measure the relative sensitivity of assets and
liability values to changes in interest rates. In computing the duration of liabilities, we consider all policyholder guarantees
and how we intend to set indeterminate policy elements such as interest credits or dividends. Each asset portfolio or
portfolio group has a duration target based on the liability duration and the investment objectives of that portfolio. Where a
liability cash flow may exceed the maturity of available assets, we may support such liabilities with equity investments,
derivatives or interest rate curve mismatch strategies.
Foreign Currency Exchange Rate Risk Management
MetLife has a well-established policy to manage foreign currency exchange rate exposures within its risk tolerance. In
general, investments backing specific liabilities are currency matched. This is achieved through direct investments in
matching currency or through the use of foreign currency exchange derivatives. Enterprise foreign currency exchange rate
risk limits are established by the ERC. Management of each of our segments, with oversight from our FX Working Group
and the ALM committee for the respective segment, is responsible for managing any foreign currency exchange rate
exposure.
We use foreign currency swaps, forwards and options to mitigate the liability exposure, risk of loss and financial
statement volatility associated with our investments in foreign subsidiaries, foreign currency denominated fixed income
investments and the sale of certain insurance products.
Equity Market Risk Management
We manage equity market risk on an integrated basis with other risks through our ALM strategies, including the
dynamic hedging of certain variable annuity guarantee benefits, as well as reinsurance, in order to limit losses, minimize
exposure to large risks, and provide additional capacity for future growth. We also manage equity market risk exposure in
our investment portfolio through the use of derivatives. These derivatives include exchange-traded equity futures, equity
index options contracts, TRRs and equity variance swaps. This risk is managed by our ALM Department in partnership
with the Investments Department.
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Table of Contents
Hedging Activities
We use derivative contracts primarily to hedge a wide range of risks including interest rate risk, foreign currency
exchange rate risk, and equity market risk. Derivative hedges are designed to reduce risk on an economic basis while
considering their impact on financial results under different accounting regimes, including U.S. GAAP and local statutory
accounting. Our derivative hedge programs vary depending on the type of risk being hedged. Some hedge programs are
asset or liability specific while others are portfolio hedges that reduce risk related to a group of liabilities or assets. Our use
of derivatives by major hedge programs is as follows:
•
Risks Related to Guarantee Benefits — We use a wide range of derivative contracts to mitigate the risk associated
with living guarantee benefits. These derivatives include equity and interest rate futures, interest rate swaps,
currency futures/forwards, equity indexed options, TRRs, interest rate option contracts and equity variance swaps.
• Minimum Interest Rate Guarantees — For certain liability contracts, we provide the contractholder a guaranteed
minimum interest rate. These contracts include certain fixed annuities and other insurance liabilities. We purchase
interest rate caps and floors to reduce risk associated with these liability guarantees.
•
•
•
Reinvestment Risk in Long-Duration Liability Contracts — Derivatives are used to hedge interest rate risk related to
certain long-duration liability contracts. Hedges include interest rate swaps, swaptions and Treasury bond forwards.
Foreign Currency Exchange Rate Risk — We use foreign currency swaps, forwards and options to hedge foreign
currency exchange rate risk. These hedges are generally used to swap foreign currency denominated bonds,
investments in foreign subsidiaries or equity market exposures to U.S. dollars. Our foreign subsidiaries also use
these hedges to swap non-local currency assets to local currency, to match liabilities.
General ALM Hedging Strategies — In the ordinary course of managing our asset/liability risks, we use interest rate
futures, interest rate swaps, interest rate caps, interest rate floors, and inflation swaps. These hedges are designed to
reduce interest rate risk or inflation risk related to the existing assets or liabilities or related to expected future cash
flows.
• Macro Hedge Program — We use equity options, equity TRRs, interest rate swaptions and interest rate swaps to
mitigate the potential loss of legal entity statutory capital under stress scenarios.
Risk Measurement: Sensitivity Analysis
We measure market risk related to our market sensitive assets and liabilities based on changes in interest rates, foreign
currency exchange rates and equity market prices utilizing a sensitivity analysis. For purposes of this disclosure, a significant
portion of the liabilities relating to insurance contracts is excluded, as discussed further below. This analysis estimates the
potential changes in estimated fair value based on a hypothetical 10% change (increase or decrease) in interest rates, foreign
currency exchange rates and equity market prices. We believe that a 10% change (increase or decrease) in these market rates
and prices is reasonably possible in the near term. In performing the analysis summarized below, we used market rates at
December 31, 2020. The sensitivity analysis separately calculates each of our market risk exposures (interest rate, foreign
currency exchange rate and equity market) relating to our assets and liabilities. We modeled the impact of changes (increases
and decreases) in market rates and prices on the estimated fair values of our market sensitive assets and liabilities and present
the results with the most adverse level of market risk impact to the Company for each of these market risk exposures as
follows:
•
•
•
the net present values of our interest rate sensitive exposures resulting from a 10% change (increase or decrease) in
interest rates;
estimated fair values of our foreign currency exchange rate sensitive exposures due to a 10% change (appreciation or
depreciation) in the value of the U.S. dollar compared to all other currencies; and
the estimated fair value of our equity market sensitive exposures due to a 10% change (increase or decrease) in
equity market prices.
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Table of Contents
The sensitivity analysis is an estimate and should not be viewed as predictive of our future financial performance. We
cannot ensure that our actual losses in any particular period will not exceed the amounts indicated in the table below.
Limitations related to this sensitivity analysis include:
•
•
•
•
•
•
•
interest sensitive and foreign currency exchange rate sensitive liabilities do not include $223.8 billion, at carrying
value, of insurance contracts. Management believes that the changes in the economic value of those contracts under
changing interest rates and changing foreign currency exchange rates would offset a significant portion of the fair
value changes of interest sensitive and foreign currency exchange rate sensitive assets;
the market risk information is limited by the assumptions and parameters established in creating the related
sensitivity analysis, including the impact of prepayment rates on mortgage loans;
sensitivities do not include the impact on asset or liability valuation of changes in market liquidity or changes in
market credit spreads;
foreign currency exchange rate risk is not isolated for certain embedded derivatives within host asset and liability
contracts, as the risk on these instruments is reflected as equity;
for the derivatives that qualify as hedges, and for certain other assets such as mortgage loans, the impact on reported
earnings may be materially different from the change in market values;
the analysis excludes liabilities pursuant to insurance contracts, as well as real estate holdings, private equity and
hedge fund holdings; and
the model assumes that the composition of assets and liabilities remains unchanged throughout the period.
Accordingly, we use such models as tools and not as substitutes for the experience and judgment of our management.
Based on our analysis of the impact of a 10% change (increase or decrease) in market rates and prices, we have determined
that such a change could have a material adverse effect on the estimated fair value of certain assets and liabilities from
interest rate, foreign currency exchange rate and equity market exposures.
The table below illustrates the potential loss in estimated fair value for each market risk exposure based on market
sensitive assets and liabilities at:
Interest rate risk
Foreign currency exchange rate risk
Equity market risk
__________________
December 31, 2020
(In millions)
$
$
$
4,012
8,389
370
The risk sensitivities derived used a 10% increase to interest rates, a 10% strengthening of the U.S. dollar against foreign
currencies, and a 10% increase in equity prices. The potential losses in estimated fair value presented are for non-trading
securities.
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Table of Contents
The table below provides additional detail regarding the potential loss in estimated fair value of our interest sensitive
financial instruments due to a 10% increase in interest rates at:
Assets
Fixed maturity securities AFS
Equity securities
FVO securities
Mortgage loans
Policy loans
Short-term investments
Other invested assets
Cash and cash equivalents
Accrued investment income
Premiums, reinsurance and other receivables
Other assets
Embedded derivatives within asset host contracts (2)
Total assets
Liabilities (3)
Policyholder account balances
Payables for collateral under securities loaned and other transactions
Short-term debt
Long-term debt
Collateral financing arrangement
Junior subordinated debt securities
Other liabilities
Embedded derivatives within liability host contracts (2)
Total liabilities
Derivative Instruments
Interest rate swaps
Interest rate floors
Interest rate caps
Interest rate futures
Interest rate options
Interest rate forwards
Interest rate total return swaps
Synthetic GICs
Foreign currency swaps
Foreign currency forwards
Currency futures
Currency options
Credit default swaps
Equity futures
Equity index options
Equity variance swaps
Equity total return swaps
Total derivative instruments
Net Change
__________________
December 31, 2020
Notional
Amount
Estimated
Fair
Value (1)
(In millions)
Assuming a
10% Increase
in Interest Rates
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
354,809
$
(3,446)
1,079
1,611
88,675
11,598
3,904
2,073
19,795
3,388
2,978
301
55
—
(6)
(200)
(46)
(1)
(2)
—
—
(15)
(2)
—
$
(3,718)
129,637
$
29,475
393
18,332
710
4,604
3,133
1,196
$
6,909
$
350
13
(2)
497
383
(59)
—
(628)
(80)
3
70
84
(24)
397
3
(279)
320
—
—
196
—
49
40
83
688
(547)
(5)
1
3
(27)
(169)
(33)
—
(178)
(20)
(4)
(2)
—
—
(1)
—
—
$
$
(982)
(4,012)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
57,497
12,701
40,730
1,498
17,746
7,728
1,048
38,646
52,975
17,743
914
4,950
12,587
5,427
22,954
716
3,294
(1)
Separate account assets and liabilities and Unit-linked investments and associated policyholder account balances,
which are interest rate sensitive, are not included herein as any interest rate risk is borne by the contractholder,
notwithstanding any general account guarantees which are included within embedded derivatives (see footnote (2)
below) or included within future policy benefits and other policy-related balances (see footnote (3) below). Long-term
debt excludes $5 million related to CSEs.
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Table of Contents
(2)
(3)
Embedded derivatives are recognized on the consolidated balance sheet in the same caption as the host contract.
Excludes $223.8 billion of liabilities, at carrying value, pursuant to insurance contracts reported within future policy
benefits and other policy-related balances. These liabilities would economically offset a significant portion of the net
change in fair value of our financial instruments resulting from a 10% increase in interest rates.
Sensitivity to interest rates decreased $1.2 billion to $4.0 billion at December 31, 2020 from $5.2 billion at December 31,
2019.
The table below provides additional detail regarding the potential loss in estimated fair value of our portfolio due to a
10% appreciation in the U.S. dollar compared to all other currencies at:
Notional
Amount
December 31, 2020
Estimated
Fair
Value (1)
(In millions)
Assuming a 10%
Appreciation in
the U.S. Dollar
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
354,809
$
(11,381)
1,079
1,611
88,675
11,598
3,904
2,073
19,795
3,388
2,978
301
55
(49)
(76)
(990)
(158)
(182)
(49)
(444)
(83)
(44)
(18)
(8)
$
(13,482)
129,637
$
3,733
29,475
18,332
3,133
1,196
176
207
20
53
$
4,189
6,909
$
(132)
350
13
(2)
497
383
(59)
—
(628)
(80)
3
70
84
(24)
397
3
(279)
—
—
—
(27)
8
—
—
1,843
(824)
(92)
126
(9)
—
11
—
—
$
$
904
(8,389)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
57,497
12,701
40,730
1,498
17,746
7,728
1,048
38,646
52,975
17,743
914
4,950
12,587
5,427
22,954
716
3,294
Assets
Fixed maturity securities AFS
Equity securities
FVO securities
Mortgage loans
Policy loans
Short-term investments
Other invested assets
Cash and cash equivalents
Accrued investment income
Premiums, reinsurance and other receivables
Other assets
Embedded derivatives within asset host contracts (2)
Total assets
Liabilities (3)
Policyholder account balances
Payables for collateral under securities loaned and other transactions
Long-term debt
Other liabilities
Embedded derivatives within liability host contracts (2)
Total liabilities
Derivative Instruments
Interest rate swaps
Interest rate floors
Interest rate caps
Interest rate futures
Interest rate options
Interest rate forwards
Interest rate total return swaps
Synthetic GICs
Foreign currency swaps
Foreign currency forwards
Currency futures
Currency options
Credit default swaps
Equity futures
Equity index options
Equity variance swaps
Equity total return swaps
Total derivative instruments
Net Change
__________________
147
Table of Contents
(1)
(2)
(3)
Does not necessarily represent those financial instruments solely subject to foreign currency exchange rate risk.
Separate account assets and liabilities and Unit-linked investments and associated policyholder account balances,
which are foreign currency exchange rate sensitive, are not included herein as any foreign currency exchange rate risk
is borne by the contractholder, notwithstanding any general account guarantees which are included within embedded
derivatives (see footnote (2) below) or included within future policy benefits and other policy-related balances (see
footnote (3) below). Long-term debt excludes $5 million related to CSEs.
Embedded derivatives are recognized on the consolidated balance sheet in the same caption as the host contract.
Excludes $223.8 billion of liabilities, at carrying value, pursuant to insurance contracts reported within future policy
benefits and other policy-related balances. These liabilities would economically offset a significant portion of the net
change in fair value of our financial instruments resulting from a 10% appreciation in the U.S. dollar compared to all
other currencies.
Sensitivity to foreign currency exchange rates increased $0.1 billion to $8.4 billion at December 31, 2020 from
$8.3 billion at December 31, 2019. These sensitivities exclude those liabilities, at carrying value, pursuant to insurance
contracts reported within future policy benefits and other policy-related balances. These liabilities would economically offset
a significant portion of the net change in fair value of our financial instruments resulting from a 10% appreciation in the U.S.
dollar compared to all other currencies.
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Table of Contents
The table below provides additional detail regarding the potential loss in estimated fair value of our portfolio due to a
10% increase in equity prices at:
Assets
Equity securities
FVO securities
Other invested assets
Embedded derivatives within asset host contracts (2)
Total assets
Liabilities (3)
Policyholder account balances
Embedded derivatives within liability host contracts (2)
Total liabilities
Derivative Instruments
Interest rate swaps
Interest rate floors
Interest rate caps
Interest rate futures
Interest rate options
Interest rate forwards
Interest rate total return swaps
Synthetic GICs
Foreign currency swaps
Foreign currency forwards
Currency futures
Currency options
Credit default swaps
Equity futures
Equity index options
Equity variance swaps
Equity total return swaps
Total derivative instruments
Net Change
__________________
Notional
Amount
December 31, 2020
Estimated
Fair
Value (1)
(In millions)
Assuming a
10% Increase
in Equity
Prices
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
57,497
12,701
40,730
1,498
17,746
7,728
1,048
38,646
52,975
17,743
914
4,950
12,587
5,427
22,954
716
3,294
1,079
$
1,611
2,073
$
55
$
129,637
$
1,196
$
6,909
$
350
13
(2)
497
383
(59)
—
(628)
(80)
3
70
84
(24)
397
3
(279)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
85
74
51
(5)
205
—
225
225
—
—
—
—
—
—
—
—
—
—
—
—
—
(493)
49
—
(356)
(800)
(370)
(1)
(2)
(3)
Does not necessarily represent those financial instruments solely subject to equity price risk. Additionally, separate
account assets and liabilities and Unit-linked investments and associated policyholder account balances, which are
equity market sensitive, are not included herein as any equity market risk is borne by the contractholder,
notwithstanding any general account guarantees which are included within embedded derivatives (see footnote (2)
below) or included within future policy benefits and other policy-related balances (see footnote (3) below).
Embedded derivatives are recognized on the consolidated balance sheet in the same caption as the host contract.
Excludes $223.8 billion of liabilities, at carrying value, pursuant to insurance contracts reported within future policy
benefits and other policy-related balances.
Sensitivity to equity market prices increased $337 million to $370 million at December 31, 2020 from $33 million at
December 31, 2019.
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements, Notes and Schedules
Report of Independent Registered Public Accounting Firm
Financial Statements at December 31, 2020 and 2019 and for the Years Ended December 31, 2020, 2019
and 2018:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies
Note 2 — Segment Information
Note 3 — Acquisition and Dispositions
Note 4 — Insurance
Note 5 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles
Note 6 — Reinsurance
Note 7 — Closed Block
Note 8 — Investments
Note 9 — Derivatives
Note 10 — Fair Value
Note 11 — Leases
Note 12 — Goodwill
Note 13 — Long-term and Short-term Debt
Note 14 — Collateral Financing Arrangement
Note 15 — Junior Subordinated Debt Securities
Note 16 — Equity
Note 17 — Other Revenues and Other Expenses
Note 18 — Employee Benefit Plans
Note 19 — Income Tax
Note 20 — Earnings Per Common Share
Note 21 — Contingencies, Commitments and Guarantees
Note 22 — Quarterly Results of Operations (Unaudited)
Financial Statement Schedules at December 31, 2020 and 2019 and for the Years Ended December 31,
2020, 2019 and 2018:
Schedule I — Consolidated Summary of Investments — Other Than Investments in Related Parties
Schedule II — Condensed Financial Information (Parent Company Only)
Schedule III — Consolidated Supplementary Insurance Information
Schedule IV — Consolidated Reinsurance
150
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of MetLife, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MetLife, Inc. and subsidiaries (the “Company”) as of
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and
cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed
in the Index to Consolidated Financial Statements, Notes and Schedules (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 18, 2021, expressed an unqualified opinion on the Company’s internal control
over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
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Fixed Maturity Securities Available-for-Sale — Fair Value of Level 3 Fixed Maturity Securities — Refer to Notes 1, 8,
and 10 to the financial statements
Critical Audit Matter Description
The Company has investments in certain fixed maturity securities classified as available-for-sale whose fair values are based
on unobservable inputs that are supported by little or no market activity. When a price is not available in the active market,
from an independent pricing service, or from independent broker quotations, management values the security using internal
matrix pricing or discounted cash flow techniques. These investments are categorized as Level 3 and had an estimated fair
value of $5.1 billion as of December 31, 2020.
Given management uses considerable judgment when estimating the fair value of Level 3 fixed maturity securities
determined using internal matrix pricing or discounted cash flow techniques, performing audit procedures to evaluate the
estimate of fair value required a high degree of auditor judgment and an increased extent of effort. This audit effort included
the use of professionals with specialized skills and knowledge, including our fair value specialists, to assist in performing
procedures and evaluating the audit evidence obtained.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of Level 3 fixed maturity securities determined using internal matrix pricing or
discounted cash flow techniques included the following, among others:
• We tested the effectiveness of controls over the determination of fair value.
• We tested the accuracy and completeness of relevant security attributes, including credit ratings, maturity dates and
coupon rates, used in the determination of Level 3 fair values.
• With the involvement of our fair value specialists, we developed independent fair value estimates for a sample of
securities and compared our estimates to the Company’s estimates and evaluated differences. We developed our
estimate by evaluating the observable and unobservable inputs used by management or developing independent
inputs.
• We evaluated management’s ability to accurately estimate fair value by comparing management’s historical
estimates to subsequent transactions, taking into account changes in market conditions subsequent to December 31,
2020.
Insurance Liabilities — Valuation of Future Policy Benefits for Long-Term Care Insurance — Refer to Notes 1 and 4 to
the financial statements
Critical Audit Matter Description
The Company’s products include long-term care insurance. Liabilities for amounts payable under long-term care insurance
are recorded in future policy benefits in the Company’s consolidated balance sheets. Such liabilities are established based on
actuarial assumptions at the time policies are issued, which are intended to estimate the experience for the period the policy
benefits are payable. Significant adverse changes in experience on such contracts may require the establishment of premium
deficiency reserves, which are based on current assumptions. Management’s estimate of future policy benefits for long-term
care insurance was $14.3 billion as of December 31, 2020.
Management applies considerable judgment in evaluating actual experience to determine whether a change in assumptions
for long-term care insurance is warranted. Principal assumptions used in the valuation of future policy benefits for long-term
care insurance include morbidity, policy lapse, investment returns and mortality.
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Given the inherent uncertainty in selecting assumptions, we have determined that management’s evaluation of actual
experience when estimating future policy benefits for long-term care insurance policies is a critical audit matter, which
required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate
the judgments made and the reasonableness of the assumptions used in the valuation. The audit effort included the use of
professionals with specialized skill and knowledge, including our actuarial specialists, to assist in performing these
procedures and evaluating the audit evidence obtained from these procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assumptions used to determine the estimate of future policy benefits for long-term care
insurance, included, among others, the following:
• We tested the effectiveness of the control over the assumptions used in the valuation of future policy benefits and
the effectiveness of the controls over the underlying data.
• With the involvement of our actuarial specialists, we:
◦
◦
◦
evaluated judgments applied by management in setting principal assumptions, including evaluating the
results of experience studies used as the basis for setting those assumptions.
evaluated management’s estimate of, or developed an independent estimate of future policy benefits, on a
sample basis, and evaluated differences. This included confirming that assumptions were applied as
intended.
evaluated the results of the Company’s annual premium deficiency tests.
Derivatives — Valuation of Embedded Derivative Liabilities — Refer to Notes 1, 4, 9, and 10 to the financial statements
Critical Audit Matter Description
The Company’s products include variable annuity contracts with guaranteed minimum benefits that provide the policyholder
a minimum return based on their initial deposit adjusted for withdrawals. The guarantees on variable annuity contracts are
accounted for as insurance liabilities or as embedded derivatives depending on how and when the benefit is paid. Guarantees
accounted for as embedded derivatives include the non-life contingent portion of guaranteed minimum withdrawal benefits
and certain non-life contingent portions of guaranteed minimum income benefits and are recorded in policyholder account
balances on the Company’s consolidated balance sheet. Embedded derivatives are measured at estimated fair value separately
from the host variable annuity contract using actuarial and capital market assumptions that are updated annually.
Management’s estimate of embedded derivative liabilities was $1.2 billion as of December 31, 2020.
Management applies considerable judgment in selecting assumptions used to estimate embedded derivative liabilities and
changes in market conditions or variations in certain assumptions could result in significant fluctuations in the estimate.
Principal assumptions include mortality, lapse, dynamic lapse, withdrawal, utilization, and risk-free rates and implied
volatilities. The valuation of the embedded derivative liabilities is also based on complex calculations which are data
intensive.
Given the inherent uncertainty in selecting assumptions and the complexity of the calculations, we have determined that
management’s valuation of the embedded derivative liabilities is a critical audit matter which required a high degree of
auditor judgment and an increased extent of effort when performing audit procedures to evaluate the judgments made and the
reasonableness of the models and assumptions used in the valuation. The audit effort included the use of professionals with
specialized skill and knowledge, including our valuation, modeling and actuarial specialists, to assist in performing these
procedures and evaluating the audit evidence obtained from these procedures.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of embedded derivative liabilities included, among others, the following:
• We tested the effectiveness of controls over the assumptions, including controls over the underlying data used in the
valuation of embedded derivative liabilities.
• We tested the effectiveness of controls over the methodologies and models used for determining the embedded
derivative liabilities.
• With the involvement of our valuation, modeling and actuarial specialists, we:
◦
◦
◦
evaluated the methods, models, and judgments applied by management in the determination of principal
assumptions and the calculation of the embedded derivative liabilities
evaluated the results of underlying experience studies, capital market projections, and judgments applied by
management in setting the assumptions
developed an independent estimate of the embedded derivative liabilities, on a sample basis, and evaluated
differences.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 18, 2021
We have served as the Company’s auditor since at least 1968; however, an earlier year could not be reliably determined.
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Assets
Investments:
MetLife, Inc.
Consolidated Balance Sheets
December 31, 2020 and 2019
(In millions, except share and per share data)
2020
2019
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $310,811 and $297,655, respectively; allowance for credit
loss of $81 and $0, respectively)
Equity securities, at estimated fair value
Contractholder-directed equity securities and fair value option securities, at estimated fair value (includes $0 and $3, respectively, relating to
variable interest entities)
Mortgage loans (net of allowance for credit loss of $590 and $353, respectively; includes $165 and $188, respectively, under the fair value
option and $0 and $59, respectively, of mortgage loans held-for-sale)
Policy loans
Real estate and real estate joint ventures (includes $169 and $127, respectively, under the fair value option and $128 and $0, respectively, of real
estate held-for-sale)
Other limited partnership interests
Short-term investments, principally at estimated fair value
Other invested assets (includes $2,156 and $2,299, respectively, of leveraged and direct financing leases and $332 and $290, respectively,
relating to variable interest entities)
Total investments
Cash and cash equivalents, principally at estimated fair value (includes $12 and $12, respectively, relating to variable interest entities)
Accrued investment income
Premiums, reinsurance and other receivables (includes $4 and $4, respectively, relating to variable interest entities)
Deferred policy acquisition costs and value of business acquired
Goodwill
Assets held-for-sale
Other assets (includes $1 and $2, respectively, relating to variable interest entities)
Separate account assets
Total assets
Liabilities and Equity
Liabilities
Future policy benefits
Policyholder account balances
Other policy-related balances
Policyholder dividends payable
Policyholder dividend obligation
Payables for collateral under securities loaned and other transactions
Short-term debt
Long-term debt (includes $5 and $5, respectively, relating to variable interest entities)
Collateral financing arrangement
Junior subordinated debt securities
Current income tax payable
Deferred income tax liability
Liabilities held-for-sale
Other liabilities (includes $1 and $1, respectively, relating to variable interest entities)
Separate account liabilities
Total liabilities
Contingencies, Commitments and Guarantees (Note 21)
Equity
MetLife, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; $4,405 and $3,405, respectively, aggregate liquidation preference
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,181,614,288 and 1,177,680,299 shares issued, respectively;
892,910,600 and 915,338,098 shares outstanding, respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost; 288,703,688 and 262,342,201 shares, respectively
Accumulated other comprehensive income (loss)
Total MetLife, Inc.’s stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to the consolidated financial statements.
155
$
354,809
$
1,079
13,319
83,919
9,493
11,933
9,470
3,904
20,593
508,519
19,795
3,388
17,870
16,389
10,112
7,418
11,685
$
$
199,970
795,146
$
206,656
$
205,176
17,101
587
2,969
29,475
393
14,603
845
3,153
129
11,008
4,650
23,614
199,970
720,329
—
12
33,812
36,491
(13,829)
18,072
74,558
259
74,817
$
795,146
$
327,820
1,342
13,102
80,529
9,680
10,741
7,716
3,850
19,015
473,795
16,598
3,523
20,443
17,833
9,308
—
10,518
188,445
740,463
194,909
192,627
17,171
681
2,020
26,745
235
13,466
993
3,150
363
9,097
—
24,179
188,445
674,081
—
12
32,680
33,078
(12,678)
13,052
66,144
238
66,382
740,463
Table of Contents
MetLife, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2020, 2019 and 2018
(In millions, except per share data)
Revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims
Interest credited to policyholder account balances
Policyholder dividends
Other expenses
Total expenses
Income (loss) before provision for income tax
Provision for income tax expense (benefit)
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to MetLife, Inc.
Less: Preferred stock dividends
Preferred stock redemption premium
2020
2019
2018
$
42,034 $
42,235 $
43,840
5,603
17,117
1,849
(110)
1,349
67,842
5,603
18,868
1,842
444
628
5,502
16,166
1,880
(298)
851
69,620
67,941
41,461
41,461
42,656
5,214
1,090
13,150
60,915
6,927
1,509
5,418
11
5,407
202
14
6,464
1,211
13,689
62,825
6,795
886
5,909
10
5,899
178
—
4,013
1,251
13,714
61,634
6,307
1,179
5,128
5
5,123
141
—
Net income (loss) available to MetLife, Inc.’s common shareholders
$
5,191 $
5,721 $
4,982
Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic
Diluted
$
$
5.72 $
5.68 $
6.10 $
6.06 $
4.95
4.91
See accompanying notes to the consolidated financial statements.
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Table of Contents
MetLife, Inc.
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Net income (loss)
Other comprehensive income (loss):
Unrealized investment gains (losses), net of related offsets
Unrealized gains (losses) on derivatives
Foreign currency translation adjustments
Defined benefit plans adjustment
Other comprehensive income (loss), before income tax
Income tax (expense) benefit related to items of other comprehensive income (loss)
Other comprehensive income (loss), net of income tax
Comprehensive income (loss)
2020
2019
2018
$
5,418 $
5,909 $
5,128
5,198
(286)
1,169
181
6,262
(1,237)
5,025
10,443
14,591
(8,719)
60
(42)
30
14,639
(3,324)
11,315
17,224
674
(587)
263
(8,369)
1,754
(6,615)
(1,487)
Less: Comprehensive income (loss) attributable to noncontrolling interest, net of income
tax
Comprehensive income (loss) attributable to MetLife, Inc.
16
16
7
$
10,427 $
17,208 $
(1,494)
See accompanying notes to the consolidated financial statements.
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Table of Contents
MetLife, Inc.
Consolidated Statements of Equity
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Balance at December 31, 2017
$
—
$
12
$
31,111
$
26,527
$
(6,401) $
7,427
$
58,676
$
194
$
58,870
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
at Cost
Accumulated
Other
Comprehensive
Income (Loss)
Total
MetLife, Inc.’s
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
Cumulative effects of changes in accounting principles, net of
income tax
Preferred stock issuance
Treasury stock acquired in connection with share repurchases
Stock-based compensation
Dividends on preferred stock
Dividends on common stock (declared per share of $1.660)
Change in equity of noncontrolling interests
Net income (loss)
Other comprehensive income (loss), net of income tax
Balance at December 31, 2018
Cumulative effects of changes in accounting principles, net of
income tax (Note 1)
Treasury stock acquired in connection with share repurchases
Stock-based compensation
Dividends on preferred stock
Dividends on common stock (declared per share of $1.740)
Change in equity of noncontrolling interests
Net income (loss)
Other comprehensive income (loss), net of income tax
Balance at December 31, 2019
Cumulative effects of changes in accounting principles, net of
income tax (Note 1)
Redemption of preferred stock
Preferred stock redemption premium
Preferred stock issuance
Treasury stock acquired in connection with share repurchases
Stock-based compensation
Dividends on preferred stock
Dividends on common stock (declared per share of $1.820)
Change in equity of noncontrolling interests
Net income (loss)
Other comprehensive income (loss), net of income tax
Balance at December 31, 2020
(905)
912
(3,992)
1,274
89
(141)
(1,678)
5,123
—
12
32,474
28,926
(10,393)
(2,285)
206
74
(178)
(1,643)
5,899
—
12
32,680
33,078
(12,678)
(989)
1,961
160
(121)
(14)
(202)
(1,657)
5,407
(1,151)
(6,617)
1,722
21
11,309
13,052
5,020
7
1,274
(3,992)
89
(141)
(1,678)
—
5,123
(6,617)
52,741
95
(2,285)
206
(178)
(1,643)
—
5,899
11,309
66,144
(121)
(989)
(14)
1,961
(1,151)
160
(202)
(1,657)
—
5,407
5,020
7
1,274
(3,992)
89
(141)
(1,678)
16
5,128
(6,615)
52,958
95
(2,285)
206
(178)
(1,643)
5
5,909
11,315
66,382
(121)
(989)
(14)
1,961
(1,151)
160
(202)
(1,657)
5
5,418
5,025
16
5
2
217
5
10
6
238
5
11
5
$
—
$
12
$
33,812
$
36,491
$
(13,829) $
18,072
$
74,558
$
259
$
74,817
See accompanying notes to the consolidated financial statements.
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Table of Contents
MetLife, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
2020
2019
2018
$
5,418
$
5,909
$
5,128
Depreciation and amortization expenses
Amortization of premiums and accretion of discounts associated with investments, net
(Gains) losses on investments and from sales of businesses, net
(Gains) losses on derivatives, net
(Income) loss from equity method investments, net of dividends or distributions
Interest credited to policyholder account balances
Universal life and investment-type product policy fees
Change in contractholder-directed equity securities and fair value option securities
Change in accrued investment income
Change in premiums, reinsurance and other receivables
Change in deferred policy acquisition costs and value of business acquired, net
Change in income tax
Change in other assets
Change in insurance-related liabilities and policy-related balances
Change in other liabilities
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities available-for-sale
Equity securities
Mortgage loans
Real estate and real estate joint ventures
Other limited partnership interests
Purchases and originations of:
Fixed maturity securities available-for-sale
Equity securities
Mortgage loans
Real estate and real estate joint ventures
Other limited partnership interests
Cash received in connection with freestanding derivatives
Cash paid in connection with freestanding derivatives
Purchases of businesses, net of cash received of $191, $0 and $0, respectively
Net change in policy loans
Net change in short-term investments
Net change in other invested assets
Other, net
619
(816)
110
(656)
76
5,348
(3,664)
131
104
842
101
(11)
(361)
5,112
(1,065)
351
11,639
77,979
367
11,300
120
597
(89,633)
(169)
(14,652)
(1,287)
(1,979)
4,847
(4,247)
(1,684)
250
(341)
(176)
139
630
(999)
(444)
(135)
254
6,464
(5,603)
(139)
8
(514)
(463)
233
426
7,803
71
285
13,786
77,820
294
12,838
1,123
625
(87,455)
(130)
(17,657)
(1,962)
(1,674)
2,914
(3,749)
(32)
5
152
(567)
(131)
628
(1,013)
298
(207)
251
4,013
(5,502)
2,212
(121)
(1,809)
(249)
940
260
7,454
(483)
(62)
11,738
106,677
342
9,918
1,227
675
(105,401)
(235)
(17,059)
(1,118)
(1,406)
3,778
(4,173)
—
(37)
870
340
(32)
Net cash provided by (used in) investing activities
$
(18,569) $
(17,586) $
(5,634)
See accompanying notes to the consolidated financial statements.
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Table of Contents
MetLife, Inc.
Consolidated Statements of Cash Flows — (continued)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Cash flows from financing activities
Policyholder account balances:
Deposits
Withdrawals
Payables for collateral under securities loaned and other transactions:
Net change in payables for collateral under securities loaned and other transactions
Cash received for other transactions with tenors greater than three months
Cash paid for other transactions with tenors greater than three months
Long-term debt issued
Long-term debt repaid
Collateral financing arrangement repaid
Financing element on certain derivative instruments and other derivative related transactions, net
Treasury stock acquired in connection with share repurchases
Preferred stock issued, net of issuance costs
Redemption of preferred stock
Preferred stock redemption premium
Dividends on preferred stock
Dividends on common stock
Other, net
Net cash provided by (used in) financing activities
Effect of change in foreign currency exchange rates on cash and cash equivalents balances
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, including subsidiary held-for-sale, end of year
Cash and cash equivalents, subsidiary held-for-sale, end of year
Cash and cash equivalents, end of year
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest
Income tax
Business acquisitions (Note 3):
Assets
Liabilities
Cash paid, excluding transaction costs
Subsidiary held-for-sale (Note 3):
Assets held-for-sale
Liabilities held-for-sale
Net assets held-for-sale
Non-cash transactions:
Fixed maturity securities available-for-sale received in connection with pension risk transfer transactions
Operating lease liability associated with the recognition of right-of-use assets
Brighthouse common stock exchange transaction (Note 3):
Reduction of long-term debt
Reduction of fair value option securities
Reclassification of certain equity securities to other invested assets
2020
2019
2018
$
93,497
$
92,122
$
(85,251)
(85,598)
92,327
(88,061)
3,538
150
(175)
1,124
(99)
(148)
(46)
(1,151)
1,961
(989)
(14)
(202)
(1,657)
191
10,729
163
3,962
16,598
20,560
765
19,795
$
$
$
891
787
$
$
2,190
$
315
1,875
$
7,418
$
4,650
2,768
$
2,037
70
—
—
—
$
$
$
$
$
2,019
125
(200)
1,382
(906)
(67)
(126)
(2,285)
—
—
—
(178)
(1,643)
(77)
4,568
9
777
15,821
16,598
—
16,598
964
1,099
—
—
—
—
—
—
637
341
—
—
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(821)
200
—
24
(1,871)
(61)
144
(3,992)
1,274
—
—
(141)
(1,678)
(145)
(2,801)
(183)
3,120
12,701
15,821
—
15,821
1,130
1,935
—
—
—
—
—
—
3,016
—
944
1,030
792
$
$
$
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to the consolidated financial statements.
160
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MetLife, Inc.
Notes to the Consolidated Financial Statements
1. Business, Basis of Presentation and Summary of Significant Accounting Policies
Business
“MetLife” and the “Company” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and
affiliates. MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee
benefits and asset management. MetLife is organized into five segments: U.S.; Asia; Latin America; Europe, the Middle East
and Africa (“EMEA”); and MetLife Holdings.
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 on the consolidated financial statements. In applying these policies and estimates, management makes
subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain, including
uncertainties associated with the novel coronavirus COVID-19 pandemic (the “COVID-19 Pandemic”). Many of these
policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to
the Company’s business and operations. Actual results could differ from these estimates.
Consolidation
The accompanying consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well
as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the
Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.
Held-for-Sale
The Company classifies a business as held-for-sale when management has approved or received approval to sell the
business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current
estimated fair value and certain other specified criteria are met. The business classified as held-for-sale is recorded at the
lower of the carrying value and estimated fair value, less cost to sell. If the carrying value of the business exceeds its
estimated fair value, less cost to sell, a loss is recognized and reported in Net investment gains (losses). Assets and
liabilities related to the business classified as held-for-sale are separately reported in the Company's consolidated balance
sheets in the period in which the business is classified as held-for-sale. See Note 3 for information on a held-for-sale
business. If a component of the Company has either been disposed of or is classified as held-for-sale and represents a
strategic shift that has or will have a major effect on the Company’s operations and financial results, the results of the
component are reported in discontinued operations.
Separate Accounts
Separate accounts are established in conformity with insurance laws. Generally, the assets of the separate accounts
cannot be used to settle the liabilities that arise from any other business of the Company. Separate account assets are
subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. The
Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate
accounts if:
•
•
•
•
such separate accounts are legally recognized;
assets supporting the contract liabilities are legally insulated from the Company’s general account liabilities;
investment objectives are directed by the contractholder; and
all investment performance, net of contract fees and assessments, is passed through to the contractholder.
161
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
The Company reports separate account assets at their fair value which is based on the estimated fair values of the
underlying assets comprising the individual separate account portfolios. Investment performance (including investment
income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to
contractholders of such separate accounts are offset within the same line on the statements of operations. Separate accounts
credited with a contractual investment return are combined on a line-by-line basis with the Company’s general account
assets, liabilities, revenues and expenses and the accounting for these investments is consistent with the methodologies
described herein for similar financial instruments held within the general account. Unit-linked separate account investments
that are directed by contractholders but do not meet one or more of the other above criteria are included in fair value option
(“FVO”) securities (“FVO Securities”).
The Company’s revenues reflect fees charged to the separate accounts, including mortality charges, risk charges,
policy administration fees, investment management fees and surrender charges. Such fees are included in universal life and
investment-type product policy fees on the statements of operations.
Summary of Significant Accounting Policies
The following are the Company’s significant accounting policies with references to notes providing additional
information on such policies and critical accounting estimates relating to such policies.
Accounting Policy
Insurance
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles
Reinsurance
Investments
Derivatives
Fair Value
Goodwill
Employee Benefit Plans
Income Tax
Litigation Contingencies
Insurance
Note
4
5
6
8
9
10
12
18
19
21
Future Policy Benefit Liabilities and Policyholder Account Balances
The Company establishes liabilities for amounts payable under insurance policies. Generally, amounts are payable
over an extended period of time and related liabilities are calculated as the present value of future expected benefits to be
paid, reduced by the present value of future expected premiums. Such liabilities are established based on methods and
underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the
establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, disability
incidence, disability terminations, investment returns, inflation, expenses and other contingent events as appropriate to
the respective product type and geographical area. These assumptions are established at the time the policy is issued and
are intended to estimate the experience for the period the policy benefits are payable. Utilizing these assumptions,
liabilities are established on a block of business basis. For long duration insurance contracts, assumptions such as
mortality, morbidity and interest rates are “locked in” upon the issuance of new business. However, significant adverse
changes in experience on such contracts may require the establishment of premium deficiency reserves. Such reserves
are determined based on the then current assumptions and do not include a provision for adverse deviation.
Premium deficiency reserves may also be established for short-duration contracts to provide for expected future
losses. These reserves are based on actuarial estimates of the amount of loss inherent in that period, including losses
incurred for which claims have not been reported. The provisions for unreported claims are calculated using studies that
measure the historical length of time between the incurred date of a claim and its eventual reporting to the Company.
Anticipated investment income is considered in the calculation of premium deficiency losses for short-duration contracts.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Liabilities for universal and variable life policies with secondary guarantees (“ULSG”) and paid-up guarantees are
determined by estimating the expected value of death benefits payable when the account balance is projected to be zero
and recognizing those benefits ratably over the life of the contract based on total expected assessments. The assumptions
used in estimating the secondary and paid-up guarantee liabilities are consistent with those used for amortizing deferred
policy acquisition costs (“DAC”), and are thus subject to the same variability and risk as further discussed herein. The
assumptions of investment performance and volatility for variable products are consistent with historical experience of
appropriate underlying equity indices, such as the S&P Global Ratings (“S&P”) 500 Index. The benefits used in
calculating the liabilities are based on the average benefits payable over a range of scenarios.
The Company regularly reviews its estimates of liabilities for future policy benefits and compares them with its
actual experience. Differences result in changes to the liability balances with related charges or credits to benefit
expenses in the period in which the changes occur.
Policyholder account balances relate to contracts or contract features where the Company has no significant
insurance risk.
The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum
benefits that provide the policyholder a minimum return based on their initial deposit adjusted for withdrawals. These
guarantees are accounted for as insurance liabilities or as embedded derivatives depending on how and when the benefit
is paid. Specifically, a guarantee is accounted for as an embedded derivative if a guarantee is paid without requiring
(i) the occurrence of a specific insurable event, or (ii) the policyholder to annuitize. Alternatively, a guarantee is
accounted for as an insurance liability if the guarantee is paid only upon either (i) the occurrence of a specific insurable
event, or (ii) annuitization. In certain cases, a guarantee may have elements of both an insurance liability and an
embedded derivative and in such cases the guarantee is split and accounted for under both models.
Guarantees accounted for as insurance liabilities in future policy benefits include guaranteed minimum death
benefits (“GMDBs”), the life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”), elective
annuitizations of guaranteed minimum income benefits (“GMIBs”), and the life contingent portion of GMIBs that
require annuitization when the account balance goes to zero.
Guarantees accounted for as embedded derivatives in policyholder account balances include guaranteed minimum
accumulation benefits (“GMABs”), the non-life contingent portion of GMWBs and certain non-life contingent portions
of GMIBs. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee
fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any
additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees.
Other Policy-Related Balances
Other policy-related balances include policy and contract claims, premiums received in advance, unearned revenue
liabilities, obligations assumed under structured settlement assignments, policyholder dividends due and unpaid,
policyholder dividends left on deposit and negative value of business acquired (“VOBA”).
The liability for policy and contract claims generally relates to incurred but not reported (“IBNR”) death, disability,
dental and vision claims. In addition, included in other policy-related balances are claims which have been reported but
not yet settled for death, disability and dental. The liability for these claims is based on the Company’s estimated
ultimate cost of settling all claims. The Company derives estimates for the development of IBNR claims principally from
analyses of historical patterns of claims by business line. The methods used to determine these estimates are continually
reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments
for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or
payments are made.
The Company accounts for the prepayment of premiums on its individual life, group life and health contracts as
premiums received in advance. These amounts are then recognized in premiums when due.
The unearned revenue liability relates to universal life and investment-type products and represents policy charges
for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the
product’s estimated gross profits and margins, similar to DAC as discussed further herein. Such amortization is recorded
in universal life and investment-type product policy fees.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
See “— Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles” for a discussion of
negative VOBA.
Recognition of Insurance Revenues and Deposits
Premiums related to traditional life, annuity contracts with life contingencies, long-duration accident & health, and
credit insurance policies are recognized as revenues when due from policyholders. Policyholder benefits and expenses
are provided to recognize profits over the estimated lives of the insurance policies. When premiums are due over a
significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized
into earnings in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy
benefit payments.
Premiums related to short-duration non-medical health and disability, accident & health, and certain credit insurance
contracts are recognized on a pro rata basis over the applicable contract term.
Deposits related to universal life and investment-type products are credited to policyholder account balances.
Revenues from such contracts consist of fees for mortality, policy administration and surrender charges and are recorded
in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are
charged to earnings include interest credited and benefit claims incurred in excess of related policyholder account
balances.
Premiums related to property & casualty contracts are recognized as revenue on a pro rata basis over the applicable
contract term. Unearned premiums, representing the portion of premium written related to the unexpired coverage, are
included in future policy benefits.
All revenues and expenses are presented net of reinsurance, as applicable.
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles
The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are
related directly to the successful acquisition or renewal of insurance contracts are capitalized as DAC. Such costs include:
•
•
•
•
incremental direct costs of contract acquisition, such as commissions;
the portion of an employee’s total compensation and benefits related to time spent selling, underwriting or
processing the issuance of new and renewal insurance business only with respect to actual policies acquired or
renewed;
other essential direct costs that would not have been incurred had a policy not been acquired or renewed; and
the costs of direct-response advertising, the primary purpose of which is to elicit sales to customers who could be
shown to have responded specifically to the advertising and that results in probable future benefits.
All other acquisition-related costs, including those related to general advertising and solicitation, market research,
agent training, product development, unsuccessful sales and underwriting efforts, as well as all indirect costs, are expensed
as incurred.
VOBA is an intangible asset resulting from a business combination that represents the excess of book value over the
estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The
estimated fair value of the acquired liabilities is based on projections, by each block of business, of future policy and
contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses,
investment returns, nonperformance risk adjustment and other factors. Actual experience with the purchased business may
vary from these projections.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
DAC and VOBA are amortized as follows:
Products:
• Nonparticipating and non-dividend-paying traditional contracts:
In proportion to the following over estimated lives of the contracts:
Actual and expected future gross premiums.
• Term insurance
• Nonparticipating whole life insurance
• Traditional group life insurance
• Non-medical health insurance
• Accident & health insurance
• Participating, dividend-paying traditional contracts
• Fixed and variable universal life contracts
• Fixed and variable deferred annuity contracts
• Credit insurance contracts
• Property & casualty insurance contracts
• Other short-duration contracts
Actual and expected future gross margins.
Actual and expected future gross profits.
Actual and future earned premiums.
See Note 5 for additional information on DAC and VOBA amortization. Amortization of DAC and VOBA is included
in other expenses.
The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA
are aggregated on the financial statements for reporting purposes.
The Company generally has two different types of sales inducements which are included in other assets: (i) the
policyholder receives a bonus whereby the policyholder’s initial account balance is increased by an amount equal to a
specified percentage of the customer’s deposit; and (ii) the policyholder receives a higher interest rate using a dollar cost
averaging method than would have been received based on the normal general account interest rate credited. The Company
defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used
to amortize DAC. The amortization of sales inducements is included in policyholder benefits and claims. Each year, or
more frequently if circumstances indicate a potential recoverability issue exists, the Company reviews deferred sales
inducements (“DSI”) to determine the recoverability of the asset.
Value of distribution agreements acquired (“VODA”) is reported in other assets and represents the present value of
expected future profits associated with the expected future business derived from the distribution agreements acquired as
part of a business combination. Value of customer relationships acquired (“VOCRA”) is also reported in other assets and
represents the present value of the expected future profits associated with the expected future business acquired through
existing customers of the acquired company or business. The VODA and VOCRA associated with past business
combinations are amortized over the assets’ useful lives ranging from nine to 40 years and such amortization is included in
other expenses. Each year, or more frequently if circumstances indicate a possible impairment exists, the Company reviews
VODA and VOCRA to determine whether the asset is impaired.
For certain acquired blocks of business, the estimated fair value of the in-force contract obligations exceeded the book
value of assumed in-force insurance policy liabilities, resulting in negative VOBA, which is presented separately from
VOBA as an additional insurance liability. The estimated fair value of the in-force contract obligations is based on
projections by each block of business. Negative VOBA is amortized over the policy period in proportion to the
approximate consumption of losses included in the liability usually expressed in terms of insurance in-force or account
value. Such amortization is recorded as an offset in other expenses.
Reinsurance
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification
against loss or liability relating to insurance risk in accordance with applicable accounting standards. Cessions under
reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The Company reviews all
contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features
that delay the timely reimbursement of claims.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the
difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying
contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance
is amortized on a basis consistent with the methodologies and assumptions used for amortizing DAC related to the
underlying reinsured contracts. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as
amounts paid (received) related to new business, are recorded as ceded (assumed) premiums; and ceded (assumed)
premiums, reinsurance and other receivables (future policy benefits) are established.
For prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts
paid (received) are recorded as ceded (assumed) premiums and ceded (assumed) unearned premiums. Unearned premiums
are reflected as a component of premiums, reinsurance and other receivables (future policy benefits). Such amounts are
amortized through earned premiums over the remaining contract period in proportion to the amount of insurance protection
provided. For retroactive reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts
paid (received) in excess of the related insurance liabilities ceded (assumed) are recognized immediately as a loss and are
reported in the appropriate line item within the statement of operations. Any gain on such retroactive agreement is deferred
and is amortized as part of DAC, primarily using the recovery method.
Amounts currently recoverable under reinsurance agreements are included in premiums, reinsurance and other
receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance
agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the
reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the
reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance
recoverable balances are stated net of allowances for uncollectible reinsurance.
Premiums, fees and policyholder benefits and claims include amounts assumed under reinsurance agreements and are
net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues.
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a
significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits
received are included in other liabilities and deposits made are included within premiums, reinsurance and other
receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are
adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the
Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through
other revenues or other expenses, as appropriate.
Investments
Net Investment Income and Net Investment Gains (Losses)
Income from investments is reported within net investment income, unless otherwise stated herein. Gains and losses
on sales of investments, intent-to-sell impairments, as well as provisions for credit loss in the allowance for credit loss
(“ACL”) on fixed maturity securities available-for-sale (“AFS”), mortgage loans and investments in leases and
subsequent changes in the ACL or for impairment losses on real estate investments and other asset classes, are reported
within net investment gains (losses), unless otherwise stated herein. Accrued investment income is presented separately
on the consolidated balance sheet and excluded from the carrying value of the related investments, primarily fixed
maturity securities AFS and mortgage loans.
Fixed Maturity Securities
The majority of the Company’s fixed maturity securities are classified as AFS and are reported at their estimated fair
value. Unrealized investment gains and losses on these securities are recorded as a separate component of other
comprehensive income (loss) (“OCI”), net of policy-related amounts and deferred income taxes. All security transactions
are recorded on a trade date basis. Sales of securities are determined on a specific identification basis.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective
yield method giving effect to amortization of premium and accretion of discount, and is based on the estimated economic
life of the securities, which for mortgage-backed and asset-backed securities considers the estimated timing and amount
of prepayments of the underlying loans. See Note 8 “— Fixed Maturity Securities AFS — Methodology for
Amortization of Premium and Accretion of Discount on Structured Products.” The amortization of premium and
accretion of discount also take into consideration call and maturity dates.
The Company periodically evaluates these securities for impairment. The assessment of whether impairments have
occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair
value as described in Note 8 “— Fixed Maturity Securities AFS — Evaluation of Fixed Maturity Securities AFS for
Credit Loss.”
Prior to January 1, 2020, the Company applied other than temporary impairment (“OTTI”) guidance for securities in
an unrealized loss position. An OTTI was recognized in earnings within net investment gains (losses) when it was
anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the
security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the
reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s
amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost
of the security and the present value of projected future cash flows expected to be collected was recognized as a
reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of
projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors was
recorded in OCI.
On January 1, 2020, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-
Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified
retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in
earnings within net investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When
either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be
required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the
entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the
difference between the amortized cost of the security and the present value of projected future cash flows expected to be
collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in net investment
gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This
limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future
cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit
loss”) is recorded in OCI.
The new credit loss guidance also replaces the model for purchased credit impaired (“PCI”) fixed maturity securities
AFS and financing receivables and requires the establishment of an ACL at acquisition, which is added to the purchase
price to establish the initial amortized cost of the investment. Upon adoption, the replacement of the PCI model did not
have a material impact on the Company’s consolidated financial statements.
Equity Securities
Equity securities are reported at their estimated fair value, with changes in estimated fair value included in net
investment gains (losses). Sales of securities are determined on a specific identification basis. Dividends are recognized
in net investment income when declared.
Contractholder-Directed Equity Securities and FVO Securities
Contractholder-directed equity securities and FVO Securities (collectively, “Unit-linked and FVO Securities”) are
investments for which the FVO has been elected, or are otherwise required to be carried at estimated fair value, and
include:
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
•
•
•
investments supporting unit-linked variable annuity
contractholder-directed
liabilities (“Unit-linked
investments”) which do not qualify for presentation and reporting as separate account summary total assets and
liabilities. These investments are primarily equity securities (including mutual funds) and, to a lesser extent, fixed
income investments and cash and cash equivalents. The investment returns on these investments inure to
contractholders and are offset by a corresponding change in policyholder account balances through interest credited
to policyholder account balances;
type
fixed maturity and equity securities held-for-investment by the general account to support asset and liability
management strategies for certain insurance products and investments in certain separate accounts; and
securities held by consolidated securitization entities (“CSEs”).
Mortgage Loans
ASU 2016-13 requires an ACL based on expected lifetime credit loss on financing receivables carried at amortized
cost, including, but not limited to, mortgage loans and leveraged and direct financing leases, as described in Note 8.
The Company disaggregates its mortgage loan investments into three portfolio segments: commercial, agricultural
and residential. Also included in commercial mortgage loans are revolving line of credit loans collateralized by
commercial properties. The accounting policies that are applicable to all portfolio segments are presented below and the
accounting policies related to each of the portfolio segments are included in Note 8.
Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred
fees or expenses, and are net of ACL. Interest income and prepayment fees are recognized when earned. Interest income
is recognized using an effective yield method giving effect to amortization of premium and accretion of discount.
The Company ceases to accrue interest when the collection of interest is not considered probable, which is based on
a current evaluation of the status of the borrower, including the number of days past due. When a loan is placed on non-
accrual status, uncollected past due accrued interest income that is considered uncollectible is charged-off against net
investment income. Generally, the accrual of interest income resumes after all delinquent amounts are paid and
management believes all future principal and interest payments will be collected. The Company records cash receipts on
non-accruing loans in accordance with the loan agreement. The Company records charge-offs upon the realization of a
credit loss, typically through foreclosure or after a decision is made to sell a loan, or for residential loans when, after
considering the individual consumer’s financial status, management believes amounts are not collectible. Gain or loss
upon charge-off is recorded, net of previously established ACL, in net investment gains (losses). Cash recoveries on
principal amounts previously charged-off are generally recorded in net investment gains.
Also included in mortgage loans are residential mortgage loans for which the FVO was elected, and which are stated
at estimated fair value. Changes in estimated fair value are recognized in net investment income.
Mortgage loans that were previously designated as held-for-investment, but now are designated as held-for-sale, are
stated at the lower of amortized cost or estimated fair value.
Policy Loans
Policy loans are stated at unpaid principal balances. Interest income is recorded as earned using the contractual
interest rate. Generally, accrued interest is capitalized on the policy’s anniversary date. Valuation allowances are not
established for policy loans, as they are fully collateralized by the cash surrender value of the underlying insurance
policies. Any unpaid principal and accrued interest are deducted from the cash surrender value or the death benefit prior
to settlement of the insurance policy.
Real Estate
Real estate held-for-investment is stated at cost less accumulated depreciation. Depreciation is recorded on a
straight-line basis over the estimated useful life of the asset (typically 20 to 55 years). Rental income is recognized on a
straight-line basis over the term of the respective leases. The Company periodically reviews its real estate held-for-
investment for impairment and tests for recoverability whenever events or changes in circumstances indicate the carrying
value may not be recoverable. Properties whose carrying values are greater than their undiscounted cash flows are
written down to their estimated fair value, which is generally computed using the present value of expected future cash
flows discounted at a rate commensurate with the underlying risks.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Real estate for which the Company commits to a plan to sell within one year and actively markets in its current
condition for a reasonable price in comparison to its estimated fair value is classified as held-for-sale. Real estate held-
for-sale is stated at the lower of depreciated cost or estimated fair value less expected disposition costs and is not
depreciated.
Real Estate Joint Ventures and Other Limited Partnership Interests
The Company uses the equity method of accounting or the FVO for real estate joint ventures and other limited
partnership interests (“investee”) when it has more than a minor ownership interest or more than a minor influence over
the investee’s operations. The Company generally recognizes its share of the investee’s earnings in net investment
income on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the
investee’s reporting period differs from the Company’s reporting period.
The Company accounts for its interest in real estate joint ventures and other limited partnership interests in which it
has virtually no influence over the investee’s operations at estimated fair value. Changes in estimated fair value of these
investments are included in net investment gains (losses). Because of the nature and structure of these investments, they
do not meet the characteristics of an equity security in accordance with applicable accounting standards.
The Company routinely evaluates its equity method investments for impairment. For equity method investees, the
Company considers financial and other information provided by the investee, other known information and inherent risks
in the underlying investments, as well as future capital commitments, in determining whether an impairment has
occurred.
Short-term Investments
Short-term investments include highly liquid securities and other investments with remaining maturities of one year
or less, but greater than three months, at the time of purchase. Securities included within short-term investments are
stated at estimated fair value, while other investments included within short-term investments are stated at amortized cost
less ACL, which approximates estimated fair value.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Other Invested Assets
Other invested assets consist principally of the following:
•
•
•
•
•
•
•
•
Freestanding derivatives with positive estimated fair values which are described in “— Derivatives” below.
Tax credit and renewable energy partnerships which derive a significant source of investment return in the form of
income tax credits or other tax incentives. Where tax credits are guaranteed by a creditworthy third party, the
investment is accounted for under the effective yield method. Otherwise, the investment is accounted for under the
equity method. See Note 19.
Annuities funding structured settlement claims represent annuities funding claims assumed by the Company in its
capacity as a structured settlements assignment company. The annuities are stated at their contract value, which
represents the present value of the future periodic claim payments to be provided. The net investment income
recognized reflects the amortization of discount of the annuity at its implied effective interest rate.
Direct financing leases net investment is equal to the minimum lease payment receivables plus the unguaranteed
residual value, less the unearned income, less ACL. Income is determined by applying the pre-tax internal rate of
return to the investment balance. The Company regularly reviews its minimum lease payment receivables for credit
loss and residual value for impairments. Certain direct financing leases are linked to inflation.
Leveraged leases net investment is equal to the minimum lease payment receivables plus the unguaranteed residual
value, less the unearned income, less ACL and is recorded net of non-recourse debt. Income is determined by
applying the leveraged lease’s estimated rate of return to the net investment in the lease in those periods in which the
net investment at the beginning of the period is positive. Leveraged leases derive investment returns in part from
their income tax treatment. The Company regularly reviews its minimum lease payment receivables for credit loss
and residual value for impairments.
Investments in operating joint ventures that engage in insurance underwriting activities are accounted for under the
equity method.
Investments in Federal Home Loan Bank (“FHLB”) common stock are carried at redemption value and are
considered restricted investments until redeemed by the respective regional FHLBs.
Funds withheld represent a receivable for amounts contractually withheld by ceding companies in accordance with
reinsurance agreements. The Company recognizes interest on funds withheld at rates defined by the terms of the
agreement which may be contractually specified or directly related to the underlying investments.
Securities Lending, Repurchase Agreements and FHLB of Boston Advance Agreements
The Company accounts for securities lending transactions and repurchase agreements as financing arrangements and
the associated liability is recorded at the amount of cash received. Income and expenses associated with securities
lending transactions and repurchase agreements are reported as investment income and investment expense, respectively,
within net investment income. While the collateral management practices are unique to the FHLB of Boston short-term
advance agreements program, these transactions are accounted for, have collateral maintenance requirements and have
restrictions on securities pledged similar to securities lending transactions.
Securities Lending
The Company enters into securities lending transactions, whereby blocks of securities are loaned to third parties,
primarily brokerage firms and commercial banks. The Company obtains collateral at the inception of the loan, usually
cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned, and maintains it at a
level greater than or equal to 100% for the duration of the loan. Securities loaned under such transactions may be sold
or re-pledged by the transferee. The Company is liable to return to the counterparties the cash collateral received.
Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or
re-pledged, unless the counterparty is in default, and is not reflected on the Company’s consolidated financial
statements. The Company monitors the ratio of the collateral held to the estimated fair value of the securities loaned on
a daily basis and additional collateral is obtained as necessary throughout the duration of the loan.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Repurchase Agreements
The Company participates in short-term repurchase agreements with unaffiliated financial institutions. Under
these agreements, the Company lends fixed maturity securities and receives cash as collateral in an amount generally
equal to 85% to 100% of the estimated fair value of the securities loaned at the inception of the transaction. The
Company monitors the ratio of the collateral held to the estimated fair value of the securities loaned throughout the
duration of the transaction and additional collateral is obtained as necessary. Securities loaned under such transactions
may be sold or re-pledged by the transferee.
FHLB of Boston Advance Agreements
A subsidiary of the Company has entered into short-term advance agreements with the FHLB of Boston. Under
these advance agreements, the subsidiary pledges fixed maturity securities AFS as collateral and receives cash, which
is segregated and reinvested, primarily into fixed maturity securities AFS and cash equivalents. Securities pledged as
collateral may not be sold or re-pledged by the transferee.
Derivatives
Freestanding Derivatives
Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or
as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts
recognized for derivatives executed with the same counterparty under the same master netting agreement.
Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However,
accruals that are not scheduled to settle within one year are included with the derivative’s carrying value in other
invested assets or other liabilities.
If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge
accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as
follows:
Statement of Operations Presentation:
Policyholder benefits and claims
Net investment income
Derivative:
• Economic hedges of variable annuity guarantees included
in future policy benefits
• Economic hedges of equity method investments in joint
ventures
• Derivatives held within Unit-linked investments
• Economic hedges of FVO Securities which are linked to
equity indices
Hedge Accounting
To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its
risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge.
Hedge designation and financial statement presentation of changes in estimated fair value of the hedging derivatives are
as follows:
•
•
•
Fair value hedge - a hedge of the estimated fair value of a recognized asset or liability - in the same line item as
the earnings effect of the hedged item. The carrying value of the hedged recognized asset or liability is adjusted
for changes in its estimated fair value due to the hedged risk.
Cash flow hedge - a hedge of a forecasted transaction or of the variability of cash flows to be received or paid
related to a recognized asset or liability - in OCI and reclassified into the statement of operations when the
Company’s earnings are affected by the variability in cash flows of the hedged item.
Net investment in a foreign operation (“NIFO”) hedge - in OCI, consistent with the translation adjustment for the
hedged net investment in the foreign operation.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
The changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately
reported on the statement of operations within interest income or interest expense to match the location of the hedged
item. Accruals on derivatives in net investment hedges are recognized in OCI.
In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated
risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the
hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly
effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at
least quarterly throughout the life of the designated hedging relationship. Assessments of hedge effectiveness are also
subject to interpretation and estimation and different interpretations or estimates may have a material effect on the
amount reported in net income.
The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer
highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative
expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur;
or (iv) the derivative is de-designated as a hedging instrument.
When hedge accounting is discontinued because it is determined that the derivative is not highly effective in
offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the
balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses).
The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes
in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into
income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of
occurring, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are
released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the
hedged item.
When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur
on the anticipated date or within two months of that date, the derivative continues to be carried on the balance sheet at its
estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred
gains and losses of a derivative recorded in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction
that is no longer probable of occurring are recognized immediately in net investment gains (losses).
In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value
on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative
gains (losses).
Embedded Derivatives
The Company issues certain products, which include variable annuities, and investment contracts and is a party to
certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded
derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host
contract and accounted for as a freestanding derivative if:
•
•
•
the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair
value recorded in earnings;
the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host
contract; and
a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and
changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to
properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried
on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net
investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on
the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net
investment gains (losses) or net investment income if that contract contains an embedded derivative that requires
bifurcation. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee
fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any
additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees.
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial
recognition.
Subsequent to initial recognition, fair values are based on unadjusted quoted prices for identical assets or liabilities in
active markets that are readily and regularly obtainable. When such unadjusted quoted prices are not available, estimated
fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical assets or
liabilities, or other observable inputs. If these inputs are not available, or observable inputs are not determinable,
unobservable inputs and/or adjustments to observable inputs requiring management’s judgment are used to determine the
estimated fair value of assets and liabilities.
Goodwill
On January 1, 2020, the Company adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment, using a prospective transition approach for goodwill impairment testing. Goodwill
represents the future economic benefits arising from net assets acquired in a business combination that are not individually
identified and recognized. Goodwill is calculated as the excess of cost over the estimated fair value of such net assets
acquired, is not amortized, and is tested for impairment based on a fair value approach at least annually, or more frequently
if events or circumstances indicate that there may be justification for conducting an interim test. The Company performs its
annual goodwill impairment testing during the third quarter based upon data as of the close of the second quarter. Goodwill
associated with a business acquisition is not tested for impairment during the year the business is acquired unless there is a
significant identified impairment event.
The impairment test is performed at the reporting unit level, which is the operating segment or a business one level
below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that
level. For purposes of goodwill impairment testing, if the carrying value of a reporting unit exceeds its estimated fair value,
an impairment charge would be recognized for the amount by which the carrying value exceeds the reporting unit’s fair
value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.
Additionally, the Company will consider income tax effects from any tax deductible goodwill on the carrying value of the
reporting unit when measuring the goodwill impairment loss, if applicable.
On an ongoing basis, the Company evaluates potential triggering events that may affect the estimated fair value of the
Company’s reporting units to assess whether any goodwill impairment exists. Deteriorating or adverse market conditions
for certain reporting units may have a significant impact on the estimated fair value of these reporting units and could result
in future impairments of goodwill.
Employee Benefit Plans
Certain subsidiaries of MetLife, Inc. sponsor defined benefit pension plans and other postretirement benefit plans
covering eligible employees. Measurement dates used for all of the subsidiaries’ defined benefit pension and other
postretirement benefit plans correspond with the fiscal year ends of sponsoring subsidiaries, which is December 31 for
U.S. and non-U.S. subsidiaries.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
The Company recognizes the funded status of each of its defined benefit pension and postretirement benefit plans,
measured as the difference between the fair value of plan assets and the benefit obligation, which is the projected benefit
obligation (“PBO”) for pension benefits and the accumulated postretirement benefit obligation (“APBO”) for other
postretirement benefits in other assets or other liabilities.
Actuarial gains and losses result from differences between each plan’s actual experience and the assumed experience
on plan assets or PBO during a particular period and are recorded in accumulated OCI (“AOCI”). To the extent such gains
and losses exceed 10% of the greater of the PBO or the estimated fair value of plan assets, the excess is amortized into net
periodic benefit costs, generally over the average projected future service years of the active employees. In addition, prior
service costs (credit) are recognized in AOCI at the time of the amendment and then amortized to net periodic benefit costs
over the average projected future service years of the active employees.
Net periodic benefit costs are determined using management’s estimates and actuarial assumptions and are comprised
of service cost, interest cost, settlement and curtailment costs, expected return on plan assets, amortization of net actuarial
(gains) losses, and amortization of prior service costs (credit). Fair value is used to determine the expected return on plan
assets.
The subsidiaries also sponsor defined contribution plans for substantially all U.S. employees under which a portion of
employee contributions is matched. Applicable matching contributions are made each payroll period. Accordingly, the
Company recognizes compensation cost for current matching contributions. As all contributions are transferred currently as
earned to the defined contribution plans, no liability for matching contributions is recognized on the balance sheets.
Income Tax
MetLife, Inc. and its includable life insurance and non-life insurance subsidiaries file a consolidated U.S. federal
income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended. Non-includable
subsidiaries file either separate individual corporate tax returns or separate consolidated tax returns.
The Company’s accounting for income taxes represents management’s best estimate of various events and
transactions.
Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of
assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in
the years the temporary differences are expected to reverse.
The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or
carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established against
deferred tax assets when management determines, based on available information, that it is more likely than not that
deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation
allowances should be established, as well as the amount of such allowances. When making such determination, the
Company considers many factors, including:
•
•
•
•
•
•
•
the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;
the jurisdiction in which the deferred tax asset was generated;
the length of time that carryforward can be utilized in the various taxing jurisdictions;
future taxable income exclusive of reversing temporary differences and carryforwards;
future reversals of existing taxable temporary differences;
taxable income in prior carryback years; and
tax planning strategies.
The Company may be required to change its provision for income taxes when estimates used in determining valuation
allowances on deferred tax assets significantly change or when receipt of new information indicates the need for
adjustment in valuation allowances. Additionally, the effect of changes in tax laws, tax regulations, or interpretations of
such laws or regulations, is recognized in net income tax expense (benefit) in the period of change.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
The Company determines whether it is more likely than not that a tax position will be sustained upon examination by
the appropriate taxing authorities before any part of the benefit can be recorded on the financial statements. A tax position
is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized
tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to
earnings in the period that such determination is made.
The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax
expense.
In December 2017, H.R.1, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“U.S. Tax Reform”) was
signed into law. See Note 19 for additional information on U.S. Tax Reform and related Staff Accounting Bulletin 118
(“SAB 118”) provisional amounts.
Litigation Contingencies
The Company is a defendant in a large number of litigation matters and is involved in a number of regulatory
investigations. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a
material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.
Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably
estimated. Except as otherwise disclosed in Note 21, legal costs are recognized as incurred. On a quarterly and annual
basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and
litigation-related contingencies to be reflected on the Company’s consolidated financial statements.
Other Accounting Policies
Stock-Based Compensation
The Company grants certain employees and directors stock-based compensation awards under various plans, subject
to vesting conditions. The Company recognizes compensation expense in an amount fixed at grant date or remeasured
quarterly as described in Note 16. The Company generally recognizes this expense over the vesting period. However, the
Company truncates the expense period to the date the employee attained age-and-service criteria to exercise or receive
payment for the award regardless of continued employment. In such a case, the Company does not accelerate award
exercise or payment timing. The Company also takes an estimation of forfeitures into account.
Cash and Cash Equivalents
The Company considers highly liquid securities and other investments purchased with an original or remaining
maturity of three months or less at the date of purchase to be cash equivalents. Securities included within cash
equivalents are stated at estimated fair value, while other investments included within cash equivalents are stated at
amortized cost which approximates estimated fair value.
Property, Equipment, Leasehold Improvements and Computer Software
Property, equipment and leasehold improvements, which are included in other assets, are stated at cost, less
accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated
useful lives of the assets, as appropriate. The estimated life is generally 40 years for company occupied real estate
property, from one to 25 years for leasehold improvements, and from three to seven years for all other property and
equipment. The cost basis of the property, equipment and leasehold improvements was $2.8 billion and $2.7 billion at
December 31, 2020 and 2019, respectively. Accumulated depreciation and amortization of property, equipment and
leasehold improvements was $1.5 billion and $1.4 billion at December 31, 2020 and 2019, respectively. Related
depreciation and amortization expense was $194 million, $207 million and $191 million for the years ended
December 31, 2020, 2019 and 2018, respectively.
Computer software, which is included in other assets, is stated at cost, less accumulated amortization. Purchased
software costs, as well as certain internal and external costs incurred to develop internal-use computer software during
the application development stage, are capitalized. Such costs are amortized over a four-year period using the straight-
line method. The cost basis of computer software was $3.7 billion and $3.4 billion at December 31, 2020 and 2019,
respectively. Accumulated amortization of capitalized software was $2.5 billion at both December 31, 2020 and 2019.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Related amortization expense was $207 million, $262 million and $276 million for the years ended December 31, 2020,
2019 and 2018, respectively.
Leases
The Company, as lessee, has entered into various lease and sublease agreements for office space and equipment. At
contract inception, the Company determines that an arrangement contains a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration. For contracts that contain a lease,
the Company recognizes the right-of-use (“ROU”) asset in Other assets and the lease liability in Other liabilities. Leases
with an initial term of 12 months or less are not recorded on the balance sheet.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent
the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are determined
using the Company’s incremental borrowing rate based upon information available at commencement date to recognize
the present value of lease payments over the lease term. ROU assets also include lease payments and excludes lease
incentives. Lease terms may include options to extend or terminate the lease and are included in the lease measurement
when it is reasonably certain that the Company will exercise that option.
The Company has lease agreements with lease and non-lease components. The Company does not separate lease and
non-lease components and accounts for these items as a single lease component for all asset classes.
The majority of the Company’s leases and subleases are operating leases related to office space. The Company
recognizes lease expense for operating leases on a straight-line basis over the lease term.
Other Revenues
Other revenues primarily include fees related to service contracts from customers for prepaid legal plans,
administrative services-only contracts, and investment management services. Substantially all of the revenue from the
services is recognized over time as the applicable services are provided or are made available to the customers. The
revenue recognized includes variable consideration to the extent it is probable that a significant reversal will not occur. In
addition to the service fees, other revenues also include certain stable value fees and other miscellaneous revenues. These
fees and miscellaneous revenues are recognized as earned.
Policyholder Dividends
Policyholder dividends are approved annually by the insurance subsidiaries’ boards of directors. The aggregate
amount of policyholder dividends is related to actual interest, mortality, morbidity and expense experience for the year,
as well as management’s judgment as to the appropriate level of statutory surplus to be retained by the insurance
subsidiaries.
Foreign Currency
Assets, liabilities and operations of foreign affiliates and subsidiaries are recorded based on the functional currency
of each entity. The determination of the functional currency is made based on the appropriate economic and management
indicators. For most of the Company’s foreign operations, the local currency is the functional currency. For certain other
foreign operations, such as Japan, the local currency and one or more other currencies qualify as functional currencies.
Assets and liabilities of foreign affiliates and subsidiaries are translated from the functional currency to U.S. dollars at
the exchange rates in effect at each year-end and revenues and expenses are translated at the average exchange rates
during the year. The resulting translation adjustments are charged or credited directly to OCI, net of applicable taxes.
Gains and losses from foreign currency transactions, including the effect of re-measurement of monetary assets and
liabilities to the appropriate functional currency, are reported as part of net investment gains (losses) in the period in
which they occur.
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Earnings Per Common Share
Basic earnings per common share are computed based on the weighted average number of common shares, or their
equivalent, outstanding during the period. Diluted earnings per common share include the dilutive effect of the assumed
exercise or issuance of stock-based awards using the treasury stock method. Under the treasury stock method, exercise or
issuance of stock-based awards is assumed to occur with the proceeds used to purchase common stock at the average
market price for the period. The difference between the number of shares assumed issued and number of shares assumed
purchased represents the dilutive shares.
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of ASUs to the
FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. The following
tables provide a description of new ASUs issued by the FASB and the impact of the adoption on the Company’s consolidated
financial statements.
Adoption of New Accounting Pronouncements
The table below describes the impacts of the ASUs adopted by the Company, effective January 1, 2020.
Standard
Description
ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of
the Effects of Reference Rate
Reform on Financial Reporting; as
clarified and amended by ASU
2021-01, Reference Rate Reform
(Topic 848): Scope
ASU 2017-04, Intangibles-
Goodwill and Other (Topic 350):
Simplifying the Test for Goodwill
Impairment
The new guidance provides optional
expedients and exceptions for applying
GAAP to contracts, hedging relationships
and other transactions affected by reference
rate reform if certain criteria are met. The
expedients and exceptions provided by the
amendments do not apply to contract
modifications made and hedging
relationships entered into or evaluated after
December 31, 2022, with certain exceptions.
ASU 2021-01 amends the scope of the
recent reference rate reform guidance. New
optional expedients allow derivative
instruments impacted by changes in the
interest rate used for margining, discounting,
or contract price alignment (i.e., discount
transition) to qualify for certain optional
relief.
The new guidance simplifies the former two-
step goodwill impairment test by eliminating
Step 2 of the test. The new guidance requires
a one-step impairment test in which an entity
compares the fair value of a reporting unit
with its carrying amount and recognizes an
impairment charge for the amount by which
the carrying amount exceeds the reporting
unit’s fair value, if any.
Effective Date and
Method of Adoption
Effective for contract
modifications made
between March 12,
2020 and December 31,
2022.
Impact on Financial Statements
The new guidance reduces the operational
and financial impacts of contract
modifications that replace a reference rate,
such as London Interbank Offered Rate
(LIBOR), affected by reference rate reform.
The adoption of the new guidance provides
relief from current GAAP and is not
expected to have a material impact on the
Company’s consolidated financial
statements. The Company will continue to
evaluate the impacts of reference rate reform
on contract modifications and hedging
relationships through December 31, 2022.
January 1, 2020, the
Company adopted,
using a prospective
approach.
The adoption of the new guidance reduced
the complexity involved with the evaluation
of goodwill for impairment and did not have
an impact on the Company’s consolidated
financial statements.
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1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Effective Date and
Method of Adoption
January 1, 2020 for
substantially all
financial assets, the
Company adopted
using a modified
retrospective approach.
For previously
impaired fixed maturity
securities AFS and
certain fixed maturity
securities AFS acquired
with evidence of credit
quality deterioration
since origination, the
Company adopted
prospectively on
January 1, 2020.
January 1, 2019. The
Company adopted
using a modified
retrospective approach.
Standard
ASU 2016-13, Financial
Instruments-Credit Losses
(Topic 326): Measurement of Credit
Losses on Financial Instruments, as
clarified and amended by ASU
2018-19, Codification
Improvements to Topic 326,
Financial Instruments-Credit
Losses; ASU 2019-04, Codification
Improvements to Topic 326,
Financial Instruments-Credit
Losses, Topic 815, Derivatives and
Hedging, and Topic 825, Financial
Instruments; ASU 2019-05,
Financial Instruments-Credit
Losses (Topic 326): Targeted
Transition Relief; and ASU
2019-11, Codification
Improvements to Topic 326,
Financial Instruments-Credit
Losses
ASU 2016-02, Leases (Topic 842),
as clarified and amended by ASU
2018-10, Codification
Improvements to Topic 842, Leases,
ASU 2018-11, Leases (Topic 842):
Targeted Improvements, and ASU
2018-20, Leases (Topic 842):
Narrow-Scope Improvements for
Lessors
Description
The new guidance requires an ACL based on
expected lifetime credit loss on financing
receivables carried at amortized cost,
including, but not limited to, mortgage loans,
premium receivables, reinsurance
receivables and leveraged and direct
financing leases.
The former model for OTTI on fixed
maturity securities AFS has been modified
and requires the recording of an ACL instead
of a reduction of the amortized cost. Any
improvements in expected future cash flows
will no longer be reflected as a prospective
yield adjustment, but instead will be
reflected as a reduction in the ACL. The new
guidance also replaces the model for PCI
fixed maturity securities AFS and financing
receivables and requires the establishment of
an ACL at acquisition, which is added to the
purchase price to establish the initial
amortized cost of the investment.
The new guidance also requires enhanced
disclosures.
The guidance requires a lessee to recognize
assets and liabilities for leases with lease
terms of more than 12 months. Leases are
classified as finance or operating leases and
both types of leases are recognized on the
balance sheet. Lessor accounting remains
largely unchanged from previous guidance
except for certain targeted changes. The new
guidance also requires new qualitative and
quantitative disclosures. In July 2018, two
amendments to the guidance were issued.
The amendments provided the option to
adopt the new guidance prospectively
without adjusting comparative periods. Also,
the amendments provided lessors with a
practical expedient not to separate lease and
non-lease components for certain operating
leases. In December 2018, an amendment
was issued to clarify lessor accounting
relating to taxes, certain lessor’s costs and
variable payments related to both lease and
non-lease components.
Impact on Financial Statements
The adoption of this guidance resulted in a
$121 million, net of income tax, decrease to
retained earnings primarily related to the
Company’s mortgage loan investments. The
Company has included the required
disclosures within Note 8.
The Company elected the package of
practical expedients allowed under the
transition guidance. This allowed the
Company to carry forward its historical lease
classification. In addition, the Company
elected all other practical expedients that
were allowed under the new guidance and
were applicable, including the practical
expedient to combine lease and non-lease
components into one lease component for
certain real estate leases.
The adoption of this guidance resulted in the
recording of additional net ROU assets and
lease liabilities of approximately $1.5 billion
and $1.7 billion, respectively, as of
January 1, 2019. The reduction of ROU
assets was a result of adjustments for
prepaid/deferred rent, unamortized initial
direct costs and impairment of certain ROU
assets based on the net present value of the
remaining minimum lease payments and
sublease revenues. In addition, as of
January 1, 2019, retained earnings increased
by $95 million, net of income tax, as a result
of the recognition of deferred gains on
previous sale leaseback transactions. The
guidance did not have a material impact on
the Company’s consolidated net income and
cash flows. The Company has included
expanded disclosures on the consolidated
balance sheets and in Notes 8 and 11.
178
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MetLife, Inc.
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Notes to the Consolidated Financial Statements — (continued)
Future Adoption of New Accounting Pronouncements
ASUs not listed below were assessed and either determined to be not applicable or are not expected to have a material
impact on the Company’s consolidated financial statements or disclosures. ASUs issued but not yet adopted as of
December 31, 2020 that are currently being assessed and may or may not have a material impact on the Company’s
consolidated financial statements or disclosures are summarized in the table below.
Impact on Financial Statements
The new guidance will not have a material
impact on the Company’s consolidated
financial statements and will be adopted on a
prospective basis.
Effective Date and
Method of Adoption
January 1, 2021. The
new guidance should
be applied either on a
retrospective, modified
retrospective or
prospective basis based
on the items to which
the amendments relate.
Early adoption is
permitted.
January 1, 2023, to be
applied retrospectively
to January 1, 2021
(with early adoption
permitted).
The implementation efforts of the Company
and the evaluation of the impact of the new
guidance are in progress. Given the nature
and extent of the required changes to a
significant portion of the Company’s
operations, the adoption of this guidance is
expected to have a material impact on its
consolidated financial statements.
Standard
ASU 2019-12, Income Taxes (Topic
740): Simplifying the Accounting
for Income Taxes
ASU 2018-12, Financial Services—
Insurance (Topic 944): Targeted
Improvements to the Accounting for
Long-Duration Contracts, as
amended by ASU 2019-09,
Financial Services—Insurance
(Topic 944): Effective Date, as
amended by ASU 2020-11,
Financial Services—Insurance
(Topic 944): Effective Date and
Early Application
Description
The new guidance simplifies the accounting
for income taxes by removing certain
exceptions to the tax accounting guidance
and providing clarification to other specific
tax accounting guidance to eliminate
variations in practice. Specifically, it
removes the exceptions related to the a)
incremental approach for intraperiod tax
allocation when there is a loss from
continuing operations and income or a gain
from other items, b) recognition of a
deferred tax liability when foreign
investment ownership changes from equity
method investment to consolidated
subsidiary and vice versa and c) use of
interim period tax accounting for year-to-
date losses that exceed anticipated losses.
The guidance also simplifies the application
of the income tax guidance for franchise
taxes that are partially based on income and
the accounting for tax law changes during
interim periods, clarifies the accounting for
transactions that result in a step-up in tax
basis of goodwill, provides for the option to
elect allocation of consolidated income taxes
to entities disregarded by taxing authorities
for their stand-alone reporting, and requires
that an entity reflect the effect of an enacted
change in tax laws or rates in the annual
effective tax rate computation in the interim
period that includes the enactment date.
The new guidance (i) prescribes the discount
rate to be used in measuring the liability for
future policy benefits for traditional and
limited payment long-duration contracts, and
requires assumptions for those liability
valuations to be updated after contract
inception, (ii) requires more market-based
product guarantees on certain separate
account and other account balance long-
duration contracts to be accounted for at fair
value, (iii) simplifies the amortization of
DAC for virtually all long-duration
contracts, and (iv) introduces certain
financial statement presentation
requirements, as well as significant
additional quantitative and qualitative
disclosures. The amendments in ASU
2019-09 defer the effective date of ASU
2018-12 to January 1, 2022 for all entities,
and the amendments in ASU 2020-11 further
defer the effective date of ASU 2018-12 for
an additional one year to January 1, 2023 for
all entities.
179
Table of Contents
2. Segment Information
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
MetLife is organized into five segments: U.S.; Asia; Latin America; EMEA; and MetLife Holdings. In addition, the
Company reports certain of its results of operations in Corporate & Other.
U.S.
The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of
customers throughout their lives. These products are sold to corporations and their respective employees, other institutions
and their respective members, as well as individuals. The U.S. segment is organized into three businesses: Group Benefits,
Retirement and Income Solutions (“RIS”) and Property & Casualty.
The Group Benefits business offers products such as term, variable and universal life insurance, dental, group and
individual disability, vision and accident & health insurance.
The RIS business offers a broad range of life and annuity-based insurance and investment products, including stable
value and pension risk transfer products, institutional income annuities, structured settlements, and capital markets
investment products, as well as solutions for funding postretirement benefits and company-, bank- and trust-owned
life insurance.
The Property & Casualty business offers personal lines of property and casualty insurance, including private
passenger automobile and homeowners’ insurance. See Note 3 for information on the pending disposition.
•
•
•
Asia
The Asia segment offers a broad range of products to both individuals and corporations, as well as to other institutions,
and their respective employees, which include life insurance, accident & health insurance and retirement and savings.
Latin America
The Latin America segment offers a broad range of products to both individuals and corporations, as well as to other
institutions, and their respective employees, which include life insurance, retirement and savings, accident & health insurance
and credit insurance.
EMEA
The EMEA segment offers products to individuals, corporations, other institutions, and their respective employees,
which include life insurance, accident & health insurance, retirement and savings and credit insurance.
MetLife Holdings
The MetLife Holdings segment consists of operations relating to products and businesses that the Company no longer
actively markets in the United States. These include variable, universal, term and whole life insurance, variable, fixed and
index-linked annuities and long-term care insurance.
Corporate & Other
Corporate & Other contains various start-up, developing and run-off businesses. Also included in Corporate & Other are:
the excess capital, as well as certain charges and activities, not allocated to the segments (including external integration and
disposition costs, internal resource costs for associates committed to acquisitions and dispositions and enterprise-wide
strategic initiative restructuring charges), interest expense related to the majority of the Company’s outstanding debt,
expenses associated with certain legal proceedings and income tax audit issues, the elimination of intersegment amounts
(which generally relate to affiliated reinsurance, investment expenses and intersegment loans, bearing interest rates
commensurate with related borrowings), and the Company’s investment management business (through which the Company
provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide).
180
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
2. Segment Information (continued)
Financial Measures and Segment Accounting Policies
Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP
guidance for segment reporting, adjusted earnings is also the Company’s GAAP measure of segment performance and is
reported below. Adjusted earnings should not be viewed as a substitute for net income (loss). The Company believes the
presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its
performance by highlighting the results of operations and the underlying profitability drivers of the business.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax.
The financial measures of adjusted revenues and adjusted expenses focus on the Company’s primary businesses
principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-
core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of
discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not
meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also
include the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and
costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in
results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net
derivative gains (losses). Adjusted expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
•
•
•
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net
investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB fees”);
Net investment income: (i) includes adjustments for earned income on derivatives and amortization of premium on
derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for
hedge accounting treatment, (ii) excludes post-tax adjusted earnings adjustments relating to insurance joint ventures
accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed equity
securities, (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP
and (v) includes distributions of profits from certain other limited partnership interests that were previously
accounted for under the cost method, but are now accounted for at estimated fair value, where the change in
estimated fair value is recognized in net investment gains (losses) under GAAP; and
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in
association with services provided under transition service agreements (“TSA fees”).
181
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
2. Segment Information (continued)
The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses:
•
•
•
•
•
•
Policyholder benefits and claims and policyholder dividends excludes: (i) amortization of basis adjustments
associated with de-designated fair value hedges of future policy benefits, (ii) changes in the policyholder dividend
obligation related to net investment gains (losses) and net derivative gains (losses), (iii) inflation-indexed benefit
adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic
crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass
through adjustments, (iv) benefits and hedging costs related to GMIBs (“GMIB costs”) and (v) market value
adjustments associated with surrenders or terminations of contracts (“Market value adjustments”);
Interest credited to policyholder account balances includes adjustments for earned income on derivatives and
amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for
hedge accounting treatment and excludes certain amounts related to net investment income earned on
contractholder-directed equity securities;
Amortization of DAC and VOBA excludes amounts related to: (i) net investment gains (losses) and net derivative
gains (losses), (ii) GMIB fees and GMIB costs and (iii) Market value adjustments;
Amortization of negative VOBA excludes amounts related to Market value adjustments;
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under
GAAP; and
Other expenses excludes: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements
costs, and (iii) acquisition, integration and other costs. Other expenses includes TSA fees.
Adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at
acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which
could differ from the Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes
the impact related to the timing of certain tax credits, as well as certain tax reforms.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as
Corporate & Other, for the years ended December 31, 2020, 2019 and 2018 and at December 31, 2020 and 2019. The
segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except
for adjusted earnings adjustments as defined above. In addition, segment accounting policies include the method of capital
allocation described below.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the
business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and
specific nature of the risks inherent in the Company’s business.
The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment
allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation
principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required
economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method
for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing
production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains
consistent with emerging industry practice standards.
Segment net investment income is credited or charged based on the level of allocated equity; however, changes in
allocated equity do not impact the Company’s consolidated net investment income, net income (loss) or adjusted earnings.
Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios
adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such
costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost
estimates included in the Company’s product pricing.
182
Table of Contents
2. Segment Information (continued)
Year Ended December 31, 2020
Revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Total expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjustments to:
Total revenues
Total expenses
Provision for income tax (expense) benefit
Net income (loss)
At December 31, 2020
Total assets
Separate account assets
Separate account liabilities
__________________
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
U.S.
Asia
Latin
America
EMEA
MetLife
Holdings
Corporate
& Other
Total
Adjustments
Total
Consolidated
(In millions)
$
27,265 $
6,571 $
2,265 $
2,259 $
3,600 $
22 $
41,982 $
52 $
42,034
1,070
6,903
957
—
—
1,892
3,938
61
—
—
994
992
38
—
—
433
269
52
—
—
1,073
5,184
238
—
—
36,195
12,462
4,289
3,013
10,095
26,309
1,622
(453)
471
—
7
4,162
32,118
853
5,213
1,834
(1,652)
1,415
(37)
—
3,481
10,254
643
2,406
1,196
6,738
240
(362)
276
—
4
1,318
3,882
127
109
(491)
454
(8)
1
1,344
2,605
81
868
(39)
370
—
6
942
8,885
234
$
3,224 $
1,565 $
280 $
327 $
976 $
138
(211)
159
(110)
1,349
1,377
692
541
(5)
166
—
—
263
1,657
127
5,603
17,117
1,849
(110)
1,349
67,842
42,551
5,214
(3,013)
3,160
(45)
913
12,135
60,915
1,509
3
42
344
—
—
411
(3)
—
(11)
8
—
895
625
1,514
(556)
(547)
5,465
17,328
1,690
—
—
66,465
41,859
4,673
(3,008)
2,994
(45)
913
11,872
59,258
1,382
5,825
1,377
(1,657)
(127)
U.S.
Asia (1)
Latin
America
EMEA
(In millions)
$
5,418
$
5,418
MetLife
Holdings
Corporate
& Other
Total
$
$
$
291,483 $
173,884 $
85,316 $
85,316 $
10,825 $
10,825 $
75,047 $
50,073 $
50,073 $
28,372 $
184,566 $
41,794 $
6,083 $
6,083 $
47,673 $
47,673 $
— $
— $
795,146
199,970
199,970
(1)
Total assets includes $146.0 billion of assets from the Company’s Japan operations which represents 18% of total consolidated assets.
183
Table of Contents
2. Segment Information (continued)
Year Ended December 31, 2019
Revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Total expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjustments to:
Total revenues
Total expenses
Provision for income tax (expense) benefit
Net income (loss)
At December 31, 2019
Total assets
Separate account assets
Separate account liabilities
__________________
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
U.S.
Asia
Latin
America
EMEA
MetLife
Holdings
Corporate
& Other
Total
Adjustments
Total
Consolidated
(In millions)
$
26,801 $
6,632 $
2,723 $
2,177 $
3,748 $
83 $
42,164 $
71 $
42,235
1,078
7,021
887
—
—
1,674
3,691
56
—
—
1,094
1,271
44
—
—
423
291
54
—
—
1,124
5,281
253
—
—
35,787
12,053
5,132
2,945
10,406
26,165
1,984
(484)
475
—
10
4,075
32,225
724
5,185
1,710
(1,913)
1,288
(25)
—
3,818
10,063
585
2,623
1,176
6,970
332
(396)
291
—
3
1,443
4,296
227
98
(505)
428
(8)
—
1,399
2,588
75
905
(28)
299
—
8
969
9,123
249
2
275
291
—
—
651
73
—
(12)
6
—
934
1,074
2,075
(1,201)
$
2,838 $
1,405 $
609 $
282 $
1,034 $
(223)
5,395
17,830
1,585
—
—
208
1,038
257
444
628
5,603
18,868
1,842
444
628
66,974
2,646
69,620
480
1,435
(20)
109
—
—
451
2,455
227
42,672
6,464
(3,358)
2,896
(33)
955
13,229
62,825
886
42,192
5,029
(3,338)
2,787
(33)
955
12,778
60,370
659
5,945
2,646
(2,455)
(227)
U.S.
Asia (1)
Latin
America
EMEA
(In millions)
$
5,909
$
5,909
MetLife
Holdings
Corporate
& Other
Total
$
$
$
266,174 $
161,018 $
75,929 $
75,929 $
9,250 $
9,250 $
75,069 $
52,018 $
52,018 $
27,281 $
175,199 $
35,722 $
5,639 $
5,639 $
45,609 $
45,609 $
— $
— $
740,463
188,445
188,445
(1)
Total assets includes $134.0 billion of assets from the Company’s Japan operations which represents 18% of total consolidated assets.
184
Table of Contents
2. Segment Information (continued)
Year Ended December 31, 2018
Revenues
Premiums
Universal life and investment-type product policy fees
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims and policyholder dividends
Interest credited to policyholder account balances
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Other expenses
Total expenses
Provision for income tax expense (benefit)
Adjusted earnings
Adjustments to:
Total revenues
Total expenses
Provision for income tax (expense) benefit
Net income (loss)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
U.S.
Asia
Latin
America
EMEA
MetLife
Holdings
Corporate
& Other
Total
Adjustments
Total
Consolidated
(In millions)
$
28,186 $
6,766 $
2,760 $
2,131 $
3,879 $
118 $
43,840 $
— $
43,840
1,053
6,977
821
—
—
1,630
3,317
51
—
—
1,050
1,239
35
—
—
431
293
66
—
—
1,218
5,379
250
—
—
37,037
11,764
5,084
2,921
10,726
27,765
1,790
(449)
477
—
12
3,902
33,497
736
5,326
1,465
(1,915)
1,302
(39)
—
3,840
9,979
548
2,602
1,127
6,833
394
(377)
209
(1)
6
1,421
4,254
238
100
(468)
434
(15)
—
1,378
2,556
88
944
(36)
332
—
9
1,081
9,163
308
$
2,804 $
1,237 $
592 $
277 $
1,255 $
—
178
333
—
—
629
80
—
(8)
6
—
1,032
907
2,017
(825)
(563)
120
(1,217)
324
(298)
851
(220)
174
(680)
(1)
215
(1)
63
398
168
86
5,502
16,166
1,880
(298)
851
67,941
43,907
4,013
(3,254)
2,975
(56)
1,122
12,927
61,634
1,179
5,382
17,383
1,556
—
—
68,161
43,733
4,693
(3,253)
2,760
(55)
1,059
12,529
61,466
1,093
5,602
(220)
(168)
(86)
$
5,128
$
5,128
185
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
2. Segment Information (continued)
The following table presents total premiums, universal life and investment-type product policy fees and other revenues
by major product groups of the Company’s segments, as well as Corporate & Other:
Life insurance
Accident & health insurance
Annuities
Property and casualty insurance
Other
Total
Years Ended December 31,
2020
2019
(In millions)
2018
$
21,256 $
20,759 $
15,346
7,916
3,589
1,379
15,159
8,590
3,716
1,456
20,550
14,489
10,990
3,651
1,542
$
49,486 $
49,680 $
51,222
The following table presents total premiums, universal life and investment-type product policy fees and other revenues
associated with the Company’s U.S. and foreign operations:
U.S.
Foreign:
Japan
Other
Total
Years Ended December 31,
2020
2019
(In millions)
2018
$
34,717 $
34,433 $
36,078
6,750
8,019
6,608
8,639
6,435
8,709
$
49,486 $
49,680 $
51,222
Revenues derived from any customer did not exceed 10% of consolidated premiums, universal life and investment-type
product policy fees and other revenues for the years ended December 31, 2020 and 2019. Revenues derived from one U.S.
segment customer were $6.0 billion for the year ended December 31, 2018, which represented 12% of consolidated
premiums, universal life and investment-type product policy fees and other revenues. The revenue was from a single
premium received for a pension risk transfer. Revenues derived from any other customer did not exceed 10% of consolidated
premiums, universal life and investment-type product policy fees and other revenues for the year ended December 31, 2018.
3. Acquisition and Dispositions
Acquisition
Acquisition of Versant Health
On December 30, 2020, the Company completed its acquisition of all of the issued and outstanding capital stock of
Versant Health, Inc. (“Versant Health”), a managed vision care company, for $1.8 billion in an all-cash transaction.
Versant Health owns the well-established marketplace brands, Davis Vision and Superior Vision.
Of the purchase price, $323 million and $95 million was allocated to the fair value of tangible assets acquired and
liabilities assumed, respectively, at the acquisition date. The tangible assets primarily included $189 million of cash.
Additionally, $890 million was allocated to goodwill, $790 million was allocated to VOCRA, and $115 million was
allocated to other intangibles. The goodwill recorded includes the certain expected synergies, assembled workforce and
other benefits that management believes will result from combining the operations of Versant Health with the operations of
MetLife, including strengthening and differentiating the Company’s vision benefit offering, reported in the U.S. segment,
with one of the industry’s broadest networks of providers and plan options. The value of VOCRA, included in other assets,
reflects the estimated fair value of the expected future profits associated with Versant Health’s customer relationships
acquired. VOCRA will be amortized over the assets’ useful lives ranging from nine to 15 years.
186
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
3. Acquisition and Dispositions (continued)
The allocated purchase price also included deferred tax liabilities of $217 million, which are attributable to the
intangible assets and liabilities, excluding goodwill, established at the acquisition date. No portion of goodwill is expected
to be deductible for tax purposes.
The valuation of the assets acquired and liabilities assumed is preliminary and subject to revision as more detailed
analyses are completed. If additional information about the estimated fair value of assets acquired and liabilities assumed
becomes available, the Company may further revise the preliminary purchase price allocation as soon as practicable, but no
later than one year from the acquisition date.
Total revenue of Versant Health represented less than 2% of pro forma total revenue of MetLife for each of the years
ended December 31, 2020, 2019 and 2018 when evaluated as though the acquisition had occurred at the beginning of the
earliest period presented.
Dispositions
Pending Disposition of Metropolitan Property and Casualty Insurance Company
In December 2020, the Company entered into a definitive agreement to sell its wholly-owned subsidiary, Metropolitan
Property and Casualty Insurance Company and certain of its wholly-owned subsidiaries (collectively, “MetLife P&C”) to
Farmers Group, Inc. for $3.9 billion in cash. In addition, the Company and the Farmers Exchanges have established a 10-
year strategic partnership through which the Farmers Insurance Group will offer its personal line products on MetLife’s
U.S. Group Benefits platform which will commence when the transaction closes. MetLife P&C results of operations are
reported in the U.S. segment adjusted earnings through December 31, 2020. The transaction is expected to close in the
second quarter of 2021 and is subject to regulatory approvals and satisfaction of other closing conditions.
The pending disposition meets the criteria for held-for-sale accounting but does not meet the criteria to be classified as
discontinued operations. As a result, the related assets and liabilities are included in the separate held-for-sale line items of
the asset and liability sections of the consolidated balance sheet. The following table summarizes the assets and liabilities
held-for-sale at December 31, 2020:
December 31, 2020
(In millions)
Assets:
Fixed maturity securities available-for-sale
Equity securities
Mortgage loans
Other invested assets
Total investments
Cash and cash equivalents
Accrued investment income
Premiums, reinsurance and other receivables
Deferred policy acquisition costs
Goodwill
Other assets
Total assets held-for-sale
Liabilities:
Future policy benefits
Other policy-related balances
Payables for collateral under securities loaned and other transactions
Other liabilities
Total liabilities held-for-sale
187
$
$
$
$
4,096
57
355
29
4,537
765
38
1,411
196
328
143
7,418
3,506
33
862
249
4,650
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
3. Acquisition and Dispositions (continued)
MetLife P&C income (loss) before provision for income tax as reflected in the consolidated statement of operations was
$399 million, $291 million and $367 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Disposition of Joint-stock Company MetLife Insurance Company
In December 2020, the Company entered into an agreement to sell its wholly-owned Russian subsidiary, the Joint-
stock Company MetLife Insurance Company (“MetLife Russia”). In connection with the pending sale, a loss of
$133 million, net of income tax, was recorded for the year ended December 31, 2020 and is reflected in net investment
gains (losses). At December 31, 2020, MetLife Russia represented $382 million of total assets in the EMEA segment.
MetLife Russia results of operations are reported in the EMEA segment adjusted earnings through December 31, 2020. In
January 2021, the Company completed the sale of MetLife Russia.
Disposition of MetLife Seguros de Retiro S.A.
In October 2020, the Company sold one of its wholly-owned Argentinian subsidiaries, MetLife Seguros de Retiro S.A.
(“MetLife Seguros de Retiro”). In connection with the sale, a loss of $162 million, net of income tax, was recorded for the
year ended December 31, 2020. This loss was comprised of a $130 million pre-tax loss, which was reflected in net
investment gains (losses). Additionally, the $162 million loss included a $32 million net tax charge, which was recorded in
the provision for income tax expense (benefit) and included previously deferred tax items and losses which are not
recognized for tax purposes. At December 31, 2019, MetLife Seguros de Retiro represented $237 million of total assets in
the Latin America segment. MetLife Seguros de Retiro’s results of operations were reported in the Latin America segment
adjusted earnings through June 30, 2020. See Note 2 for information on accounting for divested businesses.
Disposition of MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited
In June 2019, the Company entered into a definitive agreement to sell its two wholly-owned subsidiaries, MetLife
Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”). As a
result of the agreement, a loss of $140 million, net of income tax, was recorded for the year ended December 31, 2019.
This loss was comprised of a $100 million pre-tax loss, which was reflected in net investment gains (losses) and included
allocated goodwill of $71 million. Additionally, the $140 million loss included a $40 million net tax charge, which was
recorded in the provision for income tax expense (benefit) and included previously deferred tax items and losses which are
not recognized for tax purposes. At December 31, 2019, MetLife Hong Kong represented $2.9 billion of total assets in the
Asia segment. MetLife Hong Kong’s results of operations were reported in the Asia segment adjusted earnings through
June 30, 2019. See Note 2 for information on accounting for divested businesses. In June 2020, the Company completed
the sale and recorded a gain of $11 million, net of income tax, for the year ended December 31, 2020, which resulted in a
total loss on the sale of $129 million, net of income tax.
Separation of Brighthouse
On August 4, 2017, MetLife, Inc. completed the separation of Brighthouse Financial, Inc. and its subsidiaries
(“Brighthouse”) through a distribution of 96,776,670 shares of Brighthouse Financial, Inc. common stock outstanding,
representing approximately 80.8% of those shares, to the MetLife, Inc. common shareholders (the “Separation”). MetLife,
Inc. retained the remaining outstanding shares of Brighthouse Financial, Inc. common stock and recognized its investment
in Brighthouse Financial, Inc. common stock based on the NASDAQ reported market price. In June 2018, the Company
sold Brighthouse Financial, Inc. common stock (“FVO Brighthouse Common Stock”) in exchange for $944 million
aggregate principal amount of MetLife, Inc. senior notes, which MetLife, Inc. canceled. The Company recorded
$327 million of mark-to-market and disposition losses on the FVO Brighthouse Common Stock to net investment gains
(losses) for the year ended December 31, 2018. At December 31, 2018, the Company no longer held any shares of
Brighthouse Financial, Inc. for its own account; however, certain insurance company separate accounts managed by the
Company held shares of Brighthouse Financial, Inc. See Note 13 for further information on this transaction.
188
Table of Contents
4. Insurance
Insurance Liabilities
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Insurance liabilities are comprised of future policy benefits, policyholder account balances and other policy-related
balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at:
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
December 31,
2020
2019
(In millions)
$
162,524 $
126,912
16,849
17,252
103,937
1,459
150,327
118,027
15,911
16,951
101,945
1,546
$
428,933 $
404,707
Future policy benefits are measured as follows:
Product Type:
Participating life
Nonparticipating life
Individual and group
traditional fixed annuities
after annuitization
Non-medical health
insurance
Disabled lives
Measurement Assumptions:
Aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated
based upon the non-forfeiture interest rate, ranging from 3% to 7% for U.S. businesses and less
than 1% to 11% for non-U.S. businesses and mortality rates guaranteed in calculating the cash
surrender values described in such contracts); and (ii) the liability for terminal dividends for U.S.
businesses.
Aggregate of the present value of future expected benefit payments and related expenses less the
present value of future expected net premiums. Assumptions as to mortality and persistency are
based upon the Company’s experience when the basis of the liability is established. Interest rate
assumptions for the aggregate future policy benefit liabilities range from 2% to 11% for U.S.
businesses and less than 1% to 11% for non-U.S. businesses.
Present value of future expected payments. Interest rate assumptions used in establishing such
liabilities range from 1% to 11% for U.S. businesses and less than 1% to 9% for non-U.S.
businesses.
The net level premium method and assumptions as to future morbidity, withdrawals and
interest, which provide a margin for adverse deviation. Interest rate assumptions used in
establishing such liabilities range from 1% to 7% (primarily related to U.S. businesses).
Present value of benefits method and experience assumptions as to claim terminations,
expenses and interest. Interest rate assumptions used in establishing such liabilities range from
2% to 8% for U.S. businesses and less than 1% to 9% for non-U.S. businesses.
Participating business represented 3% of the Company’s life insurance in-force at both December 31, 2020 and 2019.
Participating policies represented 14%, 15% and 14% of gross traditional life insurance premiums for the years ended
December 31, 2020, 2019 and 2018, respectively.
Policyholder account balances are equal to: (i) policy account values, which consist of an accumulation of gross
premium payments and investment performance; (ii) credited interest, ranging from less than 1% to 8% for U.S. businesses
and less than 1% to 12% for non-U.S. businesses, less expenses, mortality charges and withdrawals; and (iii) fair value
adjustments relating to business combinations.
189
Table of Contents
4. Insurance (continued)
Guarantees
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum
benefits. GMABs, the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs are
accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 9. Guarantees
accounted for as insurance liabilities include:
Guarantee:
GMDBs
• A return of purchase payment upon death even if
the account value is reduced to zero.
• An enhanced death benefit may be available for
an additional fee.
GMIBs
• After a specified period of time determined at the
time of issuance of the variable annuity
contract, a minimum accumulation of purchase
payments, even if the account value is reduced
to zero, that can be annuitized to receive a
monthly income stream that is not less than a
specified amount.
• Certain contracts also provide for a guaranteed
lump sum return of purchase premium in lieu
of the annuitization benefit.
GMWBs
• A return of purchase payment via partial
withdrawals, even if the account value is
reduced to zero, provided that cumulative
withdrawals in a contract year do not exceed a
certain limit.
• Certain contracts include guaranteed withdrawals
that are life contingent.
Measurement Assumptions:
• Present value of expected death benefits in excess of
the projected account balance recognizing the
excess ratably over the accumulation period based
on the present value of total expected assessments.
• Assumptions are consistent with those used for
amortizing DAC, and are thus subject to the same
variability and risk.
•
Investment performance and volatility assumptions
are consistent with the historical experience of the
appropriate underlying equity index, such as the
S&P 500 Index.
• Benefit assumptions are based on the average benefits
payable over a range of scenarios.
• Present value of expected income benefits in excess
of the projected account balance at any future date
of annuitization and recognizing the excess ratably
over the accumulation period based on present
value of total expected assessments.
• Assumptions are consistent with those used for
estimating GMDB liabilities.
• Calculation
incorporates an assumption for
the
percentage of the potential annuitizations that may
be elected by the contractholder.
• Expected value of the life contingent payments and
expected assessments using assumptions consistent
with
the GMDB
liabilities.
for estimating
those used
The Company also issues other annuity contracts that apply a lower rate on funds deposited if the contractholder elects to
surrender the contract for cash and a higher rate if the contractholder elects to annuitize. These guarantees include benefits
that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed
annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally,
the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a
secondary guarantee or a guaranteed paid-up benefit.
190
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding the liabilities for guarantees (excluding base policy liabilities and embedded derivatives) relating
to annuity and universal and variable life contracts was as follows:
Annuity Contracts
GMDBs and
GMWBs
GMIBs
Universal and Variable
Life Contracts
Secondary
Guarantees
(In millions)
Paid-Up
Guarantees
Total
$
528 $
720 $
3,188 $
347 $
$
$
$
$
(78)
(22)
428
62
(25)
465
195
(21)
178
—
898
(3)
(1)
894
240
(5)
291
(37)
3,442
358
(38)
3,762
602
(99)
12
—
359
68
—
427
26
(45)
639 $
1,129 $
4,265 $
408 $
34 $
6 $
241 $
242 $
(38)
4
—
(4)
4
—
(11)
9
4
—
10
—
—
10
(3)
—
28
—
269
80
—
349
96
(18)
9
—
251
30
—
281
43
(32)
(2) $
7 $
427 $
292 $
494 $
714 $
2,947 $
105 $
(40)
(26)
428
66
(29)
465
206
(30)
174
—
888
(3)
(1)
884
243
(5)
263
(37)
3,173
278
(38)
3,413
506
(81)
3
—
108
38
—
146
(17)
(13)
$
641 $
1,122 $
3,838 $
116 $
4,783
403
(59)
5,127
485
(64)
5,548
1,063
(170)
6,441
523
3
4
530
106
4
640
125
(41)
724
4,260
400
(63)
4,597
379
(68)
4,908
938
(129)
5,717
Direct and Assumed:
Balance at January 1, 2018
Incurred guaranteed benefits (1)
Paid guaranteed benefits
Balance at December 31, 2018
Incurred guaranteed benefits (1)
Paid guaranteed benefits
Balance at December 31, 2019
Incurred guaranteed benefits (1)
Paid guaranteed benefits
Balance at December 31, 2020
Ceded:
Balance at January 1, 2018
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2018
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2019
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2020
Net:
Balance at January 1, 2018
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2018
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2019
Incurred guaranteed benefits
Paid guaranteed benefits
Balance at December 31, 2020
__________________
(1)
Secondary guarantees include the effects of foreign currency translation of $125 million, $23 million and $62 million
at December 31, 2020, 2019 and 2018, respectively.
191
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding the Company’s guarantee exposure, which includes direct and assumed business, but excludes
offsets from hedging or ceded reinsurance, if any, was as follows at:
December 31,
2020
2019
In the
Event of Death
At
Annuitization
In the
Event of Death
At
Annuitization
(Dollars in millions)
$
$
$
65,044
42,585
$
$
24,170
22,370
$
$
64,506
41,305
$
$
24,036
22,291
1,579 (4) $
614
(5) $
1,572 (4) $
584
(5)
Annuity Contracts:
Variable Annuity Guarantees:
Total account value (1), (2), (3)
Separate account value (1)
Net amount at risk (2)
Average attained age of contractholders
68 years
66 years
67 years
65 years
Other Annuity Guarantees:
Total account value (1), (3)
Net amount at risk
Average attained age of contractholders
N/A
N/A
N/A
$
$
6,030
459 (6)
50 years
N/A
N/A
N/A
$
$
5,671
408
(6)
51 years
December 31,
2020
2019
Secondary
Guarantees
Paid-Up
Guarantees
Secondary
Guarantees
Paid-Up
Guarantees
(Dollars in millions)
Universal and Variable Life Contracts:
Total account value (1), (3)
Net amount at risk (7)
$
$
13,426 $
82,940 $
2,808 $
13,557 $
11,937 $
86,221 $
Average attained age of policyholders
54 years
65 years
53 years
2,940
14,500
65 years
__________________
(1)
(2)
(3)
(4)
(5)
(6)
The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract.
Therefore, the amounts listed above may not be mutually exclusive.
Includes amounts, which are not reported on the consolidated balance sheets, from assumed variable annuity
guarantees from the Company’s former operating joint venture in Japan.
Includes the contractholder’s investments in the general account and separate account, if applicable.
Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the
claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes
any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon
death.
Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime
income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit.
This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders
were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the
guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved.
Defined as either the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet
date or the amount (if any) that would be required to be added to the total account value to purchase a lifetime income
stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. These
amounts represent the Company’s potential economic exposure to such guarantees in the event all contractholders
were to annuitize on the balance sheet date.
192
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(7)
Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the
claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.
Guarantees — Separate Accounts
Account balances of contracts with guarantees were invested in separate account asset classes as follows at:
Fund Groupings:
Equity
Balanced
Bond
Money Market
Total
December 31,
2020
2019
(In millions)
$
28,581 $
18,385
5,567
149
25,097
19,014
5,565
117
$
52,682 $
49,793
Obligations Under Funding Agreements
The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign
currencies, to certain unconsolidated special purpose entities that have issued either debt securities or commercial paper for
which payment of interest and principal is secured by such funding agreements. For the years ended December 31, 2020,
2019 and 2018, the Company issued $40.4 billion, $37.3 billion and $41.8 billion, respectively, and repaid $36.7 billion,
$36.4 billion and $43.7 billion, respectively, of such funding agreements. At December 31, 2020 and 2019, liabilities for
funding agreements outstanding, which are included in policyholder account balances, were $39.9 billion and $34.6 billion,
respectively.
Certain of the Company’s subsidiaries are or were members of regional FHLBs. Holdings of common stock of regional
FHLBs, included in other invested assets, were as follows at:
FHLB of New York
FHLB of Des Moines
FHLB of Pittsburgh
December 31,
2020
2019
(In millions)
812 $
2 $
— $
737
4
35
$
$
$
193
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Certain subsidiaries have also entered into funding agreements with regional FHLBs and a subsidiary of the Federal
Agricultural Mortgage Corporation, a federally chartered instrumentality of the U.S. (“Farmer Mac”). The liability for such
funding agreements is included in policyholder account balances. Information related to such funding agreements was as
follows at:
FHLB of New York (1)
Farmer Mac (3)
FHLB of Des Moines (1)
FHLB of Pittsburgh (1)
__________________
Liability
Collateral
December 31,
2020
2019
2020
2019
(In millions)
$
$
$
$
16,200 $
2,375 $
50 $
— $
14,445 $
18,539 (2)
2,550 $
2,450
100 $
775 $
72 (2)
—
$
$
$
$
16,570 (2)
2,670
141 (2)
895 (2)
(1)
(2)
(3)
Represents funding agreements issued to the applicable regional FHLB in exchange for cash and for which such
regional FHLB has been granted a lien on certain assets, some of which are in the custody of such regional FHLB,
including residential mortgage-backed securities (“RMBS”), to collateralize obligations under such funding
agreements. The applicable subsidiary of the Company is permitted to withdraw any portion of the collateral in the
custody of such regional FHLB as long as there is no event of default and the remaining qualified collateral is
sufficient to satisfy the collateral maintenance level. Upon any event of default by such subsidiary, the applicable
regional FHLB’s recovery on the collateral is limited to the amount of such subsidiary’s liability to such regional
FHLB.
Advances are collateralized by mortgage-backed securities. The amount of collateral presented is at estimated fair
value.
Represents funding agreements issued to a subsidiary of Farmer Mac. The obligations under these funding agreements
are secured by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be
secured by other qualified collateral. The amount of collateral presented is at carrying value.
Liabilities for Unpaid Claims and Claim Expenses
The following is information about incurred and paid claims development by segment at December 31, 2020. Such
amounts are presented net of reinsurance, and are not discounted. The tables present claims development and cumulative
claim payments by incurral year. The development tables are only presented for significant short-duration product liabilities
within each segment. Where practical, up to 10 years of history has been provided. In order to eliminate potential fluctuations
related to foreign exchange rates, liabilities and payments denominated in a foreign currency have been translated using the
2020 year end spot rates for all periods presented. The information about incurred and paid claims development prior to 2020
is presented as supplementary information.
194
Table of Contents
4. Insurance (continued)
U.S.
Group Life - Term
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
At December 31, 2020
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
For the Years Ended December 31,
(Unaudited)
Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
$ 6,318
$ 6,290
$ 6,293
$ 6,269
$ 6,287
$ 6,295
$ 6,294
$ 6,295
$ 6,297
$ 6,299
$
6,503
6,579
6,569
6,546
6,568
6,569
6,569
6,572
6,574
6,637
6,713
6,719
6,720
6,730
6,720
6,723
6,724
(Dollars in millions)
6,986
6,919
6,913
6,910
6,914
6,919
6,920
7,040
7,015
7,014
7,021
7,024
7,025
7,125
7,085
7,095
7,104
7,105
7,432
7,418
7,425
7,427
7,757
7,655
7,646
7,935
7,900
1
1
1
3
3
6
9
14
23
757
208,202
209,960
212,572
215,388
217,729
218,487
257,925
242,815
239,317
206,427
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
All outstanding liabilities for incurral years prior to 2011, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
8,913
72,533
(70,179)
18
$ 2,372
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
(Unaudited)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$ 4,982
$ 6,194
$ 6,239
$ 6,256
$
6,281
$
6,290
$
6,292
$
6,295
$
6,296
$
(In millions)
5,132
6,472
5,216
6,518
6,614
5,428
6,532
6,664
6,809
5,524
6,558
6,678
6,858
6,913
5,582
6,565
6,711
6,869
6,958
6,980
5,761
6,566
6,715
6,902
6,974
7,034
7,292
6,008
6,569
6,720
6,912
7,008
7,053
7,355
7,521
6,178
6,297
6,572
6,721
6,915
7,018
7,086
7,374
7,578
7,756
6,862
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
$
70,179
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2020:
Years
1
2
Group Life - Term
78.2%
20.0%
3
0.7%
4
0.2%
5
0.5%
6
0.1%
7
—%
8
—%
9
—%
10
—%
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
195
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
4. Insurance (continued)
Group Long-Term Disability
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
At December 31, 2020
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
For the Years Ended December 31,
(Unaudited)
Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
$
955 $
$
916
966
894
979
$
914
980
$
924
$
923
$
918
$
917
$
914
$
910
$
1,014
1,034
1,037
1,021
1,015
1,011
(Dollars in millions)
1,008
1,027
1,032
1,049
1,070
1,069
1,044
1,032
1,076
1,077
1,079
1,101
1,109
1,098
1,097
1,082
1,105
1,093
1,100
1,087
1,081
1,131
1,139
1,159
1,162
1,139
1,244
1,202
1,203
1,195
1,240
1,175
1,163
1,277
1,212
—
—
—
—
—
—
—
7
33
630
21,644
20,086
21,138
22,852
21,209
17,967
16,313
15,135
15,044
8,387
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
All outstanding liabilities for incurral years prior to 2011, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
1,253
11,093
(5,657)
1,543
$ 6,979
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
(Unaudited)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$
44 $
217 $
337 $
411 $
478 $
537 $
588 $
635 $
670 $
(In millions)
43
229
43
365
234
51
453
382
266
50
524
475
428
264
49
591
551
526
427
267
56
648
622
609
524
433
290
54
694
676
677
601
548
476
314
57
703
730
722
732
665
628
579
497
342
59
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
$
5,657
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2020:
Years
Group Long-Term Disability
1
4.6%
2
3
20.0%
14.6%
4
8.9%
5
7.2%
6
6.4%
7
5.4%
8
4.7%
9
3.7%
10
3.6%
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Significant Methodologies and Assumptions
Group Life - Term and Group Long-Term Disability incurred but not paid (“IBNP”) liabilities are developed using
a combination of loss ratio and development methods. Claims in the course of settlement are then subtracted from the
IBNP liabilities, resulting in the IBNR liabilities. The loss ratio method is used in the period in which the claims are
neither sufficient nor credible. In developing the loss ratios, any material rate increases that could change the
underlying premium without affecting the estimated incurred losses are taken into account. For periods where
sufficient and credible claim data exists, the development method is used based on the claim triangles which categorize
claims according to both the period in which they were incurred and the period in which they were paid, adjudicated or
reported. The end result is a triangle of known data that is used to develop known completion ratios and factors.
Claims paid are then subtracted from the estimated ultimate incurred claims to calculate the IBNP liability.
196
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
An expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims
(IBNR and pending). This is expressed as a percentage of the underlying claims liability and is based on past
experience and the anticipated future expense structure.
For Group Life - Term and Group Long-Term Disability, first year incurred claims and allocated loss adjustment
expenses increased in 2020 compared to the 2019 incurral year due to the growth in the size of the business.
There were no significant changes in methodologies for the year ended December 31, 2020. The assumptions used
in calculating the unpaid claims and claim adjustment expenses for Group Life - Term and Group Long-Term
Disability are updated annually to reflect emerging trends in claim experience.
No additional premiums or return premiums have been accrued as a result of the prior year development.
Liabilities for Group Life - Term unpaid claims and claim adjustment expenses are not discounted.
The liabilities for Group Long-Term Disability unpaid claims and claim adjustment expenses were $6.0 billion at
both December 31, 2020 and 2019. Using interest rates ranging from 3% to 8%, based on the incurral year, the total
discount applied to these liabilities was $1.2 billion at both December 31, 2020 and 2019. The amount of interest
accretion recognized was $452 million, $470 million and $509 million for the years ended December 31, 2020, 2019
and 2018, respectively. These amounts were reflected in policyholder benefits and claims.
For Group Life - Term, claims were based upon individual death claims. For Group Long-Term Disability, claim
frequency was determined by the number of reported claims as identified by a unique claim number assigned to
individual claimants. Claim counts initially include claims that do not ultimately result in a liability. These claims are
omitted from the claim counts once it is determined that there is no liability.
The incurred and paid claims disclosed for the Group Life - Term product includes activity related to the product’s
continued protection feature; however, the associated actuarial reserve for future benefit obligations under this feature
is excluded from the liability for unpaid claims.
The Group Long-Term Disability IBNR, included in the development tables above, was developed using
discounted cash flows, and is presented on a discounted basis.
Asia
Group Disability & Group Life
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
At December 31, 2020
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
For the Years Ended December 31,
(Unaudited)
Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
$
63
$
$
66
96
$
87
103
147
$
87
101
148
292
$
93
117
171
275
276
(Dollars in millions)
$
$
123
117
166
252
264
231
130
121
165
253
267
235
299
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
All outstanding liabilities for incurral years prior to 2011, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
3
5
12
25
27
32
52
110
175
341
3,561
5,586
6,503
6,706
6,570
4,472
5,052
5,097
4,530
2,429
$
$
127
132
174
265
260
221
278
365
120
125
174
260
272
236
286
333
394
$
118
124
177
261
275
239
307
347
369
438
2,655
(1,874)
11
$
792
197
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
(Unaudited)
$
12
$
$
40
30
$
53
64
43
$
66
84
98
69
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
(In millions)
$
80
97
120
142
80
$
100
105
134
177
152
65
$
107
110
147
199
190
133
87
$
110
112
161
224
205
152
157
96
$
114
115
157
225
232
190
208
176
106
115
119
166
237
248
206
255
237
194
97
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
$
1,874
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2020:
Years
1
2
3
4
5
Group Disability & Group Life
24.8%
26.1%
13.6%
10.6%
8.6%
6
7.0%
7
2.5%
8
3.3%
9
3.3%
10
0.8%
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Significant Methodologies and Assumptions
This business line consists of employer sponsored and industry sponsored Group Life and Group Disability risks.
For Group Life, the IBNR liability is determined by using the Bornhuetter-Ferguson Method, with factors derived
by examining the experience of historical claims. A pending liability is also calculated for claims that have been
reported but have not been paid. A claim eligibility ratio based on past experience is applied to the face amount of
individual claims.
For Group Disability, the IBNR liability is calculated by applying a percentage to premiums in-force based on the
expected delay as evidenced by the experience in the portfolio. The IBNR liability is then allocated back into different
incurral years based on historical run-off patterns. As the benefit for this class of business is a regular series of
payments, an additional reserve is required for the liability for ongoing benefit payments - claims in course of payment
(“CICP”). The assumptions employed in the calculation of the CICP are adjusted for the Company’s own experience.
An expense liability is held for the future expenses associated with the payment of incurred but not yet paid
claims. This is expressed as a percentage of the underlying claims liability and is based on past experience and the
future expense structure.
There were no significant changes in methodologies for the year ended December 31, 2020. The assumptions used
in calculating the unpaid claims and claim adjustment expenses for Group Disability and Group Life are updated
annually to reflect emerging trends in claim experience.
No additional premiums or return premiums have been accrued as a result of the prior year development.
The liabilities for unpaid claims and claim adjustment expenses were $1.0 billion and $814 million at
December 31, 2020 and 2019, respectively. These amounts were discounted using interest rates ranging from 1% to
7%, based on the incurral year. The total discount applied to these liabilities was $68 million and $52 million at
December 31, 2020 and 2019, respectively. The amount of interest accretion recognized was $24 million, $20 million
and $19 million for the years ended December 31, 2020, 2019 and 2018, respectively. These amounts were reflected in
policyholder benefits and claims.
The Company tracks claim frequency by the number of reported claims as identified by a unique claim number
assigned to individual claimants. Claim counts include claims that do not ultimately result in a liability. A liability is
only established for those claims that are expected to result in a liability, based on historical factors.
198
Table of Contents
4. Insurance (continued)
Latin America
Protection Life
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
At December 31, 2020
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
For the Years Ended December 31,
(Unaudited)
Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
$
129
$
$
201
138
$
207
187
150
$
208
191
212
226
$
208
193
218
345
295
(Dollars in millions)
$
$
208
193
219
354
424
313
204
191
218
323
395
409
323
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
All outstanding liabilities for incurral years prior to 2011, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
—
—
—
—
—
—
(1)
1
10
201
27,458
27,645
32,040
40,796
46,605
40,431
32,201
30,565
32,072
26,643
$
$
207
192
220
326
399
420
314
300
207
193
221
327
399
427
314
290
325
$
207
195
221
328
401
428
313
288
297
490
3,168
(2,772)
8
$
404
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
(Unaudited)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$
127
$
$
197
136
$
202
184
147
$
203
188
205
201
(In millions)
$
203
190
210
301
240
$
203
190
210
306
339
221
$
204
189
209
309
360
395
191
$
204
190
211
313
367
414
286
151
$
206
192
213
315
373
421
302
257
169
206
192
214
316
376
424
306
268
257
213
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
$
2,772
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2020:
Years
Protection Life
1
2
58.4%
30.8%
3
3.4%
4
1.0%
5
0.5%
6
0.4%
7
0.6%
8
0.5%
9
0.5%
10
—%
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
199
Table of Contents
4. Insurance (continued)
Protection Health
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
At December 31, 2020
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
For the Years Ended December 31,
(Unaudited)
Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
$
212
$
236
$
238
$
239
$
239
$
239
$
236
$
236
$
236
$
237
$
(Dollars in millions)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
205
230
222
232
251
231
233
252
257
198
233
253
259
225
260
232
250
257
227
299
376
232
250
256
226
296
350
403
—
—
—
—
—
1
2
4
9
106,659
100,420
104,293
97,855
87,290
106,170
120,810
143,040
127,651
44
103,841
232
250
255
225
297
351
423
134
232
251
256
225
297
350
401
175
486
2,910
(2,808)
4
$
106
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
All outstanding liabilities for incurral years prior to 2011, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
(Unaudited)
Incurral Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$
212
$
236
$
238
$
238
$
239
$
239
$
236
$
236
$
236
$
(In millions)
205
230
222
232
251
229
233
252
255
198
233
253
257
225
244
232
250
253
224
292
307
232
250
253
225
295
346
344
232
250
253
225
295
348
392
113
237
232
250
254
225
296
349
395
159
411
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
$
2,808
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2020:
Years
1
2
Protection Health
84.9%
13.4%
3
0.6%
4
—%
5
6
7
(0.1%)
(0.1)%
(0.2%)
8
—%
9
—%
10
0.4%
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
200
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
4. Insurance (continued)
Significant Methodologies and Assumptions
The Latin America segment establishes liabilities for unpaid losses, which are equal to the accumulation of unpaid
reported claims, plus an estimate for claims IBNR.
In general terms, for both the Protection Life and Protection Health products, the methodology for IBNR is the
Bornhuetter-Ferguson Method, with factors derived by examining the experience of historical claims. In the more
recent incurral months, the credibility is higher on expected loss ratios and lower on claims calculated using the
experience-derived factors. The credibility grows for the factors as incurral months become older.
For Protection Health products, claim duration can be very long due to the multiple incidences that may occur
over time for a single claim. The number of claims reported per year is based on the original claim occurrence date for
each individual claim. Any subsequent claims that are considered part of the original claim occurrence are not counted
as a new claim. For Protection Life products, claims are based upon individual death claims.
There were no significant changes in methodologies or assumptions for the year ended December 31, 2020. The
assumptions used in calculating the unpaid claims and claim adjustment expenses for Protection Life and Protection
Health are updated annually to reflect emerging trends in claim experience.
No additional premiums or return premiums have been accrued as a result of the prior year development.
Liabilities for unpaid claims and claim adjustment expenses were not discounted.
For Protection Life and Protection Health products, claim counts initially include claims that do not ultimately
result in a liability. These claims are omitted from the claim counts once it is determined that there is no liability.
201
Table of Contents
4. Insurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and
Claim Adjustment Expenses
The reconciliation of the net incurred and paid claims development tables to the liability for unpaid claims and claims
adjustment expenses on the consolidated balance sheet was as follows at:
Short-Duration:
Unpaid claims and allocated claims adjustment expenses, net of reinsurance:
U.S.:
Group Life - Term
Group Long-Term Disability
Total
Asia - Group Disability & Group Life
Latin America:
Protection Life
Protection Health
Total
Other insurance lines - all segments combined
Total unpaid claims and allocated claims adjustment expenses, net of reinsurance
Reinsurance recoverables on unpaid claims:
U.S.:
Group Life - Term
Group Long-Term Disability
Total
Asia - Group Disability & Group Life
Latin America:
Protection Life
Protection Health
Total
Other insurance lines - all segments combined
Total reinsurance recoverable on unpaid claims
Total unpaid claims and allocated claims adjustment expense
Unallocated claims adjustment expenses
Discounting
Liability for unpaid claims and claim adjustment liabilities - short-duration
Liability for unpaid claims and claim adjustment liabilities - all long-duration lines
Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and
other policy-related balances) (1)
__________________
December 31, 2020
(In millions)
$
2,372
6,979
$
404
106
12
128
8
12
9,351
792
510
1,991
12,644
140
313
20
437
910
13,554
2
(1,254)
12,302
6,289
$
18,591
(1)
Excludes unpaid claims and allocated claims adjustment expense reclassified to liabilities held-for-sale. See Note 3 for
information on the pending disposition of MetLife P&C.
202
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
4. Insurance (continued)
Rollforward of Claims and Claim Adjustment Expenses
Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows:
Balance at January 1,
Less: Reinsurance recoverables
Net balance at January 1,
Incurred related to:
Current year
Prior years (1)
Total incurred
Paid related to:
Current year
Prior years
Total paid
Reclassified to liabilities held-for-sale (2)
Net balance at December 31,
Add: Reinsurance recoverables
Balance at December 31,
__________________
Years Ended December 31,
2020
2019
(In millions)
2018
$
19,216 $
17,788 $
2,377
16,839
27,272
192
27,464
(20,230)
(6,241)
(26,471)
(1,658)
16,174
2,417
2,332
15,456
27,093
313
27,406
(20,141)
(5,882)
(26,023)
—
16,839
2,377
$
18,591 $
19,216 $
17,094
2,198
14,896
24,571
454
25,025
(18,757)
(5,708)
(24,465)
—
15,456
2,332
17,788
(1)
For the years ended December 31, 2020, 2019 and 2018, claims and claim adjustment expenses associated with prior
years increased due to events incurred in prior years but reported in the current year.
(2)
See Note 3 for information on the pending disposition of MetLife P&C.
Separate Accounts
Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling
$149.0 billion and $142.5 billion at December 31, 2020 and 2019, respectively, for which the policyholder assumes all
investment risk, and separate accounts for which the Company contractually guarantees either a minimum return or account
value to the policyholder which totaled $51.0 billion and $45.9 billion at December 31, 2020 and 2019, respectively. The
latter category consisted primarily of guaranteed interest contracts (“GICs”). The average interest rate credited on these
contracts was 2.55% and 2.92% at December 31, 2020 and 2019, respectively.
For the years ended December 31, 2020, 2019 and 2018, there were no investment gains (losses) on transfers of assets
from the general account to the separate accounts.
203
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles
See Note 1 for a description of capitalized acquisition costs.
Nonparticipating and Non-Dividend-Paying Traditional Contracts
The Company amortizes DAC and VOBA related to these contracts (term insurance, nonparticipating whole life
insurance, traditional group life insurance, non-medical health insurance, and accident & health insurance) over the
appropriate premium paying period in proportion to the actual and expected future gross premiums that were set at contract
issue. The expected premiums are based upon the premium requirement of each policy and assumptions for mortality,
morbidity, persistency and investment returns at policy issuance, or policy acquisition (as it relates to VOBA), include
provisions for adverse deviation, and are consistent with the assumptions used to calculate future policyholder benefit
liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is
deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after
policy issuance or acquisition is caused only by variability in premium volumes.
Participating, Dividend-Paying Traditional Contracts
The Company amortizes DAC and VOBA related to these contracts over the estimated lives of the contracts in
proportion to actual and expected future gross margins. The amortization includes interest based on rates in effect at inception
or acquisition of the contracts. The future gross margins are dependent principally on investment returns, policyholder
dividend scales, mortality, persistency, expenses to administer the business, creditworthiness of reinsurance counterparties
and certain economic variables, such as inflation. For participating contracts within the closed block (dividend-paying
traditional contracts) future gross margins are also dependent upon changes in the policyholder dividend obligation. See
Note 7. Of these factors, the Company anticipates that investment returns, expenses, persistency and other factor changes, as
well as policyholder dividend scales, are reasonably likely to impact significantly the rate of DAC and VOBA amortization.
Each reporting period, the Company updates the estimated gross margins with the actual gross margins for that period. When
the actual gross margins change from previously estimated gross margins, the cumulative DAC and VOBA amortization is
re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross margins exceed those
previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The
opposite result occurs when the actual gross margins are below the previously estimated gross margins. Each reporting
period, the Company also updates the actual amount of business in-force, which impacts expected future gross margins.
When expected future gross margins are below those previously estimated, the DAC and VOBA amortization will increase,
resulting in a current period charge to earnings. The opposite result occurs when the expected future gross margins are above
the previously estimated expected future gross margins. Each period, the Company also reviews the estimated gross margins
for each block of business to determine the recoverability of DAC and VOBA balances.
Fixed and Variable Universal Life Contracts and Fixed and Variable Deferred Annuity Contracts
The Company amortizes DAC and VOBA related to these contracts over the estimated lives of the contracts in
proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception
or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the
amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business,
creditworthiness of reinsurance counterparties, the effect of any hedges used and certain economic variables, such as
inflation. Of these factors, the Company anticipates that investment returns, expenses and persistency are reasonably likely to
significantly impact the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated
gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated
gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to
current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will
increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below
the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business
remaining in-force, which impacts expected future gross profits. When expected future gross profits are below those
previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The
opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits.
Each period, the Company also reviews the estimated gross profits for each block of business to determine the recoverability
of DAC and VOBA balances.
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)
Credit Insurance, Property and Casualty Insurance and Other Short-Duration Contracts
The Company amortizes DAC for these contracts, which is primarily composed of commissions and certain underwriting
expenses, in proportion to actual and future earned premium over the applicable contract term.
Factors Impacting Amortization
Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force
account balances on such contracts each reporting period, which can result in significant fluctuations in amortization of DAC
and VOBA. Returns that are higher than the Company’s long-term expectation produce higher account balances, which
increases the Company’s future fee expectations and decreases future benefit payment expectations on minimum death and
living benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower
than the Company’s long-term expectation. The Company’s practice to determine the impact of gross profits resulting from
returns on separate accounts assumes that long-term appreciation in equity markets is not changed by short-term market
fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these events and
only changes the assumption when its long-term expectation changes.
The Company also periodically reviews other long-term assumptions underlying the projections of estimated gross
margins and profits. These assumptions primarily relate to investment returns, policyholder dividend scales, interest crediting
rates, mortality, persistency, policyholder behavior and expenses to administer business. Management annually updates
assumptions used in the calculation of estimated gross margins and profits which may have significantly changed. If the
update of assumptions causes expected future gross margins and profits to increase, DAC and VOBA amortization will
decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes
expected future gross margins and profits to decrease.
Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of a
contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a
contract. If such modification, referred to as an internal replacement, substantially changes the contract, the associated DAC
or VOBA is written off immediately through income and any new deferrable costs associated with the replacement contract
are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original
contract will continue and any acquisition costs associated with the related modification are expensed.
Amortization of DAC and VOBA is attributed to net investment gains (losses) and net derivative gains (losses), and to
other expenses for the amount of gross margins or profits originating from transactions other than investment gains and
losses. Unrealized investment gains and losses represent the amount of DAC and VOBA that would have been amortized if
such gains and losses had been recognized.
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)
Information regarding DAC and VOBA was as follows:
Years Ended December 31,
2020
2019
(In millions)
2018
DAC:
Balance at January 1,
Capitalizations
Amortization related to:
Net investment gains (losses) and net derivative gains (losses)
Other expenses
Total amortization
Unrealized investment gains (losses)
Effect of foreign currency translation and other
Reclassified to assets held-for-sale (1)
Balance at December 31,
VOBA:
Balance at January 1,
Amortization related to:
Net investment gains (losses) and net derivative gains (losses)
Other expenses
Total amortization
Unrealized investment gains (losses)
Effect of foreign currency translation and other
Balance at December 31,
Total DAC and VOBA:
Balance at December 31,
__________________
$
14,790 $
15,570 $
3,013
3,358
(152)
(2,773)
(2,925)
(1,312)
76
(196)
13,446
(117)
(2,534)
(2,651)
(1,461)
(26)
—
14,789
3,254
(109)
(2,599)
(2,708)
511
(276)
—
14,790
15,570
3,043
3,325
3,630
(2)
(233)
(235)
(4)
139
2,943
—
(245)
(245)
(4)
(33)
3,043
—
(267)
(267)
10
(48)
3,325
$
16,389 $
17,833 $
18,895
(1)
See Note 3 for information on the pending disposition of MetLife P&C.
Information regarding total DAC and VOBA by segment, as well as Corporate & Other, was as follows at:
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
December 31,
2020
2019
$
(In millions)
434 $
9,333
2,092
1,787
2,712
31
649
9,764
2,038
1,701
3,656
25
$
16,389 $
17,833
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Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)
Information regarding other intangibles was as follows:
DSI:
Balance at January 1,
Capitalization
Amortization
Unrealized investment gains (losses)
Effect of foreign currency translation
Balance at December 31,
VODA and VOCRA:
Balance at January 1,
Acquisitions (1)
Amortization
Effect of foreign currency translation
Balance at December 31,
Accumulated amortization
Negative VOBA:
Balance at January 1,
Amortization
Effect of foreign currency translation and other
Balance at December 31,
Accumulated amortization
__________________
Years Ended December 31,
2020
2019
2018
(In millions)
$
158 $
210 $
6
(37)
(18)
(1)
7
(39)
(20)
—
220
7
(33)
16
—
$
$
$
$
$
$
$
108 $
158 $
210
335 $
384 $
814
(41)
(9)
1,099 $
475 $
—
(42)
(7)
335 $
434 $
750 $
779 $
(45)
33
(33)
4
738 $
750 $
459
—
(47)
(28)
384
392
827
(56)
8
779
3,308 $
3,263 $
3,230
(1)
Primarily related to the acquisition of Versant Health. See Note 3.
The estimated future amortization expense (credit) to be reported in other expenses for the next five years is as follows:
2021
2022
2023
2024
2025
6. Reinsurance
VOBA
VODA and VOCRA
Negative VOBA
(In millions)
$
$
$
$
$
221 $
215 $
205 $
200 $
187 $
94 $
88 $
85 $
82 $
81 $
(42)
(39)
(38)
(36)
(35)
The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance
products and also as a provider of reinsurance for some insurance products issued by third parties. The Company participates
in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for
future growth.
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Table of Contents
6. Reinsurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse the Company for the ceded amount in
the event a claim is paid. Cessions under reinsurance agreements do not discharge the Company’s obligation as the primary
insurer. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreements, reinsurance
recoverable balances could become uncollectible.
Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future
performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically
reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities
relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements
using criteria similar to that evaluated in the security impairment process discussed in Note 8.
U.S.
For its Group Benefits business, the Company generally retains most of the risk and only cedes particular risk on certain
client arrangements. The majority of the Company’s reinsurance activity within this business relates to client agreements for
employer sponsored captive programs, risk-sharing agreements and multinational pooling. The risks ceded under these
agreements are generally quota shares of group life and disability policies. The cessions vary from 50% to 100% of all the
risks of the policies.
The Company, through its Property & Casualty business, purchases reinsurance to manage its exposure to large losses
(primarily catastrophe losses) and to protect statutory surplus. The Company cedes losses and premiums based upon the
exposure of the policies subject to reinsurance. To manage exposure to large property & casualty losses, the Company
purchases property catastrophe, casualty and property per risk excess of loss reinsurance protection.
The Company’s RIS business has engaged in reinsurance activities on an opportunistic basis. In 2020, a U.S. life
insurance subsidiary of the Company began reinsuring longevity risks for certain pension products issued by unaffiliated
providers located in the United Kingdom (“U.K.”).
Asia, Latin America and EMEA
For selected large corporate clients, the Company reinsures group employee benefits or credit insurance business with
various client-affiliated reinsurance companies, covering policies issued to the employees or customers of the clients.
Additionally, the Company cedes and assumes risk with other insurance companies when either company requires a business
partner with the appropriate local licensing to issue certain types of policies in certain jurisdictions. In these cases, the
assuming company typically underwrites the risks, develops the products and assumes most or all of the risk. The Company
also has reinsurance agreements in-force that reinsure a portion of the living and death benefit guarantees issued in
connection with variable annuity products. Under these agreements, the Company pays reinsurance fees associated with the
guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values,
subject to certain limitations. The Company may also reinsure certain risks with external reinsurers depending upon the
nature of the risk and local regulatory requirements.
MetLife Holdings
For its life products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis
or on a quota share basis. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as
well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis
for risks with specified characteristics. The Company also assumes portions of the risk associated with certain whole life
policies issued by a former affiliate and reinsures certain term life policies and universal life policies with secondary death
benefit guarantees to such former affiliate.
For its other products, the Company has a reinsurance agreement in-force to reinsure the living and death benefit
guarantees issued in connection with certain variable annuity guarantees from the Company’s former operating joint venture
in Japan. Under this agreement, the Company receives reinsurance fees associated with the guarantees collected from
policyholders, and provides reimbursement for benefits paid or accrued in excess of account values, subject to certain
limitations.
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6. Reinsurance (continued)
Catastrophe Coverage
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company has exposure to catastrophes which could contribute to significant fluctuations in the Company’s results of
operations. For the U.S. and EMEA, the Company purchases catastrophe coverage to reinsure risks issued within territories
that the Company believes are subject to the greatest catastrophic risks. For its other segments, the Company uses excess of
retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger
risks. Excess of retention reinsurance agreements provide for a portion of a risk to remain with the direct writing company
and quota share reinsurance agreements provide for the direct writing company to transfer a fixed percentage of all risks of a
class of policies.
Reinsurance Recoverables
The Company reinsures its business through a diversified group of well-capitalized reinsurers. The Company analyzes
recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and
evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance
recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of
reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance
recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable
letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at
December 31, 2020 and 2019, were not significant. A U.S. life insurance subsidiary of the Company also secured collateral
from its counterparties to mitigate counterparty default risk related to its longevity reinsurance agreements.
The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured
trusts, funds withheld accounts and irrevocable letters of credit. The Company had $3.8 billion and $3.6 billion of unsecured
reinsurance recoverable balances at December 31, 2020 and 2019, respectively.
At December 31, 2020, the Company had $6.6 billion of net ceded reinsurance recoverables. Of this total, $4.2 billion, or
64%, were with the Company’s five largest ceded reinsurers, including $2.0 billion of net ceded reinsurance recoverables
which were unsecured. At December 31, 2019, the Company had $6.7 billion of net ceded reinsurance recoverables. Of this
total, $4.3 billion, or 64%, were with the Company’s five largest ceded reinsurers, including $1.7 billion of net ceded
reinsurance recoverables which were unsecured.
The Company has reinsured with an unaffiliated third-party reinsurer, 59.25% of the closed block through a modified
coinsurance agreement. The Company accounts for this agreement under the deposit method of accounting. The Company,
having the right of offset, has offset the modified coinsurance deposit with the deposit recoverable.
209
Table of Contents
6. Reinsurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The amounts on the consolidated statements of operations include the impact of reinsurance. Information regarding the
significant effects of reinsurance was as follows:
Premiums
Direct premiums
Reinsurance assumed
Reinsurance ceded
Net premiums
Universal life and investment-type product policy fees
Direct universal life and investment-type product policy fees
Reinsurance assumed
Reinsurance ceded
Net universal life and investment-type product policy fees
Policyholder benefits and claims
Direct policyholder benefits and claims
Reinsurance assumed
Reinsurance ceded
Net policyholder benefits and claims
Other expenses
Direct other expenses
Reinsurance assumed
Reinsurance ceded
Net other expenses
Years Ended December 31,
2020
2019
2018
(In millions)
$
42,201 $
42,513 $
44,199
$
$
$
$
$
$
2,032
(2,199)
2,020
(2,298)
2,021
(2,380)
42,034 $
42,235 $
43,840
6,122 $
6,109 $
6,008
50
(569)
56
(562)
5,603 $
5,603 $
86
(592)
5,502
42,221 $
42,094 $
43,456
1,745
(2,505)
1,584
(2,217)
1,583
(2,383)
41,461 $
41,461 $
42,656
13,013 $
13,559 $
13,704
371
(234)
382
(252)
321
(311)
$
13,150 $
13,689 $
13,714
The amounts on the consolidated balance sheets include the impact of reinsurance. Information regarding the significant
effects of reinsurance was as follows at:
December 31,
2020
2019
Direct
Assumed
Ceded
Total
Balance
Sheet
Direct
Assumed
Ceded
Total
Balance
Sheet
(In millions)
Assets
Premiums, reinsurance and other
receivables
Deferred policy acquisition costs and value
of business acquired
Total assets
Liabilities
Future policy benefits
Policyholder account balances
Other policy-related balances
Other liabilities
Total liabilities
$ 5,032 $ 2,107 $ 10,731 $ 17,870 $ 6,814 $ 2,190 $ 11,439 $ 20,443
16,482
230
(323)
16,389
17,822
301
(290)
17,833
$ 21,514 $ 2,337 $ 10,408 $ 34,259 $ 24,636 $ 2,491 $ 11,149 $ 38,276
$ 203,000 $ 3,656 $ — $ 206,656 $ 191,403 $ 3,506 $ — $ 194,909
204,906
15,769
16,283
270
1,332
2,417
—
—
205,176
192,328
17,101
15,806
4,914
23,614
16,165
299
1,351
2,402
—
14
192,627
17,171
5,612
24,179
$ 439,958 $ 7,675 $ 4,914 $ 452,547 $ 415,702 $ 7,558 $ 5,626 $ 428,886
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6. Reinsurance (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance
risk are recorded using the deposit method of accounting. The deposit assets on reinsurance were $1.8 billion and $2.5 billion
at December 31, 2020 and 2019, respectively. The deposit liabilities on reinsurance were $1.4 billion at both
December 31, 2020 and 2019.
7. Closed Block
On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a
mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc.
The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of
reorganization, as amended (the “Plan of Reorganization”). On the Demutualization Date, MLIC established a closed block
for the benefit of holders of certain individual life insurance policies of MLIC. Assets have been allocated to the closed block
in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies
included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these
policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for
the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales
continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares
actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are
adjusted periodically to give effect to changes in experience.
The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the
policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash
flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the
aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to
closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to
these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of
amounts assumed will be available for distribution over time to closed block policyholders and will not be available to
stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be
made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed
block remains in-force. The expected life of the closed block is over 100 years from the Demutualization Date.
The Company uses the same accounting principles to account for the participating policies included in the closed block
as it used prior to the Demutualization Date. However, the Company establishes a policyholder dividend obligation for
earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities
over closed block assets at the Demutualization Date (adjusted to eliminate the impact of related amounts in AOCI)
represents the estimated maximum future earnings from the closed block expected to result from operations, attributed net of
income tax, to the closed block. Earnings of the closed block are recognized in income over the period the policies and
contracts in the closed block remain in-force. Management believes that over time the actual cumulative earnings of the
closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the
period the closed block remains in existence, the actual cumulative earnings of the closed block are greater than the expected
cumulative earnings of the closed block, the Company will pay the excess to closed block policyholders as additional
policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize
only the expected cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such
period, the actual cumulative earnings of the closed block are less than the expected cumulative earnings of the closed block,
the Company will recognize only the actual earnings in income. However, the Company may change policyholder dividend
scales in the future, which would be intended to increase future actual earnings until the actual cumulative earnings equal the
expected cumulative earnings.
Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains
and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides
outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the
Company’s net income continues to be sensitive to the actual performance of the closed block.
Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities,
revenues and expenses outside the closed block based on the nature of the particular item.
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7. Closed Block (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding the closed block liabilities and assets designated to the closed block was as follows at:
Closed Block Liabilities
Future policy benefits
Other policy-related balances
Policyholder dividends payable
Policyholder dividend obligation
Deferred income tax liability
Other liabilities
Total closed block liabilities
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value
Equity securities, at estimated fair value
Contractholder-directed equity securities and fair value option securities, at estimated fair value
Mortgage loans
Policy loans
Real estate and real estate joint ventures
Other invested assets
Total investments
Cash and cash equivalents
Accrued investment income
Premiums, reinsurance and other receivables
Current income tax recoverable
Total assets designated to the closed block
Excess of closed block liabilities over assets designated to the closed block
AOCI:
Unrealized investment gains (losses), net of income tax
Unrealized gains (losses) on derivatives, net of income tax
Allocated to policyholder dividend obligation, net of income tax
Total amounts included in AOCI
December 31,
2020
2019
(In millions)
$
38,758 $
39,379
321
337
2,969
130
172
423
432
2,020
79
81
42,687
42,414
27,186
25,977
24
—
6,807
4,355
559
468
49
53
7,052
4,489
544
314
39,399
38,478
—
402
50
28
39,879
2,808
3,524
23
(2,346)
1,201
448
419
75
91
39,511
2,903
2,453
97
(1,596)
954
3,857
Maximum future earnings to be recognized from closed block assets and liabilities
$
4,009 $
Information regarding the closed block policyholder dividend obligation was as follows:
Balance at January 1,
Change in unrealized investment and derivative gains (losses)
Balance at December 31,
Years Ended December 31,
2020
2019
2018
(In millions)
$
$
2,020 $
428 $
949
1,592
2,969 $
2,020 $
2,121
(1,693)
428
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Table of Contents
7. Closed Block (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding the closed block revenues and expenses was as follows:
Revenues
Premiums
Net investment income
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Policyholder benefits and claims
Policyholder dividends
Other expenses
Total expenses
Revenues, net of expenses before provision for income tax expense (benefit)
Provision for income tax expense (benefit)
Years Ended December 31,
2020
2019
2018
(In millions)
$
1,498 $
1,580 $
1,596
1,740
(25)
(17)
(7)
12
1,672
1,758
(71)
22
3,052
3,325
3,381
2,330
791
104
3,225
(173)
(36)
2,291
924
111
3,326
(1)
(2)
2,475
968
117
3,560
(179)
(39)
(140)
Revenues, net of expenses and provision for income tax expense (benefit)
$
(137) $
1 $
MLIC charges the closed block with federal income taxes, state and local premium taxes and other state or local taxes, as
well as investment management expenses relating to the closed block as provided in the Plan of Reorganization. MLIC also
charges the closed block for expenses of maintaining the policies included in the closed block.
8. Investments
See Note 10 for information about the fair value hierarchy for investments and the related valuation methodologies.
Investment Risks and Uncertainties
Investments are exposed to the following primary sources of risk: credit, interest rate, liquidity, market valuation,
currency and real estate risk. The financial statement risks, stemming from such investment risks, are those associated with
the determination of estimated fair values, the diminished ability to sell certain investments in times of strained market
conditions, the recognition of ACL and impairments, the recognition of income on certain investments and the potential
consolidation of VIEs. The use of different methodologies, assumptions and inputs relating to these financial statement risks
may have a material effect on the amounts presented within the consolidated financial statements.
The determination of ACL and impairments is highly subjective and is based upon quarterly evaluations and assessments
of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as
conditions change and new information becomes available.
The recognition of income on certain investments (e.g. structured securities, including mortgage-backed securities, asset-
backed securities (“ABS”), certain structured investment transactions and FVO Securities) is dependent upon certain factors
such as prepayments and defaults, and changes in such factors could result in changes in amounts to be earned.
Fixed Maturity Securities AFS
Fixed Maturity Securities AFS by Sector
The following table presents the fixed maturity securities AFS by sector. U.S. corporate and foreign corporate sectors
include redeemable preferred stock. RMBS includes agency, prime, alternative and sub-prime mortgage-backed securities.
ABS includes securities collateralized by corporate loans and consumer loans. Municipals includes taxable and tax-exempt
revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political subdivisions.
Commercial mortgage-backed securities (“CMBS”) primarily includes securities collateralized by multiple commercial
mortgage loans. RMBS, ABS and CMBS are collectively, “Structured Products.” In accordance with new credit loss
guidance adopted January 1, 2020, securities that incurred a credit loss after December 31, 2019 and were still held as of
213
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8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
December 31, 2020, are presented net of ACL. In accordance with previous guidance, both the temporary loss and OTTI
loss are presented for securities that were in an unrealized loss position as of December 31, 2019.
Sector
Amortized
Cost
ACL
Gains
Losses
Estimated
Fair
Value
Amortized
Cost
Gains
Temporary
Losses
OTTI
Losses (2)
Estimated
Fair
Value
December 31, 2020
Gross Unrealized (1)
December 31, 2019
Gross Unrealized
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
Total fixed maturity
securities AFS
__________________
(In millions)
$ 79,788 $
(44) $ 13,924 $
252 $ 93,416 $ 79,115 $ 8,943 $
305 $ — $ 87,753
63,243
60,995
(21)
(16)
39,094
—
28,415
—
16,963
—
10,982
—
11,331
—
8,883
8,897
8,095
2,062
231
2,746
681
406
71,699
58,840
8,710
468
69,408
59,342
5,540
89
42
75
47,100
37,586
4,604
30,435
27,051
1,535
17,119
14,547
83
6
13,722
11,081
2,001
102
11,910
10,093
396
321
717
106
72
88
29
42
—
—
—
67,229
64,165
42,084
(33)
28,547
—
—
—
14,542
13,053
10,447
$ 310,811 $
(81) $ 45,519 $ 1,440 $ 354,809 $ 297,655 $ 31,812 $
1,680 $
(33) $ 327,820
(1)
(2)
Excludes gross unrealized gains (losses) related to assets held-for-sale; however, the corresponding unrealized gains
(losses) are included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the pending
disposition of MetLife P&C.
Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value
subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains
(Losses).”
Methodology for Amortization of Premium and Accretion of Discount on Structured Products
Amortization of premium and accretion of discount on Structured Products considers the estimated timing and amount
of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the originally anticipated and the actual prepayments received and currently
anticipated. Prepayment assumptions for Structured Products are estimated using inputs obtained from third-party
specialists and based on management’s knowledge of the current market. For credit-sensitive and certain prepayment-
sensitive Structured Products, the effective yield is recalculated on a prospective basis. For all other Structured Products,
the effective yield is recalculated on a retrospective basis.
Maturities of Fixed Maturity Securities AFS
The amortized cost, net of ACL, and estimated fair value of fixed maturity securities AFS, by contractual maturity
date, were as follows at December 31, 2020:
Due in One
Year or Less
Due After One
Year Through
Five Years
Due After Five
Years
Through Ten
Years
Due After Ten
Years
Structured
Products
Total Fixed
Maturity
Securities AFS
(In millions)
Amortized cost, net of ACL
Estimated fair value
$
$
14,784 $
14,935 $
49,294 $
52,294 $
59,170 $
67,613 $
130,773 $
160,503 $
56,709 $
59,464 $
310,730
354,809
Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed
maturity securities AFS not due at a single maturity date have been presented in the year of final contractual maturity.
Structured Products are shown separately, as they are not due at a single maturity.
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Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector
The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an
unrealized loss position by sector and aggregated by length of time that the securities have been in a continuous unrealized
loss position. Included in the table below are securities without an ACL as of December 31, 2020, in accordance with new
credit loss guidance adopted January 1, 2020. Also included in the table below are all securities in an unrealized loss
position as of December 31, 2019, in accordance with previous guidance.
December 31, 2020
December 31, 2019
Less than 12 Months
Gross
Unrealized
Losses (1)
Estimated
Fair
Value
Equal to or Greater
than 12 Months
Estimated
Fair
Value
Gross
Unrealized
Losses (1)
Less than 12 Months
Gross
Unrealized
Losses
Estimated
Fair
Value
Equal to or Greater
than 12 Months
Estimated
Fair
Value
Gross
Unrealized
Losses
$ 4,338 $
6,795
4,856
4,619
1,531
3,428
273
1,887
$ 27,727 $
24,572
3,155
(Dollars in millions)
196 $
305
321
87
27
26
6
63
506 $
836
1,255
33
152
2,842
—
612
50 $ 3,817 $
100
147
2
14
49
—
39
3,295
3,188
5,391
2,341
3,692
1,156
1,926
107 $ 2,226 $
149
133
97
25
22
29
16
1,490
5,873
196
584
4,843
1
487
198
172
584
9
14
66
—
26
1,031 $ 6,236 $
829
202
5,841
395
401 $ 24,806 $
350
51
22,838
1,968
578 $ 15,700 $
13,813
437
1,887
141
1,069
821
248
$ 27,727 $
1,031 $ 6,236 $
401 $ 24,806 $
578 $ 15,700 $
1,069
Sector & Credit Quality
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
Total fixed maturity securities
AFS
Investment grade
Below investment grade
Total fixed maturity securities
AFS
Total number of securities in an
unrealized loss position
2,177
690
2,153
1,411
________________
(1)
Excludes gross unrealized losses related to assets held-for-sale; however, the corresponding unrealized losses are
included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the pending disposition of
MetLife P&C.
215
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
8. Investments (continued)
Evaluation of Fixed Maturity Securities AFS for Credit Loss
Evaluation and Measurement Methodologies
Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the
cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery.
Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and
its future earnings potential. Considerations used in the credit loss evaluation process include, but are not limited to: (i)
the extent to which the estimated fair value has been below amortized cost, (ii) adverse conditions specifically related to
a security, an industry sector or sub-sector, or an economically depressed geographic area, adverse change in the
financial condition of the issuer of the security, changes in technology, discontinuance of a segment of the business that
may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security and
likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal
payments, (v) whether the issuer, or series of issuers or an industry has suffered a catastrophic loss or has exhausted
natural resources, (vi) whether the Company has the intent to sell or will more likely than not be required to sell a
particular security before the decline in estimated fair value below amortized cost recovers, (vii) with respect to
Structured Products, changes in forecasted cash flows after considering the changes in the financial condition of the
underlying loan obligors and quality of underlying collateral, expected prepayment speeds, current and forecasted loss
severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment
priority within the tranche structure of the security, (viii) changes in the rating of the security by a rating agency, and (ix)
other subjective factors, including concentrations and information obtained from regulators.
The methodology and significant inputs used to determine the amount of credit loss are as follows:
•
The Company calculates the recovery value by performing a discounted cash flow analysis based on the present
value of future cash flows. The discount rate is generally the effective interest rate of the security at the time of
purchase for fixed-rate securities and the spot rate at the date of evaluation of credit loss for floating-rate securities.
• When determining collectability and the period over which value is expected to recover, the Company applies
considerations utilized in its overall credit loss evaluation process which incorporates information regarding the
specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall
macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from
management’s single best estimate, the most likely outcome in a range of possible outcomes, after giving
consideration to a variety of variables that include, but are not limited to: payment terms of the security; the
likelihood that the issuer can service the interest and principal payments; the quality and amount of any credit
enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or
asset sales by the issuer; any private and public sector programs to restructure foreign government securities and
municipals; and changes to the rating of the security or the issuer by rating agencies.
•
Additional considerations are made when assessing the unique features that apply to certain Structured Products
including, but not limited to: the quality of underlying collateral, historical performance of the underlying loan
obligors, historical rent and vacancy levels, changes in the financial condition of the underlying loan obligors,
expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the
underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the
payment priority within the tranche structure of the security.
With respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is
given in the credit loss analysis as to whether there has been any deterioration in the credit of the issuer and the
likelihood of recovery in value of the securities that are in a severe unrealized loss position. Consideration is also given
as to whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any
dividend payments.
After the adoption of new credit loss guidance on January 1, 2020, in periods subsequent to the recognition of an
initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases or decreases in the
expected cash flow from the security result in corresponding decreases or increases in the ACL which are recorded
within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below zero. Full
or partial write-offs are deducted from the ACL in the period the security, or a portion thereof, is considered
uncollectible. Recoveries of amounts previously written off are recorded to the ACL in the period received. When the
216
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the
security before recovery of its amortized cost, any ACL is written off and the amortized cost is written down to estimated
fair value through a charge within net investment gains (losses), which becomes the new amortized cost of the security.
In accordance with the previous guidance, methodologies to evaluate the recoverability of a security in an unrealized
loss position were similar, except: (i) the length of time estimated fair value had been below amortized cost was
considered for securities, and (ii) for non-functional currency denominated securities, the impact from weakening non-
functional currencies on securities that were near maturity was considered in the evaluation. In addition, measurement
methodologies were similar, except: (i) a fair value floor was not utilized to limit the credit loss recognized, (ii) the
amortized cost of securities was adjusted for the OTTI to the expected recoverable amount and an ACL was not utilized,
(iii) subsequent to a credit loss being recognized, increases in expected cash flows from the security did not result in an
immediate increase in valuation recognized in earnings through net investment gains (losses) from reduction of the ACL
instead such increases in value were recorded as unrealized gains in OCI, and (iv) in periods subsequent to the
recognition of OTTI on a security, the Company accounted for the impaired security as if it had been purchased on the
measurement date of the impairment; accordingly, the discount (or reduced premium) based on the new cost basis was
accreted over the remaining term of the security in a prospective manner based on the amount and timing of estimated
future cash flows.
Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position
Gross unrealized losses on securities without an ACL decreased $215 million for the year ended December 31, 2020
to $1.4 billion primarily due to decreases in interest rates and movement in foreign currency exchange rates, partially
offset by widening credit spreads.
Gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position
for 12 months or greater were $401 million at December 31, 2020, or 28% of the total gross unrealized losses on
securities without an ACL.
Investment Grade Fixed Maturity Securities AFS
Of the $401 million of gross unrealized losses on securities without an ACL that have been in a continuous gross
unrealized loss position for 12 months or greater, $350 million, or 87%, were related to 600 investment grade securities.
Unrealized losses on investment grade securities are principally related to widening credit spreads since purchase and,
with respect to fixed-rate securities, rising interest rates since purchase.
Below Investment Grade Fixed Maturity Securities AFS
Of the $401 million of gross unrealized losses on securities without an ACL that have been in a continuous gross
unrealized loss position for 12 months or greater, $51 million, or 13%, were related to 90 below investment grade
securities. Unrealized losses on below investment grade securities are principally related to U.S. and foreign corporate
securities (primarily industrial and consumer), foreign government securities and CMBS and are the result of
significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and
market uncertainty, as well as with respect to fixed-rate securities, rising interest rates since purchase. Management
evaluates U.S. corporate and foreign corporate securities based on factors such as expected cash flows, financial
condition and near-term and long-term prospects of the issuers. Management evaluates foreign government securities
based on factors impacting the issuers such as expected cash flows, financial condition of the issuers and any country
specific economic conditions or public sector programs to restructure foreign government securities. Management
evaluates CMBS based on actual and projected cash flows after considering the quality of underlying collateral, credit
enhancements, expected prepayment speeds, current and forecasted loss severity, the payment terms of the underlying
assets backing a particular security and the payment priority within the tranche structure of the security.
Current Period Evaluation
At December 31, 2020, with respect to securities in an unrealized loss position without an ACL, the Company did
not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these
securities before the anticipated recovery of the remaining amortized cost. Based on the Company’s current evaluation of
its securities in an unrealized loss position without an ACL, the Company concluded that these securities had not
incurred a credit loss and should not have an ACL at December 31, 2020.
217
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Future provisions for credit loss 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 ratings and collateral
valuation.
Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS By Sector
The rollforward of ACL for fixed maturity securities AFS by sector for the year ended December 31, 2020 is as follows:
Balance at January 1,
Additions:
ACL not previously recorded
Changes for securities with previously recorded ACL
Reductions:
Securities sold or exchanged
Securities intended/required to be sold prior to
recovery of amortized cost basis
Disposition (1)
Balance at December 31,
________________
U.S.
Corporate
Foreign
Government
Foreign
Corporate
(In millions)
RMBS
Total
$
— $
— $
— $
— $
—
81
(5)
139
(5)
18
(2)
2
(2)
240
(14)
(31)
(102)
—
—
(133)
(1)
—
44 $
—
(11)
21 $
—
—
16 $
—
—
— $
(1)
(11)
81
$
(1)
In connection with the disposition of MetLife Seguros de Retiro, ACL was reduced by $11 million. See Note 3.
Equity Securities
Equity securities are summarized by security type as follows at:
Security Type
Common stock
Non-redeemable preferred stock
Total equity securities
December 31, 2020
December 31, 2019
Estimated
Fair
Value
$
$
779
300
1,079
% of
Total
Estimated
Fair
Value
(Dollars in millions)
72.2 % $
27.8
100.0 % $
944
398
1,342
% of
Total
70.3 %
29.7
100.0 %
Contractholder-Directed Equity Securities and FVO Securities
As described more fully in Note 1, Unit-linked and FVO Securities include three categories of investments for which
the FVO has been elected, or are otherwise required to be carried at estimated fair value.
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Table of Contents
8. Investments (continued)
Mortgage Loans
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Mortgage Loans by Portfolio Segment
Mortgage loans are summarized as follows at:
Portfolio Segment
Mortgage loans:
Commercial
Agricultural
Residential
Total amortized cost
Allowance for credit loss
Subtotal mortgage loans, net
Residential — FVO
Total mortgage loans held-for-investment, net
Mortgage loans held-for-sale
Total mortgage loans, net
December 31,
2020
2019
Carrying
Value
% of
Total
Carrying
Value
% of
Total
(Dollars in millions)
$
$
52,434
18,128
13,782
84,344
(590)
83,754
165
83,919
—
83,919
62.5 % $
21.6
16.4
100.5
(0.7)
99.8
0.2
100.0
—
100.0 % $
49,624
16,695
14,316
80,635
(353)
80,282
188
80,470
59
80,529
61.6 %
20.7
17.8
100.1
(0.4)
99.7
0.2
99.9
0.1
100.0 %
The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. See
Note 10 for further information.
The amount of net discounts, included within total amortized cost, primarily attributable to residential mortgage loans
was $944 million and $867 million at December 31, 2020 and 2019, respectively. The accrued interest income excluded
from total amortized cost for commercial, agricultural and residential mortgage loans at December 31, 2020 and 2019 was
$209 million and $188 million; $174 million and $186 million; and $108 million and $94 million, respectively.
Purchases of mortgage loans, primarily residential, were $3.3 billion, $4.8 billion and $3.5 billion for the years ended
December 31, 2020, 2019 and 2018, respectively.
Allowance for Credit Loss Rollforward by Portfolio Segment
The changes in the ACL, by portfolio segment, were as follows:
2020
2019
2018
For the Years Ended December 31,
Commercial
Agricultural
Residential
Total
Commercial
Agricultural
Residential
Total
Commercial
Agricultural
Residential
Total
$
246 $
52 $
55 $ 353 $
238 $
46 $
58 $ 342 $
214 $
41 $
59 $ 314
(In millions)
124
(118)
—
—
—
22
35
—
(2)
(1)
30
176
161
78
18
18
(32)
(34)
—
(1)
8
—
—
—
—
11
—
—
(5)
—
7
26
—
—
—
—
(10)
(15)
—
—
24
—
—
—
—
5
—
—
—
—
7
36
—
—
—
—
(8)
(8)
—
—
252 $
106 $
232 $ 590 $
246 $
52 $
55 $ 353 $
238 $
46 $
58 $ 342
Balance at January 1,
Provision (release)
Adoption of new credit
loss guidance
Initial credit losses on
PCD loans (1)
Charge-offs, net of
recoveries
Activity due to HFS
Transfer
Balance at December 31, $
__________________
(1)
Represents the initial credit losses on purchased mortgage loans accounted for as purchased financial assets with credit
deterioration (“PCD”).
219
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
8. Investments (continued)
Allowance for Credit Loss Methodology
After the adoption of new credit loss guidance on January 1, 2020, the Company records an allowance for expected
lifetime credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that the
Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be
collected. In determining the Company’s ACL, management: (i) pools mortgage loans that share similar risk
characteristics, (ii) considers expected lifetime credit loss over the contractual term of its mortgage loans adjusted for
expected prepayments and any extensions, and (iii) considers past events and current and forecasted economic
conditions. Each of the Company’s commercial, agricultural and residential mortgage loan portfolio segments are
evaluated separately. The ACL is calculated for each mortgage loan portfolio segment based on inputs unique to each
loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar risk
characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of ACL. On an ongoing
basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral
dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is
reasonably possible or probable) and reasonably expected troubled debt restructurings (“TDRs”) (i.e., the Company
grants concessions to borrower that is experiencing financial difficulties) are evaluated individually for credit loss. The
ACL for loans evaluated individually are established using the same methodologies for all three portfolio segments. For
example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the estimated fair
value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the
estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, is recorded as a
change in the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains
(losses).
In accordance with the previous guidance, evaluation and measurement methodologies in determining the ACL were
similar, except: (i) credit loss was recognized when incurred (when it was probable, based on current information and
events, that all amounts due under the loan agreement would not be collected), (ii) pooling of loans with similar risk
characteristics was permitted, but not required, (iii) forecasts of economic conditions were not considered in the
evaluation, (iv) measurement of the expected lifetime credit loss over the contractual term, or expected term, was not
considered in the measurement, and (v) the credit loss for loans evaluated individually could also be determined using
either discounted cash flows using the loans’ original effective interest rate or observable market prices.
220
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Commercial and Agricultural Mortgage Loan Portfolio Segments
Commercial and agricultural mortgage loan ACL are calculated in a similar manner. Within each loan portfolio
segment, commercial and agricultural, loans are pooled by internal risk rating. Estimated lifetime loss rates, which vary
by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a
quarterly basis to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which
can change over time. The estimated lifetime loss rates are based on several loan portfolio segment-specific factors,
including (i) the Company’s experience with defaults and loss severity, (ii) expected default and loss severity over the
forecast period, (iii) current and forecasted economic conditions including growth, inflation, interest rates and
unemployment levels, (iv) loan specific characteristics including loan-to-value (“LTV”) ratios, and (v) internal risk
ratings. These evaluations are revised as conditions change and new information becomes available. The Company uses
its several decades of historical default and loss severity experience which capture multiple economic cycles. The
Company uses a forecast of economic assumptions for a two-year period for most of its commercial and agricultural
mortgage loans, while a one-year period is used for loans originated in certain markets. After the applicable forecast
period, the Company reverts to its historical loss experience using a straight-line basis over two years. For evaluations of
commercial mortgage loans, in addition to historical experience, management considers factors that include the impact of
a rapid change to the economy, which may not be reflected in the loan portfolio, recent loss and recovery trend
experience as compared to historical loss and recovery experience, and loan specific characteristics including debt
service coverage ratios (“DSCR”). In estimating expected lifetime credit loss over the term of its commercial mortgage
loans, the Company adjusts for expected prepayment and extension experience during the forecast period using historical
prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e.,
floating rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical
prepayment experience. For evaluations of agricultural mortgage loans, in addition to historical experience, management
considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or
a change in the number of higher risk loans. In estimating expected lifetime credit loss over the term of its agricultural
mortgage loans, the Company’s experience is much less sensitive to the position in the economic cycle and by loan
profile; accordingly, historical prepayment experience is used, while extension terms are not prevalent with the
Company’s agricultural mortgage loans.
Commercial mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an
analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis,
estimated valuations of the underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process
focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well
as loans with higher LTV ratios and lower DSCR. Agricultural mortgage loans are reviewed on an ongoing basis, which
review includes, but is not limited to, property inspections, market analysis, estimated valuations of the underlying
collateral, LTV ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The
monitoring process for agricultural mortgage loans also focuses on higher risk loans.
For commercial mortgage loans, the primary credit quality indicator is the DSCR, which compares a property’s net
operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the
DSCR, the higher the risk of experiencing a credit loss. The Company also reviews the LTV ratio of its commercial
mortgage loan portfolio. LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the
underlying collateral. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR
and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio is routinely updated for
all but the lowest risk loans as part of the Company’s ongoing review of its commercial mortgage loan portfolio.
For agricultural mortgage loans, the Company’s primary credit quality indicator is the LTV ratio. The values utilized
in calculating this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio
and are routinely updated.
Commitments to lend: After loans are approved, the Company makes commitments to lend and, typically, borrowers
draw down on some or all of the commitments. The timing of mortgage loan funding is based on the commitment
expiration dates. A liability for credit loss for unfunded commercial and agricultural mortgage loan commitments is
recorded within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above
and the amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the
commitment is funded or expires, the liability is adjusted accordingly.
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Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
8. Investments (continued)
Residential Mortgage Loan Portfolio Segment
The Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing
residential mortgage loans, including both performing loans purchased within 12 months of origination and reperforming
loans purchased after they have been performing for at least 12 months post-modification. Residential mortgage loans are
pooled by loan type (i.e., new origination and reperforming) and pooled by similar risk profiles (including consumer
credit score and LTV ratios). Estimated lifetime loss rates, which vary by loan type and risk profile, are applied to the
amortized cost of each loan excluding accrued investment income on a quarterly basis to develop the ACL. The
estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results
over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic
conditions including growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics
including consumer credit scores, LTV ratios, payment history and home prices. These evaluations are revised as
conditions change and new information becomes available. The Company uses industry historical experience which
captures multiple economic cycles as the Company has purchased most of its residential mortgage loans in the last five
years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential mortgage
loans. After the applicable forecast period, the Company immediately reverts to industry historical loss experience.
For residential mortgage loans, the Company’s primary credit quality indicator is whether the loan is performing or
nonperforming. The Company generally defines nonperforming residential mortgage loans as those that are 60 or more
days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage
loans have a higher risk of experiencing a credit loss.
Mortgage Loan Concessions
In response to the adverse economic impact of the COVID-19 Pandemic, during 2020 the Company granted
concessions to certain of its commercial, agricultural and residential mortgage loan borrowers, including payment deferrals
and other loan modifications. The Company has elected the option under the Coronavirus Aid, Relief, and Economic
Security Act (“CARES Act”), the Consolidated Appropriations Act, 2021 and the Interagency Statement on Loan
Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)
(“Interagency Statement”) issued by bank regulatory agencies, not to account for or report qualifying concessions as TDRs
and not to classify such loans as either past due or nonaccrual during the payment deferral period. Additionally, in
accordance with the FASB’s published response to a COVID-19 Pandemic technical inquiry, the Company continues to
accrue interest income on such loans that have deferred payment. The Company records an ACL on this accrued interest
income.
Commercial
For some commercial mortgage loan borrowers (principally in the retail and hotel sectors), the Company granted
concessions which were primarily interest and principal payment deferrals generally ranging from three to four months
and, to a much lesser extent, maturity date extensions. Deferred commercial mortgage loan interest and principal
payments were $66 million at December 31, 2020.
Agricultural
For some agricultural mortgage loan borrowers (principally in the annual crops and agribusiness sectors), the
Company granted concessions which were primarily principal payment deferrals generally ranging from three to 12
months, and covenant changes and, to a much lesser extent, maturity date extensions. Deferred agricultural mortgage
loan interest and principal payments were $6 million at December 31, 2020.
Residential
For some residential mortgage loan borrowers, the Company granted concessions which were primarily three-month
interest and principal payment deferrals. Deferred residential mortgage loan interest and principal payments were
$37 million at December 31, 2020.
Troubled Debt Restructurings
The Company assesses loan concessions prior to the issuance of, or outside the scope of, the CARES Act, the
Consolidated Appropriations Act, 2021 and the Interagency Statement on a case-by-case basis to evaluate whether a
TDR has occurred. The Company may grant concessions to borrowers experiencing financial difficulties which, if not
222
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
significant, are not classified as TDRs, while more significant concessions are classified as TDRs. Generally, the types of
concessions include: reduction of the contractual interest rate, extension of the maturity date at an interest rate lower than
current market interest rates, and/or a reduction of accrued interest. The amount, timing and extent of the concessions
granted are considered in determining any ACL recorded.
For both years ended December 31, 2020 and 2019, the Company did not have commercial mortgage loans modified
in a troubled debt restructuring.
For the year ended December 31, 2020, the Company did not have a significant amount of agricultural mortgage
loans modified in a troubled debt restructuring. For the year ended December 31, 2019, the Company had three
agricultural mortgage loans modified in a troubled debt restructuring with carrying value of $111 million for both pre-
modification and post-modification.
For the year ended December 31, 2020, the Company did not have a significant amount of residential mortgage
loans modified in a troubled debt restructuring. For the year ended December 31, 2019, the Company had 396 residential
mortgage loans modified in a troubled debt restructuring with carrying value of $97 million and $87 million pre-
modification and post-modification, respectively.
For both years ended December 31, 2020 and 2019, the Company did not have a significant amount of mortgage
loans modified in a troubled debt restructuring with subsequent payment default.
Credit Quality of Mortgage Loans by Portfolio Segment
The amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at
December 31, 2020:
Credit Quality Indicator
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Total
% of
Total
(Dollars in millions)
LTV ratios:
Less than 65%
65% to 75%
76% to 80%
Greater than 80%
Total
DSCR:
> 1.20x
1.00x - 1.20x
<1.00x
Total
$
4,960 $
4,793 $
5,620 $
4,299 $
5,103 $
9,846 $
2,318 $ 36,939
70.4 %
1,455
4,057
2,450
1,554
33
8
135
11
62
248
403
422
960
273
133
1,861
281
1,149
—
—
—
12,337
1,187
1,971
23.5
2.3
3.8
$
6,456 $
8,996 $
8,380 $
6,678 $
6,469 $ 13,137 $
2,318 $ 52,434
100.0 %
$
5,896 $
8,537 $
8,194 $
6,133 $
6,129 $ 12,543 $
2,318 $ 49,750
94.9 %
351
209
—
459
18
168
204
341
340
—
492
102
—
—
1,405
1,279
2.7
2.4
$
6,456 $
8,996 $
8,380 $
6,678 $
6,469 $ 13,137 $
2,318 $ 52,434
100.0 %
The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at
December 31, 2020:
Credit Quality Indicator
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Total
% of
Total
(Dollars in millions)
LTV ratios:
Less than 65%
65% to 75%
76% to 80%
Greater than 80%
Total
$ 3,105 $ 2,240 $ 3,005 $ 1,047 $ 2,529 $ 3,687 $
1,060 $ 16,673
92.0 %
400
—
—
150
—
—
85
—
—
53
—
—
179
—
—
461
51
42
34
—
—
1,362
51
42
7.5
0.3
0.2
$ 3,505 $ 2,390 $ 3,090 $ 1,100 $ 2,708 $ 4,241 $
1,094 $ 18,128
100 %
223
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at
December 31, 2020:
Credit Quality Indicator
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Total
% of
Total
(Dollars in millions)
Performance indicators:
Performing
Nonperforming (1)
Total
__________________
$
606 $ 2,310 $ 1,007 $
473 $
331 $ 8,499 $ — $ 13,226
96.0 %
8
91
26
9
8
414
—
556
4.0
$
614 $ 2,401 $ 1,033 $
482 $
339 $ 8,913 $ — $ 13,782
100.0 %
(1)
Includes residential mortgage loans in process of foreclosure of $103 million and $118 million at December 31, 2020
and 2019, respectively.
LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. At
December 31, 2020, the amortized cost of commercial and agricultural mortgage loans with a LTV ratio in excess of 100%
was $650 million, or less than 1% of total commercial and agricultural mortgage loans, however after considering the
reduction in carrying value from the related ACL, no loans have a ratio greater than 100%.
Past Due and Nonaccrual Mortgage Loans
The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as
performing at both December 31, 2020 and 2019. The Company defines delinquency consistent with industry practice, when
mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual
mortgage loans at amortized cost, prior to ACL, by portfolio segment, were as follows:
Past Due
Greater than 90 Days Past Due and Still
Accruing Interest
Nonaccrual
Portfolio
Segment
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Commercial
Agricultural
Residential
Total
$
$
10 $
10 $
252
556
129
452
(In millions)
7 $
20
64
9 $
317 $
7
35
266
534
818 $
591 $
91 $
51 $
1,117 $
176
137
418
731
The amortized cost for nonaccrual commercial, agricultural and residential mortgage loans at beginning of year 2019 was
$176 million, $105 million and $436 million, respectively. The amortized cost for nonaccrual commercial mortgage loans
with no ACL was $168 million and $0 at December 31, 2020 and December 31, 2019, respectively. The amortized cost for
nonaccrual agricultural mortgage loans with no ACL was $178 million and $93 million at December 31, 2020 and
December 31, 2019, respectively. There were no nonaccrual residential mortgage loans without an ACL at either
December 31, 2020 or December 31, 2019.
Purchased Investments with Credit Deterioration
Investments that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit
quality since origination are classified as PCD. The amortized cost for PCD investments is the purchase price plus an ACL
for the initial estimate of expected lifetime credit losses established upon purchase. Subsequent changes in the ACL on
PCD investments are recorded in net investment gains (losses). The non-credit discount or premium is accreted or
amortized to net investment income on an effective yield basis.
224
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The following table reconciles the contractual principal to the purchase price of PCD investments:
Year Ended December 31, 2020
Contractual
Principal
ACL at
Acquisition
Non-Credit
(Discount)
Premium
Purchase
Price
(In millions)
PCD residential mortgage loans
$
593 $
(18) $
(13) $
562
Prior to the adoption of new credit loss guidance for the recognition of credit losses on financial instruments, the
Company applied applicable guidance for investments acquired with evidence of credit quality deterioration since
origination, known as PCI investments. The Company’s PCI investments had an outstanding principal balance of
$3.3 billion at December 31, 2019, which represents the contractually required principal and accrued interest payments
whether or not currently due and a carrying value (estimated fair value of the investments plus accrued interest) of
$2.7 billion at December 31, 2019. Accretion of accretable yield on PCI investments recognized in net investment income
was $178 million and $275 million for the years ended December 31, 2019 and 2018, respectively.
Real Estate and Real Estate Joint Ventures
The Company’s real estate investment portfolio is diversified by property type, geography and income stream, including
income from operating leases, operating income and equity in earnings from equity method real estate joint ventures. Real
estate investments, by income type, as well as income earned, were as follows at and for the periods indicated:
Income Type
Leased real estate investments
Other real estate investments
Real estate joint ventures
Total real estate and real estate joint ventures
Years Ended December 31,
December 31, 2020
December 31, 2019
2020
Carrying Value
(In millions)
2019
Income
2018
$
$
5,450 $
4,893 $
435 $
380 $
419
6,064
420
5,428
133
(36)
192
104
11,933 $
10,741 $
532 $
676 $
399
188
107
694
The carrying value of real estate investments acquired through foreclosure was $20 million and $36 million at
December 31, 2020 and 2019, respectively. Depreciation expense on real estate investments was $123 million, $100 million
and $92 million for the years ended December 31, 2020, 2019 and 2018, respectively. Real estate investments were net of
accumulated depreciation of $1.1 billion and $957 million at December 31, 2020 and 2019, respectively.
As a result of the COVID-19 Pandemic, earnings from certain of the Company’s equity method real estate joint ventures
were reduced for the year ended December 31, 2020, principally hotel properties. Certain of these real estate joint ventures
have granted some lessees COVID-19 Pandemic-related lease concessions. See “— Leases — Lease Concessions.”
Leases
Leased Real Estate Investments - Operating Leases
The Company, as lessor, leases investment real estate, principally commercial real estate for office and retail use,
through a variety of operating lease arrangements, which typically include tenant reimbursement for property operating
costs and options to renew or extend the lease. In some circumstances, leases may include an option for the lessee to
purchase the property. In addition, certain leases of retail space may stipulate that a portion of the income earned is
contingent upon the level of the tenants’ revenues. The Company has elected a practical expedient of not separating non-
lease components related to reimbursement of property operating costs from associated lease components. These property
operating costs have the same timing and pattern of transfer as the related lease component, because they are incurred over
the same period of time as the operating lease. Therefore, the combined component is accounted for as a single operating
lease. Risk is managed through lessee credit analysis, property type diversification, and geographic diversification. Leased
real estate investments and income earned, by property type, were as follows at and for the periods indicated:
225
Table of Contents
8. Investments (continued)
Property Type
Leased real estate investments:
Office
Retail
Apartment
Land
Industrial
Hotel
Other
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
December 31, 2020
December 31, 2019
2020
Carrying Value
(In millions)
2019
Income
2018
Years Ended December 31,
$
2,351 $
1,147
810
621
332
96
93
1,999 $
188 $
1,127
778
514
306
93
76
93
62
25
56
5
6
175 $
102
24
21
46
7
5
169
95
70
19
38
3
5
399
Total leased real estate investments
$
5,450 $
4,893 $
435 $
380 $
Future contractual receipts under operating leases at December 31, 2020 were $331 million in 2021, $268 million in
2022, $230 million in 2023, $200 million in 2024, $180 million in 2025, $1.2 billion thereafter and, in total, are
$2.4 billion.
Leveraged and Direct Financing Leases
The Company has diversified leveraged lease and direct financing lease portfolios. Its leveraged leases principally
include renewable energy generation facilities, rail cars, commercial real estate and commercial aircraft, and its direct
financing leases principally include commercial real estate. These assets are leased through a variety of lease arrangements,
which may include options to renew or extend the lease and options for the lessee to purchase the property. Residual values
are estimated using available third-party data at inception of the lease. Risk is managed through lessee credit analysis, asset
allocation, geographic diversification, and ongoing reviews of estimated residual values, using available third-party data
and, in certain leases, linking the amount of future rental receipts to changes in inflation rates. Generally, estimated residual
values are not guaranteed by the lessee or a third party.
Investment in leveraged and direct financing leases consisted of the following at:
Lease receivables, net (1)
Estimated residual values
Subtotal
Unearned income
Investment in leases, before ACL
ACL
Investment in leases, net of ACL
__________________
December 31, 2020
December 31, 2019
Leveraged
Leases
Direct
Financing
Leases
Leveraged
Leases
Direct
Financing
Leases
$
597 $
2,055 $
(In millions)
573
1,170
(318)
852
(36)
42
2,097
(749)
1,348
(8)
666 $
751
1,417
(365)
1,052
—
$
816 $
1,340 $
1,052 $
1,931
42
1,973
(726)
1,247
—
1,247
(1)
Future contractual receipts under direct financing leases at December 31, 2020 were $27 million in 2021, $103 million
in 2022, $112 million in 2023, $119 million in 2024, $102 million in 2025, $1.6 billion thereafter and, in total
$2.1 billion.
Lease receivables are generally due in periodic installments. The payment periods for leveraged leases generally range
from one to 11 years but in certain circumstances can be over 11 years, while the payment periods for direct financing
leases generally range from one to 25 years but in certain circumstances can be over 25 years. For lease receivables, the
226
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
primary credit quality indicator is whether the lease receivable is performing or nonperforming, which is assessed monthly.
The Company generally defines nonperforming lease receivables as those that are 90 days or more past due. At both
December 31, 2020 and 2019, all leveraged lease receivables were performing. At December 31, 2020 and 2019, 96% and
94% of direct financing lease receivables were performing, respectively.
The deferred income tax liability related to leveraged leases was $287 million and $467 million at December 31, 2020
and 2019, respectively.
The components of income from investment in leveraged and direct financing leases, excluding net investment gains
(losses), were as follows:
Years Ended December 31,
2020
2019
2018
Leveraged
Leases
Direct
Financing
Leases
Leveraged
Leases
Direct
Financing
Leases
Leveraged
Leases
Direct
Financing
Leases
(In millions)
Lease investment income
Less: Income tax expense
Lease investment income, net of income tax
$
$
39 $
106 $
48 $
109 $
47 $
8
22
10
23
10
31 $
84 $
38 $
86 $
37 $
95
20
75
In accordance with new credit loss guidance adopted January 1, 2020, the Company records an allowance for expected
lifetime credit loss in an amount that represents the portion of the investment in leases that the Company does not expect to
collect, resulting in the investment in leases being presented at the net amount expected to be collected. In determining the
ACL, management: (i) pools leases that share similar risk characteristics, (ii) considers expected lifetime credit loss over
the contractual term of the lease, and (iii) considers past events and current and forecasted economic conditions. Leases
with dissimilar risk characteristics are evaluated individually for credit loss. Expected lifetime credit loss on leveraged
lease receivables is estimated using a probability of default and loss given default model, where the probability of default
incorporates third party credit ratings of the lessee and the related historical default data. Direct financing leases principally
relate to leases of commercial real estate; accordingly, expected lifetime credit loss is estimated on such lease receivables
consistent with the methodology for commercial mortgage loans (see “— Mortgage Loans — Allowance for Credit Loss
Methodology”). The Company also assesses the non-guaranteed residual values for recoverability by comparison to the
current estimated fair value of the leased asset and considers other relevant market information such as independent third-
party forecasts, consulting, asset brokerage and investment banking reports and data, comparable market transactions, and
factors such as the competitive dynamics impacting specific industries, technological change and obsolescence,
government and regulatory rules, tax policy, potential environmental liabilities and litigation.
Prior to the adoption of the new credit loss guidance, lease impairment losses were recorded as incurred. Under the
incurred loss model, if all amounts due under the lease agreement would not be collected based on current information and
events, an impairment loss was recorded. The impairment loss was recorded as a reduction of the investment in lease and
within net investment gains (losses).
Lease Concessions
In response to the adverse economic impact of the COVID-19 Pandemic, the Company granted concessions to certain
of its lessees (operating and direct financing leases), primarily in the form of rent deferrals. In accordance with a Question
and Answer document issued by the FASB in response to the COVID-19 Pandemic, the Company has elected not to
evaluate whether such lease concessions are lease modifications, continues to accrue income on such leases and records
rent receivables on real estate operating leases. The rent deferrals generally range from one to six months for operating
leases and three to six months for commercial real estate direct financing leases. Deferred rental payments and rental
abatements for both operating and direct financing leases were $15 million and $3 million, respectively, at
December 31, 2020. The Company has interests in certain unconsolidated real estate joint ventures which have granted
COVID-19 Pandemic-related lease concessions.
227
Table of Contents
8. Investments (continued)
Other Invested Assets
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Other invested assets is comprised primarily of freestanding derivatives with positive estimated fair values (see Note 9),
tax credit and renewable energy partnerships, annuities funding structured settlement claims and direct financing and
leveraged leases.
Tax Credit Partnerships
The carrying value of tax credit partnerships was $1.1 billion and $1.3 billion at December 31, 2020 and 2019,
respectively. Losses from tax credit partnerships included within net investment income were $226 million, $240 million
and $257 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Cash Equivalents
The carrying value of cash equivalents, which includes securities and other investments with an original or remaining
maturity of three months or less at the time of purchase, was $9.7 billion and $8.6 billion at December 31, 2020 and 2019,
respectively.
Net Unrealized Investment Gains (Losses)
Unrealized investment gains (losses) on fixed maturity securities AFS and derivatives and the effect on DAC, VOBA,
DSI, future policy benefits and the policyholder dividend obligation, that would result from the realization of the unrealized
gains (losses), are included in net unrealized investment gains (losses) in AOCI.
The components of net unrealized investment gains (losses), included in AOCI, were as follows:
Fixed maturity securities AFS
Derivatives
Other
Subtotal
Amounts allocated from:
Future policy benefits
DAC, VOBA and DSI
Policyholder dividend obligation
Subtotal
Deferred income tax benefit (expense)
Net unrealized investment gains (losses)
Net unrealized investment gains (losses) attributable to noncontrolling interests
Years Ended December 31,
2020
2019
2018
(In millions)
$
44,415 $
30,083 $
11,381
1,924
267
46,606
(7,828)
(4,050)
(2,969)
(14,847)
(8,009)
23,750
(20)
2,209
310
32,602
(1,019)
(2,716)
(2,020)
(5,755)
(6,850)
19,997
(16)
2,127
290
13,798
31
(1,231)
(428)
(1,628)
(3,505)
8,665
(10)
Net unrealized investment gains (losses) attributable to MetLife, Inc.
$
23,730 $
19,981 $
8,655
228
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The changes in net unrealized investment gains (losses) were as follows:
Balance at January 1,
Cumulative effects of changes in accounting principles, net of income tax
Unrealized investment gains (losses) during the year
Unrealized investment gains (losses) relating to:
Future policy benefits
DAC, VOBA and DSI
Policyholder dividend obligation
Deferred income tax benefit (expense)
Net unrealized investment gains (losses)
Net unrealized investment gains (losses) attributable to noncontrolling interests
Balance at December 31,
Change in net unrealized investment gains (losses)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.
Concentrations of Credit Risk
Years Ended December 31,
2020
2019
2018
(In millions)
$ 19,981 $
8,655 $ 13,662
—
21
1,258
14,004
18,778
(10,383)
(6,809)
(1,334)
(949)
(1,159)
(1,050)
(1,485)
(1,592)
(3,340)
23,734
19,987
108
537
1,693
1,782
8,657
(4)
(6)
(2)
$ 23,730 $ 19,981 $
8,655
$
3,753 $ 11,332 $
(5,005)
(4)
(6)
(2)
$
3,749 $ 11,326 $
(5,007)
Investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government
and its agencies, at estimated fair value at December 31, 2020 and 2019, were in fixed income securities of the Japanese
government and its agencies of $35.8 billion and $33.7 billion, respectively, and in fixed income securities of the South
Korean government and its agencies of $8.0 billion and $7.3 billion, respectively.
Securities Lending, Repurchase Agreements and FHLB of Boston Advance Agreements
Securities, Collateral and Reinvestment Portfolio
A summary of the outstanding securities lending, repurchase agreements and FHLB of Boston short-term advance
agreements is as follows:
December 31,
Securities (1)
Estimated
Fair Value
2020
Cash
Collateral
Received from
Counterparties
(2), (3)
Reinvestment
Portfolio at
Estimated
Fair Value
Securities (1)
Estimated
Fair Value
2019
Cash
Collateral
Received from
Counterparties
(2), (3)
(In millions)
18,262 $
18,628 $
18,884 $
16,926 $
17,369 $
3,276 $
3,210 $
3,251 $
2,333 $
2,310 $
Reinvestment
Portfolio at
Estimated
Fair Value
17,451
2,320
— $
— $
— $
1,083 $
800 $
843
Agreement Type
Securities lending
Repurchase agreements
FHLB of Boston advance
agreements (4)
__________________
$
$
$
(1)
(2)
(3)
Securities on loan or securities pledged in connection with these programs are included within fixed maturity securities
AFS and short-term investments.
In connection with securities lending and repurchase agreements, in addition to cash collateral received, the Company
received from counterparties non-cash security collateral of $1 million and $0 at December 31, 2020 and 2019,
respectively, which is not reflected on the consolidated financial statements.
The liability for cash collateral for these programs is included within payables for collateral under securities loaned
and other transactions and other liabilities.
229
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(4)
Excludes assets held-for-sale and liabilities held-for-sale at December 31, 2020. See Note 3 for information on the
pending disposition of MetLife P&C.
Contractual Maturities
A summary of the remaining contractual maturities of securities lending, repurchase agreements and FHLB of Boston
short-term advance agreements is as follows:
December 31,
2020
2019
Remaining Maturities
Security Type
Open (1)
1 Month
or Less
Over 1
Month
to 6
Months
Over 6
Months
to 1
Year
Total
Open (1)
(In millions)
Remaining Maturities
1
Month
or Less
Over 1
Month
to 6
Months
Over 6
Months
to 1
Year
Total
Cash collateral liability by
loaned security type:
Securities lending:
U.S. government and
agency
Foreign government
U.S. corporate
Agency RMBS
Total
Repurchase agreements:
U.S. government and
agency
Cash collateral liability by
pledged security type: (2)
FHLB of Boston:
Municipals (3)
__________________
$ 2,946 $ 10,553 $ 4,009 $ — $ 17,508 $ 2,928 $ 6,676 $ 6,663 $ — $ 16,267
—
3
291
—
826
—
—
1,117
—
3
—
—
259
—
767
—
—
—
1,026
—
—
76
$ 2,949 $ 10,844 $ 4,835 $ — $ 18,628 $ 2,928 $ 7,011 $ 7,430 $ — $ 17,369
—
—
—
—
—
—
—
76
$ — $ 3,210 $ — $ — $ 3,210 $ — $ 2,310 $ — $ — $ 2,310
$ — $ — $ — $ — $ — $ — $ 250 $ 475 $
75 $
800
(1)
(2)
(3)
The related loaned security could be returned to the Company on the next business day, which would require the
Company to immediately return the cash collateral.
The Company is permitted to withdraw any portion of the pledged collateral over the minimum collateral requirement
at any time, other than in the event of a default by the Company.
Excludes assets held-for-sale at December 31, 2020. See Note 3 for information on the pending disposition of MetLife
P&C.
If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities
to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be
forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal
market conditions, or both.
The securities lending, repurchase agreements and FHLB of Boston short-term advance agreements reinvestment
portfolios consist principally of high quality, liquid, publicly-traded fixed maturity securities AFS, short-term investments,
cash equivalents or cash. If the securities on loan, securities pledged or the reinvestment portfolio become less liquid,
liquidity resources within the general account are available to meet any potential cash demands when securities on loan or
securities pledged are put back by the counterparty.
230
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
8. Investments (continued)
Invested Assets on Deposit, Held in Trust and Pledged as Collateral
Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value for all asset
classes, except mortgage loans, which are presented at carrying value at:
Invested assets on deposit (regulatory deposits)
Invested assets held in trust (collateral financing arrangement and reinsurance agreements)
Invested assets pledged as collateral (1)
Total invested assets on deposit, held in trust and pledged as collateral
__________________
December 31,
2020
2019
(In millions)
1,933 $
3,475
25,884
31,292 $
2,034
2,991
24,493
29,518
$
$
(1) The Company has pledged invested assets in connection with various agreements and transactions, including funding
agreements (see Note 4), derivative transactions (see Note 9), secured debt (see Note 13), and a collateral financing
arrangement (see Note 14).
See “— Securities Lending, Repurchase Agreements and FHLB of Boston Advance Agreements” for information
regarding securities supporting securities lending, repurchase agreement transactions and FHLB of Boston short-term
advance agreements and Note 7 for information regarding investments designated to the closed block. In addition, the
Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuers, was
$814 million and $809 million, at redemption value, at December 31, 2020 and 2019, respectively.
Collectively Significant Equity Method Investments
The Company holds investments in real estate joint ventures, real estate funds and other limited partnership interests
consisting of leveraged buy-out funds, hedge funds, private equity funds, joint ventures and other funds. The portion of these
investments accounted for under the equity method had a carrying value of $17.9 billion at December 31, 2020. The
Company’s maximum exposure to loss related to these equity method investments is limited to the carrying value of these
investments plus unfunded commitments of $8.0 billion at December 31, 2020. Except for certain real estate joint ventures
and certain funds, the Company’s investments in its remaining real estate funds and other limited partnership interests are
generally of a passive nature in that the Company does not participate in the management of the entities.
As described in Note 1, the Company generally records its share of earnings in its equity method investments using a
three-month lag methodology and within net investment income. Aggregate net investment income from these equity method
investments exceeded 10% of the Company’s consolidated pre-tax income (loss) for two of the three most recent annual
periods: 2020 and 2019.
The following aggregated summarized financial data reflects the latest available financial information and does not
represent the Company’s proportionate share of the assets, liabilities, or earnings of such entities. Aggregate total assets of
these entities totaled $704.5 billion and $585.3 billion at December 31, 2020 and 2019, respectively. Aggregate total
liabilities of these entities totaled $99.4 billion and $86.1 billion at December 31, 2020 and 2019, respectively. Aggregate net
income (loss) of these entities totaled $41.6 billion, $47.0 billion and $52.5 billion for the years ended December 31, 2020,
2019 and 2018, respectively. Aggregate net income (loss) from the underlying entities in which the Company invests is
primarily comprised of investment income, including recurring investment income and realized and unrealized investment
gains (losses).
Variable Interest Entities
The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to
direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be
the primary beneficiary or consolidator of the entity. The determination of the VIE’s primary beneficiary requires an
evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement
in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to
each party involved in the entity.
231
Table of Contents
8. Investments (continued)
Consolidated VIEs
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the
general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed
investment.
The following table presents the total assets and total liabilities relating to investment related VIEs for which the
Company has concluded that it is the primary beneficiary and which are consolidated at:
Asset Type
Investment funds (1)
Renewable energy partnership (1)
Other investments (2)
Total
__________________
December 31,
2020
2019
Total
Assets (1)
Total
Liabilities
Total
Assets (1)
Total
Liabilities
(In millions)
$
$
258 $
1 $
207 $
87
4
—
5
94
10
349 $
6 $
311 $
1
—
5
6
(1) Assets of the investment funds and renewable energy partnership primarily consisted of other invested assets.
(2) Assets of other investments primarily consisted of cash and cash equivalents at December 31, 2020 and other invested
assets at December 31, 2019.
Unconsolidated VIEs
The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant
variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:
Asset Type
Fixed maturity securities AFS:
Structured Products (2)
U.S. and foreign corporate
Foreign government
Other limited partnership interests
Other invested assets
Other investments
Total
__________________
December 31,
2020
2019
Carrying
Amount
Maximum
Exposure
to Loss (1)
Carrying
Amount
Maximum
Exposure
to Loss (1)
(In millions)
$
56,962 $
56,962 $
51,962 $
51,962
3,011
142
8,355
1,320
619
3,011
142
14,911
1,404
639
1,764
136
6,674
1,495
450
1,764
136
12,016
1,621
497
$
70,409 $
77,069 $
62,481 $
67,996
(1)
The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the
carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests is
equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets,
the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such
investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced
by income tax credits guaranteed by third parties of $3 million and $6 million at December 31, 2020 and 2019,
respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.
(2)
For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or
asset-backed securities issued by trusts that do not have substantial equity.
232
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
As described in Note 21, the Company makes commitments to fund partnership investments in the normal course of
business. Excluding these commitments, the Company did not provide financial or other support to investees designated as
VIEs for each of the years ended December 31, 2020, 2019 and 2018.
The Company securitizes certain residential mortgage loans and acquires an interest in the related RMBS issued.
While the Company has a variable interest in the issuer of the securities, it is not the primary beneficiary of the issuer of the
securities since it does not have any rights to remove the servicer or veto rights over the servicer’s actions. The resulting
gains (losses) from the securitizations are included within net investment gains (losses). The estimated fair value of the
related RMBS acquired in connection with the securitizations is included in the carrying amount and maximum exposure to
loss for Structured Products presented in the table above.
The carrying value and the estimated fair value of residential mortgage loans securitized were $308 million and
$313 million, respectively, during 2020, and $443 million and $467 million, respectively, during 2019. Gains on
securitizations of $5 million and $24 million for the years ended December 31, 2020 and 2019, respectively, were included
within net investment gains (losses). The estimated fair value of RMBS acquired in connection with the securitizations was
$43 million and $131 million at December 31, 2020 and 2019, respectively.
See Note 10 for information on how the estimated fair value of mortgage loans and RMBS is determined, the valuation
approaches and key inputs, their placement in the fair value hierarchy, and for certain RMBS, quantitative information
about the significant unobservable inputs and the sensitivity of their estimated fair value to changes in those inputs.
Net Investment Income
The components of net investment income were as follows:
Asset Type
Investment income:
Fixed maturity securities AFS
Equity securities
FVO Securities (1)
Mortgage loans
Policy loans
Real estate and real estate joint ventures
Other limited partnership interests
Cash, cash equivalents and short-term investments
Operating joint ventures
Other
Subtotal
Less: Investment expenses
Subtotal, net
Unit-linked investments (1)
Net investment income
__________________
Years Ended December 31,
2020
2019
2018
(In millions)
$
11,304 $
11,886 $
11,946
50
140
3,518
498
532
1,000
213
93
255
17,603
1,054
16,549
568
61
184
3,782
512
676
825
457
84
348
18,815
1,422
17,393
1,475
64
51
3,340
506
694
731
387
51
364
18,134
1,285
16,849
(683)
$
17,117 $
18,868 $
16,166
(1)
Changes in estimated fair value subsequent to purchase for investments still held as of the end of the respective periods
and included in net investment income were principally from Unit-linked investments, and were $489 million,
$1.0 billion and ($771) million for the years ended December 31, 2020, 2019 and 2018, respectively.
Net investment income from equity method investments, comprised of real estate joint ventures, other limited partnership
interests, tax credit and renewable energy partnerships and operating joint ventures, totaled $829 million, $795 million and
$592 million for the years ended December 31, 2020, 2019 and 2018, respectively.
233
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
8. Investments (continued)
Net Investment Gains (Losses)
Components of Net Investment Gains (Losses)
The components of net investment gains (losses) were as follows:
Asset Type
Fixed maturity securities AFS:
Net credit loss (provision) release (1)
Net gains (losses) on sales and disposals
Total gains (losses) on fixed maturity securities AFS
Equity securities:
Net gains (losses) on sales and disposals
Change in estimated fair value (2)
Total gains (losses) on equity securities
Mortgage loans
Real estate and real estate joint ventures
Other limited partnership interests
Other (3)
Subtotal
Change in estimated fair value of other limited partnership interest and real estate joint ventures
Non-investment portfolio gains (losses) (4)
Subtotal
Total net investment gains (losses)
__________________
Years Ended December 31,
2020
2019
2018
(In millions)
$
(154) $
(129) $
(40)
451
297
16
(153)
(137)
(213)
7
(15)
198
137
(4)
(243)
(247)
396
267
50
84
134
(11)
399
6
(142)
653
(14)
(195)
(209)
$
(110) $
444 $
45
5
118
(193)
(75)
(56)
326
9
(169)
40
12
(350)
(338)
(298)
(1)
(2)
(3)
Net credit loss provision by sector for foreign government, consumer corporate, industrial corporate, RMBS and
finance corporate securities for the year ended December 31, 2019 were ($81) million, ($23) million, ($22) million,
($2) million and ($1) million, respectively. Net credit loss provision by sector for foreign government, consumer
corporate, industrial corporate, and finance corporate securities for the year ended December 31, 2018 were
($9) million, ($20) million, ($2) million and ($9) million, respectively. See “— Rollforward of Allowance for Credit
Loss for Fixed Maturity Securities AFS By Sector.” Due to the adoption of new credit loss guidance on
January 1, 2020, prior period OTTI loss is presented as credit loss.
Changes in estimated fair value subsequent to purchase for equity securities still held as of the end of the period
included in net investment gains (losses) were ($127) million, $122 million and ($81) million for the years ended
December 31, 2020, 2019 and 2018, respectively.
Other gains (losses) included $129 million reclassified from AOCI to earnings due to the sale of certain investments
that were hedged in qualifying cash flow hedges, leveraged lease gain of $87 million and tax credit partnership
impairment losses of $9 million for the year ended December 31, 2020. Other gains (losses) included tax credit
partnership impairment losses of $92 million, leveraged lease impairment losses of $30 million and a renewable
energy partnership disposal gain of $46 million for the year ended December 31, 2019. Other gains (losses) included
leveraged lease impairment losses of $105 million and renewable energy partnership disposal losses of $83 million for
the year ended December 31, 2018.
(4)
See Note 3 for information on the Company’s business dispositions.
Gains (losses) from foreign currency transactions included within net investment gains (losses) were $79 million,
($124) million and ($16) million for the years ended December 31, 2020, 2019 and 2018, respectively.
234
Table of Contents
8. Investments (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Fixed Maturity Securities AFS - Sales and Disposals and Credit Loss
Sales of securities are determined on a specific identification basis. Proceeds from sales or disposals and the
components of net investment gains (losses) were as shown in the table below:
Proceeds
Gross investment gains
Gross investment (losses)
Net credit loss (provision) release
Net investment gains (losses)
9. Derivatives
Accounting for Derivatives
$
$
Years Ended December 31,
2020
2019
2018
(In millions)
40,809 $
51,052 $
85,058
1,125 $
889 $
(674)
(154)
(493)
(129)
$
297 $
267 $
856
(811)
(40)
5
See Note 1 for a description of the Company’s accounting policies for derivatives and Note 10 for information about the
fair value hierarchy for derivatives.
Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign
currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including
the use of derivatives.
Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit
spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”)
market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-
cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the
Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default
swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available
in the cash markets.
Interest Rate Derivatives
The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including
interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter
interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate
swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and
floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate
swaps in fair value, cash flow and nonqualifying hedging relationships.
The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to
acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash
instrument such as a U.S. government and agency, or other fixed maturity securities AFS. Structured interest rate swaps are
included in interest rate swaps and are not designated as hedging instruments.
Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified
intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate,
calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and
received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master
agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return
swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure
arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total
return swaps in nonqualifying hedging relationships.
235
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates
above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, and
interest rate floors primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a
specified level. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by
entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging
relationships.
In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a
specified number of contracts, the value of which is determined by the different classes of interest rate securities, to post
variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to
pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with
regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and
swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of
liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates
acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve
performance, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company.
The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.
Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and
invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the
Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The
Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes
swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.
The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the
contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in
cash flow and nonqualifying hedging relationships.
A synthetic GIC is a contract that simulates the performance of a traditional GIC through the use of financial
instruments. The contractholder owns the underlying assets, and the Company provides a guarantee (or “wrap”) on the
participant funds for an annual risk charge. The Company’s maximum exposure to loss on synthetic GICs is the notional
amount, in the event the values of all of the underlying assets were reduced to zero. The Company’s risk is substantially
lower due to contractual provisions that limit the portfolio to high quality assets, which are pre-approved and monitored for
compliance, as well as the collection of risk charges. In addition, the crediting rates reset periodically to amortize market
value gains and losses over a period equal to the duration of the wrapped portfolio, subject to a 0% floor. While plan
participants may transact at book value, contractholder withdrawals may only occur immediately at market value, or at
book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments.
Foreign Currency Exchange Rate Derivatives
The Company uses foreign currency exchange rate derivatives, including foreign currency swaps, foreign currency
forwards, currency options and exchange-traded currency futures, to reduce the risk from fluctuations in foreign currency
exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign
currency derivatives to hedge the foreign currency exchange rate risk associated with certain of its net investments in
foreign operations.
In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the
difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to
an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of
the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and nonqualifying
hedging relationships.
In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an
identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a
contract is made at the specified future date. The Company utilizes foreign currency forwards in fair value, NIFO hedges
and nonqualifying hedging relationships.
236
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company enters into currency options that give it the right, but not the obligation, to sell the foreign currency
amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be
net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses
currency options to hedge against the foreign currency exposure inherent in certain of its variable annuity products. The
Company also uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-
U.S. subsidiaries. The Company utilizes currency options in NIFO hedges and nonqualifying hedging relationships.
To a lesser extent, the Company uses exchange-traded currency futures to hedge currency mismatches between assets
and liabilities, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company.
The Company utilizes exchange-traded currency futures in nonqualifying hedging relationships.
Credit Derivatives
The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its
investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a
premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may
be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount
in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered.
Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations and involuntary
restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention for sovereign
obligors. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations
Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred.
The Company utilizes credit default swaps in nonqualifying hedging relationships.
The Company enters into written credit default swaps to synthetically create credit investments that are either more
expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and
one or more cash instruments, such as U.S. government and agency, or other fixed maturity securities AFS. These credit
default swaps are not designated as hedging instruments.
The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price
is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary
purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit
spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow
hedging relationships.
Equity Derivatives
The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index
options, equity variance swaps, exchange-traded equity futures and equity total return swaps.
Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable
annuity products issued by the Company. To hedge against adverse changes in equity indices, the Company enters into
contracts to sell the underlying equity index within a limited time at a contracted price. The contracts will be net settled in
cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also
contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of
transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of
options. The Company utilizes equity index options in nonqualifying hedging relationships.
Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable
annuity products issued by the Company. In an equity variance swap, the Company agrees with another party to exchange
amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance
swaps in nonqualifying hedging relationships.
237
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of
contracts, the value of which is determined by the different classes of equity securities, to post variation margin on a daily
basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based
on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission
merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum
guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded
equity futures in nonqualifying hedging relationships.
In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the
difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by
reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over
the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity
market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to synthetically
create investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.
238
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
9. Derivatives (continued)
Primary Risks Managed by Derivatives
The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the
Company’s derivatives, excluding embedded derivatives, held at:
Primary Underlying Risk Exposure
Derivatives Designated as Hedging Instruments:
December 31,
2020
2019
Estimated Fair Value
Estimated Fair Value
Gross
Notional
Amount
Assets
Liabilities
Gross
Notional
Amount
(In millions)
Assets
Liabilities
Fair value hedges:
Interest rate swaps
Interest rate
$
3,186 $ 3,224 $
4 $
2,369 $ 2,667 $
Foreign currency swaps
Foreign currency exchange rate
Foreign currency forwards
Foreign currency exchange rate
Subtotal
Cash flow hedges:
Interest rate swaps
Interest rate forwards
Interest rate
Interest rate
Foreign currency swaps
Foreign currency exchange rate
Subtotal
NIFO hedges:
Foreign currency forwards
Foreign currency exchange rate
Currency options
Subtotal
Total qualifying hedges
Foreign currency exchange rate
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps
Interest rate floors
Interest rate caps
Interest rate futures
Interest rate options
Interest rate forwards
Interest rate total return swaps
Synthetic GICs
Interest rate
Interest rate
Interest rate
Interest rate
Interest rate
Interest rate
Interest rate
Interest rate
Foreign currency swaps
Foreign currency exchange rate
Foreign currency forwards
Foreign currency exchange rate
Currency futures
Foreign currency exchange rate
Currency options
Credit default swaps — purchased Credit
Credit default swaps — written
Credit
Foreign currency exchange rate
Equity futures
Equity index options
Equity variance swaps
Equity total return swaps
Equity market
Equity market
Equity market
Equity market
Total non-designated or nonqualifying derivatives
Total
1,106
1,936
8
24
6,228
3,256
4,750
7,377
44
513
38,604
1,549
50,731
2,106
164
3,600
3,764
—
70
70
78
—
82
—
120
2,017
2,137
3
—
3
1,304
2,336
16
1
6,009
2,684
3,675
7,364
145
83
36,983
1,627
48,022
1,855
1,059
4,200
5,259
—
33
33
60,723
5,432
2,222
59,290
4,572
49,561
3,683
12,701
40,730
1,498
17,746
351
1,048
38,646
13,265
15,643
914
1,350
2,978
9,609
5,427
22,954
716
3,294
350
13
—
502
—
—
—
603
209
3
—
9
196
14
834
15
3
38
—
—
2
5
10
59
—
693
310
—
—
121
—
38
437
12
282
58,083
2,867
12,701
42,622
2,423
27,344
129
1,048
30,341
13,699
13,507
880
1,801
2,944
11,520
4,540
27,105
1,115
761
155
18
2
764
1
5
—
644
50
7
—
4
272
6
694
23
—
2
17
40
59
27
144
1,430
1,601
10
91
101
1,761
185
—
5
3
1
2
49
—
461
393
—
—
102
1
8
677
19
70
238,431
6,434
2,007
252,563
5,512
$ 299,154 $ 11,866 $
4,229 $ 311,853 $ 10,084 $
1,976
3,737
239
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not
qualify as part of a hedging relationship at both December 31, 2020 and 2019. The Company’s use of derivatives includes
(i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for
hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives that economically hedge
insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because
the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship;
(iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes
in estimated fair value of the embedded derivatives are already recorded in net income; and (iv) written credit default swaps
and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because
they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the
recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for
the item being hedged.
240
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Effects of Derivatives on the Consolidated Statements of Operations and Comprehensive Income (Loss)
The following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair
value, cash flow, NIFO, nonqualifying hedging relationships and embedded derivatives:
Year Ended December 31, 2020
Net
Investment
Income
Net
Investment
Gains
(Losses)
Net
Derivative
Gains
(Losses)
Interest
Credited to
Policyholder
Account
Balances
Policyholder
Benefits and
Claims
(In millions)
Other
Expenses
OCI
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$
(10) $
$
360
$
Hedged items
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
Hedged items
Amount excluded from the assessment of hedge effectiveness
Subtotal
Gain (Loss) on Cash Flow Hedges:
Interest rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency transaction gains (losses) on hedged items
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Subtotal
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)
Non-derivative hedging instruments
Subtotal
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging
Instruments:
Interest rate derivatives (1)
Foreign currency exchange rate derivatives (1)
Credit derivatives — purchased (1)
Credit derivatives — written (1)
Equity derivatives (1)
Foreign currency transaction gains (losses) on hedged items
Subtotal
Earned income on derivatives
Embedded derivatives (2)
Total
12
(46)
44
—
—
N/A
36
N/A
4
—
N/A
—
40
N/A
N/A
N/A
(6)
—
—
—
(28)
—
(34)
217
N/A
$
—
—
98
(93)
(47)
(42)
N/A
121
N/A
851
(765)
N/A
—
207
N/A
N/A
N/A
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
2,149
(323)
(28)
(106)
(1,151)
(8)
533
926
N/A
(110)
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
—
—
—
—
—
—
—
(152)
N/A
$
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
N/A $
1,277
2
(159)
N/A
2
—
(445)
(857)
—
N/A
(102)
—
4
N/A
N/A
N/A
—
—
—
—
—
—
—
—
—
(286)
36
(20)
16
N/A
N/A
N/A
N/A
N/A
N/A
N/A
—
N/A
N/A
$
(152) $
4
$
(270)
(399)
—
—
—
(39)
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
55
(3)
—
—
(203)
—
(151)
190
—
—
$
223
$
165
$
1,349
$
241
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Year Ended December 31, 2019
Net
Investment
Income
Net
Investment
Gains
(Losses)
Net
Derivative
Gains
(Losses)
Interest
Credited to
Policyholder
Account
Balances
Policyholder
Benefits and
Claims
(In millions)
Other
Expenses
OCI
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$
(3) $
Hedged items
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
Hedged items
Amount excluded from the assessment of hedge effectiveness
Subtotal
Gain (Loss) on Cash Flow Hedges:
Interest rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency transaction gains (losses) on hedged items
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Subtotal
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)
Non-derivative hedging instruments
Subtotal
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging
Instruments:
Interest rate derivatives (1)
Foreign currency exchange rate derivatives (1)
Credit derivatives — purchased (1)
Credit derivatives — written (1)
Equity derivatives (1)
Foreign currency transaction gains (losses) on hedged items
Subtotal
Earned income on derivatives
Embedded derivatives (2)
Total
4
(55)
56
—
2
N/A
23
N/A
(4)
—
N/A
1
20
N/A
N/A
N/A
(3)
—
—
—
—
—
(3)
237
N/A
$
—
—
24
(23)
(72)
(71)
N/A
4
N/A
240
(236)
N/A
—
8
N/A
N/A
N/A
—
—
—
—
—
—
—
—
N/A
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
1,263
(346)
(38)
248
(1,339)
55
(157)
513
272
$
339
$
1
$
(369)
—
—
—
(30)
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
39
2
—
—
(205)
—
(164)
138
—
—
—
—
—
1
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
—
—
—
—
—
—
—
(147)
N/A
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
N/A $
622
2
(29)
N/A
2
—
N/A
—
4
N/A
N/A
N/A
—
—
—
—
—
—
—
—
N/A
(278)
(238)
—
6
(1)
82
(32)
(4)
(36)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
—
N/A
46
$
256
$
(63) $
628
$
(56) $
(146) $
4
$
242
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Year Ended December 31, 2018
Net
Investment
Income
Net
Investment
Gains
(Losses)
Net
Derivative
Gains
(Losses)
Interest
Credited to
Policyholder
Account
Balances
Policyholder
Benefits and
Claims
(In millions)
Other
Expenses
OCI
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$
Hedged items
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
Hedged items
Amount excluded from the assessment of hedge effectiveness
Subtotal
Gain (Loss) on Cash Flow Hedges:
Interest rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Foreign currency transaction gains (losses) on hedged items
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCI
Amount of gains (losses) reclassified from AOCI into income
Subtotal
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)
Non-derivative hedging instruments
Subtotal
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging
Instruments:
Interest rate derivatives (1)
Foreign currency exchange rate derivatives (1)
Credit derivatives — purchased (1)
Credit derivatives — written (1)
Equity derivatives (1)
Foreign currency transaction gains (losses) on hedged items
Subtotal
Earned income on derivatives
Embedded derivatives (2)
Total
__________________
$
—
—
—
—
—
—
N/A
20
N/A
(5)
—
N/A
1
16
N/A
N/A
N/A
4
—
—
—
1
—
5
360
N/A
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
—
—
—
—
—
—
—
—
$
(220) $
226
156
(150)
(58)
(46)
N/A
21
N/A
(558)
569
N/A
1
33
N/A
N/A
N/A
(158)
518
6
(132)
360
(127)
467
547
N/A
(150)
$
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
—
—
—
—
—
—
—
(113)
N/A
—
—
—
—
—
—
N/A
—
N/A
—
—
N/A
—
—
N/A
N/A
N/A
(6)
(6)
—
—
60
—
48
11
—
59
$
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
N/A $
(257)
1
(42)
N/A
2
—
N/A
—
3
414
561
—
—
(2)
674
N/A
(125)
N/A
—
N/A
(125)
—
—
—
—
—
—
—
(11)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
—
N/A
549
$
381
$
—
$
851
$
$
(113) $
(8) $
(1)
(2)
Excludes earned income on derivatives.
The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in
net derivative gains (losses) in connection with this adjustment were ($10) million, ($116) million and $133 million for
the years ended December 31, 2020, 2019 and 2018, respectively.
243
Table of Contents
9. Derivatives (continued)
Fair Value Hedges
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company designates and accounts for the following as fair value hedges when they have met the requirements of
fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities;
(ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and
liabilities; and (iii) foreign currency forwards to hedge the foreign currency fair value exposure of foreign currency
denominated investments.
The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging
adjustments for items designated and qualifying as hedged items in fair value hedges:
Balance Sheet Line Item
Fixed maturity securities AFS
Mortgage loans
Future policy benefits
__________________
Carrying Amount
of the Hedged
Assets/(Liabilities)
Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
$
$
$
2,699 $
952 $
(5,512) $
(In millions)
2,736 $
1,159 $
(4,475) $
(1) $
20 $
(1,307) $
(1)
2
(908)
(1)
Includes ($1) million of hedging adjustments on discontinued hedging relationships at both December 31, 2020 and
2019.
For the Company’s foreign currency forwards, the change in the estimated fair value of the derivative related to the
changes in the difference between the spot price and the forward price is excluded from the assessment of hedge
effectiveness. The Company has elected to record changes in estimated fair value of excluded components in earnings. For all
other derivatives, all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of
cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities;
(ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and
liabilities; (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments;
(iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed rate investments; and (v) interest
rate swaps and interest rate forwards to hedge forecasted fixed rate borrowings.
In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no
longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two
months of the anticipated date, the Company reclassified amounts from AOCI into income. These amounts were $21 million,
$58 million and $5 million for the years ended December 31, 2020, 2019 and 2018, respectively.
At both the years ended December 31, 2020 and 2019, the maximum length of time over which the Company was
hedging its exposure to variability in future cash flows for forecasted transactions did not exceed eight years.
At December 31, 2020 and 2019, the balance in AOCI associated with cash flow hedges was $1.9 billion and
$2.2 billion, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
At December 31, 2020, the Company expected to reclassify $55 million of deferred net gains (losses) on derivatives in
AOCI to earnings within the next 12 months.
244
Table of Contents
9. Derivatives (continued)
NIFO Hedges
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company uses foreign currency exchange rate derivatives, which may include foreign currency forwards and
currency options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates.
The Company also designates a portion of its foreign-denominated debt as a non-derivative hedging instrument of its net
investments in foreign operations. The Company assesses hedge effectiveness of its derivatives based upon the change in
forward rates and assesses its non-derivative hedging instruments based upon the change in spot rates. All components of
each derivative’s gain or loss were included in the assessment of hedge effectiveness.
When net investments in foreign operations are sold or substantially liquidated, the amounts in AOCI are reclassified to
the statement of operations.
At December 31, 2020 and 2019, the cumulative foreign currency translation gain (loss) recorded in AOCI related to
NIFO hedges was $164 million and $148 million, respectively. At December 31, 2020 and 2019, the carrying amount of debt
designated as a non-derivative hedging instrument was $407 million and $387 million, respectively.
See Note 13 for additional information on foreign-denominated debt.
Credit Derivatives
In connection with synthetically created credit investment transactions, the Company writes credit default swaps for
which it receives a premium to insure credit risk. Such credit derivatives are included within the effects of derivatives on the
consolidated statements of operations and comprehensive income (loss) table. If a credit event occurs, as defined by the
contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified
swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company’s
maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $9.6 billion and $11.5 billion at
December 31, 2020 and 2019, respectively. The Company can terminate these contracts at any time through cash settlement
with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At
December 31, 2020 and 2019, the Company would have received $196 million and $271 million, respectively, to terminate
all of these contracts.
245
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The following table presents the estimated fair value, maximum amount of future payments and weighted average years
to maturity of written credit default swaps at:
Rating Agency Designation of Referenced
Credit Obligations (1)
2020
Maximum
Amount of
Future
Payments under
Credit Default
Swaps
Estimated
Fair Value
of Credit
Default
Swaps
December 31,
Weighted
Average
Years to
Maturity (2)
Estimated
Fair Value
of Credit
Default
Swaps
(Dollars in millions)
2019
Maximum
Amount of
Future
Payments under
Credit Default
Swaps
Weighted
Average
Years to
Maturity (2)
Aaa/Aa/A
Single name credit default swaps (3)
$
5 $
Credit default swaps referencing indices
Subtotal
Baa
Single name credit default swaps (3)
Credit default swaps referencing indices
Subtotal
Ba
Single name credit default swaps (3)
Subtotal
B
Single name credit default swaps (3)
Credit default swaps referencing indices
Subtotal
Total
__________________
27
32
3
156
159
—
—
—
5
5
$
196 $
9,609
208
1,779
1,987
249
7,318
7,567
—
—
—
55
55
2.7
2.5
2.5
2.5
5.5
5.4
—
—
—
5.0
5.0
4.8
$
4 $
35
39
3
203
206
—
—
—
26
26
298
2,175
2,473
216
8,539
8,755
9
9
10
273
283
$
271 $
11,520
1.7
2.2
2.2
1.5
5.0
4.9
5.0
5.0
0.5
5.0
4.8
4.3
(1)
(2)
The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s
Investors Service (“Moody’s”), S&P and Fitch Ratings. If no rating is available from a rating agency, then an
internally developed rating is used.
The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross
notional amounts.
(3)
Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Credit Risk on Freestanding Derivatives
The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to
derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair
value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements
and any collateral received pursuant to such agreements.
The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties
and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are governed by
ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific
counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and
bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty
against payables to the same counterparty arising out of all included transactions. All of the Company’s ISDA Master
Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in
connection with its OTC-bilateral derivatives.
246
Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded
derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis
(both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of
nonperformance by counterparties to such derivatives.
See Note 10 for a description of the impact of credit risk on the valuation of derivatives.
The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of
master netting agreements and collateral were as follows at:
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement
Assets
Liabilities
Assets
Liabilities
December 31,
2020
2019
Gross estimated fair value of derivatives:
OTC-bilateral (1)
OTC-cleared (1)
Exchange-traded
Total gross estimated fair value of derivatives presented on the consolidated
balance sheets (1)
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral
OTC-cleared
Exchange-traded
Cash collateral: (3), (4)
OTC-bilateral
OTC-cleared
Exchange-traded
Securities collateral: (5)
OTC-bilateral
OTC-cleared
Exchange-traded
(In millions)
$ 11,348 $
4,111 $
9,574 $
3,624
593
17
20
40
606
15
81
11
11,958
4,171
10,195
3,716
(2,926)
(2,926)
(2,664)
(2,664)
(7)
—
(6,842)
(530)
—
(7)
—
—
(5)
(23)
(38)
(2)
(5,317)
(560)
—
(1,453)
(1,100)
(1,521)
—
—
(1)
(1)
—
—
(38)
(2)
—
(4)
(5)
(935)
(39)
(4)
25
Net amount after application of master netting agreements and collateral
$
200 $
108 $
93 $
__________________
(1)
(2)
(3)
At December 31, 2020 and 2019, derivative assets included income (expense) accruals reported in accrued investment
income or in other liabilities of $92 million and $111 million, respectively, and derivative liabilities included (income)
expense accruals reported in accrued investment income or in other liabilities of ($58) million and ($21) million,
respectively.
Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense
accruals.
Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the centralized
clearinghouse treats variation margin as collateral, is included in cash and cash equivalents, short-term investments or
in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities
loaned and other transactions on the balance sheet.
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Table of Contents
9. Derivatives (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(4)
(5)
The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-
traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance
sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives
after application of netting agreements. At December 31, 2020 and 2019, the Company received excess cash collateral
of $265 million and $389 million, respectively, and provided excess cash collateral of $238 million and $266 million,
respectively, which is not included in the table above due to the foregoing limitation.
Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance
sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at
December 31, 2020, none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company
is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are
permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is
limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At
December 31, 2020 and 2019, the Company received excess securities collateral with an estimated fair value of
$231 million and $156 million, respectively, for its OTC-bilateral derivatives, which are not included in the table
above due to the foregoing limitation. At December 31, 2020 and 2019, the Company provided excess securities
collateral with an estimated fair value of $269 million and $189 million, respectively, for its OTC-bilateral derivatives,
$2.1 billion and $1.0 billion, respectively, for its OTC-cleared derivatives, and $318 million and $143 million,
respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing
limitation.
The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net
liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by
that counterparty reaches a minimum transfer amount. All of the Company’s netting agreements for derivatives contain
provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each
of Moody’s and S&P. If a party’s credit or financial strength rating, as applicable, were to fall below that specific investment
grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate
the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.
A small number of these arrangements also include credit-contingent provisions that include a threshold above which
collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges
toward zero) in the event of downgrades in the credit ratings of MetLife, Inc. and/or the counterparty. At December 31, 2020,
the amount of collateral not provided by the Company due to the existence of these thresholds was $15 million.
The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net
liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet
location of the collateral pledged.
December 31,
Derivatives
Subject to
Credit-
Contingent
Provisions
2020
Derivatives
Not Subject
to Credit-
Contingent
Provisions
Total
Derivatives
Subject to
Credit-
Contingent
Provisions
2019
Derivatives
Not Subject
to Credit-
Contingent
Provisions
Total
(In millions)
Estimated fair value of derivatives in a net
liability position (1)
Estimated fair value of collateral provided:
Fixed maturity securities AFS
__________________
$
$
1,182 $
3 $
1,185 $
874 $
85 $
959
1,222 $
2 $
1,224 $
983 $
80 $
1,063
(1)
After taking into consideration the existence of netting agreements.
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Table of Contents
9. Derivatives (continued)
Embedded Derivatives
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company issues certain products or purchases certain investments that contain embedded derivatives that are required
to be separated from their host contracts and accounted for as freestanding derivatives.
The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives
that have been separated from their host contracts at:
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits
Assumed guaranteed minimum benefits
Funds withheld on ceded reinsurance
Fixed annuities with equity indexed returns
Other guarantees
Embedded derivatives within liability host contracts
Balance Sheet Location
Premiums, reinsurance and other receivables
Policyholder account balances
Policyholder account balances
Other liabilities
Policyholder account balances
Policyholder account balances
$
$
December 31,
2020
2019
(In millions)
55 $
60
651 $
283
100
138
24
312
312
36
130
12
802
$
1,196 $
249
Table of Contents
10. Fair Value
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
When developing estimated fair values, the Company considers three broad valuation approaches: (i) the market
approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation
approach to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs.
The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the
significant input with the lowest level in its valuation. The input levels are as follows:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets
based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of
market activity for fixed maturity securities AFS.
Level 2 Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs
can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in
markets that are not active, or other significant inputs that are observable or can be derived principally from or
corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the determination of
estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions
about the assumptions that market participants would use in pricing the asset or liability.
Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a
reduction in asset liquidity. The Company’s ability to sell securities, as well as the price ultimately realized for these
securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the
estimated fair value of certain securities.
Considerable judgment is often required in interpreting the market data used to develop estimates of fair value, and the
use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.
250
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
10. Fair Value (continued)
Recurring Fair Value Measurements
The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the
fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:
Assets
Fixed maturity securities AFS:
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
Total fixed maturity securities AFS
Equity securities
Unit-linked and FVO Securities (2)
Short-term investments (3)
Residential mortgage loans — FVO
Other investments
Derivative assets: (4)
Interest rate
Foreign currency exchange rate
Credit
Equity market
Total derivative assets
Embedded derivatives within asset host contracts (5)
Separate account assets (6)
Total assets (7)
Liabilities
Derivative liabilities: (4)
Interest rate
Foreign currency exchange rate
Credit
Equity market
Total derivative liabilities
Embedded derivatives within liability host contracts (5)
Separate account liabilities (6)
Total liabilities
December 31, 2020 (1)
Fair Value Hierarchy
Level 1
Level 2
Level 3
(In millions)
Total
Estimated
Fair Value
$
— $
83,214 $
10,202 $
—
—
23,180
—
—
—
—
23,180
636
10,559
2,762
—
83
—
3
—
14
17
—
91,850
71,582
55,509
23,920
27,133
15,734
13,722
11,308
302,122
293
2,059
568
—
229
7,840
2,287
180
830
11,137
—
107,035
117
13,899
—
3,302
1,385
—
602
29,507
150
701
43
165
573
489
176
25
22
712
55
1,085
$
129,087 $
423,443 $
32,991 $
$
2 $
168 $
68 $
—
—
38
40
—
12
3,063
121
719
4,071
—
8
38
—
12
118
1,196
6
$
52 $
4,079 $
1,320 $
93,416
71,699
69,408
47,100
30,435
17,119
13,722
11,910
354,809
1,079
13,319
3,373
165
885
8,329
2,466
205
866
11,866
55
199,970
585,521
238
3,101
121
769
4,229
1,196
26
5,451
251
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Assets
Fixed maturity securities AFS:
U.S. corporate
Foreign government
Foreign corporate
U.S. government and agency
RMBS
ABS
Municipals
CMBS
Total fixed maturity securities AFS
Equity securities
Unit-linked and FVO Securities (2)
Short-term investments (3)
Residential mortgage loans — FVO
Other investments
Derivative assets: (4)
Interest rate
Foreign currency exchange rate
Credit
Equity market
Total derivative assets
Embedded derivatives within asset host contracts (5)
Separate account assets (6)
Total assets (7)
Liabilities
Derivative liabilities: (4)
Interest rate
Foreign currency exchange rate
Credit
Equity market
Total derivative liabilities
Embedded derivatives within liability host contracts (5)
Separate account liabilities (6)
Total liabilities
__________________
December 31, 2019
Fair Value Hierarchy
Level 1
Level 2
Level 3
(In millions)
Total
Estimated
Fair Value
$
— $
81,501 $
6,252 $
—
—
21,058
3
—
—
—
21,061
794
10,598
2,042
—
74
2
7
—
6
15
—
67,112
56,188
21,026
25,682
13,326
13,046
10,067
287,948
118
1,879
1,108
—
160
6,616
2,336
244
686
9,882
—
86,790
100,668
117
7,977
—
2,862
1,216
7
380
18,811
430
625
32
188
455
89
35
32
31
187
60
987
$
121,374 $
401,763 $
21,775 $
$
3 $
220 $
195 $
—
—
8
11
—
1
2,324
102
747
3,393
—
14
118
1
19
333
802
7
87,753
67,229
64,165
42,084
28,547
14,542
13,053
10,447
327,820
1,342
13,102
3,182
188
689
6,707
2,378
276
723
10,084
60
188,445
544,912
418
2,442
103
774
3,737
802
22
$
12 $
3,407 $
1,142 $
4,561
(1)
(2)
(3)
Excludes amounts for financial instruments reclassified to assets held-for-sale or liabilities held-for-sale. Assets held-
for-sale and liabilities held-for-sale are valued on a basis consistent with similar instruments described herein. See
Note 3 for information on the pending disposition of MetLife P&C.
Unit-linked and FVO Securities were primarily comprised of Unit-linked investments at both December 31, 2020 and
2019.
Short-term investments as presented in the tables above differ from the amounts presented on the consolidated balance
sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.
252
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(4)
(5)
(6)
(7)
Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities
are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables
above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the
rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.
Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables
and other invested assets on the consolidated balance sheets. Embedded derivatives within liability host contracts are
presented within policyholder account balances and other liabilities on the consolidated balance sheets.
Investment performance related to separate account assets is fully offset by corresponding amounts credited to
contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal
to the estimated fair value of separate account assets. Separate account liabilities presented in the tables above
represent derivative liabilities.
Total assets included in the fair value hierarchy exclude other limited partnership interests that are measured at
estimated fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient. At
December 31, 2020 and 2019, the estimated fair value of such investments was $75 million and $95 million,
respectively.
The following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities, Short-term Investments and Other Investments
When available, the estimated fair value of these financial instruments is based on quoted prices in active markets
that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and
valuation of these securities does not involve management’s judgment.
When quoted prices in active markets are not available, the determination of estimated fair value is based on market
standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard
valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are
observable in the market or can be derived principally from, or corroborated by, observable market data. When
observable inputs are not available, the market standard valuation methodologies rely on inputs that are significant to the
estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by,
observable market data. These unobservable inputs can be based in large part on management’s judgment or estimation
and cannot be supported by reference to market activity. Even though these inputs are unobservable, management
believes they are consistent with what other market participants would use when pricing such securities and are
considered appropriate given the circumstances.
The estimated fair value of short-term investments and other investments is determined on a basis consistent with
the methodologies described herein for securities.
The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2
and Level 3 of the fair value hierarchy are presented below. The primary valuation approaches are the market approach,
which considers recent prices from market transactions involving identical or similar assets or liabilities, and the income
approach, which converts expected future amounts (e.g. cash flows) to a single current, discounted amount. The
valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted
cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs.
253
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
10. Fair Value (continued)
Instrument
Fixed maturity securities AFS
Level 2
Observable Inputs
U.S. corporate and Foreign corporate securities
Level 3
Unobservable Inputs
Valuation Approaches: Principally the market and income approaches.
Valuation Approaches: Principally the market approach.
Key Inputs:
• quoted prices in markets that are not active
Key Inputs:
•
illiquidity premium
• benchmark yields; spreads off benchmark yields; new issuances; issuer ratings • delta spread adjustments to reflect specific credit-related issues
• trades of identical or comparable securities; duration
• credit spreads
• privately-placed securities are valued using the additional key inputs:
• market yield curve; call provisions
• quoted prices in markets that are not active for identical or similar securities
that are less liquid and based on lower levels of trading activity than
securities classified in Level 2
• observable prices and spreads for similar public or private securities that
•
independent non-binding broker quotations
incorporate the credit quality and industry sector of the issuer
• delta spread adjustments to reflect specific credit-related issues
Foreign government securities, U.S. government and agency securities and Municipals
Valuation Approaches: Principally the market approach.
Valuation Approaches: Principally the market approach.
Key Inputs:
• quoted prices in markets that are not active
• benchmark U.S. Treasury yield or other yields
• the spread off the U.S. Treasury yield curve for the identical security
Key Inputs:
•
independent non-binding broker quotations
• quoted prices in markets that are not active for identical or similar securities
that are less liquid and based on lower levels of trading activity than
securities classified in Level 2
• issuer ratings and issuer spreads; broker-dealer quotations
• credit spreads
• comparable securities that are actively traded
Structured Products
Valuation Approaches: Principally the market and income approaches.
Valuation Approaches: Principally the market and income approaches.
Key Inputs:
• quoted prices in markets that are not active
• spreads for actively traded securities; spreads off benchmark yields
• expected prepayment speeds and volumes
Key Inputs:
• credit spreads
• quoted prices in markets that are not active for identical or similar securities
that are less liquid and based on lower levels of trading activity than
securities classified in Level 2
• current and forecasted loss severity; ratings; geographic region
•
independent non-binding broker quotations
• weighted average coupon and weighted average maturity
• credit ratings
• average delinquency rates; debt-service coverage ratios
• credit ratings
• issuance-specific information, including, but not limited to:
• collateral type; structure of the security; vintage of the loans
• payment terms of the underlying assets
• payment priority within the tranche; deal performance
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Table of Contents
10. Fair Value (continued)
Instrument
Equity securities
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Level 2
Observable Inputs
Level 3
Unobservable Inputs
Valuation Approaches: Principally the market approach.
Valuation Approaches: Principally the market and income approaches.
Key Input:
Key Inputs:
• quoted prices in markets that are not considered active
• credit ratings; issuance structures
• quoted prices in markets that are not active for identical or similar securities
that are less liquid and based on lower levels of trading activity than
securities classified in Level 2
•
independent non-binding broker quotations
Unit-linked and FVO Securities, Short-term investments and Other investments
• Unit-linked and FVO Securities include mutual fund interests without readily
determinable fair values given prices are not published publicly. Valuation
of these mutual funds is based upon quoted prices or reported NAV
provided by the fund managers, which were based on observable inputs.
• Unit-linked and FVO Securities, short-term investments and other
investments are of a similar nature and class to the fixed maturity
securities AFS and equity securities described above; accordingly, the
valuation approaches and unobservable inputs used in their valuation are
also similar to those described above.
• Short-term investments and other investments are of a similar nature and class
to the fixed maturity securities AFS and equity securities described above;
accordingly, the valuation approaches and observable inputs used in their
valuation are also similar to those described above.
Residential mortgage loans — FVO
• N/A
Valuation Approaches: Principally the market approach.
Valuation Techniques and Key Inputs: These investments are based primarily
on matrix pricing or other similar techniques that utilize inputs from
mortgage servicers that are unobservable or cannot be derived
principally from, or corroborated by, observable market data.
Separate account assets and Separate account liabilities (1)
Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly
Key Input:
• N/A
• quoted prices or reported NAV provided by the fund managers
Other limited partnership interests
• N/A
__________________
Valued giving consideration to the underlying holdings of the partnerships and
adjusting, if appropriate.
Key Inputs:
•
liquidity; bid/ask spreads; performance record of the fund manager
• other relevant variables that may impact the exit value of the particular
partnership interest
(1)
Estimated fair value equals carrying value, based on the value of the underlying assets, including: mutual fund
interests, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-
term investments and cash and cash equivalents. Fixed maturity securities, equity securities, derivatives, short-term
investments and cash and cash equivalents are similar in nature to the instruments described under “— Securities,
Short-term Investments and Other Investments” and “— Derivatives — Freestanding Derivatives.”
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Table of Contents
10. Fair Value (continued)
Derivatives
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded
derivatives, or through the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of
estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies
and inputs that management believes are consistent with what other market participants would use when pricing such
instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial
indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions
used in the pricing models.
The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are
observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-
bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not
observable in the market or cannot be derived principally from, or corroborated by, observable market data. These
unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs
are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with
what other market participants would use when pricing such instruments.
Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity
adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of
different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s
derivatives and could materially affect net income.
The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all
OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by
counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values
its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate,
depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at
pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties
generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not
currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is, in part,
due to the netting agreements and collateral arrangements that are in place with all of its significant derivative
counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company
each reporting period.
Freestanding Derivatives
Level 2 Valuation Approaches and Key Inputs:
This level includes all types of derivatives utilized by the Company with the exception of exchange-traded
derivatives included within Level 1 and those derivatives with unobservable inputs as described in Level 3.
Level 3 Valuation Approaches and Key Inputs:
These valuation methodologies generally use the same inputs as described in the corresponding sections for
Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more
of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by,
observable market data.
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Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Freestanding derivatives are principally valued using the income approach. Valuations of non-option-based
derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing
models. Key inputs are as follows:
Instrument
Inputs common to Level 2 and
Level 3 by instrument type
Interest Rate
Foreign Currency
Exchange Rate
Credit
Equity Market
• swap yield curves
• swap yield curves
• swap yield curves
• swap yield curves
• basis curves
• basis curves
• credit curves
• spot equity index levels
•
interest rate volatility (1)
• currency spot rates
•
recovery rates
• dividend yield curves
Level 3
• swap yield curves (2)
• basis curves (2)
•
repurchase rates
• cross currency basis
curves
• currency volatility (1)
• swap yield curves (2)
• equity volatility (1)
• swap yield curves (2)
• dividend yield curves (2)
• basis curves (2)
• credit curves (2)
• equity volatility (1), (2)
• cross currency basis
curves (2)
• credit spreads
• correlation between
model inputs (1)
• currency correlation
• currency volatility (1)
•
•
repurchase rates
independent non-binding
broker quotations
__________________
(1)
(2)
Option-based only.
Extrapolation beyond the observable limits of the curve(s).
Embedded Derivatives
Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, annuity
contracts, and investment risk within funds withheld related to certain reinsurance agreements. Embedded derivatives are
recorded at estimated fair value with changes in estimated fair value reported in net income.
The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and
certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable
annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives
are classified within policyholder account balances on the consolidated balance sheets.
The Company calculates the fair value of these embedded derivatives, which is estimated as the present value of
projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions
including expectations concerning policyholder behavior. The calculation is based on in-force business, projecting future
cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates.
Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly
traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable
period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including
mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies
of historical experience.
The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk
margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration
publicly available information relating to spreads in the secondary market for MetLife, Inc.’s debt, including related credit
default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the
claims paying ability of the issuing insurance subsidiaries as compared to MetLife, Inc.
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Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Risk margins are established to capture the non-capital market risks of the instrument which represent the additional
compensation a market participant would require to assume the risks related to the uncertainties of such actuarial
assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins
requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to
cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market
conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency
exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior,
mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair
value of the guarantees that could materially affect net income.
The Company ceded the risk associated with certain of the GMIBs previously described. These reinsurance
agreements contain embedded derivatives which are included within premiums, reinsurance and other receivables on the
consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses) or policyholder
benefits and claims depending on the statement of operations classification of the direct risk. The value of the embedded
derivatives on the ceded risk is determined using a methodology consistent with that described previously for the
guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit
of the reinsurer.
The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is
determined based on the change in estimated fair value of the underlying assets held by the Company in a reference
portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as described
in “— Investments — Securities, Short-term Investments and Other Investments.” The estimated fair value of these
embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance
sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the
underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of
these embedded derivatives that could materially affect net income.
The Company issues certain annuity contracts which allow the policyholder to participate in returns from equity
indices. These equity indexed features are embedded derivatives which are measured at estimated fair value separately
from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These
embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.
The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity
returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder
behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses
standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative
for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is
calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The
valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in
nonperformance risk.
Embedded Derivatives Within Asset and Liability Host Contracts
Level 3 Valuation Approaches and Key Inputs:
Direct and assumed guaranteed minimum benefits
These embedded derivatives are principally valued using the income approach. Valuations are based on option
pricing techniques, which utilize significant inputs that may include swap yield curves, currency exchange rates and
implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the
significant inputs are not observable in the market or cannot be derived principally from, or corroborated by,
observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable
limits of the swap yield curves and implied volatilities, actuarial assumptions for policyholder behavior and
mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of
capital for purposes of calculating the risk margin.
258
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Reinsurance ceded on certain guaranteed minimum benefits
These embedded derivatives are principally valued using the income approach. The valuation techniques and
significant market standard unobservable inputs used in their valuation are similar to those described above in
“— Direct and assumed guaranteed minimum benefits” and also include counterparty credit spreads.
Transfers between Levels
Overall, transfers between levels occur when there are changes in the observability of inputs and market activity.
Transfers into or out of Level 3:
Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market
observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed,
current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting
transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input
can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific
event, or one or more significant input(s) becoming observable.
259
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
The following table presents certain quantitative information about the significant unobservable inputs used in the fair
value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset
and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
Valuation Techniques
Significant
Unobservable Inputs
Range
Weighted
Average (1)
Range
Weighted
Average (1)
December 31, 2020
December 31, 2019
Fixed maturity securities AFS (3)
U.S. corporate and foreign
• Matrix pricing
• Offered quotes (4)
— -
186
corporate
RMBS
ABS
Derivatives
Interest rate
• Market pricing
• Quoted prices (4)
• Consensus pricing
• Offered quotes (4)
• Market pricing
• Quoted prices (4)
• Market pricing
• Quoted prices (4)
• Consensus pricing
• Offered quotes (4)
• Present value
techniques
• Swap yield (6)
Foreign currency exchange rate
Credit
• Present value
techniques
• Present value
techniques
• Repurchase rates (8)
• Swap yield (6)
• Credit spreads (9)
• Consensus pricing
• Offered quotes (10)
— -
54
-
— -
1
100
92
(12)
(309)
96
-
-
-
-
-
-
116
104
159
112
100
184
1
248
99
110
100
102
95
98
100
117
98
101
98
100
100
149
(6)
(144)
5
25
81
—
3
99
190
(6)
(125)
98
96
-
-
-
-
-
-
-
-
-
-
145
131
109
119
119
104
251
6
328
100
Impact of
Increase in Input
on Estimated
Fair Value (2)
Increase
Increase
Increase
Increase (5)
Increase (5)
Increase (5)
Increase (7)
Decrease (7)
Increase (7)
Decrease (7)
Equity market
• Present value
• Volatility (11)
21% -
29%
28%
14% -
23%
Increase (7)
techniques or
option pricing
models
• Correlation (12)
10% -
30%
10%
10% -
30%
Embedded derivatives
Direct, assumed and ceded
guaranteed minimum
benefits
• Option pricing
techniques
• Mortality rates:
Ages 0 - 40
Ages 41 - 60
Ages 61 - 115
• Lapse rates:
0%
- 0.17%
0.03% - 0.75%
0.12% -
100%
Durations 1 - 10
0.25% -
100%
Durations 11 - 20
0.50% -
100%
Durations 21 - 116
0.50% -
100%
0.06%
0.30%
1.90%
6.86%
5.18%
5.18%
0.17%
3.98%
0%
-
0.18%
0.03% -
0.80%
0.13% -
100%
0.25% -
100%
0.50% -
100%
0.50% -
100%
0%
0%
-
-
22%
20%
30%
Decrease (13)
Decrease (13)
Decrease (13)
Decrease (14)
Decrease (14)
Decrease (14)
Increase (15)
(16)
Increase (17)
• Utilization rates
• Withdrawal rates
• Long-term equity
volatilities
0%
0%
-
-
22%
20%
8.33% -
27%
18.70%
6.01% -
• Nonperformance risk
0.04% - 1.18%
0.40%
0.03% -
1.30%
Decrease (18)
spread
__________________
(1)
(2)
(3)
(4)
The weighted average for fixed maturity securities AFS and derivatives is determined based on the estimated fair value
of the securities and derivatives. The weighted average for embedded derivatives is determined based on a
combination of account values and experience data.
The impact of a decrease in input would have resulted in the opposite impact on estimated fair value. For embedded
derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to
ceded guaranteed minimum benefits are based on asset positions.
Significant increases (decreases) in expected default rates in isolation would have resulted in substantially lower
(higher) valuations.
Range and weighted average are presented in accordance with the market convention for fixed maturity securities AFS
of dollars per hundred dollars of par.
260
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(5)
(6)
(7)
(8)
(9)
Changes in the assumptions used for the probability of default would have been accompanied by a directionally similar
change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for
prepayment rates.
Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are
utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present
value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a
range is more representative of the unobservable input used in the valuation.
Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for
short U.S. dollar net asset positions.
Ranges represent different repurchase rates utilized as components within the valuation methodology and are presented
in basis points.
Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives
with significant unobservable inputs are primarily comprised of written credit default swaps.
(10) At both December 31, 2020 and 2019, independent non-binding broker quotations were used in the determination of
less than 1% of the total net derivative estimated fair value.
(11) Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a
range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of
the unobservable input used in the valuation.
(12) Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting
a range of correlation factors is more representative of the unobservable input used in the valuation. Increases
(decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.
(13) Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based
on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates
vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.
(14) Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values
and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges.
A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as
in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a
surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are
projected for purposes of valuing the embedded derivative.
(15) The utilization rate assumption estimates the percentage of contractholders with a GMIB or lifetime withdrawal benefit
who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount
by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of
the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are
projected for purposes of valuing the embedded derivative.
(16) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw
from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by
other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash
flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in
withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and
GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.
(17) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are
available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows
are projected for purposes of valuing the embedded derivative.
(18) Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk
spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded
derivative.
261
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Generally, all other classes of assets and liabilities classified within Level 3 that are not included in the preceding table
use the same valuation techniques and significant unobservable inputs as previously described for Level 3. The sensitivity
of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in
nature to that described in the preceding table. The valuation techniques and significant unobservable inputs used in the fair
value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined
using significant unobservable inputs (Level 3) are summarized in “— Nonrecurring Fair Value Measurements.”
262
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The following tables summarize the change of all assets (liabilities) measured at estimated fair value on a recurring
basis using significant unobservable inputs (Level 3):
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities AFS
Corporate (7)
Foreign
Government
Structured
Products
Municipals
Equity
Securities
Unit-linked
and FVO
Securities
(In millions)
Balance, January 1, 2019
$
10,467 $
138 $
4,266 $
— $
419 $
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
Purchases (3)
Sales (3)
Issuances (3)
Settlements (3)
Transfers into Level 3 (4)
Transfers out of Level 3 (4)
Balance, December 31, 2019
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
Purchases (3)
Sales (3)
Issuances (3)
Settlements (3)
Transfers into Level 3 (4)
Transfers out of Level 3 (4), (5)
Balance, December 31, 2020
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2018 (6)
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2019 (6)
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2020 (6)
Changes in unrealized gains (losses) included in
AOCI for the instruments still held at
December 31, 2020 (6)
Gains (Losses) Data for the year ended
December 31, 2018:
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
$
$
$
$
$
$
$
(49)
893
3,689
(870)
—
—
606
(507)
14,229
(88)
1,774
5,013
(1,107)
—
—
4,985
(705)
—
(2)
10
(24)
—
—
20
(25)
117
(2)
(1)
29
(8)
—
—
6
(24)
46
42
1,338
(737)
—
—
—
(497)
4,458
49
41
1,975
(918)
—
—
127
(443)
24,101 $
117 $
5,289 $
—
—
7
—
—
—
—
—
7
—
—
—
—
—
—
—
47
—
65
(98)
—
—
—
(3)
430
12
—
11
(156)
—
—
—
(7)
— $
(147)
150 $
1 $
1 $
70 $
— $
(26) $
(50) $
— $
44 $
— $
39 $
(48) $
(1) $
54 $
— $
2 $
1,754 $
(1) $
47 $
— $
— $
9 $
3 $
82 $
— $
(36) $
(745) $
(14) $
(23) $
— $
— $
405
48
—
203
(39)
—
—
20
(12)
625
67
—
47
(101)
—
—
154
(91)
701
8
48
69
—
6
—
263
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Balance, January 1, 2019
$
33 $
299 $
39 $
(225) $
(739) $
937
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Short-term
Investments
Residential
Mortgage
Loans - FVO
Other
Investments
Net
Derivatives (8)
Net Embedded
Derivatives (9)
Separate
Accounts (10)
(In millions)
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
Purchases (3)
Sales (3)
Issuances (3)
Settlements (3)
Transfers into Level 3 (4)
Transfers out of Level 3 (4)
Balance, December 31, 2019
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
Purchases (3)
Sales (3)
Issuances (3)
Settlements (3)
Transfers into Level 3 (4)
Transfers out of Level 3 (4), (5)
Balance, December 31, 2020
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2018 (6)
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2019 (6)
Changes in unrealized gains (losses) included in net
income (loss) for the instruments still held at
December 31, 2020 (6)
Changes in unrealized gains (losses) included in
AOCI for the instruments still held at
December 31, 2020 (6)
Gains (Losses) Data for the year ended
December 31, 2018:
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
Total realized/unrealized gains (losses) included in
AOCI
__________________
$
$
$
$
$
$
$
—
(1)
31
(33)
—
—
2
—
32
(7)
4
38
(17)
—
—
9
(16)
7
—
—
(87)
—
(31)
—
—
188
9
—
—
(13)
—
(19)
—
—
—
—
416
—
—
—
—
—
455
19
—
99
—
—
—
—
—
(108)
157
4
—
(2)
29
(1)
—
(146)
279
761
4
—
(2)
(296)
—
(6)
274
(2)
—
—
—
(275)
—
—
(742)
(110)
(34)
—
—
—
(255)
—
—
7
—
191
(151)
(3)
2
—
(3)
980
(5)
—
270
(159)
(4)
1
1
(5)
43 $
165 $
573 $
594 $
(1,141) $
1,079
(1) $
(15) $
— $
(59) $
(150) $
— $
(14) $
— $
(129) $
264 $
(7) $
3 $
24 $
67 $
(124) $
4 $
— $
— $
579 $
(33) $
(1) $
7 $
— $
(161) $
(150) $
(1) $
— $
— $
(140) $
(15) $
—
—
—
—
7
—
(1)
(2)
(3)
Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net
income (loss) on securities are included in net investment gains (losses), while changes in estimated fair value of
residential mortgage loans — FVO are included in net investment income. Lapses associated with net embedded
derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in
net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).
Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the
rollforward.
Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to
embedded derivatives are included in settlements.
(4)
Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.
264
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(5)
(6)
(7)
(8)
(9)
(10)
Transfers out of Level 3 for the year ended December 31, 2020 included $137 million of corporate securities and
$29 million of Structured Products reclassified to assets held-for-sale. See Note 3 for information on the pending
disposition of MetLife P&C.
Changes in unrealized gains (losses) included in net income (loss) and included in AOCI relate to assets and liabilities
still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net
income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).
Comprised of U.S. and foreign corporate securities.
Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.
Embedded derivative assets and liabilities are presented net for purposes of the rollforward.
Investment performance related to separate account assets is fully offset by corresponding amounts credited to
contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in
net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses).
Separate account assets and liabilities are presented net for the purposes of the rollforward.
Fair Value Option
The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. The
following table presents information for residential mortgage loans, which are accounted for under the FVO and were
initially measured at fair value.
Unpaid principal balance
Difference between estimated fair value and unpaid principal balance
Carrying value at estimated fair value
Loans in nonaccrual status
Loans more than 90 days past due
Loans in nonaccrual status or more than 90 days past due, or both — difference between
aggregate estimated fair value and unpaid principal balance
$
$
$
$
$
Nonrecurring Fair Value Measurements
December 31,
2020
2019
(In millions)
172 $
(7)
165 $
45 $
27 $
(13) $
209
(21)
188
47
18
(19)
The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the
periods and still held at the reporting dates (for example, when there is evidence of impairment). The estimated fair values for
these assets were determined using significant unobservable inputs (Level 3).
Mortgage loans, net (1)
__________________
At December 31,
Years Ended December 31,
2020
2019
2020
2019
2018
Carrying Value After Measurement
Gains (Losses)
(In millions)
$
408 $
52 $
(127) $
(2) $
(2)
(1)
Estimated fair values for impaired mortgage loans are based on estimated fair value of the underlying collateral.
265
Table of Contents
10. Fair Value (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Fair Value of Financial Instruments Carried at Other Than Fair Value
The following tables provide fair value information for financial instruments that are carried on the balance sheet at
amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued
investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-
term investments that are not securities, such as time deposits, and therefore are not included in the three-level hierarchy table
disclosed in the “— Recurring Fair Value Measurements” section. The Company believes that due to the short-term nature of
these excluded assets, which are primarily classified in Level 2, the estimated fair value approximates carrying value. All
remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this
disclosure.
The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the
fair value hierarchy, are summarized as follows at:
December 31, 2020 (1)
Fair Value Hierarchy
Carrying
Value
Level 1
Level 2
Level 3
(In millions)
Total
Estimated
Fair Value
Assets
Mortgage loans
Policy loans
Other invested assets
Premiums, reinsurance and other receivables
Other assets
Liabilities
Policyholder account balances
Long-term debt
Collateral financing arrangement
Junior subordinated debt securities
Other liabilities
Separate account liabilities
Assets
Mortgage loans
Policy loans
Other invested assets
Premiums, reinsurance and other receivables
Other assets
Liabilities
Policyholder account balances
Long-term debt
Collateral financing arrangement
Junior subordinated debt securities
Other liabilities
Separate account liabilities
_________________
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
83,754 $
9,493 $
1,188 $
2,729 $
300 $
126,458 $
14,492 $
845 $
3,153 $
2,113 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
814 $
908 $
111 $
88,675 $
11,598 $
374 $
2,070 $
190 $
88,675
11,598
1,188
2,978
301
— $
134,569 $
134,569
— $
18,332
710 $
— $
710
4,604
3,133
527 $
2,606 $
18,332 $
— $
4,604 $
115,682 $
— $
115,682 $
— $
115,682
December 31, 2019
Fair Value Hierarchy
Carrying
Value
Level 1
Level 2
Level 3
(In millions)
Total
Estimated
Fair Value
80,341 $
9,680 $
1,183 $
3,678 $
318 $
119,262 $
13,336 $
993 $
3,150 $
2,045 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
83,079 $
326 $
809 $
11,329 $
374 $
1,178 $
2,706 $
131 $
188 $
83,079
11,655
1,183
3,884
319
— $
122,998 $
122,998
15,830 $
— $
15,830
— $
4,405 $
540 $
810 $
— $
2,279 $
810
4,405
2,819
110,837 $
— $
110,837 $
— $
110,837
(1)
Excludes amounts for financial instruments reclassified to assets held-for-sale or liabilities held-for-sale. See Note 3
for information on the pending disposition of MetLife P&C.
266
Table of Contents
11. Leases
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company, as lessee, has entered into various lease and sublease agreements primarily for office space. The
Company has operating leases with remaining lease terms of less than one year to 14 years. The remaining lease terms for the
subleases are less than one year to nine years.
ROU Assets and Lease Liabilities
ROU assets and lease liabilities for operating leases were:
ROU assets
Lease liabilities
Lease Costs
The components of operating lease costs were as follows:
Operating lease cost
Variable lease cost
Sublease income
Net lease cost
December 31, 2020
December 31, 2019
(In millions)
1,314 $
1,470 $
1,488
1,654
For the Year Ended December 31
2020
2019
(In millions)
286 $
39 $
(99) $
226 $
282
49
(89)
242
$
$
$
$
$
$
Operating lease expense was $342 million for the year ended December 31, 2018. Non-cancelable sublease income was
$72 million for the year ended December 31, 2018.
Other Information
Supplemental other information related to operating leases was as follows:
Cash paid for amounts included in the measurement of lease liability -
operating cash flows
ROU assets obtained in exchange for new lease liabilities
$
$
Weighted-average remaining lease term
Weighted-average discount rate
289
70
$
$
8 years
3.4 %
285
341
8 years
3.3 %
December 31, 2020
December 31, 2019
(Dollars in millions)
267
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
11. Leases (continued)
Maturities of Lease Liabilities
Maturities of operating lease liabilities were as follows:
2021
2022
2023
2024
2025
Thereafter
Total undiscounted cash flows
Less: interest
Present value of lease liability
December 31, 2020
(In millions)
283
238
219
197
185
553
1,675
205
1,470
$
$
See Notes 8 and 13 for information about the Company’s investments in leased real estate, leveraged and direct financing
leases, and financing lease obligations.
See Note 17 for information on lease impairment charges.
12. Goodwill
Goodwill is the excess of cost over the estimated fair value of net assets acquired. Goodwill is not amortized but is tested
for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business
climate, indicate that there may be justification for conducting an interim test. The goodwill impairment process requires a
comparison of the estimated fair value of a reporting unit to its carrying value. The Company tests goodwill for impairment
by either performing a qualitative assessment or a quantitative test. The qualitative impairment assessment is an assessment
of historical information and relevant events and circumstances to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, including goodwill. The Company may elect not to perform the
qualitative impairment assessment for some or all of its reporting units and perform a quantitative impairment test. In
performing the quantitative impairment test, the Company may determine the fair values of its reporting units by applying a
market multiple, discounted cash flow, and/or an actuarial-based valuation approach.
The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change.
Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future
developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood,
differ in some respects from actual future results. Declines in the estimated fair value of the Company’s reporting units could
result in goodwill impairments in future periods which could materially adversely affect the Company’s results of operations
or financial position.
268
Table of Contents
12. Goodwill (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding goodwill by segment, as well as Corporate & Other, was as follows:
Balance at January 1, 2018
Goodwill
Accumulated impairment (2)
Total goodwill, net
Effect of foreign currency translation and other
Balance at December 31, 2018
Goodwill
Accumulated impairment
Total goodwill, net
Acquisitions
Disposition (3)
Effect of foreign currency translation and other
Balance at December 31, 2019
Goodwill
Accumulated impairment
Total goodwill, net
Acquisitions (4)
Effect of foreign currency translation and other
Reclassified to assets held-for-sale (5)
Balance at December 31, 2020
Goodwill
Accumulated impairment
Total goodwill, net
__________________
U.S.
Asia (1)
Latin
America
EMEA
(In millions)
MetLife
Holdings
Corporate
& Other
Total
$
1,451 $
4,673
$
1,306
$
1,170
$
1,567
$
103
$ 10,270
—
1,451
—
1,451
—
1,451
15
—
—
1,466
—
1,466
932
—
(328)
2,070
—
—
4,673
17
4,690
—
4,690
4
(71)
13
4,636
—
4,636
—
127
—
4,763
—
—
1,306
(134)
1,172
—
1,172
—
—
(73)
1,099
—
1,099
—
44
—
1,143
—
—
1,170
(51)
1,119
—
1,119
—
—
(2)
1,117
—
1,117
—
29
—
1,146
—
(680)
887
—
1,567
(680)
887
—
—
—
1,567
(680)
887
—
—
—
1,567
(680)
—
103
—
103
—
103
—
—
—
103
—
103
—
—
—
103
—
(680)
9,590
(168)
10,102
(680)
9,422
19
(71)
(62)
9,988
(680)
9,308
932
200
(328)
10,792
(680)
$
2,070 $
4,763
$
1,143
$
1,146
$
887
$
103
$ 10,112
(1)
(2)
(3)
(4)
(5)
Includes goodwill of $4.6 billion, $4.5 billion and $4.5 billion from the Company’s Japan operations at
December 31, 2020, 2019 and 2018, respectively.
The $680 million accumulated impairment in the MetLife Holdings segment relates to the retail annuities business
impaired in 2012 that was not part of the Separation. See Note 3.
In connection with the disposition of MetLife Hong Kong, goodwill was reduced by $71 million for the year ended
December 31, 2019. See Note 3.
Primarily related to the acquisition of Versant Health. See Note 3.
See Note 3 for information on the pending disposition of MetLife P&C.
269
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
13. Long-term and Short-term Debt
Long-term and short-term debt outstanding, excluding debt relating to CSEs, was as follows:
Interest Rates (1)
Range
Weighted
Average
Maturity
Face
Value
2020
Unamortized
Discount and
Issuance
Costs
December 31,
Carrying
Value
Face
Value
(In millions)
2019
Unamortized
Discount and
Issuance
Costs
Carrying
Value
0.50 % - 6.50%
7.63 % - 7.88%
0.14 % - 3.75%
4.28%
7.79%
2.89%
2022 - 2046
$ 13,548 $
(85) $
13,463 $ 12,460 $
(81) $
12,379
2024 - 2025
2021 - 2058
507
527
106
14,688
393
(3)
(2)
—
(90)
—
504
525
106
507
457
125
14,598
13,549
393
235
(4)
(3)
—
(88)
—
503
454
125
13,461
235
$ 15,081 $
(90) $
14,991 $ 13,784 $
(88) $
13,696
Senior notes
Surplus notes
Other notes
Financing lease obligations
Total long-term debt
Total short-term debt
Total
__________________
(1)
Range of interest rates and weighted average interest rates are for the year ended December 31, 2020.
The aggregate maturities of long-term debt at December 31, 2020 for the next five years and thereafter are $77 million in
2021, $527 million in 2022, $1.0 billion in 2023, $2.1 billion in 2024, $1.2 billion in 2025 and $9.6 billion thereafter.
Financing lease obligations are collateralized and rank highest in priority, followed by unsecured senior notes and other
notes, followed by subordinated debt which consists of junior subordinated debt securities (see Note 15). Payments of interest
and principal on the Company’s surplus notes, which are subordinate to all other obligations of the operating company
issuing the notes and are senior to obligations of MetLife, Inc., may be made only with the prior approval of the insurance
department of the state of domicile of the notes issuer. The Company’s collateral financing arrangement (see Note 14) is
supported by surplus notes of a subsidiary and, accordingly, has priority consistent with surplus notes.
Certain of the Company’s debt instruments and committed facilities, as well as its unsecured revolving credit facility,
contain various administrative, reporting, legal and financial covenants. The Company believes it was in compliance with all
applicable financial covenants at December 31, 2020.
Senior Notes
In March 2020, MetLife, Inc. issued $1.0 billion of senior notes due March 2030 which bear interest at a fixed rate of
4.550%, the interest on which is payable semi-annually. In connection with the issuance, MetLife, Inc. incurred $6 million of
related costs which will be amortized over the term of the senior notes.
In June 2019, MetLife, Inc. redeemed for cash and canceled its £400 million ($509 million at repayment) aggregate
principal amount 5.250% senior notes due June 2020 and the remaining $368 million aggregate principal amount of its
4.750% senior notes due February 2021. The Company recorded a premium of $40 million paid in excess of the debt
principal and accrued and unpaid interest to other expenses for the year ended December 31, 2019.
In May 2019, MetLife, Inc. issued the following fixed rate senior notes (“Senior Notes”), interest on which is payable
semi-annually beginning in November 2019:
•
•
•
•
•
¥25.2 billion ($230 million at issuance) due May 2026 which bear interest annually at 0.495%;
¥64.9 billion ($591 million at issuance) due May 2029 which bear interest annually at 0.769%;
¥10.7 billion ($98 million at issuance) due May 2031 which bear interest annually at 0.898%;
¥26.5 billion ($241 million at issuance) due May 2034 which bear interest annually at 1.189%; and
¥24.4 billion ($222 million at issuance) due May 2039 which bear interest annually at 1.385%.
In connection with the issuances, MetLife, Inc. incurred $9 million of related costs which are amortized over the
applicable term of each series of the Senior Notes. MetLife, Inc. may redeem each series of the Senior Notes at its option, in
270
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
13. Long-term and Short-term Debt (continued)
whole, but not in part, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed, plus
accrued and unpaid interest thereon, if certain events occur affecting the U.S. tax treatment of the Senior Notes.
In June 2018, MetLife, Inc. sold FVO Brighthouse Common Stock in exchange for $944 million aggregate principal
amount of MetLife, Inc.’s senior notes. MetLife, Inc. purchased and canceled $343 million of its $1,035 million aggregate
principal amount 6.817% senior notes due August 2018; $469 million of its $1,035 million aggregate principal amount
7.717% senior notes due February 2019 and $132 million of its $1,000 million aggregate principal amount 4.750% senior
notes due February 2021. In June 2018, MetLife, Inc. additionally purchased for cash and canceled $160 million of its
$1,035 million aggregate principal amount 6.817% senior notes due August 2018. The Company recorded a premium of
$30 million paid in excess of the debt principal and incurred $37 million of advisory and other fees related to the exchange
transaction to other expenses for the year ended December 31, 2018. See Note 3 for additional information on the FVO
Brighthouse Common Stock exchange transaction.
In August 2018, MetLife, Inc. purchased for cash and canceled the remaining $566 million of its $1,035 million
aggregate principal amount 7.717% senior notes due February 2019. The Company recorded a premium of $14 million paid
in excess of the debt principal and accrued, unpaid interest to other expenses for the year ended December 31, 2018.
In December 2018, MetLife, Inc. purchased for cash and canceled an additional $500 million of its $1,000 million
aggregate principal amount 4.750% senior notes due February 2021. The Company recorded a premium of $18 million paid
in excess of the debt principal and accrued, unpaid interest to other expenses for the year ended December 31, 2018.
Other Notes
At December 31, 2020, MetLife Private Equity Holdings, LLC (“MPEH”), a wholly-owned indirect investment
subsidiary of MLIC, was party to a credit agreement providing for $350 million of term loans and $75 million of a revolving
loan (the “Credit Agreement”), which matures in November 2024. In December 2018, MPEH repaid $50 million of an initial
borrowing of a $350 million term loan under the Credit Agreement. In March 2020, MPEH borrowed $75 million on a
revolving loan under the Credit Agreement and repaid this loan in July 2020. Simultaneously, in July 2020, MPEH borrowed
$50 million on the term loan under the Credit Agreement. MPEH has pledged invested assets to secure the loans; however,
these loans are non-recourse to MLIC and MetLife, Inc.
Short-term Debt
Short-term debt with maturities of one year or less was as follows:
Commercial paper
Short-term borrowings (1)
Total short-term debt
Average daily balance
Average days outstanding
__________________
December 31,
2020
2019
(Dollars in millions)
$
$
$
100 $
293
393 $
326 $
99
136
235
216
69 days
34 days
(1)
Includes $293 million and $136 million at December 31, 2020 and 2019, respectively, of short-term debt related to
repurchase agreements, secured by assets of subsidiaries.
For the years ended December 31, 2020, 2019 and 2018, the weighted average interest rate on short-term debt was
2.01%, 2.88% and 3.02%, respectively.
Interest Expense
Interest expense included in other expenses was $632 million, $656 million and $827 million for the years ended
December 31, 2020, 2019 and 2018, respectively. Such amounts do not include interest expense on long-term debt related to
CSEs, the collateral financing arrangement, or junior subordinated debt securities. See Notes 14 and 15.
271
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
13. Long-term and Short-term Debt (continued)
Credit and Committed Facilities
At December 31, 2020, the Company maintained a $3.0 billion unsecured revolving credit facility (the “Credit Facility”)
and certain committed facilities (the “Committed Facilities”) aggregating $3.3 billion. When drawn upon, these facilities bear
interest at varying rates in accordance with the respective agreements.
Credit Facility
The Company’s Credit Facility is used for general corporate purposes, to support the borrowers’ commercial paper
programs and for the issuance of letters of credit. Total fees associated with the Credit Facility were $14 million,
$12 million and $10 million for the years ended December 31, 2020, 2019 and 2018, respectively, and were included in
other expenses. Information on the Credit Facility at December 31, 2020 was as follows:
Borrower(s)
Expiration
Maximum
Capacity
Letters of
Credit
Issued
Drawdowns
Unused
Commitments
(In millions)
MetLife, Inc. and MetLife Funding, Inc.
December 2021 (1)
$ 3,000 (1) $
463 $
— $
2,537
__________________
(1)
All borrowings under the Credit Facility must be repaid by December 20, 2021, except that letters of credit outstanding
upon termination may remain outstanding until December 20, 2022.
Committed Facilities
Letters of credit issued under the Committed Facilities are used for collateral for certain of the Company’s affiliated
reinsurance liabilities. Total fees associated with the Committed Facilities, included in other expenses, were $12 million,
$12 million and $15 million for the years ended December 31, 2020, 2019 and 2018, respectively. Information on the
Committed Facilities at December 31, 2020 was as follows:
Account Party/Borrower(s)
Expiration
Maximum
Capacity
Letters of
Credit
Issued
Drawdowns
Unused
Commitments
(In millions)
MetLife Reinsurance Company of
Vermont and MetLife, Inc.
MetLife Reinsurance Company of
Vermont and MetLife, Inc.
Total
__________________
December 2024 (1), (2)
$
400 $
396 $
— $
December 2037 (1), (3)
2,896
2,483
$
3,296 $
2,879 $
—
— $
4
413
417
(1) MetLife, Inc. is a guarantor under the applicable facility.
(2)
(3)
Capacity decreases in June 2022, December 2022, June 2023, December 2023 and December 2024 to $380 million,
$360 million, $310 million, $260 million and $0, respectively.
Capacity at December 31, 2020 of $2.8 billion increases periodically to a maximum of $2.9 billion in 2024, decreases
periodically commencing in 2025 to $2.0 billion in 2037, and decreases to $0 at expiration in December 2037. Unused
commitment of $413 million is based on maximum capacity. At December 31, 2020, Brighthouse is a beneficiary of
$2.5 billion of letters of credit issued under this facility and, in consideration, Brighthouse reimburses MetLife, Inc. for
a portion of the letter of credit fees.
In addition to the Committed Facilities, see also “— Other Notes” for information about the Credit Agreement.
272
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
14. Collateral Financing Arrangement
Information related to the collateral financing arrangement associated with the closed block (see Note 7) was as follows
at:
Surplus notes outstanding (1)
Receivable from unaffiliated financial institution (1)
Pledged collateral (2)
Assets held in trust (2)
__________________
(1)
(2)
Carrying value.
Estimated fair value.
December 31,
2020
2019
(In millions)
845 $
110 $
41 $
1,408 $
993
130
58
1,390
$
$
$
$
Interest expense on the collateral financing arrangement was $20 million, $38 million and $37 million for the years
ended December 31, 2020, 2019 and 2018, respectively, which is included in other expenses.
In December 2007, MLIC reinsured a portion of its closed block liabilities to MetLife Reinsurance Company of
Charleston (“MRC”), a wholly-owned subsidiary of MetLife, Inc. In connection with this transaction, MRC issued, to
investors placed by an unaffiliated financial institution, $2.5 billion in aggregate principal amount of 35-year surplus notes to
provide statutory reserve support for the assumed closed block liabilities. Interest on the surplus notes accrues at an annual
rate of three-month LIBOR plus 0.55%, payable quarterly. The ability of MRC to make interest and principal payments on
the surplus notes is contingent upon South Carolina regulatory approval.
Simultaneously with the issuance of the surplus notes, MetLife, Inc. entered into an agreement with the unaffiliated
financial institution, under which MetLife, Inc. is entitled to the interest paid by MRC on the surplus notes of three-month
LIBOR plus 0.55% in exchange for the payment of three-month LIBOR plus 1.12%, payable quarterly on such amount as
adjusted, as described below. MetLife, Inc. may also be required to pledge collateral or make payments to the unaffiliated
financial institution related to any decline in the estimated fair value of the surplus notes. Any such payments are accounted
for as a receivable and included in other assets on the Company’s consolidated balance sheets and do not reduce the principal
amount outstanding of the surplus notes. Such payments, however, reduce the amount of interest payments due from
MetLife, Inc. under the agreement. Any payment received from the unaffiliated financial institution reduces the receivable by
an amount equal to such payment and also increases the amount of interest payments due from MetLife, Inc. under the
agreement. In addition, the unaffiliated financial institution may be required to pledge collateral to MetLife, Inc. related to
any increase in the estimated fair value of the surplus notes.
For the years ended December 31, 2020, 2019 and 2018, following regulatory approval, MRC repurchased $148 million,
$67 million and $61 million, respectively, in aggregate principal amount of the surplus notes. Cumulatively, since
December 2007, MRC repurchased $1.7 billion in aggregate principal amount of the surplus notes as of December 31, 2020.
Payments made by the Company in 2020, 2019 and 2018 associated with the repurchases were exclusive of accrued interest
on the surplus notes. In connection with the repurchases for the years ended December 31, 2020, 2019 and 2018, the
Company received payments in the aggregate amount of $20 million, $9 million and $7 million, respectively, from the
unaffiliated financial institution, which reduced the amount receivable from the unaffiliated financial institution by the same
amounts. No other payments related to an increase or decrease in the estimated fair value of the surplus notes were made by
MetLife, Inc. or received from the unaffiliated financial institution for the years ended December 31, 2020, 2019 or 2018.
A majority of the proceeds from the offering of the surplus notes was placed in a trust, which is consolidated by the
Company, to support MRC’s statutory obligations associated with the assumed closed block liabilities. For the years ended
December 31, 2019 and 2018, MRC transferred $2 million and $97 million, respectively, to the trust out of its general
account. For the year ended December 31, 2020, MRC transferred $78 million out of the trust to its general account. The
assets are principally invested in fixed maturity securities AFS and are presented as such within the Company’s consolidated
balance sheets, with the related income included within net investment income on the Company’s consolidated statements of
operations.
273
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
15. Junior Subordinated Debt Securities
Outstanding Junior Subordinated Debt Securities
Outstanding junior subordinated debt securities and exchangeable surplus trust securities which are exchangeable for
junior subordinated debt securities prior to redemption or repayment, were as follows:
Issuer
Issue
Date
Interest
Rate (1)
Scheduled
Redemption
Date
Interest Rate
Subsequent to
Scheduled
Redemption
Date (2)
Final
Maturity
Face
Value
2020
Unamortized
Discount
and Issuance
Costs
December 31,
Carrying
Value
Face
Value
(In millions)
2019
Unamortized
Discount
and Issuance
Costs
Carrying
Value
MetLife, Inc.
December
2006
6.400%
December
2036
LIBOR +
2.205%
December
2066
$ 1,250
$
(17) $ 1,233
$ 1,250
$
(18) $ 1,232
MetLife Capital
Trust IV (3)
December
2007
7.875%
December
2037
MetLife, Inc.
April 2008
9.250%
April 2038
MetLife, Inc.
July 2009
10.750%
August
2039
LIBOR +
3.960%
LIBOR +
5.540%
LIBOR +
7.548%
December
2067
April 2068
August 2069
700
750
500
(14)
(10)
(6)
686
740
494
700
750
500
(15)
685
(10)
740
(7)
493
$ 3,200
$
(47) $ 3,153
$ 3,200
$
(50) $ 3,150
_________________
(1)
(2)
Prior to the scheduled redemption date, interest is payable semiannually in arrears.
In the event the securities are not redeemed on or before the scheduled redemption date, interest will accrue after such
date at an annual rate of three-month LIBOR plus the indicated margin, payable quarterly in arrears.
(3) MetLife Capital Trust IV is a VIE which is consolidated on the financial statements of the Company. The securities
issued by this entity are exchangeable surplus trust securities, which are exchangeable for a like amount of
MetLife, Inc.’s junior subordinated debt securities on the scheduled redemption date, mandatorily under certain
circumstances, and at any time upon MetLife, Inc. exercising its option to redeem the securities.
274
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
15. Junior Subordinated Debt Securities (continued)
In connection with each of the securities described above, MetLife, Inc. may redeem or may cause the redemption of the
securities (i) in whole or in part, at any time on or after the date five years prior to the scheduled redemption date at their
principal amount plus accrued and unpaid interest to, but excluding, the date of redemption, or (ii) in certain circumstances,
in whole or in part, prior to the date five years prior to the scheduled redemption date at their principal amount plus accrued
and unpaid interest to, but excluding, the date of redemption or, if greater, a make-whole price. MetLife, Inc. also has the
right to, and in certain circumstances the requirement to, defer interest payments on the securities for a period up to 10 years.
Interest compounds during such periods of deferral. If interest is deferred for more than five consecutive years, MetLife, Inc.
is required to use proceeds from the sale of its common stock or warrants on common stock to satisfy this interest payment
obligation. In connection with each of the securities described above, MetLife, Inc. entered into a separate replacement
capital covenant (“RCC”). As part of each RCC, MetLife, Inc. agreed that it will not repay, redeem, or purchase the securities
on or before a date 10 years prior to the final maturity date of each issuance, unless, subject to certain limitations, it has
received cash proceeds during a specified period from the sale of specified replacement securities. Each RCC will terminate
upon the occurrence of certain events, including an acceleration of the applicable securities due to the occurrence of an event
of default. The RCCs are not intended for the benefit of holders of the securities and may not be enforced by them. Rather,
each RCC is for the benefit of the holders of a designated series of MetLife, Inc.’s other indebtedness (the “Covered Debt”).
Initially, the Covered Debt for each of the securities described above was MetLife, Inc.’s 5.700% senior notes due 2035 (the
“5.700% Senior Notes”). As a result of the issuance of MetLife, Inc.’s 10.750% Fixed-to-Floating Rate Junior Subordinated
Debentures due 2069 (the “10.750% JSDs”), the 10.750% JSDs became the Covered Debt with respect to, and in accordance
with, the terms of the RCC relating to MetLife, Inc.’s 6.40% Fixed-to-Floating Rate Junior Subordinated Debentures due
2066. The 5.700% Senior Notes continue to be the Covered Debt with respect to, and in accordance with, the terms of the
RCCs relating to each of MetLife Capital Trust IV’s 7.875% Fixed-to-Floating Rate Exchangeable Surplus Trust Securities,
MetLife, Inc.’s 9.250% Fixed-to-Floating Rate Junior Subordinated Debentures and the 10.750% JSDs. MetLife, Inc. also
entered into a replacement capital obligation which will commence during the six-month period prior to the scheduled
redemption date of each of the securities described above and under which MetLife, Inc. must use reasonable commercial
efforts to raise replacement capital to permit repayment of the securities through the issuance of certain qualifying capital
securities.
Interest expense on outstanding junior subordinated debt securities was $261 million, $261 million and $258 million for
the years ended December 31, 2020, 2019 and 2018, respectively, which is included in other expenses.
16. Equity
Preferred Stock
Preferred stock authorized, issued and outstanding was as follows:
Series
Series A preferred stock
Series C preferred stock
Series D preferred stock
Series E preferred stock
Series F preferred stock
Series G preferred stock
Series A Junior Participating
Preferred Stock
Not designated
Total
December 31, 2020
December 31, 2019
Shares
Authorized
Shares
Issued
Shares
Outstanding
Shares
Authorized
Shares
Issued
Shares
Outstanding
27,600,000
24,000,000
24,000,000
27,600,000
24,000,000
24,000,000
1,500,000
1,500,000
1,500,000
1,500,000
500,000
32,200
40,000
500,000
500,000
32,200
40,000
500,000
500,000
32,200
40,000
1,000,000
1,000,000
1,000,000
500,000
32,200
—
—
500,000
32,200
500,000
32,200
—
—
—
—
—
—
—
—
10,000,000
159,327,800
—
—
—
—
10,000,000
160,367,800
200,000,000
26,072,200
26,072,200
200,000,000
26,032,200
26,032,200
In September 2020, MetLife, Inc. delivered a notice of partial redemption to the holders of MetLife, Inc.’s 5.25% Fixed-
to-Floating Rate Non-Cumulative Preferred Stock, Series C (the “Series C preferred stock”) pursuant to which it would
redeem 1,000,000 of its 1,500,000 shares of Series C preferred stock at a redemption price of $1,000 per share, plus an
amount equal to accrued but unpaid dividends on the Series C preferred stock to, but excluding, October 10, 2020, the
redemption date. In connection with the redemption, MetLife, Inc. recognized a preferred stock redemption premium of
$14 million (calculated as the difference between the carrying value of the Series C preferred stock and the total amount paid
275
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
by MetLife, Inc. to the holders of the Series C preferred stock in connection with the redemption). In October 2020, MetLife,
Inc. redeemed and canceled 1,000,000 shares of Series C preferred stock for an aggregate redemption price of $1.0 billion in
cash.
In September 2020, MetLife, Inc. issued 1,000,000 shares of 3.85% Fixed Rate Reset Non-Cumulative Preferred Stock,
Series G (the “Series G preferred stock”) with a $0.01 par value per share and a liquidation preference of $1,000 per share,
for aggregate net proceeds of $989 million. In connection with the offering of the Series G preferred stock, MetLife, Inc.
incurred approximately $11 million of issuance costs which have been recorded as a reduction of additional paid-in capital.
In January 2020, MetLife, Inc. issued 40,000 shares of 4.75% Non-Cumulative Preferred Stock, Series F (the “Series F
preferred stock”) with a $0.01 par value per share and a liquidation preference of $25,000 per share, for aggregate net
proceeds of $972 million. MetLife, Inc. deposited the Series F preferred stock under a deposit agreement with a depositary,
which issued interests in fractional shares of the Series F preferred stock in the form of depositary shares (“Series F
Depositary Shares”) evidenced by depositary receipts; each Series F Depositary Share representing 1/1,000th interest in a
share of the Series F preferred stock. In connection with the offering of the Series F Depositary Shares, MetLife, Inc. incurred
approximately $28 million of issuance costs which have been recorded as a reduction of additional paid-in capital.
In June 2018, MetLife, Inc. issued 32,200 shares of 5.625% Non-Cumulative Preferred Stock, Series E (the “Series E
preferred stock”) with a $0.01 par value per share and a liquidation preference of $25,000 per share, for aggregate net
proceeds of $780 million. MetLife, Inc. deposited the Series E preferred stock under a deposit agreement with a depositary,
which issued interests in fractional shares of the Series E preferred stock in the form of depositary shares (“Series E
Depositary Shares”) evidenced by depositary receipts; each Series E Depositary Share representing 1/1,000th interest in a
share of the Series E preferred stock. In connection with the offering of the Series E Depositary Shares, MetLife, Inc.
incurred approximately $25 million of issuance costs which have been recorded as a reduction of additional paid-in capital.
In March 2018, MetLife, Inc. issued 500,000 shares of 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock,
Series D (the “Series D preferred stock”) with a $0.01 par value per share and a liquidation preference of $1,000 per share,
for aggregate net proceeds of $494 million. In connection with the offering of the Series D preferred stock, MetLife, Inc.
incurred $6 million of issuance costs which have been recorded as a reduction of additional paid-in capital.
The outstanding preferred stock ranks senior to MetLife, Inc.’s common stock with respect to the payment of dividends
and distributions upon liquidation, dissolution or winding-up. Holders of the outstanding preferred stock are entitled to
receive dividend payments only when, as and if declared by MetLife, Inc.’s Board of Directors or a duly authorized
committee thereof. Dividends on the preferred stock are not cumulative or mandatory. Accordingly, if dividends are not
declared on the preferred stock of the applicable series for any dividend period, then any accrued dividends for that dividend
period will cease to accrue and be payable. If a dividend is not declared before the dividend payment date for any such
dividend period, MetLife, Inc. will have no obligation to pay dividends accrued for such dividend period whether or not
dividends are declared for any future period. No dividends may be paid or declared on MetLife, Inc.’s common stock (or any
other securities ranking junior to the preferred stock) and MetLife, Inc. may not purchase, redeem, or otherwise acquire its
common stock (or other such junior stock) unless the full dividends for the latest completed dividend period on all
outstanding shares of preferred stock, and any parity stock, have been declared and paid or provided for.
The table below presents the dividend rates of MetLife, Inc.’s preferred stock outstanding at December 31, 2020:
Series
A
C
D
E
F
G
Per Annum Dividend Rate
Three-month LIBOR + 1.00%, with floor of 4.00%, payable quarterly in March, June, September and December
5.250% from issuance date to, but excluding, June 15, 2020, payable semiannually in June and December; three-month LIBOR +
3.575%, payable quarterly in March, June, September and December, thereafter
5.875% from issuance date to, but excluding, March 15, 2028, payable semiannually in March and September commencing in
September 2018; three-month LIBOR + 2.959% payable quarterly in March, June, September and December, thereafter
5.625% from issuance date, payable quarterly in March, June, September and December, commencing in September 2018
4.750% from issuance date, payable quarterly in March, June, September and December, commencing in June 2020
3.850% from issuance date, but excluding, September 15, 2025, payable semiannually in March and September commencing in
March 2021; five year treasury rate, reset every five years, + 3.576% payable semiannually in March and September, thereafter
In the table above, dividends on each series of preferred stock are payable in arrears for the periods specified, if declared.
276
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
MetLife, Inc. is prohibited from declaring dividends on the Floating Rate Non-Cumulative Preferred Stock, Series A (the
“Series A preferred stock”) if it fails to meet specified capital adequacy, net income and stockholders’ equity levels. See “—
Dividend Restrictions — MetLife, Inc.”
Holders of the preferred stock do not have voting rights except in certain circumstances, including where the dividends
have not been paid for a specified number of dividend payment periods whether or not those periods are consecutive. Under
such circumstances, the holders of the preferred stock have certain voting rights with respect to members of the Board of
Directors of MetLife, Inc.
The preferred stock is not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar
provisions.
The Series A preferred stock is redeemable at MetLife, Inc.’s option in whole or in part, at a redemption price of $25 per
share of Series A preferred stock, plus declared and unpaid dividends. The Series C preferred stock is redeemable at MetLife,
Inc.’s option in whole or in part, at a redemption price of $1,000 per share of Series C preferred stock, plus an amount equal
to any dividends per share that have accrued but have not been declared and paid for the then-current dividend period to, but
excluding, such redemption date.
MetLife, Inc. may, at its option, redeem the Series D preferred stock, (i) in whole but not in part at any time prior to
March 15, 2028, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $1,020 per
share of Series D preferred stock, plus an amount equal to any dividends per share that have accrued but have not been
declared and paid for the then-current dividend period to, but excluding, such redemption date; (ii) in whole but not in part, at
any time prior to March 15, 2028, within 90 days after the occurrence of a “regulatory capital event;” and (iii) in whole or in
part, at any time or from time to time, on or after March 15, 2028, in the case of (ii) or (iii), at a redemption price equal to
$1,000 per share of Series D preferred stock, plus an amount equal to any dividends per share that have accrued but have not
been declared and paid for the then-current dividend period to, but excluding, such redemption date.
MetLife, Inc. may, at its option, redeem the Series E preferred stock, (i) in whole but not in part at any time prior to
June 15, 2023, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $25,500 per
share of Series E preferred stock (equivalent to $25.50 per Series E Depositary Share), plus an amount equal to any dividends
per share that have accrued but have not been declared and paid for the then-current dividend period to, but excluding, such
redemption date; (ii) in whole but not in part, at any time prior to June 15, 2023, within 90 days after the occurrence of a
“regulatory capital event;” and (iii) in whole or in part, at any time or from time to time, on or after June 15, 2023, in the case
of (ii) or (iii), at a redemption price equal to $25,000 per share of Series E preferred stock (equivalent to $25 per Series E
Depositary Share), plus an amount equal to any dividends per share that have accrued but have not been declared and paid for
the then-current dividend period to, but excluding, such redemption date.
MetLife, Inc. may, at its option, redeem the Series F preferred stock, (i) in whole but not in part at any time prior to
March 15, 2025, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $25,500 per
share of Series F preferred stock (equivalent to $25.50 per Series F Depositary Share), plus an amount equal to any accrued
and unpaid dividends per share that have accrued but have not been declared and paid for the then-current dividend period to,
but excluding, the redemption date, (ii) in whole but not in part, at any time prior to March 15, 2025, within 90 days after the
occurrence of a “regulatory capital event;” and (iii) in whole or in part, at any time or from time to time, on or after
March 15, 2025, in the case of (ii) or (iii), at a redemption price equal to $25,000 per share of Series F preferred stock
(equivalent to $25 per Series F Depositary Share), plus an amount equal to any dividends per share that have accrued but
have not been declared and paid for the then-current dividend period to, but excluding, such redemption date.
MetLife, Inc. may, at its option, redeem the Series G preferred stock, (a) in whole but not in part, at any time, within 90
days after the conclusion of any review or appeal process instituted by the Company following the occurrence of a “rating
agency event” or, in the absence of any such review or appeal process, from such “rating agency event,” at a redemption price
equal to $1,020 per share of Series G preferred stock, plus an amount equal to any dividends per share that have accrued but
have not been declared and paid for the then-current dividend period to, but excluding, such redemption date and (b)(i) in
whole but not in part, at any time, within 90 days after the occurrence of a “regulatory capital event,” or (ii) in whole or in
part, on any dividend payment date, on or after September 15, 2025, in each case, at a redemption price equal to $1,000 per
share of Series G preferred stock, plus an amount equal to any dividends per share that have accrued but have not been
declared and paid for the then-current dividend period to, but excluding, such redemption date.
277
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
A “rating agency event” means that any nationally recognized statistical rating organization that then publishes a rating
for MetLife, Inc. amends, clarifies or changes the criteria used to assign equity credit to securities like the Series D preferred
stock, Series E preferred stock, Series F preferred stock or Series G preferred stock, which results in the lowering of the
equity credit assigned to the security, or shortens the length of time that the security is assigned a particular level of equity
credit. A “regulatory capital event” could occur as a result of a change or proposed change in laws, rules, regulations or
regulatory standards, including capital adequacy rules (or the interpretation or application thereof) of the United States or any
political subdivision thereof, including any capital regulator, including but not limited to the Board of Governors of the
Federal Reserve System (the “Federal Reserve Board”), the Federal Insurance Office, the National Association of Insurance
Commissioners (“NAIC”) or any state insurance regulator as may then have group-wide oversight of MetLife, Inc.’s
regulatory capital, from those laws, rules, regulations or regulatory standards (or the interpretation or application thereof) in
effect as of March 22, 2018, in the case of the Series D preferred stock, June 4, 2018, in the case of the Series E preferred
stock, January 15, 2020, in the case of the Series F preferred stock, or September 10, 2020, in the case of the Series G
preferred stock, that would create a more than insubstantial risk, as determined by MetLife, Inc., that the security would not
be treated as “Tier 1 capital” or as capital with attributes similar to those of Tier 1 capital, except that a “regulatory capital
event” will not include a change or proposed change (or the interpretation or application thereof) that would result in the
adoption of any criteria substantially the same as the criteria in the capital adequacy rules of the Federal Reserve Board
applicable to bank holding companies as of March 22, 2018, in the case of the Series D preferred stock, June 4, 2018, in the
case of the Series E preferred stock, January 15, 2020, in the case of the Series F preferred stock, or September 10, 2020, in
the case of the Series G preferred stock.
The per share and aggregate dividends declared for MetLife, Inc.’s preferred stock were as follows for the years ended
December 31, 2020, 2019 and 2018:
2020
2019
2018
For the Years Ended December 31,
Series
Per Share
Aggregate
Per Share
Aggregate
Per Share
Aggregate
$
$
$
$
$
$
A
C
D
E
F
G
Total
1.015 $
45.860
58.750
1,406.252
1,088.542
—
$
Common Stock
Issuances
(In million, except per share data)
24 $
59 $
30 $
45 $
44 $
— $
202
1.017 $
52.500
58.750
1,406.252
—
—
$
24 $
79 $
30 $
45 $
— $
— $
178
1.015 $
52.500
28.233
746.094
—
—
$
25
79
14
23
—
—
141
For the years ended December 31, 2020, 2019 and 2018, MetLife, Inc. issued 3,933,989 shares, 5,856,057 shares and
3,114,141 shares of its common stock for $153 million, $199 million and $108 million, respectively, in connection with
stock option exercises and other stock-based awards. There were no shares of common stock issued from treasury stock for
each of the years ended December 31, 2020, 2019 and 2018.
Repurchase Authorizations
MetLife, Inc. announced that its Board of Directors authorized common stock repurchases as follows:
Announcement Date
Authorization Amount
Authorization Remaining at
December 31, 2020
December 11, 2020
July 31, 2019
November 1, 2018
May 22, 2018
$
$
$
$
(In millions)
3,000 $
2,000 $
2,000 $
1,500 $
2,835
—
—
—
278
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Under these authorizations, MetLife, Inc. may purchase its common stock from the MetLife Policyholder Trust, in the
open market (including pursuant to the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1 under the
Securities Exchange Act of 1934 (“Exchange Act”)), and in privately negotiated transactions. Common stock repurchases
are subject to the discretion of MetLife, Inc.’s Board of Directors and will depend upon the Company’s capital position,
liquidity, financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.’s common stock
compared to management’s assessment of the stock’s underlying value, applicable regulatory approvals, and other legal
and accounting factors.
For the years ended December 31, 2020, 2019 and 2018, MetLife, Inc. repurchased 26,361,487 shares, 49,131,501
shares and 88,029,138 shares under these repurchase authorizations for $1.2 billion, $2.3 billion, and $4.0 billion,
respectively. At December 31, 2020, MetLife, Inc. had $2.8 billion remaining under its December 2020 common stock
repurchase authorization.
Dividends
The funding of the cash dividends and operating expenses of MetLife, Inc. is primarily provided by cash dividends
from MetLife, Inc.’s insurance subsidiaries. The statutory capital and surplus, or net assets, of MetLife, Inc.’s insurance
subsidiaries are subject to regulatory restrictions except to the extent that dividends are allowed to be paid in a given year
without prior regulatory approval. Dividends exceeding these limitations can generally be made subject to regulatory
approval. The nature and amount of these dividend restrictions, as well as the statutory capital and surplus of
MetLife, Inc.’s U.S. insurance subsidiaries, are disclosed in “— Statutory Equity and Income” and “— Dividend
Restrictions — Insurance Operations.” MetLife, Inc.’s principal non-U.S. insurance operations are branches or subsidiaries
of American Life Insurance Company (“American Life”), a U.S. insurance subsidiary of the Company. In addition, the
payment of dividends by MetLife, Inc. to its shareholders is also subject to restrictions. See “— Dividend Restrictions —
MetLife, Inc.”
Stock-Based Compensation Plans
Plans for Employees and Agents
Under the MetLife, Inc. 2015 Stock and Incentive Compensation Plan (the “2015 Stock Plan”), MetLife, Inc. may
grant awards to employees and agents in the form of Stock Options, Stock Appreciation Rights, Performance Shares or
Performance Share Units, Restricted Stock or Restricted Stock Units, Cash-Based Awards and Stock-Based Awards (each,
as applicable, as defined in the 2015 Stock Plan with reference to shares of MetLife, Inc. common stock (“Shares”)).
Awards under the 2015 Stock Plan and its predecessor plan, the MetLife, Inc. 2005 Stock and Incentive Compensation Plan
(the “2005 Stock Plan”), were outstanding at December 31, 2020. MetLife, Inc. granted all awards to employees and agents
in 2020 under the 2015 Stock Plan.
The aggregate number of Shares authorized for issuance under the 2015 Stock Plan at December 31, 2020 was
33,701,004.
MetLife recognizes compensation expense related to each award under the 2005 Stock Plan or 2015 Stock Plan in one
of two ways:
•
•
For cash-settled awards and the Performance Shares it granted in 2017 and 2018, MetLife remeasures the
compensation expense quarterly.
For other awards, MetLife recognizes an expense based on the number of awards it expects to vest, which represents
the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless
MetLife observes a material deviation from the assumed forfeiture rate during the term in which the awards are
expensed, MetLife recognizes any adjustment necessary to reflect differences in actual experience in the period the
award becomes payable or exercisable.
Compensation expense related to awards under the 2005 Stock Plan principally relates to the issuance of Stock
Options. Under the 2015 Stock Plan, compensation expense principally relates to Stock Options, Unit Options,
Performance Shares, Performance Units, Restricted Stock Units and Restricted Units. MetLife, Inc. granted the majority of
each year’s awards under the 2005 Stock Plan and 2015 Stock Plan in the first quarter of the year.
Awards that have become payable in Shares but the issuance of which has been deferred (“Deferred Shares”), payable
to employees or agents related to awards under all plans equaled 806,715 Shares at December 31, 2020.
279
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
MetLife granted cash-settled awards based in whole or in part on the price of Shares or changes in the price of Shares
(“Phantom Stock-Based Awards”) under the MetLife, Inc. International Unit Option Incentive Plan, the MetLife
International Performance Unit Incentive Plan, and the MetLife International Restricted Unit Incentive Plan prior to 2015,
and under the 2015 Stock Plan in 2015 and later.
Plans for Non-Management Directors
Under the MetLife, Inc. 2015 Non-Management Director Stock Compensation Plan (the “2015 Director Stock Plan”),
MetLife, Inc. may grant non-management Directors of MetLife, Inc. awards in the form of nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, or Stock-Based Awards (each, as applicable, as
defined in the 2015 Director Stock Plan with reference to Shares).
The only awards MetLife, Inc. granted under the 2015 Director Stock Plan and its predecessor plan, the MetLife, Inc.
2005 Non-Management Director Stock Compensation Plan (the “2005 Director Stock Plan”), through December 31, 2020
were Stock-Based Awards that vested immediately. As a result, no awards under the 2005 Director Stock Plan or 2015
Director Stock Plan remained outstanding at December 31, 2020.
The aggregate number of Shares authorized for issuance under the 2015 Director Stock Plan at December 31, 2020
was 1,548,274.
MetLife recognizes compensation expense related to awards under the 2015 Director Stock Plan based on the number
of Shares awarded.
Deferred Shares payable to Directors related to awards under the 2005 Director Stock Plan, 2015 Director Stock Plan,
or earlier applicable plans equaled 298,808 Shares at December 31, 2020.
Compensation Expense Related to Stock-Based Compensation
The components of compensation expense related to stock-based compensation includes compensation expense related
to Phantom Stock-Based Awards and excludes the insignificant compensation expense related to the 2015 Director Stock
Plan. Those components were:
Stock Options and Unit Options
Performance Shares and Performance Units (1)
Restricted Stock Units and Restricted Units
Total compensation expense
Income tax benefit
__________________
Years Ended December 31,
2020
2019
2018
(In millions)
$
$
$
6 $
63
58
127 $
27 $
7 $
89
54
150 $
32 $
6
23
57
86
18
(1)
The Company may further adjust the number of Performance Shares and Performance Units it expects to vest, and the
related compensation expense, if management changes its estimate of the most likely final performance factor.
The following table presents the total unrecognized compensation expense related to stock-based compensation and
the expected weighted average period over which these expenses will be recognized at:
December 31, 2020
Expense
Weighted Average
Period
(In millions)
(Years)
$
$
$
2
28
38
1.57
1.64
1.76
Stock Options
Performance Shares
Restricted Stock Units
280
Table of Contents
16. Equity (continued)
Equity Awards
Stock Options
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Stock Options are the contingent right of award holders to purchase Shares at a stated price for a limited time. All
Stock Options have an exercise price equal to the closing price of a Share reported on the New York Stock Exchange
(“NYSE”) on the date of grant and have a maximum term of 10 years. The majority of Stock Options MetLife, Inc. has
granted have become or will become exercisable at a rate of one-third of each award on each of the first three
anniversaries of the grant date. Other Stock Options have become or will become exercisable on the third anniversary of
the grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria
and in certain other limited circumstances.
Stock Option Activity
A summary of the activity related to Stock Options was as follows:
Outstanding at January 1, 2020
Granted
Exercised
Expired (2)
Forfeited (3)
Outstanding at December 31, 2020
Vested and expected to vest at December 31, 2020
Exercisable at December 31, 2020
__________________
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Shares
Under
Option
Aggregate
Intrinsic
Value (1)
9,011,323 $ 39.20
3.73 $
106
(Years)
(In millions)
487,564 $ 47.58
(2,363,639) $ 37.79
(55,844) $ 34.27
(36,963) $ 46.56
7,042,441 $ 40.25
7,030,683 $ 40.25
6,005,334 $ 39.24
3.95 $
3.94 $
3.17 $
47
47
46
(1)
(2)
(3)
The intrinsic value of each Stock Option is the closing price on a particular date less the exercise price of the Stock
Option, so long as the difference is greater than zero. The aggregate intrinsic value of all outstanding Stock Options is
computed using the closing Share price on December 31, 2020 of $46.95 and December 31, 2019 of $50.97, as
applicable.
Expired options were exercisable, but unexercised, as of their expiration date.
Forfeited awards were either (a) unvested or unexercisable at the end of the awardholder’s employment, where the
awardholder did not meet the criteria for post-employment award continuation; or (b) held by awardholders the
Company terminated from employment for cause as defined in the terms of the awards.
MetLife estimates the fair value of Stock Options on the date of grant using a binomial lattice model. The significant
assumptions the Company uses in its binomial lattice model include: expected volatility of the price of Shares; risk-free
rate of return; dividend yield on Shares; exercise multiple; and the post-vesting termination rate.
MetLife bases expected volatility on an analysis of historical prices of Shares and call options on Shares traded on
the open market. The Company uses a weighted-average of the implied volatility for publicly-traded call options with the
longest remaining maturity nearest to the money as of each valuation date and the historical volatility, calculated using
monthly closing prices of Shares. The Company chose a monthly measurement interval for historical volatility as this
interval reflects the Company’s view that employee option exercise decisions are based on longer-term trends in the price
of the underlying Shares rather than on daily price movements.
The Company’s binomial lattice model incorporates different risk-free rates based on the imputed forward rates for
U.S. Treasury Strips for each year over the contractual term of the option. The table below presents the full range of rates
that were used for options granted during the respective periods.
281
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company determines dividend yield based on historical dividend distributions compared to the price of the
underlying Shares as of the valuation date and held constant over the life of the Stock Option.
The Company’s binomial lattice model incorporates the term of the Stock Options, expected exercise behavior and a
post-vesting termination rate, or the rate at which vested options are exercised or expire prematurely due to termination
of employment. From these factors, the model derives an expected life of the Stock Option. The model’s exercise
behavior is a multiple that reflects the ratio of stock price at the time of exercise over the exercise price of the Stock
Option at the time the model expects holders to exercise. The model derives the exercise multiple from actual exercise
activity. The model determines the post-vesting termination rate from actual exercise experience and expiration activity
under the Incentive Plans.
The following table presents the weighted average assumptions, with the exception of risk-free rate (which is
expressed as a range), that the model uses to determine the fair value of unexercised Stock Options:
Dividend yield
Risk-free rate of return
Expected volatility
Exercise multiple
Post-vesting termination rate
Contractual term (years)
Expected life (years)
Weighted average exercise price of stock options granted
Weighted average fair value of stock options granted
Years Ended December 31,
2020
3.70%
2019
3.76%
2018
3.52%
1.30% - 1.57%
2.52% - 3.32%
2.02% - 3.40%
25.55%
1.44
3.79%
10
7
$47.58
$9.02
30.27%
1.43
3.86%
10
6
$44.65
$10.36
34.18%
1.43
3.77%
10
6
$45.50
$11.87
The following table presents a summary of Stock Option exercise activity:
Total intrinsic value of stock options exercised
Cash received from exercise of stock options
Income tax benefit realized from stock options exercised
Performance Shares
Years Ended December 31,
2020
2019
(In millions)
2018
$
$
$
29 $
89 $
6 $
60 $
125 $
13 $
24
54
5
Performance Shares are units that, if they vest, are multiplied by a performance factor to produce a number of final
Shares payable. MetLife accounts for Performance Shares as equity awards. MetLife, Inc. does not credit Performance
Shares with dividend-equivalents for dividends paid on Shares. Performance Share awards normally vest in their entirety
at the end of the three-year performance period. Vesting is subject to continued service, except for employees who meet
specified age and service criteria and in certain other limited circumstances.
For awards granted for the 2018 – 2020 and earlier performance periods in progress through December 31, 2020, the
vested Performance Shares will be multiplied by a performance factor of 0% to 175% that the MetLife, Inc.
Compensation Committee will determine in its discretion (subject to MetLife, Inc. meeting threshold performance goals
related to its adjusted income or total shareholder return). In doing so, the Compensation Committee may consider
MetLife, Inc.’s total shareholder return relative to the performance of its competitors and adjusted return on
MetLife, Inc.’s common stockholders’ equity relative to its financial plan. MetLife estimates the fair value of
Performance Shares each quarter until they become payable.
282
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
For awards granted for the 2019 – 2021 and later performance periods in progress through December 31, 2020, the
vested Performance Shares will be multiplied by a performance factor of 0% to 175% that the MetLife, Inc.
Compensation Committee will determine by (a) the Company’s annual adjusted return on equity performance over the
three-year period compared to the Company’s three-year business plan goal; (b) the Company’s total shareholder return
over the same three-year period compared to a peer group of companies; and (c) a cap of 100% if the Company’s total
shareholder return for the three-year period is zero or less. The Compensation Committee will exclude the impact of a
“Significant Event” from the Company’s adjusted return on equity or the business plan goal, to the extent the Committee
determines in its informed judgment that the event changed the adjusted return on equity performance factor component.
“Significant Events” include accounting changes, business combinations, restructuring, nonrecurring tax events, common
share issuance or repurchases, catastrophes, litigation and regulatory settlements, asbestos and environment events,
certain specified classes of non-coupon investments, and other significant nonrecurring, infrequent, or unusual items.
The performance factor for the 2017 - 2019 performance period was 91.4%.
Restricted Stock Units
Restricted Stock Units are units that, if they vest, are payable in an equal number of Shares. MetLife accounts for
Restricted Stock Units as equity awards. MetLife, Inc. does not credit Restricted Stock Units with dividend-equivalents
for dividends paid on Shares. Accordingly, the estimated fair value of Restricted Stock Units is based upon the closing
price of Shares on the date of grant, reduced by the present value of estimated dividends to be paid on that stock.
The majority of Restricted Stock Units normally vest in thirds on or shortly after the first three anniversaries of their
grant date. Other Restricted Stock Units normally vest in their entirety on the third or later anniversary of their grant
date. Vesting is subject to continued service, except for employees who meet specified age and service criteria and in
certain other limited circumstances.
Performance Share and Restricted Stock Unit Activity
The following table presents a summary of Performance Share and Restricted Stock Unit activity:
Outstanding at January 1, 2020
Granted
Forfeited (2)
Payable (3)
Outstanding at December 31, 2020
Vested and expected to vest at December 31, 2020
__________________
Performance Shares
Restricted Stock Units
Shares
Weighted
Average
Fair Value (1)
Units
Weighted
Average
Fair Value (1)
3,945,742 $
1,341,997 $
(117,786) $
(1,068,099) $
4,101,854 $
4,034,096 $
43.40
41.89
39.72
46.24
40.61
40.60
2,894,428 $
1,431,970 $
(178,960) $
(1,359,288) $
2,788,150 $
2,735,982 $
40.31
41.21
40.87
40.78
40.51
40.52
(1)
(2)
Values for awards outstanding at January 1, 2020, represent weighted average number of awards multiplied by the fair
value per Share at December 31, 2019. Otherwise, all values represent weighted average of number of awards
multiplied by the fair value per Share at December 31, 2020. Fair value of Restricted Stock Units on
December 31, 2020 was equal to Grant Date fair value.
Forfeited awards were either (a) unvested or unexercisable at the end of the awardholder’s employment, where the
awardholder did not meet the criteria for post-employment award continuation; or (b) held by awardholders the
Company terminated from employment for cause as defined in the terms of the awards.
(3)
Includes both Shares paid and Deferred Shares for later payment.
Performance Share amounts above represent aggregate awards at target, and do not reflect potential increases or
decreases that may result from the performance factor. At December 31, 2020, the performance period for the 2018 —
2020 Performance Share grants was completed, but the performance factor had not yet been determined. Included in the
immediately preceding table are 1,266,651 outstanding Performance Shares to which the 2018 — 2020 performance factor
will be applied.
283
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
16. Equity (continued)
Liability Awards (Phantom Stock-Based Awards)
Certain MetLife subsidiaries have a liability for Phantom Stock-Based Awards in the form of Unit Options,
Performance Units, and/or Restricted Units. These Share-based cash settled awards are recorded as liabilities until MetLife
makes payment. The fair value of unsettled or unvested liability awards is re-measured at the end of each reporting period
based on the change in fair value of one Share. The liability and corresponding expense are adjusted accordingly until the
award is settled.
Unit Options
Unit Options are the contingent right of award holders to receive a cash payment equal to the closing price of a
Share on the exercise date, less the closing price on the grant date, if the difference is greater than zero, for a limited
time. All Unit Options have an exercise price equal to the closing price of a Share reported on the NYSE on the date of
grant and have a maximum term of 10 years. The majority of Unit Options have become or will become eligible for
exercise at a rate of one-third of each award on each of the first three anniversaries of the grant date. Other Unit Options
have become or will become eligible for exercise on the third anniversary of the grant date. Vesting is subject to
continued service, except for employees who meet specified age and service criteria and in certain other limited
circumstances.
Performance Units
Performance Units are units that, if they vest, are multiplied by a performance factor to produce a number of final
Performance Units which are payable in cash equal to the closing price of a Share on a date following the last day of the
three-year performance period. Performance Units are accounted for as liability awards. MetLife, Inc. does not credit
them with dividend-equivalents for dividends paid on Shares. Accordingly, the estimated fair value of Performance Units
is based upon the closing price of a Share on the date of grant, reduced by the present value of estimated dividends to be
paid on that stock during the performance period. MetLife determines each performance period’s performance factor in
the same way it does for the same performance period’s Performance Shares.
See “— Equity Awards — Performance Shares” for a discussion of the Performance Shares vesting period and
performance factor calculation, which are also used for Performance Units.
Restricted Units
Restricted Units are units that, if they vest, are payable in cash equal to the closing price of a Share on the last day of
the restriction period. The majority of Restricted Units normally vest in thirds on or shortly after the first three
anniversaries of their grant date. Other Restricted Units normally vest in their entirety on the third or later anniversary of
their grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria
and in certain other limited circumstances. Restricted Units are accounted for as liability awards. MetLife, Inc. does not
credit Restricted Units with dividend-equivalents for dividends paid on Shares. Accordingly, the estimated fair value of
Restricted Units is based upon the closing price of a Share on the date of grant, reduced by the present value of estimated
dividends to be paid on that stock during the performance period.
284
Table of Contents
16. Equity (continued)
Liability Award Activity
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The following table presents a summary of Liability Awards activity:
Outstanding at January 1, 2020
Granted
Exercised
Expired (1)
Forfeited (2)
Paid
Outstanding at December 31, 2020
Vested and expected to vest at December 31, 2020
__________________
Unit
Options
Performance
Units
Restricted
Units
501,687
21,518
(141,693)
(3,078)
529,997
185,251
—
—
623,095
319,981
—
—
—
—
(33,822)
(46,685)
(166,191)
(290,944)
378,434
377,317
515,235
499,864
605,447
589,494
(1)
(2)
Expired options were exercisable, but unexercised, as of their expiration date.
Forfeited awards were either (a) unvested or unexercisable at the end of the awardholder’s employment, where the
awardholder did not meet the criteria for post-employment award continuation; or (b) held by awardholders the
Company terminated from employment for cause as defined in the terms of the awards.
Performance Units amounts above represent aggregate awards at target, and do not reflect potential increases or
decreases that may result from the performance factor. At December 31, 2020, the performance period for the 2018 -
2020 Performance Unit grants was completed, but the performance factor had not yet been determined. Included in the
immediately preceding table are 170,214 outstanding Performance Units to which the 2018 - 2020 performance factor
will be applied.
Statutory Equity and Income
The states of domicile of MetLife, Inc.’s U.S. insurance subsidiaries each impose risk-based capital (“RBC”)
requirements that were developed by the NAIC. American Life does not write business in Delaware or any other U.S. state
and, as such, is exempt from RBC requirements by Delaware law. Regulatory compliance is determined by a ratio of a
company’s total adjusted capital, calculated in the manner prescribed by the NAIC (“TAC”) to its authorized control level
RBC, calculated in the manner prescribed by the NAIC (“ACL RBC”), based on the statutory-based filed financial
statements. Companies below specific trigger levels or ratios are classified by their respective levels, each of which requires
specified corrective action. The minimum level of TAC before corrective action commences is twice ACL RBC (“Company
Action Level RBC”). While not required by or filed with insurance regulators, the Company also calculates an internally
defined combined RBC ratio (“Statement-Based Combined RBC Ratio”), which is determined by dividing the sum of TAC
for MetLife, Inc.’s principal U.S. insurance subsidiaries, excluding American Life, by the sum of Company Action Level
RBC for such subsidiaries. The Company’s Statement-Based Combined RBC Ratio was in excess of 350% and in excess of
360% at December 31, 2020 and 2019, respectively. In addition, all non-exempted U.S. insurance subsidiaries individually
exceeded Company Action Level RBC for all periods presented.
MetLife, Inc.’s foreign insurance operations are regulated by applicable authorities of the jurisdictions in which each
entity operates and are subject to minimum capital and solvency requirements in those jurisdictions before corrective action
commences. At December 31, 2020 and 2019, the adjusted capital of American Life’s insurance subsidiary in Japan, the
Company’s largest foreign insurance operation, was in excess of four times the 200% solvency margin ratio that would
require corrective action. Excluding Japan, the aggregate required capital and surplus of the Company’s other foreign
insurance operations was $3.9 billion and the aggregate actual regulatory capital and surplus of such operations was
$9.6 billion as of the date of the most recent required capital adequacy calculation for each jurisdiction. The Company’s
foreign insurance operations exceeded the minimum capital and solvency requirements as of the date of the most recent fiscal
year-end capital adequacy calculation for each jurisdiction.
285
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
MetLife, Inc.’s insurance subsidiaries prepare statutory-basis financial statements in accordance with statutory
accounting practices prescribed or permitted by the insurance department of the state of domicile or applicable foreign
jurisdiction. The NAIC has adopted the Codification of Statutory Accounting Principles (“Statutory Codification”). Statutory
Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However,
statutory accounting principles continue to be established by individual state laws and permitted practices. Modifications by
the various state insurance departments may impact the effect of Statutory Codification on the statutory capital and surplus of
MetLife, Inc.’s U.S. insurance subsidiaries.
Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred,
establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of
debt and valuing securities on a different basis.
In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The
most significant assets not admitted by the Company are net deferred income tax assets resulting from temporary differences
between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within three
years. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. MetLife, Inc.’s
U.S. insurance subsidiaries have no material state prescribed accounting practices, except as described below.
New York has adopted certain prescribed accounting practices, primarily consisting of the continuous Commissioners’
Annuity Reserve Valuation Method, which impacts deferred annuities, and the New York Special Considerations Letter,
which mandates certain assumptions in asset adequacy testing. The collective impact of these prescribed accounting practices
decreased the statutory capital and surplus of MLIC by $1.6 billion and $1.2 billion at December 31, 2020 and 2019,
respectively, compared to what capital and surplus would have been had it been measured under NAIC guidance.
American Life calculates its policyholder reserves on insurance written in each foreign jurisdiction in accordance with
the reserve standards required by such jurisdiction. Additionally, American Life’s insurance subsidiaries are valued based on
each respective subsidiary’s underlying local statutory equity, adjusted in a manner consistent with the reporting prescribed
for its branch operations. The prescribed practice exempts American Life from calculating and disclosing the impact to its
statutory capital and surplus.
The tables below present amounts from MetLife, Inc.’s U.S. insurance subsidiaries, which are derived from the statutory-
basis financial statements as filed with the insurance regulators.
Statutory net income (loss) was as follows:
Company
State of Domicile
2020
Metropolitan Life Insurance Company
American Life Insurance Company
Metropolitan Property and Casualty Insurance Company
Metropolitan Tower Life Insurance Company
Other
__________________
New York
Delaware
Rhode Island
Nebraska (1)
Various
$
$
$
$
$
Years Ended December 31,
2019
(In millions)
2018
3,392 $
980 $
336 $
(237) $
84 $
3,859 $
1,386 $
245 $
(13) $
12 $
3,656
2,086
345
76
16
(1)
In April 2018, Metropolitan Tower Life Insurance Company (“MTL”) merged with General American Life Insurance
Company (“MTL Merger”). The surviving entity of the merger was MTL, which re-domesticated from Delaware to
Nebraska immediately prior to the merger.
286
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
16. Equity (continued)
Statutory capital and surplus was as follows at:
Company
Metropolitan Life Insurance Company
American Life Insurance Company
Metropolitan Property and Casualty Insurance Company
Metropolitan Tower Life Insurance Company
Other
December 31,
2020
2019
(In millions)
11,312 $
10,915
4,419 $
2,249 $
1,387 $
186 $
4,970
2,159
1,502
105
$
$
$
$
$
The Company’s U.S. captive life reinsurance subsidiaries, which reinsure risks including the closed block, level premium
term life and ULSG assumed from other MetLife subsidiaries, have no state prescribed accounting practices, except for
MetLife Reinsurance Company of Vermont (“MRV”).
MRV, with the explicit permission of the Commissioner of Insurance of the State of Vermont, has included, as admitted
assets, the value of letters of credit serving as collateral for reinsurance credit taken by various affiliated cedants, in
connection with reinsurance agreements entered into between MRV and the various affiliated cedants, which resulted in
higher statutory capital and surplus of $2.0 billion at both December 31, 2020 and 2019. MRV’s RBC would have triggered a
regulatory event without the use of the state prescribed practice.
The combined statutory net income (loss) of MetLife, Inc.’s U.S. captive life reinsurance subsidiaries was ($7) million,
($27) million and ($59) million for the years ended December 2020, 2019 and 2018, respectively, and the combined statutory
capital and surplus, including the aforementioned prescribed practice, was $691 million and $695 million at
December 31, 2020 and 2019, respectively.
Dividend Restrictions
Insurance Operations
The table below sets forth the dividends permitted to be paid by MetLife, Inc.’s primary insurance subsidiaries without
insurance regulatory approval and the actual dividends paid:
Company
Metropolitan Life Insurance Company
American Life Insurance Company
Metropolitan Property and Casualty Insurance Company (4)
Metropolitan Tower Life Insurance Company
__________________
2021
2020
Permitted Without
Approval (1)
Paid (2)
(In millions)
$
$
$
$
3,392 $
800 $
222 $
82 $
2,832
1,200 (3)
250
—
$
$
$
$
2019
Paid (2)
3,065
1,100
430
—
(1)
(2)
(3)
(4)
Reflects dividend amounts that may be paid by the end of 2021 without prior regulatory approval.
Reflects all amounts paid, including those where regulatory approval was obtained as required.
Includes a $341 million non-cash dividend.
See Note 3 for information regarding the pending disposition of MetLife P&C, which may impact the ability of
MetLife P&C to pay a dividend to MetLife, Inc. in 2021.
287
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Under the New York State Insurance Law, MLIC is permitted, without prior insurance regulatory clearance, to pay
stockholder dividends to MetLife, Inc. in any calendar year based on either of two standards. Under one standard, MLIC is
permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive
unassigned funds (surplus), excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax),
for the immediately preceding calendar year), in an amount up to the greater of: (i) 10% of its surplus to policyholders as of
the end of the immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately
preceding calendar year (excluding realized capital gains), not to exceed 30% of surplus to policyholders as of the end of
the immediately preceding calendar year. In addition, under this standard, MLIC may not, without prior insurance
regulatory clearance, pay any dividends in any calendar year immediately following a calendar year for which its net gain
from operations, excluding realized capital gains, was negative. Under the second standard, if dividends are paid out of
other than earned surplus, MLIC may, without prior insurance regulatory clearance, pay an amount up to the lesser of: (i)
10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its statutory net gain
from operations for the immediately preceding calendar year (excluding realized capital gains). In addition, MLIC will be
permitted to pay a dividend to MetLife, Inc. in excess of the amounts allowed under both standards only if it files notice of
its intention to declare such a dividend and the amount thereof with the New York Superintendent of Financial Services
(the “Superintendent”) and the Superintendent either approves the distribution of the dividend or does not disapprove the
dividend within 30 days of its filing. Under the New York State Insurance Law, the Superintendent has broad discretion in
determining whether the financial condition of a stock life insurance company would support the payment of such
dividends to its stockholder.
Under the Delaware Insurance Code, American Life is permitted, without prior insurance regulatory clearance, to pay
a stockholder dividend to MetLife, Inc. as long as the amount of the dividend, when aggregated with all other dividends in
the preceding 12 months, does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the
immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar
year (excluding realized capital gains), not including pro rata distributions of American Life’s own securities. American
Life will be permitted to pay a dividend to MetLife, Inc. in excess of the greater of such two amounts only if it files notice
of the declaration of such a dividend and the amount thereof with the Delaware Commissioner of Insurance (the “Delaware
Commissioner”) and the Delaware Commissioner either approves the distribution of the dividend or does not disapprove
the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined as “unassigned
funds (surplus)”) as of the immediately preceding calendar year requires insurance regulatory approval. Under the
Delaware Insurance Code, the Delaware Commissioner has broad discretion in determining whether the financial condition
of a stock life insurance company would support the payment of such dividends to its stockholders.
Under the Rhode Island Insurance Code, Metropolitan Property and Casualty Insurance Company (“MPC”) is
permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to MetLife, Inc. as long as the
aggregate amount of all such dividends in any 12 month period does not exceed the lesser of: (i) 10% of its surplus to
policyholders as of the end of the immediately preceding calendar year, or (ii) net income, excluding realized capital gains,
for the immediately preceding calendar year, not including pro rata distributions of MPC’s own securities. In determining
whether a dividend is extraordinary, MPC may include carry forward net income from the previous two calendar years,
excluding realized capital gains less dividends paid in the second and immediately preceding calendar years. MPC will be
permitted to pay a dividend to MetLife, Inc. in excess of the lesser of such two amounts only if it files notice of its
intention to declare such a dividend and the amount thereof with the Rhode Island Commissioner of Insurance (the “Rhode
Island Commissioner”) and the Rhode Island Commissioner either approves the distribution of the dividend or does not
disapprove the distribution within 30 days of its filing. Under the Rhode Island Insurance Code, the Rhode Island
Commissioner has broad discretion in determining whether the financial condition of a stock property and casualty
insurance company would support the payment of such dividends to its stockholders.
288
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Under the Nebraska Insurance Code, MTL is permitted, without prior insurance regulatory clearance, to pay a
stockholder dividend to MetLife, Inc. as long as the amount of the dividend, when aggregated with all other dividends in
the preceding 12 months, does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the
immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar
year (excluding realized capital gains), not including pro rata distributions of MTL’s own securities. MTL will be permitted
to pay a dividend to MetLife, Inc. in excess of the greater of such two amounts only if it files notice of the declaration of
such a dividend and the amount thereof with the Director of the Nebraska Department of Insurance (the “Nebraska
Director”) and the Nebraska Director either approves the distribution of the dividend or does not disapprove the
distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined as “unassigned funds
(surplus)” excluding unrealized capital gains) as of the immediately preceding calendar year requires insurance regulatory
approval. Under the Nebraska Insurance Code, the Nebraska Director has broad discretion in determining whether the
financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.
MetLife, Inc.
The declaration and payment of dividends are subject to the discretion of MetLife, Inc.’s Board of Directors and will
depend on its financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the
payment of dividends by MetLife, Inc.’s insurance subsidiaries and other factors deemed relevant by the Board of
Directors. In addition, the payment of dividends on MetLife, Inc.’s common stock, and MetLife, Inc.’s ability to repurchase
its common stock, may be subject to restrictions described below arising under the terms of MetLife, Inc.’s Series A
preferred stock and its junior subordinated debentures in situations where MetLife, Inc. may be experiencing financial
stress, as described below. For purposes of this discussion, “junior subordinated debentures” are deemed to include
MetLife, Inc.’s Fixed-to-Floating Rate Exchangeable Surplus Trust Securities, as discussed in Note 15.
“Dividend Stopper” Provisions in the Preferred Stock and Junior Subordinated Debentures
If MetLife, Inc. has not paid the full dividends on its preferred stock for the latest completed dividend period,
MetLife, Inc. may not repurchase or pay dividends on its common stock during a dividend period under so-called
“dividend stopper” provisions. Further, MetLife, Inc.’s Series A preferred stock and its junior subordinated debentures
contain provisions that would suspend the payment of preferred stock dividends and interest on junior subordinated
debentures if MetLife, Inc. fails to meet certain RBC ratio, net income and stockholders’ equity tests at specified times,
except to the extent of the net proceeds from the issuance of certain securities during specified periods. If Series A
preferred stock dividends or interest on junior subordinated debentures are not paid, certain provisions in those
instruments (including under “dividend stopper” provisions) may restrict MetLife, Inc. from repurchasing its common or
preferred stock or paying dividends on its common or preferred stock and interest on its junior subordinated debentures.
The junior subordinated debentures further provide that MetLife, Inc. may, at its option and provided that certain
conditions are met, defer payment of interest without giving rise to an event of default for periods of up to 10 years. In that
case, after five years MetLife, Inc. would be obligated to use commercially reasonable efforts to sell equity securities to
raise proceeds to pay the interest. MetLife, Inc. would not be subject to limitations on the number of deferral periods that
MetLife, Inc. could begin, so long as all accrued and unpaid interest is paid with respect to prior deferral periods. If
MetLife, Inc. were to defer payments of interest, the “dividend stopper” provisions in the junior subordinated debentures
would thus prevent MetLife, Inc. from repurchasing or paying dividends on its common stock or other capital stock
(including the preferred stock) during the period of deferral, subject to exceptions.
MetLife, Inc. is a party to certain RCCs which limit its ability to eliminate these restrictions through the repayment,
redemption or purchase of junior subordinated debentures by requiring MetLife, Inc., with some limitations, to receive cash
proceeds during a specified period from the sale of specified replacement securities prior to any repayment, redemption or
purchase. See Note 15 for a description of such covenants.
289
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
16. Equity (continued)
Accumulated Other Comprehensive Income (Loss)
Information regarding changes in the balances of each component of AOCI attributable to MetLife, Inc. was as follows:
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
Unrealized Gains
(Losses) on
Derivatives
Foreign
Currency
Translation
Adjustments
(In millions)
Defined
Benefit
Plans
Adjustment
Total
Balance at December 31, 2017
OCI before reclassifications
Deferred income tax benefit (expense)
AOCI before reclassifications, net of income tax
Amounts reclassified from AOCI
Deferred income tax benefit (expense)
Amounts reclassified from AOCI, net of income tax
Cumulative effects of changes in accounting principles
Deferred income tax benefit (expense), cumulative
effects of changes in accounting principles
Cumulative effects of changes in accounting
principles, net of income tax
Sale of subsidiary
Balance at December 31, 2018
OCI before reclassifications
Deferred income tax benefit (expense)
AOCI before reclassifications, net of income tax
Amounts reclassified from AOCI
Deferred income tax benefit (expense)
Amounts reclassified from AOCI, net of income tax
Cumulative effects of changes in accounting principles
Deferred income tax benefit (expense), cumulative
effects of changes in accounting principles
Cumulative effects of changes in accounting
principles, net of income tax
Balance at December 31, 2019
OCI before reclassifications
Deferred income tax benefit (expense)
AOCI before reclassifications, net of income tax
Amounts reclassified from AOCI
Deferred income tax benefit (expense)
Amounts reclassified from AOCI, net of income tax
Sale of subsidiaries, net of income tax (2)
Balance at December 31, 2020
__________________
$
12,757 $
905 $
(4,390) $
(1,845) $
(8,735)
1,961
5,983
14
(3)
11
(425)
1,473
1,048
—
7,042
14,850
(3,408)
18,484
(265)
61
(204)
4
(1)
3
18,283
5,775
(1,349)
22,709
(357)
83
(274)
(218)
157
(41)
1,021
517
(135)
382
—
210
210
—
1,613
328
34
1,975
(268)
(27)
(295)
22
(4)
18
1,698
730
(257)
2,171
(1,016)
358
(658)
—
(679)
36
(5,033)
—
—
—
—
36
36
92
143
(35)
(1,737)
120
(29)
91
—
(382)
(382)
—
(4,905)
(2,028)
(43)
21
(88)
14
(4,927)
(2,102)
—
—
—
—
—
—
(4,927)
1,002
(36)
(3,961)
—
—
—
166
118
(18)
100
—
—
—
(2,002)
95
(22)
(1,929)
86
(20)
66
—
7,427
(9,114)
1,921
234
651
(167)
484
(425)
1,337
912
92
1,722
15,047
(3,339)
13,430
(415)
16
(399)
26
(5)
21
13,052
7,602
(1,664)
18,990
(1,287)
421
(866)
(52)
$
22,217 $
1,513 $
(3,795) $
(1,863) $
18,072
(1)
See Note 8 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the
policyholder dividend obligation.
(2)
See Note 3.
290
Table of Contents
16. Equity (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Information regarding amounts reclassified out of each component of AOCI was as follows:
AOCI Components
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)
Net unrealized investment gains (losses)
Net unrealized investment gains (losses)
Net unrealized investment gains (losses), before income tax
Income tax (expense) benefit
Net unrealized investment gains (losses), net of income tax
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate derivatives
Interest rate derivatives
Interest rate derivatives
Interest rate derivatives
Foreign currency exchange rate derivatives
Foreign currency exchange rate derivatives
Foreign currency exchange rate derivatives
Foreign currency exchange rate derivatives
Credit derivatives
Credit derivatives
Gains (losses) on cash flow hedges, before income tax
Income tax (expense) benefit
Gains (losses) on cash flow hedges, net of income tax
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)
Amortization of prior service (costs) credit
Amortization of defined benefit plan items, before income tax
Income tax (expense) benefit
Amortization of defined benefit plan items, net of income tax
Years Ended December 31,
2020
2019
2018
Amounts Reclassified from AOCI
(In millions)
Consolidated Statements of
Operations Locations
$
362 $
270 $
6 Net investment gains (losses)
(24)
19
357
(83)
274
36
121
—
2
4
851
—
2
—
—
1,016
(358)
658
(105)
19
(86)
20
(66)
(30)
25
265
(61)
204
23
4
—
2
(4)
240
—
2
1
—
268
27
295
(145)
27
(118)
18
(100)
(1) Net investment income
(19) Net derivative gains (losses)
(14)
3
(11)
20 Net investment income
— Net investment gains (losses)
21 Net derivative gains (losses)
1 Other expenses
(5) Net investment income
— Net investment gains (losses)
(558) Net derivative gains (losses)
2 Other expenses
1 Net investment income
1 Net derivative gains (losses)
(517)
135
(382)
(145)
25
(120)
29
(91)
(484)
Total reclassifications, net of income tax
$
866 $
399 $
__________________
(1)
These AOCI components are included in the computation of net periodic benefit costs. See Note 18.
291
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
17. Other Revenues and Other Expenses
Other Revenues
Information on other revenues, which primarily includes fees related to service contracts from customers, was as follows:
Prepaid legal plans
Fee-based investment management
Recordkeeping and administrative services (1)
Administrative services-only contracts
Other revenue from service contracts from customers
Total revenues from service contracts from customers
Other
Total other revenues
__________________
Years Ended December 31,
2020
2019
(In millions)
2018
$
$
395 $
318
196
218
227
1,354
495
1,849 $
347 $
286
206
210
240
1,289
553
1,842 $
296
293
221
205
241
1,256
624
1,880
(1)
Related to products and businesses no longer actively marketed by the Company.
Other Expenses
Information on other expenses was as follows:
2020
Years Ended December 31,
2019
(In millions)
2018
Employee related costs (1)
Third party staffing costs
General and administrative expenses
Pension, postretirement and postemployment benefit costs
Premium taxes, other taxes, and licenses & fees
Commissions and other variable expenses
Capitalization of DAC
Amortization of DAC and VOBA
Amortization of negative VOBA
Interest expense on debt
Total other expenses
__________________
$
$
3,514 $
1,335
761
165
764
5,596
(3,013)
3,160
(45)
913
13,150 $
3,665 $
1,755
901
233
674
6,001
(3,358)
2,896
(33)
955
13,689 $
3,664
1,703
910
185
758
5,707
(3,254)
2,975
(56)
1,122
13,714
(1)
Includes ($147) million, ($219) million and $0 for the years ended December 31, 2020, 2019 and 2018, respectively,
for the net change in cash surrender value of investments in certain life insurance policies, net of premiums paid.
Capitalization of DAC and Amortization of DAC and VOBA
See Note 5 for additional information on DAC and VOBA including impacts of capitalization and amortization. See
also Note 7 for a description of the DAC amortization impact associated with the closed block.
Expenses related to Debt
See Notes 13, 14, and 15 for attribution of interest expense by debt issuance and other expenses related to debt
transactions.
292
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
17. Other Revenues and Other Expenses (continued)
Restructuring Charges
In December 2019, the Company incurred the remaining restructuring charges related to its unit cost improvement
program. During this program period, restructuring charges were included in other expenses and reported in Corporate &
Other. Such restructuring charges were as follows:
Balance at January 1,
Restructuring charges
Cash payments
Balance at December 31,
Total severance charges incurred since inception of initiative
2020
Years Ended December 31,
2019
Severance
(In millions)
2018
$
$
$
57 $
—
(51)
6 $
244 $
23 $
108
(74)
57 $
244 $
22
63
(62)
23
136
In addition to the above severance charges, the Company recognized lease and asset impairment charges of $0,
$43 million and $12 million for the years ended December 31, 2020, 2019 and 2018, respectively.
18. Employee Benefit Plans
Pension and Other Postretirement Benefit Plans
Certain subsidiaries of MetLife, Inc. sponsor a U.S. qualified and various U.S. and non-U.S. nonqualified defined benefit
pension plans covering employees who meet specified eligibility requirements. U.S. pension benefits are provided utilizing
either a traditional formula or cash balance formula. The traditional formula provides benefits that are primarily based upon
years of credited service and final average earnings. The cash balance formula utilizes hypothetical or notional accounts
which credit participants with benefits equal to a percentage of eligible pay, as well as interest credits, determined annually
based upon the annual rate of interest on 30-year U.S. Treasury securities, for each account balance. In September 2018, the
U.S. qualified and nonqualified defined benefit pension plans were amended, effective January 1, 2023, to provide benefits
accruals for all active participants under the cash balance formula and to cease future accruals under the traditional
formula. The U.S. nonqualified pension plans provide supplemental benefits in excess of limits applicable to a qualified plan.
The non-U.S. pension plans generally provide benefits based upon either years of credited service and earnings preceding
retirement or points earned on job grades and other factors in years of service.
These subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance
benefits for U.S. and non-U.S. retired employees. U.S. employees of these subsidiaries who were hired prior to 2003 (or, in
certain cases, rehired during or after 2003) and meet age and service criteria while working for one of the subsidiaries may
become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all
retirees, or their beneficiaries, contribute a portion of the total costs of postretirement medical benefits. U.S. employees hired
after 2003 are not eligible for any employer subsidy for postretirement medical benefits. In September 2018, the U.S.
postretirement medical and life insurance benefit plans were amended, effective January 1, 2023, to discontinue the accrual of
the employer subsidy credits for eligible employees.
293
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
The benefit obligations, funded status and net periodic benefit costs related to these pension and other postretirement
benefits were comprised of the following:
December 31, 2020
December 31, 2019
Pension Benefits
Non-
U.S.
Plans
U.S.
Plans
Total
Other Postretirement
Benefits
Non-
U.S.
Plans
U.S.
Plans
Total
Pension Benefits
Non-
U.S.
Plans
U.S.
Plans
Total
Other Postretirement
Benefits
Non-
U.S.
Plans
U.S.
Plans
Total
Benefit
obligations $ 11,700 $ 1,173 $ 12,873 $ 1,208 $
44 $ 1,252 $ 10,824 $ 1,126 $ 11,950 $ 1,247 $
42 $ 1,289
(In millions)
Estimated fair
value of
plan assets
Over (under)
funded
status
Net periodic
benefit
costs
10,692
564
11,256
1,465
27
1,492
9,742
488
10,230
1,441
27
1,468
$ (1,008) $ (609) $ (1,617) $ 257 $
(17) $ 240 $ (1,082) $ (638) $ (1,720) $ 194 $
(15) $ 179
$ 143 $ 103 $ 246 $
(94) $
2 $
(92) $ 244 $
92 $ 336 $
(70) $
3 $
(67)
294
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
Obligations and Funded Status
Change in benefit obligations:
Benefit obligations at January 1,
Service costs
Interest costs
Plan participants’ contributions
Plan amendments
Net actuarial (gains) losses (2)
Acquisition, divestitures, settlements and curtailments
Benefits paid
Effect of foreign currency translation
Benefit obligations at December 31,
Change in plan assets:
Estimated fair value of plan assets at January 1,
Actual return on plan assets
Acquisition, divestitures and settlements
Plan participants’ contributions
Employer contributions
Benefits paid
Effect of foreign currency translation
Estimated fair value of plan assets at December 31,
Over (under) funded status at December 31,
Amounts recognized on the consolidated balance sheets:
Other assets
Other liabilities
Net amount recognized
AOCI:
Net actuarial (gains) losses
Prior service costs (credit)
AOCI, before income tax
Accumulated benefit obligation
__________________
December 31,
2020
2019
Pension
Benefits (1)
Other
Postretirement
Benefits
Pension
Benefits (1)
Other
Postretirement
Benefits
(In millions)
$
11,950 $
1,289 $
10,591 $
1,324
226
363
—
—
928
(55)
(589)
50
5
42
32
—
(15)
—
(101)
—
214
425
—
3
1,360
(5)
(647)
9
5
53
32
—
(31)
(3)
(93)
2
12,873
1,252
11,950
1,289
10,230
1,491
(55)
—
155
(589)
24
11,256
1,468
89
—
32
4
(101)
—
1,492
8,948
1,619
(5)
—
311
(647)
4
10,230
$
$
$
$
$
$
(1,617) $
240 $
(1,720) $
390 $
756 $
147 $
(2,007)
(516)
(1,867)
(1,617) $
240 $
(1,720) $
2,780 $
(327) $
3,009 $
(86)
1
(100)
2,694 $
(326) $
2,909 $
12,510
N/A $
11,616
1,360
173
(3)
32
(2)
(93)
1
1,468
179
617
(438)
179
(359)
(2)
(361)
N/A
(1)
(2)
Includes nonqualified unfunded plans, for which the aggregate PBO was $1.4 billion and $1.2 billion at
December 31, 2020 and 2019, respectively.
For the year ended December 31, 2020, significant sources of actuarial (gains) losses for pension and other
postretirement benefits include the impact of changes to the financial assumptions of $851 million and $103 million,
respectively, demographic assumptions of $31 million and $4 million, respectively, and plan experience of $46 million
and ($122) million, respectively. For the year ended December 31, 2019, significant sources of actuarial (gains) losses
for pension and other postretirement benefits include the impact of changes to the financial assumptions of $1.2 billion
and $66 million, respectively, and plan experience of $103 million and ($97) million, respectively.
295
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
Information for pension plans and other postretirement benefit plans with PBOs and/or accumulated benefit obligations
(“ABO”) or APBO in excess of plan assets was as follows at:
December 31,
2020
2019
2020
2019
2020
2019
PBO Exceeds Estimated
Fair Value
of Plan Assets
ABO Exceeds Estimated
Fair Value
of Plan Assets
APBO Exceeds Estimated
Fair Value
of Plan Assets
(In millions)
$
$
$
2,469 $
2,287 $
2,441 $
2,332 $
2,162 $
2,312 $
N/A
N/A
N/A
564 $
487 $
539 $
2,227
2,113
N/A $
430 $
N/A
N/A
868 $
355 $
N/A
N/A
812
375
Projected benefit obligations
Accumulated benefit obligations
Accumulated postretirement benefit obligations
Estimated fair value of plan assets
Net Periodic Benefit Costs
The components of net periodic benefit costs and other changes in plan assets and benefit obligations recognized in
OCI were as follows:
Years Ended December 31,
2020
2019
2018
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
(In millions)
$
226 $
5 $
214 $
5 $
223 $
Net periodic benefit costs:
Service costs
Interest costs
Settlement and curtailment costs
Expected return on plan assets
Amortization of net actuarial (gains)
losses
Amortization of prior service costs
(credit)
Total net periodic benefit costs
(credit)
Other changes in plan assets and
benefit obligations recognized in
OCI:
Net actuarial (gains) losses
Prior service costs (credit)
Amortization of net actuarial (gains)
losses
Amortization of prior service (costs)
credit
Settlement and curtailment (gains)
losses
Exchange rate changes
Total recognized in OCI
Total recognized in net periodic
benefit costs and OCI
363
10
(528)
189
(14)
246
(35)
—
(189)
14
(10)
5
(215)
42
—
(62)
(74)
(3)
(92)
(42)
—
74
3
—
—
35
425
—
(489)
201
(15)
336
231
3
(201)
15
—
—
48
53
2
(67)
(48)
(12)
(67)
(138)
—
48
12
—
—
391
(1)
(533)
182
(3)
259
244
(110)
(182)
3
—
—
6
55
—
(71)
(34)
(20)
(64)
(248)
(7)
34
20
—
—
(78)
(45)
(201)
$
31 $
(57) $
384 $
(145) $
214 $
(265)
296
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
Assumptions
Assumptions used in determining benefit obligations for the U.S. plans were as follows:
December 31, 2020
Weighted average discount rate
Weighted average interest crediting rate
Rate of compensation increase
December 31, 2019
Weighted average discount rate
Weighted average interest crediting rate
Rate of compensation increase
Pension Benefits
Other Postretirement Benefits
2.65%
3.46%
2.50% -
8.00%
3.30%
3.99%
2.25% -
8.50%
2.85%
N/A
N/A
3.45%
N/A
N/A
Assumptions used in determining net periodic benefit costs for the U.S. plans were as follows:
Pension Benefits
Other Postretirement Benefits
Year Ended December 31, 2020
Weighted average discount rate
Weighted average interest crediting rate
Weighted average expected rate of return on plan assets
Rate of compensation increase
Year Ended December 31, 2019
Weighted average discount rate
Weighted average interest crediting rate
Weighted average expected rate of return on plan assets
Rate of compensation increase
Year Ended December 31, 2018
Weighted average discount rate
Weighted average interest crediting rate
Weighted average expected rate of return on plan assets
Rate of compensation increase
3.30%
3.38%
5.50%
2.25% -
8.50%
4.35%
4.01%
5.75%
2.25% -
8.50%
3.65%
4.13%
5.75%
2.25% -
8.50%
3.45%
N/A
4.31%
N/A
4.35%
N/A
5.04%
N/A
3.70%
N/A
5.11%
N/A
The weighted average discount rate for the U.S. plans is determined annually based on the yield, measured on a yield
to worst basis, of a hypothetical portfolio constructed of high quality debt instruments available on the measurement date,
which would provide the necessary future cash flows to pay the aggregate PBO when due.
The weighted average expected rate of return on plan assets for the U.S. plans is based on anticipated performance of
the various asset sectors in which the plans invest, weighted by target allocation percentages. Anticipated future
performance is based on long-term historical returns of the plan assets by sector, adjusted for the long-term expectations on
the performance of the markets. While the precise expected rate of return derived using this approach will fluctuate from
year to year, the policy is to hold this long-term assumption constant as long as it remains within reasonable tolerance from
the derived rate.
The weighted average expected rate of return on plan assets for use in that plan’s valuation in 2021 is currently
anticipated to be 5.00% for U.S. pension benefits and 3.87% for U.S. other postretirement benefits.
The weighted average interest crediting rate is determined annually based on the plan selected rate, long-term financial
forecasts of that rate and the demographics of the plan participants.
297
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows:
Following year
Ultimate rate to which cost increase is assumed to decline
Year in which the ultimate trend rate is reached
Plan Assets
December 31,
2020
2019
Before
Age 65
Age 65 and
older
Before
Age 65
Age 65 and
older
5.8 %
3.8 %
2074
5.6%
3.8%
2074
4.9 %
3.8 %
2074
(1.0) %
3.8 %
2074
Certain U.S. subsidiaries provide employees with benefits under various Employee Retirement Income Security Act of
1974 (“ERISA”) benefit plans. These include qualified pension plans, postretirement medical plans and certain retiree life
insurance coverage. The assets of these U.S. subsidiaries’ qualified pension plans are held in an insurance group annuity
contract, and the vast majority of the assets of the postretirement medical plan are held in a trust which largely utilizes
insurance contracts to hold the assets. All of these contracts are issued by the Company’s insurance affiliates, and the assets
under the contracts are held in insurance separate accounts that have been established by the Company. The underlying
assets of the separate accounts are principally comprised of cash and cash equivalents, short-term investments, fixed
maturity securities AFS, equity securities, derivatives, real estate and private equity investments. The assets backing the
retiree life coverage also utilize insurance contracts issued by the Company’s insurance affiliate and are held in a general
account Life Insurance Funding Agreement.
The insurance contract provider engages investment management firms (“Managers”) to serve as sub-advisors for the
separate accounts based on the specific investment needs and requests identified by the plan fiduciary. These Managers
have portfolio management discretion over the purchasing and selling of securities and other investment assets pursuant to
the respective investment management agreements and guidelines established for each insurance separate account. The
assets of the qualified pension plans and postretirement medical plans (the “Invested Plans”) are well diversified across
multiple asset categories and across a number of different Managers, with the intent of minimizing risk concentrations
within any given asset category or with any of the given Managers.
The Invested Plans, other than those held in participant directed investment accounts, are managed in accordance with
investment policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters.
Specifically, investment policies are oriented toward (i) maximizing the Invested Plan’s funded status; (ii) minimizing the
volatility of the Invested Plan’s funded status; (iii) generating asset returns that exceed liability increases; and (iv) targeting
rates of return in excess of a custom benchmark and industry standards over appropriate reference time periods. These
goals are expected to be met through identifying appropriate and diversified asset classes and allocations, ensuring
adequate liquidity to pay benefits and expenses when due and controlling the costs of administering and managing the
Invested Plan’s investments. Independent investment consultants are periodically used to evaluate the investment risk of
the Invested Plan’s assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and
management strategies and recommend asset allocations.
Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile
of an asset or asset class. Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure
to an asset, asset class, interest rates or any other financial variable. Derivatives are also prohibited for use in creating
exposures to securities, currencies, indices or any other financial variable that is otherwise restricted.
298
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
The table below summarizes the actual weighted average allocation of the estimated fair value of total plan assets by
asset class at December 31 for the years indicated and the approved target allocation by major asset class at
December 31, 2020 for the Invested Plans:
December 31,
2020
2019
U.S. Pension
Benefits
U.S. Other
Postretirement
Benefits (1)
Target
Actual
Allocation
Target
Actual
Allocation
U.S. Pension
Benefits
Actual
Allocation
U.S. Other
Postretirement
Benefits (1)
Actual
Allocation
85 %
11 %
4 %
85 %
8 %
7 %
100 %
95 %
5 %
— %
95 %
5 %
— %
100 %
81 %
12 %
7 %
100 %
95 %
5 %
— %
100 %
Asset Class
Fixed maturity securities AFS
Equity securities (2)
Alternative securities (3)
Total assets
__________________
(1)
(2)
(3)
U.S. other postretirement benefits do not reflect postretirement life’s plan assets invested in fixed maturity securities
AFS.
Equity securities percentage includes derivative assets.
Alternative securities primarily include private equity and real estate funds.
Estimated Fair Value
The pension and other postretirement benefit plan assets are categorized into a three-level fair value hierarchy, as
described in Note 10, based upon the significant input with the lowest level in its valuation. The Level 2 asset category
includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair
value of such separate accounts is based upon reported NAV provided by fund managers and this value represents the
amount at which transfers into and out of the respective separate account are effected. These separate accounts provide
reasonable levels of price transparency and can be corroborated through observable market data. Directly held investments
are primarily invested in U.S. and foreign government and corporate securities. The Level 3 asset category includes
separate accounts that are invested in assets that provide little or no price transparency due to the infrequency with which
the underlying assets trade and generally require additional time to liquidate in an orderly manner. Accordingly, the values
for separate accounts invested in these alternative asset classes are based on inputs that cannot be readily derived from or
corroborated by observable market data.
299
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
The pension and other postretirement plan assets measured at estimated fair value on a recurring basis and their
corresponding placement in the fair value hierarchy are summarized as follows:
December 31, 2020
Pension Benefits
Fair Value Hierarchy
Other Postretirement Benefits
Fair Value Hierarchy
Level 1
Level 2
Level 3
Total
Estimated
Fair Value
Level 1
Level 2
Level 3
Total
Estimated
Fair Value
(In millions)
$
— $
4,704 $
— $
4,704 $
— $
244 $
— $
244
1,820
—
—
—
—
399
2,219
826
26
14
48
990
114
310
265
757
7,188
275
—
—
—
—
—
—
—
—
—
—
708
—
1,868
990
114
310
265
1,156
9,407
1,101
734
14
51
—
—
—
471
44
566
56
—
—
—
69
2
8
503
44
870
—
—
—
—
—
—
—
—
—
—
—
—
—
51
69
2
8
974
88
1,436
56
—
—
$
3,085 $
7,463 $
708 $ 11,256 $
622 $
870 $
— $
1,492
Assets
Fixed maturity securities AFS:
Corporate
U.S. government bonds
Foreign bonds
Federal agencies
Municipals
Short-term investments
Other (1)
Total fixed maturity securities
AFS
Equity securities
Other investments
Derivative assets
Total assets
300
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
December 31, 2019
Pension Benefits
Fair Value Hierarchy
Other Postretirement Benefits
Fair Value Hierarchy
Level 1
Level 2
Level 3
Total
Estimated
Fair Value
Level 1
Level 2
Level 3
Total
Estimated
Fair Value
(In millions)
$
— $
3,750 $
— $
3,750 $
— $
278 $
— $
1,599
—
—
—
—
328
1,927
962
23
10
457
996
106
280
192
620
6,401
215
3
3
—
—
—
—
—
—
—
—
686
—
2,056
259
996
106
280
192
948
8,328
1,177
712
13
—
—
—
24
151
434
59
—
—
—
63
9
20
383
219
972
—
—
—
—
—
—
—
—
3
3
—
—
—
278
259
63
9
20
407
373
1,409
59
—
—
$
2,922 $
6,622 $
686 $ 10,230 $
493 $
972 $
3 $
1,468
Assets
Fixed maturity securities AFS:
Corporate
U.S. government bonds
Foreign bonds
Federal agencies
Municipals
Short-term investments
Other (1)
Total fixed maturity securities
AFS
Equity securities
Other investments
Derivative assets
Total assets
__________________
(1)
Other primarily includes money market securities, mortgage-backed securities, collateralized mortgage obligations and
ABS.
A rollforward of all pension and other postretirement benefit plan assets measured at estimated fair value on a
recurring basis using significant unobservable (Level 3) inputs was as follows:
Balance, January 1, 2019
Realized gains (losses)
Unrealized gains (losses)
Purchases, sales, issuances and settlements, net
Transfers into and/or out of Level 3
Balance, December 31, 2019
Realized gains (losses)
Unrealized gains (losses)
Purchases, sales, issuances and settlements, net
Transfers into and/or out of Level 3
Balance, December 31, 2020
__________________
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities
AFS:
Corporate
Other (1)
Equity
Securities
Other
Investments
Derivative
Assets
$
1 $
1 $
— $
688 $
(In millions)
—
—
(1)
—
—
—
2
—
—
—
—
—
—
(1)
(1)
—
$
— $
3 $
— $
686 $
—
—
—
—
—
—
(3)
—
—
—
—
—
—
(55)
77
—
$
— $
— $
— $
708 $
1
—
(1)
—
—
—
—
—
—
—
—
(1)
Other includes ABS and collateralized mortgage obligations.
301
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
18. Employee Benefit Plans (continued)
Expected Future Contributions and Benefit Payments
It is the subsidiaries’ practice to make contributions to the U.S. qualified pension plan to comply with minimum
funding requirements of ERISA. In accordance with such practice, no contributions are expected to be required for 2021.
The subsidiaries do not expect to make any discretionary contributions to the qualified pension plan in 2021. For
information on employer contributions, see “— Obligations and Funded Status.”
Benefit payments due under the U.S. nonqualified pension plans are primarily funded from the subsidiaries’ general
assets as they become due under the provisions of the plans, and therefore benefit payments equal employer contributions.
The U.S. subsidiaries expect to make contributions of $74 million to fund the benefit payments in 2021.
Postretirement benefits are either: (i) not vested under law; (ii) a non-funded obligation of the subsidiaries; or
(iii) both. Current regulations do not require funding for these benefits. The subsidiaries use their general assets, net of
participant’s contributions, to pay postretirement medical claims as they come due. As permitted under the terms of the
governing trust document, the subsidiaries may be reimbursed from plan assets for postretirement medical claims paid from
their general assets. The U.S. subsidiaries expect to make contributions of $28 million towards benefit obligations in 2021
to pay postretirement medical claims.
Gross benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to
be as follows:
2021
2022
2023
2024
2025
2026-2030
Defined Contribution Plans
Pension Benefits
Other Postretirement Benefits
(In millions)
674 $
684 $
704 $
722 $
732 $
3,781 $
71
70
68
68
66
314
$
$
$
$
$
$
Certain subsidiaries sponsor defined contribution plans under which a portion of employee contributions are matched.
These subsidiaries contributed $95 million, $96 million and $63 million for the years ended December 31, 2020, 2019 and
2018, respectively.
19. Income Tax
The provision for income tax was as follows:
Current:
U.S. federal
U.S. state and local
Non-U.S.
Subtotal
Deferred:
U.S. federal
U.S. state and local
Non-U.S.
Subtotal
Provision for income tax expense (benefit)
Years Ended December 31,
2020
2019
2018
(In millions)
$
271 $
(189) $
(207)
27
882
1,180
4
850
665
(115)
(235)
1
443
329
—
456
221
11
932
736
342
—
101
443
$
1,509 $
886 $
1,179
302
Table of Contents
19. Income Tax (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company’s income (loss) before income tax expense (benefit) was as follows:
Income (loss):
U.S.
Non-U.S.
Total
Years Ended December 31,
2020
2019
2018
(In millions)
$
$
2,970 $
2,094 $
3,957
4,701
6,927 $
6,795 $
(803)
7,110
6,307
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported was
as follows:
Tax provision at U.S. statutory rate
Tax effect of:
Dividend received deduction
Tax-exempt income
Prior year tax (1), (2)
Low income housing tax credits
Other tax credits
Foreign tax rate differential (3), (4), (5)
Change in valuation allowance
U.S. Tax Reform impact (6), (7)
Other, net (8)
2020
Years Ended December 31,
2019
(In millions)
2018
$
1,455 $
1,427 $
1,325
(34)
(45)
(27)
(202)
(45)
414
(5)
—
(2)
(37)
(64)
(179)
(254)
(52)
395
(22)
(326)
(2)
(35)
(29)
(197)
(284)
(79)
335
(2)
78
67
Provision for income tax expense (benefit)
$
1,509 $
886 $
1,179
__________________
(1)
(2)
(3)
(4)
(5)
(6)
For the year ended December 31, 2020, prior year tax includes a $40 million tax benefit related to an Internal Revenue
Service (“IRS”) audit matter.
As discussed further below, prior year tax includes a non-cash benefit related to an uncertain tax position of
$158 million and $168 million for the years ended December 31, 2019 and 2018, respectively.
For the year ended December 31, 2020, foreign tax rate differential includes tax charges of $60 million and
$24 million related to the sales of MetLife Seguros de Retiro and MetLife Russia, respectively, and $43 million related
to the U.S. tax on Global Intangible Low-Taxed Income (“GILTI”). See Note 3 for information on the Company’s
business dispositions.
For the year ended December 31, 2019, foreign tax rate differential includes tax charges of $61 million from the
definitive agreement to sell MetLife Hong Kong and $12 million related to GILTI, of which $35 million is a current
year charge offset by a $23 million tax benefit revising the 2018 estimate. See Note 3 for information on the
disposition of MetLife Hong Kong.
For the year ended December 31, 2018, foreign tax rate differential includes tax charges of $45 million related to
GILTI, $17 million related to a tax adjustment in Chile and $13 million from changes in the valuation of the peso in
Argentina.
For the year ended December 31, 2019, U.S. Tax Reform impact includes a $317 million tax benefit related to the
deemed repatriation transition tax and $9 million related to the effect of sequestration on the alternative minimum tax
credit.
303
Table of Contents
19. Income Tax (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
(7)
(8)
For the year ended December 31, 2018, U.S. Tax Reform impact includes a $468 million tax charge related to the
deemed repatriation transition tax, offset by a $390 million tax benefit related to the adjustment of deferred taxes due
to the U.S. tax rate change. This excludes $12 million of tax provision at the U.S. statutory rate for a total tax reform
charge of $66 million.
For the year ended December 31, 2018, other includes tax charges of $69 million related to the non-deductible loss
incurred on the mark-to-market and exchange of FVO Brighthouse Common Stock and $18 million related to a non-
deductible Patient Protection and Affordable Care Act excise tax, offset by a tax benefit of $36 million related to a
non-cash transfer of assets from a wholly-owned U.K. subsidiary to its U.S. parent.
In December 2017, U.S. Tax Reform was signed into law. U.S. Tax Reform includes numerous changes in tax law,
including a permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%, which took effect for taxable
years beginning on or after January 1, 2018. U.S. Tax Reform moves the United States from a worldwide tax system to a
participation exemption system by providing corporations a 100% dividends received deduction for dividends distributed by
a controlled foreign corporation. To transition to that new system, U.S. Tax Reform imposed a one-time deemed repatriation
tax on unremitted earnings and profits at a rate of 8.0% for illiquid assets and 15.5% for cash and cash equivalents.
The Company recorded estimates of the impacts of U.S. Tax Reform in the period of enactment, the fourth quarter of
2017. In 2018, these estimates were updated in accordance with SAB 118. However, the impact of certain provisions of U.S.
Tax Reform remains uncertain. For instance, many regulations under the new law have not been finalized or have only
recently been finalized, including certain rules on international taxation. As a result, the Company continued to report
additional revisions resulting from U.S. Tax Reform in 2019.
The incremental financial statement impact related to U.S. Tax Reform was as follows:
Income (loss) before provision for income tax
Provision for income tax expense (benefit):
Deemed repatriation
Deferred tax revaluation
Total provision for income tax expense (benefit)
Income (loss), net of income tax
Increase to net equity from U.S. Tax Reform
Years Ended December 31,
2019
2018
(In millions)
$
— $
(58)
(317)
(9)
(326)
326
$
326 $
468
(402)
66
(124)
(124)
In accordance with SAB 118, the Company recorded provisional amounts for certain items for which the income tax
accounting was not complete. For these items, the Company recorded a reasonable estimate of the tax effects of U.S. Tax
Reform. The estimates were reported as provisional amounts during the measurement period, which did not exceed one year
from the date of enactment of U.S. Tax Reform. In 2018, the Company reflected adjustments to its provisional amounts upon
obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enactment date
that, if known, would have affected the income tax effects initially reported as provisional amounts. While the SAB 118
provisional measurement period ended December 31, 2018, the Company continued to revise certain U.S. Tax Reform
amounts in 2019.
As of December 31, 2017, the following items were considered provisional estimates due to complexities and
ambiguities in U.S. Tax Reform which resulted in incomplete accounting for the tax effects of these provisions. Further
guidance, either legislative or interpretive, and analysis were completed and updates were made to complete the accounting
for these items during the measurement period as of December 31, 2018 and subsequent to the measurement period as of
December 31, 2019:
304
Table of Contents
19. Income Tax (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
•
•
•
•
Deemed Repatriation Transition Tax - In 2018, the IRS issued proposed regulations related to the transition tax. As a
result, for the year ended December 31, 2018, the Company recorded a $468 million charge. In 2019, as a result of
executing a binding agreement with the IRS, the Company recorded a tax benefit of $317 million to settle this
matter. This agreement resolved uncertainty regarding the taxation of certain dividends from certain foreign
subsidiaries paid prior to U.S. Tax Reform.
GILTI - U.S. Tax Reform imposes a minimum tax on GILTI, which is generally the excess income of foreign
subsidiaries over a 10% rate of routine return on tangible business assets. In 2018, the Company established an
accounting policy in which it treats taxes due on GILTI as a current-period expense when incurred. Accordingly, the
Company recorded tax charges of $43 million, $12 million and $45 million related to this income for the periods
ended December 31, 2020, 2019 and 2018, respectively.
Alternative Minimum Tax Credits - U.S. Tax Reform eliminates the corporate alternative minimum tax and allows
for minimum tax credit carryforwards to be used to offset future regular tax or to be refunded 50% each tax year
beginning in 2018, with any remaining balance fully refunded in 2021. However, pursuant to the requirements of the
Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued for corporations
claiming refundable prior year alternative minimum tax credits are subject to a sequestration rate of 6.2%. The
application of this fee to refunds in future years is subject to further guidance. Additionally, the sequestration
reduction rate in effect at the time is subject to uncertainty. For the year ended December 31, 2018, the Company
determined that no additional adjustment was required. In early 2019, the IRS issued guidance indicating that for
years beginning after December 31, 2017, refund payments and credit elect and refund offset transactions due to
refundable alternative minimum tax credits will not be subject to the sequestration fee. Accordingly, to reflect this
guidance the Company recorded a $9 million tax benefit in 2019.
Tax Credit Partnerships - The reduction in the federal corporate income tax rate due to U.S. Tax Reform required
adjustments for multiple investment portfolios, including tax credit partnerships and tax-advantaged leveraged
leases. Certain tax credit partnership investments derive returns in part from income tax credits. The Company
recognizes changes in tax attributes at the partnership level when reported by the investee in its financial
information. The Company did not receive the necessary investee financial information to determine the impact of
U.S. Tax Reform on the tax attributes of its tax credit partnership investments until the third quarter of
2018. Accordingly, prior to the third quarter of 2018, the Company applied prior law to these equity method
investments in accordance with SAB 118. For the year ended December 31, 2018, after receiving additional investee
information, a reduction in tax credit partnerships’ equity method income of $46 million, net of income tax, was
included in net investment income. The tax-advantaged leveraged lease portfolio is valued on an after-tax yield
basis. In 2018, the Company received third party data that was used to complete a comprehensive review of its
portfolio to determine the full and complete impact of U.S. Tax Reform on these investments. As a result of this
review, a tax benefit of $125 million was recorded for the year ended December 31, 2018. No additional adjustment
was required for the years ended December 31, 2020 and 2019.
305
Table of Contents
19. Income Tax (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
U.S. Tax Reform required the Company to recognize a transition tax on all previously unremitted non-U.S. earnings.
However, the Company has not provided for U.S. deferred taxes on the remaining excess of book bases over tax bases of
certain investments in non-U.S. subsidiaries that are essentially permanent in duration. The amount of deferred tax liability
related to the Company’s remaining basis difference in these non-U.S. subsidiaries is $281 million at December 31, 2020.
Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities.
Net deferred income tax assets and liabilities consisted of the following at:
Deferred income tax assets:
Policyholder liabilities and receivables
Net operating loss carryforwards (1)
Employee benefits
Capital loss carryforwards
Tax credit carryforwards (2)
Litigation-related and government mandated
Other
Total gross deferred income tax assets
Less: Valuation allowance (1)
Total net deferred income tax assets
Deferred income tax liabilities:
Investments, including derivatives
Intangibles
Net unrealized investment gains
DAC
Other
Total deferred income tax liabilities
Net deferred income tax asset (liability) (3)
__________________
December 31,
2020
2019
(In millions)
$
3,890 $
3,635
301
673
9
922
126
—
5,921
309
5,612
4,421
1,387
7,422
3,162
134
240
692
10
1,296
151
127
6,151
294
5,857
4,170
1,181
6,226
3,312
—
16,526
$
(10,914) $
14,889
(9,032)
(1)
(2)
(3)
The Company has recorded a deferred tax asset of $301 million related to U.S. state and non-U.S. net operating loss
carryforwards and an offsetting valuation allowance for the year ended December 31, 2020. Certain net operating loss
carryforwards will expire between 2021 and 2040, whereas others have an unlimited carryforward period.
Tax credit carryforwards for the year ended December 31, 2020 primarily reflect general business credits expiring
between 2037 and 2040 and are reduced by $94 million related to unrecognized tax benefits.
On the consolidated balance sheet for the years ended December 31, 2020 and 2019, $11,008 million and
$9,097 million, respectively, is reported in Deferred income tax liability for jurisdictions in a net deferred income tax
liability position and $94 million and $65 million, respectively, of a deferred income tax asset is reported in Other
assets for jurisdictions in a net deferred income tax asset position.
The Company files income tax returns with the U.S. federal government and various U.S. state and local jurisdictions, as
well as non-U.S. jurisdictions. The Company is under continuous examination by the IRS and other tax authorities in
jurisdictions in which the Company has significant business operations. The income tax years under examination vary by
jurisdiction and subsidiary. The Company is no longer subject to U.S. federal, state, or local income tax examinations for
years prior to 2010. For tax years 2007 through 2009, the Company has established adequate reserves for payment of tax
liabilities resulting from the completed IRS audit of 2007-2009 which is expected to be settled in 2021. In material non-U.S.
jurisdictions, the Company is no longer subject to income tax examinations for years prior to 2013.
306
Table of Contents
19. Income Tax (continued)
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
The Company filed refund claims in 2017 with the IRS for 2000 through 2002 to recover tax and interest predominantly
related to the disallowance of certain foreign tax credits for which the Company received a statutory notice of deficiency in
2015 and paid the tax thereon. The disallowed foreign tax credits relate to certain non-U.S. investments held by MLIC in
support of its life insurance business through a United Kingdom investment subsidiary that was structured as a joint venture
until early 2009. In 2020, the Company received refunds from these claims filed in 2017, and as a result, the Company
recorded a $28 million interest benefit ($22 million, net of tax) included in other expenses.
For tax years 2000 through 2002 and tax years 2007 through 2009, the Company entered into binding agreements with
the IRS in 2019 under which all remaining issues regarding the foreign tax credit matter noted above were resolved.
Accordingly, in 2019, the Company recorded a non-cash benefit to net income of $226 million, net of tax, comprised of a
$158 million tax benefit recorded in provision for income tax expense (benefit) and a $86 million interest benefit
($68 million, net of tax) included in other expenses. For tax years 2003 through 2006, the Company entered into binding
agreements with the IRS in 2018 under which all remaining issues, including the foreign tax credit matter noted above, were
resolved. Accordingly, in 2018, the Company recorded a non-cash benefit to net income of $349 million, net of tax,
comprised of a $168 million tax benefit recorded in provision for income tax expense (benefit) and a $229 million interest
benefit ($181 million, net of tax) included in other expenses.
The Company’s overall liability for unrecognized tax benefits may increase or decrease in the next 12 months. For
example, U.S. federal tax legislation and regulation could impact unrecognized tax benefits. A reasonable estimate of the
increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of
the pending issues will not result in a material change to its consolidated financial statements, although the resolution of
income tax matters could impact the Company’s effective tax rate for a particular future period.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
Balance at January 1,
Additions for tax positions of prior years (1)
Reductions for tax positions of prior years (2)
Additions for tax positions of current year (1)
Reductions for tax positions of current year
Settlements with tax authorities (3)
Lapses of statute of limitations
Balance at December 31,
Unrecognized tax benefits that, if recognized, would impact the effective
rate
__________________
2020
Years Ended December 31,
2019
(In millions)
2018
$
256 $
1,111 $
1,102
16
(1)
12
—
(1)
(10)
272 $
6
(493)
13
—
(381)
—
256 $
269
(195)
226
(3)
(288)
—
1,111
203 $
194 $
1,046
$
$
(1)
(2)
(3)
The increase in 2018 is primarily related to the deemed repatriation transition tax and related IRS regulations.
The decreases in 2019 and 2018 are primarily related to non-cash benefits from tax audit settlements.
The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $377 million and
$284 million, respectively, was reclassified to the current income tax payable account.
The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other
expenses.
307
Table of Contents
19. Income Tax (continued)
Interest was as follows:
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
Interest expense (benefit) recognized on the consolidated statements of
operations (1)
$
12 $
(179) $
(441)
Years Ended December 31,
2020
2019
2018
(In millions)
Interest included in other liabilities on the consolidated balance sheets
$
51 $
39
__________________
(1)
The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $60 million and
$168 million, respectively, was recorded in other expenses and $119 million and $273 million, respectively, was
reclassified to the current income tax payable account.
December 31,
2020
2019
(In millions)
308
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
20. Earnings Per Common Share
The following table presents the weighted average shares, basic earnings per common share and diluted earnings per
common share:
Weighted Average Shares:
Weighted average common stock outstanding - basic
Incremental common shares from assumed exercise or issuance of
stock-based awards
Weighted average common stock outstanding - diluted
Net Income (Loss):
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Less: Preferred stock dividends
Preferred stock redemption premium
Net income (loss) available to MetLife, Inc.’s common
shareholders
Basic
Diluted
Years Ended December 31,
2020
2019
2018
(In millions, except per share data)
907.8
5.4
913.2
937.6
6.8
944.4
1,005.9
8.0
1,013.9
5,418 $
5,909 $
5,128
11
202
14 $
5,191 $
5.72 $
5.68 $
10
178
— $
5,721 $
6.10 $
6.06 $
5
141
—
4,982
4.95
4.91
$
$
$
$
$
309
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees
Contingencies
Litigation
The Company is a defendant in a large number of litigation matters. Putative or certified class action litigation and
other litigation and claims and assessments against the Company, in addition to those discussed below and those otherwise
provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business,
including, but not limited to, in connection with its activities as an insurer, mortgage lending bank, employer, investor,
investment advisor, broker-dealer, and taxpayer.
The Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from
state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities;
federal regulators, including the U.S. Securities and Exchange Commission; federal governmental authorities, including
congressional committees; and the Financial Industry Regulatory Authority, as well as from local and national regulators
and government authorities in jurisdictions outside the United States where the Company conducts business. The issues
involved in information requests and regulatory matters vary widely, but can include inquiries or investigations concerning
the Company’s compliance with applicable insurance and other laws and regulations. The Company cooperates in these
inquiries.
In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought.
Modern pleading practice in the United States permits considerable variation in the assertion of monetary damages or other
relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state
only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit
plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar
matters. This variability in pleadings, together with the Company’s actual experience in litigating or resolving through
settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which
may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.
It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. The Company
establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and
the amount of the loss can be reasonably estimated. Liabilities have been established for a number of the matters noted
below. In certain circumstances where liabilities have been established there may be coverage under one or more corporate
insurance policies, pursuant to which there may be an insurance recovery. Insurance recoveries are recognized as gains
when any contingencies relating to the insurance claim have been resolved, which is the earlier of when the gains are
realized or realizable. It is possible that some of the matters could require the Company to pay damages or make other
expenditures or establish accruals in amounts that could not be reasonably estimated at December 31, 2020. While the
potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on
information currently known to management, management does not believe any such charges are likely to have a material
effect on the Company’s financial position. Given the large and/or indeterminate amounts sought in certain of these matters
and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to
time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual
periods.
Matters as to Which an Estimate Can Be Made
For some of the matters disclosed below, the Company is able to estimate a reasonably possible range of loss. For
matters where a loss is believed to be reasonably possible, but not probable, the Company has not made an accrual. As of
December 31, 2020, the Company estimates the aggregate range of reasonably possible losses in excess of amounts
accrued for these matters to be $0 to $200 million.
310
Table of Contents
MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees (continued)
Matters as to Which an Estimate Cannot Be Made
For other matters disclosed below, the Company is not currently able to estimate the reasonably possible loss or range
of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have
provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage
demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on
motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the
Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and
estimates of reasonably possible losses or ranges of loss based on such reviews.
Asbestos-Related Claims
MLIC is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits
principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both
actual and punitive damages. MLIC has never engaged in the business of manufacturing, producing, distributing or selling
asbestos or asbestos-containing products nor has MLIC issued liability or workers’ compensation insurance to companies
in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits
principally have focused on allegations with respect to certain research, publication and other activities of one or more of
MLIC’s employees during the period from the 1920s through approximately the 1950s and allege that MLIC learned or
should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to
disclose those health risks. MLIC believes that it should not have legal liability in these cases. The outcome of most
asbestos litigation matters, however, is uncertain and can be impacted by numerous variables, including differences in legal
rulings in various jurisdictions, the nature of the alleged injury and factors unrelated to the ultimate legal merit of the
claims asserted against MLIC. MLIC employs a number of resolution strategies to manage its asbestos loss exposure,
including seeking resolution of pending litigation by judicial rulings and settling individual or groups of claims or lawsuits
under appropriate circumstances.
Claims asserted against MLIC have included negligence, intentional tort and conspiracy concerning the health risks
associated with asbestos. MLIC’s defenses (beyond denial of certain factual allegations) include that: (i) MLIC owed no
duty to the plaintiffs — it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell
the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of MLIC; (iii) MLIC’s
conduct was not the cause of the plaintiffs’ injuries; (iv) plaintiffs’ exposure occurred after the dangers of asbestos were
known; and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial
courts have granted motions dismissing claims against MLIC, while other trial courts have denied MLIC’s motions. There
can be no assurance that MLIC will receive favorable decisions on motions in the future. While most cases brought to date
have settled, MLIC intends to continue to defend aggressively against claims based on asbestos exposure, including
defending claims at trials.
The approximate total number of asbestos personal injury claims pending against MLIC as of the dates indicated, the
approximate number of new claims during the years ended on those dates and the approximate total settlement payments
made to resolve asbestos personal injury claims at or during those years are set forth in the following table:
2020
December 31,
2019
(In millions, except number of claims)
2018
Asbestos personal injury claims at year end
Number of new claims during the year
Settlement payments during the year (1)
__________________
60,618
2,496
61,134
3,187
$
52.9 $
49.4 $
62,522
3,359
51.4
(1)
Settlement payments represent payments made by MLIC during the year in connection with settlements made in that
year and in prior years. Amounts do not include MLIC’s attorneys’ fees and expenses.
The number of asbestos cases that may be brought, the aggregate amount of any liability that MLIC may incur, and the
total amount paid in settlements in any given year are uncertain and may vary significantly from year to year.
311
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees (continued)
The ability of MLIC to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the
conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is
difficult to predict the numerous variables that can affect liability estimates, including the number of future claims, the cost
to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new
claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible
impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against MLIC when exposure to
asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse
verdicts and their amounts.
The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to
years further in the future. In the Company’s judgment, there is a future point after which losses cease to be probable and
reasonably estimable. It is reasonably possible that the Company’s total exposure to asbestos claims may be materially
greater than the asbestos liability currently accrued and that future charges to income may be necessary. While the potential
future charges could be material in the particular quarterly or annual periods in which they are recorded, based on
information currently known by management, management does not believe any such charges are likely to have a material
effect on the Company’s financial position.
The Company believes adequate provision has been made in its consolidated financial statements for all probable and
reasonably estimable losses for asbestos-related claims. MLIC’s recorded asbestos liability is based on its estimation of the
following elements, as informed by the facts presently known to it, its understanding of current law and its past
experiences: (i) the probable and reasonably estimable liability for asbestos claims already asserted against MLIC,
including claims settled but not yet paid; (ii) the probable and reasonably estimable liability for asbestos claims not yet
asserted against MLIC, but which MLIC believes are reasonably probable of assertion; and (iii) the legal defense costs
associated with the foregoing claims. Significant assumptions underlying MLIC’s analysis of the adequacy of its recorded
liability with respect to asbestos litigation include: (i) the number of future claims; (ii) the cost to resolve claims; and
(iii) the cost to defend claims.
MLIC reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims
experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant
trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an
overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation,
legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims
filed against it and other defendants and the jurisdictions in which claims are pending. Based upon its regular reevaluation
of its exposure from asbestos litigation, MLIC has updated its recorded liability for asbestos-related claims to $425 million
at December 31, 2020.
City of Westland Police and Fire Retirement System v. MetLife, Inc., et. al. (S.D.N.Y., filed January 12, 2012)
Plaintiff filed this class action on behalf of a class of persons who either purchased MetLife, Inc. common shares
between February 9, 2011, and October 6, 2011, or purchased or acquired MetLife, Inc. common stock in the Company’s
August 3, 2010 offering or the Company’s March 4, 2011 offering. Plaintiff alleges that MetLife, Inc. and several current
and former directors and executive officers of MetLife, Inc. violated the Securities Act of 1933, as well as the Exchange
Act and Rule 10b-5 promulgated thereunder by issuing, or causing MetLife, Inc. to issue, materially false and misleading
statements concerning MetLife, Inc.’s potential liability for millions of dollars in insurance benefits that should have
purportedly been paid to beneficiaries or escheated to the states. The parties reached an agreement on a class settlement of
the case, and on June 17, 2020, plaintiff filed with the district court a motion to approve notice of the proposed settlement
to the classes. The Company has accrued the full amount of the settlement payment. On November 24, 2020, the district
court approved notice of the proposed settlement to the classes.
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees (continued)
Julian & McKinney v. Metropolitan Life Insurance Company (S.D.N.Y., filed February 9, 2017)
Plaintiffs filed this putative class and collective action on behalf of themselves and all current and former long-term
disability (“LTD”) claims specialists between February 2011 and the present for alleged wage and hour violations under
the Fair Labor Standards Act, the New York Labor Law, and the Connecticut Minimum Wage Act. The suit alleges that
MLIC improperly reclassified the plaintiffs and similarly situated LTD claims specialists from non-exempt to exempt from
overtime pay in November 2013. As a result, they and members of the putative class were no longer eligible for overtime
pay even though they allege they continued to work more than 40 hours per week. Plaintiffs seek unspecified compensatory
and punitive damages, as well as other relief. On March 22, 2018, the court conditionally certified the case as a collective
action, requiring that notice be mailed to LTD claims specialists who worked for MLIC from February 8, 2014 to the
present. MLIC intends to defend this action vigorously.
Total Asset Recovery Services, LLC. v. MetLife, Inc., et al. (Supreme Court of the State of New York, County of New
York, filed December 27, 2017)
Total Asset Recovery Services (the “Relator”) brought an action under the qui tam provision of the New York False
Claims Act (the “Act”) on behalf of itself and the State of New York. The Relator originally filed this action under seal in
2010, and the complaint was unsealed on December 19, 2017. The Relator alleges that MetLife, Inc., MLIC, and several
other insurance companies violated the Act by filing false unclaimed property reports with the State of New York from
1986 to 2017, to avoid having to escheat the proceeds of more than 25,000 life insurance policies, including policies for
which the defendants escheated funds as part of their demutualizations in the late 1990s. The Relator seeks treble damages
and other relief. On April 3, 2019, the court granted MetLife, Inc.’s and MLIC’s motion to dismiss and dismissed the
complaint in its entirety. The Relator filed an appeal with the Appellate Division of the New York State Supreme Court,
First Department. On December 10, 2020, the Appellate Division reversed the court’s order granting MetLife, Inc. and
MLIC’s motion to dismiss and remanded the case to the trial court where the Relator’s counsel will be permitted to file an
amended complaint.
Matters Related to Group Annuity Benefits and Assumed Variable Annuity Guarantee Reserves
In 2018, the Company announced that it identified two material weaknesses in its internal control over financial
reporting related to the practices and procedures for estimating reserves for certain group annuity benefits and the
calculation of reserves associated with certain variable annuity guarantees assumed from the former operating joint venture
in Japan. Several regulators have made inquiries into these issues and it is possible that other jurisdictions may pursue
similar investigations or inquiries. The Company is exposed to lawsuits, and could be exposed to additional legal actions
relating to these issues. These may result in payments, including damages, fines, penalties, interest and other amounts
assessed or awarded by courts or regulatory authorities under applicable escheat, tax, securities, ERISA, or other laws or
regulations. The Company could incur significant costs in connection with these actions.
Litigation Matters
Parchmann v. MetLife, Inc., et. al. (E.D.N.Y., filed February 5, 2018)
Plaintiff filed this putative class action seeking to represent a class of persons who purchased MetLife, Inc.
common stock from February 27, 2013 through January 29, 2018. Plaintiff alleges that MetLife, Inc., its former Chief
Executive Officer and Chairman of the Board, and its former Chief Financial Officer violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder by issuing materially false and/or misleading financial
statements. Plaintiff alleges that MetLife’s practices and procedures for estimating reserves for certain group annuity
benefits were inadequate, and that MetLife had inadequate internal control over financial reporting. Plaintiff seeks
unspecified compensatory damages and other relief. On January 11, 2021, the court granted MetLife’s motion to
dismiss and dismissed the complaint in its entirety. Plaintiff filed an appeal with the United States Court of Appeals for
the Second Circuit.
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees (continued)
Derivative Actions and Demands
Shareholders, seeking to sue derivatively on behalf of MetLife, Inc., commenced three separate actions against
certain current and former members of the MetLife, Inc. Board of Directors and/or certain current and former officers of
MetLife, Inc., alleging that, among other things, they breached their fiduciary and other duties to the Company. In Kates
v. Kandarian, et al. (E.D.N.Y., filed January 18, 2019, transferred to D. Del. July 8, 2019) and Felt, et al. v. Grise, et al.
(D. Del., filed April 29, 2019), plaintiffs allege that the defendants disseminated or approved public statements that failed
to disclose that MetLife’s practices and procedures for estimating reserves for certain group annuity benefits were
inadequate and that MetLife had inadequate internal control over financial reporting. In Lifschitz v. Kandarian, et al.
(Del. Ch., filed June 19, 2019), plaintiff alleges that the MetLife, Inc. Board of Directors knew or should have known
that MetLife’s practices and procedures for estimating reserves for certain group annuity benefits were inadequate. Felt
and Lifschitz have been consolidated in the Court of Chancery in Delaware under the caption In re: MetLife, Inc.
Derivative Litigation. In all of these actions, plaintiffs allege that because of the defendants’ breaches of duty, MetLife,
Inc. has incurred damage to its reputation and has suffered other unspecified damages. On August 17, 2020, the court
dismissed the complaint in In re: MetLife, Inc. Derivative Litigation, and on September 8, 2020, the court dismissed the
complaint in Kates. Plaintiffs in In re: MetLife, Inc. Derivative Litigation have filed an appeal with the Supreme Court of
the State of Delaware, and on October 8, 2020, plaintiffs in Kates filed a third amended complaint with the district court.
The MetLife, Inc. Board of Directors received six letters, dated March 28, 2018, May 11, 2018, July 16, 2018,
December 20, 2018, February 5, 2019, and April 7, 2020, written on behalf of individual stockholders, demanding that
MetLife, Inc. take action against current and former directors and officers for alleged breaches of fiduciary duty and/or
investigate, remediate, and recover damages allegedly suffered by the Company as a result of (i) the Company’s
allegedly inadequate practices and procedures for estimating reserves for certain group annuity benefits, (ii) the
Company’s allegedly inadequate internal controls over financial reporting and corporate governance practices and
procedures, and (iii) the alleged dissemination of false or misleading information related to these issues. The MetLife,
Inc. Board of Directors appointed a special committee to investigate the allegations set forth in these six letters.
Insolvency Assessments
Many jurisdictions in which the Company is admitted to transact business require insurers doing business within the
jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to
insurance policies issued by impaired, insolvent or failed insurers or those that may become impaired, insolvent or fail.
These associations levy assessments, up to prescribed limits, on all member insurers in a particular jurisdiction on the basis
of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired,
insolvent or failed insurer engaged. In addition, certain jurisdictions have government owned or controlled organizations
providing life, health and property and casualty insurance to their citizens, whose activities could place additional stress on
the adequacy of guaranty fund assessments. Many of these organizations have the power to levy assessments similar to
those of the guaranty associations. Some jurisdictions permit member insurers to recover assessments paid through full or
partial premium tax offsets.
Assets and liabilities held for insolvency assessments were as follows:
Other Assets:
Premium tax offset for future discounted and undiscounted assessments
Premium tax offset currently available for paid assessments
Total
Other Liabilities:
Insolvency assessments
December 31,
2020
2019
(In millions)
$
$
$
40 $
35
75 $
60 $
43
43
86
62
314
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
21. Contingencies, Commitments and Guarantees (continued)
Commitments
Mortgage Loan Commitments
The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan
commitments were $3.3 billion and $4.1 billion at December 31, 2020 and 2019, respectively.
Commitments to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans and Private Corporate Bond
Investments
The Company commits to fund partnership investments and to lend funds under bank credit facilities, bridge loans and
private corporate bond investments. The amounts of these unfunded commitments were $8.5 billion and $8.1 billion at
December 31, 2020 and 2019, respectively.
Guarantees
In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third
parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition,
investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax,
environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things,
breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business,
the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for
certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in
duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In
some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation
ranging from less than $1 million to $329 million, with a cumulative maximum of $549 million, while in other cases such
limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does
not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in
the future. Management believes that it is unlikely the Company will have to make any material payments under these
indemnities, guarantees, or commitments.
In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the
Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since
these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe
that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.
The Company also has minimum fund yield requirements on certain pension funds. Since these guarantees are not
subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the
maximum potential amount that could become due under these guarantees in the future.
The Company’s recorded liabilities were $20 million and $6 million at December 31, 2020 and 2019, respectively, for
indemnities, guarantees and commitments.
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (continued)
22. Quarterly Results of Operations (Unaudited)
The unaudited quarterly results of operations for 2020 and 2019 are summarized in the table below:
2020
Total revenues
Total expenses
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to MetLife, Inc.
Less: Preferred stock dividends
Preferred stock redemption premium
Net income (loss) available to MetLife, Inc.’s common shareholders
Basic earnings per common share
Net income (loss) attributable to MetLife, Inc.
Net income (loss) available to MetLife, Inc.’s common shareholders
Diluted earnings per common share
Net income (loss) attributable to MetLife, Inc.
Net income (loss) available to MetLife, Inc.’s common shareholders
2019
Total revenues
Total expenses
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to MetLife, Inc.
Less: Preferred stock dividends
Net income (loss) available to MetLife, Inc.’s common shareholders
Basic earnings per common share
Net income (loss) attributable to MetLife, Inc.
Net income (loss) available to MetLife, Inc.’s common shareholders
Diluted earnings per common share
Net income (loss) attributable to MetLife, Inc.
Net income (loss) available to MetLife, Inc.’s common shareholders
Three Months Ended
March 31,
June 30,
September 30,
December 31,
(In millions, except per share data)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
18,310
12,667
4,401
3
4,398
32
—
4,366
4.81
4.78
4.78
4.75
16,302
14,558
1,385
4
1,381
32
1,349
1.44
1.41
1.43
1.40
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
14,099
13,902
150
5
145
77
—
68
0.16
0.07
0.16
0.07
17,497
15,200
1,746
5
1,741
57
1,684
1.84
1.78
1.83
1.77
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16,015
15,092
709
3
706
59
14
633
0.78
0.70
0.77
0.69
18,678
15,887
2,190
6
2,184
32
2,152
2.35
2.31
2.33
2.30
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
19,418
19,254
158
—
158
34
—
124
0.18
0.14
0.17
0.14
17,143
17,180
588
(5)
593
57
536
0.65
0.58
0.64
0.58
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Table of Contents
Types of Investments
Fixed maturity securities AFS:
Bonds:
Foreign government
U.S. government and agency
Public utilities
Municipals
All other corporate bonds
Total bonds
Mortgage-backed and asset-backed securities
Redeemable preferred stock
Total fixed maturity securities AFS
Unit-linked and FVO Securities
Equity securities:
Common stock:
Industrial, miscellaneous and all other
Banks, trust and insurance companies
Public utilities
Non-redeemable preferred stock
Total equity securities
Mortgage loans
Policy loans
Real estate and real estate joint ventures
Real estate acquired in satisfaction of debt
Other limited partnership interests
Short-term investments
Other invested assets
Total investments
__________________
MetLife, Inc.
Schedule I
Consolidated Summary of Investments —
Other Than Investments in Related Parties
December 31, 2020
(In millions)
Cost or
Amortized Cost (1)
Estimated Fair
Value
Amount at
Which Shown on
Balance Sheet
$
63,243 $
71,699 $
39,094
12,399
10,982
127,375
253,093
56,709
1,009
310,811
11,339
493
63
88
297
941
84,509
9,493
11,913
20
9,470
3,904
20,593
462,993
47,100
14,948
13,722
146,741
294,210
59,464
1,135
354,809
13,319
596
131
52
300
1,079
$
$
71,699
47,100
14,948
13,722
146,741
294,210
59,464
1,135
354,809
13,319
596
131
52
300
1,079
83,919
9,493
11,913
20
9,470
3,904
20,593
508,519
(1)
The Unit-linked and FVO Securities are primarily equity securities (including mutual funds) and fixed maturity
securities. Amortized cost for fixed maturity securities AFS, mortgage loans and short-term investments represents
original cost reduced by repayments and adjusted for amortization of premium or accretion of discount; for equity
securities, cost represents original cost; for real estate, cost represents original cost reduced by impairments and
depreciation; for real estate joint ventures and other limited partnerships interests, cost represents original cost reduced
for impairments or original cost adjusted for equity in earnings and distributions.
317
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MetLife, Inc.
Schedule II
Condensed Financial Information
(Parent Company Only)
December 31, 2020 and 2019
(In millions, except share and per share data)
Condensed Balance Sheets
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $3,400 and
$3,062, respectively)
Short-term investments, principally at estimated fair value
Other invested assets, at estimated fair value
Total investments
Cash and cash equivalents
Accrued investment income
Investment in subsidiaries
Loans to subsidiaries
Other assets
Total assets
Liabilities and Stockholders’ Equity
Liabilities
Payables for collateral under derivatives transactions
Long-term debt — unaffiliated
Long-term debt — affiliated
Junior subordinated debt securities
Other liabilities
Total liabilities
Stockholders’ Equity
Preferred stock, par value $0.01 per share; $4,405 and $3,405, respectively, aggregate liquidation
preference
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,181,614,288 and
1,177,680,299 shares issued, respectively; 892,910,600 and 915,338,098 shares outstanding,
respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost; 288,703,688 and 262,342,201 shares, respectively
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities and stockholders’ equity
2020
2019
$
3,443 $
156
187
3,786
441
11
88,684
—
966
3,073
2
120
3,195
377
12
79,571
100
747
93,888 $
84,002
$
$
65 $
13,463
2,073
2,461
1,268
19,330
—
12
33,812
36,491
(13,829)
18,072
74,558
16
12,379
1,976
2,458
1,029
17,858
—
12
32,680
33,078
(12,678)
13,052
66,144
84,002
$
93,888 $
See accompanying notes to the condensed financial information.
318
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MetLife, Inc.
Schedule II
Condensed Financial Information — (continued)
(Parent Company Only)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
2020
2019
2018
Condensed Statements of Operations
Revenues
Net investment income
Other revenues
Net investment gains (losses)
Net derivative gains (losses)
Total revenues
Expenses
Interest expense
Other expenses
Total expenses
Income (loss) before provision for income tax and equity in earnings of
subsidiaries
Provision for income tax (expense) benefit
Equity in earnings of subsidiaries
Net income (loss)
Less: Preferred stock dividends
$
50 $
77 $
29
(154)
(61)
(136)
833
154
987
(1,123)
267
6,263
5,407
202
27
(40)
(45)
19
850
153
1,003
(984)
582
6,301
5,899
178
Preferred stock redemption premium
Net income (loss) available to common shareholders
Comprehensive income (loss)
$
$
$
14 $
— $
5,191 $
5,721 $
10,427 $
17,208 $
See accompanying notes to the condensed financial information.
87
19
(277)
(56)
(227)
1,009
158
1,167
(1,394)
51
6,466
5,123
141
—
4,982
(1,494)
319
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MetLife, Inc.
Schedule II
Condensed Financial Information — (continued)
(Parent Company Only)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Condensed Statements of Cash Flows
Cash flows from operating activities
Net income (loss)
Earnings of subsidiaries
Dividends from subsidiaries
(Gains) losses on investments and from sales of businesses, net
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Sales and maturities of fixed maturity securities available-for-sale
Purchases of fixed maturity securities available-for-sale
Cash received in connection with freestanding derivatives
Cash paid in connection with freestanding derivatives
Purchases of businesses
Expense paid on behalf of subsidiaries
Receipts on loans to subsidiaries
Returns of capital from subsidiaries
Capital contributions to subsidiaries
Net change in short-term investments
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net change in payables for collateral under derivative transactions
Long-term debt issued
Long-term debt repaid
Treasury stock acquired in connection with share repurchases
Preferred stock issued, net of issuance costs
Redemption of preferred stock
Preferred stock redemption premium
Dividends on preferred stock
Dividends on common stock
Other, net
Net cash provided by (used in) financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2020
2019
2018
$
5,407 $
5,899 $
(6,263)
3,970
154
211
3,479
3,693
(3,858)
71
(100)
(1,875)
(15)
100
16
(422)
4
(2)
(2,388)
49
1,246
(251)
(1,151)
1,961
(989)
(14)
(202)
(1,657)
(19)
(1,027)
64
377
(6,301)
4,790
40
(251)
4,177
3,153
(3,380)
101
(392)
—
(13)
—
10
(75)
14
28
(554)
7
1,382
(877)
(2,285)
—
—
—
(178)
(1,643)
(28)
(3,622)
1
376
$
441 $
377 $
5,123
(6,466)
7,367
277
(807)
5,494
9,635
(8,178)
227
(237)
—
(14)
—
87
(767)
14
(3)
764
(27)
—
(1,759)
(3,992)
1,274
—
—
(141)
(1,678)
(75)
(6,398)
(140)
516
376
320
Table of Contents
MetLife, Inc.
Schedule II
Condensed Financial Information — (continued)
(Parent Company Only)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest
Income tax:
Amounts paid to (received from) subsidiaries, net
Amounts paid to Brighthouse in accordance with the tax separation agreement
Income tax paid (received) by MetLife, Inc., net
Total income tax, net
Non-cash transactions:
Dividends from subsidiary
Returns of capital from subsidiaries
Capital contributions to subsidiaries
Brighthouse common stock exchange transaction (Note 3):
Reduction of long-term debt
Reduction of fair value option securities
2020
2019
2018
$
$
$
$
$
$
$
$
815 $
864 $
1,040
(392) $
(152) $
—
96
—
(3)
(296) $
(155) $
341 $
13 $
1 $
— $
— $
— $
29 $
30 $
— $
— $
(33)
909
1
877
—
3,844
3,844
944
1,030
321
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MetLife, Inc.
Schedule II
Notes to the Condensed Financial Information
(Parent Company Only)
1. Basis of Presentation
The condensed financial information of MetLife, Inc. (parent company only) should be read in conjunction with the
consolidated financial statements of MetLife, Inc. and its subsidiaries and the notes thereto (the “Consolidated Financial
Statements”). These condensed unconsolidated financial statements reflect the results of operations, financial position and
cash flows for MetLife, Inc. Investments in subsidiaries are accounted for using the equity method of accounting.
The preparation of these condensed unconsolidated financial statements in conformity with GAAP requires management
to adopt accounting policies and make certain estimates and assumptions. The most important of these estimates and
assumptions relate to the fair value measurements, the accounting for goodwill and identifiable intangible assets and the
provision for potential losses that may arise from litigation and regulatory proceedings and tax audits, which may affect the
amounts reported in the condensed unconsolidated financial statements and accompanying notes. Actual results could differ
from these estimates.
2. Investment in Subsidiaries
In December 2020, MetLife, Inc. paid $1.8 billion in cash in connection with the acquisition of Versant Health. See
Note 3 of the Notes to the Consolidated Financial Statements.
3. Loans to Subsidiaries
MetLife, Inc. lends funds as necessary, through credit agreements or otherwise to its subsidiaries, some of which are
regulated, to meet their capital requirements or to provide liquidity. Payments of interest and principal on surplus notes of
regulated subsidiaries, which are subordinate to all other obligations of the issuing company, may be made only with the prior
approval of the insurance department of the state of domicile.
Interest income earned on loans to subsidiaries of $2 million, $3 million and $3 million for the years ended
December 31, 2020, 2019 and 2018, respectively, is included in net investment income.
322
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MetLife, Inc.
Schedule II
Notes to the Condensed Financial Information — (continued)
(Parent Company Only)
4. Long-term Debt
Long-term debt outstanding was as follows:
Senior notes — unaffiliated (2)
Senior notes — affiliated
Total
__________________
Interest Rates (1)
Range
Weighted
Average
December 31,
Maturity
2020
2019
(Dollars in millions)
0.50% - 6.50%
1.60% - 3.14%
4.28%
2.31%
2022
2021
-
-
2046
2029
$ 13,463 $ 12,379
2,073
1,976
$ 15,536 $ 14,355
(1)
(2)
Range of interest rates and weighted average interest rates are for the year ended December 31, 2020.
Net of $85 million and $81 million of unamortized issuance costs and net premiums and discounts at
December 31, 2020 and 2019, respectively.
See Note 13 of the Notes to the Consolidated Financial Statements.
The aggregate maturities of long-term debt at December 31, 2020 for the next five years and thereafter are $1.0 billion in
2021, $500 million in 2022, $1.4 billion in 2023, $1.5 billion in 2024, $1.2 billion in 2025 and $9.9 billion thereafter.
Senior Notes – Affiliated
In June 2020, MetLife, Inc. issued a new $250 million senior unsecured floating rate note to MetLife Insurance K.K. The
senior unsecured floating rate note matures in June 2025 and bears interest at a variable rate of three-month LIBOR plus
1.82%, payable quarterly.
In May 2018, $500 million in senior notes previously issued by MetLife, Inc. to MLIC and other subsidiaries were
redenominated to new ¥54.6 billion senior notes. The ¥54.6 billion senior notes mature in December 2021 and bear interest at
a rate per annum of 3.14%, payable semi-annually.
In April 2018, $500 million in senior notes previously issued by MetLife, Inc. to MLIC and other subsidiaries were
redenominated to new ¥53.7 billion senior notes. The ¥53.7 billion senior notes mature in July 2021 and bear interest at a rate
per annum of 2.97%, payable semi-annually.
In March 2018, three senior notes previously issued by MetLife, Inc. to MLIC were redenominated to Japanese yen, two
of which have been refinanced upon maturity.
•
•
•
A $500 million senior note was redenominated to a new ¥53.3 billion senior note. The ¥53.3 billion senior note bore
interest at a rate per annum of 1.45%, payable semi-annually. In July 2019, this note matured and was refinanced
with a ¥37.3 billion 1.602% senior note due July 2023 and a ¥16.0 billion 1.637% senior note due July 2026, both
issued to MLIC and payable semi-annually.
A $250 million senior note was redenominated to a new ¥26.5 billion senior note. The ¥26.5 billion senior note bore
interest at a rate per annum of 1.72% payable semi-annually. In October 2019, this note matured and was refinanced
with a ¥26.5 billion 1.81% senior note due October 2029 issued to MLIC, payable semi-annually.
A $250 million senior note was also redenominated to a new ¥26.5 billion senior note. The ¥26.5 billion senior note
bore interest at a rate per annum of 0.82%, payable semi-annually. In September 2020, MetLife, Inc. repaid this note
in cash at maturity.
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MetLife, Inc.
Schedule II
Notes to the Condensed Financial Information — (continued)
(Parent Company Only)
4. Long-term Debt (continued)
Interest Expense
Interest expense was comprised of the following:
Long-term debt — unaffiliated
Long-term debt — affiliated
Collateral financing arrangements
Junior subordinated debt securities
Total
2020
Years Ended December 31,
2019
(In millions)
2018
$
570 $
591 $
52
6
205
48
6
205
$
833 $
850 $
755
45
6
203
1,009
See Notes 14 and 15 of the Notes to the Consolidated Financial Statements for information about the collateral financing
arrangement and junior subordinated debt securities.
5. Support Agreements
MetLife, Inc. is party to various capital support commitments and guarantees with certain of its subsidiaries. Under these
arrangements, MetLife, Inc. has agreed to cause each such entity to meet specified capital and surplus levels or has
guaranteed certain contractual obligations.
MetLife, Inc. guarantees the obligations of its subsidiary, Missouri Reinsurance, Inc. (“MoRe”), under a retrocession
agreement with RGA Reinsurance (Barbados) Inc., pursuant to which MoRe retrocedes a portion of the closed block
liabilities associated with industrial life and ordinary life insurance policies that it assumed from MLIC.
MetLife, Inc. guarantees the obligations of MetLife Reinsurance Company of Bermuda, Ltd. (“MrB”), a Bermuda
insurance affiliate and an indirect, wholly-owned subsidiary of MetLife, Inc. under a reinsurance agreement with Mitsui
Sumitomo Primary Life Insurance Co., Ltd. (“Mitsui”), a former affiliate that is now an unaffiliated third party, under which
MrB reinsures certain variable annuity business written by Mitsui.
MetLife, Inc. guarantees the obligations of MrB in an aggregate amount up to $1.0 billion, under a reinsurance
agreement with MetLife Europe d.a.c., in respect of MrB’s reinsurance of the guaranteed living benefits and guaranteed death
benefits associated with certain unit-linked variable annuity type liability contracts issued by MetLife Europe d.a.c.
MetLife, Inc., in connection with MRV’s reinsurance of certain universal life and term life insurance risks, committed to
the Vermont Department of Banking, Insurance, Securities and Health Care Administration to take necessary action to cause
the two protected cells of MRV to maintain total adjusted capital in an amount that is equal to or greater than 200% of each
such protected cell’s authorized control level RBC, as defined in Vermont state insurance statutes.
MetLife, Inc., in connection with the collateral financing arrangement associated with MRC’s reinsurance of a portion of
the liabilities associated with the closed block, committed to the South Carolina Department of Insurance to make capital
contributions, if necessary, to MRC so that MRC may at all times maintain its total adjusted capital in an amount that is equal
to or greater than 200% of the Company Action Level RBC, as defined in South Carolina state insurance statutes as in effect
on the date of determination or December 31, 2007, whichever calculation produces the greater capital requirement, or as
otherwise required by the South Carolina Department of Insurance. See Note 14 of the Notes to the Consolidated Financial
Statements.
324
Table of Contents
MetLife, Inc.
Schedule II
Notes to the Condensed Financial Information — (continued)
(Parent Company Only)
5. Support Agreements (continued)
MetLife, Inc. guarantees obligations arising from OTC-bilateral derivatives of MrB. MrB is exposed to various risks
relating to their ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market.
MrB uses a variety of strategies to manage these risks, including the use of derivatives. Further, MrB’s derivatives are subject
to industry standard netting agreements and collateral agreements that limit the unsecured portion of any open derivative
position. On a net counterparty basis at December 31, 2020 and 2019, derivative transactions with positive mark-to-market
values (in-the-money) were $366 million and $360 million, respectively, and derivative transactions with negative mark-to-
market values (out-of-the-money) were $158 million and $197 million, respectively. To secure the obligations represented by
the out-of-the-money transactions, MrB had provided collateral to its counterparties with an estimated fair value of
$158 million and $196 million at December 31, 2020 and 2019, respectively. Accordingly, unsecured derivative liabilities
guaranteed by MetLife, Inc. were $0 and $1 million at December 31, 2020 and 2019, respectively.
MetLife, Inc. also guarantees the obligations of certain of its subsidiaries under committed facilities with third-party
banks. See Note 13 of the Notes to the Consolidated Financial Statements.
325
Table of Contents
Segment
2020
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
2019
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
__________________
MetLife, Inc.
Schedule III
Consolidated Supplementary Insurance Information
December 31, 2020 and 2019
(In millions)
Future Policy Benefits,
Other Policy-Related
Balances and
Policyholder Dividend
Obligation
DAC
and
VOBA
Policyholder
Account
Balances
Policyholder
Dividends
Payable
Unearned
Premiums (1), (2)
Unearned
Revenue (1)
$
434 $
85,037 $
77,487 $
— $
175 $
9,333
2,092
1,787
2,712
31
45,202
11,749
5,215
78,048
1,475
81,710
5,100
12,037
28,858
(16)
87
—
6
494
—
2,493
1
23
154
—
42
587
740
555
188
—
$ 16,389 $
226,726 $ 205,176 $
587 $
2,846 $
2,112
$
649 $
79,147 $
71,180 $
— $
2,062 $
9,764
2,038
1,701
3,656
25
42,328
10,840
5,221
74,999
1,565
75,699
5,071
11,730
28,966
(19)
75
—
5
601
—
2,275
123
23
164
—
41
973
762
509
193
—
$ 17,833 $
214,100 $ 192,627 $
681 $
4,647 $
2,478
(1)
Amounts are included within the future policy benefits, other policy-related balances and policyholder dividend
obligation column.
(2)
Includes premiums received in advance.
326
Table of Contents
Segment
2020
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
2019
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
2018
U.S.
Asia
Latin America
EMEA
MetLife Holdings
Corporate & Other
Total
______________
MetLife, Inc.
Schedule III
Consolidated Supplementary Insurance Information — (continued)
For the Years Ended December 31, 2020, 2019 and 2018
(In millions)
Premiums and
Universal Life
and Investment-Type
Product Policy Fees
Net
Investment
Income
Policyholder
Benefits and
Claims and
Interest Credited
to Policyholder
Account Balances
Amortization of
DAC and
VOBA
Charged to
Other
Expenses
Other
Expenses (1)
$
28,335 $
6,563 $
27,966 $
471 $
8,554
3,257
2,709
4,757
25
3,931
991
697
4,900
35
7,249
2,857
1,623
6,983
(3)
1,468
276
452
485
8
3,716
1,825
971
860
1,976
1,732
$
$
$
$
47,637 $
17,117 $
46,675 $
3,160 $
11,080
27,879 $
6,821 $
28,165 $
475 $
8,482
3,817
2,615
4,960
85
3,920
1,262
1,442
5,140
283
7,278
3,210
2,361
6,842
69
1,380
291
420
324
6
3,603
1,907
1,039
921
2,246
2,288
47,838 $
18,868 $
47,925 $
2,896 $
12,004
29,239 $
6,703 $
29,539 $
477 $
8,390
3,817
2,587
5,191
118
3,055
1,194
(195)
5,222
187
6,559
3,057
772
6,662
80
1,297
209
433
553
6
3,466
1,903
1,044
909
2,286
2,382
$
49,342 $
16,166 $
46,669 $
2,975 $
11,990
(1)
Includes other expenses and policyholder dividends, excluding amortization of DAC and VOBA charged to other
expenses.
327
Table of Contents
2020
Life insurance in-force
Insurance premium
Life insurance (1)
Accident & health insurance
Property and casualty insurance
Total insurance premium
2019
Life insurance in-force
Insurance premium
Life insurance (1)
Accident & health insurance
Property and casualty insurance
Total insurance premium
2018
Life insurance in-force
Insurance premium
Life insurance (1)
Accident & health insurance
Property and casualty insurance
Total insurance premium
__________________
MetLife, Inc.
Schedule IV
Consolidated Reinsurance
December 31, 2020, 2019 and 2018
(Dollars in millions)
Gross Amount
Ceded
Assumed
Net Amount
% Amount
Assumed
to Net
$
$
$
$
$
$
$
$
$
5,222,988 $
442,381 $
597,903 $ 5,378,510
11.1 %
23,629 $
1,620 $
1,809 $
14,958
3,614
516
63
208
15
42,201 $
2,199 $
2,032 $
23,818
14,650
3,566
42,034
7.6 %
1.4 %
0.4 %
4.8 %
5,100,675 $
488,958 $
623,662 $ 5,235,379
11.9 %
23,938 $
1,704 $
1,794 $
14,835
3,740
523
71
207
19
42,513 $
2,298 $
2,020 $
24,028
14,519
3,688
42,235
7.5 %
1.4 %
0.5 %
4.8 %
4,963,820 $
507,589 $
532,511 $ 4,988,742
10.7 %
26,356 $
1,792 $
1,791 $
14,166
3,677
515
73
212
18
44,199 $
2,380 $
2,021 $
26,355
13,863
3,622
43,840
6.8 %
1.5 %
0.5 %
4.6 %
(1)
Includes annuities with life contingencies.
328
Table of Contents
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Evaluation of Disclosure Controls and Procedures
Item 9A. Controls and Procedures
The Company maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act. The Company has designed these controls and procedures to ensure that information the Company is required
to disclose in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and is accumulated and communicated to Company management, including the CEO
and CFO as appropriate, to allow timely decisions regarding required disclosure.
Management, including the CEO and CFO, evaluated the effectiveness of the design and operation of the Company’s
disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by
this Annual Report on Form 10-K. Based on that evaluation, the CEO and CFO concluded that the disclosure controls and
procedures were effective as of December 31, 2020.
There were no changes to the Company’s internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. In fulfilling this responsibility, management’s estimates and
judgments must assess the expected benefits and related costs of control procedures. The Company’s internal control
objectives include providing management with reasonable, but not absolute, assurance that the Company has safeguarded
assets against loss from unauthorized use or disposition, and that the Company has executed transactions in accordance with
management’s authorization and recorded them properly to permit the preparation of consolidated financial statements in
conformity with GAAP.
Management evaluated the design and operating effectiveness of the Company’s internal control over financial reporting
based on the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In the opinion of management, MetLife, Inc. maintained effective
internal control over financial reporting as of December 31, 2020.
Deloitte has issued its report on its audit of the effectiveness of internal control over financial reporting, which is set
forth below.
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Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of MetLife, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of MetLife, Inc. and subsidiaries (the “Company”) as of
December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established
in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the financial statements as of and for the year ended December 31, 2020, of the Company and our report dated
February 18, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 18, 2021
330
Table of Contents
None.
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
The information called for by this Item pertaining to Directors is incorporated herein by reference to MetLife, Inc.’s
definitive proxy statement for the Annual Meeting of Shareholders to be held on June 15, 2021, to be filed by MetLife, Inc.
with the SEC pursuant to Regulation 14A within 120 days after the year ended December 31, 2020 (the “2021 Proxy
Statement”).
The information called for by this Item pertaining to Executive Officers appears in “Business — Information About Our
Executive Officers” in this Annual Report on Form 10-K.
The Company has adopted the MetLife Financial Management Code of Business Ethics (the “Financial Management
Code”), a “code of ethics” as defined under the rules of the SEC, that applies to MetLife, Inc.’s CEO, CFO, Chief Accounting
Officer and all professionals in finance and finance-related departments. In addition, the Company has adopted the Directors’
Code of Business Ethics (the “Directors’ Code”) which applies to all members of MetLife, Inc.’s Board of Directors,
including the CEO, and the Company’s Code of Business Ethics, which applies to all employees of the Company, including
MetLife, Inc.’s CEO, CFO and Chief Accounting Officer. These codes are available on the Company’s website at
www.metlife.com/about-us/corporate-governance/corporate-conduct/. The Company intends to satisfy any disclosure
obligations under Item 5.05 of Form 8-K by posting information on the Company’s website at the address given above.
Item 11. Executive Compensation
The information called for by this Item is incorporated herein by reference to the 2021 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information called for by this Item pertaining to ownership of shares of MetLife, Inc.’s common stock (“Shares”) is
incorporated herein by reference to the 2021 Proxy Statement.
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Table of Contents
The following table provides information at December 31, 2020, regarding MetLife, Inc.’s equity compensation plans:
Equity Compensation Plan Information at December 31, 2020
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights (1)
Weighted-average
Exercise Price of
Outstanding
Options, Warrants
and Rights (2)
(a)
(b)
18,114,359 $
None
18,114,359 $
40.25
—
40.25
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities Reflected
in Column (a)) (3)
(c)
35,249,278
None
35,249,278
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security
holders
Total
______________
(1) Column (a) reflects the following items outstanding as of December 31, 2020:
Stock Options
Restricted Stock Units
Performance Shares (assuming future payout at maximum performance factor)
Deferred Shares
Shares that will or may be issued
As of December 31, 2020:
7,042,441
2,788,150
7,178,245
1,105,523
18,114,359
•
•
•
Stock Options under the MetLife, Inc. 2015 Stock and Incentive Compensation Plan (the “2015 Stock Plan”) and its
predecessor plan, the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the “2005 Stock Plan”) were
outstanding;
Restricted Stock Units and Performance Shares under the 2015 Stock Plan were outstanding; and
Deferred Shares related to awards under the 2015 Stock Plan, MetLife, Inc. 2015 Non-Management Directors Stock
Compensation Plan (the “2015 Director Stock Plan”), 2005 Stock Plan, MetLife, Inc. 2005 Non-Management
Directors Stock Compensation Plan (the “2005 Director Stock Plan”), and earlier plans, were outstanding. Deferred
Shares are related to awards that have become payable in Shares under any plan, the issuance of which has been
deferred.
The maximum performance factor for Performance Shares granted in 2015, 2016, 2017, 2018, 2019 and 2020 was 175%.
The number of Performance Shares outstanding as of December 31, 2020 at target (100%) performance factor was 4,101,854.
MetLife, Inc. may issue Shares pursuant to awards (including Stock Option exercises, if any) under any plan using
Shares held in treasury by MetLife, Inc. or by issuing new Shares.
For a general description of how the number of Shares paid out on account of Performance Shares and Restricted Stock
Units is determined, and the vesting periods applicable to Performance Shares and Restricted Stock Units, see Note 16 of the
Notes to the Consolidated Financial Statements.
(2) Column (b) reflects the weighted average exercise price of all Stock Options under any plan that, as of December 31,
2020, had been granted but not forfeited, expired, or exercised. Performance Shares, Restricted Stock Units, and
Deferred Shares are not included in determining the weighted average in column (b) because they have no exercise
price.
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Table of Contents
(3) Column (c) reflects the following items outstanding as of December 31, 2020:
Number of
Shares
At January 15, 2015, the effective date of the 2015 Stock Plan and 2015 Director Stock Plan:
Shares newly authorized for issuance under the 2015 Stock Plan
Shares remaining authorized for issuance under the 2005 Stock Plan or other plans that were not covered
by awards (i)
Shares authorized for issuance under the 2015 Director Stock Plan (ii)
Net shares added to the 2015 Stock Plan and 2015 Director Stock Plan authorizations in light of the
Separation (iii)
11,750,000
18,023,959
1,642,208
3,979,727
Total Shares authorized for issuance at January 1, 2015 and net shares added in light of the Separation
35,395,894
Additional Shares recovered for issuance (iv) in:
2015 - 2019
2020
Total Shares recovered for issuance since January 1, 2015
Less: Shares covered by new awards and new imputed reinvested dividends on Deferred Shares (v) in:
2015 - 2019
2020
Total Shares covered by new awards and new imputed reinvested dividends on Deferred Shares since
January 1, 2015
26,533,707
2,430,725
28,964,432
24,738,291
4,372,757
29,111,048
Shares remaining available for future issuance under the 2015 Stock Plan and 2015 Director Stock Plan
35,249,278
______________
(i)
(ii)
(iii)
(iv)
Consists of Shares that were not covered by awards, including Shares previously covered by awards but recovered
due to forfeiture of awards or other reasons and once again available for issuance.
Consists of Shares remaining authorized for issuance under the predecessor plan, the 2005 Director Stock Plan, that
were not covered by awards, including Shares previously covered by awards but recovered due to forfeiture of
awards or other reasons and once again available.
In 2017, MetLife, Inc. completed the separation of Brighthouse Financial, Inc. and its subsidiaries (“Brighthouse”)
through a distribution of shares of Brighthouse Financial, Inc. common stock to the MetLife, Inc. common
shareholders (the “Separation”). In light of the Separation, and in order to maintain the Share authorizations under
each plan at the levels that shareholders had approved, MetLife, Inc. increased the number of Shares authorized for
issuance under the 2015 Stock Plan and 2015 Director Stock Plan as of August 4, 2017, excluding those Shares from
the authorizations that had already been issued, by the Adjustment Ratio. MetLife, Inc. also increased the number of
Shares covered by outstanding Stock Options, Performance Shares, Restricted Stock Units, and Deferred Shares on
that date by the Adjustment Ratio, in order to maintain the intrinsic value of those awards and Deferred Shares,
which decreased the number of Shares available for issuance under both plans. The amount in this row is the net
increase in the Share authorization under both the 2015 Stock Plan and 2015 Director Stock Plan as a result of these
adjustments. For a description of the adjustment to Stock Options, Performance Shares, Restricted Stock Units, and
Deferred Shares, see Note 16 of the Notes to the Consolidated Financial Statements.
Consists of Shares utilized under the 2005 Stock Plan or 2015 Stock Plan that were recovered during each of the
indicated calendar years, and therefore once again available for issuance, due to: (i) termination of the award by
expiration, forfeiture, cancellation, lapse, or otherwise without issuing Shares; (ii) settlement of the award in cash
either in lieu of Shares or otherwise; (iii) exchange of the award for awards not involving Shares; (iv) payment of the
exercise price of a Stock Option, or the tax withholding requirements with respect to an award, satisfied by tendering
Shares to MetLife, Inc. (by either actual delivery or by attestation); (v) satisfaction of tax withholding requirements
with respect to an award satisfied by MetLife, Inc. withholding Shares otherwise issuable; and (vi) the payout of
Performance Shares at any performance factor less than the maximum performance factor.
(v)
Consists of Shares covered by awards granted under the 2015 Stock Plan (including Performance Shares assuming
future payout at maximum performance factor). Shares covered by awards granted under the 2015 Directors Stock
Plan and Shares covered by imputed reinvested dividends credited on Deferred Shares owed to directors, employees
or agents, in each case during each of the indicated calendar years.
333
Table of Contents
Each Share MetLife, Inc. issues in connection with awards granted under the MetLife, Inc. 2005 Stock Plan other than
Stock Options or Stock Appreciation Rights (such as Shares payable on account of Performance Shares or Restricted Stock
Units under that plan, including any Deferred Shares resulting from such awards) reduces the number of Shares remaining for
issuance by 1.179 (“2005 Stock Plan Share Award Ratio”). Each Share MetLife, Inc. issues in connection with a Stock
Option or Stock Appreciation Right granted under the 2005 Stock Plan, or in connection with any award under any other plan
for employees and agents (including any Deferred Shares resulting from such awards), reduces the number of Shares
remaining for issuance by 1.0. (“Standard Award Ratio”). Shares related to awards that are recovered, and therefore
authorized for issuance under the 2015 Stock Plan, are recovered with consideration of the 2005 Stock Plan Share Award
Ratio and Standard Award Ratio, as applicable. Each Share MetLife, Inc. issues under the 2005 Director Stock Plan or 2015
Director Stock Plan (including any Deferred Shares resulting from such awards) reduces the number of Shares remaining for
issuance under that plan by one. Shares related to awards that are recovered, and therefore authorized for issuance under the
2015 Director Stock Plan are recovered with consideration of this ratio. If MetLife, Inc. was to grant a Share-settled Stock
Appreciation Right under the 2015 Stock Plan and the award holder exercised it, only the number of Shares MetLife, Inc.
issued, net of the Shares tendered, if any, would be deemed delivered for purposes of determining the maximum number of
Shares MetLife, Inc. may issue under the 2015 Stock Plan.
Any Shares covered by awards under the 2015 Director Stock Plan that were to be recovered due to (i) termination of the
award by expiration, forfeiture, cancellation, lapse, or otherwise without issuing Shares; (ii) settlement of the award in cash
either in lieu of Shares or otherwise; (iii) exchange of the award for awards not involving Shares; and (iv) payment of the
exercise price of a Stock Option, or the tax withholding requirements with respect to an award, satisfied by tendering Shares
to MetLife, Inc. (by either actual delivery or by attestation) would be available to be issued under the 2015 Director Stock
Plan. In addition, if MetLife, Inc. was to grant a Share-settled Stock Appreciation Right under the 2015 Director Stock Plan,
only the number of Shares issued, net of the Shares tendered, if any, would be deemed delivered for purposes of determining
the maximum number of Shares available for issuance under the 2015 Director Stock Plan.
Under both the 2015 Stock Plan and the 2015 Director Stock Plan, in the event of a corporate event or transaction
(including, but not limited to, a change in the Shares or the capitalization of MetLife) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, extraordinary dividend, stock split, reverse stock split, split up,
spin-off, or other distribution of stock or property of MetLife, combination of securities, exchange of securities, dividend in
kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of MetLife, or
any similar corporate event or transaction, the appropriate committee of the Board of Directors of MetLife, in order to
prevent dilution or enlargement of participants’ rights under the applicable plan, shall substitute or adjust, as applicable, the
number and kind of Shares that may be issued under that plan and shall adjust the number and kind of Shares subject to
outstanding awards. Any Shares related to awards under either plan which: (i) terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of Shares; (ii) are settled in cash either in lieu of Shares or otherwise; or (iii)
are exchanged with the appropriate committee’s permission for awards not involving Shares, are available again for grant
under the applicable plan. If the option price of any Stock Option granted under either plan or the tax withholding
requirements with respect to any award granted under either plan is satisfied by tendering Shares to MetLife (by either actual
delivery or by attestation), or if a Stock Appreciation Right is exercised, only the number of Shares issued, net of the Shares
tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for issuance
under that plan. The maximum number of Shares available for issuance under either plan shall not be reduced to reflect any
dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock or
Restricted Stock Units.
For a description of the kinds of awards that have been or may be made under the 2015 Stock Plan and 2015 Director
Stock Plan and awards that remained outstanding under the 2005 Stock Plan, see Note 16 of the Notes to the Consolidated
Financial Statements.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by this Item is incorporated herein by reference to the 2021 Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information called for by this item is incorporated herein by reference to the 2021 Proxy Statement.
334
Table of Contents
Part IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
1. Financial Statements
The financial statements are listed in the Index to Consolidated Financial Statements, Notes and Schedules on page 150.
2. Financial Statement Schedules
The financial statement schedules are listed in the Index to Consolidated Financial Statements, Notes and Schedules on
page 150.
3. Exhibits
The exhibits are listed in the Exhibit Index which begins on page 336.
Item 16. Form 10-K Summary
None.
335
Table of Contents
Exhibit Index
(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this
Annual Report on Form 10-K, 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 affiliates,
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 (i) 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; (ii) 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; (iii) may apply standards of materiality in a way that is different from what may be
viewed as material to investors; and (iv) 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., its subsidiaries and affiliates may be found elsewhere in this Annual Report on Form 10-K
and MetLife, Inc.’s other public filings, which are available without charge through the U.S. Securities and Exchange
Commission website at www.sec.gov.)
Exhibit
No.
Description
Form
File Number
Exhibit
Filing Date
Filed or
Furnished
Herewith
Incorporated By Reference
2.1
2.2
2.3
3.1.1
3.1.2
3.1.3
3.1.4
3.1.5
3.1.6
3.1.7
3.1.8
3.1.9
Plan of Reorganization.
S-1
333-91517
Amendment to Plan of Reorganization, dated as of March 9,
2000.
S-1/A
333-91517
Master Separation Agreement, dated August 4, 2017,
between MetLife, Inc. and Brighthouse Financial, Inc.
8-K
001-15787
Amended and Restated Certificate of Incorporation of
MetLife, Inc.
10-K
001-15787
Certificate of Retirement of Series B Contingent
Convertible Junior Participating Non-Cumulative Perpetual
Preferred Stock of MetLife, Inc., filed with the Secretary of
State of Delaware on November 5, 2013.
10-Q
001-15787
2.1
2.2
2.1
3.1
3.6
Certificate of Amendment of Amended and Restated
Certificate of Incorporation of MetLife, Inc., dated April 29,
2015.
8-K
001-15787
3.1
November
23, 1999
March 29,
2000
August 7,
2017
March 1,
2017
November 7,
2013
April 30,
2015
May 28,
2015
8-K
001-15787
3.1
10-Q
001-15787
3.7
November 5,
2015
10-K
001-15787
3.4
10-K
001-15787
3.2
10-K
001-15787
3.3
March 1,
2017
March 1,
2017
March 1,
2017
8-K
001-15787
3.1
October 24,
2017
Certificate of Designations of 5.250% Fixed-to-Floating
Rate Non-Cumulative Preferred Stock, Series C, of
MetLife, Inc., filed with the Secretary of State of Delaware
on May 28, 2015.
Certificate of Elimination of 6.500% Non-Cumulative
Preferred Stock, Series B, of MetLife, Inc., filed with the
Secretary of State of Delaware on November 3, 2015.
Certificate of Amendment of Amended and Restated
Certificate of Incorporation of MetLife, Inc., dated April 29,
2011.
Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock of MetLife, Inc.,
filed with the Secretary of State of Delaware on April 7,
2000.
Certificate of Designations of Floating Rate Non-
Cumulative Preferred Stock, Series A, of MetLife, Inc.,
filed with the Secretary of State of Delaware on June 10,
2005.
Certificate of Amendment of Amended and Restated
Certificate of Incorporation of MetLife, Inc., dated October
23, 2017.
336
Table of Contents
Exhibit
No.
3.1.10
3.1.11
3.1.12
3.1.13
Description
Certificate of Designations of 5.875% Fixed-to-Floating
Rate Non-Cumulative Preferred Stock, Series D, of
MetLife, Inc., filed with the Secretary of State of Delaware
on March 21, 2018.
Certificate of Designations of 5.625% Non-Cumulative
Preferred Stock, Series E, of MetLife, Inc., filed with the
Secretary of the State of Delaware on May 31, 2018.
Certificate of Designations of 4.75% Non-Cumulative
Preferred Stock, Series F, of MetLife, Inc., filed with the
Secretary of the State of Delaware on January 8, 2020.
Certificate of Designations of 3.850% Fixed Rate Reset
Non-Cumulative Preferred Stock, Series G, of MetLife,
Inc., filed with the Secretary of the State of Delaware on
September 9, 2020.
Incorporated By Reference
Form
8-K
File Number
001-15787
Exhibit
3.1
Filing Date
March 22,
2018
Filed or
Furnished
Herewith
8-K
001-15787
3.1
June 4, 2018
8-K
001-15787
3.1
8-K
001-15787
3.1
January 9,
2020
September
10, 2020
October 1,
2018
March 9,
2000
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
Amended and Restated By-Laws of MetLife, Inc., effective
September 25, 2018.
8-K
001-15787
Form of Certificate for Common Stock, par value $0.01 per
share.
S-1/A
333-91517
3.2
4.1
Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock of MetLife, Inc.,
filed with the Secretary of State of Delaware on April 7,
2000. (See Exhibit 3.1.7 above).
Certificate of Designations of Floating Rate Non-
Cumulative Preferred Stock, Series A, of MetLife, Inc.,
filed with the Secretary of State of Delaware on June 10,
2005. (See Exhibit 3.1.8 above).
Form of Stock Certificate, Floating Rate Non-Cumulative
Preferred Stock, Series A, of MetLife, Inc.
8-A
001-15787
99.6
June 10,
2005
Certificate of Designations of 5.250% Fixed-to-Floating
Rate Non-Cumulative Preferred Stock, Series C, of
MetLife, Inc., filed with the Secretary of State of Delaware
on May 28, 2015. (See Exhibit 3.1.4 above).
Form of Stock Certificate, 5.250% Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series C, of MetLife, Inc.
8-K
001-15787
4.2
May 28,
2015
Certificate of Amendment of Amended and Restated
Certificate of Incorporation of MetLife, Inc., dated October
23, 2017. (See Exhibit 3.1.9 above).
Certificate of Designations of 5.875% Fixed-to-Floating
Rate Non-Cumulative Preferred Stock, Series D, of
MetLife, Inc., filed with the Secretary of State of Delaware
on March 21, 2018. (See Exhibit 3.1.10 above).
Form of Stock Certificate, 5.875% Fixed-to-Floating Rate
Non-Cumulative Preferred Stock, Series D, of MetLife, Inc.
8-K
001-15787
4.1
March 22,
2018
Certificate of Designations of 5.625% Non-Cumulative
Preferred Stock, Series E, of MetLife, Inc., filed with the
Secretary of the State of Delaware on May 31, 2018. (See
Exhibit 3.1.11 above).
Form of Stock Certificate, 5.625% Non-Cumulative
Preferred Stock, Series E, of MetLife, Inc.
8-K
001-15787
4.1
June 4, 2018
Deposit Agreement, dated June 4, 2018, among MetLife,
Inc., Computershare Inc. and Computershare Trust
Company, N.A., as depositary, and the holders from time to
time of the depositary receipts described therein.
8-K
001-15787
4.2
June 4, 2018
337
Table of Contents
Exhibit
No.
4.13
4.14
4.15
4.16
4.17
4.18
4.19
Incorporated By Reference
Form
8-K
File Number
001-15787
Exhibit
4.3
Filing Date
June 4, 2018
Filed or
Furnished
Herewith
Description
Form of Depositary Receipt, Depositary Shares each
representing a 1/1,000th interest in a share of 5.625% Non-
Cumulative Preferred Stock, Series E, of MetLife, Inc.
Certificate of Designations of 4.75% Non-Cumulative
Preferred Stock, Series F, of MetLife, Inc., filed with the
Secretary of the State of Delaware on January 8, 2020. (See
Exhibit 3.1.12 above).
Form of Stock Certificate, 4.75% Non-Cumulative
Preferred Stock, Series F, of MetLife, Inc.
8-K
001-15787
4.1
January 9,
2020
Certificate of Designations of 3.850% Fixed Rate Reset
Non-Cumulative Preferred Stock, Series G, of MetLife,
Inc., filed with the Secretary of the State of Delaware on
September 9, 2020. (See Exhibit 3.1.13 above).
Form of Stock Certificate, 3.850% Reset Non-Cumulative
Preferred Stock, Series G, of MetLife, Inc.
8-K
001-15787
Deposit Agreement, dated January 15, 2020, among
MetLife, Inc., Computershare Inc. and Computershare Trust
Company, N.A., collectively, as depositary, and the holders
from time to time of the depositary receipts described
therein.
8-K
001-15787
4.1
4.1
September
10, 2020
January 15,
2020
Form of Depositary Receipt, Depositary Shares each
representing a 1/1,000th interest in a share of 4.75% Non-
Cumulative Preferred Stock, Series F, of MetLife, Inc.
8-K
001-15787
4.3
January 15,
2020
4.20
Description of Securities.
Certain instruments defining the rights of holders of long-
term debt of MetLife, Inc. and its consolidated subsidiaries
are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-
K. MetLife, Inc. hereby agrees to furnish to the Securities
and Exchange Commission, upon request, copies of such
instruments.
10.1.1
MetLife Policyholder Trust Agreement.
S-1
333-91517
10.12
10.1.2
Amendment to MetLife Policyholder Trust Agreement.
10-K
001-15787
10.62
8-K
001-15787
10.1
November
23, 1999
February 27,
2013
December
21, 2016
10.2
10.3
10.4
10.5
10.6.1
10.6.2
Five-Year Credit Agreement, dated as of August 4, 2017
(“2017 Credit Agreement”), amending and restating the
Five-Year Credit Agreement, dated as of May 30, 2014
(“2014 Credit Agreement”), among MetLife, Inc. and
MetLife Funding, Inc., as borrowers, and the other parties
signatory thereto (The 2017 Credit Agreement is included
as Exhibit A to the Second Amendment, dated as of
December 20, 2016, to the 2014 Credit Agreement).
Purchase Agreement by and among MetLife, Inc. and
Massachusetts Mutual Life Insurance Company, dated as of
February 28, 2016.
Tax Separation Agreement, dated as of July 27, 2017, by
and among MetLife, Inc. and its affiliates and Brighthouse
Financial, Inc. and its affiliates.
MetLife, Inc. 2015 Non-Management Director Stock
Compensation Plan, effective January 1, 2015.*
MetLife Non-Management Director Deferred
Compensation Plan (as amended and restated, effective
January 1, 2005, implemented November 2012).*
Amendment to MetLife Non-Management Director
Deferred Compensation Plan (as amended and restated,
effective January 1, 2005, implemented November 2020).*
338
10-Q
001-15787
10.1
May 6, 2016
8-K
001-15787
10.1
S-8
S-8
333-198141
333-214710
4.1
4.1
August 7,
2017
August 14,
2014
November
18, 2016
X
X
Filed or
Furnished
Herewith
Table of Contents
Exhibit
No.
10.7
10.8.1
10.8.2
10.9
10.10
10.11.1
10.11.2
10.12
10.13.1
10.13.2
10.14.1
10.14.2
10.14.3
10.14.4
10.14.5
10.14.6
10.14.7
10.14.8
10.14.9
10.15.1
10.15.2
Incorporated By Reference
Description
MetLife, Inc. Director Indemnity Plan (dated and effective
July 22, 2008).*
Form
10-K
File Number
001-15787
Exhibit
10.94
Form of Agreement to Protect Corporate Property executed
by Michel Khalaf, effective April 9, 2012.*
10-K
001-15787
10.15
Form of Agreement to Protect Corporate Property executed
by Ricardo A. Anzaldua, John C. R. Hele, Frans Hijkoop,
and Esther Lee on May 25, 2016; Steven A. Kandarian on
May 31, 2016; Steven J. Goulart on June 2, 2016; Maria M.
Morris on June 8, 2016; Martin J. Lippert on July 6, 2016;
Susan Podlogar, effective July 10, 2017; and Ramy Tadros,
effective September 11, 2017.*
10-Q
001-15787
10.1
MetLife Executive Severance Plan (as amended and
restated, effective June 14, 2010).*
10-K
001-15787
10.1
MetLife Performance-Based Compensation Recoupment
Policy (effective as amended and restated November 1,
2017).*
8-K
001-15787
10.1
MetLife, Inc. 2015 Stock and Incentive Compensation Plan,
effective January 1, 2015 (the “2015 SIC Plan”).*
S-8
333-198145
4.1
MetLife, Inc. 2005 Stock and Incentive Compensation Plan,
effective April 15, 2005 (the “2005 SIC Plan”).*
10-K
001-15787
10.24
MetLife Annual Variable Incentive Plan (effective as
amended and restated January 1, 2015).*
MetLife International Unit Option Incentive Plan (as
amended and restated December 3, 2012).*
MetLife International Unit Option Incentive Plan, dated
July 21, 2011 (as amended and restated effective February
23, 2011).*
Form of Stock Option Agreement under the 2005 SIC Plan
effective February 11, 2013.*
Form of Stock Option Agreement (Three-Year “Cliff”
Exercisability) under the 2005 SIC Plan effective February
11, 2013.*
8-K
8-K
001-15787
10.11
001-15787
10.11
10-K
001-15787
10.24
8-K
8-K
001-15787
10.9
001-15787
10.10
Form of Management Stock Option Agreement under the
2005 SIC Plan effective as of April 25, 2007.*
10-K
001-15787
10.24
Amendment to Stock Option Agreements under the 2005
SIC Plan effective as of April 25, 2007.*
10-K
001-15787
10.25
Form of Stock Option Agreement (Ratable Exercisability in
Thirds) under the 2015 SIC Plan, effective January 1, 2015
*
Form of Stock Option Agreement (Three-Year “Cliff”
Exercisability) under the 2015 SIC Plan, effective January
1, 2015 *
8-K
001-15787
10.7
8-K
001-15787
10.8
Form of Management Stock Option Agreement under the
2005 SIC Plan effective December 15, 2009.*
10-K
001-15787
10.28
Form of Stock Option Agreement (Ratable Exercisability in
Thirds) under the 2015 SIC Plan, effective January 1,
2016.*
Form of Stock Option Agreement (Three-Year “Cliff”
Exercisability) under the 2015 SIC Plan, effective January
1, 2016.*
Form of Unit Option Agreement under the MetLife
International Unit Option Incentive Plan effective February
11, 2013.*
Form of Unit Option Agreement (Three-Year “Cliff”
Exercisability) under the MetLife International Unit Option
Incentive Plan, effective February 11, 2013.*
10-K
001-15787
10.101
10-K
001-15787
10.102
8-K
001-15787
10.12
8-K
001-15787
10.13
Filing Date
February 27,
2014
February 25,
2016
August 5,
2016
February 27,
2015
November 6,
2017
August 14,
2014
February 27,
2015
December
11, 2014
February 15,
2013
March 1,
2017
February 15,
2013
February 15,
2013
February 27,
2013
February 27,
2013
December
11, 2014
December
11, 2014
February 27,
2015
February 25,
2016
February 25,
2016
February 15,
2013
February 15,
2013
339
Table of Contents
Exhibit
No.
10.15.3
10.15.4
10.15.5
10.15.6
10.15.7
10.16.1
10.16.2
10.16.3
10.16.4
10.17.1
10.17.2
10.17.3
10.17.4
10.18.1
10.18.2
10.18.3
10.18.4
10.18.5
10.19.1
10.19.2
10.19.3
Description
Form of Unit Option Agreement (Ratable Exercisability in
Thirds) under the 2015 SIC Plan, effective January 1,
2015.*
Form of Unit Option Agreement (Three-Year “Cliff”
Exercisability) under the 2015 SIC Plan, effective January
1, 2015.*
Form of Unit Option Agreement (Ratable Exercisability in
Thirds) under the 2015 SIC Plan, effective January 1,
2016.*
Form of Unit Option Agreement (Three-Year “Cliff”
Exercisability) under the 2015 SIC Plan, effective January
1, 2016.*
Form of Unit Option Agreement under the MetLife
International Unit Option Incentive Plan effective February
23, 2011.*
Form of Restricted Stock Unit Agreement (Ratable Period
of Restriction Ends in Thirds; Code Section 162(m) Goals)
under the 2015 SIC Plan, effective January 1, 2016.*
Form of Restricted Stock Unit Agreement (Three-Year
“Cliff” Period of Restriction; No Code Section 162(m)
Goals) under the 2015 SIC Plan, effective January 1, 2016.*
Form of Restricted Stock Unit Agreement (Ratable Period
of Restriction Ends in Thirds) under the 2015 SIC Plan,
effective February 27, 2018.*
Form of Restricted Stock Unit Agreement (Three-Year
“Cliff” Period of Restriction) under the 2015 SIC Plan,
effective February 27, 2018.*
Form of Restricted Unit Agreement (Ratable Period of
Restriction Ends in Thirds; Code Section 162(m) Goals)
under the 2015 SIC Plan, effective January 1, 2016.*
Form of Restricted Unit Agreement (Three-Year “Cliff”
Period of Restriction; No Code Section 162(m) Goals)
under the 2015 SIC Plan, effective January 1, 2016.*
Form of Restricted Unit Agreement (Ratable Period of
Restriction Ends in Thirds) under the 2015 SIC Plan,
effective February 27, 2018.*
Form of Restricted Unit Agreement (Three-Year “Cliff”
Period of Restriction) under the 2015 SIC Plan, effective
February 27, 2018.*
Incorporated By Reference
Form
8-K
File Number
001-15787
Exhibit
10.9
8-K
001-15787
10.10
10-K
001-15787
10.103
10-K
001-15787
10.104
10-K
001-15787
10.25
10-K
001-15787
10.97
10-K
001-15787
10.98
8-K
001-15787
10.3
8-K
001-15787
10.4
10-K
001-15787
10.99
10-K
001-15787
10.100
8-K
001-15787
10.5
8-K
001-15787
10.6
Form of Performance Share Agreement under the 2015 SIC
Plan, effective January 1, 2016.*
10-K
001-15787
10.95
Form of Performance Share Agreement under the 2015 SIC
Plan, effective February 27, 2018.*
Form of Performance Share Agreement under the 2015 SIC
Plan, effective January 1, 2019. *
8-K
8-K
001-15787
10.1
001-15787
10.1
Form of Performance Share Agreement under the 2015 SIC
Plan, effective December 10, 2019.*
10-K
001-15787
10.18.5
Form of Performance Share Agreement under the 2015 SIC
Plan, effective February 23, 2021.*
Form of Performance Unit Agreement under the 2015 SIC
Plan, effective January 1, 2016.*
10-K
001-15787
10.96
Form of Performance Unit Agreement under the 2015 SIC
Plan, effective February 27, 2018.*
Form of Performance Unit Agreement under the 2015 SIC
Plan, effective January 1, 2019. *
8-K
8-K
001-15787
10.2
001-15787
10.2
Filing Date
December
11, 2014
December
11, 2014
February 25,
2016
February 25,
2016
March 1,
2017
February 25,
2016
February 25,
2016
February 20,
2018
February 20,
2018
February 25,
2016
February 25,
2016
February 20,
2018
February 20,
2018
February 25,
2016
February 20,
2018
December
13, 2018
February 21,
2020
February 25,
2016
February 20,
2018
December
13, 2018
Filed or
Furnished
Herewith
X
340
Filed or
Furnished
Herewith
X
X
Filing Date
February 21,
2020
February 25,
2016
February 20,
2018
March 1,
2017
March 1,
2017
February 27,
2013
February 27,
2014
February 27,
2014
February 25,
2016
February 27,
2015
February 25,
2016
February 27,
2013
March 1,
2017
Table of Contents
Incorporated By Reference
Exhibit
No.
10.19.4
10.19.5
Description
Form of Performance Unit Agreement under the 2015 SIC
Plan, effective December 10, 2019.*
Form
10-K
File Number
001-15787
Exhibit
10.19.5
Form of Performance Unit Agreement under the 2015 SIC
Plan, effective February 23, 2021.*
10-K
10.20.1
Award Agreement Supplement, effective January 1, 2016.*
10-K
001-15787
10.105
Award Agreement Supplement, effective February 27,
2018.*
8-K
001-15787
10.7
Award Agreement Supplement, effective February 23,
2021.*
MetLife Auxiliary Pension Plan, dated August 7, 2006 (as
amended and restated, effective June 30, 2006).*
10-K
001-15787
10.60
10.20.2
10.20.3
10.21.1
10.21.2
10.21.3
10.21.4
10.21.5
10.21.6
10.21.7
10.21.8
10.21.9
10.21.10
10.21.11
10.21.12
10.21.13
MetLife Auxiliary Pension Plan, dated December 21, 2006
(amending and restating Part I thereof, effective January 1,
2007).*
MetLife Auxiliary Pension Plan, dated December 21, 2007
(amending and restating Part I thereof, effective January 1,
2008).*
Amendment #1 to the MetLife Auxiliary Pension Plan (as
amended and restated, effective January 1, 2008), dated
October 24, 2008 (effective October 1, 2008).*
Amendment Number Two to the MetLife Auxiliary Pension
Plan (as amended and restated, effective January 1, 2008),
dated December 12, 2008 (effective December 31, 2008).*
Amendment Number Three to the MetLife Auxiliary
Pension Plan (as amended and restated, effective January 1,
2008) dated March 25, 2009 (effective January 1, 2009).*
Amendment Number Four to the MetLife Auxiliary Pension
Plan (as amended and restated, effective January 1, 2008),
dated December 16, 2009 (effective January 1, 2010).*
Amendment Number Five to the MetLife Auxiliary Pension
Plan (as amended and restated, effective January 1, 2008),
dated December 21, 2010 (effective January 1, 2010).*
Amendment Number Six to the MetLife Auxiliary Pension
Plan (as amended and restated, effective January 1, 2008),
dated December 20, 2012 (effective January 1, 2012).*
Amendment Number Seven to the MetLife Auxiliary
Pension Plan (as amended and restated, effective January 1,
2008), dated December 27, 2013 (effective December 10,
2013).*
Amendment Number 6 to the MetLife Auxiliary Pension
Plan (as amended and restated, effective January 1, 2008),
dated March 5, 2018 (effective March 15, 2018).*
Amendment Number 8 to the MetLife Auxiliary Retirement
Plan (as amended and restated, effective January 1, 2008,
formerly referred to as the “MetLife Auxiliary Pension
Plan” until March 15, 2018), dated September 4, 2018
(effective March 15, 2018).*
Amendment Number Nine to the MetLife Auxiliary
Retirement Plan (as amended and restated, effective January
1, 2008), dated September 26, 2018 (effective January 1,
2023).*
10-K
001-15787
10.61
10-K
001-15787
10.95
10-K
001-15787
10.98
10-K
001-15787
10.99
10-K
001-15787
10.71
10-K
001-15787
10.102
10-K
001-15787
10.73
10-K
001-15787
10.101
10-K
001-15787
10.69
10-Q
001-15787
10.9
May 8, 2018
10-Q
001-15787
10.2
November 8,
2018
10-Q
001-15787
10.3
November 8,
2018
10.22.1
Alico Overseas Pension Plan, dated January 2009.*
10-K
001-15787
10.70
10.22.2
Amendment Number One to the Alico Overseas Pension
Plan (effective November 1, 2010), dated December 20,
2010.*
10-K
001-15787
10.71
March 1,
2017
March 1,
2017
341
Table of Contents
Exhibit
No.
10.22.3
10.22.4
10.22.5
10.23
10.24.1
10.24.2
10.24.3
10.24.4
10.24.5
10.24.6
10.25.1
10.25.2
10.25.3
10.25.4
10.26.1
10.26.2
10.26.3
10.26.4
10.26.5
Incorporated By Reference
Description
Form
File Number
Exhibit
Filing Date
Amendment Number Two to the Alico Overseas Pension
Plan (effective as of November 1, 2011), dated December
13, 2011.*
Amendment Number Three to the Alico Overseas Pension
Plan, dated May 1, 2012 (effective January 1, 2012).*
10-K
001-15787
10.72
March 1,
2017
8-K
001-15787
10.1
May 4, 2012
Filed or
Furnished
Herewith
Amendment Number Four to the Alico Overseas Pension
Plan, dated June 19, 2017, effective July 1, 2017.*
10-Q
001-15787
10.6
MetLife Deferred Compensation Plan For Globally Mobile
Employees, effective July 31, 2014, for which Michel
Khalaf became eligible July 1, 2017.*
10-Q
001-15787
10.4
Metropolitan Life Auxiliary Savings and Investment Plan
(Amended and Restated Effective January 1, 2008).*
10-K
001-15787
10.72
Amendment 1 to the Metropolitan Life Auxiliary Savings
and Investment Plan (Amended and Restated, Effective
January 1, 2008).*
Amendment Number 2 to the Metropolitan Life Auxiliary
Savings and Investment Plan (Amended and Restated
Effective January 1, 2008).*
Amendment Number 3 to the Metropolitan Life Auxiliary
Savings and Investment Plan (Amended and Restated
Effective January 1, 2008).*
Amendment Number 4 to the Metropolitan Life Auxiliary
Savings and Investment Plan (Amended and Restated
Effective January 1, 2008).*
Amendment Number 5 to the Metropolitan Life Auxiliary
Savings and Investment Plan (Amended and Restated
Effective January 1, 2008).*
10-K
001-15787
10.74
10-K
001-15787
10.48
10-K
001-15787
10.75
10-K
001-15787
10.77
November 6,
2017
November 6,
2017
February 27,
2013
February 27,
2015
February 25,
2016
February 27,
2013
February 27,
2014
10-Q
001-15787
10.8
May 8, 2018
MetLife Deferred Compensation Plan for Officers, as
amended and restated, effective November 1, 2003.*
10-K
001-15787
10.78
Amendment Number One to the MetLife Deferred
Compensation Plan for Officers (as amended and restated as
of November 1, 2003), dated May 4, 2005.*
Amendment Number Two to the MetLife Deferred
Compensation Plan for Officers (as amended and restated as
of November 1, 2003, effective December 14, 2005).*
Amendment Number Three to the MetLife Deferred
Compensation Plan for Officers (as amended and restated as
of November 1, 2003, effective February 26, 2007).*
MetLife Leadership Deferred Compensation Plan, dated
November 2, 2006 (as amended and restated, effective with
respect to salary and cash incentive compensation, January
1, 2005, and with respect to stock compensation, April 15,
2005).*
Amendment Number One to the MetLife Leadership
Deferred Compensation Plan, dated December 13, 2007
(effective as of December 31, 2007).*
Amendment Number Two to the MetLife Leadership
Deferred Compensation Plan, dated December 11, 2008
(effective December 31, 2008).*
Amendment Number Three to the MetLife Leadership
Deferred Compensation Plan, dated December 11, 2009
(effective January 1, 2010).*
Amendment Number Four to the MetLife Leadership
Deferred Compensation Plan, dated December 11, 2009
(effective December 31, 2009).*
10-K
001-15787
10.52
10-K
001-15787
10.53
10-K
001-15787
10.45
10-K
001-15787
10.46
10-K
001-15787
10.81
10-K
001-15787
10.84
10-K
001-15787
10.85
10-K
001-15787
10.86
February 27,
2014
February 25,
2016
February 25,
2016
March 1,
2017
March 1,
2017
February 27,
2013
February 27,
2014
February 27,
2015
February 27,
2015
342
Table of Contents
Incorporated By Reference
Form
10-K
File Number
001-15787
Exhibit
10.60
Filing Date
February 25,
2016
Filed or
Furnished
Herewith
Exhibit
No.
10.26.6
10.26.7
10.26.8
10.26.9
10.26.10
10.26.11
10.26.12
10.26.13
10.26.14
10.27.1
10.27.2
10.27.3
10.27.4
10.27.5
10.27.6
10.27.7
10.27.8
10.27.9
10.27.10
10.27.11
10.28.1
10.28.2
Description
Amendment Number Five to the MetLife Leadership
Deferred Compensation Plan, dated December 16, 2010
(effective January 1, 2011).*
Amendment Number Six to the MetLife Leadership
Deferred Compensation Plan, dated December 27, 2011
(effective January 1, 2011).*
Amendment Number Seven to the MetLife Leadership
Deferred Compensation Plan, dated December 26, 2012
(effective January 1, 2013).*
Amendment Number Eight to the MetLife Leadership
Deferred Compensation Plan, dated December 17, 2013
(effective January 1, 2014).*
Amendment Number Nine to the MetLife Leadership
Deferred Compensation Plan, dated December 30, 2014
(effective January 1, 2015).*
Amendment Number Ten to the MetLife Leadership
Deferred Compensation Plan, dated September 30, 2016
(effective October 1, 2016).*
Amendment Number Eleven to the MetLife Leadership
Deferred Compensation Plan, dated September 30, 2016
(effective October 1, 2016).*
Amendment Number Twelve to the MetLife Leadership
Deferred Compensation Plan, dated December 19, 2017
(effective January 1, 2017 and April 1, 2017).*
Amendment Number Thirteen to the MetLife Leadership
Deferred Compensation Plan, dated December 4, 2018
(effective January 1, 2019).*
MetLife Plan for Transition Assistance for Officers, dated
April 21, 2014 (as amended and restated, effective April 1,
2014 (the “MPTA”)).*
10-K
001-15787
10.52
10-K
001-15787
10.53
10-K
001-15787
10.54
10-K
001-15787
10.88
10-K
001-15787
10.56
10-K
001-15787
10.57
10-K
001-15787
10.29.13
10-K
001-15787
10.29.14
10-Q
001-15787
10.2
Amendment Number One to the MPTA, dated December
30, 2014 (effective January 1, 2015).*
10-K
001-15787
10.111
Amendment Number Two to the MPTA, dated March 30,
2016 (effective April 1, 2016).*
10-K
001-15787
10.77
Amendment Number Three to the MPTA, dated June 30,
2016 (effective June 30, 2016).*
10-K
001-15787
10.78
Amendment Number Four to the MPTA, dated October 24,
2016 (effective October 31, 2016).*
10-K
001-15787
10.79
Amendment Number Five to the MPTA, dated November 3,
2016 (effective October 1, 2016).*
10-K
001-15787
10.80
Amendment Number Six to the MPTA, dated July 20, 2017
(effective July 1, 2017).*
10-K
001-15787
10.31.7
Amendment Number Seven to the MPTA, dated May 1,
2018 (effective May 1, 2018).*
10-K
001-15787
10.31.8
Amendment Number Eight to the MPTA, dated September
6, 2018 (effective October 1, 2018).*
10-K
001-15787
10.31.9
Amendment Number Nine to the MPTA, dated November
15, 2018 (effective October 15, 2018).*
10-K
001-15787
10.31.10
Amendment Number Ten to the MPTA, dated November
15, 2018 (effective October 15, 2018).*
10-K
001-15787
10.31.11
Adjustment of certain compensation terms for Michel
Khalaf, effective July 1, 2012.*
10-Q
001-15787
10.2
Tax Equalization Agreement dated June 10, 2015 between
MetLife, Inc. and Michel Khalaf.*
10-Q
001-15787
10.1
343
March 1,
2017
March 1,
2017
March 1,
2017
February 27,
2015
March 1,
2017
March 1,
2017
February 22,
2019
February 22,
2019
August 8,
2014
February 27,
2015
March 1,
2017
March 1,
2017
March 1,
2017
March 1,
2017
February 22,
2019
February 22,
2019
February 22,
2019
February 22,
2019
February 22,
2019
November 7,
2012
August 6,
2015
Table of Contents
Exhibit
No.
10.28.3
10.28.4
10.28.5
10.28.6
10.28.7
10.29
10.30
10.31.1
10.31.2
10.31.3
10.31.4
10.31.5
10.31.6
10.31.7
10.32
10.33.1
10.33.2
10.34
10.35
21.1
23.1
31.1
Filed or
Furnished
Herewith
Incorporated By Reference
Description
Offer Letter, dated March 25, 2009, between American Life
Insurance Company and Michel Khalaf.*
Form
10-K
File Number
001-15787
Exhibit
10.2
Letter of Understanding, dated June 15, 2017, effective July
1, 2017, with Michel Khalaf.*
10-Q
001-15787
10.3
MetLife, Inc. and Metropolitan Life Insurance Company
Compensation Committee and Board of Directors
Resolutions of June 13, 2017 approving Michel Khalaf’s
eligibility to participate in the MetLife Deferred
Compensation Plan For Globally Mobile Employees.*
Amendment Number 1 to Letter of Understanding, Dated
February 26, 2019, Effective February 27, 2019, with
Michel Khalaf *
Confirmation of End of Employment and Waiver and
Release of Claims, Effective March 4, 2019, with Michel
Khalaf *
Sign-on Payments Letter, dated May 24, 2017, effective
July 10, 2017, between MetLife Group, Inc. and Susan
Podlogar.*
Sign-on Payments Letter, dated June 14, 2017, effective
September 11, 2017, between MetLife Group, Inc. and
Ramy Tadros.*
10-Q
001-15787
10.5
8-K
001-15787
10.1
8-K
001-15787
10.2
10-Q
001-15787
10.1
10-Q
001-15787
10.2
Executive Deferred Compensation Plan for Oscar Schmidt,
effective July 1, 2009.*
10-Q
001-15787
10.3
Amendment Number One to the Executive Deferred
Compensation Plan for Oscar Schmidt (effective July 1,
2009).*
Amendment Number Two to the Executive Deferred
Compensation Plan for Oscar Schmidt (effective July 1,
2009).*
Amendment Number Three to the Executive Deferred
Compensation Plan for Oscar Schmidt (effective July 1,
2009).*
10-Q
001-15787
10.4
10-Q
001-15787
10.5
10-Q
001-15787
10.6
Settlement Agreement & General Release, dated November
19, 2013, between MetLife Group, Inc. and Oscar
Schmidt.*
10-Q
001-15787
10.7
Letter Agreement, dated April 25, 2018, between MetLife
Inc. and Oscar Schmidt.*
10-Q
001-15787
10.8
General Release And Waiver, dated April 27, 2018,
between MetLife Group, Inc. and Oscar Schmidt.*
10-Q
001-15787
10.9
Filing Date
March 1,
2017
November 6,
2017
November 6,
2017
March 5,
2019
March 5,
2019
November 6,
2017
November 6,
2017
August 7,
2018
August 7,
2018
August 7,
2018
August 7,
2018
August 7,
2018
August 7,
2018
August 7,
2018
Letter Agreement entered May 4, 2018 between MetLife,
Inc. and John McCallion.*
8-K
001-15787
10.1
May 7, 2018
Letter of Understanding, dated August 23, 2018, effective
September 1, 2018, with Kishore Ponnavolu.*
10-Q
001-15787
10.1
Description of Agreement between Kishore Ponnavolu and
MetLife, Inc. dated April 23, 2019.*
10-Q
001-15787
10.1
8-K
001-15787
10.1
10-K
001-15787
10.35
Separation Agreement and General Release, effective June
16, 2019, between MetLife, Inc. and MetLife Group, Inc.
and Martin Lippert.*
Sign-on Payments Letter, dated August 14, 2019, effective
November 19, 2019, between MetLife Group, Inc. and Bill
Pappas.**
Subsidiaries of the Registrant.
Consent of Deloitte & Touche LLP.
Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
November 8,
2018
November 5,
2019
June 18,
2019
February 21,
2020
X
X
X
344
Table of Contents
Exhibit
No.
31.2
32.1
32.2
Description
Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
Document.
101.INS
XBRL Instance Document - the instance document does not
appear in the Interactive Data file because its XBRL tags
are embedded within the Inline XBRL document.
104
Cover Page Interactive Data File (embedded within the
Inline XBRL document and included in Exhibit 101).
Incorporated By Reference
Form
File Number
Exhibit
Filing Date
Filed or
Furnished
Herewith
X
X
X
X
X
X
X
X
X
X
__________
* Indicates management contracts or compensatory plans or arrangements.
345
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 18, 2021
Signatures
METLIFE, INC.
By
/s/ Michel A. Khalaf
Name: Michel A. Khalaf
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
/s/ Cheryl W. Grisé
Cheryl W. Grisé
/s/ Carlos M. Gutierrez
Carlos M. Gutierrez
/s/ Gerald L. Hassell
Gerald L. Hassell
/s/ David L. Herzog
David L. Herzog
/s/ R. Glenn Hubbard
R. Glenn Hubbard
/s/ Edward J. Kelly, III
Edward J. Kelly, III
/s/ William E. Kennard
William E. Kennard
/s/ Catherine R. Kinney
Catherine R. Kinney
/s/ Diana L. McKenzie
Diana L. McKenzie
/s/ Denise M. Morrison
Denise M. Morrison
/s/ Mark A. Weinberger
Mark A. Weinberger
Title
Director
Director
Director
Director
Date
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
Chairman of the Board
February 18, 2021
Director
Director
Director
Director
Director
Director
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
346
Table of Contents
Signature
/s/ Michel A. Khalaf
Michel A. Khalaf
/s/ John D. McCallion
John D. McCallion
/s/ Tamara L. Schock
Tamara L. Schock
Title
Date
President,
Chief Executive Officer and Director
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Executive Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
February 18, 2021
February 18, 2021
February 18, 2021
347