Edgar Filing: METLIFE INC

e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)

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

		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-15787

MetLife, Inc.

(Exact name of registrant as specified in its charter)


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

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

(212) 578-2211

(Registrant’s telephone number, including area code)

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

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

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


Large accelerated filer þ		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

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

At May 2, 2011, 1,057,040,484 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 March 31, 2011 (Unaudited) and December 31, 2010 and for the Three Months Ended March 31, 2011 and 2010 (Unaudited))		5
Interim Condensed Consolidated Balance Sheets		5
Interim Condensed Consolidated Statements of Operations		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		107
Item 3. Quantitative and Qualitative Disclosures About Market Risk		160
Item 4. Controls and Procedures		168
Part II — Other Information		168
Item 1. Legal Proceedings		168
Item 1A. Risk Factors		170
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		178
Item 6. Exhibits		179
Signatures		180
Exhibit Index		E-1
EX-3.6
EX-4.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

As used in this Form 10-Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), 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) increased volatility and disruption of the capital and credit markets, which may affect our ability to seek financing or access our credit facilities; (3) uncertainty about the effectiveness of the U.S. government’s programs to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (4) impact of comprehensive financial services regulation reform on us; (5) exposure to financial and capital market risk; (6) 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; (7) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (8) investment losses and defaults, and changes to investment valuations; (9) impairments of goodwill and realized losses or market value impairments to illiquid assets; (10) defaults on our mortgage loans; (11) the impairment of other financial institutions that could adversely affect our investments or business; (12) our ability to address unforeseen liabilities, asset impairments, loss of key contractual relationships, or rating actions arising from acquisitions or dispositions, including our acquisition of American Life Insurance Company (“American Life”), a subsidiary of AM Holdings LLC (formerly known as ALICO Holdings LLC) (“AM Holdings”), and Delaware American Life Insurance Company (“DelAm” together with American Life, collectively, “ALICO”) (“the Acquisition”) and to successfully integrate and manage the growth of acquired businesses with minimal disruption; (13) uncertainty with respect to the outcome of the closing agreement entered into with the United States Internal Revenue Service in connection with the Acquisition; (14) uncertainty with respect to any incremental tax benefits resulting from the planned elections for ALICO and certain of its subsidiaries under Section 338 of the U.S. Internal Revenue Code of 1986, as amended; (15) the dilutive impact on our stockholders resulting from the issuance of equity securities in connection with the Acquisition or otherwise; (16) economic, political, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (17) our primary reliance, as a holding company, on dividends from our subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (18) downgrades in our claims paying ability, financial strength or credit ratings; (19) ineffectiveness of risk management policies and procedures; (20) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (21) 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; (22) catastrophe losses; (23) 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; (24) unanticipated changes in industry trends; (25) changes in accounting standards, practices and/or policies; (26) changes in assumptions related to deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (27) increased expenses relating to pension and postretirement benefit plans, as well as health care and other employee benefits; (28) 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; (29) deterioration in the experience of the “closed block” established in connection with the reorganization of Metropolitan Life Insurance Company; (30) adverse results or other consequences from litigation, arbitration or regulatory investigations; (31) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (32) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (33) 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, impair our ability to attract and retain talented and experienced management and other employees, or increase the cost or administrative burdens of providing benefits to employees; (34) the effects of business disruption or economic contraction due to terrorism, other hostilities, or natural catastrophes, including any related impact on our disaster recovery systems and management continuity planning which could impair our ability to conduct business effectively; (35) the effectiveness of our programs and practices in avoiding giving our associates incentives to take excessive risks; and (36) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.

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

Note Regarding Reliance on Statements in Our Contracts

In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife, Inc., its subsidiaries or 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:


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

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

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

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

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

Part I — Financial Information


Item 1.	*Financial Statements*

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

March 31, 2011 (Unaudited) and December 31, 2010

(In millions, except share and per share data)


	March 31,			December 31,
	2011			2010

Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $327,052 and $317,617, respectively; includes $3,312 and $3,330, respectively, relating to variable interest entities)	$	333,664		$	324,797
Equity securities available-for-sale, at estimated fair value (cost: $3,513 and $3,621, respectively)		3,584			3,602
Trading and other securities, at estimated fair value (includes: $572 and $463, of actively traded securities, respectively; and $359 and $387, respectively, relating to variable interest entities)		19,365			18,589
Mortgage loans:
Held-for-investment, principally at amortized cost (net of valuation allowances of $621 and $664, respectively; includes $6,771 and $6,840, respectively, at estimated fair value, relating to variable interest entities)		59,397			58,976
Held-for-sale, principally at estimated fair value		2,435			3,321

Mortgage loans, net		61,832			62,297
Policy loans		11,872			11,761
Real estate and real estate joint ventures (includes $15 and $10, respectively, relating to variable interest entities)		8,042			8,030
Other limited partnership interests (includes $311 and $298, respectively, relating to variable interest entities)		6,409			6,416
Short-term investments, principally at estimated fair value		8,822			9,384
Other invested assets, principally at estimated fair value (includes $103 and $104, respectively, relating to variable interest entities)		13,693			15,430

Total investments		467,283			460,306
Cash and cash equivalents, principally at estimated fair value (includes $231 and $69, respectively, relating to variable interest entities)		10,692			12,957
Accrued investment income (includes $32 and $34, respectively, relating to variable interest entities)		4,478			4,328
Premiums, reinsurance and other receivables (includes $2 and $2, respectively, relating to variable interest entities)		20,315			19,799
Deferred policy acquisition costs and value of business acquired		27,979			27,092
Goodwill		11,946			11,781
Other assets (includes $7 and $6, respectively, relating to variable interest entities)		9,321			8,174
Assets of subsidiaries held-for-sale		3,413			3,331
Separate account assets		195,914			183,138

Total assets	$	751,341		$	730,906

Liabilities and Equity
Liabilities
Future policy benefits	$	172,987		$	170,912
Policyholder account balances		214,641			210,757
Other policy-related balances		15,641			15,750
Policyholder dividends payable		820			830
Policyholder dividend obligation		793			876
Payables for collateral under securities loaned and other transactions		28,625			27,272
Bank deposits		9,313			10,316
Short-term debt		572			306
Long-term debt (includes $6,718 and $6,902, respectively, at estimated fair value, relating to variable interest entities)		27,604			27,586
Collateral financing arrangements		5,297			5,297
Junior subordinated debt securities		3,191			3,191
Current income tax payable		113			297
Deferred income tax liability		2,238			1,856
Other liabilities (includes $112 and $93, respectively, relating to variable interest entities)		20,037			20,366
Liabilities of subsidiaries held-for-sale		3,206			3,043
Separate account liabilities		195,914			183,138

Total liabilities		700,992			681,793

Contingencies, Commitments and Guarantees (Note 8)
Redeemable noncontrolling interests in partially owned consolidated subsidiaries		128			117

Equity
MetLife, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized:
Preferred stock, 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference		1			1
Convertible preferred stock, 0 and 6,857,000 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively		—			—
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,059,276,399 and 989,031,704 shares issued at March 31, 2011 and December 31, 2010, respectively; 1,056,082,512 and 985,837,817 shares outstanding at March 31, 2011 and December 31, 2010, respectively		11			10
Additional paid-in capital		26,668			26,423
Retained earnings		22,193			21,363
Treasury stock, at cost; 3,193,887 shares at March 31, 2011 and December 31, 2010		(172	)		(172	)
Accumulated other comprehensive income (loss)		1,115			1,000

Total MetLife, Inc.’s stockholders’ equity		49,816			48,625
Noncontrolling interests		405			371

Total equity		50,221			48,996

Total liabilities and equity	$	751,341		$	730,906

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2011 and 2010 (Unaudited)

(In millions, except per share data)


	Three Months
	Ended
	March 31,
	2011			2010

Revenues
Premiums	$	8,554		$	6,788
Universal life and investment-type product policy fees		1,889			1,405
Net investment income		5,317			4,321
Other revenues		566			513
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(132	)		(151	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)		9			59
Other net investment gains (losses)		24			124

Total net investment gains (losses)		(99	)		32
Net derivative gains (losses)		(315	)		41

Total revenues		15,912			13,100

Expenses
Policyholder benefits and claims		8,231			7,464
Interest credited to policyholder account balances		1,924			1,142
Policyholder dividends		372			377
Other expenses		3,902			2,932

Total expenses		14,429			11,915

Income (loss) from continuing operations before provision for income tax		1,483			1,185
Provision for income tax expense (benefit)		428			356

Income (loss) from continuing operations, net of income tax		1,055			829
Income (loss) from discontinued operations, net of income tax		(42	)		5

Net income (loss)		1,013			834
Less: Net income (loss) attributable to noncontrolling interests		7			(1	)

Net income (loss) attributable to MetLife, Inc.		1,006			835
Less: Preferred stock dividends		30			30
Preferred stock redemption premium		146			—

Net income (loss) available to MetLife, Inc.’s common shareholders	$	830		$	805

Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.82		$	0.97

Diluted	$	0.82		$	0.96

Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.78		$	0.98

Diluted	$	0.78		$	0.97

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, 2011 (Unaudited)

(In millions)


																Accumulated Other Comprehensive Income (Loss)
																Net						Foreign			Defined			Total
			Convertible				Additional						Treasury			Unrealized			Other-Than-			Currency			Benefit			MetLife, Inc.’s
	Preferred		Preferred		Common		Paid-in			Retained			Stock			Investment			Temporary			Translation			Plans			Stockholders’			Noncontrolling			Total
	Stock		Stock		Stock		Capital			Earnings			at Cost			Gains (Losses)			Impairments			Adjustments			Adjustment			Equity			Interests (1)			Equity

Balance at December 31, 2010	$	1	$	—	$	10	$	26,423		$	21,363		$	(172	)	$	3,356		$	(366	)	$	(541	)	$	(1,449	)	$	48,625		$	371		$	48,996
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								101						—															101						101
Dividends on preferred stock											(30	)																	(30	)					(30	)
Change in equity of noncontrolling interests																																36			36
Comprehensive income (loss):
Net income (loss)											1,006																		1,006			(3	)		1,003
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax																	(116	)											(116	)					(116	)
Unrealized investment gains (losses), net of related offsets and income tax																	(240	)		27									(213	)		—			(213	)
Foreign currency translation adjustments, net of income tax																							425						425			1			426
Defined benefit plans adjustment, net of income tax																										19			19						19


Other comprehensive income (loss)																													115			1			116

Comprehensive income (loss)																													1,121			(2	)		1,119

Balance at March 31, 2011	$	1	$	—	$	11	$	26,668		$	22,193		$	(172	)	$	3,000		$	(339	)	$	(116	)	$	(1,430	)	$	49,816		$	405		$	50,221


(1)		Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially owned consolidated subsidiaries of $10 million.

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Equity — (Continued)

For the Three Months Ended March 31, 2010 (Unaudited)

(In millions)


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

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

Balance at January 1, 2010		1		8		16,859		19,489			(190	)		(786	)		(502	)		(183	)		(1,545	)		33,151			377			33,528
Stock-based compensation						12					18															30						30
Dividends on preferred stock								(30	)																	(30	)					(30	)
Change in equity of noncontrolling interests																													(14	)		(14	)
Comprehensive income (loss):
Net income (loss)								835																		835			(1	)		834
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax														78												78						78
Unrealized investment gains (losses), net of related offsets and income tax														1,696			(29	)								1,667			(1	)		1,666
Foreign currency translation adjustments, net of income tax																				61						61			7			68
Defined benefit plans adjustment, net of income tax																							19			19						19

Other comprehensive income (loss)																										1,825			6			1,831

Comprehensive income (loss)																										2,660			5			2,665

Balance at March 31, 2010	$	1	$	8	$	16,871	$	20,294		$	(172	)	$	988		$	(531	)	$	(122	)	$	(1,526	)	$	35,811		$	368		$	36,179

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2011 and 2010 (Unaudited)

(In millions)


	Three Months
	Ended
	March 31,
	2011			2010

Net cash provided by operating activities	$	3,501		$	2,871

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		25,149			14,896
Equity securities		473			255
Mortgage loans		2,411			1,152
Real estate and real estate joint ventures		106			18
Other limited partnership interests		320			97
Purchases of:
Fixed maturity securities		(32,954	)		(22,518	)
Equity securities		(271	)		(134	)
Mortgage loans		(2,678	)		(1,156	)
Real estate and real estate joint ventures		(159	)		(176	)
Other limited partnership interests		(211	)		(166	)
Cash received in connection with freestanding derivatives		1,070			465
Cash paid in connection with freestanding derivatives		(1,916	)		(725	)
Net change in policy loans		(87	)		(85	)
Net change in short-term investments		774			386
Net change in other invested assets		(68	)		128
Other, net		(53	)		(35	)

Net cash used in investing activities		(8,094	)		(7,598	)

Cash flows from financing activities
Policyholder account balances:
Deposits		25,042			17,321
Withdrawals		(23,363	)		(14,194	)
Net change in payables for collateral under securities loaned and other transactions		1,353			1,786
Net change in bank deposits		(1,027	)		(218	)
Net change in short-term debt		266			(594	)
Long-term debt issued		280			163
Long-term debt repaid		(249	)		(322	)
Common stock issued, net of issuance costs		2,997			—
Redemption of convertible preferred stock		(2,805	)		—
Preferred stock redemption premium		(146	)		—
Dividends on preferred stock		(30	)		(30	)
Other, net		(56	)		(67	)

Net cash provided by financing activities		2,262			3,845

Effect of change in foreign currency exchange rates on cash and cash equivalents balances		93			(28	)

Change in cash and cash equivalents		(2,238	)		(910	)
Cash and cash equivalents, beginning of period		13,046			10,112

Cash and cash equivalents, end of period	$	10,808		$	9,202

Cash and cash equivalents, subsidiaries held-for-sale, beginning of period	$	89		$	88

Cash and cash equivalents, subsidiaries held-for-sale, end of period	$	116		$	85

Cash and cash equivalents, from continuing operations, beginning of period	$	12,957		$	10,024

Cash and cash equivalents, from continuing operations, end of period	$	10,692		$	9,117

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Interest	$	333		$	258

Income tax	$	415		$	(88	)

Non-cash transactions during the period:
Real estate and real estate joint ventures acquired in satisfaction of debt	$	—		$	8

See accompanying notes to the interim condensed consolidated financial statements.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)


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

Business

“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), its subsidiaries and affiliates. MetLife is a leading global provider of insurance, annuities and employee benefit programs throughout the United States (“U.S.”), Japan, Latin America, Asia Pacific, Europe and the Middle East. Through its subsidiaries and affiliates, MetLife offers life insurance, annuities, auto and homeowners insurance, mortgage and deposit products 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: Insurance Products, Retirement Products, Corporate Benefit Funding and Auto & Home (collectively, “U.S. Business”), and Japan and Other International Regions (collectively, “International”). See Note 13 for further business segment information.

Basis of Presentation

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

On November 1, 2010 (the “Acquisition Date”), MetLife, Inc. completed the acquisition of American Life Insurance Company (“American Life”) from AM Holdings LLC (formerly known as ALICO Holdings LLC) (“AM Holdings”), a subsidiary of American International Group, Inc. (“AIG”), and Delaware American Life Insurance Company (“DelAm”) from AIG, (American Life, together with DelAm, collectively, “ALICO”) (the “Acquisition”). The Acquisition was accounted for using the acquisition method of accounting. ALICO’s fiscal year-end is November 30. Accordingly, the Company’s interim condensed consolidated financial statements reflect the assets and liabilities of ALICO as of February 28, 2011 and the operating results of ALICO for the quarter ended February 28, 2011. The accounting policies of ALICO were conformed to those of MetLife upon the Acquisition. See Note 2.

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

The accompanying interim condensed consolidated financial statements include the accounts of the Holding Company and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 6. Intercompany accounts and transactions have been eliminated.

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

Certain amounts in the prior year period’s interim condensed consolidated financial statements have been reclassified to conform with the 2011 presentation. Such reclassifications include:


	•	Reclassification from other net investment gains (losses) of $41 million to net derivative gains (losses) in the consolidated statements of operations for the three months ended March 31, 2010;

MetLife, Inc.

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


	•	Realignment that affected assets, liabilities and results of operations on a segment basis with no impact to the consolidated results. See Note 13;

	•	Reclassifications related to operating revenues and expenses that affected results of operations on a segment and consolidated basis. See Note 13; and

	•	Reclassifications related to discontinued operations. See Note 14.

The accompanying interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at March 31, 2011, its consolidated results of operations for the three months ended March 31, 2011 and 2010, its consolidated cash flows for the three months ended March 31, 2011 and 2010, and its consolidated statements of equity for the three months ended March 31, 2011 and 2010, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2010 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, 2010, as amended by MetLife, Inc.’s Form 10-K/A dated March 1, 2011 (as amended, the “2010 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”), which includes all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2010 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2011, the Company adopted new guidance that addresses when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure. Under the new guidance, if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The guidance also expands the supplemental pro forma disclosures to include additional narratives. The adoption did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2011, the Company adopted new guidance regarding goodwill impairment testing. This guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity would be required to perform Step 2 of the test if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The adoption did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2011, the Company adopted new guidance regarding accounting for investment funds determined to be VIEs. Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer’s evaluation of its economics in a VIE, unless the separate account contractholder is a related party. The adoption did not have a material impact on the Company’s consolidated financial statements.

Future Adoption of New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding effective control in repurchase agreements (Accounting Standards Update (“ASU”) 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements), effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. The amendments in this ASU remove from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

MetLife, Inc.

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

In April 2011, the FASB issued new guidance regarding accounting for troubled debt restructuring (ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring), effective for the first interim or annual period beginning on or after June 15, 2011 and should be applied retrospectively to the beginning of the annual period of adoption. This guidance clarifies whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for the purpose of determining when a restructuring constitutes a troubled debt restructuring. The Company is currently evaluating the impact this guidance would have on its consolidated financial statements and related disclosures.

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


2.	Acquisitions and Dispositions

2010 Acquisition of ALICO

Description of Transaction

On the Acquisition Date, MetLife, Inc. acquired all of the issued and outstanding capital stock of American Life from AM Holdings, a subsidiary of AIG, and DelAm from AIG for a total purchase price of $16.4 billion. The Acquisition has significantly broadened the Company’s diversification by product, distribution and geography, will meaningfully accelerate MetLife’s global growth strategy, and creates the opportunity to build an international franchise leveraging the key strengths of ALICO.

On March 8, 2011, AM Holdings sold, in public offering transactions, all the shares of common stock and common equity units it received as consideration from MetLife in connection with the Acquisition. The Company did not receive any of the proceeds from the sale of either the shares of common stock held by AM Holdings or the common equity units owned by AM Holdings. On March 8, 2011, MetLife, Inc. issued 68,570,000 shares of common stock for gross proceeds of $3.0 billion, which were used to repurchase and cancel 6,857,000 shares of convertible preferred stock received by AM Holdings from MetLife in connection with the Acquisition. See Note 10 herein and Note 2 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report.

Goodwill

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired and liabilities assumed that could not be individually identified. The goodwill recorded as part of the Acquisition includes the expected synergies and other benefits that management believes will result from combining the operations of ALICO with the operations of MetLife, including further diversification in geographic mix and product offerings and an increase in distribution strength. Of the $7.0 billion in goodwill resulting from the Acquisition, $5.2 billion was allocated to reporting units in the Japan segment and $1.8 billion was allocated to reporting units in the Other International Regions segment.

Contingent Consideration

American Life has guaranteed that the fair value of a fund of assets backing certain United Kingdom unit-linked contracts will 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 exceeds £106 million AIG will pay the difference to American Life and conversely, if the shortfall at July 1, 2012 is less than £106 million American Life will pay the difference to AIG. The Company believes that the fair value of the fund will equal or exceed the guaranteed amount by July 1, 2012. The contingent consideration liability was $127 million at March 31, 2011. The increase in the contingent

MetLife, Inc.

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

consideration liability amount during the three months ended March 31, 2011 was recorded in net derivative gains (losses) in the interim condensed consolidated statement of operations.

Current and Deferred Income Tax

The future tax effects of temporary differences between financial reporting and tax bases of assets and liabilities are measured at the balance sheet dates and are recorded as deferred income tax assets and liabilities, with certain exceptions such as certain temporary differences relating to goodwill under purchase accounting.

For federal income tax purposes, MetLife, Inc. and AM Holdings are expected to make elections under Section 338 of the U.S. Internal Revenue Code of 1986, as amended (the “Section 338 Elections”) with respect to American Life and certain of its subsidiaries. In addition, MetLife, Inc. and AIG are expected to make a Section 338 Election with respect to DelAm. Under such elections, the U.S. tax basis of the assets deemed acquired and liabilities assumed of ALICO were adjusted as of the Acquisition Date to reflect the consequences of the Section 338 Elections.

At March 31, 2011, ALICO’s current and deferred income tax liabilities are provisional and not yet finalized. Current income taxes may be adjusted pending the resolution of the amount of taxes resulting from the Section 338 Elections and the filing of income tax returns. Deferred income taxes may be adjusted as a result of changes in estimates and assumptions relating to the reversal of U.S. temporary differences prior to the completion of the anticipated restructuring of American Life’s foreign branches, the filing of income tax returns and as additional information becomes available during the measurement period. We expect to finalize these amounts as soon as possible but no later than one year from the Acquisition Date.

Costs Related to Acquisition

Transaction and Integration-Related Expenses. The Company incurred $2 million and $27 million of transaction costs for the three months ended March 31, 2011 and 2010, respectively. Transaction costs represent costs directly related to effecting the Acquisition and primarily include banking and legal expenses. Such costs have been expensed as incurred and are included in other expenses. These expenses have been reported within Banking, Corporate & Other.

Integration-related expenses incurred were $68 million and $2 million for the three months ended March 31, 2011 and 2010, respectively, and are included in other expenses. Integration costs represent incremental costs directly related to integrating ALICO, including expenses for consulting, rebranding and the integration of information systems. As the integration of ALICO is an enterprise-wide initiative, these expenses have been reported within Banking, Corporate & Other.

Restructuring Costs and Other Charges. As part of the integration of ALICO’s operations, management has initiated restructuring plans focused on increasing productivity and improving the efficiency of the Company’s operations. For the three months ended March 31, 2011, the Company recognized a severance-related restructuring charge of $17 million associated with the termination of certain employees in connection with this initiative which was reflected within other expenses. Total severance-related restructuring charges incurred since inception and through March 31, 2011 were $27 million. The Company made cash payments of $14 million related to these severance costs during the three months ended March 31, 2011. The balance at March 31, 2011 related to severance-related restructuring costs was $13 million. These expenses have been reported within Banking, Corporate & Other.

Estimated restructuring costs may change as management continues to execute its restructuring plans. Management anticipates further restructuring charges including severance, contract termination costs and other associated costs through the year ended December 31, 2011. However, such restructuring plans are not sufficiently developed to enable the Company to make an estimate of such restructuring charges at March 31, 2011.

MetLife, Inc.

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

2011 Disposition

On April 1, 2011, the Company sold its 50% interest in Mitsui Sumitomo MetLife Insurance Co., Ltd. (“MSI MetLife”), a Japan domiciled life insurance company, to its joint venture partner, MS&AD Insurance Group Holdings, Inc., for $267 million (¥22.5 billion) in cash consideration. During the three months ended March 31, 2011, the Company recorded an additional loss of $52 million, net of income tax, in net investment gains (losses) within the interim condensed consolidated statement of operations. The Company’s operating earnings relating to its investment in MSI MetLife were included in the Other International Regions segment.

2011 Pending Disposition

During the first quarter of 2011, the Company entered into a definitive agreement with a third party to sell its wholly-owned subsidiary, MetLife Taiwan Insurance Company Limited (“MetLife Taiwan”) for $180 million in cash consideration. The transaction is expected to close no later than December 31, 2011. As a part of the sale agreement, the Company received a deposit of $10 million from the third party which is included in other liabilities in the interim condensed consolidated balance sheet at March 31, 2011. The deposit, which is refundable in certain cases, will be applied against the final purchase price. As a result of recording MetLife Taiwan’s net assets at the lower of cost or fair value as assets and liabilities held-for-sale, the Company recognized a net investment loss in discontinued operations of $67 million, net of income tax, for the three months ended March 31, 2011. Income from the operations of MetLife Taiwan of $6 million and $3 million, net of income tax, for the three months ended March 31, 2011 and 2010, respectively, were also recorded in discontinued operations.


3.	Investments

Fixed Maturity and Equity Securities Available-for-Sale

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


	March 31, 2011
	Cost or		Gross Unrealized							Estimated
	Amortized				Temporary		OTTI			Fair		% of
	Cost		Gains		Losses		Losses			Value		Total
	(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	90,810	$	4,277	$	1,538	$	—		$	93,549		28.0	%
Foreign corporate securities (1)		66,414		3,289		1,007		(1	)		68,697		20.6
Foreign government securities		44,288		1,584		683		—			45,189		13.6
Residential mortgage-backed securities (“RMBS”)		44,627		1,542		703		459			45,007		13.5
U.S. Treasury and agency securities		35,158		1,179		858		—			35,479		10.6
Commercial mortgage-backed securities (“CMBS”) (1)		19,135		838		196		(8	)		19,785		5.9
Asset-backed securities (“ABS”)		15,308		306		524		100			14,990		4.5
State and political subdivision securities		11,306		192		537		—			10,961		3.3
Other fixed maturity securities		6		1		—		—			7		—

Total fixed maturity securities (2),(3)	$	327,052	$	13,208	$	6,046	$	550		$	333,664		100.0	%

Equity Securities:
Common stock	$	1,939	$	193	$	20	$	—		$	2,112		58.9	%
Non-redeemable preferred stock (2)		1,574		90		192		—			1,472		41.1

Total equity securities	$	3,513	$	283	$	212	$	—		$	3,584		100.0	%

MetLife, Inc.

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


	December 31, 2010
	Cost or		Gross Unrealized						Estimated
	Amortized				Temporary		OTTI		Fair		% of
	Cost		Gains		Losses		Losses		Value		Total
	(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	88,905	$	4,469	$	1,602	$	—	$	91,772		28.3	%
Foreign corporate securities		65,487		3,326		925		—		67,888		20.9
Foreign government securities		40,871		1,733		602		—		42,002		12.9
RMBS		44,468		1,652		917		470		44,733		13.8
U.S. Treasury and agency securities		32,469		1,394		559		—		33,304		10.2
CMBS		20,213		740		266		12		20,675		6.4
ABS		14,722		274		590		119		14,287		4.4
State and political subdivision securities		10,476		171		518		—		10,129		3.1
Other fixed maturity securities		6		1		—		—		7		—

Total fixed maturity securities (2),(3)	$	317,617	$	13,760	$	5,979	$	601	$	324,797		100.0	%

Equity Securities:
Common stock	$	2,059	$	146	$	12	$	—	$	2,193		60.9	%
Non-redeemable preferred stock (2)		1,562		76		229		—		1,409		39.1

Total equity securities	$	3,621	$	222	$	241	$	—	$	3,602		100.0	%


(1)		OTTI losses as presented above represents 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 and CMBS were in an unrealized gain (loss) position of $1 million and $8 million, respectively, at March 31, 2011, due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “Net Unrealized Investment Gains (Losses)”.

(2)		Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics; while those with more equity-like characteristics, are classified as equity securities within non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” The following table presents the perpetual hybrid securities held by the Company at:

March 31, 2011

December 31, 2010

Estimated

Classification

Fair

Consolidated Balance Sheets

Sector Table

Primary Issuers

Value

(In millions)

Equity securities

Non-redeemable preferred stock

Non-U.S. financial institutions

1,105

1,043

Equity securities

Non-redeemable preferred stock

U.S. financial institutions

226

236

Fixed maturity securities

Foreign corporate securities

Non-U.S. financial institutions

1,782

2,008

Fixed maturity securities

U.S. corporate securities

U.S. financial institutions


(3)		The Company’s holdings in redeemable preferred stock with stated maturity dates, commonly referred to as “capital securities”, were primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $2.2 billion and $2.7 billion at estimated fair value of such securities at March 31, 2011 and December 31, 2010, respectively, which are included in the U.S. and foreign corporate securities sectors within fixed maturity securities.

MetLife, Inc.

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

The below investment grade and non-income producing amounts presented below are based on rating agency designations and equivalent designations of the National Association of Insurance Commissioners (“NAIC”), with the exception of certain structured securities described below held by the Company’s insurance subsidiaries that file NAIC statutory financial statements. Non-agency RMBS, including RMBS backed by sub-prime mortgage loans reported within ABS, CMBS and all other ABS held by the Company’s insurance subsidiaries that file NAIC statutory financial statements are presented based on final ratings from the revised NAIC rating methodologies which became effective prior to January 1, 2011 (which may not correspond to rating agency designations). All NAIC designation (e.g., NAIC 1 — 6) amounts and percentages presented herein are based on the revised NAIC methodologies. All rating agency designation (e.g., Aaa/AAA) amounts and percentages presented herein are based on rating agency designations without adjustment for the revised NAIC methodologies described above. Rating agency designations are based on availability of applicable ratings from rating agencies on the NAIC acceptable rating organization list, including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”).

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


	March 31, 2011			December 31, 2010
	(In millions)

Below investment grade or non-rated fixed maturity securities:
Estimated fair value	$	25,139		$	24,870
Net unrealized gains (losses)	$	(218	)	$	(696	)
Non-income producing fixed maturity securities:
Estimated fair value	$	148		$	130
Net unrealized gains (losses)	$	(20	)	$	(23	)

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

The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s equity, other than the government securities summarized in the table below. The estimated fair value of the Company’s holdings in sovereign fixed maturity securities of Portugal, Ireland, Italy, Greece and Spain, commonly referred to as “Europe’s perimeter region,” was $1.4 billion and $1.6 billion prior to considering net purchased credit default swap protection at March 31, 2011 and December 31, 2010, respectively. The estimated fair value of these Europe perimeter region sovereign fixed maturity securities was 2.9% and 3.2% of the Company’s equity at March 31, 2011 and December 31, 2010, respectively and 0.3% of total cash and invested assets at both March 31, 2011 and December 31, 2010.

Concentrations of Credit Risk (Government and Agency Securities). The following section contains a summary of the concentrations of credit risk related to government and agency fixed maturity and fixed-income securities holdings, which were greater than 10% of the Company’s equity at:


	March 31, 2011		December 31, 2010
	Carrying Value (1)
	(In millions)

Government and agency fixed maturity securities:
United States	$	35,479	$	33,304
Japan	$	16,596	$	15,591
Mexico	$	5,306	$	5,050
U.S. Treasury and agency fixed-income securities included in:
Short-term investments	$	4,026	$	4,048
Cash equivalents	$	4,300	$	5,762

MetLife, Inc.

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


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

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


	March 31, 2011					December 31, 2010
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
			(In millions)

Corporate fixed maturity securities — by sector:
Foreign corporate fixed maturity securities (1)	$	68,697		42.3	%	$	67,888		42.5	%
U.S. corporate fixed maturity securities — by industry:
Industrial		22,437		13.8			22,070		13.8
Consumer		22,344		13.8			21,482		13.5
Finance		20,317		12.5			20,785		13.0
Utility		17,668		10.9			16,902		10.6
Communications		7,607		4.7			7,335		4.6
Other		3,176		2.0			3,198		2.0

Total	$	162,246		100.0	%	$	159,660		100.0	%


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


	March 31, 2011					December 31, 2010
	Estimated					Estimated
	Fair		% of Total			Fair		% of Total
	Value		Investments			Value		Investments
	(In millions)

Concentrations within corporate fixed maturity securities:
Largest exposure to a single issuer	$	2,189		0.5	%	$	2,291		0.5	%
Holdings in ten issuers with the largest exposures	$	13,463		2.9	%	$	14,247		3.1	%

MetLife, Inc.

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

Concentrations of Credit Risk (Fixed Maturity Securities) — RMBS. The table below presents information on the Company’s RMBS holdings at:


	March 31, 2011					December 31, 2010
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

By security type:
Pass-through securities	$	23,275		51.7	%	$	22,430		50.1	%
Collateralized mortgage obligations		21,732		48.3			22,303		49.9

Total RMBS	$	45,007		100.0	%	$	44,733		100.0	%

By risk profile:
Agency	$	34,856		77.5	%	$	34,254		76.6	%
Prime		5,900		13.1			6,258		14.0
Alternative residential mortgage loans		4,251		9.4			4,221		9.4

Total RMBS	$	45,007		100.0	%	$	44,733		100.0	%

Rated Aaa/AAA	$	36,550		81.2	%	$	36,085		80.7	%

Rated NAIC 1	$	39,482		87.7	%	$	38,984		87.1	%

See “Note 3 — Investments — Concentrations of Credit Risk (Fixed Maturity Securities) — RMBS” of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for a description of the security types and risk profile.

The following tables present information on the Company’s investment in alternative residential mortgage loans (“Alt-A”) RMBS at:


	March 31, 2011					December 31, 2010
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

Vintage Year:
2004 & Prior	$	91		2.1	%	$	93		2.2	%
2005		1,519		35.7			1,483		35.1
2006		1,019		24.0			1,013		24.0
2007		943		22.2			922		21.8
2008		6		0.1			7		0.2
2009 (1)		641		15.1			671		15.9
2010 (1)		32		0.8			32		0.8

Total	$	4,251		100.0	%	$	4,221		100.0	%


(1)		All of the Company’s Alt-A RMBS holdings in the 2009 and 2010 vintage years are resecuritization of real estate mortgage investment conduit (“Re-REMIC”) Alt-A RMBS that were purchased in 2009 and 2010 and are comprised of original issue vintage year 2005 through 2007 Alt-A RMBS. All of the Company’s Re-REMIC Alt-A RMBS holdings are NAIC 1 rated.

MetLife, Inc.

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


	March 31, 2011						December 31, 2010
				% of						% of
	Amount			Total			Amount			Total
	(In millions)

Net unrealized gains (losses)	$	(577	)				$	(670	)
Rated Aa/AA or better					14.7	%					15.9	%
Rated NAIC 1					41.2	%					39.5	%
Distribution of holdings — at estimated fair value — by collateral type:
Fixed rate mortgage loans collateral					90.8	%					90.7	%
Hybrid adjustable rate mortgage loans collateral					9.2						9.3

Total Alt-A RMBS					100.0	%					100.0	%

Concentrations of Credit Risk (Fixed Maturity Securities) — CMBS. The following tables present the Company’s holdings of CMBS by rating agency designation and by vintage year at:


	March 31, 2011
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
	(In millions)

2003 & Prior	$	6,851	$	7,032		$	229	$	231		$	155	$	154		$	74	$	72		$	21	$	19		$	7,330	$	7,508
2004		3,452		3,579			508		517			106		104			103		103			91		73			4,260		4,376
2005		2,904		3,091			400		430			315		336			201		207			46		42			3,866		4,106
2006		1,454		1,536			164		168			88		94			166		178			175		192			2,047		2,168
2007		676		689			414		385			173		166			51		53			96		106			1,410		1,399
2008		—		—			28		35			—		—			—		—			—		—			28		35
2009		2		2			—		—			—		—			—		—			—		—			2		2
2010		3		3			56		55			—		—			—		—			—		—			59		58
2011		133		133			—		—			—		—			—		—			—		—			133		133

Total	$	15,475	$	16,065		$	1,799	$	1,821		$	837	$	854		$	595	$	613		$	429	$	432		$	19,135	$	19,785

Ratings Distribution				81.2	%				9.2	%				4.3	%				3.1	%				2.2	%				100.0	%


	December 31, 2010
																					Below
																					Investment
	Aaa					Aa					A					Baa					Grade					Total
			Estimated					Estimated					Estimated					Estimated					Estimated					Estimated
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value
	(In millions)

2003 & Prior	$	7,411	$	7,640		$	282	$	282		$	228	$	227		$	74	$	71		$	28	$	24		$	8,023	$	8,244
2004		3,489		3,620			277		273			216		209			181		175			91		68			4,254		4,345
2005		3,113		3,292			322		324			286		280			263		255			73		66			4,057		4,217
2006		1,463		1,545			159		160			168		168			385		398			166		156			2,341		2,427
2007		840		791			344		298			96		95			119		108			122		133			1,521		1,425
2008		2		2			—		—			—		—			—		—			—		—			2		2
2009		3		3			—		—			—		—			—		—			—		—			3		3
2010		8		8			—		—			4		4			—		—			—		—			12		12

Total	$	16,329	$	16,901		$	1,384	$	1,337		$	998	$	983		$	1,022	$	1,007		$	480	$	447		$	20,213	$	20,675

Ratings Distribution				81.7	%				6.4	%				4.8	%				4.9	%				2.2	%				100.0	%

The tables above reflect rating agency designations assigned by nationally recognized rating agencies including Moody’s, S&P, Fitch and Realpoint, LLC.

MetLife, Inc.

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

The NAIC rating distribution of the Company’s holdings of CMBS was as follows at:


	March 31, 2011			December 31, 2010

NAIC 1		93.9	%		93.7	%
NAIC 2		3.3	%		3.2	%
NAIC 3		1.4	%		1.8	%
NAIC 4		1.1	%		1.0	%
NAIC 5		0.3	%		0.3	%
NAIC 6		—	%		—	%

Concentrations of Credit Risk (Fixed Maturity Securities) — ABS. The Company’s ABS are diversified both by collateral type and by issuer. The following table presents information about ABS held by the Company at:


	March 31, 2011					December 31, 2010
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
			(In millions)

By collateral type:
Credit card loans	$	5,879		39.2	%	$	6,027		42.2	%
Student loans		2,648		17.7			2,416		16.9
Collateralized debt obligations		1,949		13.0			1,798		12.6
RMBS backed by sub-prime mortgage loans		1,113		7.4			1,119		7.8
Automobile loans		776		5.2			605		4.2
Other loans		2,625		17.5			2,322		16.3

Total	$	14,990		100.0	%	$	14,287		100.0	%

Rated Aaa/AAA	$	10,486		70.0	%	$	10,411		72.9	%

Rated NAIC 1	$	13,805		92.1	%	$	13,133		91.9	%

The Company had ABS supported by sub-prime mortgage loans with estimated fair values of $1,113 million and $1,119 million and unrealized losses of $274 million and $317 million at March 31, 2011 and December 31, 2010, respectively. Approximately 28% of this portfolio was rated Aa or better, of which 75% was in vintage year 2005 and prior at March 31, 2011. Approximately 54% of this portfolio was rated Aa or better, of which 88% was in vintage year 2005 and prior at December 31, 2010. These older vintages from 2005 and prior benefit from better underwriting, improved enhancement levels and higher residential property price appreciation. Approximately 63% and 66% of this portfolio was rated NAIC 2 or better at March 31, 2011 and December 31, 2010, respectively.

Concentrations of Credit Risk (Equity Securities). The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company’s equity or 1% of total investments at March 31, 2011 and December 31, 2010.

MetLife, Inc.

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

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:


	March 31, 2011				December 31, 2010
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In millions)

Due in one year or less	$	10,343	$	10,487	$	8,580	$	8,702
Due after one year through five years		66,913		68,596		65,143		66,796
Due after five years through ten years		79,908		82,766		76,508		79,571
Due after ten years		90,818		92,033		87,983		90,033

Subtotal		247,982		253,882		238,214		245,102
RMBS, CMBS and ABS		79,070		79,782		79,403		79,695

Total fixed maturity securities	$	327,052	$	333,664	$	317,617	$	324,797

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 2010 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.

MetLife, Inc.

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

Net Unrealized Investment Gains (Losses)

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


	March 31, 2011			December 31, 2010
	(In millions)

Fixed maturity securities	$	7,189		$	7,817
Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss)		(550	)		(601	)

Total fixed maturity securities		6,639			7,216
Equity securities		99			(3	)
Derivatives		(237	)		(59	)
Other		4			42

Subtotal		6,505			7,196

Amounts allocated from:
Insurance liability loss recognition		(569	)		(672	)
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		31			38
DAC and VOBA		(1,187	)		(1,205	)
Policyholder dividend obligation		(793	)		(876	)

Subtotal		(2,518	)		(2,715	)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		180			197
Deferred income tax benefit (expense)		(1,510	)		(1,692	)

Net unrealized investment gains (losses)		2,657			2,986
Net unrealized investment gains (losses) attributable to noncontrolling interests		4			4

Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	2,661		$	2,990

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


	March 31, 2011			December 31, 2010
	(In millions)

Balance, beginning of period	$	(601	)	$	(859	)
Noncredit OTTI losses recognized (1)		(9	)		(212	)
Transferred to retained earnings (2)		—			16
Securities sold with previous noncredit OTTI loss		37			137
Subsequent increases in estimated fair value		23			317

Balance, end of period	$	(550	)	$	(601	)


(1)		Noncredit OTTI losses recognized, net of deferred policy acquisition costs (“DAC”), were ($13) million and ($202) million for the periods ended March 31, 2011 and December 31, 2010, respectively.

(2)		Amounts transferred to retained earnings were in connection with the adoption of guidance related to the consolidation of VIEs as described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report.

MetLife, Inc.

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

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


	Three Months
	Ended
	March 31, 2011
	(In millions)

Balance, beginning of period	$	2,990
Fixed maturity securities on which noncredit OTTI losses have been recognized		51
Unrealized investment gains (losses) during the period		(742	)
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition		103
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		(7	)
DAC and VOBA		18
Policyholder dividend obligation		83
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)		(17	)
Deferred income tax benefit (expense)		182

Net unrealized investment gains (losses)		2,661
Net unrealized investment gains (losses) attributable to noncontrolling interests		—

Balance, end of period	$	2,661

Change in net unrealized investment gains (losses)	$	(329	)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests		—

Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(329	)

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

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

MetLife, Inc.

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

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


	March 31, 2011
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	22,680	$	580	$	7,608	$	958	$	30,288	$	1,538
Foreign corporate securities		23,018		635		3,320		371		26,338		1,006
Foreign government securities		26,529		670		172		13		26,701		683
RMBS		9,396		257		5,873		905		15,269		1,162
U.S. Treasury and agency securities		14,313		827		110		31		14,423		858
CMBS		3,187		52		1,061		136		4,248		188
ABS		2,999		35		2,767		589		5,766		624
State and political subdivision securities		5,036		251		968		286		6,004		537
Other fixed maturity securities		1		—		—		—		1		—

Total fixed maturity securities	$	107,159	$	3,307	$	21,879	$	3,289	$	129,038	$	6,596

Equity Securities:
Common stock	$	97	$	20	$	—	$	—	$	97	$	20
Non-redeemable preferred stock		173		11		828		181		1,001		192

Total equity securities	$	270	$	31	$	828	$	181	$	1,098	$	212

Total number of securities in an unrealized loss position		5,882				1,533


	December 31, 2010
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	22,954	$	447	$	8,319	$	1,155	$	31,273	$	1,602
Foreign corporate securities		22,415		410		3,976		515		26,391		925
Foreign government securities		26,659		585		189		17		26,848		602
RMBS		7,588		212		6,700		1,175		14,288		1,387
U.S. Treasury and agency securities		13,401		530		118		29		13,519		559
CMBS		3,787		29		1,363		249		5,150		278
ABS		2,713		42		3,026		667		5,739		709
State and political subdivision securities		5,061		246		988		272		6,049		518
Other fixed maturity securities		1		—		—		—		1		—

Total fixed maturity securities	$	104,579	$	2,501	$	24,679	$	4,079	$	129,258	$	6,580

Equity Securities:
Common stock	$	89	$	12	$	1	$	—	$	90	$	12
Non-redeemable preferred stock		191		9		824		220		1,015		229

Total equity securities	$	280	$	21	$	825	$	220	$	1,105	$	241

Total number of securities in an unrealized loss position		5,609				1,704

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

The following tables present the cost or amortized cost, gross unrealized losses, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized losses as a percentage of cost or amortized cost and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:


	March 31, 2011
	Cost or Amortized Cost				Gross Unrealized Losses						Number of Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	106,912	$	1,821	$	2,990		$	446			5,432		123
Six months or greater but less than nine months		2,300		186		156			63			291		13
Nine months or greater but less than twelve months		740		159		20			53			59		11
Twelve months or greater		19,740		3,776		1,640			1,228			1,171		227

Total	$	129,692	$	5,942	$	4,806		$	1,790

Percentage of amortized cost						4	%		30	%

Equity Securities:
Less than six months	$	245	$	43	$	12		$	18			96		21
Six months or greater but less than nine months		3		1		—			1			4		5
Nine months or greater but less than twelve months		28		—		4			—			2		—
Twelve months or greater		604		386		58			119			39		15

Total	$	880	$	430	$	74		$	138

Percentage of cost						8	%		32	%

MetLife, Inc.

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


	December 31, 2010
	Cost or Amortized Cost				Gross Unrealized Losses						Number of Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	105,301	$	1,403	$	2,348		$	368			5,320		121
Six months or greater but less than nine months		1,125		376		29			102			104		29
Nine months or greater but less than twelve months		371		89		28			27			50		9
Twelve months or greater		21,627		5,546		1,863			1,815			1,245		311

Total	$	128,424	$	7,414	$	4,268		$	2,312

Percentage of amortized cost						3	%		31	%

Equity Securities:
Less than six months	$	247	$	94	$	10		$	22			106		33
Six months or greater but less than nine months		29		65		5			16			3		2
Nine months or greater but less than twelve months		6		47		—			16			3		2
Twelve months or greater		518		340		56			116			35		14

Total	$	800	$	546	$	71		$	170

Percentage of cost						9	%		31	%

Equity securities with gross unrealized losses of 20% or more for twelve months or greater increased from $116 million at December 31, 2010 to $119 million at March 31, 2011. As shown in the section “— Evaluating Temporarily Impaired Available-for-Sale Securities” below, $119 million of the equity securities with gross unrealized losses of 20% or more for twelve months or greater at March 31, 2011 were non-redeemable preferred stock, of which $118 million were financial services industry investment grade non-redeemable preferred stock, of which 80% were rated A or better.

MetLife, Inc.

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

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

The Company’s gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI losses on fixed maturity securities recognized in accumulated other comprehensive income (loss) of $6.8 billion at both March 31, 2011 and December 31, 2010, were concentrated, calculated as a percentage of gross unrealized losses and OTTI losses, by sector and industry as follows:


	March 31, 2011			December 31, 2010

Sector:
U.S. corporate securities		23	%		23	%
RMBS		17			20
Foreign corporate securities		15			14
U.S. Treasury and agency securities		13			8
Foreign government securities		10			9
ABS		9			10
State and political subdivision securities		8			8
CMBS		3			4
Other		2			4

Total		100	%		100	%

Industry:
Mortgage-backed		20	%		24	%
Finance		17			21
U.S. Treasury and agency securities		13			8
Foreign government securities		10			9
Asset-backed		9			10
State and political subdivision securities		8			8
Utility		6			5
Consumer		6			4
Communications		2			2
Industrial		1			2
Other		8			7

Total		100	%		100	%

Evaluating Temporarily Impaired Available-for-Sale Securities

The following table presents the Company’s 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:


	March 31, 2011						December 31, 2010
	Fixed Maturity			Equity			Fixed Maturity			Equity
	Securities			Securities			Securities			Securities
	(In millions, except number of securities)

Number of securities		97			6			107			6
Total gross unrealized losses	$	1,885		$	93		$	2,014		$	103
Percentage of total gross unrealized losses		29	%		44	%		31	%		43	%

MetLife, Inc.

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

Fixed maturity and equity securities, each with gross unrealized losses greater than $10 million, decreased $139 million during the three months ended March 31, 2011. The decline in, or improvement in, gross unrealized losses for the three months ended March 31, 2011, was primarily attributable to the narrowing of credit spreads. These securities were included in the Company’s OTTI review process. Based upon the Company’s current evaluation of these securities and other available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired.

In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities 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.

The following table presents certain information about the Company’s equity securities available-for-sale with gross unrealized losses of 20% or more at March 31, 2011:


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

Less than six months	$	18	$	5		28	%	$	5		100	%	$	5		100	%		100	%
Six months or greater but less than twelve months		1		—		—	%		—		—	%		—		—	%		—	%
Twelve months or greater		119		119		100	%		118		99	%		118		100	%		80	%

All equity securities with gross unrealized losses of 20% or more	$	138	$	124		90	%	$	123		99	%	$	123		100	%		80	%

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

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

MetLife, Inc.

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

Net Investment Gains (Losses)

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


	Three Months
	Ended
	March 31,
	2011			2010
	(In millions)

Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized	$	(132	)	$	(151	)
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)		9			59

Net OTTI losses on fixed maturity securities recognized in earnings		(123	)		(92	)
Fixed maturity securities — net gains (losses) on sales and disposals		(40	)		26

Total gains (losses) on fixed maturity securities		(163	)		(66	)
Other net investment gains (losses):
Equity securities		36			27
Mortgage loans		47			(28	)
Real estate and real estate joint ventures		1			(22	)
Other limited partnership interests		3			(1	)
Other investment portfolio gains (losses)		4			58

Subtotal — investment portfolio gains (losses)		(72	)		(32	)

Fair value option (“FVO”) consolidated securitization entities — changes in estimated fair value included in net investment gains (losses):
Commercial mortgage loans		18			481
Securities		(40	)		(4	)
Long-term debt — related to commercial mortgage loans		—			(479	)
Long-term debt — related to securities		47			12
Other gains (losses) (1)		(52	)		54

Subtotal FVO consolidated securitization entities and other gains (losses)		(27	)		64

Total net investment gains (losses)	$	(99	)	$	32


(1)		Other gains (losses) for the three months ended March 31, 2011 includes a loss of $80 million related to the sale of the Company’s investment in MSI MetLife. See Note 2.

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

Gains (losses) from foreign currency transactions included within net investment gains (losses) were $35 million and $150 million for the three months ended March 31, 2011 and 2010, respectively.

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

MetLife, Inc.

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


	Three Months Ended March 31,
	2011			2010			2011			2010			2011			2010
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)

Proceeds	$	16,532		$	8,372		$	316		$	145		$	16,848		$	8,517

Gross investment gains	$	193		$	164		$	48		$	31		$	241		$	195

Gross investment losses		(233	)		(138	)		(6	)		(3	)		(239	)		(141	)

Total OTTI losses recognized in earnings:
Credit-related		(43	)		(86	)		—			—			(43	)		(86	)
Other (1)		(80	)		(6	)		(6	)		(1	)		(86	)		(7	)

Total OTTI losses recognized in earnings		(123	)		(92	)		(6	)		(1	)		(129	)		(93	)

Net investment gains (losses)	$	(163	)	$	(66	)	$	36		$	27		$	(127	)	$	(39	)


(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.

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
	March 31,
	2011		2010
	(In millions)

Sector:
U.S. and foreign corporate securities — by industry:
Communications	$	13	$	3
Consumer		2		22
Utility		1		—
Finance		1		8

Total U.S. and foreign corporate securities		17		33
Foreign government securities		76		—
RMBS		18		30
ABS		9		19
CMBS		3		10

Total	$	123	$	92

MetLife, Inc.

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

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


	Three Months
	Ended
	March 31,
	2011		2010
	(In millions)

Sector:
Common stock	$	6	$	1
Industry:
Other industries	$	6	$	1

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

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


	Three Months
	Ended
	March 31,
	2011			2010
	(In millions)

Balance, beginning of period	$	443		$	581
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired		8			19
Additional impairments — credit loss OTTI recognized on securities previously impaired		16			31
Reductions:
Due to sales (maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired		(29	)		(104	)
Due to securities de-recognized in connection with the adoption of new guidance related to the consolidation of VIEs		—			(100	)
Due to securities impaired to net present value of expected future cash flows		(44	)		—
Due to increases in cash flows — accretion of previous credit loss OTTI		(5	)		(3	)

Balance, end of period	$	389		$	424

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
	March 31,
	2011			2010
	(In millions)

Investment income:
Fixed maturity securities	$	3,683		$	3,053
Equity securities		30			25
Trading and other securities — Actively Traded Securities and FVO general account securities (1)		28			15
Mortgage loans		759			673
Policy loans		160			176
Real estate and real estate joint ventures		156			46
Other limited partnership interests		243			265
Cash, cash equivalents and short-term investments		46			18
International joint ventures (2)		(19	)		17
Other		(32	)		86

Subtotal		5,054			4,374
Less: Investment expenses		252			226

Subtotal, net		4,802			4,148

Trading and other securities — FVO contractholder-directed unit-linked investments (1)		419			64
FVO consolidated securitization entities:
Commercial mortgage loans		95			105
Securities		1			4

Subtotal		515			173

Net investment income	$	5,317		$	4,321


(1)		Changes in estimated fair value subsequent to purchase included in net investment income:


Trading and other securities — Actively Traded Securities and FVO general account securities	$	21	$	7
Trading and other securities— FVO contractholder-directed unit-linked investments	$	316	$	57


(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 ($23) million and ($32) million for the three months ended March 31, 2011 and 2010, respectively.

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

Securities Lending

The Company participates in securities lending programs whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, primarily brokerage firms and commercial banks. The Company generally obtains collateral, generally cash, in an amount equal to 102% of the estimated fair value of the securities loaned, which is obtained at the inception of a loan and maintained at a level greater than or equal to 100% for the duration of the loan. Securities loaned under such transactions may be sold or

MetLife, Inc.

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

repledged by the transferee. The Company is liable to return to its counterparties the cash collateral under its control. These transactions are treated as financing arrangements and the associated liability is recorded at the amount of the cash received.

Elements of the securities lending programs are presented below at:


	March 31, 2011		December 31, 2010
	(In millions)

Securities on loan:
Amortized cost	$	25,689	$	23,715
Estimated fair value	$	25,893	$	24,230
Aging of cash collateral liability:
Open (1)	$	3,672	$	2,752
Less than thirty days		9,736		12,301
Thirty days or greater but less than sixty days		6,496		4,399
Sixty days or greater but less than ninety days		4,215		2,291
Ninety days or greater		2,346		2,904

Total cash collateral liability	$	26,465	$	24,647

Security collateral on deposit from counterparties	$	11	$	—

Reinvestment portfolio — estimated fair value	$	26,188	$	24,177


(1)		Open — meaning that the related loaned security could be returned to the Company on the next business day requiring the Company to immediately return the cash collateral.

The estimated fair value of the securities on loan related to the cash collateral on open at March 31, 2011 was $3.6 billion, of which $3.1 billion were U.S. Treasury and agency securities which, if put to the Company, can be immediately sold to satisfy the cash requirements. The remainder of the securities on loan was primarily U.S. Treasury and agency securities, and very liquid RMBS. The U.S. Treasury securities on loan are primarily holdings of on-the-run U.S. Treasury securities, the most liquid U.S. Treasury securities available. If these high quality securities that are on loan are put back to the Company, the proceeds from immediately selling these securities can be used to satisfy the related cash requirements. The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including RMBS, U.S. corporate securities, U.S. Treasury and agency securities, ABS, foreign corporate securities and CMBS). If the on loan securities or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities are put back to the Company.

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 consolidated financial statements.

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (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 in the table below at estimated fair value for cash and cash equivalents, short-term investments, fixed maturity, equity, trading and other securities and at carrying value for mortgage loans.


	March 31, 2011		December 31, 2010
	(In millions)

Invested assets on deposit:
Regulatory agencies	$	2,085	$	2,110
Invested assets held in trust:
Collateral financing arrangements		5,550		5,340
Reinsurance arrangements		2,206		3,090
Invested assets pledged as collateral:
Funding agreements and advances — Federal Home Loan Bank (“FHLB”) of New York		20,878		21,975
Funding agreements — FHLB of Boston		600		211
Funding agreements — FHLB of Des Moines		859		—
Funding agreements — Federal Agricultural Mortgage Corporation		3,160		3,159
Federal Reserve Bank of New York		1,633		1,822
Collateral financing arrangements		50		112
Derivative transactions		1,296		1,726
Short sale agreements		575		465

Total invested assets on deposit, held in trust and pledged as collateral	$	38,892	$	40,010

See Note 3 “— Investments — Invested Assets on Deposit, Held in Trust and Pledged as Collateral” of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for a description of the types of invested assets on deposit, held in trust and pledged as collateral and selected other information about the related program or counterparty. The Company has pledged fixed maturity securities in support of its funding agreements with the FHLB of Des Moines. See Note 8 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for a description of the nature of these arrangements.

See also “— Securities Lending” for the amount of the Company’s cash received from and due back to counterparties pursuant to the Company’s securities lending program. See “— Variable Interest Entities” for assets of certain CSEs that can only be used to settle liabilities of such entities.

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 FVO has been elected:


	March 31, 2011			December 31, 2010
	(In millions)

Actively Traded Securities	$	572		$	463
FVO general account securities		173			131
FVO contractholder-directed unit-linked investments		18,459			17,794
FVO securities held by consolidated securitization entities		161			201

Total trading and other securities — at estimated fair value	$	19,365		$	18,589

Actively Traded Securities — at estimated fair value	$	572		$	463
Short sale agreement liabilities — at estimated fair value		(47	)		(46	)

Net long/short position — at estimated fair value	$	525		$	417

Investments pledged to secure short sale agreement liabilities	$	575		$	465

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2010 Annual Report for discussion of FVO contractholder-directed unit-linked investments and “— Variable Interest Entities” for discussion of 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 net investment income and net investment gains (losses), as applicable.

Mortgage Loans

Mortgage loans are summarized as follows at:


	March 31, 2011						December 31, 2010
	Carrying			% of			Carrying			% of
	Value			Total			Value			Total
	(In millions)

Mortgage loans held-for-investment:
Commercial	$	38,087			61.6	%	$	37,818			60.7	%
Agricultural		12,761			20.6			12,751			20.4
Residential		2,399			3.9			2,231			3.7

Subtotal		53,247			86.1			52,800			84.8
Valuation allowances		(621	)		(1.0	)		(664	)		(1.1	)

Subtotal mortgage loans held-for-investment, net		52,626			85.1			52,136			83.7
Commercial mortgage loans held by consolidated securitization entities — FVO		6,771			11.0			6,840			11.0

Total mortgage loans held-for-investment, net		59,397			96.1			58,976			94.7

Mortgage loans held-for-sale:
Residential — FVO		1,571			2.5			2,510			4.0
Agricultural and residential mortgage loans — lower of amortized cost or estimated fair value		864			1.4			811			1.3

Total mortgage loans held-for-sale		2,435			3.9			3,321			5.3

Total mortgage loans, net	$	61,832			100.0	%	$	62,297			100.0	%

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.

Concentration of Credit Risk — The Company diversifies its mortgage loan portfolio by both geographic region and property type to reduce the risk of concentration. The Company’s commercial and agricultural mortgage loans are collateralized by properties primarily located in the U.S., at 90%, with the remaining 10% collateralized by properties located outside the U.S., calculated as a percent of total mortgage loans held-for-investment (excluding commercial mortgage loans held by CSEs) at March 31, 2011. The carrying value of the Company’s commercial and agricultural mortgage loans located in California, New York and Texas were 20%, 9% and 7%, respectively, of total mortgage loans held-for-investment (excluding commercial mortgage loans held by CSEs) at March 31, 2011. Additionally, the Company manages risk when originating commercial and agricultural mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate.

Certain of the Company’s real estate joint ventures have mortgage loans with the Company. The carrying values of such mortgage loans were $343 million and $283 million at March 31, 2011 and December 31, 2010, respectively.

The following tables present the recorded investment in mortgage loans held-for-investment, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, at:


	Commercial		Agricultural		Residential		Total
	(In millions)

March 31, 2011:
Mortgage loans:
Evaluated individually for credit losses	$	160	$	105	$	18	$	283
Evaluated collectively for credit losses		37,927		12,656		2,381		52,964

Total mortgage loans		38,087		12,761		2,399		53,247

Valuation allowances:
Specific credit losses		41		39		1		81
Non-specifically identified credit losses		491		37		12		540

Total valuation allowances		532		76		13		621

Mortgage loans, net of valuation allowance	$	37,555	$	12,685	$	2,386	$	52,626

December 31, 2010:
Mortgage loans:
Evaluated individually for credit losses	$	120	$	146	$	13	$	279
Evaluated collectively for credit losses		37,698		12,605		2,218		52,521

Total mortgage loans		37,818		12,751		2,231		52,800

Valuation allowances:
Specific credit losses		36		52		—		88
Non-specifically identified credit losses		526		36		14		576

Total valuation allowances		562		88		14		664

Mortgage loans, net of valuation allowance	$	37,256	$	12,663	$	2,217	$	52,136

MetLife, Inc.

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

The following tables present the changes in the valuation allowance, by portfolio segment:


	Mortgage Loan Valuation Allowances
	Commercial			Agricultural			Residential			Total
	(In millions)

Balance at January 1, 2010	$	589		$	115		$	17		$	721
Provision (release)		35			6			—			41
Charge-offs, net of recoveries		—			(11	)		—			(11	)

Balance at March 31, 2010	$	624		$	110		$	17		$	751

Balance at January 1, 2011	$	562		$	88		$	14		$	664
Provision (release)		(30	)		(9	)		—			(39	)
Charge-offs, net of recoveries		—			(3	)		(1	)		(4	)

Balance at March 31, 2011	$	532		$	76		$	13		$	621

Commercial Mortgage Loans — by Credit Quality Indicators with Estimated Fair Value: Presented below for the commercial mortgage loans held-for-investment is the recorded investment, prior to valuation allowances, by the indicated loan-to-value ratio categories and debt service coverage ratio categories and estimated fair value of such mortgage loans by the indicated loan-to-value ratio categories at:


	Recorded Investment
	Debt Service Coverage Ratios												Estimated
	> 1.20x		1.00x - 1.20x		< 1.00x			Total		% of Total			Fair Value		% of Total
			(In millions)										(In millions)

March 31, 2011:

Loan-to-value ratios:
Less than 65%	$	17,994	$	182	$	338		$	18,514		48.6	%	$	19,604		49.9	%
65% to 75%		9,700		554		598			10,852		28.5			11,276		28.7
76% to 80%		2,763		321		109			3,193		8.4			3,268		8.3
Greater than 80%		3,858		984		686			5,528		14.5			5,124		13.1

Total	$	34,315	$	2,041	$	1,731		$	38,087		100.0	%	$	39,272		100.0	%


December 31, 2010:
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