Edgar Filing: METLIFE INC

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-15787

MetLife, Inc.

(Exact name of registrant as specified in its charter)


Delaware		13-4075851
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(212) 578-2211

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

At October 31, 2012, 1,091,044,048 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Table of Contents


		Page
Part I — Financial Information
Item 1.	Financial Statements (at September 30, 2012 (Unaudited) and December 31, 2011 and for the Three Months and Nine Months Ended September 30, 2012 and 2011 (Unaudited))		5
	Interim Condensed Consolidated Balance Sheets		5
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income		6
	Interim Condensed Consolidated Statements of Equity		7
	Interim Condensed Consolidated Statements of Cash Flows		9
	Notes to the Interim Condensed Consolidated Financial Statements		10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		134
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		226
Item 4.	Controls and Procedures		234

Part II — Other Information			234
Item 1.	Legal Proceedings		234
Item 1A.	Risk Factors		237
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		251
Item 6.	Exhibits		252

Signatures			254

Exhibit Index			E-1

As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates.

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife, Inc., its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) concerns over U.S. fiscal policy and the “fiscal cliff” in the U.S., as well as rating agency downgrades of U.S. Treasury securities; (3) uncertainty about the effectiveness of governmental and regulatory actions to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (4) increased volatility and disruption of the capital and credit markets, which may affect our ability to seek financing or access our credit facilities; (5) impact of comprehensive financial services regulation reform on us; (6) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (7) exposure to financial and capital market risk, including as a result of the disruption in Europe and possible withdrawal of one or more countries from the Euro zone; (8) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect our ability to raise capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets; (9) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (10) investment losses and defaults, and changes to investment valuations; (11) impairments of goodwill and realized losses or market value impairments to illiquid assets; (12) defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial institutions that could adversely affect us; (14) our ability to address unforeseen liabilities, asset impairments, or rating actions arising from acquisitions or dispositions, including our acquisition of American Life Insurance Company and Delaware American Life Insurance Company (collectively, “ALICO”) and to successfully integrate and manage the growth of acquired businesses with minimal disruption; (15) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the acquisition of ALICO; (16) the dilutive impact on our stockholders resulting from the settlement of common equity units issued in connection with the acquisition of ALICO or otherwise; (17) regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (18) MetLife, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (19) downgrades in our claims paying ability, financial strength or credit ratings; (20) ineffectiveness of risk management policies and procedures; (21) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (22) discrepancies between actual claims experience and

assumptions used in setting prices for our products and establishing the liabilities for our obligations for future policy benefits and claims; (23) catastrophe losses; (24) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, distribution of amounts available under U.S. government programs, and for personnel; (25) unanticipated changes in industry trends; (26) changes in assumptions related to investment valuations, deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (27) changes in accounting standards, practices and/or policies; (28) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (29) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (30) deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (31) adverse results or other consequences from litigation, arbitration or regulatory investigations; (32) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (33) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (34) regulatory, legislative or tax changes relating to our insurance, banking, international, or other operations that may affect the cost of, or demand for, our products or services, or increase the cost or administrative burdens of providing benefits to employees; (35) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on our disaster recovery systems, cyber- or other information security systems and management continuity planning; (36) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (37) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.

MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the SEC.

Note Regarding Reliance on Statements in Our Contracts

See “Exhibit Index — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.

Part I — Financial Information

Item 1. Financial Statements

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

September 30, 2012 (Unaudited) and December 31, 2011

(In millions, except share and per share data)


	September 30, 2012			December 31, 2011
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $344,791 and $329,811, respectively; includes $3,349 and $3,225, respectively, relating to variable interest entities)	$	378,005		$	350,271
Equity securities available-for-sale, at estimated fair value (cost: $2,838 and $3,208, respectively)		2,803			3,023
Trading and other securities, at estimated fair value (includes $565 and $473, respectively, of actively traded securities; and $146 and $280, respectively, relating to variable interest entities)		15,995			18,268
Mortgage loans:
Held-for-investment, principally at amortized cost (net of valuation allowances of $354 and $481, respectively; includes $2,928 and $3,187, respectively, at estimated fair value, relating to variable interest entities)		57,884			56,915
Held-for-sale, principally at estimated fair value (includes $64 and $10,716, respectively, under the fair value option)		1,286			15,178

Mortgage loans, net		59,170			72,093
Policy loans		11,949			11,892
Real estate and real estate joint ventures (includes $10 and $15, respectively, relating to variable interest entities)		8,749			8,563
Other limited partnership interests (includes $271 and $259, respectively, relating to variable interest entities)		6,730			6,378
Short-term investments, principally at estimated fair value		14,678			17,310
Other invested assets, principally at estimated fair value (includes $81 and $98, respectively, relating to variable interest entities)		23,477			23,581

Total investments		521,556			511,379
Cash and cash equivalents, principally at estimated fair value (includes $88 and $176, respectively, relating to variable interest entities)		16,950			10,461
Accrued investment income (includes $14 and $16, respectively, relating to variable interest entities)		4,716			4,344
Premiums, reinsurance and other receivables (includes $3 and $12, respectively, relating to variable interest entities)		22,939			22,481
Deferred policy acquisition costs and value of business acquired		24,604			24,619
Goodwill		10,024			11,935
Other assets (includes $6 and $5, respectively, relating to variable interest entities)		8,123			7,984
Separate account assets		237,373			203,023

Total assets	$	846,285		$	796,226

Liabilities and Equity
Liabilities
Future policy benefits	$	191,068		$	184,275
Policyholder account balances		226,882			217,700
Other policy-related balances		15,836			15,599
Policyholder dividends payable		817			774
Policyholder dividend obligation		3,909			2,919
Payables for collateral under securities loaned and other transactions		38,493			33,716
Bank deposits		6,515			10,507
Short-term debt		100			686
Long-term debt (includes $2,733 and $3,068, respectively, at estimated fair value, relating to variable interest entities)		19,621			23,692
Collateral financing arrangements		4,196			4,647
Junior subordinated debt securities		3,192			3,192
Current income tax payable		451			193
Deferred income tax liability		9,275			6,395
Other liabilities (includes $41 and $60, respectively, relating to variable interest entities; and $0 and $7,626, respectively, under the fair value option)		24,007			30,914
Separate account liabilities		237,373			203,023

Total liabilities		781,735			738,232

Contingencies, Commitments and Guarantees (Note 12)
Redeemable noncontrolling interests in partially owned consolidated subsidiaries		152			105

Equity
MetLife, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference		1			1
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,065,840,714 and 1,061,150,915 shares issued at September 30, 2012 and December 31, 2011, respectively; 1,062,646,827 and 1,057,957,028 shares outstanding at September 30, 2012 and December 31, 2011, respectively		11			11
Additional paid-in capital		26,964			26,782
Retained earnings		25,920			24,814
Treasury stock, at cost; 3,193,887 shares at September 30, 2012 and December 31, 2011		(172	)		(172	)
Accumulated other comprehensive income (loss)		11,325			6,083

Total MetLife, Inc.’s stockholders’ equity		64,049			57,519
Noncontrolling interests		349			370

Total equity		64,398			57,889

Total liabilities and equity	$	846,285		$	796,226

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income

For the Three Months and Nine Months Ended September 30, 2012 and 2011 (Unaudited)

(In millions, except per share data)


		Three Months Ended September 30,						Nine Months Ended September 30,
		2012			2011			2012			2011
Revenues
Premiums		$	9,096		$	9,342		$	27,386		$	27,190
Universal life and investment-type product policy fees			2,131			1,998			6,306			5,856
Net investment income			5,517			4,252			16,436			14,658
Other revenues			455			720			1,445			1,878
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities			(57	)		(95	)		(310	)		(525	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)			10			(189	)		39			(5	)
Other net investment gains (losses)			69			229			119			221

Total net investment gains (losses)			22			(55	)		(152	)		(309	)
Net derivative gains (losses)			(718	)		4,196			(604	)		4,233

Total revenues			16,503			20,453			50,817			53,506

Expenses
Policyholder benefits and claims			8,943			9,018			26,958			26,376
Interest credited to policyholder account balances			2,102			738			5,681			4,104
Policyholder dividends			355			384			1,050			1,130
Goodwill impairment			1,868			—			1,868			—
Other expenses			4,245			5,198			13,341			13,987

Total expenses			17,513			15,338			48,898			45,597

Income (loss) from continuing operations before provision for income tax			(1,010	)		5,115			1,919			7,909
Provision for income tax expense (benefit)			(53	)		1,673			710			2,481

Income (loss) from continuing operations, net of income tax			(957	)		3,442			1,209			5,428
Income (loss) from discontinued operations, net of income tax			—			8			17			(1	)

Net income (loss)			(957	)		3,450			1,226			5,427
Less: Net income (loss) attributable to noncontrolling interests			(3	)		(6	)		29			(6	)

Net income (loss) attributable to MetLife, Inc.			(954	)		3,456			1,197			5,433
Less:	Preferred stock dividends		30			30			91			91
	Preferred stock redemption premium		—			—			—			146

Net income (loss) available to MetLife, Inc.’s common shareholders		$	(984	)	$	3,426		$	1,106		$	5,196

Comprehensive income (loss)		$	1,655		$	6,966		$	6,474		$	11,291
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax			19			(12	)		35			(21	)

Comprehensive income (loss) attributable to MetLife, Inc.		$	1,636		$	6,978		$	6,439		$	11,312

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic		$	(0.92	)	$	3.22		$	1.02		$	4.91

Diluted		$	(0.92	)	$	3.20		$	1.01		$	4.86

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic		$	(0.92	)	$	3.23		$	1.04		$	4.91

Diluted		$	(0.92	)	$	3.21		$	1.03		$	4.86

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity

For the Nine Months Ended September 30, 2012 (Unaudited)

(In millions)


													Accumulated Other Comprehensive Income (Loss)
	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Treasury Stock at Cost			Net Unrealized Investment Gains (Losses)		Other-Than- Temporary Impairments			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total MetLife, Inc.’s Stockholders’ Equity			Noncontrolling Interests (1)			Total Equity
Balance at December 31, 2011	$	1	$	11	$	26,782	$	24,814		$	(172	)	$	9,115	$	(441	)	$	(648	)	$	(1,943	)	$	57,519		$	370		$	57,889
Stock-based compensation						182																			182						182
Dividends on preferred stock								(91	)																(91	)					(91	)
Change in equity of noncontrolling interests																												(56	)		(56	)
Net income (loss)								1,197																	1,197			24			1,221
Other comprehensive income (loss), net of income tax														4,908		170			89			75			5,242			11			5,253

Balance at September 30, 2012	$	1	$	11	$	26,964	$	25,920		$	(172	)	$	14,023	$	(271	)	$	(559	)	$	(1,868	)	$	64,049		$	349		$	64,398

(1)	Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially owned consolidated subsidiaries of $5 million.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity — (Continued)

For the Nine Months Ended September 30, 2011 (Unaudited)

(In millions)


														Accumulated Other Comprehensive Income (Loss)
	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock at Cost			Net Unrealized Investment Gains (Losses)		Other-Than- Temporary Impairments			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total MetLife, Inc.’s Stockholders’ Equity			Noncontrolling Interests (1)			Total Equity
Balance at December 31, 2010	$	1	$	10	$	26,423		$	21,363		$	(172	)	$	3,356	$	(366	)	$	(541	)	$	(1,449	)	$	48,625		$	371		$	48,996
Cumulative effect of change in accounting principle, net of income tax (Note 1)									(1,917	)					132					13						(1,772	)		(6	)		(1,778	)

Balance at January 1, 2011		1		10		26,423			19,446			(172	)		3,488		(366	)		(528	)		(1,449	)		46,853			365			47,218
Redemption of convertible preferred stock						(2,805	)																			(2,805	)					(2,805	)
Preferred stock redemption premium									(146	)																(146	)					(146	)
Common stock issuance—newly issued shares				1		2,949																				2,950						2,950
Stock-based compensation						177																				177						177
Dividends on preferred stock									(91	)																(91	)					(91	)
Change in equity of noncontrolling interests																													48			48
Net income (loss)									5,433																	5,433			1			5,434
Other comprehensive income (loss), net of income tax															5,584		(51	)		281			65			5,879			(22	)		5,857

Balance at September 30, 2011	$	1	$	11	$	26,744		$	24,642		$	(172	)	$	9,072	$	(417	)	$	(247	)	$	(1,384	)	$	58,250		$	392		$	58,642

(1)	Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially owned consolidated subsidiaries of ($7) million.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2012 and 2011 (Unaudited)

(In millions)


	Nine Months Ended September 30,
	2012			2011
Net cash provided by operating activities	$	15,288		$	9,034

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		78,296			81,918
Equity securities		1,011			1,342
Mortgage loans		6,696			8,784
Real estate and real estate joint ventures		669			856
Other limited partnership interests		690			852
Purchases of:
Fixed maturity securities		(91,998	)		(95,660	)
Equity securities		(499	)		(869	)
Mortgage loans		(7,585	)		(12,248	)
Real estate and real estate joint ventures		(595	)		(608	)
Other limited partnership interests		(1,017	)		(849	)
Cash received in connection with freestanding derivatives		1,560			2,841
Cash paid in connection with freestanding derivatives		(2,534	)		(3,102	)
Net change in securitized reverse residential mortgage loans		(1,198	)		—
Sale of interest in joint venture		—			265
Net change in policy loans		(116	)		(84	)
Net change in short-term investments		2,825			(6,508	)
Net change in other invested assets		(206	)		(169	)
Other, net		(74	)		(104	)

Net cash used in investing activities		(14,075	)		(23,343	)

Cash flows from financing activities
Policyholder account balances:
Deposits		69,438			69,911
Withdrawals		(64,718	)		(67,001	)
Net change in payables for collateral under securities loaned and other transactions		4,777			7,661
Net change in bank deposits		(4,052	)		296
Net change in short-term debt		(586	)		145
Long-term debt issued		750			1,346
Long-term debt repaid		(1,106	)		(1,192	)
Collateral financing arrangements repaid		(349	)		—
Cash received in connection with collateral financing arrangements		—			100
Cash paid in connection with collateral financing arrangements		(44	)		—
Debt issuance costs		(7	)		(1	)
Net change in liability for securitized reverse residential mortgage loans		1,198			—
Common stock issued, net of issuance costs		—			2,950
Stock options exercised		89			77
Redemption of convertible preferred stock		—			(2,805	)
Preferred stock redemption premium		—			(146	)
Dividends on preferred stock		(91	)		(91	)
Other, net		(47	)		(68	)

Net cash provided by financing activities		5,252			11,182

Effect of change in foreign currency exchange rates on cash and cash equivalents balances		24			133

Change in cash and cash equivalents		6,489			(2,994	)
Cash and cash equivalents, beginning of period		10,461			13,046

Cash and cash equivalents, end of period	$	16,950		$	10,052

Cash and cash equivalents, subsidiaries held-for-sale, beginning of period	$	—		$	89

Cash and cash equivalents, subsidiaries held-for-sale, end of period	$	—		$	51

Cash and cash equivalents, from continuing operations, beginning of period	$	10,461		$	12,957

Cash and cash equivalents, from continuing operations, end of period	$	16,950		$	10,001

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Interest	$	946		$	1,184

Income tax	$	442		$	668

Non-cash transactions during the period:
Real estate and real estate joint ventures acquired in satisfaction of debt	$	334		$	106

Collateral financing arrangements repaid	$	102		$	—

Redemption of advances agreements in long-term debt (1)	$	3,806		$	—

Issuance of funding agreements in policyholder account balances (1)	$	3,806		$	—

(1)	See Note 2.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

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

Business

“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. MetLife is a leading global provider of insurance, annuities and employee benefit programs throughout the United States, Japan, Latin America, Asia, Europe and the Middle East. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, property & casualty insurance, and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions.

MetLife is organized into six segments: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively, “The Americas”); Asia; and Europe, the Middle East and Africa (“EMEA”). See Note 17 for information on the reorganization of the Company’s segments and continued realignment of certain products and businesses among its existing segments during 2012, which were retrospectively applied.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements.

Certain international subsidiaries have a fiscal year-end of November 30. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of such subsidiaries as of August 31, 2012 and November 30, 2011 and the operating results of such subsidiaries for the three months and nine months ended August 31, 2012 and 2011.

In applying the Company’s accounting policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

The accompanying interim condensed consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 9. Intercompany accounts and transactions have been eliminated.

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

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2012 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements. See “— Adoption of New Accounting Pronouncements” for discussion of accounting pronouncements adopted in the first quarter of 2012, which were retrospectively applied.

MetLife, Inc.

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

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at September 30, 2012, its consolidated results of operations and comprehensive income for the three months and nine months ended September 30, 2012 and 2011, its consolidated statements of equity for the nine months ended September 30, 2012 and 2011, and its consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2011 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, as revised by MetLife, Inc.’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (“SEC”) on May 23, 2012 (as revised, the “2011 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2011 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2012, the Company adopted new guidance regarding comprehensive income that defers the effective date pertaining to reclassification adjustments out of accumulated other comprehensive income. The amendments in this guidance are being made to allow the Financial Accounting Standards Board (“FASB”) time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. All other requirements in the new comprehensive income standard are not affected by this guidance, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements on an annual basis.

On January 1, 2012, the Company adopted new guidance regarding comprehensive income, which was retrospectively applied, that provides companies with the option to present the total of comprehensive income, components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements in annual financial statements. The objective of the standard is to increase the prominence of items reported in other comprehensive income and to facilitate convergence of GAAP and International Financial Reporting Standards (“IFRS”). The standard eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this guidance do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified in net income. The Company adopted the two-statement approach for annual financial statements.

Effective January 1, 2012, the Company adopted new guidance on goodwill impairment testing that simplifies how an entity tests goodwill for impairment. This new guidance allows an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it needs to perform the quantitative two-step goodwill impairment test. Only if an entity determines, based on qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying value will it be required to calculate the fair value of the reporting unit. The adoption did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2012, the Company adopted new guidance regarding fair value measurements that establishes common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRS. Some of the amendments clarify the FASB’s intent on the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The adoption did not have a material impact on the Company’s consolidated financial statements. See also expanded disclosures in Note 5.

MetLife, Inc.

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

Effective January 1, 2012, the Company adopted new guidance regarding effective control in repurchase agreements. The guidance removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets. The adoption did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted new guidance regarding accounting for deferred policy acquisition costs (“DAC”), which was retrospectively applied. The guidance specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized as DAC; all other acquisition-related costs must be expensed as incurred. Under the new guidance, advertising costs may only be included in DAC if the capitalization criteria in the direct-response advertising guidance in Subtopic 340-20, Other Assets and Deferred Costs—Capitalized Advertising Costs, are met. As a result, certain direct marketing, sales manager compensation and administrative costs previously capitalized by the Company will no longer be deferred.

The following table presents the effects of the retrospective application of the adoption of such new accounting guidance to the Company’s previously reported consolidated statements of operations and comprehensive income:


	Three Months Ended September 30, 2011								Nine Months Ended September 30, 2011
	As Previously Reported			Adjustment			As Adjusted		As Previously Reported			Adjustment			As Adjusted
	(In millions)
Revenues
Net investment income	$	4,253	(1)	$	(1	)	$	4,252	$	14,663	(1)	$	(5	)	$	14,658
Expenses
Policyholder benefits and claims	$	9,017		$	1		$	9,018	$	26,367		$	9		$	26,376
Other expenses	$	5,013		$	185		$	5,198	$	13,410		$	577		$	13,987
Income (loss) from continuing operations before provision for income tax	$	5,302	(1)	$	(187	)	$	5,115	$	8,500	(1)	$	(591	)	$	7,909
Provision for income tax expense (benefit)	$	1,734		$	(61	)	$	1,673	$	2,680	(1)	$	(199	)	$	2,481
Income (loss) from continuing operations, net of income tax	$	3,568	(1)	$	(126	)	$	3,442	$	5,820	(1)	$	(392	)	$	5,428
Net income (loss)	$	3,576		$	(126	)	$	3,450	$	5,819		$	(392	)	$	5,427
Net income (loss) attributable to MetLife, Inc.	$	3,582		$	(126	)	$	3,456	$	5,825		$	(392	)	$	5,433
Net income (loss) available to MetLife, Inc.’s common shareholders	$	3,552		$	(126	)	$	3,426	$	5,588		$	(392	)	$	5,196
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	3.35		$	(0.13	)	$	3.22	$	5.29		$	(0.38	)	$	4.91
Diluted	$	3.33		$	(0.13	)	$	3.20	$	5.24		$	(0.38	)	$	4.86
Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	3.35		$	(0.12	)	$	3.23	$	5.28		$	(0.37	)	$	4.91
Diluted	$	3.33		$	(0.12	)	$	3.21	$	5.23		$	(0.37	)	$	4.86

MetLife, Inc.

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

(1)

Amounts in the table above differ from the amounts previously reported in the consolidated statements of operations and comprehensive income due to the inclusion of the impact of discontinued real estate operations of $4 million for the three months ended September 30, 2011 and $5 million (net investment income of $6 million, net of $1 million of income tax) for the nine months ended September 30, 2011.

The following table presents the effects of the retrospective application of the adoption of such new accounting guidance to the Company’s previously reported consolidated statement of cash flows:


	Nine Months Ended September 30, 2011
	As Previously Reported			Adjustment			As Adjusted
	(In millions)
Net cash provided by operating activities	$	9,040		$	(6	)	$	9,034
Net change in other invested assets	$	(175	)	$	6		$	(169	)

Future Adoption of New Accounting Pronouncements

In December 2011, the FASB issued new guidance regarding balance sheet offsetting disclosures (Accounting Standards Update (“ASU”) 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities), effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The guidance should be applied retrospectively for all comparative periods presented. The amendments in ASU 2011-11 require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effects of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The objective of ASU 2011-11 is to facilitate comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of IFRS. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In July 2011, the FASB issued new guidance on other expenses (ASU 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers), effective for calendar years beginning after December 31, 2013. The objective of this standard is to address how health insurers should recognize and classify in their income statements fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. The amendments in this standard specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using the straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

2. Acquisitions and Dispositions

2012 Pending Dispositions

MetLife Bank

In December 2011, MetLife Bank, National Association (“MetLife Bank”) and MetLife, Inc. entered into a definitive agreement to sell most of the depository business of MetLife Bank to GE Capital Bank (formerly

MetLife, Inc.

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

known as GE Capital Financial Inc.). In September 2012, this agreement was amended. Under the new structure, MetLife Bank’s depository business would be assumed by GE Capital Retail Bank, rather than by GE Capital Bank. The key terms of the agreement, whereby a GE Capital affiliate will acquire approximately $7 billion in MetLife Bank deposits, including certificates of deposit and money market accounts, remain unchanged. The transaction, as amended, will now be subject to approval by the Office of the Comptroller of the Currency (the “OCC”), the primary regulator of GE Capital Retail Bank, and other customary closing conditions. The approval of the Federal Deposit Insurance Corporation (the “FDIC”) will no longer be required for the transaction. Upon completion of the sale, MetLife Bank would take the remaining administrative steps with the FDIC to terminate its deposit insurance and MetLife, Inc. would deregister as a bank holding company.

Additionally, in January 2012, MetLife, Inc. announced it was exiting the business of originating forward residential mortgage loans and, in April 2012, announced it was exiting the businesses of originating and servicing reverse residential mortgage loans and that it and MetLife Bank entered into a definitive agreement to sell MetLife Bank’s reverse mortgage servicing portfolio. In June 2012, the Company sold the majority of MetLife Bank’s reverse mortgage servicing rights and related assets and liabilities, with the remainder sold in September 2012 pursuant to the same sales agreement. Also, in the third quarter of 2012, MetLife began exploring the sale of MetLife Bank’s forward mortgage servicing assets and operations. On November 2, 2012, MetLife, Inc. and MetLife Bank entered into a definitive agreement to sell MetLife Bank’s forward mortgage servicing portfolio to JPMorganChase Bank, N.A. The transaction is subject to certain regulatory approvals and other customary closing conditions. Upon entering into this agreement, MetLife Bank has committed to sell or has otherwise exited most of its operations.

In conjunction with exiting the depository, reverse mortgage servicing rights and mortgage loan origination businesses, for the three months and nine months ended September 30, 2012, the Company recorded a net loss of $45 million and $155 million, respectively, net of income tax, related to the loss on disposal of the reverse mortgage servicing rights, lease impairments, other employee-related charges, impairments on mortgage loans, and gains (losses) on securities and mortgage loans sold. The Company expects to incur additional charges of $10 million to $40 million, net of income tax, through 2013, related to exiting these businesses. For reverse mortgage servicing rights, collective net assets of $140 million were sold for $38 million in net consideration. In conjunction with the sale of reverse servicing rights, the Company also de-recognized $9.1 billion of the associated securitized reverse residential mortgage loans that previously did not qualify as sales, as well as the corresponding liability of $9.1 billion related to these mortgage loans, from the consolidated balance sheet. In addition, the total assets and liabilities recorded in the consolidated balance sheets related to the depository and origination businesses were approximately $6.8 billion and $6.0 billion at September 30, 2012, respectively, and $11.3 billion and $10.5 billion at December 31, 2011, respectively. These businesses did not qualify for classification as discontinued operations under GAAP.

MetLife Bank has historically taken advantage of collateralized borrowing opportunities with the Federal Home Loan Bank of New York (“FHLB of NY”). In January 2012, MetLife Bank discontinued taking advances from the FHLB of NY. In April 2012, MetLife Bank transferred cash to Metropolitan Life Insurance Company (“MLIC”) related to $3.8 billion of outstanding advances which had been included in long-term debt, and MLIC assumed the associated obligations under terms similar to those of the transferred advances by issuing funding agreements which are included in policyholder account balances (“PABs”).

MetLife, Inc.

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

Caribbean Business

In November 2011, the Company entered into an agreement to sell its insurance operations in the Caribbean region, Panama and Costa Rica (the “Caribbean Business”). During the third quarter of 2012, regulatory approvals have been received and closings have taken place in the majority of the jurisdictions. The net assets sold were $127 million. During the three months and nine months ended September 30, 2012, the Company recorded an additional loss of $8 million, net of income tax, related to these closings in net investment gains (losses) within the interim condensed consolidated statements of operations and comprehensive income. See Note 2 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report. Sales in the remaining jurisdictions are expected to close in the fourth quarter of 2012, subject to regulatory approval and other customary closing conditions in each of the jurisdictions. The total assets and liabilities recorded in the consolidated balance sheets related to the pending disposition of these insurance operations were $127 million and $102 million at September 30, 2012, respectively, and $859 million and $707 million at December 31, 2011, respectively. The results of the Caribbean Business are included in continuing operations.

2012 Disposition

American Life U.K. Assumption Reinsurance

During July 2012, the Company completed the disposal, through a ceded assumption reinsurance agreement, of certain closed blocks of business in the United Kingdom (“U.K.”), to a third party. Simultaneously, the Company recaptured from the third party the indemnity reinsurance agreement related to this business, previously reinsured as of July 1, 2011. These transactions resulted in a decrease in both insurance and reinsurance assets and liabilities of $4.1 billion. The Company recognized a gain of $34 million, net of income tax, on the transactions for both the three months and nine months ended September 30, 2012, which was recorded in net investment gains (losses) in the interim condensed consolidated statement of operations and comprehensive income.

2010 Acquisition

American Life Insurance Company

Contingent Consideration

Related to the 2010 acquisition of American Life Insurance Company (“American Life”), the Company guaranteed that the fair value of a fund of assets backing certain U.K. unit-linked contracts would have a value of at least £1 per unit on July 1, 2012. If the shortfall between the aggregate guaranteed amount and the fair value of the fund exceeded £106 million (as adjusted for withdrawals), American International Group, Inc. (“AIG”) would pay the difference to the Company and, conversely, if the shortfall at July 1, 2012 was less than £106 million, the Company would pay the difference to AIG. At July 1, 2012, the shortfall between the aggregate guaranteed amount and the fair value of the fund was less than £106 million, resulting in a payment of $108 million by the Company to AIG during the third quarter of 2012. The contingent consideration liability was $109 million at December 31, 2011. The decrease in the contingent consideration liability amount from December 31, 2011 to the date of settlement was recorded in net derivative gains (losses) in the interim condensed consolidated statement of operations and comprehensive income. See Note 2 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report.

MetLife, Inc.

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

Branch Restructuring

During the second quarter of 2012, and in accordance with the closing agreement American Life entered into on March 4, 2010 (the “Closing Agreement”) with the Commissioner of the Internal Revenue Service, the Company transferred the business of the Japan branch to a newly incorporated wholly-owned subsidiary in Japan, MetLife Alico Life Insurance K. K. (“MLKK”). Also during the second quarter of 2012, the Company revised the estimate of the valuation allowance required for U.S. deferred tax assets relating to the ongoing restructuring of American Life’s other non-U.S. branches. At December 31, 2011, the Company had recorded a valuation allowance related to the branch restructuring of $720 million to reduce the net amount of U.S. deferred tax assets to an amount that is more likely than not realizable. This valuation allowance was reduced to $118 million at September 30, 2012. The net reduction in the valuation allowance was primarily due to the following factors:

•

Additional U.S. deferred tax assets that were determined to be realizable;

•

Additional tax basis in assets as a result of the gain recognized related to the branch restructuring that more likely than not will not be realizable; and

•

A reduction in both the gross deferred tax asset and the valuation allowance related to the completion of the Company’s transfer of the Japan branch business to MLKK.

The following table provides a rollforward of the deferred tax asset valuation allowance associated with the branch restructuring:


	Nine Months Ended September 30, 2012
	Japan			Other Non-U.S. Branches			Total
	(In millions)
Balance, beginning of period	$	566		$	154		$	720
Income tax expense (benefit)		10			(11	)		(1	)
Deferred income tax expense (benefit) related to unrealized investment gains (losses)		320			(25	)		295
Offsetting reduction in gross deferred tax asset related to the branch transfer to subsidiary		(896	)		—			(896	)

Balance, end of period	$	—		$	118		$	118

A liability of $277 million was recognized in purchase accounting at November 1, 2010 for the anticipated and estimated costs associated with restructuring American Life’s foreign branches into subsidiaries in connection with the Closing Agreement. This liability has been reduced based on payments through September 30, 2012. In addition, based on revised estimates of anticipated costs, this liability was reduced by $35 million for the nine months ended September 30, 2012, which was recorded as a reduction in other expenses in the interim condensed consolidated statements of operations and comprehensive income, resulting in a liability of $92 million at September 30, 2012.

MetLife, Inc.

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

3. Investments

Fixed Maturity and Equity Securities Available-for-Sale

Presented below is certain information about fixed maturity and equity securities for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairment (“OTTI”) losses:


	September 30, 2012
	Cost or Amortized Cost		Gross Unrealized							Estimated Fair Value		% of Total
	Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses			Estimated Fair Value		% of Total
	(In millions)
Fixed Maturity Securities:
U.S. corporate securities	$	102,483	$	11,975	$	516	$	—		$	113,942		30.1	%
Foreign corporate securities (1)		60,235		5,400		379		(1	)		65,257		17.3
Foreign government securities		52,205		5,323		123		—			57,405		15.2
U.S. Treasury and agency securities		44,964		6,489		5		—			51,448		13.6
Residential mortgage-backed securities (“RMBS”)		38,788		2,685		454		428			40,591		10.7
Commercial mortgage-backed securities (“CMBS”)		18,495		1,029		84		—			19,440		5.1
Asset-backed securities (“ABS”)		14,809		370		160		14			15,005		4.0
State and political subdivision securities		12,812		2,184		79		—			14,917		4.0

Total fixed maturity securities	$	344,791	$	35,455	$	1,800	$	441		$	378,005		100.0	%

Equity Securities:
Common stock	$	1,999	$	112	$	42	$	—		$	2,069		73.8	%
Non-redeemable preferred stock		839		52		157		—			734		26.2

Total equity securities	$	2,838	$	164	$	199	$	—		$	2,803		100.0	%


	December 31, 2011
	Cost or Amortized Cost		Gross Unrealized						Estimated Fair Value
	Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses		Estimated Fair Value		% of Total
	(In millions)
Fixed Maturity Securities:
U.S. corporate securities	$	98,621	$	8,544	$	1,380	$	—	$	105,785		30.2	%
Foreign corporate securities		61,568		3,789		1,338		1		64,018		18.3
Foreign government securities		49,840		3,053		357		—		52,536		15.0
U.S. Treasury and agency securities		34,132		5,882		2		—		40,012		11.4
RMBS		42,092		2,281		1,033		703		42,637		12.2
CMBS		18,565		730		218		8		19,069		5.4
ABS		13,018		278		305		12		12,979		3.7
State and political subdivision securities		11,975		1,416		156		—		13,235		3.8

Total fixed maturity securities	$	329,811	$	25,973	$	4,789	$	724	$	350,271		100.0	%

Equity Securities:
Common stock	$	2,219	$	83	$	97	$	—	$	2,205		72.9	%
Non-redeemable preferred stock		989		31		202		—		818		27.1

Total equity securities	$	3,208	$	114	$	299	$	—	$	3,023		100.0	%

MetLife, Inc.

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

(1)

OTTI losses as presented above represent the noncredit portion of OTTI losses that is included in accumulated other comprehensive income (loss). OTTI losses include both the initial recognition of noncredit losses, and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that were previously noncredit loss impaired. The noncredit loss component of OTTI losses for foreign corporate securities was in an unrealized gain (loss) position of $1 million at September 30, 2012 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

The Company held non-income producing fixed maturity securities with an estimated fair value of $66 million and $62 million with unrealized gains (losses) of $4 million and ($19) million at September 30, 2012 and December 31, 2011, respectively.

Concentrations of Credit Risk — Summary. The Company was not exposed to any concentrations of credit risk of any single issuer within its fixed maturity securities and equity securities greater than 10% of the Company’s equity, other than the government and agency securities summarized in the table below at:


	September 30, 2012		December 31, 2011
	Carrying Value (1)
	(In millions)
U.S. Treasury and agency securities included in:
Fixed maturity securities	$	51,448	$	40,012
Short-term investments		11,553		15,775
Cash equivalents		3,050		1,748

Total U.S. Treasury and agency securities	$	66,051	$	57,535

Japan government and agency securities included in:
Fixed maturity securities	$	21,925	$	21,003
Short-term investments		333		—
Cash equivalents		623		—
Total Japan government and agency securities	$	22,881	$	21,003

(1)	Represents estimated fair value for fixed maturity securities, and for short-term investments and cash equivalents, estimated fair value or amortized cost, which approximates estimated fair value.

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


	September 30, 2012				December 31, 2011
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	23,569	$	23,771	$	16,747	$	16,862
Due after one year through five years		69,820		73,205		62,819		64,414
Due after five years through ten years		82,628		92,009		82,694		88,036
Due after ten years		96,682		113,984		93,876		106,274

Subtotal		272,699		302,969		256,136		275,586
RMBS, CMBS and ABS		72,092		75,036		73,675		74,685

Total fixed maturity securities	$	344,791	$	378,005	$	329,811	$	350,271

MetLife, Inc.

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

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

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

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

Net Unrealized Investment Gains (Losses)

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


	September 30, 2012			December 31, 2011
	(In millions)
Fixed maturity securities	$	33,589		$	21,096
Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss)		(441	)		(724	)

Total fixed maturity securities		33,148			20,372
Equity securities		15			(167	)
Derivatives		1,508			1,514
Other		(11	)		72

Subtotal		34,660			21,791

Amounts allocated from:
Insurance liability loss recognition		(6,902	)		(3,996	)
DAC and value of business acquired (“VOBA”) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		25			47
DAC and VOBA		(2,616	)		(1,800	)
Policyholder dividend obligation		(3,909	)		(2,919	)

Subtotal		(13,402	)		(8,668	)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		145			236
Deferred income tax benefit (expense)		(7,652	)		(4,694	)

Net unrealized investment gains (losses)		13,751			8,665
Net unrealized investment gains (losses) attributable to noncontrolling interests		1			9

Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	13,752		$	8,674

MetLife, Inc.

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

The changes in fixed maturity securities with noncredit OTTI losses included in accumulated other comprehensive income (loss), were as follows:


	Nine Months Ended September 30, 2012			Year Ended December 31, 2011
	(In millions)
Balance, beginning of period	$	(724	)	$	(601	)
Noncredit OTTI losses recognized (1)		(39	)		31
Securities sold with previous noncredit OTTI loss		119			125
Subsequent changes in estimated fair value		203			(279	)

Balance, end of period	$	(441	)	$	(724	)

(1)	Noncredit OTTI losses recognized, net of DAC, were ($48) million and $33 million for the nine months ended September 30, 2012 and year ended December 31, 2011, respectively.

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


	Nine Months Ended September 30, 2012
	(In millions)
Balance, beginning of period	$	8,674
Fixed maturity securities on which noncredit OTTI losses have been recognized		283
Unrealized investment gains (losses) during the period		12,586
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition		(2,906	)
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		(22	)
DAC and VOBA		(816	)
Policyholder dividend obligation		(990	)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		(91	)
Deferred income tax benefit (expense)		(2,958	)

Net unrealized investment gains (losses)		13,760
Net unrealized investment gains (losses) attributable to noncontrolling interests		(8	)

Balance, end of period	$	13,752

Change in net unrealized investment gains (losses)	$	5,086
Change in net unrealized investment gains (losses) attributable to noncontrolling interests		(8	)

Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	5,078

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

Presented below is certain information about the estimated fair value and gross unrealized losses of fixed maturity and equity securities in an unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being “less than 12 months” or “equal to or greater than 12 months” in a continuous unrealized loss position based on

MetLife, Inc.

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

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


	September 30, 2012
	Less than 12 Months				Equal to or Greater than 12 Months				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(In millions, except number of securities)
Fixed Maturity Securities:
U.S. corporate securities	$	3,380	$	91	$	4,377	$	425	$	7,757	$	516
Foreign corporate securities		3,006		88		4,062		290		7,068		378
Foreign government securities		1,935		53		864		70		2,799		123
U.S. Treasury and agency securities		1,475		5		—		—		1,475		5
RMBS		531		37		4,822		845		5,353		882
CMBS		524		10		829		74		1,353		84
ABS		1,363		11		1,783		163		3,146		174
State and political subdivision securities		154		1		352		78		506		79

Total fixed maturity securities	$	12,368	$	296	$	17,089	$	1,945	$	29,457	$	2,241

Equity Securities:
Common stock	$	271	$	35	$	109	$	7	$	380	$	42
Non-redeemable preferred stock		10		—		328		157		338		157

Total equity securities	$	281	$	35	$	437	$	164	$	718	$	199

Total number of securities in an unrealized loss position		1,342				1,587


	December 31, 2011
	Less than 12 Months				Equal to or Greater than 12 Months				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(In millions, except number of securities)
Fixed Maturity Securities:
U.S. corporate securities	$	15,642	$	590	$	5,135	$	790	$	20,777	$	1,380
Foreign corporate securities		12,618		639		5,957		700		18,575		1,339
Foreign government securities		11,227		230		1,799		127		13,026		357
U.S. Treasury and agency securities		2,611		1		50		1		2,661		2
RMBS		4,040		547		4,724		1,189		8,764		1,736
CMBS		2,825		135		678		91		3,503		226
ABS		4,972		103		1,316		214		6,288		317
State and political subdivision securities		177		2		1,007		154		1,184		156

Total fixed maturity securities	$	54,112	$	2,247	$	20,666	$	3,266	$	74,778	$	5,513

Equity Securities:
Common stock	$	581	$	96	$	5	$	1	$	586	$	97
Non-redeemable preferred stock		204		30		370		172		574		202

Total equity securities	$	785	$	126	$	375	$	173	$	1,160	$	299

Total number of securities in an unrealized loss position		3,978				1,963

MetLife, Inc.

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

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

Presented below is certain information about the aging and severity of gross unrealized losses on fixed maturity and equity securities, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss) at:


	September 30, 2012
	Cost or Amortized Cost				Gross Unrealized Losses						Number of Securities
	Less than 20%		20% or more		Less than 20%			20% or more			Less than 20%		20% or more
	(In millions, except number of securities)
Fixed Maturity Securities:
Less than six months	$	9,978	$	430	$	140		$	111			914		66
Six months or greater but less than nine months		1,265		147		37			49			116		40
Nine months or greater but less than twelve months		1,209		233		50			69			175		40
Twelve months or greater		15,871		2,565		930			855			1,303		166

Total	$	28,323	$	3,375	$	1,157		$	1,084

Percentage of amortized cost						4	%		32	%

Equity Securities:
Less than six months	$	195	$	102	$	11		$	28			77		32
Six months or greater but less than nine months		37		—		4			—			16		—
Nine months or greater but less than twelve months		26		42		2			14			9		2
Twelve months or greater		225		290		16			124			37		15

Total	$	483	$	434	$	33		$	166

Percentage of cost						7	%		38	%


	December 31, 2011
	Cost or Amortized Cost				Gross Unrealized Losses						Number of Securities
	Less than 20%		20% or more		Less than 20%			20% or more			Less than 20%		20% or more
	(In millions, except number of securities)
Fixed Maturity Securities:
Less than six months	$	49,249	$	4,736	$	1,346		$	1,332			3,260		320
Six months or greater but less than nine months		4,104		1,049		279			349			375		63
Nine months or greater but less than twelve months		1,160		288		55			93			143		14
Twelve months or greater		17,590		2,115		1,216			843			1,523		167

Total	$	72,103	$	8,188	$	2,896		$	2,617

Percentage of amortized cost						4	%		32	%

Equity Securities:
Less than six months	$	714	$	376	$	64		$	123			154		42
Six months or greater but less than nine months		22		8		2			4			19		3
Nine months or greater but less than twelve months		18		—		2			—			8		—
Twelve months or greater		98		223		8			96			24		20

Total	$	852	$	607	$	76		$	223

Percentage of cost						9	%		37	%

MetLife, Inc.

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

Equity securities with gross unrealized losses of 20% or more for twelve months or greater increased from $96 million at December 31, 2011 to $124 million at September 30, 2012. As shown in the section “— Evaluating Temporarily Impaired Available-for-Sale Securities” below, over 90% of the equity securities with gross unrealized losses of 20% or more for twelve months or greater at September 30, 2012 were financial services industry investment grade non-redeemable preferred stock, of which 72% were rated A or better.

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

The gross unrealized losses related to fixed maturity and equity securities, including the portion of OTTI losses on fixed maturity securities recognized in accumulated other comprehensive income (loss) were $2.4 billion and $5.8 billion at September 30, 2012 and December 31, 2011, respectively. The concentration, calculated as a percentage of gross unrealized losses (including OTTI losses), by sector and industry was as follows at:


	September 30, 2012			December 31, 2011
Sector:
RMBS		36	%		30	%
U.S. corporate securities		21			24
Foreign corporate securities		16			23
ABS		7			5
Foreign government securities		5			6
CMBS		4			4
State and political subdivision securities		3			3
Other		8			5

Total		100	%		100	%

Industry:
Mortgage-backed		40	%		34	%
Finance		23			27
Asset-backed		7			5
Utility		7			8
Foreign government securities		5			6
Consumer		5			6
State and political subdivision securities		3			3
Communications		3			3
Industrial		2			2
Other		5			6

Total		100	%		100	%

MetLife, Inc.

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

Evaluating Temporarily Impaired Available-for-Sale Securities

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


	September 30, 2012						December 31, 2011
	Fixed Maturity Securities			Equity Securities			Fixed Maturity Securities			Equity Securities
	(In millions, except number of securities)
Number of securities		37			5			96			8
Total gross unrealized losses	$	676		$	87		$	1,703		$	117
Percentage of total gross unrealized losses		30	%		44	%		31	%		39	%

Fixed maturity and equity securities, each with gross unrealized losses greater than $10 million, decreased $1.1 billion during the nine months ended September 30, 2012. The decline in, or improvement in, gross unrealized losses for the nine months ended September 30, 2012 was primarily attributable to narrowing credit spreads and a decrease in interest rates. These securities were included in the Company’s OTTI review process.

As of September 30, 2012, $973 million of unrealized losses were from fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater. Of the $973 million, $430 million, or 44%, was related to unrealized losses on investment grade securities. Unrealized losses on investment grade securities were principally related to widening credit spreads or rising interest rates since purchase. Of the $973 million, $543 million, or 56%, was related to unrealized losses on below investment grade securities. Unrealized losses on below investment grade securities were principally related to non-agency RMBS (primarily sub- prime residential mortgage loans and alternative residential mortgage loans), U.S. and foreign corporate securities (primarily financial services and utility industry securities) and foreign government securities (primarily European sovereign bonds) and were the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over the financial services sector, unemployment levels, sovereign debt levels and valuations of residential real estate supporting non-agency RMBS. See Note 1 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report for the factors management considers in evaluating these corporate, sovereign and structured securities. See “— Aging of Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale” for a discussion of equity securities with an unrealized loss position of 20% or more of cost for 12 months or greater.

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

MetLife, Inc.

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

The following table presents certain information about the Company’s equity securities available-for-sale with gross unrealized losses of 20% or more at September 30, 2012:


			Non-Redeemable Preferred Stock
	All Equity Securities		All Types of Non-Redeemable Preferred Stock					Investment Grade
	All Equity Securities		All Types of Non-Redeemable Preferred Stock					All Industries					Financial Services Industry
	Gross Unrealized Losses		Gross Unrealized Losses		% of All Equity Securities			Gross Unrealized Losses		% of All Non-Redeemable Preferred Stock			Gross Unrealized Losses		% of All Industries			% A Rated or Better
	(In millions)							(In millions)					(In millions)
Less than six months	$	28	$	7		25	%	$	6		86	%	$	6		100	%		100	%
Six months or greater but less than twelve months		14		14		100	%		2		14	%		2		100	%		100	%
Twelve months or greater		124		124		100	%		115		93	%		115		100	%		72	%

All equity securities with gross unrealized losses of 20% or more	$	166	$	145		87	%	$	123		85	%	$	123		100	%		74	%

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

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

Based on the Company’s current evaluation of available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired.

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

MetLife, Inc.

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

Trading and Other Securities

The table below presents certain information about the Company’s trading securities that are actively purchased and sold (“Actively Traded Securities”) and other securities for which the fair value option (“FVO”) has been elected at:


	September 30, 2012			December 31, 2011
	(In millions)
Actively Traded Securities	$	565		$	473
FVO general account securities		178			267
FVO contractholder-directed unit-linked investments		15,199			17,411
FVO securities held by CSEs		53			117

Total trading and other securities — at estimated fair value	$	15,995		$	18,268

Actively Traded Securities — at estimated fair value	$	565		$	473
Short sale agreement liabilities — at estimated fair value		(121	)		(127	)

Net long/short position — at estimated fair value	$	444		$	346

Investments pledged to secure short sale agreement liabilities	$	609		$	558

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report for a discussion of FVO contractholder-directed unit-linked investments and “— Variable Interest Entities” for a discussion of consolidated securitization entities (“CSEs”) included in the table above. See “— Net Investment Income” and “— Net Investment Gains (Losses)” for the net investment income recognized on trading and other securities and the related changes in estimated fair value subsequent to purchase included in earnings for securities still held as of the end of the respective periods.

MetLife, Inc.

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

Net Investment Gains (Losses)

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized	$	(57	)	$	(95	)	$	(310	)	$	(525	)
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)		10			(189	)		39			(5	)

Net OTTI losses on fixed maturity securities recognized in earnings		(47	)		(284	)		(271	)		(530	)
Fixed maturity securities — net gains (losses) on sales and disposals (1)		80			101			146			79

Total gains (losses) on fixed maturity securities		33			(183	)		(125	)		(451	)

Other net investment gains (losses):
Equity securities		3			(3	)		13			(37	)
Trading and other securities — FVO general account securities - changes in estimated fair value subsequent to purchase		1			(3	)		4			(3	)
Mortgage loans (1)		—			45			49			160
Real estate and real estate joint ventures		(15	)		139			(35	)		144
Other limited partnership interests		(7	)		—			(18	)		8
Other investment portfolio gains (losses)		15			—			(20	)		(2	)

Subtotal — investment portfolio gains (losses) (1)		30			(5	)		(132	)		(181	)

FVO CSEs — changes in estimated fair value:
Commercial mortgage loans		9			(64	)		8			(39	)
Securities		—			2			—			1
Long-term debt — related to commercial mortgage loans		(2	)		56			8			48
Long-term debt — related to securities		8			(1	)		(2	)		(8	)
Non-investment portfolio gains (losses) (2)		(23	)		(43	)		(34	)		(130	)

Subtotal FVO CSEs and non-investment portfolio gains (losses)		(8	)		(50	)		(20	)		(128	)

Total net investment gains (losses)	$	22		$	(55	)	$	(152	)	$	(309	)

(1)

Investment portfolio gains (losses) for the three months and nine months ended September 30, 2012 includes a net gain (loss) of ($26) million and $34 million, respectively, as a result of the pending disposition of certain operations of MetLife Bank, which is comprised of gains (losses) on securities and mortgage loans sold of $0 and $75 million, and impairments on mortgage loans of ($26) million and ($41) million, for the three months and nine months ended September 30, 2012, respectively. See Note 2.

(2)

Non-investment portfolio gains (losses) for both the three months and nine months ended September 30, 2012 includes gains of $41 million, related to certain dispositions as more fully described in Note 2. Non-investment portfolio gains (losses) for the three months and nine months ended September 30, 2011 includes a loss of $0 and $87 million, respectively, in connection with a disposition and a goodwill impairment loss of $65 million related to MetLife Bank. See Notes 2 and 7 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report for further information about the 2011 transactions.

MetLife, Inc.

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

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

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($79) million and ($56) million for the three months and nine months ended September 30, 2012, respectively, and $94 million and $80 million for the three months and nine months ended September 30, 2011, respectively.

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


	Three Months Ended September 30,
	2012			2011			2012			2011			2012			2011
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)
Proceeds	$	12,004		$	19,368		$	231		$	169		$	12,235		$	19,537

Gross investment gains	$	192		$	252		$	23		$	9		$	215		$	261

Gross investment losses		(112	)		(151	)		(11	)		(7	)		(123	)		(158	)

Total OTTI losses recognized in earnings:
Credit-related		(36	)		(269	)		—			—			(36	)		(269	)
Other (1)		(11	)		(15	)		(9	)		(5	)		(20	)		(20	)

Total OTTI losses recognized in earnings		(47	)		(284	)		(9	)		(5	)		(56	)		(289	)

Net investment gains (losses)	$	33		$	(183	)	$	3		$	(3	)	$	36		$	(186	)


	Nine Months Ended September 30,
	2012			2011			2012			2011			2012			2011
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)
Proceeds	$	47,023		$	55,216		$	594		$	974		$	47,617		$	56,190

Gross investment gains	$	742		$	680		$	56		$	83		$	798		$	763

Gross investment losses		(596	)		(601	)		(17	)		(62	)		(613	)		(663	)

Total OTTI losses recognized in earnings:
Credit-related		(177	)		(382	)		—			—			(177	)		(382	)
Other (1)		(94	)		(148	)		(26	)		(58	)		(120	)		(206	)

Total OTTI losses recognized in earnings		(271	)		(530	)		(26	)		(58	)		(297	)		(588	)

Net investment gains (losses)	$	(125	)	$	(451	)	$	13		$	(37	)	$	(112	)	$	(488	)

(1)

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

MetLife, Inc.

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In millions)
Sector:
U.S. and foreign corporate securities — by industry:
Utility	$	10	$	6	$	61	$	7
Finance		—		7		32		48
Communications		1		12		19		26
Transportation		11		—		17		—
Consumer		4		6		16		35
Industrial		4		—		5		—

Total U.S. and foreign corporate securities		30		31		150		116
RMBS		15		34		61		100	(1)
CMBS		—		5		50		8
ABS		2		8		9		11	(1)
State and political subdivision securities		—		—		1		—
Foreign government securities		—		206		—		295

Total	$	47	$	284	$	271	$	530

(1)	See Note 3 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report for discussion of a reclassification from the ABS sector to the RMBS sector for securities backed by sub-prime residential mortgage loans.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In millions)
Sector:
Common stock	$	9	$	5	$	26	$	20
Non-redeemable preferred stock		—		—		—		38

Total	$	9	$	5	$	26	$	58

Industry:
Financial services industry — perpetual hybrid securities	$	—	$	—	$	—	$	38
Other industries		9		5		26		20

Total	$	9	$	5	$	26	$	58

MetLife, Inc.

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

Credit Loss Rollforward

Presented below is a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In millions)
Balance, beginning of period	$	391		$	401		$	471		$	443
Additions:
Initial impairments — credit loss OTTI on securities not previously impaired		2			6			39			32
Additional impairments — credit loss OTTI on securities previously impaired		15			39			41			79
Reductions:
Sales, maturities, pay downs and prepayments during the period on securities previously impaired as credit loss OTTI		(36	)		(8	)		(155	)		(63	)
Securities impaired to net present value of expected future cash flows		—			(1	)		(23	)		(45	)
Increases in cash flows — accretion of previous credit loss OTTI		(1	)		—			(2	)		(9	)

Balance, end of period	$	371		$	437		$	371		$	437

MetLife, Inc.

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

Net Investment Income

The components of net investment income were as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
	(In millions)
Investment income:
Fixed maturity securities	$	3,825	$	3,770		$	11,370	$	11,244
Equity securities		26		28			96		106
Trading and other securities — Actively Traded Securities and FVO general account securities (1)		24		(38	)		68		6
Mortgage loans		811		806			2,405		2,331
Policy loans		157		162			471		482
Real estate and real estate joint ventures		173		206			630		539
Other limited partnership interests		145		180			593		582
Cash, cash equivalents and short-term investments		40		41			115		131
International joint ventures (2)		7		6			11		(8	)
Other		27		82			148		151

Subtotal		5,235		5,243			15,907		15,564
Less: Investment expenses		276		268			793		762

Subtotal, net		4,959		4,975			15,114		14,802

Trading and other securities — FVO contractholder-directed unit-linked investments (1)		512		(824	)		1,010		(437	)
Securitized reverse residential mortgage loans		3		—			177		—
FVO CSEs:
Commercial mortgage loans		42		95			131		286
Securities		1		6			4		7

Subtotal		558		(723	)		1,322		(144	)

Net investment income	$	5,517	$	4,252		$	16,436	$	14,658

(1)	Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective periods included in net investment income were:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
	(In millions)
Actively Traded Securities and FVO general account securities	$	6	$	(46	)	$	36	$	(25	)
FVO contractholder-directed unit-linked investments	$	247	$	(873	)	$	741	$	(641	)

(2)

Amounts are presented net of changes in estimated fair value of derivatives related to economic hedges of the Company’s investment in these equity method international joint venture investments that do not qualify for hedge accounting of $0 for both the three months and nine months ended September 30, 2012, and $0 and ($23) million for the three months and nine months ended September 30, 2011, respectively.

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

MetLife, Inc.

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

Securities Lending

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report, the Company participates in a securities lending program whereby blocks of securities are loaned to third parties. These transactions are treated as financing arrangements and the associated cash collateral received is recorded as a liability. The Company is obligated to return the cash collateral received to its counterparties.

Elements of the securities lending program are presented below at:


	September 30, 2012		December 31, 2011
	(In millions)
Securities on loan: (1)
Amortized cost	$	25,106	$	20,613
Estimated fair value	$	29,302	$	24,072
Cash collateral on deposit from counterparties (2)	$	29,932	$	24,223
Security collateral on deposit from counterparties	$	63	$	371
Reinvestment portfolio — estimated fair value	$	30,210	$	23,940

(1)	Included within fixed maturity securities, short-term investments, equity securities and cash and cash equivalents.

(2)	Included within payables for collateral under securities loaned and other transactions.

Security collateral on deposit from counterparties in connection with the securities lending transactions may not be sold or repledged, unless the counterparty is in default, and is not reflected in the interim condensed consolidated financial statements.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented in the table below at estimated fair value for cash and cash equivalents, short-term investments, fixed maturity securities, equity securities, and trading and other securities and at carrying value for mortgage loans.


	September 30, 2012		December 31, 2011
	(In millions)
Invested assets on deposit (1)	$	2,329	$	1,660
Invested assets held in trust (2)		11,866		11,135
Invested assets pledged as collateral (3)		22,390		29,899

Total invested assets on deposit, held in trust and pledged as collateral	$	36,585	$	42,694

(1)	The Company has invested assets on deposit with regulatory agencies consisting primarily of cash and cash equivalents, short-term investments, fixed maturity securities and equity securities.

(2)	The Company held in trust cash and securities, primarily fixed maturity and equity securities, to satisfy requirements under certain collateral financing agreements and certain reinsurance agreements.

MetLife, Inc.

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

(3)

The Company has pledged fixed maturity securities, mortgage loans and cash and cash equivalents in connection with various agreements and transactions, including funding and advances agreements (see Notes 8 and 11 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report), collateralized borrowings (see Note 11 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report), collateral financing arrangements (see Note 12 of the Notes to the Consolidated Financial Statements included in the 2011 Annual Report), derivative transactions (see Note 4), and short sale agreements (see “— Trading and Other Securities”).

Mortgage Loans

Mortgage loans are summarized as follows at:


	September 30, 2012						December 31, 2011
	Carrying Value			% of Total			Carrying Value			% of Total
	(In millions)						(In millions)
Mortgage loans held-for-investment:
Commercial	$	41,941			70.9	%	$	40,440			56.1	%
Agricultural		12,600			21.3			13,129			18.2
Residential		818			1.4			689			1.0

Subtotal		55,359			93.6			54,258			75.3
Valuation allowances		(354	)		(0.6	)		(481	)		(0.7	)

Subtotal mortgage loans held-for-investment, net		55,005			93.0			53,777			74.6
Commercial mortgage loans held by CSEs		2,879			4.9			3,138			4.4