REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Policy Owners of
Separate Account No. 13S
and Board of Directors of
Metropolitan Life Insurance Company
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of Separate Account No. 13S (the "Separate Account") of Metropolitan Life Insurance Company (the "Company") comprising each of the individual Divisions listed in Note 2A as of December 31, 2023, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights in Note 7 for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Divisions constituting the Separate Account of the Company as of December 31, 2023, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on the Separate Account's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2023, by correspondence with the custodian or mutual fund companies. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
Tampa, Florida
March 22, 2024
We have served as the Separate Account's auditor since 2000.
This page is intentionally left blank.
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2023
|
|
BHFTI Invesco Global Equity Division |
|
BHFTI MFS®​ Research International Division |
|
BHFTII BlackRock Ultra-Short Term Bond Division |
|
BHFTII MetLife Aggregate Bond Index Division |
|
Assets: |
|
Investments at fair value |
|
$ |
40,891 |
|
|
$ |
134,395 |
|
|
$ |
112,896 |
|
|
$ |
136,256 |
|
|
Total Assets |
|
|
40,891 |
|
|
|
134,395 |
|
|
|
112,896 |
|
|
|
136,256 |
|
|
Liabilities: |
|
Accrued fees |
|
|
5 |
|
|
|
19 |
|
|
|
12 |
|
|
|
|
|
|
Due to Metropolitan Life Insurance Company |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
10 |
|
|
|
19 |
|
|
|
12 |
|
|
|
|
|
|
Net Assets |
|
$ |
40,881 |
|
|
$ |
134,376 |
|
|
$ |
112,884 |
|
|
$ |
136,256 |
|
|
The accompanying notes are an integral part of these financial statements.
1
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES (Concluded)
December 31, 2023
|
|
BHFTII MetLife Mid Cap Stock Index Division |
|
BHFTII MetLife MSCI EAFE®​ Index Division |
|
BHFTII MetLife Russell 2000®​ Index Division |
|
BHFTII MetLife Stock Index Division |
|
BHFTII T. Rowe Price Large Cap Growth Division |
|
Assets: |
|
Investments at fair value |
|
$ |
247,450 |
|
|
$ |
316,559 |
|
|
$ |
221,524 |
|
|
$ |
5,247,081 |
|
|
$ |
205,340 |
|
|
Total Assets |
|
|
247,450 |
|
|
|
316,559 |
|
|
|
221,524 |
|
|
|
5,247,081 |
|
|
|
205,340 |
|
|
Liabilities: |
|
Accrued fees |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
14 |
|
|
Due to Metropolitan Life Insurance Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
14 |
|
|
Net Assets |
|
$ |
247,450 |
|
|
$ |
316,559 |
|
|
$ |
221,518 |
|
|
$ |
5,247,081 |
|
|
$ |
205,326 |
|
|
The accompanying notes are an integral part of these financial statements.
2
|
|
BHFTII Western Asset Management Strategic Bond Opportunities Division |
|
Fidelity®​ VIP Contrafund® ​Division |
|
Fidelity®​ VIP Equity-Income Division |
|
Fidelity®​ VIP Investment Grade Bond Division |
|
Assets: |
|
Investments at fair value |
|
$ |
46,907 |
|
|
$ |
340,894 |
|
|
$ |
100,241 |
|
|
$ |
390,675 |
|
|
Total Assets |
|
|
46,907 |
|
|
|
340,894 |
|
|
|
100,241 |
|
|
|
390,675 |
|
|
Liabilities: |
|
Accrued fees |
|
|
11 |
|
|
|
7 |
|
|
|
|
|
|
|
11 |
|
|
Due to Metropolitan Life Insurance Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
Total Liabilities |
|
|
11 |
|
|
|
7 |
|
|
|
|
|
|
|
12 |
|
|
Net Assets |
|
$ |
46,896 |
|
|
$ |
340,887 |
|
|
$ |
100,241 |
|
|
$ |
390,663 |
|
|
The accompanying notes are an integral part of these financial statements.
3
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
For the year ended December 31, 2023
|
|
BHFTI Invesco Global Equity Division |
|
BHFTI MFS®​ Research International Division |
|
BHFTII BlackRock Ultra-Short Term Bond Division |
|
BHFTII MetLife Aggregate Bond Index Division |
|
BHFTII MetLife Mid Cap Stock Index Division |
|
Investment Income: |
|
Dividends |
|
$ |
139 |
|
|
$ |
2,307 |
|
|
$ |
2,002 |
|
|
$ |
4,139 |
|
|
$ |
2,984 |
|
|
Expenses: |
|
Mortality and expense risk charges |
|
|
128 |
|
|
|
462 |
|
|
|
416 |
|
|
|
493 |
|
|
|
804 |
|
|
Net investment income (loss) |
|
|
11 |
|
|
|
1,845 |
|
|
|
1,586 |
|
|
|
3,646 |
|
|
|
2,180 |
|
|
Net Realized and Change in Unrealized Gains (Losses) on Investments: |
|
Realized gain distributions |
|
|
2,155 |
|
|
|
2,574 |
|
|
|
2 |
|
|
|
|
|
|
|
14,384 |
|
|
Realized gains (losses) on sale of investments |
|
|
350 |
|
|
|
205 |
|
|
|
475 |
|
|
|
(4,141 |
) |
|
|
(880 |
) |
|
Net realized gains (losses) |
|
|
2,505 |
|
|
|
2,779 |
|
|
|
477 |
|
|
|
(4,141 |
) |
|
|
13,504 |
|
|
Change in unrealized gains (losses) on investments |
|
|
8,384 |
|
|
|
11,190 |
|
|
|
3,386 |
|
|
|
6,988 |
|
|
|
19,656 |
|
|
Net realized and change in unrealized gains (losses) on investments |
|
|
10,889 |
|
|
|
13,969 |
|
|
|
3,863 |
|
|
|
2,847 |
|
|
|
33,160 |
|
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
10,900 |
|
|
$ |
15,814 |
|
|
$ |
5,449 |
|
|
$ |
6,493 |
|
|
$ |
35,340 |
|
|
The accompanying notes are an integral part of these financial statements.
4
|
|
BHFTII MetLife MSCI EAFE®​ Index Division |
|
BHFTII MetLife Russell 2000®​ Index Division |
|
BHFTII MetLife Stock Index Division |
|
BHFTII T. Rowe Price Large Cap Growth Division |
|
BHFTII Western Asset Management Strategic Bond Opportunities Division |
|
Investment Income: |
|
Dividends |
|
$ |
7,428 |
|
|
$ |
2,635 |
|
|
$ |
66,127 |
|
|
$ |
|
|
|
$ |
3,019 |
|
|
Expenses: |
|
Mortality and expense risk charges |
|
|
1,034 |
|
|
|
706 |
|
|
|
16,661 |
|
|
|
641 |
|
|
|
162 |
|
|
Net investment income (loss) |
|
|
6,394 |
|
|
|
1,929 |
|
|
|
49,466 |
|
|
|
(641 |
) |
|
|
2,857 |
|
|
Net Realized and Change in Unrealized Gains (Losses) on Investments: |
|
Realized gain distributions |
|
|
|
|
|
|
3,464 |
|
|
|
312,356 |
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) on sale of investments |
|
|
5,034 |
|
|
|
(3,057 |
) |
|
|
65,842 |
|
|
|
(5,113 |
) |
|
|
(1,410 |
) |
|
Net realized gains (losses) |
|
|
5,034 |
|
|
|
407 |
|
|
|
378,198 |
|
|
|
(5,113 |
) |
|
|
(1,410 |
) |
|
Change in unrealized gains (losses) on investments |
|
|
38,532 |
|
|
|
30,686 |
|
|
|
663,194 |
|
|
|
74,123 |
|
|
|
2,678 |
|
|
Net realized and change in unrealized gains (losses) on investments |
|
|
43,566 |
|
|
|
31,093 |
|
|
|
1,041,392 |
|
|
|
69,010 |
|
|
|
1,268 |
|
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
49,960 |
|
|
$ |
33,022 |
|
|
$ |
1,090,858 |
|
|
$ |
68,369 |
|
|
$ |
4,125 |
|
|
The accompanying notes are an integral part of these financial statements.
5
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (Concluded)
For the year ended December 31, 2023
|
|
Fidelity®​ VIP Contrafund®​ Division |
|
Fidelity®​ VIP Equity-Income Division |
|
Fidelity®​ VIP Investment Grade Bond Division |
|
Investment Income: |
|
Dividends |
|
$ |
1,520 |
|
|
$ |
1,853 |
|
|
$ |
10,161 |
|
|
Expenses: |
|
Mortality and expense risk charges |
|
|
1,077 |
|
|
|
336 |
|
|
|
1,385 |
|
|
Net investment income (loss) |
|
|
443 |
|
|
|
1,517 |
|
|
|
8,776 |
|
|
Net Realized and Change in Unrealized Gains (Losses) on Investments: |
|
Realized gain distributions |
|
|
11,000 |
|
|
|
2,781 |
|
|
|
|
|
|
Realized gains (losses) on sale of investments |
|
|
6,397 |
|
|
|
384 |
|
|
|
(18,308 |
) |
|
Net realized gains (losses) |
|
|
17,397 |
|
|
|
3,165 |
|
|
|
(18,308 |
) |
|
Change in unrealized gains (losses) on investments |
|
|
69,782 |
|
|
|
4,813 |
|
|
|
32,813 |
|
|
Net realized and change in unrealized gains (losses) on investments |
|
|
87,179 |
|
|
|
7,978 |
|
|
|
14,505 |
|
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
87,622 |
|
|
$ |
9,495 |
|
|
$ |
23,281 |
|
|
The accompanying notes are an integral part of these financial statements.
6
This page is intentionally left blank.
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2023 and 2022
|
|
BHFTI Invesco Global Equity Division |
|
BHFTI MFS®​ Research International Division |
|
BHFTII BlackRock Ultra-Short Term Bond Division |
|
BHFTII MetLife Aggregate Bond Index Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Increase (Decrease) in Net Assets: |
|
From Operations: |
|
Net investment income (loss) |
|
$ |
11 |
|
|
$ |
(129 |
) |
|
$ |
1,845 |
|
|
$ |
2,813 |
|
|
$ |
1,586 |
|
|
$ |
(568 |
) |
|
$ |
3,646 |
|
|
$ |
4,126 |
|
|
Net realized gains (losses) |
|
|
2,505 |
|
|
|
5,605 |
|
|
|
2,779 |
|
|
|
9,629 |
|
|
|
477 |
|
|
|
(315 |
) |
|
|
(4,141 |
) |
|
|
(2,496 |
) |
|
Change in unrealized gains (losses) on investments |
|
|
8,384 |
|
|
|
(21,580 |
) |
|
|
11,190 |
|
|
|
(47,298 |
) |
|
|
3,386 |
|
|
|
2,222 |
|
|
|
6,988 |
|
|
|
(27,082 |
) |
|
Net increase (decrease) in net assets resulting from operations |
|
|
10,900 |
|
|
|
(16,104 |
) |
|
|
15,814 |
|
|
|
(34,856 |
) |
|
|
5,449 |
|
|
|
1,339 |
|
|
|
6,493 |
|
|
|
(25,452 |
) |
|
Policy Transactions: |
|
Premium payments received from policy owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transfers (including fixed account) |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy charges |
|
|
(2,644 |
) |
|
|
(2,141 |
) |
|
|
(8,754 |
) |
|
|
(8,002 |
) |
|
|
(18,455 |
) |
|
|
(17,409 |
) |
|
|
(21,640 |
) |
|
|
(20,290 |
) |
|
Transfers for policy benefits and terminations |
|
|
(3 |
) |
|
|
|
|
|
|
(4,593 |
) |
|
|
(19,224 |
) |
|
|
(3,337 |
) |
|
|
(51,292 |
) |
|
|
(2 |
) |
|
|
|
|
|
Net increase (decrease) in net assets resulting from policy transactions |
|
|
(2,647 |
) |
|
|
(2,137 |
) |
|
|
(13,347 |
) |
|
|
(27,226 |
) |
|
|
(21,792 |
) |
|
|
(68,701 |
) |
|
|
(21,642 |
) |
|
|
(20,290 |
) |
|
Net increase (decrease) in net assets |
|
|
8,253 |
|
|
|
(18,241 |
) |
|
|
2,467 |
|
|
|
(62,082 |
) |
|
|
(16,343 |
) |
|
|
(67,362 |
) |
|
|
(15,149 |
) |
|
|
(45,742 |
) |
|
Net Assets: |
|
Beginning of year |
|
|
32,628 |
|
|
|
50,869 |
|
|
|
131,909 |
|
|
|
193,991 |
|
|
|
129,227 |
|
|
|
196,589 |
|
|
|
151,405 |
|
|
|
197,147 |
|
|
End of year |
|
$ |
40,881 |
|
|
$ |
32,628 |
|
|
$ |
134,376 |
|
|
$ |
131,909 |
|
|
$ |
112,884 |
|
|
$ |
129,227 |
|
|
$ |
136,256 |
|
|
$ |
151,405 |
|
|
The accompanying notes are an integral part of these financial statements.
8
|
|
BHFTII MetLife Mid Cap Stock Index Division |
|
BHFTII MetLife MSCI EAFE®​ Index Division |
|
BHFTII MetLife Russell 2000®​ Index Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Increase (Decrease) in Net Assets: |
|
From Operations: |
|
Net investment income (loss) |
|
$ |
2,180 |
|
|
$ |
1,855 |
|
|
$ |
6,394 |
|
|
$ |
9,663 |
|
|
$ |
1,929 |
|
|
$ |
1,576 |
|
|
Net realized gains (losses) |
|
|
13,504 |
|
|
|
40,933 |
|
|
|
5,034 |
|
|
|
10,305 |
|
|
|
407 |
|
|
|
39,719 |
|
|
Change in unrealized gains (losses) on investments |
|
|
19,656 |
|
|
|
(80,988 |
) |
|
|
38,532 |
|
|
|
(69,008 |
) |
|
|
30,686 |
|
|
|
(96,465 |
) |
|
Net increase (decrease) in net assets resulting from operations |
|
|
35,340 |
|
|
|
(38,200 |
) |
|
|
49,960 |
|
|
|
(49,040 |
) |
|
|
33,022 |
|
|
|
(55,170 |
) |
|
Policy Transactions: |
|
Premium payments received from policy owners |
|
|
15,476 |
|
|
|
15,476 |
|
|
|
23,334 |
|
|
|
23,334 |
|
|
|
15,476 |
|
|
|
15,476 |
|
|
Net transfers (including fixed account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
Policy charges |
|
|
(37,998 |
) |
|
|
(31,206 |
) |
|
|
(46,790 |
) |
|
|
(35,564 |
) |
|
|
(33,891 |
) |
|
|
(29,089 |
) |
|
Transfers for policy benefits and terminations |
|
|
(2 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
Net increase (decrease) in net assets resulting from policy transactions |
|
|
(22,524 |
) |
|
|
(15,730 |
) |
|
|
(23,459 |
) |
|
|
(12,230 |
) |
|
|
(18,416 |
) |
|
|
(13,612 |
) |
|
Net increase (decrease) in net assets |
|
|
12,816 |
|
|
|
(53,930 |
) |
|
|
26,501 |
|
|
|
(61,270 |
) |
|
|
14,606 |
|
|
|
(68,782 |
) |
|
Net Assets: |
|
Beginning of year |
|
|
234,634 |
|
|
|
288,564 |
|
|
|
290,058 |
|
|
|
351,328 |
|
|
|
206,912 |
|
|
|
275,694 |
|
|
End of year |
|
$ |
247,450 |
|
|
$ |
234,634 |
|
|
$ |
316,559 |
|
|
$ |
290,058 |
|
|
$ |
221,518 |
|
|
$ |
206,912 |
|
|
The accompanying notes are an integral part of these financial statements.
9
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (Concluded)
For the years ended December 31, 2023 and 2022
|
|
BHFTII MetLife Stock Index Division |
|
BHFTII T. Rowe Price Large Cap Growth Division |
|
BHFTII Western Asset Management Strategic Bond Opportunities Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Increase (Decrease) in Net Assets: |
|
From Operations: |
|
Net investment income (loss) |
|
$ |
49,466 |
|
|
$ |
45,148 |
|
|
$ |
(641 |
) |
|
$ |
(638 |
) |
|
$ |
2,857 |
|
|
$ |
4,045 |
|
|
Net realized gains (losses) |
|
|
378,198 |
|
|
|
519,564 |
|
|
|
(5,113 |
) |
|
|
31,539 |
|
|
|
(1,410 |
) |
|
|
(2,987 |
) |
|
Change in unrealized gains (losses) on investments |
|
|
663,194 |
|
|
|
(1,614,512 |
) |
|
|
74,123 |
|
|
|
(137,632 |
) |
|
|
2,678 |
|
|
|
(14,470 |
) |
|
Net increase (decrease) in net assets resulting from operations |
|
|
1,090,858 |
|
|
|
(1,049,800 |
) |
|
|
68,369 |
|
|
|
(106,731 |
) |
|
|
4,125 |
|
|
|
(13,412 |
) |
|
Policy Transactions: |
|
Premium payments received from policy owners |
|
|
220,583 |
|
|
|
148,488 |
|
|
|
24,452 |
|
|
|
10,033 |
|
|
|
|
|
|
|
|
|
|
Net transfers (including fixed account) |
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
964 |
|
|
|
|
|
|
|
|
|
|
Policy charges |
|
|
(452,883 |
) |
|
|
(380,209 |
) |
|
|
(38,120 |
) |
|
|
(26,181 |
) |
|
|
(2,564 |
) |
|
|
(2,955 |
) |
|
Transfers for policy benefits and terminations |
|
|
(40,110 |
) |
|
|
(86,136 |
) |
|
|
|
|
|
|
|
|
|
|
(5,291 |
) |
|
|
(14,853 |
) |
|
Net increase (decrease) in net assets resulting from policy transactions |
|
|
(272,410 |
) |
|
|
(317,857 |
) |
|
|
(13,658 |
) |
|
|
(15,184 |
) |
|
|
(7,855 |
) |
|
|
(17,808 |
) |
|
Net increase (decrease) in net assets |
|
|
818,448 |
|
|
|
(1,367,657 |
) |
|
|
54,711 |
|
|
|
(121,915 |
) |
|
|
(3,730 |
) |
|
|
(31,220 |
) |
|
Net Assets: |
|
Beginning of year |
|
|
4,428,633 |
|
|
|
5,796,290 |
|
|
|
150,615 |
|
|
|
272,530 |
|
|
|
50,626 |
|
|
|
81,846 |
|
|
End of year |
|
$ |
5,247,081 |
|
|
$ |
4,428,633 |
|
|
$ |
205,326 |
|
|
$ |
150,615 |
|
|
$ |
46,896 |
|
|
$ |
50,626 |
|
|
The accompanying notes are an integral part of these financial statements.
10
|
|
Fidelity®​ VIP Contrafund® ​Division |
|
Fidelity®​ VIP Equity-Income Division |
|
Fidelity®​ VIP Investment Grade Bond Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Increase (Decrease) in Net Assets: |
|
From Operations: |
|
Net investment income (loss) |
|
$ |
443 |
|
|
$ |
474 |
|
|
$ |
1,517 |
|
|
$ |
1,536 |
|
|
$ |
8,776 |
|
|
$ |
8,181 |
|
|
Net realized gains (losses) |
|
|
17,397 |
|
|
|
19,773 |
|
|
|
3,165 |
|
|
|
3,714 |
|
|
|
(18,308 |
) |
|
|
5,253 |
|
|
Change in unrealized gains (losses) on investments |
|
|
69,782 |
|
|
|
(124,604 |
) |
|
|
4,813 |
|
|
|
(11,102 |
) |
|
|
32,813 |
|
|
|
(82,041 |
) |
|
Net increase (decrease) in net assets resulting from operations |
|
|
87,622 |
|
|
|
(104,357 |
) |
|
|
9,495 |
|
|
|
(5,852 |
) |
|
|
23,281 |
|
|
|
(68,607 |
) |
|
Policy Transactions: |
|
Premium payments received from policy owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,569 |
|
|
|
39,893 |
|
|
Net transfers (including fixed account) |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy charges |
|
|
(21,688 |
) |
|
|
(17,781 |
) |
|
|
(6,776 |
) |
|
|
(5,805 |
) |
|
|
(133,774 |
) |
|
|
(115,386 |
) |
|
Transfers for policy benefits and terminations |
|
|
(5 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4,531 |
) |
|
|
(22,409 |
) |
|
Net increase (decrease) in net assets resulting from policy transactions |
|
|
(21,693 |
) |
|
|
(17,780 |
) |
|
|
(6,779 |
) |
|
|
(5,808 |
) |
|
|
(40,736 |
) |
|
|
(97,902 |
) |
|
Net increase (decrease) in net assets |
|
|
65,929 |
|
|
|
(122,137 |
) |
|
|
2,716 |
|
|
|
(11,660 |
) |
|
|
(17,455 |
) |
|
|
(166,509 |
) |
|
Net Assets: |
|
Beginning of year |
|
|
274,958 |
|
|
|
397,095 |
|
|
|
97,525 |
|
|
|
109,185 |
|
|
|
408,118 |
|
|
|
574,627 |
|
|
End of year |
|
$ |
340,887 |
|
|
$ |
274,958 |
|
|
$ |
100,241 |
|
|
$ |
97,525 |
|
|
$ |
390,663 |
|
|
$ |
408,118 |
|
|
The accompanying notes are an integral part of these financial statements.
11
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
Separate Account No. 13S (the "Separate Account"), a separate account of Metropolitan Life Insurance Company (the "Company"), was established by the Board of Directors of Security Equity Life Insurance Company ("Security Equity") on December 30, 1994 to support operations of Security Equity with respect to certain variable life insurance policies (the "Policies"). On October 31, 2003, Security Equity merged into the Company and the Separate Account became a separate account of the Company. The Company is a direct wholly-owned subsidiary of MetLife, Inc., a Delaware corporation. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and is subject to the rules and regulations of the United States Securities and Exchange Commission, as well as the New York State Department of Financial Services.
The Separate Account is divided into Divisions, each of which is treated as an individual accounting entity for financial reporting purposes. Each Division invests in shares of the corresponding fund or portfolio (with the same name) of registered investment management companies (the "Trusts"), which are presented below:
AIM Variable Insurance Funds (Invesco Variable Insurance Funds) ("Invesco V.I.")
American Funds Insurance Series®​ ("American Funds")
Brighthouse Funds Trust I ("BHFTI")
Brighthouse Funds Trust II ("BHFTII")
Fidelity®​ Variable Insurance Products ("Fidelity VIP")
Janus Aspen Series ("Janus Aspen")
PIMCO Variable Insurance Trust ("PIMCO VIT")
Pioneer Variable Contracts Trust ("Pioneer VCT")
Putnam Variable Trust ("Putnam VT")
The assets of each of the Divisions of the Separate Account are registered in the name of the Company. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the Company's other assets and liabilities. The portion of the Separate Account's assets applicable to the Policies cannot be used for liabilities arising out of any other business conducted by the Company.
2. LIST OF DIVISIONS
A. Premium payments, less any applicable charges, applied to the Separate Account are invested in one or more Divisions in accordance with the selection made by the Policy owner. The following Divisions had net assets as of December 31, 2023:
BHFTI Invesco Global Equity Division
BHFTI MFS®​ Research International Division
BHFTII BlackRock Ultra-Short Term Bond Division
BHFTII MetLife Aggregate Bond Index Division
BHFTII MetLife Mid Cap Stock Index Division
BHFTII MetLife MSCI EAFE®​ Index Division
BHFTII MetLife Russell 2000®​ Index Division
BHFTII MetLife Stock Index Division
BHFTII T. Rowe Price Large Cap Growth Division
BHFTII Western Asset Management Strategic Bond Opportunities Division
Fidelity®​ VIP Contrafund®​ Division
Fidelity®​ VIP Equity-Income Division
Fidelity®​ VIP Investment Grade Bond Division
B. The following Divisions had no net assets as of December 31, 2023:
American Funds®​ Growth Division
American Funds®​ International Division
American Funds®​ U.S. Government Securities Division
BHFTI Brighthouse Small Cap Value Division
BHFTI Invesco Small Cap Growth Division
BHFTI JPMorgan Small Cap Value Division
BHFTI Morgan Stanley Discovery Division
BHFTII Brighthouse/Artisan Mid Cap Value Division
BHFTII Loomis Sayles Small Cap Core Division
BHFTII MFS®​ Total Return Division
Fidelity®​ VIP Freedom 2020 Division
Fidelity®​ VIP Freedom 2025 Division
Fidelity®​ VIP Government Money Market Division
Fidelity®​ VIP High Income Division
Fidelity®​ VIP Mid Cap Division
Invesco V.I. EQV International Equity Division
12
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2. LIST OF DIVISIONS (Concluded)
Janus Henderson Research Division
PIMCO VIT All Asset Division
Pioneer Mid Cap Value VCT Division
Putnam VT International Value Division
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable for variable life separate accounts registered as unit investment trusts, which follow the accounting and reporting guidance in Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic 946, Investment Companies.
Security Transactions
Security transactions are recorded on a trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the average cost of the investment sold. Income from dividends and realized gain distributions are recorded on the ex-distribution date.
Security Valuation
A Division's investment in shares of a fund or portfolio of the Trusts is valued at fair value based on the closing net asset value ("NAV"). All changes in fair value are recorded as changes in unrealized gains (losses) on investments in the statements of operations of the applicable Divisions. The Separate Account defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Each Division invests in shares of open-end mutual funds which calculate a daily NAV based on the fair value of the underlying securities in their portfolios. As a result, and as required by law, shares of open-end mutual funds are purchased and redeemed at their daily NAV as reported by the Trusts at the close of each business day.
ASC Topic 820, Fair Value Measurement ("ASC 820") provides that the Separate Account is not required to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. Additionally, ASC 820 does not require certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The Separate Account's investments in shares of a fund or portfolio of the Trusts are using NAV as a practical expedient, therefore investments are not categorized within the ASC 820 fair value hierarchy.
Federal Income Taxes
The operations of the Separate Account form a part of the total operations of the Company and are not taxed separately. The Company is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the Policies. Accordingly, no charge is currently being made to the Separate Account for federal income taxes. The Company will periodically review the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the Policies.
Premium Payments
The Company deducts a sales charge for certain Policies and a state premium tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain Policies, the Company also deducts a federal income tax charge before amounts are allocated to the Separate Account. This federal income tax charge is imposed in connection with certain Policies to recover a portion of the federal income tax adjustment attributable to Policy acquisition expenses. Net premiums are reported as premium payments received from Policy owners on the statements of changes in net assets of the applicable Divisions and are credited as units.
13
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3. SIGNIFICANT ACCOUNTING POLICIES (Concluded)
Net Transfers
Assets transferred by the Policy owner into or out of Divisions within the Separate Account or into or out of the fixed account, which is part of the Company's general account, are recorded on a net basis as net transfers in the statements of changes in net assets of the applicable Divisions.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.
4. EXPENSES & POLICY CHARGES
The following annual Separate Account charge paid to the Company is an asset-based charge and assessed through a daily reduction in unit values, which is recorded as an expense in the accompanying statements of operations of the applicable Divisions:
Mortality and Expense Risk The mortality risk assumed by the Company is the risk that those insured may die sooner than anticipated and therefore, the Company will pay an aggregate amount of death benefits greater than anticipated. The expense risk assumed is the risk that expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges assessed against the Policies.
The table below represents the effective annual rate for the charge for the year ended December 31, 2023:
Mortality and Expense Risk |
|
|
0.35 |
% |
|
The above referenced charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge or associated with a particular Policy.
Separate Account charges referred to in this disclosure are for current charges of the Policies. Policy charges are assessed on a monthly basis through the redemption of units. These charges generally include: Cost of Insurance ("COI") charges, administrative charges, a Policy fee, and charges for benefits provided by rider, if any. The COI charge is the primary charge under the Policy for the death benefit provided by the Company which may vary by Policy based on underwriting criteria. An administrative charge of $4.50 is assessed per month per Policy. These charges are paid to the Company and are recorded as Policy charges in the accompanying statements of changes in net assets of the applicable Divisions for the years ended December 31, 2023 and 2022.
14
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5. STATEMENT OF INVESTMENTS
|
|
As of December 31, 2023 |
|
For the year ended December 31, 2023 |
|
|
|
Shares |
|
Cost ($) |
|
Cost of Purchases ($) |
|
Proceeds from Sales ($) |
|
BHFTI Invesco Global Equity Division |
|
|
1,708 |
|
|
|
32,284 |
|
|
|
2,296 |
|
|
|
2,785 |
|
|
BHFTI MFS®​ Research International Division |
|
|
11,107 |
|
|
|
126,899 |
|
|
|
4,881 |
|
|
|
13,793 |
|
|
BHFTII BlackRock Ultra-Short Term Bond Division |
|
|
1,080 |
|
|
|
108,377 |
|
|
|
2,005 |
|
|
|
22,200 |
|
|
BHFTII MetLife Aggregate Bond Index Division |
|
|
14,313 |
|
|
|
157,488 |
|
|
|
4,139 |
|
|
|
22,152 |
|
|
BHFTII MetLife Mid Cap Stock Index Division |
|
|
14,659 |
|
|
|
236,980 |
|
|
|
32,824 |
|
|
|
38,785 |
|
|
BHFTII MetLife MSCI EAFE®​ Index Division |
|
|
21,331 |
|
|
|
265,438 |
|
|
|
30,762 |
|
|
|
47,836 |
|
|
BHFTII MetLife Russell 2000®​ Index Division |
|
|
12,695 |
|
|
|
216,900 |
|
|
|
21,552 |
|
|
|
34,574 |
|
|
BHFTII MetLife Stock Index Division |
|
|
86,500 |
|
|
|
4,224,325 |
|
|
|
590,321 |
|
|
|
500,908 |
|
|
BHFTII T. Rowe Price Large Cap Growth Division |
|
|
9,920 |
|
|
|
200,952 |
|
|
|
23,311 |
|
|
|
37,599 |
|
|
BHFTII Western Asset Management Strategic Bond Opportunities Division |
|
|
4,276 |
|
|
|
54,343 |
|
|
|
3,019 |
|
|
|
8,021 |
|
|
Fidelity®​ VIP Contrafund®​ Division |
|
|
7,010 |
|
|
|
223,461 |
|
|
|
12,520 |
|
|
|
22,771 |
|
|
Fidelity®​ VIP Equity-Income Division |
|
|
4,034 |
|
|
|
92,246 |
|
|
|
4,633 |
|
|
|
7,131 |
|
|
Fidelity®​ VIP Investment Grade Bond Division |
|
|
34,975 |
|
|
|
430,156 |
|
|
|
101,694 |
|
|
|
133,653 |
|
|
15
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6. SCHEDULES OF UNITS
For the years ended December 31, 2023 and 2022:
|
|
BHFTI Invesco Global Equity Division |
|
BHFTI MFS® ​Research International Division |
|
BHFTII BlackRock Ultra-Short Term Bond Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Units beginning of year |
|
|
8,086 |
|
|
|
8,581 |
|
|
|
42,029 |
|
|
|
50,935 |
|
|
|
74,533 |
|
|
|
114,620 |
|
|
Units issued and transferred from other funding options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
|
|
321 |
|
|
Units redeemed and transferred to other funding options |
|
|
(554 |
) |
|
|
(495 |
) |
|
|
(4,025 |
) |
|
|
(8,931 |
) |
|
|
(12,337 |
) |
|
|
(40,408 |
) |
|
Units end of year |
|
|
7,532 |
|
|
|
8,086 |
|
|
|
38,004 |
|
|
|
42,029 |
|
|
|
62,196 |
|
|
|
74,533 |
|
|
|
|
BHFTII MetLife Russell 2000®​ Index Division |
|
BHFTII MetLife Stock Index Division |
|
BHFTII T. Rowe Price Large Cap Growth Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Units beginning of year |
|
|
7,335 |
|
|
|
7,769 |
|
|
|
876,810 |
|
|
|
934,343 |
|
|
|
13,761 |
|
|
|
14,772 |
|
|
Units issued and transferred from other funding options |
|
|
562 |
|
|
|
524 |
|
|
|
39,201 |
|
|
|
42,929 |
|
|
|
1,827 |
|
|
|
1,935 |
|
|
Units redeemed and transferred to other funding options |
|
|
(1,150 |
) |
|
|
(958 |
) |
|
|
(88,245 |
) |
|
|
(100,462 |
) |
|
|
(2,765 |
) |
|
|
(2,946 |
) |
|
Units end of year |
|
|
6,747 |
|
|
|
7,335 |
|
|
|
827,766 |
|
|
|
876,810 |
|
|
|
12,823 |
|
|
|
13,761 |
|
|
|
|
Fidelity®​ VIP Investment Grade Bond Division |
|
|
|
2023 |
|
2022 |
|
Units beginning of year |
|
|
123,080 |
|
|
|
150,310 |
|
|
Units issued and transferred from other funding options |
|
|
29,319 |
|
|
|
28,763 |
|
|
Units redeemed and transferred to other funding options |
|
|
(41,077 |
) |
|
|
(55,993 |
) |
|
Units end of year |
|
|
111,322 |
|
|
|
123,080 |
|
|
16
|
|
BHFTII MetLife Aggregate Bond Index Division |
|
BHFTII MetLife Mid Cap Stock Index Division |
|
BHFTII MetLife MSCI EAFE®​ Index Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Units beginning of year |
|
|
11,263 |
|
|
|
12,701 |
|
|
|
7,037 |
|
|
|
7,481 |
|
|
|
23,009 |
|
|
|
23,753 |
|
|
Units issued and transferred from other funding options |
|
|
|
|
|
|
|
|
|
|
462 |
|
|
|
464 |
|
|
|
1,784 |
|
|
|
2,049 |
|
|
Units redeemed and transferred to other funding options |
|
|
(1,594 |
) |
|
|
(1,438 |
) |
|
|
(1,083 |
) |
|
|
(908 |
) |
|
|
(3,425 |
) |
|
|
(2,793 |
) |
|
Units end of year |
|
|
9,669 |
|
|
|
11,263 |
|
|
|
6,416 |
|
|
|
7,037 |
|
|
|
21,368 |
|
|
|
23,009 |
|
|
|
|
BHFTII Western Asset Management Strategic Bond Opportunities Division |
|
Fidelity®​ VIP Contrafund®​ Division |
|
Fidelity®​ VIP Equity-Income Division |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Units beginning of year |
|
|
21,976 |
|
|
|
29,508 |
|
|
|
32,560 |
|
|
|
34,530 |
|
|
|
16,626 |
|
|
|
17,629 |
|
|
Units issued and transferred from other funding options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units redeemed and transferred to other funding options |
|
|
(3,309 |
) |
|
|
(7,532 |
) |
|
|
(2,205 |
) |
|
|
(1,970 |
) |
|
|
(1,128 |
) |
|
|
(1,003 |
) |
|
Units end of year |
|
|
18,667 |
|
|
|
21,976 |
|
|
|
30,355 |
|
|
|
32,560 |
|
|
|
15,498 |
|
|
|
16,626 |
|
|
17
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Continued)
7. FINANCIAL HIGHLIGHTS
The following table is a summary of unit values and units outstanding for the Policies, net assets, net investment income ratios, expense ratios, excluding expenses for the underlying fund or portfolio, and total return ratios for the five years ended December 31, 2023:
|
|
|
|
As of December 31 |
|
For the year ended December 31 |
|
|
|
|
|
Units |
|
Unit Value ($) |
|
Net Assets ($) |
|
Investment1​ Income Ratio (%) |
|
Expense2​ Ratio (%) |
|
Total3​ Return (%) |
|
BHFTI Invesco Global |
|
|
2023 |
|
|
|
7,532 |
|
|
|
5.43 |
|
|
|
40,881 |
|
|
|
0.37 |
|
|
|
0.35 |
|
|
34.52 |
|
Equity Division |
|
|
2022 |
|
|
|
8,086 |
|
|
|
4.03 |
|
|
|
32,628 |
|
|
|
|
|
|
|
0.35 |
|
|
(31.94) |
|
|
|
|
2021 |
|
|
|
8,581 |
|
|
|
5.93 |
|
|
|
50,869 |
|
|
|
0.13 |
|
|
|
0.35 |
|
|
15.35 |
|
|
|
|
2020 |
|
|
|
8,934 |
|
|
|
5.14 |
|
|
|
45,911 |
|
|
|
0.90 |
|
|
|
0.35 |
|
|
27.47 |
|
|
|
|
2019 |
|
|
|
9,323 |
|
|
|
4.03 |
|
|
|
37,587 |
|
|
|
1.02 |
|
|
|
0.35 |
|
|
31.45 |
|
BHFTI MFS®​ Research |
|
|
2023 |
|
|
|
38,004 |
|
|
|
3.54 |
|
|
|
134,376 |
|
|
|
1.74 |
|
|
|
0.35 |
|
|
12.66 |
|
International Division |
|
|
2022 |
|
|
|
42,029 |
|
|
|
3.14 |
|
|
|
131,909 |
|
|
|
2.23 |
|
|
|
0.35 |
|
|
(17.59) |
|
|
|
|
2021 |
|
|
|
50,935 |
|
|
|
3.81 |
|
|
|
193,991 |
|
|
|
1.17 |
|
|
|
0.35 |
|
|
11.59 |
|
|
|
|
2020 |
|
|
|
56,269 |
|
|
|
3.41 |
|
|
|
192,050 |
|
|
|
2.29 |
|
|
|
0.35 |
|
|
12.88 |
|
|
|
|
2019 |
|
|
|
63,410 |
|
|
|
3.02 |
|
|
|
191,730 |
|
|
|
1.56 |
|
|
|
0.35 |
|
|
28.24 |
|
BHFTII BlackRock |
|
|
2023 |
|
|
|
62,196 |
|
|
|
1.81 |
|
|
|
112,884 |
|
|
|
1.68 |
|
|
|
0.35 |
|
|
4.68 |
|
Ultra-Short Term Bond |
|
|
2022 |
|
|
|
74,533 |
|
|
|
1.73 |
|
|
|
129,227 |
|
|
|
|
|
|
|
0.35 |
|
|
1.09 |
|
Division |
|
|
2021 |
|
|
|
114,620 |
|
|
|
1.72 |
|
|
|
196,589 |
|
|
|
0.34 |
|
|
|
0.35 |
|
|
(0.54) |
|
|
|
|
2020 |
|
|
|
128,190 |
|
|
|
1.72 |
|
|
|
221,064 |
|
|
|
1.67 |
|
|
|
0.35 |
|
|
0.08 |
|
|
|
|
2019 |
|
|
|
113,146 |
|
|
|
1.72 |
|
|
|
194,967 |
|
|
|
1.80 |
|
|
|
0.35 |
|
|
1.77 |
|
BHFTII MetLife Aggregate |
|
|
2023 |
|
|
|
9,669 |
|
|
|
14.09 |
|
|
|
136,256 |
|
|
|
2.92 |
|
|
|
0.35 |
|
|
4.83 |
|
Bond Index Division |
|
|
2022 |
|
|
|
11,263 |
|
|
|
13.44 |
|
|
|
151,405 |
|
|
|
2.80 |
|
|
|
0.35 |
|
|
(13.40) |
|
|
|
|
2021 |
|
|
|
12,701 |
|
|
|
15.52 |
|
|
|
197,147 |
|
|
|
2.53 |
|
|
|
0.35 |
|
|
(2.27) |
|
|
|
|
2020 |
|
|
|
13,894 |
|
|
|
15.88 |
|
|
|
220,679 |
|
|
|
2.97 |
|
|
|
0.35 |
|
|
6.84 |
|
|
|
|
2019 |
|
|
|
15,268 |
|
|
|
14.87 |
|
|
|
226,988 |
|
|
|
3.26 |
|
|
|
0.35 |
|
|
8.26 |
|
BHFTII MetLife Mid Cap |
|
|
2023 |
|
|
|
6,416 |
|
|
|
38.57 |
|
|
|
247,450 |
|
|
|
1.29 |
|
|
|
0.35 |
|
|
15.68 |
|
Stock Index Division |
|
|
2022 |
|
|
|
7,037 |
|
|
|
33.34 |
|
|
|
234,634 |
|
|
|
1.11 |
|
|
|
0.35 |
|
|
(13.56) |
|
|
|
|
2021 |
|
|
|
7,481 |
|
|
|
38.57 |
|
|
|
288,564 |
|
|
|
1.08 |
|
|
|
0.35 |
|
|
23.96 |
|
|
|
|
2020 |
|
|
|
7,788 |
|
|
|
31.11 |
|
|
|
242,331 |
|
|
|
1.54 |
|
|
|
0.35 |
|
|
13.00 |
|
|
|
|
2019 |
|
|
|
6,010 |
|
|
|
27.54 |
|
|
|
165,478 |
|
|
|
1.41 |
|
|
|
0.35 |
|
|
25.51 |
|
BHFTII MetLife MSCI EAFE®​ |
|
|
2023 |
|
|
|
21,368 |
|
|
|
14.81 |
|
|
|
316,559 |
|
|
|
2.50 |
|
|
|
0.35 |
|
|
17.52 |
|
Index Division |
|
|
2022 |
|
|
|
23,009 |
|
|
|
12.61 |
|
|
|
290,058 |
|
|
|
3.69 |
|
|
|
0.35 |
|
|
(14.77) |
|
|
|
|
2021 |
|
|
|
23,753 |
|
|
|
14.79 |
|
|
|
351,328 |
|
|
|
1.79 |
|
|
|
0.35 |
|
|
10.34 |
|
|
|
|
2020 |
|
|
|
24,281 |
|
|
|
13.41 |
|
|
|
325,499 |
|
|
|
3.35 |
|
|
|
0.35 |
|
|
7.47 |
|
|
|
|
2019 |
|
|
|
18,899 |
|
|
|
12.47 |
|
|
|
235,741 |
|
|
|
2.76 |
|
|
|
0.35 |
|
|
21.50 |
|
BHFTII MetLife Russell 2000®​ |
|
|
2023 |
|
|
|
6,747 |
|
|
|
32.83 |
|
|
|
221,518 |
|
|
|
1.30 |
|
|
|
0.35 |
|
|
16.39 |
|
Index Division |
|
|
2022 |
|
|
|
7,335 |
|
|
|
28.21 |
|
|
|
206,912 |
|
|
|
1.06 |
|
|
|
0.35 |
|
|
(20.51) |
|
|
|
|
2021 |
|
|
|
7,769 |
|
|
|
35.49 |
|
|
|
275,694 |
|
|
|
0.99 |
|
|
|
0.35 |
|
|
14.12 |
|
|
|
|
2020 |
|
|
|
8,091 |
|
|
|
31.10 |
|
|
|
251,583 |
|
|
|
1.45 |
|
|
|
0.35 |
|
|
19.20 |
|
|
|
|
2019 |
|
|
|
6,163 |
|
|
|
26.09 |
|
|
|
160,774 |
|
|
|
1.20 |
|
|
|
0.35 |
|
|
25.18 |
|
BHFTII MetLife Stock Index |
|
|
2023 |
|
|
|
827,766 |
|
|
|
6.34 |
|
|
|
5,247,081 |
|
|
|
1.38 |
|
|
|
0.35 |
|
|
25.50 |
|
Division |
|
|
2022 |
|
|
|
876,810 |
|
|
|
5.05 |
|
|
|
4,428,633 |
|
|
|
1.29 |
|
|
|
0.35 |
|
|
(18.58) |
|
|
|
|
2021 |
|
|
|
934,343 |
|
|
|
6.20 |
|
|
|
5,796,290 |
|
|
|
1.51 |
|
|
|
0.35 |
|
|
27.91 |
|
|
|
|
2020 |
|
|
|
971,930 |
|
|
|
4.85 |
|
|
|
4,713,899 |
|
|
|
1.89 |
|
|
|
0.35 |
|
|
17.69 |
|
|
|
|
2019 |
|
|
|
938,109 |
|
|
|
4.12 |
|
|
|
3,866,036 |
|
|
|
2.14 |
|
|
|
0.35 |
|
|
30.69 |
|
18
SEPARATE ACCOUNT NO. 13S
OF METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO THE FINANCIAL STATEMENTS (Concluded)
7. FINANCIAL HIGHLIGHTS (Concluded)
|
|
|
|
As of December 31 |
|
For the year ended December 31 |
|
|
|
|
|
Units |
|
Unit Value ($) |
|
Net Assets ($) |
|
Investment1​ Income Ratio (%) |
|
Expense2​ Ratio (%) |
|
Total3​ Return (%) |
|
BHFTII T. Rowe Price Large |
|
|
2023 |
|
|
|
12,823 |
|
|
|
16.01 |
|
|
|
205,326 |
|
|
|
|
|
|
|
0.35 |
|
|
46.30 |
|
Cap Growth Division |
|
|
2022 |
|
|
|
13,761 |
|
|
|
10.95 |
|
|
|
150,615 |
|
|
|
|
|
|
|
0.35 |
|
|
(40.67) |
|
|
|
|
2021 |
|
|
|
14,772 |
|
|
|
18.45 |
|
|
|
272,530 |
|
|
|
|
|
|
|
0.35 |
|
|
19.80 |
|
|
|
|
2020 |
|
|
|
14,931 |
|
|
|
15.40 |
|
|
|
229,928 |
|
|
|
0.24 |
|
|
|
0.35 |
|
|
36.47 |
|
|
|
|
2019 |
|
|
|
14,581 |
|
|
|
11.28 |
|
|
|
164,528 |
|
|
|
0.43 |
|
|
|
0.35 |
|
|
30.53 |
|
BHFTII Western Asset |
|
|
2023 |
|
|
|
18,667 |
|
|
|
2.51 |
|
|
|
46,896 |
|
|
|
6.47 |
|
|
|
0.35 |
|
|
9.06 |
|
Management Strategic Bond |
|
|
2022 |
|
|
|
21,976 |
|
|
|
2.30 |
|
|
|
50,626 |
|
|
|
6.67 |
|
|
|
0.35 |
|
|
(16.95) |
|
Opportunities Division |
|
|
2021 |
|
|
|
29,508 |
|
|
|
2.77 |
|
|
|
81,846 |
|
|
|
3.92 |
|
|
|
0.35 |
|
|
2.46 |
|
|
|
|
2020 |
|
|
|
35,820 |
|
|
|
2.71 |
|
|
|
96,973 |
|
|
|
5.46 |
|
|
|
0.35 |
|
|
6.54 |
|
|
|
|
2019 |
|
|
|
49,939 |
|
|
|
2.54 |
|
|
|
126,896 |
|
|
|
4.86 |
|
|
|
0.35 |
|
|
14.09 |
|
Fidelity®​ VIP Contrafund®​ |
|
|
2023 |
|
|
|
30,355 |
|
|
|
11.23 |
|
|
|
340,887 |
|
|
|
0.49 |
|
|
|
0.35 |
|
|
32.99 |
|
Division |
|
|
2022 |
|
|
|
32,560 |
|
|
|
8.44 |
|
|
|
274,958 |
|
|
|
0.50 |
|
|
|
0.35 |
|
|
(26.57) |
|
|
|
|
2021 |
|
|
|
34,530 |
|
|
|
11.50 |
|
|
|
397,095 |
|
|
|
0.06 |
|
|
|
0.35 |
|
|
27.39 |
|
|
|
|
2020 |
|
|
|
35,935 |
|
|
|
9.03 |
|
|
|
324,408 |
|
|
|
0.25 |
|
|
|
0.35 |
|
|
30.11 |
|
|
|
|
2019 |
|
|
|
37,489 |
|
|
|
6.94 |
|
|
|
260,114 |
|
|
|
0.46 |
|
|
|
0.35 |
|
|
31.12 |
|
Fidelity®​ VIP |
|
|
2023 |
|
|
|
15,498 |
|
|
|
6.47 |
|
|
|
100,241 |
|
|
|
1.92 |
|
|
|
0.35 |
|
|
10.26 |
|
Equity-Income Division |
|
|
2022 |
|
|
|
16,626 |
|
|
|
5.87 |
|
|
|
97,525 |
|
|
|
1.88 |
|
|
|
0.35 |
|
|
(5.29) |
|
|
|
|
2021 |
|
|
|
17,629 |
|
|
|
6.19 |
|
|
|
109,185 |
|
|
|
1.91 |
|
|
|
0.35 |
|
|
24.46 |
|
|
|
|
2020 |
|
|
|
18,344 |
|
|
|
4.98 |
|
|
|
91,286 |
|
|
|
1.83 |
|
|
|
0.35 |
|
|
6.32 |
|
|
|
|
2019 |
|
|
|
19,132 |
|
|
|
4.68 |
|
|
|
89,549 |
|
|
|
2.01 |
|
|
|
0.35 |
|
|
27.00 |
|
Fidelity®​ VIP Investment |
|
|
2023 |
|
|
|
111,322 |
|
|
|
3.51 |
|
|
|
390,663 |
|
|
|
2.56 |
|
|
|
0.35 |
|
|
5.83 |
|
Grade Bond Division |
|
|
2022 |
|
|
|
123,080 |
|
|
|
3.32 |
|
|
|
408,118 |
|
|
|
2.16 |
|
|
|
0.35 |
|
|
(13.26) |
|
|
|
|
2021 |
|
|
|
150,310 |
|
|
|
3.82 |
|
|
|
574,627 |
|
|
|
2.10 |
|
|
|
0.35 |
|
|
(0.95) |
|
|
|
|
2020 |
|
|
|
147,231 |
|
|
|
3.86 |
|
|
|
568,274 |
|
|
|
2.10 |
|
|
|
0.35 |
|
|
9.01 |
|
|
|
|
2019 |
|
|
|
151,350 |
|
|
|
3.54 |
|
|
|
535,883 |
|
|
|
2.50 |
|
|
|
0.35 |
|
|
9.28 |
|
1 These amounts represent the dividends, excluding distributions of capital gains, received by the Division from the underlying fund or portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that are assessed against Policy owner accounts either through reductions in the unit values or the redemption of units. The investment income ratio is calculated for each period indicated or from the effective date through the end of the reporting period. The recognition of investment income by the Division is affected by the timing of the declaration of dividends by the underlying fund or portfolio in which the Division invests.
2 These amounts represent annualized Policy expenses of each of the applicable Divisions, consisting primarily of mortality and expense risk charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to Policy owner accounts through the redemption of units and expenses of the underlying fund or portfolio have been excluded.
3 These amounts represent the total return for the period indicated, including changes in the value of the underlying fund or portfolio, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. The total return is calculated for each period indicated or from the effective date through the end of the reporting period.
19
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Metropolitan Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Item
8. Financial Statements and Supplementary Data
Index
to Consolidated Financial Statements, Notes and Schedules
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Financial
Statements at December 31, 2023 and 2022 and for the Years Ended December 31, 2023, 2022 and 2021: |
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Financial
Statement Schedules at December 31, 2023 and 2022 and for the Years Ended December 31, 2023, 2022 and 2021: |
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the stockholder and the Board of Directors of Metropolitan Life Insurance Company
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Metropolitan Life Insurance Company and subsidiaries (the “Company”)
as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows
for each of the three years in the period ended December 31, 2023, and the related notes and the schedules listed in the Index to Consolidated
Financial Statements, Notes and Schedules (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results
of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting
principles generally accepted in the United States of America.
Adoption
of New Accounting Standard
As
discussed in Note 1 to the financial statements, the Company has changed its method of accounting and presentation related to long-duration
insurance contracts and certain related balances effective January 1, 2023, due to the adoption of Accounting Standards Update No. 2018-12,
Financial
Services— Insurance (Topic 944):
Targeted
Improvements to the Accounting for Long-Duration Contracts,
as amended (“ASU 2018-12”), with a transition date of January 1, 2021. Also see Critical Audit Matters section below.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Fixed
Maturity Securities Available-for-Sale – Fair Value of Level 3 Fixed Maturity Securities — Refer to Notes 1, 10, and 12 to
the financial statements
Critical
Audit Matter Description
The
Company has investments in certain fixed maturity securities classified as available-for-sale whose fair values are based on unobservable
inputs that are supported by little or no market activity. When a price is not available in the active market, from an independent pricing
service, or from independent broker quotations, management values the security using internal matrix pricing or discounted cash flow techniques.
These investments are categorized as Level 3.
We
have determined that the fair value of Level 3 fixed maturity securities valued using internal matrix pricing or discounted cash flow
techniques, is a critical audit matter because of the critical judgments made by management. This required complex auditor judgment and
an increased extent of effort, including the use of fair value specialists in performing audit procedures to evaluate the estimate of
fair value of these securities.
How
the Critical Audit Matter Was Addressed in the Audit
Our
audit procedures related to the valuation of Level 3 fixed maturity securities determined using internal matrix pricing or discounted
cash flow techniques included, among others, the following:
•We
tested the effectiveness of controls over the determination of fair value.
•We
tested the accuracy and completeness of relevant security attributes, including credit ratings, maturity dates and coupon rates, used
in the determination of Level 3 fair values.
•With
the involvement of our fair value specialists, we developed independent fair value estimates for a sample of securities and compared our
estimates to the Company’s estimates and evaluated differences.
We
developed our estimate by evaluating the observable and unobservable inputs used by management or developing independent inputs.
Insurance
Liabilities – Valuation of Future Policy Benefits for Long-Term Care Insurance — Refer to Notes 1 and 3 to the financial statements
Critical
Audit Matter Description
The
Company’s products include long-term care insurance. Liabilities for amounts payable under long-term care insurance are recorded
in future policy benefits in the Company’s consolidated balance sheets. Such liabilities are established based on actuarial assumptions.
Management’s estimate of future policy benefits for long-term care insurance in the MetLife Holdings segment was $15,240 million
as of December 31, 2023.
Management
applies considerable judgment in evaluating actual experience and other information to determine current best estimate assumptions. Principal
assumptions used in the valuation of future policy benefits for long-term care insurance include incidence, claim terminations, utilization,
premium rate increases and mortality.
We
have determined that future policy benefits for long-term care insurance is a critical audit matter because of the significant judgments
made by management when estimating future policy benefits liability. This required subjective auditor judgment and an increased extent
of effort, including the involvement of actuarial specialists, when performing audit procedures to evaluate the judgments made and the
reasonableness of the principal assumptions used in the valuation.
How
the Critical Audit Matter Was Addressed in the Audit
Our
audit procedures related to the assumptions used to determine the estimate of future policy benefits for long-term care insurance, included,
among others, the following:
•We
tested the effectiveness of controls over the assumptions used in the valuation of future policy benefits and the effectiveness of controls
over the underlying data.
•With
the involvement of our actuarial specialists, we:
◦evaluated
judgments applied by management in setting principal assumptions, including evaluating the results of experience studies used as the basis
for setting those assumptions.
◦evaluated
that principal assumptions were applied in the valuation model as intended, on a sample basis.
Market
Risk Benefits – Valuation of Market Risk Benefits for MetLife Holdings — Refer to Notes 1, 5, and 12 to the financial statements
Critical
Audit Matter Description
Market
risk benefits are contracts or contract features that guarantee benefits, such as guaranteed minimum benefits, in addition to an account
balance which, expose insurance companies to other than nominal capital market risk and protect the contractholder from the same risk.
The Company adopted ASU 2018-12, effective January 1, 2023 with a transition date of January 1, 2021 (see Adoption of New Accounting Standard
explanatory paragraph above).
As
part of the adoption, market risk benefits were required to be measured at fair value, using a full retrospective transition method.
Management’s
estimates of market risk benefits in the MetLife Holdings segment were $2,858 million in liabilities and $156 million in assets as of
December 31, 2023.
Management
applies considerable judgment in determining the actuarial and capital market assumptions to be used in the valuation models to estimate
the fair value of market risk benefits. In addition, at the transition date, management judgment was involved in estimating the assumptions
at contract inception for the market risk benefits not previously accounted for as embedded derivatives. Principal assumptions include
mortality, withdrawal, utilization, lapse and implied volatility.
We
have identified the valuation of MetLife Holdings’ market risk benefits as a critical audit matter due to the high degree of auditor
judgment and an increased extent of effort, including the use of specialists, when performing audit procedures to evaluate the judgments
made by management to estimate the fair value of market risk benefits.
How
the Critical Audit Matter Was Addressed in the Audit
Our
audit procedures related to the valuation of market risk benefits included, among others, the following:
•We
tested the effectiveness of controls over valuation of market risk benefits under ASU 2018-12, including the related methodologies, models
and assumptions used for determining fair value.
•With
the involvement of our valuation and actuarial specialists, we:
◦evaluated
the results of underlying experience studies, capital market projections, and judgments applied by management in setting the principal
assumptions.
◦developed
an independent estimate, on a sample basis, of the market risk benefits and evaluated differences.
/s/
DELOITTE & TOUCHE LLP
New
York, New York
March
6, 2024
We
have served as the Company’s auditor since at least 1968; however, an earlier year could not be reliably determined.
Metropolitan Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Balance Sheets
December
31, 2023 and 2022
(In
millions, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
Assets |
|
|
|
|
Investments: |
|
|
|
|
Fixed
maturity securities available-for-sale, at estimated fair value (net of allowance for credit loss of $132 and $114, respectively); and
amortized cost: $152,080 and $160,477, respectively |
|
$ |
142,805 |
|
|
$ |
145,576 |
|
Mortgage
loans (net of allowance for credit loss of $509 and $448, respectively; includes $166 and $144, respectively, relating to variable interest
entities) |
|
62,584 |
|
|
62,570 |
|
Policy
loans |
|
5,671 |
|
|
5,729 |
|
Real
estate and real estate joint ventures (includes $1,427 and $1,358, respectively, relating to variable interest entities, $317 and $299,
respectively, under the fair value option) |
|
8,690 |
|
|
8,416 |
|
Other
limited partnership interests |
|
7,765 |
|
|
7,887 |
|
Short-term
investments, at estimated fair value |
|
3,048 |
|
|
2,759 |
|
Other
invested assets (net of allowance for credit loss of $14 and $19, respectively; includes $805 and $858, respectively, of leveraged and
direct financing leases; $117 and $161, respectively, relating to variable interest entities) |
|
17,040 |
|
|
19,148 |
|
Total
investments |
|
247,603 |
|
|
252,085 |
|
Cash
and cash equivalents, principally at estimated fair value |
|
6,795 |
|
|
9,405 |
|
Accrued
investment income |
|
2,026 |
|
|
1,949 |
|
Premiums,
reinsurance and other receivables |
|
28,236 |
|
|
20,791 |
|
Market
risk benefits, at estimated fair value |
|
177 |
|
|
174 |
|
Deferred
policy acquisition costs and value of business acquired |
|
3,305 |
|
|
3,757 |
|
Current
income tax recoverable |
|
112 |
|
|
165 |
|
Deferred
income tax asset |
|
2,922 |
|
|
2,920 |
|
Other
assets |
|
4,312 |
|
|
4,352 |
|
Separate
account assets |
|
83,197 |
|
|
89,241 |
|
Total
assets |
|
$ |
378,685 |
|
|
$ |
384,839 |
|
Liabilities
and Equity |
|
|
|
|
Liabilities |
|
|
|
|
Future
policy benefits |
|
$ |
129,182 |
|
|
$ |
126,914 |
|
Policyholder
account balances |
|
103,894 |
|
|
103,407 |
|
Market
risk benefits, at estimated fair value |
|
2,878 |
|
|
3,270 |
|
Other
policy-related balances |
|
8,289 |
|
|
7,931 |
|
Policyholder
dividends payable |
|
233 |
|
|
240 |
|
Payables
for collateral under securities loaned and other transactions |
|
11,790 |
|
|
14,171 |
|
Short-term
debt |
|
— |
|
|
99 |
|
Long-term
debt |
|
1,887 |
|
|
1,676 |
|
Other
liabilities |
|
23,719 |
|
|
24,495 |
|
Separate
account liabilities |
|
83,197 |
|
|
89,241 |
|
Total
liabilities |
|
365,069 |
|
|
371,444 |
|
Contingencies,
Commitments and Guarantees (Note 19) |
|
|
|
|
Equity |
|
|
|
|
Metropolitan
Life Insurance Company stockholder’s equity: |
|
|
|
|
Common
stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding |
|
5 |
|
|
5 |
|
Additional
paid-in capital |
|
12,475 |
|
|
12,476 |
|
Retained
earnings |
|
7,645 |
|
|
9,022 |
|
Accumulated
other comprehensive income (loss) |
|
(6,872) |
|
|
(8,320) |
|
Total
Metropolitan Life Insurance Company stockholder’s equity |
|
13,253 |
|
|
13,183 |
|
Noncontrolling
interests |
|
363 |
|
|
212 |
|
Total
equity |
|
13,616 |
|
|
13,395 |
|
Total
liabilities and equity |
|
$ |
378,685 |
|
|
$ |
384,839 |
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Statements of Operations
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Revenues |
|
|
|
|
|
Premiums |
$ |
24,718 |
|
|
$ |
31,189 |
|
|
$ |
26,188 |
|
Universal
life and investment-type product policy fees |
1,664 |
|
|
1,817 |
|
|
1,874 |
|
Net
investment income |
11,206 |
|
|
10,122 |
|
|
12,486 |
|
Other
revenues |
1,673 |
|
|
1,694 |
|
|
1,616 |
|
Net
investment gains (losses) |
(1,375) |
|
|
(127) |
|
|
652 |
|
Net
derivative gains (losses) |
(1,537) |
|
|
752 |
|
|
(1,629) |
|
Total
revenues |
36,349 |
|
|
45,447 |
|
|
41,187 |
|
Expenses |
|
|
|
|
|
Policyholder
benefits and claims |
26,150 |
|
|
33,133 |
|
|
29,084 |
|
Policyholder
liability remeasurement (gains) losses |
(150) |
|
|
(11) |
|
|
— |
|
Market
risk benefit remeasurement (gains) losses |
(703) |
|
|
(3,379) |
|
|
(758) |
|
Interest
credited to policyholder account balances |
3,602 |
|
|
2,509 |
|
|
2,185 |
|
Policyholder
dividends |
470 |
|
|
563 |
|
|
732 |
|
Other
expenses |
5,785 |
|
|
5,703 |
|
|
5,700 |
|
Total
expenses |
35,154 |
|
|
38,518 |
|
|
36,943 |
|
Income
(loss) before provision for income tax |
1,195 |
|
|
6,929 |
|
|
4,244 |
|
Provision
for income tax expense (benefit) |
60 |
|
|
1,273 |
|
|
529 |
|
|
|
|
|
|
|
Net
income (loss) |
1,135 |
|
|
5,656 |
|
|
3,715 |
|
Less:
Net income (loss) attributable to noncontrolling interests |
41 |
|
|
28 |
|
|
5 |
|
Net
income (loss) attributable to Metropolitan Life Insurance Company |
$ |
1,094 |
|
|
$ |
5,628 |
|
|
$ |
3,710 |
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Statements of Comprehensive Income (Loss)
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Net
income (loss) |
|
$ |
1,135 |
|
|
$ |
5,656 |
|
|
$ |
3,715 |
|
Other
comprehensive income (loss): |
|
|
|
|
|
|
Unrealized
investment gains (losses), net of related offsets |
|
5,841 |
|
|
(30,335) |
|
|
(5,341) |
|
Deferred
gains (losses) on derivatives |
|
(1,078) |
|
|
(399) |
|
|
111 |
|
Future
policy benefits discount rate remeasurement gains (losses) |
|
(2,957) |
|
|
21,623 |
|
|
5,118 |
|
Market
risk benefit instrument-specific credit risk remeasurement gains (losses) |
|
(59) |
|
|
(236) |
|
|
311 |
|
Foreign
currency translation adjustments |
|
56 |
|
|
(177) |
|
|
9 |
|
Defined
benefit plans adjustment |
|
(34) |
|
|
325 |
|
|
82 |
|
Other
comprehensive income (loss), before income tax |
|
1,769 |
|
|
(9,199) |
|
|
290 |
|
Income
tax (expense) benefit related to items of other comprehensive income (loss) |
|
(321) |
|
|
1,934 |
|
|
(20) |
|
Other
comprehensive income (loss), net of income tax |
|
1,448 |
|
|
(7,265) |
|
|
270 |
|
Comprehensive
income (loss) |
|
2,583 |
|
|
(1,609) |
|
|
3,985 |
|
Less:
Comprehensive income (loss) attributable to noncontrolling interest, net of income tax |
|
41 |
|
|
28 |
|
|
5 |
|
Comprehensive
income (loss) attributable to Metropolitan Life Insurance Company |
|
$ |
2,542 |
|
|
$ |
(1,637) |
|
|
$ |
3,980 |
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Statements of Equity
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional Paid-in Capital |
|
Retained Earnings |
|
Accumulated Other Comprehensive Income
(Loss) |
|
Total Metropolitan
Life Insurance Company Stockholder’s Equity |
|
Noncontrolling Interests |
|
Total Equity |
Balance
at December 31, 2020 |
$ |
5 |
|
|
$ |
12,460 |
|
|
$ |
10,548 |
|
|
$ |
11,662 |
|
|
$ |
34,675 |
|
|
$ |
183 |
|
|
$ |
34,858 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
|
|
|
|
(3,932) |
|
|
(12,987) |
|
|
(16,919) |
|
|
|
|
(16,919) |
|
Capital
contributions from MetLife, Inc. |
|
|
4 |
|
|
|
|
|
|
4 |
|
|
|
|
4 |
|
Dividends
to MetLife, Inc. |
|
|
|
|
(3,393) |
|
|
|
|
(3,393) |
|
|
|
|
(3,393) |
|
Change
in equity of noncontrolling interests |
|
|
|
|
|
|
|
|
— |
|
|
(14) |
|
|
(14) |
|
Net
income (loss) |
|
|
|
|
3,710 |
|
|
|
|
3,710 |
|
|
5 |
|
|
3,715 |
|
Other
comprehensive income (loss), net of
income
tax |
|
|
|
|
|
|
270 |
|
|
270 |
|
|
|
|
270 |
|
Balance
at December 31, 2021 |
5 |
|
|
12,464 |
|
|
6,933 |
|
|
(1,055) |
|
|
18,347 |
|
|
174 |
|
|
18,521 |
|
Capital
contributions from MetLife, Inc. |
|
|
12 |
|
|
|
|
|
|
12 |
|
|
|
|
12 |
|
Dividends
to MetLife, Inc. |
|
|
|
|
(3,539) |
|
|
|
|
(3,539) |
|
|
|
|
(3,539) |
|
Change
in equity of noncontrolling interests |
|
|
|
|
|
|
|
|
— |
|
|
10 |
|
|
10 |
|
Net
income (loss) |
|
|
|
|
5,628 |
|
|
|
|
5,628 |
|
|
28 |
|
|
5,656 |
|
Other
comprehensive income (loss), net of
income
tax |
|
|
|
|
|
|
(7,265) |
|
|
(7,265) |
|
|
|
|
(7,265) |
|
Balance
at December 31, 2022 |
5 |
|
|
12,476 |
|
|
9,022 |
|
|
(8,320) |
|
|
13,183 |
|
|
212 |
|
|
13,395 |
|
Returns
of capital |
|
|
(1) |
|
|
|
|
|
|
(1) |
|
|
|
|
(1) |
|
Dividends
to MetLife, Inc. |
|
|
|
|
(2,471) |
|
|
|
|
(2,471) |
|
|
|
|
(2,471) |
|
Change
in equity of noncontrolling interests |
|
|
|
|
|
|
|
|
— |
|
|
110 |
|
|
110 |
|
Net
income (loss) |
|
|
|
|
1,094 |
|
|
|
|
1,094 |
|
|
41 |
|
|
1,135 |
|
Other
comprehensive income (loss), net of
income
tax |
|
|
|
|
|
|
1,448 |
|
|
1,448 |
|
|
|
|
1,448 |
|
Balance
at December 31, 2023 |
$ |
5 |
|
|
$ |
12,475 |
|
|
$ |
7,645 |
|
|
$ |
(6,872) |
|
|
$ |
13,253 |
|
|
$ |
363 |
|
|
$ |
13,616 |
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Statements of Cash Flows
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Cash
flows from operating activities |
|
|
|
|
|
Net
income (loss) |
$ |
1,135 |
|
|
$ |
5,656 |
|
|
$ |
3,715 |
|
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
Depreciation
and amortization expenses |
124 |
|
|
127 |
|
|
136 |
|
Amortization
of premiums and accretion of discounts associated with investments, net |
(858) |
|
|
(595) |
|
|
(656) |
|
(Gains)
losses on investments and from sales of businesses, net |
1,353 |
|
|
127 |
|
|
(652) |
|
(Gains)
losses on derivatives, net |
2,461 |
|
|
935 |
|
|
2,712 |
|
(Income)
loss from equity method investments, net of dividends or distributions |
1,098 |
|
|
890 |
|
|
(1,873) |
|
Interest
credited to policyholder account balances |
3,623 |
|
|
2,293 |
|
|
2,104 |
|
Universal
life and investment-type product policy fees |
(1,175) |
|
|
(1,163) |
|
|
(1,091) |
|
Change
in fair value option and trading securities |
39 |
|
|
123 |
|
|
(125) |
|
Change
in accrued investment income |
(146) |
|
|
(230) |
|
|
69 |
|
Change
in premiums, reinsurance and other receivables |
(992) |
|
|
215 |
|
|
590 |
|
Change
in market risk benefits |
(455) |
|
|
(3,141) |
|
|
(476) |
|
Change
in deferred policy acquisition costs and value of business acquired, net |
452 |
|
|
108 |
|
|
278 |
|
Change
in income tax |
(267) |
|
|
853 |
|
|
4 |
|
Change
in other assets |
(77) |
|
|
187 |
|
|
(303) |
|
Change
in insurance-related liabilities and policy-related balances |
(1,546) |
|
|
(1,330) |
|
|
(257) |
|
Change
in other liabilities |
84 |
|
|
(63) |
|
|
(372) |
|
Other,
net |
(18) |
|
|
148 |
|
|
(74) |
|
Net
cash provided by (used in) operating activities |
4,835 |
|
|
5,140 |
|
|
3,729 |
|
Cash
flows from investing activities |
|
|
|
|
|
Sales,
maturities and repayments of: |
|
|
|
|
|
Fixed
maturity securities available-for-sale |
30,090 |
|
|
54,515 |
|
|
51,010 |
|
Equity
securities |
104 |
|
|
213 |
|
|
565 |
|
Mortgage
loans |
6,129 |
|
|
8,912 |
|
|
16,790 |
|
Real
estate and real estate joint ventures |
354 |
|
|
925 |
|
|
1,329 |
|
Other
limited partnership interests |
415 |
|
|
992 |
|
|
541 |
|
Short-term
investments |
7,271 |
|
|
8,914 |
|
|
10,309 |
|
Purchases
and originations of: |
|
|
|
|
|
Fixed
maturity securities available-for-sale |
(27,700) |
|
|
(49,620) |
|
|
(52,513) |
|
Equity
securities |
(162) |
|
|
(127) |
|
|
(48) |
|
Mortgage
loans |
(6,087) |
|
|
(12,083) |
|
|
(10,502) |
|
Real
estate and real estate joint ventures |
(931) |
|
|
(589) |
|
|
(1,042) |
|
Other
limited partnership interests |
(715) |
|
|
(1,036) |
|
|
(1,896) |
|
Short-term
investments |
(7,438) |
|
|
(6,727) |
|
|
(12,604) |
|
Cash
received in connection with freestanding derivatives |
1,628 |
|
|
2,967 |
|
|
1,720 |
|
Cash
paid in connection with freestanding derivatives |
(2,998) |
|
|
(3,971) |
|
|
(5,181) |
|
Cash
received from the redemption of an investment in affiliated preferred stock |
— |
|
|
— |
|
|
315 |
|
Receipts
on loans to affiliates |
100 |
|
|
— |
|
|
87 |
|
|
|
|
|
|
|
Purchases
of loans to affiliates |
— |
|
|
(19) |
|
|
(15) |
|
Net
change in policy loans |
58 |
|
|
87 |
|
|
157 |
|
|
|
|
|
|
|
Net
change in other invested assets |
6 |
|
|
114 |
|
|
74 |
|
Net
change in property, equipment and leasehold improvements |
2 |
|
|
12 |
|
|
15 |
|
Other,
net |
41 |
|
|
19 |
|
|
14 |
|
Net
cash provided by (used in) investing activities |
$ |
167 |
|
|
$ |
3,498 |
|
|
$ |
(875) |
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated
Statements of Cash Flows — (continued)
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Cash
flows from financing activities |
|
|
|
|
|
Policyholder
account balances: |
|
|
|
|
|
Deposits |
$ |
69,794 |
|
|
$ |
85,285 |
|
|
$ |
78,129 |
|
Withdrawals |
(72,788) |
|
|
(80,492) |
|
|
(80,850) |
|
Net
change in payables for collateral under securities loaned and other transactions |
(2,381) |
|
|
(10,695) |
|
|
1,744 |
|
|
|
|
|
|
|
Long-term
debt issued |
210 |
|
|
64 |
|
|
35 |
|
Long-term
debt repaid |
— |
|
|
(57) |
|
|
(26) |
|
|
|
|
|
|
|
Derivatives
with certain financing elements and other derivative related transactions, net |
24 |
|
|
308 |
|
|
173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid to MetLife, Inc. |
(2,471) |
|
|
(3,539) |
|
|
(3,393) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other,
net |
(2) |
|
|
(57) |
|
|
(42) |
|
Net
cash provided by (used in) financing activities |
(7,614) |
|
|
(9,183) |
|
|
(4,230) |
|
Effect
of change in foreign currency exchange rates on cash and cash equivalents balances |
2 |
|
|
(7) |
|
|
(4) |
|
Change
in cash and cash equivalents |
(2,610) |
|
|
(552) |
|
|
(1,380) |
|
Cash
and cash equivalents, beginning of year |
9,405 |
|
|
9,957 |
|
|
11,337 |
|
Cash
and cash equivalents, end of year |
$ |
6,795 |
|
|
$ |
9,405 |
|
|
$ |
9,957 |
|
Supplemental
disclosures of cash flow information |
|
|
|
|
|
Net
cash paid (received) for: |
|
|
|
|
|
Interest |
$ |
131 |
|
|
$ |
102 |
|
|
$ |
95 |
|
Income
tax |
$ |
374 |
|
|
$ |
344 |
|
|
$ |
388 |
|
Non-cash
transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
maturity securities available-for-sale disposed of in connection with a reinsurance transaction |
$ |
6,527 |
|
|
$ |
— |
|
|
$ |
— |
|
Fixed
maturity securities available-for-sale received in connection with pension risk transfer transactions |
$ |
1,113 |
|
|
$ |
7,450 |
|
|
$ |
— |
|
Fixed
maturity securities available-for-sale received from an affiliate |
$ |
502 |
|
|
$ |
139 |
|
|
$ |
— |
|
Policyholder
account balances received in connection with affiliated reinsurance transactions |
$ |
502 |
|
|
$ |
— |
|
|
$ |
— |
|
Mortgage
loans disposed of in connection with a reinsurance transaction |
$ |
110 |
|
|
$ |
— |
|
|
$ |
— |
|
Equity
securities received due to in-kind distributions from other limited partnership interests |
$ |
64 |
|
|
$ |
84 |
|
|
$ |
337 |
|
Real
estate and real estate joint ventures acquired in satisfaction of debt |
$ |
34 |
|
|
$ |
313 |
|
|
$ |
174 |
|
Fixed
maturity securities available-for-sale transferred to an affiliate |
$ |
— |
|
|
$ |
328 |
|
|
$ |
— |
|
Fair
value option securities received from an affiliate |
$ |
— |
|
|
$ |
186 |
|
|
$ |
— |
|
Real
estate and real estate joint ventures received from an affiliate |
$ |
— |
|
|
$ |
144 |
|
|
$ |
— |
|
Real
estate and real estate joint ventures transferred to an affiliate |
$ |
— |
|
|
$ |
144 |
|
|
$ |
— |
|
Other
invested assets received in connection with an affiliated reinsurance transaction |
$ |
— |
|
|
$ |
— |
|
|
$ |
3,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the consolidated financial statements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies
Business
Metropolitan
Life Insurance Company and its subsidiaries (collectively, “MLIC” or the “Company”) is a provider of insurance,
annuities, employee benefits and asset management. In the fourth quarter of 2023, MLIC reorganized from two segments into the following
three segments to reflect changes in management’s responsibilities: Group Benefits; Retirement and Income Solutions (“RIS”);
and MetLife Holdings. The Group Benefits and RIS businesses were previously reported as the U.S. segment. In addition, the Company continues
to report certain of its results of operations in Corporate & Other. See Note 2 for further information on the Company’s segments
and Corporate & Other. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together
with its subsidiaries and affiliates, “MetLife”).
Basis
of Presentation
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the consolidated financial
statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions
about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial
services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.
Adoption
of ASU 2018-12 - Targeted Improvements to the Accounting for Long-Duration Contracts
Effective
January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2018-12, Financial
Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts,
as amended by ASU 2019-09, Financial
Services—Insurance (Topic 944): Effective Date;
ASU 2020-11, Financial
Services—Insurance (Topic 944): Effective Date and Early Application;
and ASU 2022-05, Financial
Services—Insurance (Topic 944): Transition for Sold Contracts
(“LDTI”), with a transition date of January 1, 2021 (the “Transition Date”). Adoption of LDTI impacted the Company’s
accounting and presentation related to long-duration insurance contracts and certain related balances for the years ended December 31,
2022 and 2021. Amounts within these consolidated financial statements which were previously presented, have been revised to conform with
the current year accounting and presentation under LDTI. Disclosures as of the Transition Date are reflected in summary within “—
Recent Accounting Pronouncements — Adoption of ASU 2018-12 - Targeted Improvements to the Accounting for Long-Duration Contracts,”
and in further detail (at the disaggregated level) within Notes 3, 4, 5 and 7.
Consolidation
The
accompanying consolidated financial statements include the accounts of Metropolitan Life Insurance Company and its subsidiaries, as well
as partnerships and joint ventures in which the Company has a controlling financial interest, and variable interest entities (“VIEs”)
for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.
The
Company uses the equity method of accounting, unless the fair value option (“FVO”) is applied, for real estate joint ventures
and other limited partnership interests (“investee”) when it has more than a minor ownership interest or more than a
minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings in net
investment income on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when
the investee’s reporting period differs from the Company’s reporting period.
Since
the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Separate
Accounts
Separate
accounts are established in conformity with insurance laws. Generally, the assets of the separate accounts cannot be used to settle the
liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the
extent the value of such assets exceeds the separate account liabilities. The Company reports separately, as separate account assets and
liabilities, investments held in separate accounts and corresponding policyholder liabilities of the same amount if all of the following
criteria are met:
•such
separate accounts are legally recognized;
•assets
supporting the contract liabilities are legally insulated from the Company’s general account liabilities;
•investment
objectives are directed by the contractholder; and
•all
investment performance, net of contract fees and assessments, is passed through to the contractholder.
The
Company reports separate account assets at their fair value, which is based on the estimated fair values of the underlying assets comprising
the individual separate account portfolios. Investment performance (including investment income, net investment gains (losses) and
changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within
the same line on the statements of operations. Separate accounts credited with a contractual investment return are not reported as separate
account assets and liabilities and are combined on a line-by-line basis with the Company’s general account assets, liabilities,
revenues and expenses and the accounting for these investments is consistent with the methodologies described herein for similar financial
instruments held within the general account.
The
Company’s revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration
fees, investment management fees and surrender charges. Such fees are included in universal life and investment-type product policy fees
on the statements of operations.
Summary
of Significant Accounting Policies
The
following table presents the Company’s significant accounting policies with cross-references to the notes which provide additional
information on such policies.
|
|
|
|
|
|
Accounting
Policy |
Note |
Future
Policy Benefit Liabilities |
3 |
Policyholder
Account Balances |
4 |
Market
Risk Benefits |
5 |
Deferred
Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles |
7 |
Reinsurance |
8 |
Investments |
10 |
Derivatives |
11 |
Fair
Value |
12 |
Employee
Benefit Plans |
17 |
Income
Tax |
18 |
Litigation
Contingencies |
19 |
Future
Policy Benefit Liabilities
Traditional
Non-participating and Limited-payment Long-duration products
The
Company establishes future policy benefit liabilities (“FPBs”) for amounts payable under traditional non-participating and
limited-payment long-duration insurance and reinsurance policies which include, but are not limited to, pension risk transfers, structured
settlements, institutional income annuities, long-term care, individual disability, as well as whole and term life products. Generally,
amounts are payable over an extended period of time and the related liabilities are calculated as the present value of future expected
benefits and claim settlement expenses to be paid, reduced by the present value of future expected net premiums.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
FPBs
are measured as cohorts (e.g., groups of long-duration contracts), with the exception of pension risk transfers and longevity reinsurance
solutions contracts, each of which is generally considered its own cohort. Contracts from different subsidiaries or branches, issue years,
benefit currencies and product types are not grouped together in the same cohort.
Such
liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. A
net premium ratio (“NPR”) approach is utilized, where net premiums (i.e., the portion of gross premiums required to fund expected
insurance benefits and claim settlement expenses) are accrued each period as FPBs. The NPR used to accrue the FPB in each period is determined
by using the historical and present value of expected future benefits and claim settlement expenses for the cohort divided by the historical
and present value of expected future gross premiums
for
the cohort.
Cash
flow assumptions are incorporated into the calculation of a cohort's NPR and FPB reserve. These assumptions are used to project the amount
and timing of expected benefits and claim settlement expenses to be paid and the expected amount of premiums to be collected for a cohort.
The principal inputs and assumptions used in the establishment of FPBs are actual premiums, actual benefits, in-force policies, and best
estimate cash flow assumptions to project future premium and benefit amounts. The Company’s primary best estimate cash flow assumptions
include expectations related to mortality, morbidity, termination, claim settlement expense, policy lapse, renewal, retirement, disability
incidence, disability terminations, inflation and other contingent events as appropriate to the respective product type and geographical
area. Generally, the NPR and FPB reserve are updated retrospectively on a quarterly basis for actual experience and at least once a year
for any changes in future cash flow assumptions, except for claim settlement expenses, for which the Company has elected to lock in assumptions
at the Transition Date or inception (for contracts sold after the Transition Date), as allowed by LDTI. The resulting remeasurement (gain)
loss is recorded through net income and reflects the impact of the change in the NPR based on experience at the end of the quarter applied
to the cumulative premiums received from the inception of the cohort (or from the Transition Date for contracts issued prior to the Transition
Date) to the beginning of the quarter. The total contractual profit pattern is recognized over the expected life of the cohort by retrospectively
updating the NPR. If net premiums exceed gross premiums (i.e., expected benefits exceed expected gross premiums), the FPB is increased,
and a corresponding adjustment is recognized immediately in net income.
The
change in FPB reflected in the statement of operations is calculated using a locked-in discount rate. For products issued prior to the
Transition Date, a cohort level locked-in discount rate was developed that reflected the interest accretion rates that were locked in
at inception of the underlying contracts (unless there was a historical premium deficiency event that resulted in updating the interest
accretion rate prior to the Transition Date), or the acquisition date for contracts acquired through an assumed in-force reinsurance transaction
or a business combination. For contracts issued subsequent to the Transition Date, the upper-medium grade discount rate used for interest
accretion is locked in for the cohort and represents the original upper-medium grade discount rate at the issue date of the underlying
contracts. The FPB for all cohorts is remeasured to a current upper-medium grade discount rate at each reporting date through other comprehensive
income (loss) (“OCI”).
The
Company generally interprets the upper-medium grade discount rate to be a rate comparable to that of a corporate single A rate that reflects
the duration characteristics of the liability. The upper-medium grade discount rate for the products that are included in the disaggregated
rollforwards in Note 3 which are issued in the U.S. is determined by using observable market data, including published single A base curves.
The last liquid point on the upper-medium grade discount curve grades to an ultimate forward rate, which is derived using assumptions
of economic growth, inflation, and a long-term upper-medium grade spread.
For
limited-payment long-duration contracts, the collection of premiums does not represent the completion of the earnings process, therefore,
any gross premiums received in excess of net premiums is deferred and amortized as a deferred profit liability (“DPL”). The
DPL is presented within FPBs and is amortized in proportion to either the present value of expected benefit payments or insurance in-force
of each cohort to ensure that profits are recognized over the life of the underlying policies in that cohort, regardless of when premiums
are received. This amortization of the DPL is recorded through net income within policyholder benefits and claims. Consistent with the
Company’s measurement of traditional long-duration products, management also recognizes a FPB reserve for limited-payment contracts
that is representative of the difference between the present value of expected future benefits and the present value of expected
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
future
net premiums, subject to retrospective remeasurement through net income and OCI, as described above. The DPL is also subject to retrospective
remeasurement through net income, however, it is not remeasured for changes in discount rates.
When
a cohort’s present value of future net premiums exceeds the present value of future benefits, a “flooring” adjustment
is required. The flooring adjustment ensures that the liability for future policy benefits for each cohort is not less than zero, and
is reported in net income or OCI, depending on whether the flooring relates to the FPB discounted at the locked-in discount rate versus
the current upper-medium grade discount rate, respectively.
Traditional
Participating Products
The
Company establishes FPBs for traditional participating contracts in the U.S., which include whole and term life participating contracts
in both the open and closed block using a net premium approach, similar to traditional non-participating contracts. However, for participating
contracts, the discount rate and actuarial assumptions are locked in at inception, include a provision for adverse deviation, and all
changes in the associated FPBs are reported within policyholder benefits and claims. See Note 9 for additional information on the closed
block. For traditional participating contracts, the Company reviews its estimates of actuarial liabilities for future benefits and compares
them with current best estimate assumptions. The Company revises estimates, to increase FPBs, if the Company determines that the liabilities
previously established for future benefit payments less future expected net premiums in the aggregate for this line of business prove
inadequate.
Additional
Insurance Liabilities
Liabilities
for universal and variable universal life policies with secondary guarantees (“ULSG”) and paid-up guarantees are determined
by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits
ratably over the life of the contract based on total expected assessments. The additional insurance liabilities are updated retrospectively
on a quarterly basis for actual experience and at least once a year for any changes in future cash flow assumptions. The assumptions used
in estimating the secondary and paid-up guarantee liabilities are investment income, mortality, lapse, and premium payment pattern and
persistency. The assumptions of investment performance and volatility for variable products are consistent with historical experience
of appropriate underlying equity indices, such as the S&P Global Ratings (“S&P”) 500 Index. The benefits used in calculating
the liabilities are based on the average benefits payable over a range of scenarios.
The
resulting adjustments are recorded as policyholder liability remeasurement (gains) losses in the statement of operations reflecting the
impact on the change in the ratio of benefits payable to total assessments over the life of the contract based on experience at the end
of the quarter applied to the cumulative assessments received as of the beginning of the quarter.
Premium
Deficiency Reserves
Premium
deficiency reserves may be established for short-duration contracts to provide for expected future losses and certain expenses that exceed
unearned premiums. These reserves are based on actuarial estimates of the amount of loss inherent in that period, including losses incurred
for which claims have not been reported. The provisions for unreported claims are calculated using studies that measure the historical
length of time between the incurred date of a claim and its eventual reporting to the Company. For universal life-type and certain participating
contracts, a premium deficiency reserve may be established when existing contract liabilities together with the present value of future
fees and/or premiums are not sufficient to cover the present value of future benefits and settlement costs.
Anticipated
investment income is also considered in the calculations of premium deficiency reserves for short-duration contracts, as well as universal
life-type and certain participating contracts.
Policyholder
Account Balances
Policyholder
account balances (“PABs”) represent the amount held by the Company on behalf of the policyholder at each reporting date. This
amount includes deposits received from the policyholder, interest credited to the policyholder’s account balance, net of charges
assessed against the account balance, and any policyholder withdrawals. This balance also includes liabilities for structured settlement
and institutional income annuities, and certain other contracts, that do not contain significant insurance risk, as well as the estimated
fair value of embedded derivatives associated with indexed annuity products.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Market
Risk Benefits
As
defined by LDTI, market risk benefits (“MRBs”) are contracts or contract features that guarantee benefits, such as guaranteed
minimum benefits, in addition to an account balance, which expose insurance companies to other than nominal capital market risk (e.g.,
equity price, interest rate, and/or foreign currency exchange risk) and subsequently protect the contractholder from the same risk. These
contracts and contract features were generally recorded as embedded derivatives or additional insurance liabilities prior to the Transition
Date. Certain contracts may have multiple contract features or guarantees. In these cases, each feature is separately evaluated to determine
whether it meets the definition of an MRB at contract inception. If a contract includes multiple benefits that meet the definition of
an MRB, those benefits are aggregated and measured as a single compound MRB.
All
identified MRBs are required to be measured at estimated fair value, whether the contract or contract feature represents a direct, assumed
or ceded capital market risk. All MRBs in an asset position are aggregated and presented as an asset, and all MRBs in a liability position
are aggregated and presented as a liability. Changes in the estimated fair value of MRBs are recognized in net income, except for the
portion of the fair value change attributable to the change in nonperformance risk of the Company which is recorded as a separate component
of OCI.
The
Company generally uses an attributed fee approach to value MRBs, where the attributed fee is determined at contract inception by estimating
the fair value of expected future benefits and the expected future fees. The attributed fee percentage is the portion of the expected
future fees due from contractholders deemed necessary at contract inception to fund all future expected benefits. This typically results
in a zero fair value for the MRB at inception. The estimated fair value of the expected future benefits is estimated using a stochastically-generated
set of risk-neutral scenarios. Once calculated, the attributed fee percentage is fixed and does not change over the life of the contract.
All fees due from contractholders in excess of the attributed fees are reported in universal life and investment-type product policy fees.
Other
Policy-Related Balances
Other
policy-related balances include policy and contract claims, premiums received in advance, unearned revenue (“UREV”) liabilities,
obligations assumed under structured settlement assignments, policyholder dividends due and unpaid and policyholder dividends left on
deposit.
The
liability for policy and contract claims generally relates to incurred but not reported (“IBNR”) death, disability, and dental
claims. In addition, generally included in other policy-related balances are claims which have been reported but not yet settled for death,
disability, and dental. The liability for these claims is based on the Company’s estimated ultimate cost of settling all claims.
The Company derives estimates for the development of IBNR claims principally from analyses of historical patterns of claims by business
line. The methods used to determine these estimates are continually reviewed. Adjustments resulting from this continuous review process
and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in
which the estimates are changed or payments are made.
The
Company accounts for the prepayment of premiums on its individual life, group life and health contracts as premiums received in advance.
These amounts are then recognized in premiums when due.
The
UREV liability relates to universal life and investment-type products and represents policy charges for services to be provided in future
periods. The charges are deferred as UREV and amortized on a basis consistent with the methodologies and assumptions used for amortizing
deferred policy acquisition costs (“DAC”) for the related contracts. Changes in the UREV liability for each period (representing
deferrals less amortization) are reported in universal life and investment-type product policy fees.
Recognition
of Insurance Revenues and Deposits
Premiums
related to long-duration individual and group fixed annuities (including pension risk transfers, certain structured settlements and certain
income annuities), long-term care, individual disability, whole and term life, and participating products are recognized as revenues when
due from policyholders. Policyholder benefits and expenses are provided to recognize profits over the estimated lives of the insurance
policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit
is deferred as a DPL and recognized into earnings in a constant relationship to insurance in-force or, for annuities, the present value
of expected future policy benefit payments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Premiums
related to short-duration group term life, dental, disability, and legal plan contracts are recognized on a pro rata basis over the applicable
contract term. Unearned premiums, representing the portion of premium written related to the unexpired coverage, are reflected as liabilities
until earned.
Deposits
related to universal life and investment-type products are credited to PABs. Revenues from such contracts consist of fees for mortality,
policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in
which services are provided. All fees due from contractholders in excess of the attributed fees on contracts with MRBs are reported in
universal life and investment-type product policy fees. Amounts that are charged to earnings include interest credited and benefit claims
incurred in excess of related PABs.
All
revenues and expenses are presented net of reinsurance, as applicable.
Deferred
Policy Acquisition Costs, Value of Business Acquired and Other Intangibles
The
Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are related directly to the
successful acquisition or renewal of insurance contracts are capitalized as DAC. Such costs include:
•incremental
direct costs of contract acquisition, such as commissions;
•the
portion of an employee’s total compensation and benefits related to time spent selling, underwriting or processing the issuance
of new and renewal insurance business only with respect to actual policies acquired or renewed; and
•other
essential direct costs that would not have been incurred had a policy not been acquired or renewed.
All
other acquisition-related costs, including those related to general advertising and solicitation, market research, agent training, product
development, unsuccessful sales and underwriting efforts, as well as all indirect costs, are expensed as incurred.
Value
of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess
of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition
date. The estimated fair value of the acquired liabilities is based on projections, by each block of business, of future policy and contract
charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns, nonperformance
risk adjustment and other factors. Actual experience with the purchased business may vary from these projections. VOBA is subject to periodic
recoverability testing for traditional life and limited-payment contracts, as well as universal life type contracts.
DAC
and VOBA for most long-duration products are amortized on a constant-level basis that approximates straight-line amortization on an individual
contract basis. The DAC and VOBA related to RIS annuities are amortized over expected benefit payments, and for all other long-duration
products are generally amortized in proportion to policy count. For short-duration products, DAC and VOBA are amortized in proportion
to actual and expected future earned premiums.
DAC
and VOBA are aggregated on the financial statements for reporting purposes. Amortization of DAC and VOBA is included in other expenses.
The
Company generally has two different types of sales inducements which are included in other assets: (i) the policyholder receives
a bonus whereby the policyholder’s initial account balance is increased by an amount equal to a specified percentage of the customer’s
deposit; and (ii) the policyholder receives a higher interest rate using a dollar cost averaging method than would have been received
based on the normal general account interest rate credited. The Company defers sales inducements and amortizes them over the life of the
policy using the same methodologies and assumptions used to amortize DAC for the related contracts. The amortization of deferred sales
inducements (“DSI”) is included in policyholder benefits and claims. DSI assets were $45 million and $49 million
at December 31, 2023 and 2022, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Value
of distribution agreements acquired (“VODA”) is reported in other assets and represents the present value of expected
future profits associated with the expected future business derived from the distribution agreements acquired as part of a business combination.
Value of customer relationships acquired (“VOCRA”) is also reported in other assets and represents the present value
of the expected future profits associated with the expected future business acquired through existing customers of the acquired company
or business. The VODA and VOCRA associated with past business combinations are amortized over the assets’ useful lives ranging from
10 to 30 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a possible
impairment exists, the Company reviews VODA and VOCRA to determine whether the asset is impaired.
Reinsurance
For
each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating
to insurance risk in accordance with applicable accounting standards. Cessions under reinsurance agreements do not discharge the Company’s
obligations as the primary insurer. The Company reviews all contractual features, including those that may limit the amount of insurance
risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.
For
reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between
the amounts paid (received), and the liabilities ceded (assumed) related to the underlying reinsured contracts is considered
the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is amortized on a basis consistent
with the methodologies and assumptions used for amortizing DAC related to the underlying reinsured contracts. Subsequent accounting for
in-force blocks and new business assumed is the same as if the business was directly sold by the Company.
For
prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid (received) are
recorded as ceded (assumed) premiums and ceded (assumed) unearned premiums. Ceded (assumed) unearned premiums are reflected
as a component of premiums, reinsurance and other receivables (future policy benefits). Such amounts are amortized through earned
premiums over the remaining contract period in proportion to the amount of insurance protection provided. For retroactive reinsurance
of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid (received) in excess of the related insurance
liabilities ceded (assumed) are recognized immediately as a loss and are reported in the appropriate line item within the statement
of operations. Any gain on such retroactive agreement is deferred and is amortized as part of DAC, primarily using the recovery method.
The
reinsurance recoverable for traditional non-participating and limited-payment contracts is generally measured using a net premium methodology
to accrue the projected net gain or loss on reinsurance in proportion to the gross premiums of the underlying reinsured cohorts; and is
updated retrospectively on a quarterly basis for actual experience and at least once a year for any changes in cash flow assumptions.
The locked-in discount rate used to measure changes in the reinsurance recoverable recorded in net income was established at the Transition
Date, or at the inception of the reinsurance coverage for new reinsurance agreements entered into subsequent to the Transition Date. The
reinsurance recoverable is remeasured to an upper-medium grade discount rate through OCI at each reporting date, similar to the underlying
reinsured contracts. The reinsurance recoverable for other long-duration contracts and associated contract features is measured using
assumptions and methods generally consistent with the underlying direct policies.
Amounts
currently recoverable under reinsurance agreements are included in premiums, reinsurance and other receivables and amounts currently payable
are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net
on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations
to the Company under the terms of the reinsurance agreements, or when events or changes in circumstances indicate that its carrying amount
may not be recoverable, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances
are stated net of allowances for uncollectible reinsurance, consistent with credit loss guidance which requires recording an allowance
for credit loss (“ACL”).
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements. The Company
withholds the funds rather than transferring the underlying investments and, as a result, records funds withheld liability within other
liabilities. The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement
which may be contractually specified or directly related to the investment portfolio. See “— Investments — Other
Invested Assets” for information on funds withheld assets.
Premiums,
fees, policyholder liability remeasurement (gains) losses, and policyholder benefits and claims include amounts assumed under reinsurance
agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other expenses.
If
the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from
insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities
and deposits made are included within premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the
underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other
expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit
asset or liability through other revenues or other expenses, as appropriate.
Investments
Net
Investment Income
Net
investment income includes primarily interest income, including amortization of premium and accretion of discount, prepayment fees, dividend
income, rental income and equity method income and is net of related investment expenses. Net investment income also includes, (i) realized
gains (losses) on investments sold or disposed and (ii) unrealized gains (losses) recognized in earnings, representing changes in estimated
fair value, primarily for FVO securities.
Net
Investment Gains (Losses)
Net
investment gains (losses) include primarily (i) realized gains (losses) from sales and disposals of investments, which are determined
by specific identification, (ii) intent-to-sell impairment losses on fixed maturity securities available-for-sale (“AFS”)
and impairment losses on all other asset classes and, to a lesser extent, (iii) recognized gains (losses). Recognized gains (losses) are
primarily comprised of the change in the ACL and unrealized gains (losses) for certain investments for which changes in estimated fair
value are recognized in earnings. Changes in the ACL includes both (i) provisions for credit loss on fixed maturity securities AFS, mortgage
loans and leveraged and direct financing leases, and (ii) subsequent changes in the ACL. Unrealized gains (losses), representing changes
in estimated fair value recognized in earnings, primarily relate to equity securities and certain other limited partnership interests
and real estate joint ventures.
Net
investment gains (losses) also include non-investment portfolio gains (losses) which do not relate to the performance of the investment
portfolio, including gains (losses) from sales and divestitures of businesses and impairment of property, equipment, leasehold improvements
and right-of-use (“ROU”) lease assets.
Accrued
Investment Income
Accrued
investment income is presented separately on the consolidated balance sheet and excluded from the carrying value of the related investments,
primarily fixed maturity securities and mortgage loans.
Fixed
Maturity Securities
The
majority of the Company’s fixed maturity securities are classified as AFS and are reported at their estimated fair value. Changes
in the estimated fair value of these securities not recognized in earnings representing unrecognized unrealized investment gains (losses)
are recorded as a separate component of OCI, net of policy-related amounts and deferred income taxes. All security transactions are recorded
on a trade date basis. Sales of securities are determined on a specific identification basis.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Interest
income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to
amortization of premium and accretion of discount, and is based on the estimated economic life of the securities, which for mortgage-backed
and asset-backed securities considers the estimated timing and amount of prepayments of the underlying loans. See Note 10 “—
Fixed Maturity Securities AFS — Methodology for Amortization of Premium and Accretion of Discount on Structured Products.”
The amortization of premium and accretion of discount also take into consideration call and maturity dates. Generally, the accrual of
income is ceased and accrued investment income that is considered uncollectible is recognized as a charge within net investment gains
(losses) when securities are impaired.
The
Company periodically evaluates these securities for impairment. The assessment of whether impairments have occurred is based on management’s
case-by-case evaluation of the underlying reasons for the decline in estimated fair value as described in Note 10 “—
Fixed Maturity Securities AFS — Evaluation of Fixed Maturity Securities AFS for Credit Loss.”
For
securities in an unrealized loss position, a credit loss is recognized in earnings within net investment gains (losses) when it is anticipated
that the amortized cost, excluding accrued investment income, will not be recovered. When either: (i) the Company has the intent
to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery,
the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost
and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present
value of projected future cash flows expected to be collected is recognized in earnings as a credit loss by establishing an ACL with a
corresponding charge recorded in net investment gains (losses). However, the ACL is limited by the amount that the fair value is less
than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the
present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit
factors (“noncredit loss”) is recorded in OCI as an unrecognized loss.
For
purchased credit deteriorated (“PCD”) fixed maturity securities AFS and financing receivables, an ACL is established at acquisition,
which is added to the purchase price to establish the initial amortized cost of the investment and is not recognized in earnings.
Mortgage
Loans
The
Company may originate or acquire mortgage loans and in certain cases transfer an interest under participation agreements. The Company
accounts for transfers of an interest in a mortgage loan as sales if the transfers meet both the conditions of a participating interest
and the conditions for sale accounting. The Company also acquires mortgage loans through an affiliate. The affiliate originates and acquires
mortgage loans and the Company simultaneously purchases participation interests under a participation agreement. Mortgage loans acquired
from affiliates that do not meet the conditions for sale accounting are treated as mortgage secured loans and reported within mortgage
loans on the balance sheet.
The
Company disaggregates its mortgage loan investments into three portfolio segments: commercial, agricultural and residential. Also included
in commercial mortgage loans are revolving line of credit loans collateralized by commercial properties. The accounting policies that
are applicable to all portfolio segments are presented below and the accounting policies related to each of the portfolio segments are
included in Note 10.
The
Company recognizes an ACL in earnings within net investment gains (losses) at time of purchase or origination based on expected lifetime
credit loss on financing receivables carried at amortized cost, including, but not limited to, mortgage loans, in an amount that represents
the portion of the amortized cost basis of such financing receivables that the Company does not expect to collect, resulting in financing
receivables being presented at the net amount expected to be collected.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
Company ceases to accrue interest when the collection of interest is not considered probable, which is based on a current evaluation of
the status of the borrower, including the number of days past due. When a loan is placed on non-accrual status, uncollected past due accrued
interest income that is considered uncollectible is charged-off against net investment income. Generally, the accrual of interest income
resumes after all delinquent amounts are paid and management believes all future principal and interest payments will be collected. The
Company records cash receipts on non-accruing loans in accordance with the loan agreement. The Company records charge-offs of mortgage
loan balances not considered collectible upon the realization of a credit loss, for commercial and agricultural mortgage loans typically
through foreclosure or after a decision is made to sell a loan, and for residential mortgage loans, typically after considering the individual
consumer’s financial status. The charge-off is recorded in net investment gains (losses), net of amounts recognized in ACL. Cash
recoveries on principal amounts previously charged-off are generally reported in net investment gains (losses).
Mortgage
loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, and are net
of ACL. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method
giving effect to amortization of premium and deferred expenses and accretion of discount and deferred fees.
Also
included in mortgage loans are residential mortgage loans for which the FVO was elected, and which are stated at estimated fair value.
Changes in estimated fair value are recognized in net investment income.
Mortgage
loans that are designated as held-for-sale are carried at the lower of amortized cost or estimated fair value.
Policy
Loans
Policy
loans are stated at unpaid principal balances. Interest income is recognized as earned using the contractual interest rate. Generally,
accrued interest is capitalized on the policy’s anniversary date. Valuation allowances are not established for policy loans, as
they are fully collateralized by the cash surrender value of the underlying insurance policies. Any unpaid principal and accrued interest
are deducted from the cash surrender value or the death benefit prior to settlement of the insurance policy.
Real
Estate
Real
estate is stated at cost less accumulated depreciation. Depreciation is recognized on a straight-line basis, without any provision for
salvage value, over the estimated useful life of the asset (typically up to 55 years). Rental income is recognized on a straight-line
basis over the term of the respective leases. The Company periodically reviews its real estate for impairment and tests for recoverability
whenever events or changes in circumstances indicate the carrying value may not be recoverable. Properties whose carrying values are greater
than their estimated undiscounted cash flows are written down to their estimated fair value, which is generally computed using the present
value of expected future cash flows discounted at a rate commensurate with the underlying risks.
Real
estate for which the Company commits to a plan to sell within one year and actively markets in its current condition for a reasonable
price in comparison to its estimated fair value is classified as held-for-sale and is not depreciated. Real estate held-for-sale is stated
at the lower of depreciated cost or estimated fair value less expected disposition costs.
Real
Estate Joint Ventures and Other Limited Partnership Interests
The
Company uses the equity method of accounting or the FVO for an investee when it has more than a minor ownership interest or more than
a minor influence over the investee’s operations but does not hold a controlling financial interest, including when the Company
is not deemed the primary beneficiary of a VIE. Under the equity method, the Company recognizes its share of the investee's earnings within
net investment income. Contributions paid by the Company increase carrying value and distributions received by the Company reduce carrying
value. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s
financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting
period.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
Company accounts for its interest in real estate joint ventures and other limited partnership interests in which it has virtually no influence
over the investee’s operations at estimated fair value. Unrealized gains (losses), representing changes in estimated fair value
of these investments, are recognized in earnings within net investment gains (losses). Due to the nature and structure of these investments,
they do not meet the characteristics of an equity security in accordance with applicable accounting guidance.
The
Company consolidates real estate joint ventures and other limited partnership interests of which it holds a controlling financial interest,
or it is deemed the primary beneficiary of a VIE. Assets of certain consolidated real estate joint ventures and other limited partnership
interests are initially recorded at estimated fair value. The Company elects the FVO for certain real estate joint ventures that are managed
on a total return basis. Unrealized gains (losses) representing changes in estimated fair value for real estate joint ventures and other
limited partnership interests recorded at estimated fair value are recognized in net investment income.
The
Company routinely evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the
carrying amount is not recoverable and exceeds its estimated fair value. When it is determined an equity method investment has had a loss
in value that is other than temporary, an impairment is recognized. Such an impairment is charged to net investment gains (losses).
Short-term
Investments
Short-term
investments include highly liquid securities and other investments with remaining maturities of one year or less, but greater than three
months, at the time of purchase. Securities included within short-term investments are stated at estimated fair value, while other investments
included within short-term investments are stated at amortized cost less ACL, which approximates estimated fair value.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Other
Invested Assets
Other
invested assets consist principally of the following:
•Freestanding
derivatives with positive estimated fair values which are described in “— Derivatives” below.
•Funds
withheld represent a receivable for amounts contractually withheld by ceding companies in accordance with reinsurance agreements. The
Company recognizes interest on funds withheld at rates defined by the terms of the agreement which may be contractually specified or directly
related to the underlying investments.
•Annuities
funding structured settlement claims represent annuities funding claims assumed by the Company in its capacity as a structured settlements
assignment company. The annuities are stated at their contract value, which represents the present value of the future periodic claim
payments to be provided. The net investment income recognized reflects the amortization of discount of the annuity at its implied effective
interest rate.
•Affiliated
investments are comprised of affiliated loans which are stated at unpaid principal balance, adjusted for any unamortized premium or discount.
Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount.
•Tax
credit and renewable energy partnerships which derive a significant source of investment return in the form of income tax credits or other
tax incentives. The Company accounts for its tax credit and renewable energy investments under the equity method. See Note 18.
•FVO
securities are primarily investments in fixed maturity securities held-for-investment that are managed on a total return basis where the
FVO has been elected, with changes in estimated fair value included in net investment income.
•Net
investment in leveraged leases is equal to the minimum lease payment receivables plus the unguaranteed residual value, less the unearned
income, less ACL and is reported net of non-recourse debt. Income is recognized by applying the leveraged lease’s estimated rate
of return to the net investment in the lease in those periods in which the net investment at the beginning of the period is positive.
Leveraged leases derive investment returns in part from their income tax benefit. The Company regularly reviews its minimum lease payment
receivables for credit loss and residual value for impairments.
•Investments
in Federal Home Loan Bank of New York (“FHLBNY”) common stock are carried at redemption value and are considered restricted
investments until redeemed by FHLBNY. Dividends are recognized in net investment income when declared.
•Investment
in an operating joint venture that engages in insurance underwriting activities is accounted for under the equity method.
•Company-owned
life insurance policies (“COLI”) are carried at cash surrender value.
•Equity
securities are reported at their estimated fair value, with changes in estimated fair value included in net investment gains (losses).
Sales of securities are determined on a specific identification basis. Dividends are recognized in net investment income when declared.
•Net
investment in direct financing leases is equal to the minimum lease payment receivables plus the unguaranteed residual value, less the
unearned income, less ACL. Income is recognized by applying the pre-tax internal rate of return to the investment balance. The Company
regularly reviews its minimum lease payment receivables for credit loss and residual value for impairments.
Securities
Lending Transactions and Repurchase Agreements
The
Company accounts for securities lending transactions and repurchase agreements as financing arrangements and the associated liability
is recorded at the amount of cash received. The securities loaned or sold under these agreements are included in invested assets. Income
and expenses associated with securities lending transactions and repurchase agreements are recognized as investment income and investment
expense, respectively, within net investment income.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Securities
Lending Transactions
The
Company enters into securities lending transactions, whereby securities are loaned to unaffiliated financial institutions. The Company
obtains collateral at the inception of the loan, usually cash, in an amount generally equal to 102% of the estimated fair value of the
securities loaned, and maintains it at a level greater than or equal to 100% for the duration of the loan. Securities loaned under such
transactions may be sold or re-pledged by the transferee. The Company is liable to return to the counterparties the cash collateral received.
Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, unless
the counterparty is in default, and is not reflected on the Company’s consolidated financial statements. The Company monitors the
ratio of the collateral held to the estimated fair value of the securities loaned on a daily basis and additional collateral is obtained
as necessary throughout the duration of the loan.
Repurchase
Agreements
The
Company participates in short-term repurchase agreements with unaffiliated financial institutions. Under these agreements, the Company
sells securities and receives cash in an amount generally equal to 85% to 100% of the estimated fair value of the securities sold at the
inception of the transaction, with a simultaneous agreement to repurchase such securities at a future date or on demand in an amount equal
to the cash initially received plus interest. The Company monitors the ratio of the cash held to the estimated fair value of the securities
sold throughout the duration of the transaction and additional cash or securities are obtained as necessary. Securities sold under such
transactions may be sold or re-pledged by the transferee.
Derivatives
Freestanding
Derivatives
Freestanding
derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other
liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed
with the same counterparty under the same master netting agreement.
Accruals
on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled
to settle within one year are included with the derivative’s carrying value in other invested assets or other liabilities.
If
a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the
estimated fair value of the derivative are reported in net derivative gains (losses) except as follows:
|
|
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|
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|
|
|
|
Statement
of Operations Presentation: |
Derivative: |
Net
investment income |
• |
Economic
hedges of equity method investments in joint ventures |
• |
Economic
hedges of FVO securities which are linked to equity indices |
Hedge
Accounting
To
qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective
and strategy for undertaking the hedging transaction, as well as its designation of the hedge. Hedge designation and financial statement
presentation of changes in estimated fair value of the hedging derivatives are as follows:
•Fair
value hedge
- a hedge of the estimated fair value of a recognized asset or liability - in the same line item as the earnings effect of the hedged
item. The carrying value of the hedged recognized asset or liability is adjusted for changes in its estimated fair value due to the hedged
risk.
•Cash
flow hedge
- a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability
- in OCI and reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows
of the hedged item.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement
of operations within interest income or interest expense to match the location of the hedged item.
In
its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged
item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness.
A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged
item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.
Assessments of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have
a material effect on the amount reported in net income.
The
Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective
in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated,
or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated
as a hedging instrument.
When
hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated
fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with
changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or
liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative
adjustment to its carrying value is amortized into income over the remaining life of the hedged item. The changes in estimated fair value
of derivatives related to discontinued cash flow hedges remain in OCI unless it is probable that the hedged forecasted transaction will
not occur.
When
hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date
or within two months of that date, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes
in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded
in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable of occurring are recognized
immediately in net investment gains (losses).
In
all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet,
with changes in its estimated fair value recognized in the current period as net derivative gains (losses).
Embedded
Derivatives
The
Company issues certain products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives.
The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative
is bifurcated from the host contract and accounted for as a freestanding derivative if:
•the
contract or contract feature does not meet the definition of a MRB;
•the
combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;
•the
terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and
•a
separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Such
embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair
value are reported in net derivative gains (losses). If the Company is unable to properly identify and measure an embedded derivative
for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated
fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect
to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current
period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation.
Fair
Value
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition.
Subsequent
to initial recognition, fair values are based on unadjusted quoted prices for identical assets or liabilities in active markets that are
readily and regularly obtainable. When such unadjusted quoted prices are not available, estimated fair values are based on quoted prices
in markets that are not active, quoted prices for similar but not identical assets or liabilities, or other observable inputs. If these
inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring
significant management judgment are used to determine the estimated fair value of assets and liabilities. These unobservable inputs can
be based on management’s judgment, assumptions or estimation and may not be observable in market activity. Unobservable inputs are
based on management’s assumptions about the inputs market participants would use in pricing the assets.
Employee
Benefit Plans
The
Company sponsors a U.S. nonqualified defined benefit pension plan covering eligible MetLife employees. A December 31 measurement
date is used for the Company’s defined benefit pension plan.
The
Company recognizes the funded status of its defined benefit pension plan, measured as the difference between the fair value of plan assets
and the benefit obligation, which is the projected benefit obligation (“PBO”) for pension benefits, in other liabilities.
Actuarial
gains and losses result from differences between the plan’s actual experience and the assumed experience on PBO during a particular
period and are recorded in accumulated OCI (“AOCI”). To the extent such gains and losses exceed 10% of the PBO, the excess
is amortized into net periodic benefit costs, generally over the average projected future service years of the active employees. In addition,
prior service costs (credit) are recognized in AOCI at the time of the amendment and then amortized to net periodic benefit costs
over the average projected future service years of the active employees.
Net
periodic benefit costs are determined using management’s estimates and actuarial assumptions and are comprised of service cost,
interest cost, settlement and curtailment costs, amortization of net actuarial (gains) losses, and amortization of prior service costs
(credit).
The
Company sponsors a nonqualified defined contribution plan for all MetLife employees who qualify. This nonqualified defined contribution
plan provides supplemental benefits in excess of limits applicable to a qualified plan which is sponsored by an affiliate.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Income
Tax
Metropolitan
Life Insurance Company and its includable subsidiaries join with MetLife, Inc. and its includable subsidiaries in filing a consolidated
U.S. life insurance and non-life insurance federal income tax return in accordance with the provisions of the Internal Revenue Code
of 1986, as amended. Current taxes (and the benefits of tax attributes such as losses) are allocated to Metropolitan Life Insurance
Company and its includable subsidiaries under the consolidated tax return regulations and a tax sharing agreement. Under the consolidated
tax return regulations, MetLife, Inc. has elected the “percentage method” (and 100% under such method) of reimbursing companies
for tax attributes, e.g., net operating losses. As a result, 100% of tax attributes are reimbursed by MetLife, Inc. to the extent
that consolidated federal income tax of the consolidated federal tax return group is reduced in a year by tax attributes. On an annual
basis, each of the profitable subsidiaries pays to MetLife, Inc. the federal income tax which it would have paid based upon that year’s
taxable income. If Metropolitan Life Insurance Company or its includable subsidiaries have current or prior deductions and credits (including
but not limited to losses) which reduce the consolidated tax liability of the consolidated federal tax return group, the deductions and
credits are characterized as realized (or realizable) by Metropolitan Life Insurance Company and its includable subsidiaries when those
tax attributes are realized (or realizable) by the consolidated federal tax return group, even if Metropolitan Life Insurance Company
or its includable subsidiaries would not have realized the attributes on a stand-alone basis under a “wait and see” method.
The
Company’s accounting for income taxes represents management’s best estimate of various events and transactions.
Deferred
tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities
are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences
are expected to reverse.
The
realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods
under the tax law in the applicable tax jurisdiction. Valuation allowances are established against deferred tax assets when management
determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant
judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When
making such determination, the Company considers many factors, including:
•the
nature, frequency, and amount of cumulative financial reporting income and losses in recent years;
•the
jurisdiction in which the deferred tax asset was generated;
•the
length of time that carryforward can be utilized in the various taxing jurisdictions;
•future
taxable income exclusive of reversing temporary differences and carryforwards;
•future
reversals of existing taxable temporary differences;
•taxable
income in prior carryback years; and
•tax
planning strategies, including the intent and ability to hold certain AFS debt securities until they recover in value.
The
Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax
assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally,
the effect of changes in tax laws, tax regulations, or interpretations of such laws or regulations, is recognized in net income tax expense
(benefit) in the period of change.
The
Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing
authorities before any part of the benefit can be recorded on the financial statements. A tax position is measured at the largest amount
of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that
do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made.
The
Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Litigation
Contingencies
The
Company is a defendant in a large number of litigation matters and is involved in a number of regulatory investigations. Liabilities are
established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Except as otherwise
disclosed in Note 19, legal costs are recognized as incurred. On a quarterly and annual basis, the Company reviews relevant information
with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected on the Company’s
consolidated financial statements.
Other
Accounting Policies
Stock-Based
Compensation
The
Company does not issue any awards payable in its common stock or options to purchase its common stock. MetLife, Inc. grants certain employees
stock-based compensation awards under various plans, subject to vesting conditions. In accordance with a services agreement with an affiliate,
the Company bears a proportionate share of stock-based compensation expense. The Company’s expense related to stock-based compensation
included in other expenses was $67 million, $67 million and $59 million for the years ended December 31, 2023, 2022 and
2021, respectively.
Cash
and Cash Equivalents
The
Company considers highly liquid securities and other investments purchased with an original or remaining maturity of three months or less
at the date of purchase to be cash equivalents. Securities included within cash equivalents are stated at estimated fair value, while
other investments included within cash equivalents are stated at amortized cost, which approximates estimated fair value.
Property,
Equipment and Leasehold Improvements
Property,
equipment and leasehold improvements, which are included in other assets, are stated at cost, less accumulated depreciation and amortization.
Depreciation and amortization on property and equipment are determined using the straight-line method over the estimated useful lives
of the assets, generally ranging from four
to 40 years. Leasehold improvements are amortized over the shorter of the useful life or remaining lease term up to 20
years. The cost basis of the property, equipment and leasehold improvements was $826 million and $840 million at December 31,
2023 and 2022, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $727 million
and $719 million at December 31, 2023 and 2022, respectively.
Leases
The
Company, as lessee, has entered into various lease and sublease agreements for office space and equipment. At contract inception, the
Company determines that an arrangement contains a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. For contracts that contain a lease, the Company recognizes the ROU asset in other assets
and the lease liability in other liabilities. The Company evaluates whether a ROU asset is impaired when events or changes in circumstances
indicate that its carrying amount may not be recoverable. Leases with an initial term of 12 months or less are not recorded on the balance
sheet and the associated lease costs are recorded as an expense on a straight-line basis over the lease term.
ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. ROU assets and lease liabilities are determined using the Company’s incremental
borrowing rate based upon information available at commencement date to recognize the present value of lease payments over the lease term.
ROU assets also include lease payments and exclude lease incentives. Lease terms may include options to extend or terminate the lease
and are included in the lease measurement when it is reasonably certain that the Company will exercise that option.
The
Company has lease agreements with lease and non-lease components. The Company does not separate lease and non-lease components and accounts
for these items as a single lease component for all asset classes.
The
majority of the Company’s leases and subleases are operating leases related to office space. The Company recognizes lease expense
for operating leases on a straight-line basis over the lease term.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Other
Revenues
Other
revenues primarily include fees related to service contracts from customers for prepaid legal plans, administrative services-only contracts,
and recordkeeping and related services. Substantially all of the revenue from the services is recognized over time as the applicable services
are provided or are made available to the customers. The revenue recognized includes variable consideration to the extent it is probable
that a significant reversal will not occur. In addition to the service fees, other revenues also include certain stable value fees and
interest on ceded reinsurance deposit assets. These amounts are recognized as earned.
Policyholder
Dividends
Policyholder
dividends are approved annually by Metropolitan Life Insurance Company’s Board of Directors. The aggregate amount of policyholder
dividends is related to actual interest, mortality, morbidity and expense experience for the year, as well as management’s judgment
as to the appropriate level of statutory surplus to be retained by Metropolitan Life Insurance Company.
Foreign
Currency
Assets,
liabilities and operations of foreign affiliates and subsidiaries, as well as investments accounted for under the equity method, are recorded
based on the functional currency of each entity. The determination of the functional currency is made based on the appropriate economic
and management indicators. For most of the Company’s foreign operations, the local currency is the functional currency. Assets and
liabilities of foreign affiliates and subsidiaries are translated from the functional currency to U.S. dollars at the exchange rates
in effect at each year-end and revenues and expenses are translated at the average exchange rates during the year. The resulting translation
adjustments are charged or credited directly to OCI, net of applicable taxes. Gains and losses from foreign currency transactions, including
the effect of re-measurement of monetary assets and liabilities to the appropriate functional currency, are reported as part of net investment
gains (losses) in the period in which they occur.
Goodwill
Goodwill
represents the future economic benefits arising from net assets acquired in a business combination that are not individually identified
and recognized. Goodwill is calculated as the excess of the cost of the acquired entity over the estimated fair value of such assets acquired
and liabilities assumed. Goodwill is not amortized, but is tested for impairment at least annually, or more frequently if events or circumstances
indicate that there may be justification for conducting an interim test. The Company performs its annual goodwill impairment testing during
the third quarter based upon data as of the close of the second quarter. Goodwill associated with a business acquisition is not tested
for impairment during the year the business is acquired unless there is a significant identified impairment event.
For the 2023 annual goodwill impairment tests, the Company concluded that goodwill was not impaired. The goodwill balance was $84 million,
$2 million and $31 million in the Group Benefits, RIS and MetLife Holdings segments, respectively, at both December 31, 2023
and 2022.
Recent
Accounting Pronouncements
Changes
to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of ASUs to the FASB Accounting Standards
Codification. The Company considers the applicability and impact of all ASUs. The following tables provide a description of ASUs recently
issued by the FASB and the impact of their adoption on the Company’s consolidated financial statements.
Adoption
of ASU 2018-12 - Targeted Improvements to the Accounting for Long-Duration Contracts
The
Company adopted LDTI effective January 1, 2023 with a Transition Date of January 1, 2021. The standard required a full retrospective transition
approach for MRBs, and allowed for a transition method election for FPBs and DAC, as well as other balances that have historically been
amortized in a manner consistent with DAC. The Company has elected the modified retrospective transition approach for all FPBs, DAC, and
related balances on all long-duration contracts, subject to the transition provisions. Additionally, an amendment in LDTI allowed entities
to make an accounting policy election to exclude certain sold or disposed contracts or legal entities from application of the transition
guidance. The Company did not make such an election.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Under
the modified retrospective approach, the Company was required to establish LDTI-compliant FPBs, DAC and related balances for the Company’s
Transition Date opening balance sheet by utilizing the Company’s December 31, 2020 balances with certain adjustments as described
below.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
following table presents a summary of the Transition Date impacts associated with the implementation of LDTI to the consolidated balance
sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums,
Reinsurance and Other Receivables |
|
|
|
Deferred
Policy Acquisition Costs and Value of Business Acquired |
|
Deferred
Tax Asset |
|
Other
Assets |
|
Future
Policy Benefits |
|
Policyholder
Account Balances |
|
Market
Risk Benefit Liabilities |
|
Deferred
Income Tax Liability |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
(In
millions) |
Balances
as reported, December 31, 2020 |
|
$ |
21,478 |
|
|
|
|
$ |
2,649 |
|
|
$ |
— |
|
|
$ |
4,276 |
|
|
$ |
133,921 |
|
|
$ |
96,635 |
|
|
$ |
— |
|
|
$ |
1,980 |
|
|
$ |
10,548 |
|
|
$ |
11,662 |
|
Reclassification
of carrying amounts of contracts and contract features that are market risk benefits |
|
(59) |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
(1,447) |
|
|
(495) |
|
|
1,883 |
|
|
— |
|
|
— |
|
|
— |
|
Adjustments
for the difference between previous carrying amounts and fair value measurements for market risk benefits |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,906 |
|
|
(1,030) |
|
|
(3,897) |
|
|
21 |
|
Removal
of related amounts in accumulated other comprehensive income |
|
— |
|
|
|
|
1,482 |
|
|
— |
|
|
29 |
|
|
(6,835) |
|
|
— |
|
|
— |
|
|
1,751 |
|
|
— |
|
|
6,595 |
|
Adjustment
of future policy benefits to remeasure cohorts where net premiums exceed gross premiums under the modified retrospective approach |
|
32 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
89 |
|
|
— |
|
|
— |
|
|
(12) |
|
|
(45) |
|
|
— |
|
Effect
of remeasurement of future policy benefits to an upper-medium grade discount rate |
|
403 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
25,208 |
|
|
— |
|
|
— |
|
|
(5,209) |
|
|
— |
|
|
(19,596) |
|
Adjustments
for the cumulative effect of adoption on additional insurance assets and liabilities |
|
29 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
36 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7) |
|
Other
balance sheet reclassifications and adjustments upon adoption of the LDTI standard |
|
2 |
|
|
|
|
12 |
|
|
2,518 |
|
|
— |
|
|
(4,794) |
|
|
4,794 |
|
|
— |
|
|
2,520 |
|
|
10 |
|
|
— |
|
Balances
as adjusted, January 1, 2021 |
|
$ |
21,885 |
|
|
|
|
$ |
4,143 |
|
|
$ |
2,518 |
|
|
$ |
4,305 |
|
|
$ |
146,178 |
|
|
$ |
100,934 |
|
|
$ |
6,789 |
|
|
$ |
— |
|
|
$ |
6,616 |
|
|
$ |
(1,325) |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
Transition Date impacts associated with the implementation of LDTI were applied as follows:
Market
Risk Benefits (See Note 5)
The
full retrospective transition approach for MRBs required assessing products to determine whether contract or contract features expose
the Company to other than nominal capital market risk. The population of MRBs identified was then reviewed to determine the historical
measurement model prior to adoption of LDTI. If the MRB was a bifurcated embedded derivative prior to the adoption of LDTI, the existing
measurement approach was retained, except that the fair value of the MRB at inception was recalculated to isolate the contract issue date
nonperformance risk of the Company.
If,
prior to the adoption of LDTI, the MRB was partially a bifurcated embedded derivative (e.g., a contract with multiple features where one
was a bifurcated embedded derivative and one was an additional insurance liability), or was accounted for under a different model, the
at-inception attributed fee ratio was calculated for every identified MRB, and using the at inception attributed fee ratio, the fair value
of the MRB at the contract issue date was calculated to isolate the contract issue date nonperformance risk of the Company.
At
the Transition Date, the impacts to the financial statements of the full retrospective approach for MRBs include the following:
•The
amounts previously recorded for these contracts within additional insurance liabilities, embedded derivatives, and other insurance liabilities
were reclassified to MRB liabilities;
•The
difference between the fair value of the MRBs and the previously recorded carrying value at the Transition Date, excluding the cumulative
effect of changes in nonperformance risk of the Company, was recorded as an adjustment to the opening balance of retained earnings; and
•The
cumulative effect of changes in nonperformance risk between the contract issue date and the Transition Date was recorded as an adjustment
to opening AOCI as of the Transition Date.
Future
Policy Benefits (See Note 3)
Traditional
Non-participating Long-duration products
•Loss
recognition balances related to unrealized investment gains associated with certain long-duration products previously recorded in AOCI
were removed;
•Contracts
in-force as of the Transition Date were grouped into cohorts; a revised NPR was calculated for each cohort using the existing Transition
Date balance, best estimate cash flow assumptions without a provision for adverse deviation, and the historical discount rates used for
the contracts within the cohort prior to the adoption of LDTI (the “locked-in” discount rate). For any cohorts where the net
premiums exceeded gross premiums (NPR exceeded 100%), the FPB was increased for the excess of net premiums over gross premiums, with a
corresponding adjustment recorded to opening retained earnings as of the Transition Date;
•The
difference between the FPB balance calculated at the current upper-medium grade discount rate and the FPB balance calculated at the locked-in
discount rate was recorded as an adjustment to opening AOCI as of the Transition Date; and
•Corresponding
adjustments were made to ceded reinsurance balances.
Limited-payment
Long-duration products
Limited-payment
long-duration products transition to LDTI follows a similar approach to traditional non-participating products, except that these product
cohorts may have a DPL which is adjusted at the Transition Date. If an increase to FPB depleted the DPL, the remaining adjustment was
recorded to opening retained earnings as of the Transition Date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Additional
insurance liabilities
•The
contracts and contract features that met the definition of a MRB were reclassified;
•The
impact of updating assessments used in the calculation of the additional insurance liabilities to reflect the constant margin amortization
basis for UREV liabilities was recorded as an adjustment to opening retained earnings and AOCI; and
•Corresponding
adjustments were made to ceded reinsurance balances.
DAC
and other balances to be amortized in a manner consistent with DAC (VOBA, DSI and UREV) (See Note 7 for information on DAC, VOBA and UREV)
The
opening balances of these accounts were adjusted for removal of the related amounts in AOCI, as these balances are no longer amortized
using expected future gross premiums, margins, profits or earned premiums.
Other
balance sheet reclassifications and adjustments at LDTI adoption (See Notes 3, 4 and 7)
Individual
income annuities reclassification
Prior
to the Transition Date, the Company classified all structured settlement and institutional income annuity products within FPBs. While
the pre-LDTI GAAP reserving model was the same for these products, upon transition to LDTI, the reserving model for a subset of these
products changed, requiring the Company to reclassify $4.7 billion of FPBs to PABs at the Transition Date.
Other
reclassifications and adjustments
Other
minor reclassifications and adjustments were made to conform to LDTI presentation requirements.
The
following table presents the effects of the retrospective application of the adoption of the new LDTI accounting guidance to the Company’s
previously reported consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
|
(In
millions) |
Assets |
|
|
|
|
|
|
Premiums,
reinsurance and other receivables |
|
$ |
20,704 |
|
|
$ |
87 |
|
|
$ |
20,791 |
|
Market
risk benefits |
|
$ |
— |
|
|
$ |
174 |
|
|
$ |
174 |
|
Deferred
policy acquisition costs and value of business acquired |
|
$ |
5,263 |
|
|
$ |
(1,506) |
|
|
$ |
3,757 |
|
Deferred
income tax asset |
|
$ |
2,661 |
|
|
$ |
259 |
|
|
$ |
2,920 |
|
Other
assets |
|
$ |
4,367 |
|
|
$ |
(15) |
|
|
$ |
4,352 |
|
Total
assets |
|
$ |
385,840 |
|
|
$ |
(1,001) |
|
|
$ |
384,839 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Future
policy benefits |
|
$ |
133,725 |
|
|
$ |
(6,811) |
|
|
$ |
126,914 |
|
Policyholder
account balances |
|
$ |
99,967 |
|
|
$ |
3,440 |
|
|
$ |
103,407 |
|
Market
risk benefits |
|
$ |
— |
|
|
$ |
3,270 |
|
|
$ |
3,270 |
|
Other
policy-related balances |
|
$ |
7,863 |
|
|
$ |
68 |
|
|
$ |
7,931 |
|
Other
liabilities |
|
$ |
24,489 |
|
|
$ |
6 |
|
|
$ |
24,495 |
|
Total
liabilities |
|
$ |
371,471 |
|
|
$ |
(27) |
|
|
$ |
371,444 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Retained
earnings |
|
$ |
10,572 |
|
|
$ |
(1,550) |
|
|
$ |
9,022 |
|
Accumulated
other comprehensive income (loss) |
|
$ |
(8,896) |
|
|
$ |
576 |
|
|
$ |
(8,320) |
|
Total
Metropolitan Life Insurance Company stockholder’s equity |
|
$ |
14,157 |
|
|
$ |
(974) |
|
|
$ |
13,183 |
|
|
|
|
|
|
|
|
Total
equity |
|
$ |
14,369 |
|
|
$ |
(974) |
|
|
$ |
13,395 |
|
Total
liabilities and equity |
|
$ |
385,840 |
|
|
$ |
(1,001) |
|
|
$ |
384,839 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
following table presents the effects of the retrospective application of the adoption of the new LDTI accounting guidance to the Company’s
previously reported consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2022 |
|
2021 |
|
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
(In
millions) |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Premiums |
|
$ |
31,198 |
|
|
$ |
(9) |
|
|
$ |
31,189 |
|
|
$ |
26,191 |
|
|
$ |
(3) |
|
|
$ |
26,188 |
|
Universal
life and investment-type product policy fees |
|
$ |
1,997 |
|
|
$ |
(180) |
|
|
$ |
1,817 |
|
|
$ |
2,062 |
|
|
$ |
(188) |
|
|
$ |
1,874 |
|
Other
revenues |
|
$ |
1,698 |
|
|
$ |
(4) |
|
|
$ |
1,694 |
|
|
$ |
1,616 |
|
|
$ |
— |
|
|
$ |
1,616 |
|
Net
derivative gains (losses) |
|
$ |
472 |
|
|
$ |
280 |
|
|
$ |
752 |
|
|
$ |
(964) |
|
|
$ |
(665) |
|
|
$ |
(1,629) |
|
Total
revenues |
|
$ |
45,360 |
|
|
$ |
87 |
|
|
$ |
45,447 |
|
|
$ |
42,043 |
|
|
$ |
(856) |
|
|
$ |
41,187 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder
benefits and claims |
|
$ |
32,954 |
|
|
$ |
179 |
|
|
$ |
33,133 |
|
|
$ |
29,423 |
|
|
$ |
(339) |
|
|
$ |
29,084 |
|
Policyholder
liability remeasurement (gains) losses |
|
$ |
— |
|
|
$ |
(11) |
|
|
$ |
(11) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Market
risk benefits remeasurement (gains) losses |
|
$ |
— |
|
|
$ |
(3,379) |
|
|
$ |
(3,379) |
|
|
$ |
— |
|
|
$ |
(758) |
|
|
$ |
(758) |
|
Interest
credited to policyholder account balances |
|
$ |
2,382 |
|
|
$ |
127 |
|
|
$ |
2,509 |
|
|
$ |
2,027 |
|
|
$ |
158 |
|
|
$ |
2,185 |
|
Policyholder
dividends |
|
$ |
559 |
|
|
$ |
4 |
|
|
$ |
563 |
|
|
$ |
728 |
|
|
$ |
4 |
|
|
$ |
732 |
|
Other
expenses |
|
$ |
5,555 |
|
|
$ |
148 |
|
|
$ |
5,703 |
|
|
$ |
5,617 |
|
|
$ |
83 |
|
|
$ |
5,700 |
|
Total
expenses |
|
$ |
41,450 |
|
|
$ |
(2,932) |
|
|
$ |
38,518 |
|
|
$ |
37,795 |
|
|
$ |
(852) |
|
|
$ |
36,943 |
|
Income
(loss) before provision for income tax |
|
$ |
3,910 |
|
|
$ |
3,019 |
|
|
$ |
6,929 |
|
|
$ |
4,248 |
|
|
$ |
(4) |
|
|
$ |
4,244 |
|
Provision
for income tax expense (benefit) |
|
$ |
639 |
|
|
$ |
634 |
|
|
$ |
1,273 |
|
|
$ |
530 |
|
|
$ |
(1) |
|
|
$ |
529 |
|
Net
income (loss) |
|
$ |
3,271 |
|
|
$ |
2,385 |
|
|
$ |
5,656 |
|
|
$ |
3,718 |
|
|
$ |
(3) |
|
|
$ |
3,715 |
|
Net
income (loss) attributable to Metropolitan Life Insurance Company |
|
$ |
3,243 |
|
|
$ |
2,385 |
|
|
$ |
5,628 |
|
|
$ |
3,713 |
|
|
$ |
(3) |
|
|
$ |
3,710 |
|
The
following table presents the effects of the retrospective application of the adoption of the new LDTI accounting guidance to the Company’s
previously reported consolidated statements of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2022 |
|
2021 |
|
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
|
(In
millions) |
Net
income (loss) |
|
$ |
3,271 |
|
|
$ |
2,385 |
|
|
$ |
5,656 |
|
|
$ |
3,718 |
|
|
$ |
(3) |
|
|
$ |
3,715 |
|
Unrealized
investment gains (losses), net of related offsets |
|
$ |
(23,566) |
|
|
$ |
(6,769) |
|
|
$ |
(30,335) |
|
|
$ |
(2,462) |
|
|
$ |
(2,879) |
|
|
$ |
(5,341) |
|
Future
policy benefits discount rate remeasurement gains (losses) |
|
$ |
— |
|
|
$ |
21,623 |
|
|
$ |
21,623 |
|
|
$ |
— |
|
|
$ |
5,118 |
|
|
$ |
5,118 |
|
Market
risk benefits instrument-specific credit risk remeasurement gains (losses) |
|
$ |
— |
|
|
$ |
(236) |
|
|
$ |
(236) |
|
|
$ |
— |
|
|
$ |
311 |
|
|
$ |
311 |
|
Other
comprehensive income (loss), before income tax |
|
$ |
(23,817) |
|
|
$ |
14,618 |
|
|
$ |
(9,199) |
|
|
$ |
(2,260) |
|
|
$ |
2,550 |
|
|
$ |
290 |
|
Income
tax (expense) benefit related to items of other comprehensive income (loss) |
|
$ |
5,004 |
|
|
$ |
(3,070) |
|
|
$ |
1,934 |
|
|
$ |
515 |
|
|
$ |
(535) |
|
|
$ |
(20) |
|
Other
comprehensive income (loss), net of income tax |
|
$ |
(18,813) |
|
|
$ |
11,548 |
|
|
$ |
(7,265) |
|
|
$ |
(1,745) |
|
|
$ |
2,015 |
|
|
$ |
270 |
|
Comprehensive
income (loss) |
|
$ |
(15,542) |
|
|
$ |
13,933 |
|
|
$ |
(1,609) |
|
|
$ |
1,973 |
|
|
$ |
2,012 |
|
|
$ |
3,985 |
|
Comprehensive
income (loss) attributable to Metropolitan Life Insurance Company |
|
$ |
(15,570) |
|
|
$ |
13,933 |
|
|
$ |
(1,637) |
|
|
$ |
1,968 |
|
|
$ |
2,012 |
|
|
$ |
3,980 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
following table presents the effects of the retrospective application of the adoption of the new LDTI accounting guidance to the Company’s
previously reported consolidated statements of equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
|
|
|
|
|
|
|
(In
millions) |
Retained
Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
|
|
|
|
|
|
|
$ |
10,548 |
|
|
$ |
— |
|
|
$ |
10,548 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
(3,932) |
|
|
$ |
(3,932) |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,713 |
|
|
$ |
(3) |
|
|
$ |
3,710 |
|
Balance
at December 31, 2021 |
|
|
|
|
|
|
|
$ |
10,868 |
|
|
$ |
(3,935) |
|
|
$ |
6,933 |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,243 |
|
|
$ |
2,385 |
|
|
$ |
5,628 |
|
Balance
at December 31, 2022 |
|
|
|
|
|
|
|
$ |
10,572 |
|
|
$ |
(1,550) |
|
|
$ |
9,022 |
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
|
|
|
|
|
|
|
$ |
11,662 |
|
|
$ |
— |
|
|
$ |
11,662 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
(12,987) |
|
|
$ |
(12,987) |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(1,745) |
|
|
$ |
2,015 |
|
|
$ |
270 |
|
Balance
at December 31, 2021 |
|
|
|
|
|
|
|
$ |
9,917 |
|
|
$ |
(10,972) |
|
|
$ |
(1,055) |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(18,813) |
|
|
$ |
11,548 |
|
|
$ |
(7,265) |
|
Balance
at December 31, 2022 |
|
|
|
|
|
|
|
$ |
(8,896) |
|
|
$ |
576 |
|
|
$ |
(8,320) |
|
Total
Metropolitan Life Insurance Company Stockholder’s Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
|
|
|
|
|
|
|
$ |
34,675 |
|
|
$ |
— |
|
|
$ |
34,675 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
(16,919) |
|
|
$ |
(16,919) |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,713 |
|
|
$ |
(3) |
|
|
$ |
3,710 |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(1,745) |
|
|
$ |
2,015 |
|
|
$ |
270 |
|
Balance
at December 31, 2021 |
|
|
|
|
|
|
|
$ |
33,254 |
|
|
$ |
(14,907) |
|
|
$ |
18,347 |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,243 |
|
|
$ |
2,385 |
|
|
$ |
5,628 |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(18,813) |
|
|
$ |
11,548 |
|
|
$ |
(7,265) |
|
Balance
at December 31, 2022 |
|
|
|
|
|
|
|
$ |
14,157 |
|
|
$ |
(974) |
|
|
$ |
13,183 |
|
Total
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
|
|
|
|
|
|
|
$ |
34,858 |
|
|
$ |
— |
|
|
$ |
34,858 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
(16,919) |
|
|
$ |
(16,919) |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,718 |
|
|
$ |
(3) |
|
|
$ |
3,715 |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(1,745) |
|
|
$ |
2,015 |
|
|
$ |
270 |
|
Balance
at December 31, 2021 |
|
|
|
|
|
|
|
$ |
33,428 |
|
|
$ |
(14,907) |
|
|
$ |
18,521 |
|
Change
in equity of noncontrolling interests |
|
|
|
|
|
|
|
$ |
10 |
|
|
$ |
— |
|
|
$ |
10 |
|
Net
income (loss) |
|
|
|
|
|
|
|
$ |
3,271 |
|
|
$ |
2,385 |
|
|
$ |
5,656 |
|
Other
comprehensive income (loss), net of income tax |
|
|
|
|
|
|
|
$ |
(18,813) |
|
|
$ |
11,548 |
|
|
$ |
(7,265) |
|
Balance
at December 31, 2022 |
|
|
|
|
|
|
|
$ |
14,369 |
|
|
$ |
(974) |
|
|
$ |
13,395 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
following table presents the effects of the retrospective application of the adoption of the new LDTI accounting guidance to the Company’s
previously reported consolidated statements of cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2022 |
|
2021 |
|
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
As
Previously Reported |
|
Adoption Adjustment |
|
Post Adoption |
|
|
(In
millions) |
Cash
flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
3,271 |
|
|
$ |
2,385 |
|
|
$ |
5,656 |
|
|
$ |
3,718 |
|
|
$ |
(3) |
|
|
$ |
3,715 |
|
(Gains)
losses on derivatives, net |
|
$ |
1,122 |
|
|
$ |
(187) |
|
|
$ |
935 |
|
|
$ |
2,480 |
|
|
$ |
232 |
|
|
$ |
2,712 |
|
Interest
credited to policyholder account balances |
|
$ |
2,344 |
|
|
$ |
(51) |
|
|
$ |
2,293 |
|
|
$ |
1,988 |
|
|
$ |
116 |
|
|
$ |
2,104 |
|
Universal
life and investment-type product policy fees |
|
$ |
(1,162) |
|
|
$ |
(1) |
|
|
$ |
(1,163) |
|
|
$ |
(1,070) |
|
|
$ |
(21) |
|
|
$ |
(1,091) |
|
Change
in premiums, reinsurance and other receivables |
|
$ |
146 |
|
|
$ |
69 |
|
|
$ |
215 |
|
|
$ |
752 |
|
|
$ |
(162) |
|
|
$ |
590 |
|
Change
in market risk benefits |
|
$ |
— |
|
|
$ |
(3,141) |
|
|
$ |
(3,141) |
|
|
$ |
— |
|
|
$ |
(476) |
|
|
$ |
(476) |
|
Change
in deferred policy acquisition costs and value of business acquired, net |
|
$ |
(39) |
|
|
$ |
147 |
|
|
$ |
108 |
|
|
$ |
194 |
|
|
$ |
84 |
|
|
$ |
278 |
|
Change
in income tax |
|
$ |
219 |
|
|
$ |
634 |
|
|
$ |
853 |
|
|
$ |
5 |
|
|
$ |
(1) |
|
|
$ |
4 |
|
Change
in other assets |
|
$ |
201 |
|
|
$ |
(14) |
|
|
$ |
187 |
|
|
$ |
(308) |
|
|
$ |
5 |
|
|
$ |
(303) |
|
Change
in insurance-related liabilities and policy-related balances |
|
$ |
(1,958) |
|
|
$ |
628 |
|
|
$ |
(1,330) |
|
|
$ |
(957) |
|
|
$ |
700 |
|
|
$ |
(257) |
|
Change
in other liabilities |
|
$ |
(67) |
|
|
$ |
4 |
|
|
$ |
(63) |
|
|
$ |
(370) |
|
|
$ |
(2) |
|
|
$ |
(372) |
|
Net
cash provided by (used in) operating activities |
|
$ |
4,667 |
|
|
$ |
473 |
|
|
$ |
5,140 |
|
|
$ |
3,257 |
|
|
$ |
472 |
|
|
$ |
3,729 |
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder
account balances - deposits |
|
$ |
85,294 |
|
|
$ |
(9) |
|
|
$ |
85,285 |
|
|
$ |
78,129 |
|
|
$ |
— |
|
|
$ |
78,129 |
|
Policyholder
account balances - withdrawals |
|
$ |
(80,028) |
|
|
$ |
(464) |
|
|
$ |
(80,492) |
|
|
$ |
(80,378) |
|
|
$ |
(472) |
|
|
$ |
(80,850) |
|
Net
cash provided by (used in) financing activities |
|
$ |
(8,710) |
|
|
$ |
(473) |
|
|
$ |
(9,183) |
|
|
$ |
(3,758) |
|
|
$ |
(472) |
|
|
$ |
(4,230) |
|
Other
Adopted Accounting Pronouncements
The
table below describes the impacts of the other ASUs adopted by the Company.
|
|
|
|
|
|
|
|
|
|
|
|
Standard |
Description |
Effective
Date and Method of Adoption |
Impact
on Financial Statements |
ASU
2022-02, Financial
Instruments—Credit Losses
(Topic
326): Troubled Debt Restructurings and Vintage Disclosures
|
The
amendments in the new ASU eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the current
expected credit loss guidance while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when
a borrower is experiencing financial difficulty. In addition, the amendments require that a public business entity disclose current-period
gross write-offs by year of origination for financing receivables and net investment in leases. |
January
1, 2023, the Company adopted, using a prospective approach. |
The
new guidance has reduced the complexity involved with evaluating and accounting for certain loan modifications. The adoption of the guidance
did not have a material impact on the Company’s consolidated financial statements, other than expanded disclosures in Note 10. |
ASU
2020-04, Reference
Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting;
as clarified and amended by ASU 2021-01, Reference
Rate Reform (Topic 848): Scope; as
amended by ASU 2022-06, Reference
Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848 |
The
guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected
by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract
modifications made and hedging relationships entered into or evaluated after December 31, 2022, with certain exceptions. ASU 2021-01 amends
the scope of the recent reference rate reform guidance. New optional expedients allow derivative instruments impacted by changes in the
interest rate used for margining, discounting, or contract price alignment to qualify for certain optional relief. The amendments in ASU
2022-06 extend the sunset date of the reference rate reform optional expedients and exceptions to December 31, 2024. |
Effective
for contract modifications made between March 12, 2020 and December 31, 2024. |
The
guidance has reduced the operational and financial impacts of contract modifications that replace a reference rate, such as London Interbank
Offered Rate, affected by reference rate reform.
Contract
modifications to replace reference rates affected by the reform occurred during 2021, 2022 and 2023. The adoption of the guidance did
not have a material impact on the Company’s consolidated financial statements. |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
1.
Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)
Future
Adoption of Accounting Pronouncements
ASUs
not listed below were assessed and either determined to be not applicable or are not expected to have a material impact on the Company’s
consolidated financial statements or disclosures. ASUs issued but not yet adopted as of December 31, 2023 that are currently being
assessed and may or may not have a material impact on the Company’s consolidated financial statements or disclosures are summarized
in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
Standard |
Description |
Effective
Date and Method of Adoption |
Impact
on Financial Statements |
ASU
2023-09, Income
Taxes (Topic 740): Improvements to Income Tax Disclosures |
Among
other things, the amendments in this update require that public business entities, on an annual basis: (i) disclose specific categories
in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. In addition,
the amendments in this update require that all entities disclose on an annual basis the following information about income taxes paid:
(i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and (ii) the
amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds
received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). |
Effective
for annual periods beginning January 1, 2025, to be applied prospectively with an option for retrospective application (with early adoption
permitted). |
The
Company is evaluating the impact of the guidance on its consolidated financial statements. |
ASU
2023-07, Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures |
The
amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about
significant segment expenses. The key amendments include:
(i)
disclosures on significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within
each reported measure of segment profit or loss on an annual and interim basis;
(ii)
disclosures on an amount for other segment items by reportable segment and a description of its composition on an annual and interim basis.
The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure
of segment profit or loss;
(iii)
providing all annual disclosures on a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment
Reporting in interim periods; and
(iv)
specifying the title and position of the CODM. |
Effective
for annual periods beginning January 1, 2024 and
interim
periods beginning January 1, 2025, to be applied on a retrospective basis unless it is impracticable (with early adoption permitted).
|
The
Company is evaluating the impact of the guidance on its annual disclosures to be included in its 2024 consolidated financial statements
and interim condensed consolidated financial statements to be issued thereafter. |
ASU
2023-02,
Investments—Equity Method and Joint Ventures
(Topic
323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
|
The
amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit
program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. In addition,
disclosures describing the nature of the investments and related income tax credits and benefits will be required. |
January
1, 2024, to be applied on either a modified retrospective or a retrospective basis subject to certain exceptions (with early adoption
permitted). |
Effective
January 1, 2024, the Company will elect to account for its tax equity investments using the proportional amortization method if certain
criteria are met. The adoption of the proportional amortization method will be
applied
on a modified retrospective basis and the Company estimates that the January 1, 2024 transition date impact from adoption will result
in a decrease to total equity not to exceed $250 million, net of income tax. |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information
In
the fourth quarter of 2023, MLIC reorganized from two segments into the following three segments to reflect changes in management’s
responsibilities: Group Benefits, RIS and MetLife Holdings. The Group Benefits and RIS businesses were previously reported as the U.S.
segment. These changes were applied retrospectively and did not have an impact on prior period total consolidated net income (loss) or
adjusted earnings. In addition, the Company continues to report certain of its results of operations in Corporate & Other.
Group
Benefits
The
Group Benefits segment, based in the U.S., offers a broad range of products to corporations and their respective employees, other institutions
and their respective members, as well as individuals. These products include term, variable and universal life insurance, dental, group
and individual disability and accident & health insurance.
RIS
The
RIS segment, based in the U.S., offers a broad range of life and annuity-based insurance and investment products to corporations and their
respective employees, other institutions and their respective members, as well as individuals. These products include stable value and
pension risk transfer products, institutional income annuities, structured settlements, benefit funding solutions and capital markets
investment products.
MetLife
Holdings
The
MetLife Holdings segment consists of operations relating to products and businesses that the Company no longer actively markets in the
United States. These include variable, universal, term and whole life insurance, variable, fixed and index-linked annuities and long-term
care insurance.
Corporate &
Other
Corporate &
Other contains various start-up, developing and run-off businesses, including the Company’s ancillary non-U.S. operations. Also
included in Corporate & Other are: the excess capital, as well as certain charges and activities, not allocated to the segments (including
enterprise-wide strategic initiatives), interest expense related to the majority of the Company’s outstanding debt, expenses associated
with certain legal proceedings and income tax audit issues, and the elimination of intersegment amounts (which generally relate to intersegment
loans bearing interest rates commensurate with related borrowings).
Financial
Measures and Segment Accounting Policies
Adjusted
earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted
earnings is also the Company’s GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed
as a substitute for net income (loss). The Company believes the presentation of adjusted earnings, as the Company measures it for
management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability
drivers of the business.
The
adoption of LDTI impacted the Company’s calculation of adjusted earnings. With the adoption of LDTI, the measurement model was simplified
for DAC and VOBA, and most embedded derivatives were reclassified as MRBs. As a result, the Company updated its calculation of adjusted
earnings to remove certain adjustments related to the amortization of DAC, VOBA and related intangibles and adjusted for changes in measurement
of certain guarantees. Under LDTI, adjusted earnings excludes changes in fair value associated with MRBs, changes in discount rates on
certain annuitization guarantees, losses at contract inception for certain single premium business, and asymmetrical accounting associated
with in-force reinsurance. All periods presented herein reflect the updated calculation of adjusted earnings.
Adjusted
earnings is defined as adjusted revenues less adjusted expenses, net of income tax.
These
financial measures focus on the Company’s primary businesses principally by excluding the impact of (i) market volatility which
could distort trends, (ii) asymmetrical and non-economic accounting, and (iii) revenues and costs related to divested businesses, non-core
products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations
under GAAP.
Market
volatility can have a significant impact on the Company’s financial results. Adjusted earnings excludes net investment gains (losses),
net derivative gains (losses), MRB remeasurement gains (losses) and goodwill impairments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information (continued)
Further,
policyholder benefits and claims exclude (i) changes in the discount rate on certain annuitization guarantees accounted for as additional
liabilities and (ii) market value adjustments.
Asymmetrical
and non-economic accounting adjustments are made to the line items indicated in calculating adjusted earnings:
•Net
investment income includes earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that
are used to replicate certain investments, but do not qualify for hedge accounting treatment.
•Other
revenues include settlements of foreign currency earnings hedges and exclude asymmetrical accounting associated with in-force reinsurance.
•Policyholder
benefits and claims excludes (i) amortization of basis adjustments associated with de-designated fair value hedges of future policy benefits,
(ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments, (iii) asymmetrical accounting
associated with in-force reinsurance, and (iv) non-economic losses incurred at contract inception for certain single premium annuity business.
These losses are amortized into adjusted earnings within policyholder benefits and claims over the estimated lives of the contracts.
•Interest
credited to PABs excludes amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced
pool of assets and other pass-through adjustments and asymmetrical accounting associated with in-force reinsurance.
Divested
businesses are those that have been or will be sold or exited by MLIC but do not meet the discontinued operations criteria under GAAP.
Divested businesses also include the net impact of transactions with exited businesses that have been eliminated in consolidation under
GAAP and costs relating to businesses that have been or will be sold or exited by MLIC that do not meet the criteria to be included in
results of discontinued operations under GAAP.
Other
adjustments are made to the line items indicated in calculating adjusted earnings:
•Net
investment income and interest credited to PABs excludes certain amounts related to contractholder-directed equity securities.
•Other
revenues include fee revenue on synthetic guaranteed interest contracts (“GICs”) accounted for as freestanding derivatives.
•Other
revenues exclude and other expenses include fees received in connection with services provided under transition service agreements.
•Other
expenses exclude (i) implementation of new insurance regulatory requirements and other costs, and (ii) acquisition, integration and other
related costs. Other expenses include (i) deductions for net income attributable to noncontrolling interests, and (ii) benefits accrued
on synthetic GICs accounted for as freestanding derivatives.
Adjusted
earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted
for during the measurement period under GAAP business combination accounting guidance.
The
tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the
Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the
timing of certain tax credits, as well as certain tax reforms.
Set
forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate &
Other, for the years ended December 31, 2023, 2022 and 2021 and at December 31, 2023 and 2022. The segment accounting policies
are the same as those used to prepare the Company’s consolidated financial statements, except for adjusted earnings adjustments
as defined above. In addition, segment accounting policies include the method of capital allocation described below.
Economic
capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis
upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in MetLife’s
and the Company’s businesses.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information (continued)
MetLife’s
economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards
and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company
is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level
and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. MetLife’s
management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically
to ensure that it remains consistent with emerging industry practice standards. The
adoption of LDTI resulted in changes to the economic capital model.
The changes related to this adoption do not represent a change in the composition of the segments and, in accordance with GAAP guidance
for segment reporting, the Company will apply the changes to the economic capital model prospectively and did not update the economic
capital model for 2022 and 2021.
Segment
net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact
the Company’s consolidated net investment income, net income (loss) or adjusted earnings.
Net
investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for
allocated equity. With the adoption of LDTI, net investment income was reallocated for certain segments to reflect the impact of the change
to certain liability balances, with no impact to consolidated net investment income.
Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing
the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product
pricing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
Corporate
& Other |
|
Total |
|
Adjustments |
|
Total Consolidated |
|
|
(In
millions) |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums |
|
$ |
20,593 |
|
|
$ |
1,776 |
|
|
$ |
2,346 |
|
|
$ |
3 |
|
|
$ |
24,718 |
|
|
$ |
— |
|
|
$ |
24,718 |
|
Universal
life and investment-type product policy fees |
|
878 |
|
|
264 |
|
|
519 |
|
|
3 |
|
|
1,664 |
|
|
— |
|
|
1,664 |
|
Net
investment income (1) |
|
1,272 |
|
|
6,508 |
|
|
3,991 |
|
|
224 |
|
|
11,995 |
|
|
(789) |
|
|
11,206 |
|
Other
revenues |
|
711 |
|
|
256 |
|
|
197 |
|
|
499 |
|
|
1,663 |
|
|
10 |
|
|
1,673 |
|
Net
investment gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,375) |
|
|
(1,375) |
|
Net
derivative gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,537) |
|
|
(1,537) |
|
Total
revenues |
|
23,454 |
|
|
8,804 |
|
|
7,053 |
|
|
729 |
|
|
40,040 |
|
|
(3,691) |
|
|
36,349 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder
benefits and claims and policyholder dividends |
|
17,976 |
|
|
4,163 |
|
|
4,462 |
|
|
1 |
|
|
26,602 |
|
|
18 |
|
|
26,620 |
|
Policyholder
liability remeasurement (gains) losses |
|
(26) |
|
|
(158) |
|
|
34 |
|
|
— |
|
|
(150) |
|
|
— |
|
|
(150) |
|
Market
risk benefit remeasurement (gains) losses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(703) |
|
|
(703) |
|
Interest
credited to policyholder account balances |
|
193 |
|
|
2,492 |
|
|
582 |
|
|
317 |
|
|
3,584 |
|
|
18 |
|
|
3,602 |
|
Capitalization of DAC |
|
(18) |
|
|
(46) |
|
|
1 |
|
|
(55) |
|
|
(118) |
|
|
— |
|
|
(118) |
|
Amortization of DAC and VOBA |
|
26 |
|
|
31 |
|
|
224 |
|
|
17 |
|
|
298 |
|
|
— |
|
|
298 |
|
Interest expense
on debt |
|
2 |
|
|
14 |
|
|
13 |
|
|
103 |
|
|
132 |
|
|
— |
|
|
132 |
|
Other
expenses |
|
3,318 |
|
|
559 |
|
|
794 |
|
|
852 |
|
|
5,523 |
|
|
(50) |
|
|
5,473 |
|
Total
expenses |
|
21,471 |
|
|
7,055 |
|
|
6,110 |
|
|
1,235 |
|
|
35,871 |
|
|
(717) |
|
|
35,154 |
|
Provision
for income tax expense (benefit) |
|
416 |
|
|
365 |
|
|
182 |
|
|
(283) |
|
|
680 |
|
|
(620) |
|
|
60 |
|
Adjusted
earnings |
|
$ |
1,567 |
|
|
$ |
1,384 |
|
|
$ |
761 |
|
|
$ |
(223) |
|
|
3,489 |
|
|
|
|
|
Adjustments
to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
|
|
|
|
|
|
|
|
(3,691) |
|
|
|
|
|
Total
expenses |
|
|
|
|
|
|
|
|
|
717 |
|
|
|
|
|
Provision
for income tax (expense) benefit |
|
|
|
|
|
|
|
|
|
620 |
|
|
|
|
|
Net
income (loss) |
|
$ |
1,135 |
|
|
|
|
$ |
1,135 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31, 2023 |
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
Corporate
& Other |
|
Total |
|
|
(In
millions) |
Total
assets |
|
$ |
34,185 |
|
|
$ |
180,625 |
|
|
$ |
133,219 |
|
|
$ |
30,656 |
|
|
$ |
378,685 |
|
Separate
account assets |
|
$ |
1,159 |
|
|
$ |
47,310 |
|
|
$ |
34,728 |
|
|
$ |
— |
|
|
$ |
83,197 |
|
Separate
account liabilities |
|
$ |
1,159 |
|
|
$ |
47,310 |
|
|
$ |
34,728 |
|
|
$ |
— |
|
|
$ |
83,197 |
|
__________________
(1)Net
investment income from equity method invested assets represents 0%, 1% and 2% of segment net investment income, and equity method invested
assets represent 1%, 3% and 4% of segment total assets for the Group Benefits, RIS and MetLife Holdings segments, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2022 |
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
Corporate & Other |
|
Total |
|
Adjustments |
|
Total Consolidated |
|
|
(In
millions) |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums |
|
$ |
20,269 |
|
|
$ |
8,425 |
|
|
$ |
2,495 |
|
|
$ |
— |
|
|
$ |
31,189 |
|
|
$ |
— |
|
|
$ |
31,189 |
|
Universal
life and investment-type product policy fees |
|
855 |
|
|
267 |
|
|
695 |
|
|
— |
|
|
1,817 |
|
|
— |
|
|
1,817 |
|
Net
investment income (1) |
|
1,126 |
|
|
5,236 |
|
|
4,393 |
|
|
(45) |
|
|
10,710 |
|
|
(588) |
|
|
10,122 |
|
Other
revenues |
|
653 |
|
|
407 |
|
|
149 |
|
|
485 |
|
|
1,694 |
|
|
— |
|
|
1,694 |
|
Net
investment gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(127) |
|
|
(127) |
|
Net
derivative gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
752 |
|
|
752 |
|
Total
revenues |
|
22,903 |
|
|
14,335 |
|
|
7,732 |
|
|
440 |
|
|
45,410 |
|
|
37 |
|
|
45,447 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder benefits and claims and
policyholder dividends |
|
18,157 |
|
|
10,666 |
|
|
4,757 |
|
|
— |
|
|
33,580 |
|
|
116 |
|
|
33,696 |
|
Policyholder
liability remeasurement (gains) losses |
|
7 |
|
|
(85) |
|
|
67 |
|
|
— |
|
|
(11) |
|
|
— |
|
|
(11) |
|
Market
risk benefit remeasurement (gains) losses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,379) |
|
|
(3,379) |
|
Interest
credited to policyholder account balances |
|
143 |
|
|
1,687 |
|
|
643 |
|
|
67 |
|
|
2,540 |
|
|
(31) |
|
|
2,509 |
|
Capitalization of DAC |
|
(18) |
|
|
(51) |
|
|
— |
|
|
(120) |
|
|
(189) |
|
|
— |
|
|
(189) |
|
Amortization of DAC and VOBA |
|
26 |
|
|
28 |
|
|
237 |
|
|
6 |
|
|
297 |
|
|
— |
|
|
297 |
|
Interest expense
on debt |
|
1 |
|
|
8 |
|
|
8 |
|
|
87 |
|
|
104 |
|
|
— |
|
|
104 |
|
Other
expenses |
|
3,073 |
|
|
391 |
|
|
801 |
|
|
1,249 |
|
|
5,514 |
|
|
(23) |
|
|
5,491 |
|
Total
expenses |
|
21,389 |
|
|
12,644 |
|
|
6,513 |
|
|
1,289 |
|
|
41,835 |
|
|
(3,317) |
|
|
38,518 |
|
Provision
for income tax expense (benefit) |
|
318 |
|
|
350 |
|
|
240 |
|
|
(339) |
|
|
569 |
|
|
704 |
|
|
1,273 |
|
Adjusted
earnings |
|
$ |
1,196 |
|
|
$ |
1,341 |
|
|
$ |
979 |
|
|
$ |
(510) |
|
|
3,006 |
|
|
|
|
|
Adjustments
to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
|
|
|
|
|
|
|
|
37 |
|
|
|
|
|
Total
expenses |
|
|
|
|
|
|
|
|
|
3,317 |
|
|
|
|
|
Provision
for income tax (expense) benefit |
|
|
|
|
|
|
|
|
|
(704) |
|
|
|
|
|
Net
income (loss) |
|
$ |
5,656 |
|
|
|
|
$ |
5,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31, 2022 |
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
Corporate &
Other |
|
Total |
|
|
(In
millions) |
Total
assets |
|
$ |
33,179 |
|
|
$ |
187,479 |
|
|
$ |
133,393 |
|
|
$ |
30,788 |
|
|
$ |
384,839 |
|
Separate
account assets |
|
$ |
990 |
|
|
$ |
55,020 |
|
|
$ |
33,231 |
|
|
$ |
— |
|
|
$ |
89,241 |
|
Separate
account liabilities |
|
$ |
990 |
|
|
$ |
55,020 |
|
|
$ |
33,231 |
|
|
$ |
— |
|
|
$ |
89,241 |
|
__________________
(1)Net
investment income from equity method invested assets represents 1%, 5% and 7% of segment net investment income for the Group Benefits,
RIS and MetLife Holdings segments, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2021 |
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
Corporate & Other |
|
Total |
|
Adjustments |
|
Total Consolidated |
|
|
(In
millions) |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums |
|
$ |
19,640 |
|
|
$ |
3,823 |
|
|
$ |
2,725 |
|
|
$ |
— |
|
|
$ |
26,188 |
|
|
$ |
— |
|
|
$ |
26,188 |
|
Universal
life and investment-type product policy fees |
|
829 |
|
|
272 |
|
|
773 |
|
|
— |
|
|
1,874 |
|
|
— |
|
|
1,874 |
|
Net
investment income (1) |
|
1,152 |
|
|
6,097 |
|
|
5,768 |
|
|
48 |
|
|
13,065 |
|
|
(579) |
|
|
12,486 |
|
Other
revenues |
|
617 |
|
|
244 |
|
|
243 |
|
|
512 |
|
|
1,616 |
|
|
— |
|
|
1,616 |
|
Net
investment gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
652 |
|
|
652 |
|
Net
derivative gains (losses) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,629) |
|
|
(1,629) |
|
Total
revenues |
|
22,238 |
|
|
10,436 |
|
|
9,509 |
|
|
560 |
|
|
42,743 |
|
|
(1,556) |
|
|
41,187 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder
benefits and claims and policyholder dividends |
|
18,820 |
|
|
5,813 |
|
|
5,154 |
|
|
— |
|
|
29,787 |
|
|
29 |
|
|
29,816 |
|
Policyholder
liability remeasurement (gains) losses |
|
(4) |
|
|
(11) |
|
|
15 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Market
risk benefit remeasurement (gains) losses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(758) |
|
|
(758) |
|
Interest
credited to policyholder account balances |
|
127 |
|
|
1,397 |
|
|
666 |
|
|
1 |
|
|
2,191 |
|
|
(6) |
|
|
2,185 |
|
Capitalization of DAC |
|
(19) |
|
|
(40) |
|
|
2 |
|
|
(6) |
|
|
(63) |
|
|
— |
|
|
(63) |
|
Amortization of DAC and VOBA |
|
26 |
|
|
29 |
|
|
286 |
|
|
— |
|
|
341 |
|
|
— |
|
|
341 |
|
Interest expense
on debt |
|
1 |
|
|
5 |
|
|
5 |
|
|
85 |
|
|
96 |
|
|
— |
|
|
96 |
|
Other
expenses |
|
2,819 |
|
|
447 |
|
|
839 |
|
|
1,230 |
|
|
5,335 |
|
|
(9) |
|
|
5,326 |
|
Total
expenses |
|
21,770 |
|
|
7,640 |
|
|
6,967 |
|
|
1,310 |
|
|
37,687 |
|
|
(744) |
|
|
36,943 |
|
Provision
for income tax expense (benefit) |
|
100 |
|
|
580 |
|
|
514 |
|
|
(505) |
|
|
689 |
|
|
(160) |
|
|
529 |
|
Adjusted
earnings |
|
$ |
368 |
|
|
$ |
2,216 |
|
|
$ |
2,028 |
|
|
$ |
(245) |
|
|
4,367 |
|
|
|
|
|
Adjustments
to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
|
|
|
|
|
|
|
|
(1,556) |
|
|
|
|
|
Total
expenses |
|
|
|
|
|
|
|
|
|
744 |
|
|
|
|
|
Provision
for income tax (expense) benefit |
|
|
|
|
|
|
|
|
|
160 |
|
|
|
|
|
Net
income (loss) |
|
$ |
3,715 |
|
|
|
|
$ |
3,715 |
|
__________________
(1)Net
investment income from equity method invested assets represents 5%, 26% and 28% of segment net investment income for the Group Benefits,
RIS and MetLife Holdings segments, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
2.
Segment Information (continued)
The
following table presents total premiums, universal life and investment-type product policy fees and other revenues by major product
groups of the Company’s segments, as well as Corporate & Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Life
insurance |
$ |
14,721 |
|
|
$ |
14,809 |
|
|
$ |
15,396 |
|
Accident &
health insurance |
10,460 |
|
|
10,111 |
|
|
9,493 |
|
Annuities |
2,412 |
|
|
9,346 |
|
|
4,386 |
|
Other |
462 |
|
|
434 |
|
|
403 |
|
Total |
$ |
28,055 |
|
|
$ |
34,700 |
|
|
$ |
29,678 |
|
Substantially
all of the Company’s consolidated premiums, universal life and investment-type product policy fees and other revenues originated
in the U.S.
Revenues
derived from one RIS customer were $8.1 billion for the year ended December 31, 2022, which represented 23%, of consolidated premiums,
universal life and investment-type product policy fees and other revenues. The revenue was from a single premium received for a pension
risk transfer. Revenues derived from one Group Benefits customer were $3.6 billion, $3.8 billion and $3.9 billion for the
years ended December 31, 2023, 2022 and 2021, respectively, which represented 13%, 11% and 13% of the consolidated premiums, universal
life and investment-type product policy fees and other revenues, respectively. Revenues derived from any other customer did not exceed
10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31,
2023, 2022 or 2021.
3.
Future Policy Benefits
The
Company establishes liabilities for amounts payable under insurance policies. These liabilities are comprised of traditional and limited-payment
contracts and associated DPLs, additional insurance liabilities, participating life and short-duration contracts.
The
LDTI transition adjustments related to traditional and limited-payment contracts, DPLs, and additional insurance liabilities, as well
as the associated ceded recoverables, as described in Note 1, were as follows at the Transition Date:
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RIS
Annuities |
|
MetLife
Holdings Long-Term Care |
|
MetLife Holdings Participating Life |
|
Other
Long-Duration |
|
Short-Duration
and Other |
|
Total |
|
|
(In
millions) |
Balance,
future policy benefits, at December 31, 2020 |
|
$ |
54,535 |
|
|
$ |
14,281 |
|
|
$ |
45,349 |
|
|
$ |
9,625 |
|
|
$ |
10,131 |
|
|
$ |
133,921 |
|
Removal
of additional insurance liabilities for separate presentation (1) |
|
(4) |
|
|
— |
|
|
— |
|
|
(2,925) |
|
|
— |
|
|
(2,929) |
|
Subtotal
- pre-adoption balance, excluding additional liabilities |
|
54,531 |
|
|
14,281 |
|
|
45,349 |
|
|
6,700 |
|
|
10,131 |
|
|
130,992 |
|
Removal
of related amounts in AOCI |
|
(5,571) |
|
|
(1,210) |
|
|
— |
|
|
(54) |
|
|
— |
|
|
(6,835) |
|
Adjustment
of future policy benefits to remeasure cohorts where net premiums exceed gross premiums under the modified retrospective approach |
|
41 |
|
|
— |
|
|
— |
|
|
48 |
|
|
— |
|
|
89 |
|
Effect
of remeasurement of future policy benefits to an upper-medium grade discount rate |
|
15,011 |
|
|
8,270 |
|
|
— |
|
|
1,927 |
|
|
— |
|
|
25,208 |
|
Other
balance sheet reclassifications and adjustments upon adoption of the LDTI standard |
|
(4,747) |
|
|
— |
|
|
— |
|
|
(47) |
|
|
— |
|
|
(4,794) |
|
Removal
of remeasured deferred profit liabilities for separate presentation (1) |
|
(2,413) |
|
|
— |
|
|
— |
|
|
(250) |
|
|
— |
|
|
(2,663) |
|
Balance,
traditional and limited-payment contracts, at January 1, 2021 |
|
$ |
56,852 |
|
|
$ |
21,341 |
|
|
$ |
45,349 |
|
|
$ |
8,324 |
|
|
$ |
10,131 |
|
|
$ |
141,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
deferred profit liabilities at January 1, 2021 |
|
$ |
2,413 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
250 |
|
|
$ |
— |
|
|
$ |
2,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
ceded recoverables on traditional and limited-payment contracts at December 31, 2020 |
|
$ |
203 |
|
|
$ |
— |
|
|
|
|
$ |
752 |
|
|
|
|
$ |
955 |
|
Effect
of remeasurement of the ceded recoverable to an upper-medium grade discount rate |
|
135 |
|
|
— |
|
|
|
|
268 |
|
|
|
|
403 |
|
Adjustments
for loss contracts (with net premiums in excess of gross premiums) under the modified retrospective approach |
|
— |
|
|
— |
|
|
|
|
32 |
|
|
|
|
32 |
|
Adjustments
for the cumulative effect of adoption on ceded recoverables on traditional and limited-payment contract |
|
6 |
|
|
— |
|
|
|
|
20 |
|
|
|
|
26 |
|
Balance
ceded recoverables on traditional and limited-payment contracts at January 1, 2021 |
|
$ |
344 |
|
|
$ |
— |
|
|
|
|
$ |
1,072 |
|
|
|
|
$ |
1,416 |
|
__________________
(1)LDTI
requires separate disaggregated rollforwards of the additional insurance liabilities balance and the traditional and limited-payment FPBs.
Therefore, the additional insurance liabilities and DPL amounts that are recorded in the FPB financial statement line item are removed
to derive the opening balance of traditional and limited-payment contracts at the Transition Date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MetLife
Holdings Universal and Variable Universal Life |
|
Other
Long-Duration |
|
Total |
|
|
(In
millions) |
Additional
insurance liabilities at December 31, 2020 |
|
$ |
1,478 |
|
|
$ |
1,451 |
|
|
$ |
2,929 |
|
Reclassification
of carrying amount of contracts and contract features that are market risk benefits |
|
— |
|
|
(1,447) |
|
|
(1,447) |
|
Adjustments
for the cumulative effect of adoption on additional insurance liabilities |
|
36 |
|
|
— |
|
|
36 |
|
Additional
insurance liabilities at January 1, 2021 |
|
$ |
1,514 |
|
|
$ |
4 |
|
|
$ |
1,518 |
|
|
|
|
|
|
|
|
Ceded
recoverables on additional insurance liabilities at December 31, 2020 |
|
$ |
554 |
|
|
$ |
— |
|
|
$ |
554 |
|
Adjustments
for the cumulative effect of adoption on ceded recoverables on additional insurance liabilities |
|
9 |
|
|
— |
|
|
9 |
|
Ceded
recoverables on additional insurance liabilities at January 1, 2021 |
|
$ |
563 |
|
|
$ |
— |
|
|
$ |
563 |
|
|
|
|
|
|
|
|
Balance,
traditional and limited-payment contracts, at January 1, 2021 |
|
|
|
|
|
$ |
141,997 |
|
Balance,
deferred profit liabilities at January 1, 2021 |
|
|
|
|
|
2,663 |
|
Balance,
additional insurance liabilities at January 1, 2021 |
|
|
|
|
|
1,518 |
|
Total
future policy benefits at January 1, 2021 |
|
|
|
|
|
$ |
146,178 |
|
The
Company’s future policy benefits on the consolidated balance sheets was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
|
|
(In
millions) |
Traditional
and Limited-Payment Contracts: |
|
|
|
|
RIS
- Annuities |
|
$ |
48,695 |
|
|
$ |
47,990 |
|
MetLife
Holdings - Long-term care |
|
15,240 |
|
|
13,845 |
|
Deferred
Profit Liabilities: |
|
|
|
|
RIS
- Annuities |
|
3,000 |
|
|
2,699 |
|
Additional
Insurance Liabilities: |
|
|
|
|
MetLife
Holdings - Universal and variable universal life |
|
1,841 |
|
|
1,641 |
|
MetLife
Holdings - Participating life |
|
43,586 |
|
|
44,434 |
|
Other
long-duration (1) |
|
6,605 |
|
|
6,297 |
|
Short-duration
and other |
|
10,215 |
|
|
10,008 |
|
Total |
|
$ |
129,182 |
|
|
$ |
126,914 |
|
__________________
(1)
This balance represents liabilities for various smaller product lines across all segments.
Rollforwards
- Traditional and Limited-Payment Contracts
The
following information about the direct and assumed liability for future policy benefits includes disaggregated rollforwards of expected
future net premiums and expected future benefits. The products grouped within these rollforwards were selected based upon common characteristics
and valuations using similar inputs, judgments, assumptions and methodologies within a particular segment of the business. The adjusted
balance in each disaggregated rollforward reflects the remeasurement (gains) losses. All amounts presented in the rollforwards and accompanying
financial information do not include a reduction for amounts ceded to reinsurers, except with respect to ending net liability for future
policy benefits balances where applicable. See Note 8 for further information regarding the impact of reinsurance on the consolidated
balance sheets and the consolidated statements of operations.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
RIS
- Annuities
The
RIS segment’s annuity products include pension risk transfers, certain structured settlements and certain institutional income annuities,
which are mainly single premium spread-based products. Information regarding these products was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Present
Value of Expected Net Premiums |
|
|
|
|
|
|
Balance
at January 1, at current discount rate at balance sheet date |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Balance
at January 1, at original discount rate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Effect
of changes in cash flow assumptions (1) |
|
— |
|
|
— |
|
|
— |
|
Effect
of actual variances from expected experience (2) |
|
(44) |
|
|
— |
|
|
— |
|
Adjusted
balance |
|
(44) |
|
|
— |
|
|
— |
|
Issuances |
|
1,607 |
|
|
8,326 |
|
|
3,370 |
|
Net
premiums collected |
|
(1,563) |
|
|
(8,326) |
|
|
(3,370) |
|
Balance
at December 31, at original discount rate |
|
— |
|
|
— |
|
|
— |
|
Balance
at December 31, at current discount rate at balance sheet date |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Present
Value of Expected Future Policy Benefits |
|
|
|
|
|
|
Balance
at January 1, at current discount rate at balance sheet date |
|
$ |
48,190 |
|
|
$ |
54,172 |
|
|
$ |
55,778 |
|
|
|
|
|
|
|
|
Balance
at January 1, at original discount rate |
|
$ |
49,194 |
|
|
$ |
42,453 |
|
|
$ |
40,767 |
|
Effect
of changes in cash flow assumptions (1) |
|
(193) |
|
|
(99) |
|
|
(112) |
|
Effect
of actual variances from expected experience (2) |
|
(411) |
|
|
(136) |
|
|
(183) |
|
Adjusted
balance |
|
48,590 |
|
|
42,218 |
|
|
40,472 |
|
Issuances |
|
1,642 |
|
|
8,427 |
|
|
3,419 |
|
Interest
accrual |
|
2,377 |
|
|
2,182 |
|
|
2,098 |
|
Benefit
payments |
|
(4,618) |
|
|
(3,633) |
|
|
(3,536) |
|
Balance
at December 31, at original discount rate |
|
47,991 |
|
|
49,194 |
|
|
42,453 |
|
Effect
of changes in discount rate assumptions |
|
895 |
|
|
(1,004) |
|
|
11,719 |
|
Balance
at December 31, at current discount rate at balance sheet date |
|
48,886 |
|
|
48,190 |
|
|
54,172 |
|
|
|
|
|
|
|
|
Cumulative
amount of fair value hedging adjustments |
|
(191) |
|
|
(200) |
|
|
727 |
|
Net
liability for future policy benefits |
|
48,695 |
|
|
47,990 |
|
|
54,899 |
|
Less:
Reinsurance recoverables |
|
— |
|
|
— |
|
|
312 |
|
Net
liability for future policy benefits, net of reinsurance |
|
$ |
48,695 |
|
|
$ |
47,990 |
|
|
$ |
54,587 |
|
|
|
|
|
|
|
|
Undiscounted
- Expected future benefit payments |
|
$ |
93,959 |
|
|
$ |
95,493 |
|
|
$ |
80,524 |
|
Discounted
- Expected future benefit payments (at current discount rate at balance sheet date) |
|
$ |
48,886 |
|
|
$ |
48,190 |
|
|
$ |
54,172 |
|
Weighted-average
duration of the liability |
|
9
years |
|
9
years |
|
12
years |
Weighted-average
interest accretion (original locked-in) rate |
|
5.0 |
% |
|
4.9 |
% |
|
5.2 |
% |
Weighted-average
current discount rate at balance sheet date |
|
5.1 |
% |
|
5.5 |
% |
|
2.9 |
% |
__________________
(1) For
the years ended December 31, 2023 and 2021, the net effect of changes in cash flow assumptions was largely offset by the corresponding
impact in DPL associated with the RIS segment’s annuity products of $136 million and $95 million, respectively.
For
the year ended December 31, 2022,
the net effect of changes in cash flow assumptions was
more than offset by the corresponding impact in DPL associated with the RIS segment’s annuity products of $113 million.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
(2) For
the year ended December 31, 2023, the net effect of actual variances from expected experience was largely offset by the corresponding
impact in DPL associated with the RIS segment’s annuity products of $269 million. For the year ended December 31, 2022, the
net effect of actual variances from expected experience was partially offset by the corresponding impact in DPL associated with the RIS
segment’s annuity products of $51 million. For the year ended December 31, 2021, the net effect of actual variances from expected
experience was more than offset by the corresponding impact in DPL associated with the RIS segment’s annuity products of $188 million.
Significant
Methodologies and Assumptions
The
principal inputs used in the establishment of the FPB for the RIS segment’s annuity products include actual premiums, actual benefits,
in-force data, locked-in claim-related expense, the locked-in interest accretion rate, the current upper-medium grade discount rate at
the balance sheet date and best estimate mortality assumptions.
For
each of the years ended December 31, 2023, 2022 and 2021, the net effect of changes in cash flow assumptions was primarily driven by updates
in biometric assumptions related to mortality.
For
the year ended December 31, 2023, the net effect of actual variances from expected experience was primarily driven by favorable mortality,
an amendment of an affiliated reinsurance treaty and model refinements. For the years ended December 31, 2022 and 2021, the net effect
of actual variances from expected experience was primarily driven by favorable mortality.
When
single premium annuity contracts are issued, the FPB reserve is required to be measured at an upper-medium grade discount rate. Due to
differences between the upper-medium grade discount rate and pricing assumptions used to determine the contractual premium, the initial
FPB reserve at issue for a particular cohort may be greater than the contractual premium received, and the difference must be recognized
as an immediate loss at issue. On these cohorts, future experience that differs from expected experience and changes in cash flow assumptions
result in the recognition of remeasurement gains and losses with net remeasurement gains limited to the amount of the original loss at
issue, after which any favorable experience is deferred and recorded within the DPL. For the year ended December 31, 2022, the Company
incurred a loss at issue of $91 million and recognized a net remeasurement gain of $8 million attributable
to cohorts with no DPL or where the DPL was depleted during the year.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
MetLife
Holdings - Long-term Care
The
MetLife Holdings segment’s long-term care products offer protection against potentially high costs of long-term health care services.
Information regarding these products was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Present
Value of Expected Net Premiums |
|
|
|
|
|
|
Balance
at January 1, at current discount rate at balance sheet date |
|
$ |
5,775 |
|
|
$ |
7,058 |
|
|
$ |
7,142 |
|
|
|
|
|
|
|
|
Balance
at January 1, at original discount rate |
|
$ |
5,807 |
|
|
$ |
5,699 |
|
|
$ |
5,516 |
|
Effect
of changes in cash flow assumptions |
|
(152) |
|
|
272 |
|
|
270 |
|
Effect
of actual variances from expected experience |
|
199 |
|
|
120 |
|
|
183 |
|
Adjusted
balance |
|
5,854 |
|
|
6,091 |
|
|
5,969 |
|
Interest
accrual |
|
294 |
|
|
298 |
|
|
287 |
|
Net
premiums collected |
|
(582) |
|
|
(582) |
|
|
(557) |
|
Balance
at December 31, at original discount rate |
|
5,566 |
|
|
5,807 |
|
|
5,699 |
|
Effect
of changes in discount rate assumptions |
|
121 |
|
|
(32) |
|
|
1,359 |
|
Balance
at December 31, at current discount rate at balance sheet date |
|
$ |
5,687 |
|
|
$ |
5,775 |
|
|
$ |
7,058 |
|
|
|
|
|
|
|
|
Present
Value of Expected Future Policy Benefits |
|
|
|
|
|
|
Balance
at January 1, at current discount rate at balance sheet date |
|
$ |
19,619 |
|
|
$ |
27,627 |
|
|
$ |
28,483 |
|
|
|
|
|
|
|
|
Balance
at January 1, at original discount rate |
|
$ |
20,165 |
|
|
$ |
19,406 |
|
|
$ |
18,586 |
|
Effect
of changes in cash flow assumptions |
|
(190) |
|
|
301 |
|
|
276 |
|
Effect
of actual variances from expected experience |
|
223 |
|
|
115 |
|
|
188 |
|
Adjusted
balance |
|
20,198 |
|
|
19,822 |
|
|
19,050 |
|
Interest
accrual |
|
1,070 |
|
|
1,043 |
|
|
998 |
|
Benefit
payments |
|
(774) |
|
|
(700) |
|
|
(642) |
|
Balance
at December 31, at original discount rate |
|
20,494 |
|
|
20,165 |
|
|
19,406 |
|
Effect
of changes in discount rate assumptions |
|
433 |
|
|
(546) |
|
|
8,221 |
|
Balance
at December 31, at current discount rate at balance sheet date |
|
20,927 |
|
|
19,619 |
|
|
27,627 |
|
Other
adjustments |
|
— |
|
|
1 |
|
|
— |
|
Net
liability for future policy benefits |
|
$ |
15,240 |
|
|
$ |
13,845 |
|
|
$ |
20,569 |
|
|
|
|
|
|
|
|
Undiscounted:
|
|
|
|
|
|
|
Expected
future gross premiums |
|
$ |
10,603 |
|
|
$ |
11,201 |
|
|
$ |
11,404 |
|
Expected
future benefit payments |
|
$ |
45,016 |
|
|
$ |
45,872 |
|
|
$ |
45,835 |
|
Discounted
(at current discount rate at balance sheet date): |
|
|
|
|
|
|
Expected
future gross premiums |
|
$ |
7,139 |
|
|
$ |
7,200 |
|
|
$ |
9,049 |
|
Expected
future benefit payments |
|
$ |
20,927 |
|
|
$ |
19,619 |
|
|
$ |
27,627 |
|
Weighted-average
duration of the liability |
|
15
years |
|
15
years |
|
18
years |
Weighted
-average interest accretion (original locked-in) rate |
|
5.4 |
% |
|
5.5 |
% |
|
5.5 |
% |
Weighted-average
current discount rate at balance sheet date |
|
5.2 |
% |
|
5.6 |
% |
|
3.0 |
% |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Significant
Methodologies and Assumptions
The
principal inputs used in the establishment of the FPB reserve for long-term care products include actual premiums, actual benefits, in-force
data, locked-in claim-related expense, the locked-in interest accretion rate, current upper-medium grade discount rate at the balance
sheet date and best estimate assumptions. The best estimate assumptions include mortality, lapse, incidence, claim utilization, claim
cost inflation, claim continuance, and premium rate increases.
For
the year ended December 31, 2023, the net effect of changes in cash flow assumptions was primarily driven by updates in policyholder behavior
assumptions related to claim utilization experience, which lowered the expected cost of care. This was partially offset by updates in
biometric assumptions associated with an increase in incidence rates. For the year ended December 31, 2022, the net effect of changes
in cash flow assumptions was primarily driven by updates in operational assumptions related to inflation, which increased the expected
cost of care.
For the year ended December 31, 2021, the net effect of actual variances from expected experience was primarily driven by a model refinement
resulting in unfavorable claim utilization expectations, largely offset by higher than expected claim terminations and mortality.
Rollforward
- Additional Insurance Liabilities
The
Company establishes additional insurance liabilities for annuitization, death or other insurance benefits for universal life and variable
universal life contract features where the Company guarantees to the contractholder either a secondary guarantee or a guaranteed paid-up
benefit. The policy can remain in force, even if the base policy account value is zero, as long as contractual secondary guarantee requirements
have been met.
The
following information about the direct liability for additional insurance liabilities includes a disaggregated rollforward. The products
grouped within the rollforward were selected based upon common characteristics and valuations using similar inputs, judgments, assumptions
and methodologies within a particular segment of the business. The adjusted balance in each disaggregated rollforward reflects the remeasurement
(gains) losses. All amounts presented in the rollforward and accompanying financial information do not include a reduction for amounts
ceded to reinsurers. See Note 8 for further information regarding the impact of reinsurance on the consolidated balance sheets and the
consolidated statements of operations.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
MetLife
Holdings
The
MetLife Holdings segment’s universal life and variable universal life products offer a contract feature where the Company guarantees
to the contractholder a secondary guarantee or a guaranteed paid-up benefit. Information regarding these additional insurance liabilities
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
Universal
and Variable Universal Life |
|
|
(Dollars
in millions) |
Balance,
at January 1 |
|
$ |
1,642 |
|
|
$ |
1,623 |
|
|
$ |
1,514 |
|
Less:
AOCI adjustment |
|
(63) |
|
|
66 |
|
|
78 |
|
Balance,
at January 1, before AOCI adjustment |
|
1,705 |
|
|
1,557 |
|
|
1,436 |
|
Effect
of changes in cash flow assumptions |
|
26 |
|
|
18 |
|
|
— |
|
Effect
of actual variances from expected experience |
|
16 |
|
|
31 |
|
|
13 |
|
Adjusted
balance |
|
1,747 |
|
|
1,606 |
|
|
1,449 |
|
Assessments
accrual |
|
91 |
|
|
90 |
|
|
100 |
|
Interest
accrual |
|
90 |
|
|
82 |
|
|
75 |
|
Excess
benefits paid |
|
(73) |
|
|
(73) |
|
|
(67) |
|
Balance,
at December 31, before AOCI adjustment |
|
1,855 |
|
|
1,705 |
|
|
1,557 |
|
Add:
AOCI adjustment |
|
(14) |
|
|
(63) |
|
|
66 |
|
Balance,
at December 31 |
|
1,841 |
|
|
1,642 |
|
|
1,623 |
|
Less:
Reinsurance recoverables |
|
1,841 |
|
|
627 |
|
|
605 |
|
Balance,
at December 31, net of reinsurance |
|
$ |
— |
|
|
$ |
1,015 |
|
|
$ |
1,018 |
|
|
|
|
|
|
|
|
Weighted-average
duration of the liability |
|
17
years |
|
18
years |
|
18
years |
Weighted-average
interest accretion rate |
|
5.2 |
% |
|
5.2 |
% |
|
5.2 |
% |
Significant
Methodologies and Assumptions
Liabilities
for ULSG and paid-up guarantees are determined by estimating the expected value of death benefits payable when the account balance is
projected to be zero and recognizing those benefits ratably over the life of the contract based on total expected assessments.
The
guaranteed benefits are estimated over a range of scenarios. The significant assumptions used in estimating the ULSG and paid-up guarantee
liabilities are investment income, mortality, lapses, and premium payment pattern and persistency. In addition, projected earned rate
and crediting rates are used to project the account values and excess death benefits and assessments. The discount rate is equal to the
crediting rate for each annual cohort and is locked-in at inception.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
The
Company’s gross premiums or assessments and interest expense recognized in the consolidated statements of operations and comprehensive
income (loss) for long-duration contracts, excluding MetLife Holdings’ participating life contracts, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
Gross
Premiums or Assessments (1) |
|
Interest
Expense (2) |
|
Gross
Premiums or Assessments (1) |
|
Interest
Expense (2) |
|
Gross
Premiums or Assessments (1) |
|
Interest
Expense (2) |
|
|
(In
millions) |
Traditional
and Limited-Payment Contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
RIS
- Annuities |
|
$ |
1,584 |
|
|
$ |
2,377 |
|
|
$ |
8,353 |
|
|
$ |
2,182 |
|
|
$ |
3,383 |
|
|
$ |
2,098 |
|
MetLife
Holdings - Long-term care |
|
731 |
|
|
776 |
|
|
734 |
|
|
745 |
|
|
736 |
|
|
711 |
|
Deferred
Profit Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
RIS
- Annuities |
|
N/A |
|
144 |
|
|
N/A |
|
136 |
|
|
N/A |
|
132 |
|
Additional
Insurance Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
MetLife
Holdings - Universal and variable universal life |
|
452 |
|
|
90 |
|
|
470 |
|
|
82 |
|
|
535 |
|
|
75 |
|
Other
long-duration |
|
887 |
|
|
304 |
|
|
821 |
|
|
301 |
|
|
1,131 |
|
|
304 |
|
Total
|
|
$ |
3,654 |
|
|
$ |
3,691 |
|
|
$ |
10,378 |
|
|
$ |
3,446 |
|
|
$ |
5,785 |
|
|
$ |
3,320 |
|
__________________
(1)
Gross premiums are related to traditional and limited-payment contracts and are included in premiums. Assessments are related to additional
insurance liabilities and are included in universal life and investment-type product policy fees and net investment income.
(2)
Interest expense is included in policyholder benefits and claims.
Participating
Business
Participating
business represented 2% and 3% of the Company’s life insurance in-force at December 31, 2023 and 2022, respectively. Participating
policies represented 11%, 13% and 14% of gross traditional life insurance premiums for the years ended December 31, 2023, 2022 and
2021, respectively.
Liabilities
for Unpaid Claims and Claim Expenses
The
following is information about incurred and paid claims development by segment at December 31, 2023. Such amounts are presented net of
reinsurance, and are not discounted. The tables present claims development and cumulative claim payments by incurral year. The development
tables are only presented for significant short-duration product liabilities within each segment. The information about incurred and paid
claims development prior to 2023 is presented as supplementary information.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Group
Benefits
Group
Life - Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incurred
Claims and Allocated Claim Adjustment Expense, Net of Reinsurance |
|
At
December 31, 2023 |
|
|
Years
Ended December 31, |
|
Total
IBNR Liabilities Plus Expected Development on Reported Claims |
|
Cumulative Number
of Reported Claims |
|
|
(Unaudited) |
|
|
|
|
Incurral
Year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
|
|
|
(Dollars
in millions) |
2014 |
|
$ |
6,986 |
|
|
$ |
6,919 |
|
|
$ |
6,913 |
|
|
$ |
6,910 |
|
|
$ |
6,914 |
|
|
$ |
6,919 |
|
|
$ |
6,920 |
|
|
$ |
6,918 |
|
|
$ |
6,920 |
|
|
$ |
6,921 |
|
|
$ |
1 |
|
|
216,354 |
|
2015 |
|
|
|
7,040 |
|
|
7,015 |
|
|
7,014 |
|
|
7,021 |
|
|
7,024 |
|
|
7,025 |
|
|
7,026 |
|
|
7,026 |
|
|
7,028 |
|
|
1 |
|
|
219,102 |
|
2016 |
|
|
|
|
|
7,125 |
|
|
7,085 |
|
|
7,095 |
|
|
7,104 |
|
|
7,105 |
|
|
7,104 |
|
|
7,107 |
|
|
7,109 |
|
|
2 |
|
|
221,155 |
|
2017 |
|
|
|
|
|
|
|
7,432 |
|
|
7,418 |
|
|
7,425 |
|
|
7,427 |
|
|
7,428 |
|
|
7,428 |
|
|
7,432 |
|
|
2 |
|
|
264,341 |
|
2018 |
|
|
|
|
|
|
|
|
|
7,757 |
|
|
7,655 |
|
|
7,646 |
|
|
7,650 |
|
|
7,651 |
|
|
7,652 |
|
|
2 |
|
|
252,744 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
7,935 |
|
|
7,900 |
|
|
7,907 |
|
|
7,917 |
|
|
7,914 |
|
|
4 |
|
|
254,564 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
8,913 |
|
|
9,367 |
|
|
9,389 |
|
|
9,384 |
|
|
11 |
|
|
299,634 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,555 |
|
|
10,795 |
|
|
10,777 |
|
|
23 |
|
|
332,964 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,640 |
|
|
9,653 |
|
|
44 |
|
|
331,022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,584 |
|
|
1,198 |
|
|
263,329 |
|
Total |
|
83,454 |
|
|
|
|
|
Cumulative
paid claims and paid allocated claim adjustment expenses, net of reinsurance |
|
(80,287) |
|
|
|
|
|
All
outstanding liabilities for incurral years prior to 2014, net of reinsurance |
|
20 |
|
|
|
|
|
Total
unpaid claims and claim adjustment expenses, net of reinsurance |
|
$ |
3,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance |
|
|
Years
Ended December 31, |
|
|
(Unaudited) |
|
|
Incurral
Year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
|
(In
millions) |
2014 |
|
$ |
5,428 |
|
|
$ |
6,809 |
|
|
$ |
6,858 |
|
|
$ |
6,869 |
|
|
$ |
6,902 |
|
|
$ |
6,912 |
|
|
$ |
6,915 |
|
|
$ |
6,916 |
|
|
$ |
6,917 |
|
|
$ |
6,919 |
|
2015 |
|
|
|
5,524 |
|
|
6,913 |
|
|
6,958 |
|
|
6,974 |
|
|
7,008 |
|
|
7,018 |
|
|
7,022 |
|
|
7,024 |
|
|
7,027 |
|
2016 |
|
|
|
|
|
5,582 |
|
|
6,980 |
|
|
7,034 |
|
|
7,053 |
|
|
7,086 |
|
|
7,096 |
|
|
7,100 |
|
|
7,106 |
|
2017 |
|
|
|
|
|
|
|
5,761 |
|
|
7,292 |
|
|
7,355 |
|
|
7,374 |
|
|
7,400 |
|
|
7,414 |
|
|
7,427 |
|
2018 |
|
|
|
|
|
|
|
|
|
6,008 |
|
|
7,521 |
|
|
7,578 |
|
|
7,595 |
|
|
7,629 |
|
|
7,646 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
6,178 |
|
|
7,756 |
|
|
7,820 |
|
|
7,853 |
|
|
7,898 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,862 |
|
|
9,103 |
|
|
9,242 |
|
|
9,296 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,008 |
|
|
10,476 |
|
|
10,640 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,101 |
|
|
9,399 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,929 |
|
Total
cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance |
|
$ |
80,287 |
|
Average
Annual Percentage Payout
The
following is supplementary information about average historical claims duration at December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance |
Years |
|
1 |
|
2 |
|
3 |
|
4 |
|
5 |
|
6 |
|
7 |
|
8 |
|
9 |
|
10 |
Group
Life - Term |
|
76.3% |
|
21.1% |
|
0.9% |
|
0.3% |
|
0.5% |
|
0.2% |
|
0.1% |
|
—% |
|
—% |
|
—% |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Group
Long-Term Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incurred
Claims and Allocated Claim Adjustment Expense, Net of Reinsurance |
|
At
December 31, 2023 |
|
|
Years
Ended December 31, |
|
Total
IBNR
Liabilities
Plus
Expected
Development
on
Reported
Claims |
|
Cumulative
Number
of
Reported
Claims |
|
|
(Unaudited) |
|
|
|
|
Incurral
Year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
|
|
|
(Dollars
in millions) |
2014 |
|
$ |
1,076 |
|
|
$ |
1,077 |
|
|
$ |
1,079 |
|
|
$ |
1,101 |
|
|
$ |
1,109 |
|
|
$ |
1,098 |
|
|
$ |
1,097 |
|
|
$ |
1,081 |
|
|
$ |
1,078 |
|
|
$ |
1,071 |
|
|
$ |
— |
|
|
22,854 |
|
2015 |
|
|
|
1,082 |
|
|
1,105 |
|
|
1,093 |
|
|
1,100 |
|
|
1,087 |
|
|
1,081 |
|
|
1,067 |
|
|
1,086 |
|
|
1,078 |
|
|
— |
|
|
21,218 |
|
2016 |
|
|
|
|
|
1,131 |
|
|
1,139 |
|
|
1,159 |
|
|
1,162 |
|
|
1,139 |
|
|
1,124 |
|
|
1,123 |
|
|
1,086 |
|
|
— |
|
|
17,974 |
|
2017 |
|
|
|
|
|
|
|
1,244 |
|
|
1,202 |
|
|
1,203 |
|
|
1,195 |
|
|
1,165 |
|
|
1,181 |
|
|
1,101 |
|
|
— |
|
|
16,329 |
|
2018 |
|
|
|
|
|
|
|
|
|
1,240 |
|
|
1,175 |
|
|
1,163 |
|
|
1,147 |
|
|
1,170 |
|
|
1,102 |
|
|
— |
|
|
15,215 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
1,277 |
|
|
1,212 |
|
|
1,169 |
|
|
1,177 |
|
|
1,103 |
|
|
— |
|
|
15,408 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,253 |
|
|
1,223 |
|
|
1,155 |
|
|
1,100 |
|
|
— |
|
|
15,773 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,552 |
|
|
1,608 |
|
|
1,477 |
|
|
9 |
|
|
19,557 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,641 |
|
|
1,732 |
|
|
46 |
|
|
18,006 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,725 |
|
|
793 |
|
|
10,994 |
|
Total |
|
12,575 |
|
|
|
|
|
Cumulative
paid claims and paid allocated claim adjustment expenses, net of reinsurance |
|
(6,295) |
|
|
|
|
|
All
outstanding liabilities for incurral years prior to 2014, net of reinsurance |
|
1,477 |
|
|
|
|
|
Total
unpaid claims and claim adjustment expenses, net of reinsurance |
|
$ |
7,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance |
|
|
Years
Ended December 31, |
|
|
(Unaudited) |
|
|
Incurral
Year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
|
(In
millions) |
2014 |
|
$ |
51 |
|
|
$ |
266 |
|
|
$ |
428 |
|
|
$ |
526 |
|
|
$ |
609 |
|
|
$ |
677 |
|
|
$ |
732 |
|
|
$ |
778 |
|
|
$ |
818 |
|
|
$ |
850 |
|
2015 |
|
|
|
50 |
|
|
264 |
|
|
427 |
|
|
524 |
|
|
601 |
|
|
665 |
|
|
718 |
|
|
764 |
|
|
801 |
|
2016 |
|
|
|
|
|
49 |
|
|
267 |
|
|
433 |
|
|
548 |
|
|
628 |
|
|
696 |
|
|
750 |
|
|
769 |
|
2017 |
|
|
|
|
|
|
|
56 |
|
|
290 |
|
|
476 |
|
|
579 |
|
|
655 |
|
|
719 |
|
|
718 |
|
2018 |
|
|
|
|
|
|
|
|
|
54 |
|
|
314 |
|
|
497 |
|
|
594 |
|
|
666 |
|
|
663 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
57 |
|
|
342 |
|
|
522 |
|
|
620 |
|
|
621 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
59 |
|
|
355 |
|
|
535 |
|
|
560 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95 |
|
|
505 |
|
|
620 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76 |
|
|
609 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84 |
|
Total
cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance |
|
$ |
6,295 |
|
Average
Annual Percentage Payout
The
following is supplementary information about average historical claims duration at December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance |
Years |
|
1 |
|
2 |
|
3 |
|
4 |
|
5 |
|
6 |
|
7 |
|
8 |
|
9 |
|
10 |
Group
Long-Term Disability |
|
5.0% |
|
24.0% |
|
14.9% |
|
8.3% |
|
6.0% |
|
4.8% |
|
3.7% |
|
3.4% |
|
3.6% |
|
3.0% |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Significant
Methodologies and Assumptions
Group
Life - Term and Group Long-Term Disability incurred but not paid (“IBNP”) liabilities are developed using a combination of
loss ratio and development methods. Claims in the course of settlement are then subtracted from the IBNP liabilities, resulting in the
IBNR liabilities. The loss ratio method is used in the period in which the claims are neither sufficient nor credible. In developing the
loss ratios, any material rate increases that could change the underlying premium without affecting the estimated incurred losses are
taken into account. For periods where sufficient and credible claim data exists, the development method is used based on the claim triangles
which categorize claims according to both the period in which they were incurred and the period in which they were paid, adjudicated or
reported. The end result is a triangle of known data that is used to develop known completion ratios and factors. Claims paid are then
subtracted from the estimated ultimate incurred claims to calculate the IBNP liability.
An
expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims (IBNR and pending).
This is expressed as a percentage of the underlying claims liability and is based on past experience and the anticipated future expense
structure.
For
Group Life - Term, first year incurred claims and allocated loss adjustment expenses decreased in 2023 compared to the 2022 incurral year
due to the decline in COVID-19 related death claims. For Group Long-Term Disability, first year incurred claims and allocated loss adjustment
expenses increased in 2023 compared to 2022 incurral year due to the growth in the size of the business.
The
assumptions used in calculating the unpaid claims and claim adjustment expenses for Group Life - Term and Group Long-Term Disability are
updated annually to reflect emerging trends in claim experience.
Certain
of the Group Life - Term customers have experience-rated contracts, whereby the group sponsor participates in the favorable and/or adverse
claim experience, including favorable and/or adverse prior year development. Claim experience adjustments on these contracts are not reflected
in the foregoing incurred and paid claim development tables, but are instead reflected as an increase (adverse experience) or decrease
(favorable experience) to premiums on the consolidated statements of operations.
Liabilities
for Group Life - Term unpaid claims and claim adjustment expenses are not discounted.
The
liabilities for Group Long-Term Disability unpaid claims and claim adjustment expenses were $6.7 billion and $6.5 billion at
December 31, 2023 and 2022, respectively. Using interest rates ranging from 3% to 8%, based on the incurral year, the total discount applied
to these liabilities was $1.3 billion and $1.2 billion at December 31, 2023 and 2022, respectively. The amount of interest accretion
recognized was $516 million, $461 million and $518 million for the years ended December 31, 2023, 2022 and 2021, respectively.
These amounts were reflected in policyholder benefits and claims.
For
Group Life - Term, claims were based upon individual death claims. For Group Long-Term Disability, claim frequency was determined by the
number of reported claims as identified by a unique claim number assigned to individual claimants. Claim counts initially include claims
that do not ultimately result in a liability. These claims are omitted from the claim counts once it is determined that there is
no liability.
The
incurred and paid claims disclosed for the Group Life - Term product includes activity related to the product’s continued protection
feature; however, the associated actuarial reserve for future benefit obligations under this feature is excluded from the liability for
unpaid claims.
The
Group Long-Term Disability IBNR, included in the development tables above, was developed using discounted cash flows, and is presented
on a discounted basis.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Reconciliation
of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses
The
reconciliation of the net incurred and paid claims development tables to the liability for unpaid claims and claims adjustment expenses
on the consolidated balance sheet was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
|
(In
millions) |
Short-Duration: |
|
|
|
Unpaid
claims and allocated claims adjustment expenses, net of reinsurance: |
|
|
|
Group
Benefits: |
|
|
|
Group
Life - Term |
|
$ |
3,187 |
|
Group
Long-Term Disability |
|
7,757 |
|
Total |
|
|
$ |
10,944 |
Other
insurance lines - all segments combined |
|
|
894 |
Total
unpaid claims and allocated claims adjustment expenses, net of reinsurance |
|
|
11,838 |
|
|
|
|
Reinsurance
recoverables on unpaid claims: |
|
|
|
Group
Benefits: |
|
|
|
Group
Life - Term |
|
8 |
|
Group
Long-Term Disability |
|
272 |
|
Total |
|
|
280 |
Other
insurance lines - all segments combined |
|
|
31 |
Total
reinsurance recoverable on unpaid claims |
|
|
311 |
Total
unpaid claims and allocated claims adjustment expense |
|
|
12,149 |
|
|
|
|
Discounting |
|
|
(1,325) |
Liability
for unpaid claims and claim adjustment liabilities - short-duration |
|
|
10,824 |
Liability
for unpaid claims and claim adjustment liabilities - all long-duration lines |
|
|
785 |
Total
liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances) |
|
|
$ |
11,609 |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
3.
Future Policy Benefits — (continued)
Rollforward
of Claims and Claim Adjustment Expenses
Information
regarding the liabilities for unpaid claims and claim adjustment expenses was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Balance
at January 1, |
|
$ |
11,300 |
|
|
$ |
10,820 |
|
|
$ |
9,791 |
|
Less:
Reinsurance recoverables |
|
1,633 |
|
|
1,857 |
|
|
1,209 |
|
Net
balance at January 1, |
|
9,667 |
|
|
8,963 |
|
|
8,582 |
|
Incurred
related to: |
|
|
|
|
|
|
Current
year |
|
19,983 |
|
|
19,997 |
|
|
19,876 |
|
Prior
years (1) |
|
14 |
|
|
359 |
|
|
567 |
|
Total
incurred |
|
19,997 |
|
|
20,356 |
|
|
20,443 |
|
Paid
related to: |
|
|
|
|
|
|
Current
year |
|
(14,484) |
|
|
(14,439) |
|
|
(15,331) |
|
Prior
years |
|
(5,311) |
|
|
(5,213) |
|
|
(4,731) |
|
Total
paid |
|
(19,795) |
|
|
(19,652) |
|
|
(20,062) |
|
Net
balance at December 31, |
|
9,869 |
|
|
9,667 |
|
|
8,963 |
|
Add:
Reinsurance recoverables |
|
1,740 |
|
|
1,633 |
|
|
1,857 |
|
Balance
at December 31, |
|
$ |
11,609 |
|
|
$ |
11,300 |
|
|
$ |
10,820 |
|
______________
(1)For
the year ended December 31, 2023, incurred claims and claim adjustment expenses associated with prior years increased due to events incurred
in prior years but reported in the current year. For the years ended December 31, 2022 and 2021, incurred claims and claim adjustment
expenses include expenses associated with prior years but reported in 2022 and 2021 which contain impacts related to the COVID-19 pandemic,
partially offset by additional premiums recorded for experience-rated contracts that are not reflected in the table above.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances
The
Company establishes liabilities for PABs, which are generally equal to the account value, and which includes accrued interest credited,
but excludes the impact of any applicable charge that may be incurred upon surrender.
The
LDTI transition adjustments related to PABs, as described in Note 1, were as follows at the Transition Date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits
Group
Life |
|
RIS
Capital
Markets Investment Products and Stable Value GICs |
|
RIS
Annuities
and Risk Solutions |
|
MetLife
Holdings Annuities |
|
Other |
|
Total |
|
|
(In
millions) |
Balance
at December 31, 2020 |
|
$ |
7,585 |
|
|
$ |
60,641 |
|
|
$ |
5,316 |
|
|
$ |
15,012 |
|
|
$ |
8,081 |
|
|
$ |
96,635 |
|
Reclassification
of carrying amounts of contracts and contract features that are market risk benefits |
|
— |
|
|
— |
|
|
(1) |
|
|
(494) |
|
|
— |
|
|
(495) |
|
Other
balance sheet reclassifications and adjustments upon adoption of the LDTI standard |
|
— |
|
|
— |
|
|
4,747 |
|
|
— |
|
|
47 |
|
|
4,794 |
|
Balance
at January 1, 2021 |
|
$ |
7,585 |
|
|
$ |
60,641 |
|
|
$ |
10,062 |
|
|
$ |
14,518 |
|
|
$ |
8,128 |
|
|
$ |
100,934 |
|
The
Company’s PABs on the consolidated balance sheets were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
December
31, 2022 |
|
|
(In
millions) |
Group
Benefits - Group Life |
|
$ |
7,605 |
|
|
$ |
7,954 |
|
RIS: |
|
|
|
|
Capital
Markets Investment Products and Stable Value GICs |
|
58,554 |
|
|
58,508 |
|
Annuities
and Risk Solutions |
|
10,650 |
|
|
10,244 |
|
|
|
|
|
|
|
|
|
|
|
MetLife
Holdings - Annuities |
|
10,888 |
|
|
12,598 |
|
|
|
|
|
|
Other
|
|
16,197 |
|
|
14,103 |
|
Total
|
|
$ |
103,894 |
|
|
$ |
103,407 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
Rollforwards
The
following information about the direct and assumed liability for PABs includes year-to-date disaggregated rollforwards. The products grouped
within these rollforwards were selected based upon common characteristics and valuations using similar inputs, judgments, assumptions
and methodologies within a particular segment of the business. Policy charges presented in each disaggregated rollforward reflect a premium
and/or assessment based on the account balance.
Group
Benefits
Group
Life
The
Group Benefits segment’s group life PABs predominantly consist of retained asset accounts, universal life products, and the fixed
account of variable life insurance products. Information regarding this liability was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Balance
at January 1, |
|
$ |
7,954 |
|
|
$ |
7,889 |
|
|
$ |
7,585 |
|
Deposits |
|
3,227 |
|
|
3,227 |
|
|
3,444 |
|
Policy
charges |
|
(635) |
|
|
(612) |
|
|
(589) |
|
Surrenders
and withdrawals |
|
(3,121) |
|
|
(2,680) |
|
|
(2,667) |
|
Benefit
payments |
|
(12) |
|
|
(10) |
|
|
(9) |
|
Net
transfers from (to) separate accounts |
|
— |
|
|
(2) |
|
|
(1) |
|
Interest
credited |
|
192 |
|
|
142 |
|
|
126 |
|
Balance
at December 31, |
|
$ |
7,605 |
|
|
$ |
7,954 |
|
|
$ |
7,889 |
|
|
|
|
|
|
|
|
Weighted-average
annual crediting rate |
|
2.5 |
% |
|
1.8 |
% |
|
1.6 |
% |
|
|
|
|
|
|
|
At
period end: |
|
|
|
|
|
|
Cash
surrender value |
|
$ |
7,543 |
|
$ |
7,900 |
|
$ |
7,837 |
Net
amount at risk, excluding offsets from reinsurance: |
|
|
|
|
|
|
In
the event of death (1) |
|
$ |
250,033 |
|
$ |
244,638 |
|
$ |
238,062 |
__________________
(1)For
benefits that are payable in the event of death, the net amount at risk is generally defined as the current death benefit in excess of
the current account balance at the balance sheet date. It
represents the amount of the claim that the Company would incur if death claims were filed on all contracts at the balance sheet date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
The
Group Benefits segment’s group life product account values by range of guaranteed minimum crediting rates (“GMCR”) and
the related range of differences between rates being credited to policyholders and the respective guaranteed minimums were as follows
at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
of GMCR |
|
At
GMCR |
|
Greater
than 0% but less than 0.50% above GMCR |
|
Equal
to or greater than 0.50% but less than 1.50% above GMCR |
|
Equal
to or greater than 1.50% above GMCR |
|
Total
Account Value |
|
|
(In
millions) |
December
31, 2023 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
863 |
|
|
$ |
4,558 |
|
|
$ |
5,421 |
|
Equal
to or greater than 2% but less than 4% |
|
1,196 |
|
|
9 |
|
|
62 |
|
|
2 |
|
|
1,269 |
|
Equal
to or greater than 4% |
|
727 |
|
|
1 |
|
|
43 |
|
|
34 |
|
|
805 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
110 |
|
Total |
|
$ |
1,923 |
|
|
$ |
10 |
|
|
$ |
968 |
|
|
$ |
4,594 |
|
|
$ |
7,605 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
899 |
|
|
$ |
4,471 |
|
|
$ |
236 |
|
|
$ |
5,606 |
|
Equal
to or greater than 2% but less than 4% |
|
1,303 |
|
|
52 |
|
|
21 |
|
|
— |
|
|
1,376 |
|
Equal
to or greater than 4% |
|
803 |
|
|
1 |
|
|
11 |
|
|
30 |
|
|
845 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
127 |
|
Total |
|
$ |
2,106 |
|
|
$ |
952 |
|
|
$ |
4,503 |
|
|
$ |
266 |
|
|
$ |
7,954 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
5,228 |
|
|
$ |
132 |
|
|
$ |
— |
|
|
$ |
131 |
|
|
$ |
5,491 |
|
Equal
to or greater than 2% but less than 4% |
|
1,374 |
|
|
50 |
|
|
23 |
|
|
— |
|
|
1,447 |
|
Equal
to or greater than 4% |
|
793 |
|
|
— |
|
|
— |
|
|
29 |
|
|
822 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
129 |
|
Total |
|
$ |
7,395 |
|
|
$ |
182 |
|
|
$ |
23 |
|
|
$ |
160 |
|
|
$ |
7,889 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
RIS
Capital
Markets Investment Products and Stable Value GICs
The
RIS segment’s capital markets investment products and stable value GICs in PABs are investment-type products, mainly funding agreements.
In
addition, the Company has entered into funding agreements with FHLBNY and a subsidiary of the Federal Agricultural Mortgage Corporation,
a federally chartered instrumentality of the U.S. (“Farmer Mac”). The PAB balances for FHLBNY funding agreements were $13.0
billion and $13.5 billion at December 31, 2023 and 2022, respectively. These advances are collateralized by residential mortgage-backed
securities (“RMBS”) with an estimated fair value of $15.9 billion at both December 31, 2023 and 2022. The Company is
permitted to withdraw any portion of the collateral in the custody of FHLBNY as long as there is no event of default and the remaining
qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by the Company, FHLBNY’s
recovery on the collateral is limited to the amount of the Company’s liability to FHLBNY. The PAB balances for the Farmer Mac funding
agreements were $2.1 billion at both December 31, 2023 and 2022. The obligations under the Farmer Mac funding agreements are secured
by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be secured by other qualified collateral.
The carrying value of such collateral was $2.2 billion and $2.1 billion at December 31, 2023 and 2022, respectively.
Information
regarding the RIS segment’s capital markets investment products and stable value GICs in PABs was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Balance
at January 1, |
|
$ |
58,508 |
|
|
$ |
58,495 |
|
|
$ |
60,641 |
|
Deposits |
|
62,605 |
|
|
74,689 |
|
|
72,504 |
|
|
|
|
|
|
|
|
Surrenders
and withdrawals |
|
(65,444) |
|
|
(75,129) |
|
|
(75,079) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
credited |
|
1,907 |
|
|
1,190 |
|
|
885 |
|
Effect
of foreign currency translation and other, net |
|
978 |
|
|
(737) |
|
|
(456) |
|
Balance
at December 31, |
|
$ |
58,554 |
|
|
$ |
58,508 |
|
|
$ |
58,495 |
|
|
|
|
|
|
|
|
Weighted-average
annual crediting rate |
|
3.3 |
% |
|
2.1 |
% |
|
1.5 |
% |
Cash
surrender value at period end |
|
$ |
1,583 |
|
$ |
1,706 |
|
$ |
1,571 |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
The
RIS segment’s capital markets investment products and stable value GICs account values by range of GMCR and the related range of
differences between rates being credited to policyholders and the respective guaranteed minimums were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
of GMCR |
|
At
GMCR |
|
Greater
than 0% but less than 0.50% above GMCR |
|
Equal
to or greater than 0.50% but less than 1.50% above GMCR |
|
Equal
to or greater than 1.50% above GMCR |
|
Total
Account Value |
|
|
(In
millions) |
December
31, 2023 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
2,621 |
|
|
$ |
2,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
55,932 |
|
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
2,621 |
|
|
$ |
58,554 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
3,053 |
|
|
$ |
3,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
55,454 |
|
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
3,053 |
|
|
$ |
58,508 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
632 |
|
|
$ |
3,542 |
|
|
$ |
10 |
|
|
$ |
4,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
54,311 |
|
Total |
|
$ |
— |
|
|
$ |
632 |
|
|
$ |
3,542 |
|
|
$ |
10 |
|
|
$ |
58,495 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
Annuities
and Risk Solutions
The
RIS segment’s annuities and risk solutions PABs include certain structured settlements and institutional income annuities, and benefit
funding solutions that include postretirement benefits and company-, bank- or trust-owned life insurance used to finance nonqualified
benefit programs for executives. Information regarding this liability was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Balance
at January 1, |
|
$ |
10,244 |
|
|
$ |
10,009 |
|
|
$ |
10,062 |
|
Deposits |
|
850 |
|
|
912 |
|
|
754 |
|
Policy
charges |
|
(160) |
|
|
(135) |
|
|
(108) |
|
Surrenders
and withdrawals |
|
(215) |
|
|
(176) |
|
|
(444) |
|
Benefit
payments |
|
(547) |
|
|
(555) |
|
|
(570) |
|
Net
transfers from (to) separate accounts |
|
53 |
|
|
(1) |
|
|
10 |
|
Interest
credited |
|
427 |
|
|
396 |
|
|
388 |
|
Other |
|
(2) |
|
|
(206) |
|
|
(83) |
|
Balance
at December 31, |
|
$ |
10,650 |
|
|
$ |
10,244 |
|
|
$ |
10,009 |
|
|
|
|
|
|
|
|
Weighted-average
annual crediting rate |
|
4.2 |
% |
|
4.0 |
% |
|
4.0 |
% |
|
|
|
|
|
|
|
At
period end: |
|
|
|
|
|
|
Cash
surrender value |
|
$ |
6,798 |
|
$ |
6,365 |
|
$ |
5,637 |
Net
amount at risk, excluding offsets from ceded reinsurance: |
|
|
|
|
|
|
In
the event of death (1) |
|
$ |
33,148 |
|
$ |
33,908 |
|
$ |
32,158 |
__________________
(1)For
benefits that are payable in the event of death, the net amount at risk is generally defined as the current death benefit in excess of
the current account balance at the balance sheet date. It
represents the amount of the claim that the Company would incur if death claims were filed on all contracts at the balance sheet date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
The
RIS segment’s annuities and risk solutions account values by range of GMCR and the related range of differences between rates being
credited to policyholders and the respective guaranteed minimums were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
of GMCR |
|
At
GMCR |
|
Greater
than 0% but less than 0.50% above GMCR |
|
Equal
to or greater than 0.50% but less than 1.50% above GMCR |
|
Equal
to or greater than 1.50% above GMCR |
|
Total
Account Value |
|
|
(In
millions) |
December
31, 2023 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
20 |
|
|
$ |
1,490 |
|
|
$ |
1,510 |
|
Equal
to or greater than 2% but less than 4% |
|
249 |
|
|
34 |
|
|
7 |
|
|
432 |
|
|
722 |
|
Equal
to or greater than 4% |
|
3,607 |
|
|
— |
|
|
165 |
|
|
5 |
|
|
3,777 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
4,641 |
|
Total |
|
$ |
3,856 |
|
|
$ |
34 |
|
|
$ |
192 |
|
|
$ |
1,927 |
|
|
$ |
10,650 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
64 |
|
|
$ |
1,201 |
|
|
$ |
1,265 |
|
Equal
to or greater than 2% but less than 4% |
|
301 |
|
|
39 |
|
|
40 |
|
|
375 |
|
|
755 |
|
Equal
to or greater than 4% |
|
3,657 |
|
|
122 |
|
|
1 |
|
|
4 |
|
|
3,784 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
4,440 |
|
Total |
|
$ |
3,958 |
|
|
$ |
161 |
|
|
$ |
105 |
|
|
$ |
1,580 |
|
|
$ |
10,244 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
114 |
|
|
$ |
490 |
|
|
$ |
604 |
|
Equal
to or greater than 2% but less than 4% |
|
258 |
|
|
36 |
|
|
41 |
|
|
469 |
|
|
804 |
|
Equal
to or greater than 4% |
|
3,650 |
|
|
126 |
|
|
1 |
|
|
5 |
|
|
3,782 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
4,819 |
|
Total |
|
$ |
3,908 |
|
|
$ |
162 |
|
|
$ |
156 |
|
|
$ |
964 |
|
|
$ |
10,009 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
MetLife
Holdings
Annuities
The
MetLife Holdings segment’s annuity PABs primarily includes fixed deferred annuities, the fixed account portion of variable annuities,
certain income annuities, and embedded derivatives related to equity-indexed annuities. Information regarding this liability was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Dollars
in millions) |
Balance
at January 1, |
|
$ |
12,598 |
|
|
$ |
13,692 |
|
|
$ |
14,518 |
|
Deposits |
|
172 |
|
|
229 |
|
|
274 |
|
Policy
charges |
|
(12) |
|
|
(13) |
|
|
(13) |
|
Surrenders
and withdrawals |
|
(1,916) |
|
|
(1,453) |
|
|
(1,341) |
|
Benefit
payments |
|
(408) |
|
|
(406) |
|
|
(404) |
|
Net
transfers from (to) separate accounts |
|
72 |
|
|
198 |
|
|
237 |
|
Interest
credited |
|
359 |
|
|
375 |
|
|
394 |
|
Other |
|
23 |
|
|
(24) |
|
|
27 |
|
Balance
at December 31, |
|
$ |
10,888 |
|
|
$ |
12,598 |
|
|
$ |
13,692 |
|
|
|
|
|
|
|
|
Weighted-average
annual crediting rate |
|
3.1 |
% |
|
2.9 |
% |
|
2.9 |
% |
|
|
|
|
|
|
|
At
period end: |
|
|
|
|
|
|
Cash
surrender value |
|
$ |
10,181 |
|
$ |
11,688 |
|
$ |
12,554 |
Net
amount at risk, excluding offsets from ceded reinsurance (1): |
|
|
|
|
|
|
In
the event of death (2) |
|
$ |
2,821 |
|
$ |
4,354 |
|
$ |
1,119 |
At
annuitization or exercise of other living benefits (3) |
|
$ |
646 |
|
$ |
917 |
|
$ |
538 |
__________________
(1)Includes
amounts for certain variable annuities recorded as PABs with the related guarantees recorded as MRBs which are disclosed in “MetLife
Holdings – Annuities” in Note 5.
(2)For
benefits that are payable in the event of death, the net amount at risk is generally defined as the current death benefit in excess of
the current account balance at the balance sheet date. It represents the amount of the claim that the Company would incur if death claims
were filed on all contracts at the balance sheet date.
(3)For
benefits that are payable in the event of annuitization or exercise of other living benefits, the net amount at risk is generally defined
as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current
annuity rates or to provide other living benefits. This amount represents the Company’s potential economic exposure in the event
all contractholders were to annuitize or to exercise other living benefits at the balance sheet date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
4.
Policyholder Account Balances (continued)
The
MetLife Holdings segment’s annuities account values by range of GMCR and the related range of differences between rates being credited
to policyholders and the respective guaranteed minimums were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
of GMCR |
|
At
GMCR |
|
Greater
than 0% but less than 0.50% above GMCR |
|
Equal
to or greater than 0.50% but less than 1.50% above GMCR |
|
Equal
to or greater than 1.50% above GMCR |
|
Total
Account Value |
|
|
(In
millions) |
December
31, 2023 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
36 |
|
|
$ |
307 |
|
|
$ |
378 |
|
|
$ |
252 |
|
|
$ |
973 |
|
Equal
to or greater than 2% but less than 4% |
|
1,033 |
|
|
7,197 |
|
|
454 |
|
|
202 |
|
|
8,886 |
|
Equal
to or greater than 4% |
|
426 |
|
|
145 |
|
|
27 |
|
|
— |
|
|
598 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
431 |
|
Total |
|
$ |
1,495 |
|
|
$ |
7,649 |
|
|
$ |
859 |
|
|
$ |
454 |
|
|
$ |
10,888 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
934 |
|
|
$ |
4 |
|
|
$ |
8 |
|
|
$ |
16 |
|
|
$ |
962 |
|
Equal
to or greater than 2% but less than 4% |
|
9,381 |
|
|
892 |
|
|
186 |
|
|
12 |
|
|
10,471 |
|
Equal
to or greater than 4% |
|
593 |
|
|
43 |
|
|
— |
|
|
— |
|
|
636 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
529 |
|
Total |
|
$ |
10,908 |
|
|
$ |
939 |
|
|
$ |
194 |
|
|
$ |
28 |
|
|
$ |
12,598 |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
Equal
to or greater than 0% but less than 2% |
|
$ |
1,066 |
|
|
$ |
7 |
|
|
$ |
14 |
|
|
$ |
11 |
|
|
$ |
1,098 |
|
Equal
to or greater than 2% but less than 4% |
|
10,671 |
|
|
299 |
|
|
192 |
|
|
1 |
|
|
11,163 |
|
Equal
to or greater than 4% |
|
623 |
|
|
40 |
|
|
— |
|
|
— |
|
|
663 |
|
Products
with either a fixed rate or no guaranteed minimum crediting rate |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
768 |
|
Total |
|
$ |
12,360 |
|
|
$ |
346 |
|
|
$ |
206 |
|
|
$ |
12 |
|
|
$ |
13,692 |
|
5.
Market Risk Benefits
The
Company establishes liabilities for variable annuity contract features which include a minimum benefit guarantee that provides to the
contractholder a minimum return based on their initial deposit less withdrawals. In some cases, the benefit base may be increased by additional
deposits, bonus amounts, accruals or optional market value resets.
The
LDTI transition adjustments related to MRB liabilities, as described in Note 1, were as follows at the Transition Date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MetLife
Holdings Annuities |
|
Other |
|
Total |
|
|
(In
millions) |
Direct
and assumed MRB liabilities at December 31, 2020 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Reclassification
of carrying amounts of contracts and contract features that are market risk benefits |
|
1,882 |
|
|
1 |
|
|
1,883 |
|
Adjustments
for the cumulative effect of changes in nonperformance risk between contract issue date and Transition Date |
|
(9) |
|
|
(17) |
|
|
(26) |
|
Adjustments
for the difference between the fair value of the MRB balance, excluding the cumulative effect of changes in nonperformance risk, and the
historical carrying value |
|
4,728 |
|
|
204 |
|
|
4,932 |
|
Direct
and assumed MRB liabilities at January 1, 2021 |
|
$ |
6,601 |
|
|
$ |
188 |
|
|
$ |
6,789 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
5.
Market Risk Benefits (continued)
The
Company’s MRB assets and MRB liabilities on the consolidated balance sheets were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2023 |
|
2022 |
|
|
Asset |
|
Liability |
|
Net |
|
Asset |
|
Liability |
|
Net |
|
|
(In
millions) |
MetLife
Holdings - Annuities |
|
$ |
156 |
|
|
$ |
2,858 |
|
|
$ |
2,702 |
|
|
$ |
153 |
|
|
$ |
3,224 |
|
|
$ |
3,071 |
|
Other |
|
21 |
|
|
20 |
|
|
(1) |
|
|
21 |
|
|
46 |
|
|
25 |
|
Total |
|
$ |
177 |
|
|
$ |
2,878 |
|
|
$ |
2,701 |
|
|
$ |
174 |
|
|
$ |
3,270 |
|
|
$ |
3,096 |
|
Rollforwards
The
following information about the direct liability for MRBs includes a disaggregated rollforward. The products grouped within this rollforward
were selected based upon common characteristics and valuations using similar inputs, judgments, assumptions and methodologies within a
particular segment of the business.
MetLife
Holdings - Annuities
The
MetLife Holdings segment’s variable annuity products offer contract features where the Company guarantees to the contractholder
a minimum benefit, which includes guaranteed minimum death benefits (“GMDBs”) and living benefit guarantees. The GMDB contract
features include return of premium, which provides a return of the purchase payment upon death, annual step-up and roll-up and step-up
combinations. The living benefit guarantees contract features primarily include guaranteed minimum income benefits (“GMIBs”),
which provide a minimum accumulation of purchase payments that can be annuitized to receive a monthly income stream, and guaranteed minimum
withdrawal benefits (“GMWBs”), which provide a series of withdrawals, provided that withdrawals in a contract year do not
exceed a contractual limit. Information regarding MetLife Holdings annuity products was as follows:
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
5.
Market Risk Benefits (continued)
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|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Balance
at January 1, |
|
$ |
3,071 |
|
|
$ |
5,715 |
|
|
$ |
6,601 |
|
|
|
|
|
|
|
|
Balance,
beginning of period, before effect of cumulative changes in the instrument-specific credit risk |
|
$ |
3,164 |
|
|
$ |
6,017 |
|
|
$ |
6,610 |
|
|
|
|
|
|
|
|
Attributed
fees collected |
|
315 |
|
|
316 |
|
|
320 |
|
Benefit
payments |
|
(57) |
|
|
(42) |
|
|
(41) |
|
Effect
of changes in interest rates |
|
(156) |
|
|
(3,584) |
|
|
(524) |
|
Effect
of changes in capital markets |
|
(734) |
|
|
896 |
|
|
(934) |
|
Effect
of changes in equity index volatility |
|
(120) |
|
|
41 |
|
|
20 |
|
Actual
policyholder behavior different from expected behavior |
|
115 |
|
|
3 |
|
|
(46) |
|
Effect
of changes in future expected policyholder behavior and other assumptions (1) |
|
9 |
|
|
(317) |
|
|
557 |
|
Effect
of foreign currency translation and other, net (2) |
|
219 |
|
|
72 |
|
|
399 |
|
Effect
of changes in risk margin |
|
(14) |
|
|
(238) |
|
|
(344) |
|
Balance,
end of period, before the cumulative effect of changes in the instrument-specific credit risk |
|
2,741 |
|
|
3,164 |
|
|
6,017 |
|
Cumulative
effect of changes in the instrument-specific credit risk |
|
(39) |
|
|
(93) |
|
|
(302) |
|
|
|
|
|
|
|
|
Balance
at December 31, |
|
$ |
2,702 |
|
|
$ |
3,071 |
|
|
$ |
5,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
period end: |
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|
|
|
|
|
Net
amount at risk, excluding offsets from hedging (3): |
|
|
|
|
|
|
In
the event of death (4) |
|
$ |
2,821 |
|
|
$ |
4,354 |
|
|
$ |
1,119 |
|
At
annuitization or exercise of other living benefits (5) |
|
$ |
646 |
|
|
$ |
917 |
|
|
$ |
538 |
|
Weighted-average
attained age of contractholders: |
|
|
|
|
|
|
In
the event of death (4) |
|
70
years |
|
69
years |
|
70
years |
At
annuitization or exercise of other living benefits (5) |
|
70
years |
|
69
years |
|
67
years |
__________________
(1) For
the year ended December 31, 2022, the effect of changes in future expected policyholder behavior and other assumptions was primarily driven
by changes in policyholder behavior assumptions relating to projected annuitizations for variable annuities.
(2) Included
is the covariance impact from aggregating the market observable inputs, mostly driven by interest rate and capital market volatility.
(3) Includes
amounts for certain variable annuities guarantees recorded as MRBs on contracts also recorded as PABs which are disclosed in “MetLife
Holdings – Annuities” in Note 4.
(4) For
those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed
minimum death benefit in excess of the current account balance at the balance sheet date. It represents the amount of the claim that the
Company would incur if death claims were filed on all contracts at the balance sheet date.
(5) For
benefits that are payable in the event of annuitization or exercise of other living benefits, the net amount at risk is generally defined
as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current
annuity rates or to provide other living benefits. This amount represents the Company’s potential economic exposure in the event
all contractholders were to annuitize or to exercise other living benefits at the balance sheet date.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
5.
Market Risk Benefits (continued)
Significant
Methodologies and Assumptions
The
Company issues GMDBs, GMWBs, guaranteed minimum accumulation benefits (“GMABs”) and GMIBs that typically meet the definition
of MRBs, which are measured in aggregate, as one compound MRB, at estimated fair value separately from the variable annuity contract,
with changes in estimated fair value reported in net income, except for changes in nonperformance risk of the Company which are recorded
in OCI.
The
Company calculates the fair value of these MRBs, which is estimated as the present value of projected future benefits minus the present
value of projected attributed fees, using actuarial and capital market assumptions including expectations concerning policyholder behavior.
The calculation is based on in-force business, projecting future cash flows from the MRB over multiple risk neutral stochastic scenarios
using observable risk-free rates.
Capital
market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the
extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable
implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable
and are reviewed at least annually based on actuarial studies of historical experience. See Note 12 for additional information on significant
unobservable inputs.
The
valuation of these MRBs includes a nonperformance risk adjustment and adjustments for a risk margin related to non-capital market inputs.
The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary
market for MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary,
to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries as compared to MetLife,
Inc.
Risk
margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market
participant would require to assume the risks related to the uncertainties of such actuarial assumptions at annuitization, premium persistency,
partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions
of the amount and cost of capital needed to cover the guarantees.
These
guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including changes in interest rates,
equity indices, market volatility and foreign currency exchange rates; and variations in actuarial assumptions regarding policyholder
behavior, mortality and risk margins related to non-capital market inputs, impact the estimated fair value of the guarantees and affect
net income, and changes in nonperformance risk of the Company affect OCI.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
5.
Market Risk Benefits (continued)
Other
In
addition to the disaggregated MRB product rollforward above, the Company offers other products with guaranteed minimum benefit features.
These MRBs are measured at estimated fair value with changes in estimated fair value reported in net income, except for changes in nonperformance
risk of the Company which are recorded in OCI. See Note 12 for additional information on significant unobservable inputs used in the fair
value measurement of MRBs. Information regarding these product liabilities was as follows:
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|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Balance
at January 1, |
|
$ |
25 |
|
|
$ |
286 |
|
|
$ |
188 |
|
|
|
|
|
|
|
|
Balance,
beginning of period, before effect of cumulative changes in the instrument-specific credit risk |
|
$ |
34 |
|
|
$ |
322 |
|
|
$ |
205 |
|
|
|
|
|
|
|
|
Attributed
fees collected |
|
2 |
|
|
2 |
|
|
2 |
|
|
|
|
|
|
|
|
Effect
of changes in interest rates |
|
(9) |
|
|
(156) |
|
|
(63) |
|
Effect
of changes in capital markets |
|
— |
|
|
(2) |
|
|
(5) |
|
|
|
|
|
|
|
|
Actual
policyholder behavior different from expected behavior |
|
(26) |
|
|
(5) |
|
|
(4) |
|
Effect
of changes in future expected policyholder behavior and other assumptions |
|
1 |
|
|
(2) |
|
|
63 |
|
Effect
of foreign currency translation and other, net |
|
— |
|
|
(125) |
|
|
124 |
|
|
|
|
|
|
|
|
Balance,
end of period, before the cumulative effect of changes in the instrument-specific credit risk |
|
2 |
|
|
34 |
|
|
322 |
|
Cumulative
effect of changes in the instrument-specific credit risk |
|
(3) |
|
|
(9) |
|
|
(36) |
|
|
|
|
|
|
|
|
Balance
at December 31, |
|
$ |
(1) |
|
|
$ |
25 |
|
|
$ |
286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
Separate Accounts
Separate
account assets consist of investment accounts established and maintained by the Company. The investment objectives of these assets are
directed by the contractholder. An equivalent amount is reported as separate account liabilities. These accounts are reported separately
from the general account assets and liabilities.
Separate
account assets and liabilities include two categories of account types: pass-through separate accounts totaling $54.7 billion and
$52.4 billion at December 31, 2023 and 2022, respectively, for which the contractholder assumes all investment risk, and separate
accounts for which the Company contractually guarantees either a minimum return or account value to the contractholder which totaled $28.5 billion
and $36.8 billion at December 31, 2023 and 2022, respectively. The latter category consisted primarily of GICs. The average
interest rate credited on these contracts was 2.6% and 2.5% at December 31, 2023 and 2022, respectively.
Separate
Account Liabilities
The
Company’s separate account liabilities on the consolidated balance sheets were as follows at:
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|
|
|
|
|
|
December
31, 2023 |
|
December
31, 2022 |
|
(In
millions) |
RIS: |
|
|
|
Stable
Value and Risk Solutions |
$ |
35,562 |
|
|
$ |
43,249 |
|
Annuities |
11,659 |
|
|
11,694 |
|
MetLife
Holdings - Annuities |
29,162 |
|
|
28,443 |
|
Other |
6,814 |
|
|
5,855 |
|
Total
|
$ |
83,197 |
|
|
$ |
89,241 |
|
Rollforwards
The
following information about the separate account liabilities includes disaggregated rollforwards. The products grouped within these rollforwards
were selected based upon common characteristics and valuations using similar inputs, judgments, assumptions and methodologies within a
particular segment of the business.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
6.
Separate Accounts (continued)
The
separate account liabilities are primarily comprised of the following: RIS stable value and risk solutions contracts, RIS annuities participating
and non-participating group contracts and MetLife Holdings variable annuities.
The
balances of and changes in separate account liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RIS Stable
Value and Risk Solutions |
|
RIS Annuities |
|
MetLife
Holdings Annuities |
|
|
(In
millions) |
Balance,
January 1, 2021 |
|
$ |
58,704 |
|
|
$ |
21,895 |
|
|
$ |
40,755 |
|
Premiums
and deposits |
|
3,411 |
|
|
944 |
|
|
298 |
|
Policy
charges |
|
(263) |
|
|
(35) |
|
|
(788) |
|
Surrenders
and withdrawals |
|
(8,170) |
|
|
(2,457) |
|
|
(4,454) |
|
Benefit
payments |
|
(137) |
|
|
— |
|
|
(500) |
|
Investment
performance |
|
400 |
|
|
1,189 |
|
|
5,023 |
|
Net
transfers from (to) general account |
|
(41) |
|
|
30 |
|
|
(237) |
|
Other
|
|
487 |
|
|
(274) |
|
|
(1) |
|
Balance,
December 31, 2021 |
|
$ |
54,391 |
|
|
$ |
21,292 |
|
|
$ |
40,096 |
|
Premiums
and deposits |
|
4,329 |
|
|
1,233 |
|
|
266 |
|
Policy
charges |
|
(263) |
|
|
(25) |
|
|
(665) |
|
Surrenders
and withdrawals |
|
(5,882) |
|
|
(7,481) |
|
|
(2,906) |
|
Benefit
payments |
|
(108) |
|
|
— |
|
|
(431) |
|
Investment
performance |
|
(4,492) |
|
|
(2,823) |
|
|
(7,722) |
|
Net
transfers from (to) general account |
|
57 |
|
|
(56) |
|
|
(199) |
|
Other
(1) |
|
(4,783) |
|
|
(446) |
|
|
4 |
|
Balance,
December 31, 2022 |
|
$ |
43,249 |
|
|
$ |
11,694 |
|
|
$ |
28,443 |
|
Premiums
and deposits |
|
1,643 |
|
|
175 |
|
|
256 |
|
Policy
charges |
|
(232) |
|
|
(21) |
|
|
(608) |
|
Surrenders
and withdrawals |
|
(11,087) |
|
|
(944) |
|
|
(2,942) |
|
Benefit
payments |
|
(95) |
|
|
— |
|
|
(464) |
|
Investment
performance |
|
2,241 |
|
|
774 |
|
|
4,548 |
|
Net
transfers from (to) general account |
|
(56) |
|
|
3 |
|
|
(73) |
|
Other
|
|
(101) |
|
|
(22) |
|
|
2 |
|
Balance,
December 31, 2023 |
|
$ |
35,562 |
|
|
$ |
11,659 |
|
|
$ |
29,162 |
|
|
|
|
|
|
|
|
Cash
surrender value at December 31, 2021 (2) |
|
$ |
44,774 |
|
|
N/A |
|
$ |
39,855 |
|
Cash
surrender value at December 31, 2022 (2) |
|
$ |
38,420 |
|
|
N/A |
|
$ |
28,292 |
|
Cash
surrender value at December 31, 2023 (2) |
|
$ |
30,841 |
|
|
N/A |
|
29,016 |
|
_____________
(1) Other
for RIS stable value and risk solutions primarily includes changes related to unsettled trades of mortgage-backed securities.
(2) Cash
surrender value represents the amount of the contractholders’ account balances distributable at the balance sheet date less policy
loans and certain surrender charges.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
6.
Separate Accounts (continued)
Separate
Account Assets
The
Company’s aggregate fair value of assets, by major investment asset category, supporting separate account liabilities was as follows
at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
|
Group
Benefits |
|
RIS |
|
MetLife
Holdings |
|
|
Total |
|
|
(In
millions) |
Fixed
maturity securities: |
|
|
|
|
|
|
|
|
|
Bonds: |
|
|
|
|
|
|
|
|
|
Foreign
government |
|
$ |
— |
|
|
$ |
509 |
|
|
$ |
— |
|
|
|
$ |
509 |
|
U.S.
government and agency |
|
— |
|
|
9,603 |
|
|
— |
|
|
|
9,603 |
|
Public
utilities |
|
— |
|
|
1,066 |
|
|
— |
|
|
|
1,066 |
|
Municipals |
|
— |
|
|
346 |
|
|
— |
|
|
|
346 |
|
Corporate
bonds: |
|
|
|
|
|
|
|
|
|
Materials |
|
— |
|
|
143 |
|
|
— |
|
|
|
143 |
|
Communications |
|
— |
|
|
883 |
|
|
— |
|
|
|
883 |
|
Consumer |
|
— |
|
|
1,843 |
|
|
— |
|
|
|
1,843 |
|
Energy |
|
— |
|
|
906 |
|
|
— |
|
|
|
906 |
|
Financial |
|
— |
|
|
2,670 |
|
|
— |
|
|
|
2,670 |
|
Industrial
and other |
|
— |
|
|
757 |
|
|
— |
|
|
|
757 |
|
Technology |
|
— |
|
|
541 |
|
|
— |
|
|
|
541 |
|
Foreign |
|
— |
|
|
1,889 |
|
|
— |
|
|
|
1,889 |
|
Total
corporate bonds |
|
— |
|
|
9,632 |
|
|
— |
|
|
|
9,632 |
|
Total
bonds |
|
— |
|
|
21,156 |
|
|
— |
|
|
|
21,156 |
|
Mortgage-backed
securities |
|
— |
|
|
9,515 |
|
|
— |
|
|
|
9,515 |
|
Asset-backed
securities and collateralized loan obligations |
|
— |
|
|
2,341 |
|
|
— |
|
|
|
2,341 |
|
Redeemable
preferred stock |
|
— |
|
|
9 |
|
|
— |
|
|
|
9 |
|
Total
fixed maturity securities |
|
— |
|
|
33,021 |
|
|
— |
|
|
|
33,021 |
|
Equity
securities: |
|
|
|
|
|
|
|
|
|
Common
stock: |
|
|
|
|
|
|
|
|
|
Industrial,
miscellaneous and all other |
|
— |
|
|
2,338 |
|
|
— |
|
|
|
2,338 |
|
Banks,
trust and insurance companies |
|
— |
|
|
716 |
|
|
— |
|
|
|
716 |
|
Public
utilities |
|
— |
|
|
65 |
|
|
— |
|
|
|
65 |
|
Non-redeemable
preferred stock |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
Mutual
funds |
|
1,159 |
|
|
3,672 |
|
|
34,728 |
|
|
|
39,559 |
|
Total
equity securities |
|
1,159 |
|
|
6,791 |
|
|
34,728 |
|
|
|
42,678 |
|
Other
invested assets |
|
— |
|
|
1,425 |
|
|
— |
|
|
|
1,425 |
|
Total
investments |
|
1,159 |
|
|
41,237 |
|
|
34,728 |
|
|
|
77,124 |
|
Other
assets |
|
— |
|
|
6,073 |
|
|
— |
|
|
|
6,073 |
|
Total |
|
$ |
1,159 |
|
|
$ |
47,310 |
|
|
$ |
34,728 |
|
|
|
$ |
83,197 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
6.
Separate Accounts (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
Group
Benefits (1) |
|
RIS
(1) |
|
MetLife
Holdings |
|
|
Total |
|
|
(In
millions) |
Fixed
maturity securities: |
|
|
|
|
|
|
|
|
|
Bonds: |
|
|
|
|
|
|
|
|
|
Foreign
government |
|
$ |
— |
|
|
$ |
588 |
|
|
$ |
— |
|
|
|
$ |
588 |
|
U.S.
government and agency |
|
— |
|
|
11,189 |
|
|
— |
|
|
|
11,189 |
|
Public
utilities |
|
— |
|
|
1,174 |
|
|
— |
|
|
|
1,174 |
|
Municipals |
|
— |
|
|
475 |
|
|
— |
|
|
|
475 |
|
Corporate
bonds: |
|
|
|
|
|
|
|
|
|
Materials |
|
— |
|
|
242 |
|
|
— |
|
|
|
242 |
|
Communications |
|
— |
|
|
1,174 |
|
|
— |
|
|
|
1,174 |
|
Consumer |
|
— |
|
|
2,365 |
|
|
— |
|
|
|
2,365 |
|
Energy |
|
— |
|
|
861 |
|
|
— |
|
|
|
861 |
|
Financial |
|
— |
|
|
3,495 |
|
|
— |
|
|
|
3,495 |
|
Industrial
and other |
|
— |
|
|
876 |
|
|
— |
|
|
|
876 |
|
Technology |
|
— |
|
|
711 |
|
|
— |
|
|
|
711 |
|
Foreign |
|
— |
|
|
2,451 |
|
|
— |
|
|
|
2,451 |
|
Total
corporate bonds |
|
— |
|
|
12,175 |
|
|
— |
|
|
|
12,175 |
|
Total
bonds |
|
— |
|
|
25,601 |
|
|
— |
|
|
|
25,601 |
|
Mortgage-backed
securities |
|
— |
|
|
12,202 |
|
|
— |
|
|
|
12,202 |
|
Asset-backed
securities and collateralized loan obligations |
|
— |
|
|
2,763 |
|
|
— |
|
|
|
2,763 |
|
Redeemable
preferred stock |
|
— |
|
|
4 |
|
|
— |
|
|
|
4 |
|
Total
fixed maturity securities |
|
— |
|
|
40,570 |
|
|
— |
|
|
|
40,570 |
|
Equity
securities: |
|
|
|
|
|
|
|
|
|
Common
stock: |
|
|
|
|
|
|
|
|
|
Industrial,
miscellaneous and all other |
|
— |
|
|
2,853 |
|
|
— |
|
|
|
2,853 |
|
Banks,
trust and insurance companies |
|
— |
|
|
586 |
|
|
— |
|
|
|
586 |
|
Public
utilities |
|
— |
|
|
94 |
|
|
— |
|
|
|
94 |
|
Non-redeemable
preferred stock |
|
— |
|
|
2 |
|
|
— |
|
|
|
2 |
|
Mutual
funds |
|
988 |
|
|
3,367 |
|
|
33,231 |
|
|
|
37,586 |
|
Total
equity securities |
|
988 |
|
|
6,902 |
|
|
33,231 |
|
|
|
41,121 |
|
Other
invested assets |
|
2 |
|
|
1,634 |
|
|
— |
|
|
|
1,636 |
|
Total
investments |
|
990 |
|
|
49,106 |
|
|
33,231 |
|
|
|
83,327 |
|
Other
assets |
|
— |
|
|
5,914 |
|
|
— |
|
|
|
5,914 |
|
Total |
|
$ |
990 |
|
|
$ |
55,020 |
|
|
$ |
33,231 |
|
|
|
$ |
89,241 |
|
__________________
(1)See
Note 2 for information on the reorganization of the Company’s segments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
7.
Deferred Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles
The
transition adjustments related to DAC, VOBA, and UREV, as described in Note 1, were as follows at the Transition Date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (1) |
|
RIS
(1) |
|
MetLife
Holdings |
|
Total |
|
(In
millions) |
DAC: |
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
$ |
278 |
|
|
$ |
100 |
|
|
$ |
2,248 |
|
|
$ |
2,626 |
|
Removal
of related amounts in AOCI |
— |
|
|
— |
|
|
1,480 |
|
|
1,480 |
|
Other
adjustments upon adoption of the LDTI standard |
— |
|
|
— |
|
|
12 |
|
|
12 |
|
Balance
at January 1, 2021 |
$ |
278 |
|
|
$ |
100 |
|
|
$ |
3,740 |
|
|
$ |
4,118 |
|
|
|
|
|
|
|
|
|
VOBA: |
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
$ |
— |
|
|
$ |
20 |
|
|
$ |
3 |
|
|
$ |
23 |
|
Removal
of related amounts in AOCI |
— |
|
|
— |
|
|
2 |
|
|
2 |
|
Balance
at January 1, 2021 |
$ |
— |
|
|
$ |
20 |
|
|
$ |
5 |
|
|
$ |
25 |
|
|
|
|
|
|
|
|
|
UREV: |
|
|
|
|
|
|
|
Balance
at December 31, 2020 |
$ |
— |
|
|
$ |
22 |
|
|
$ |
157 |
|
|
$ |
179 |
|
Removal
of related amounts in AOCI |
— |
|
|
— |
|
|
— |
|
|
— |
|
Balance
at January 1, 2021 |
$ |
— |
|
|
$ |
22 |
|
|
$ |
157 |
|
|
$ |
179 |
|
__________________
(1)See
Note 2 for information on the reorganization of the Company’s segments.
DAC
and VOBA
Information
regarding total DAC and VOBA by segment, as well as Corporate & Other, was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (1) |
|
RIS
(1) |
|
MetLife
Holdings (2) |
|
Corporate
& Other |
|
Total |
|
(In
millions) |
DAC: |
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2021 |
$ |
278 |
|
|
$ |
100 |
|
|
$ |
3,740 |
|
|
$ |
— |
|
|
$ |
4,118 |
|
Capitalizations |
19 |
|
|
40 |
|
|
(2) |
|
|
6 |
|
|
63 |
|
Amortization |
(25) |
|
|
(28) |
|
|
(281) |
|
|
— |
|
|
(334) |
|
Balance
at December 31, 2021 |
272 |
|
|
112 |
|
|
3,457 |
|
|
6 |
|
|
3,847 |
|
Capitalizations |
18 |
|
|
51 |
|
|
— |
|
|
120 |
|
|
189 |
|
Amortization |
(26) |
|
|
(26) |
|
|
(237) |
|
|
(6) |
|
|
(295) |
|
Balance
at December 31, 2022 |
264 |
|
|
137 |
|
|
3,220 |
|
|
120 |
|
|
3,741 |
|
Capitalizations |
18 |
|
|
46 |
|
|
(1) |
|
|
55 |
|
|
118 |
|
Amortization |
(27) |
|
|
(28) |
|
|
(224) |
|
|
(17) |
|
|
(296) |
|
Other
(3) |
— |
|
|
— |
|
|
(272) |
|
|
— |
|
|
(272) |
|
Balance
at December 31, 2023 |
$ |
255 |
|
|
$ |
155 |
|
|
$ |
2,723 |
|
|
$ |
158 |
|
|
$ |
3,291 |
|
|
|
|
|
|
|
|
|
|
|
Total
DAC and VOBA: |
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2021 |
|
|
|
|
|
|
|
|
$ |
3,865 |
|
Balance
at December 31, 2022 |
|
|
|
|
|
|
|
|
$ |
3,757 |
|
Balance
at December 31, 2023 |
|
|
|
|
|
|
|
|
$ |
3,305 |
|
__________________
(1)See
Note 2 for information on the reorganization of the Company’s segments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
7.
Deferred Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles (continued)
(2)Includes
DAC balances primarily related to whole life, variable annuities, disability income, term life, long-term care, and universal life products.
(3)MetLife
Holdings segment includes activity for total DAC ceded at the date of inception related to a reinsurance agreement. See Note 8 for further
information on the transaction.
Significant
Methodologies and Assumptions
The
Company amortizes DAC and VOBA related to long-duration contracts over the estimated lives of the contracts in proportion to benefits
in-force for RIS annuities and policy count for all other products. The amortization amount is calculated using the same cohorts as the
corresponding liabilities on a quarterly basis, using an amortization rate that includes current period reporting experience and end of
period persistency and longevity assumptions that are consistent with those used to measure the corresponding liabilities.
The
Company amortizes DAC for short-duration contracts, which is primarily comprised of commissions and certain underwriting expenses, in
proportion to actual and future earned premium over the applicable contract term.
Information
regarding other intangibles was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
VODA
and VOCRA: |
|
|
|
|
|
|
Balance
at January 1, |
|
$ |
99 |
|
|
$ |
116 |
|
|
$ |
135 |
|
Amortization |
|
(15) |
|
|
(17) |
|
|
(19) |
|
Balance
at December 31, |
|
$ |
84 |
|
|
$ |
99 |
|
|
$ |
116 |
|
Accumulated
amortization |
|
$ |
373 |
|
|
$ |
358 |
|
|
$ |
341 |
|
Unearned
Revenue
Information
regarding the Company’s UREV primarily related to universal life and variable universal life products by segment included in other
policy-related balances was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RIS
(1) |
|
MetLife
Holdings |
|
Total |
|
|
(In
millions) |
Balance
at January 1, 2021 |
|
$ |
22 |
|
|
$ |
157 |
|
|
$ |
179 |
|
Deferrals |
|
3 |
|
|
49 |
|
|
52 |
|
Amortization |
|
(4) |
|
|
(11) |
|
|
(15) |
|
Balance
at December 31, 2021 |
|
21 |
|
|
195 |
|
|
216 |
|
Deferrals |
|
1 |
|
|
45 |
|
|
46 |
|
Amortization |
|
(4) |
|
|
(13) |
|
|
(17) |
|
Balance
at December 31, 2022 |
|
18 |
|
|
227 |
|
|
245 |
|
Deferrals |
|
2 |
|
|
33 |
|
|
35 |
|
Amortization |
|
(4) |
|
|
(14) |
|
|
(18) |
|
Other
(2) |
|
— |
|
|
(241) |
|
|
(241) |
|
Balance
at December 31, 2023 |
|
$ |
16 |
|
|
$ |
5 |
|
|
$ |
21 |
|
__________________
(1)
See Note 2 for information on the reorganization of the Company’s segments.
(2)MetLife
Holdings segment includes activity for total UREV ceded at the date of inception related to a reinsurance agreement. See Note 8 for further
information on the transaction.
Significant
Methodologies and Assumptions
UREV
is amortized similarly to DAC and VOBA, see “— DAC and VOBA.”
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance
The
Company enters into reinsurance agreements that transfer risk from its various insurance products to affiliated and unaffiliated companies.
These cessions limit losses, minimize exposure to significant risks and provide additional capacity for future growth. The Company also
provides reinsurance by accepting risk from affiliates and nonaffiliates.
Under
the terms of the reinsurance agreements, the reinsurer agrees to reimburse the Company for the ceded amount in the event a claim is paid.
Cessions under reinsurance agreements do not discharge the Company’s obligation as the primary insurer. In the event that reinsurers
do not meet their obligations under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible.
Accounting
for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying
business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared
to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the
financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment
process discussed in “— Fixed Maturity Securities AFS – Evaluation of Fixed Maturity Securities AFS for Credit Loss”
in Note 10.
Group
Benefits
For
its Group Benefits segment, the Company generally retains most of the risk, with the exception of its Group Term Life business and certain
client arrangements.
The
Company reinsures an 80% quota share of its Group Term Life business and a 50% quota share of its Group Dental business for capital management
purposes. The majority of the Company’s other reinsurance activity within this segment relates to client agreements for employer
sponsored captive programs, risk-sharing agreements and multinational pooling. The risks ceded under these agreements are generally quota
shares of group life and disability policies. The cessions vary and the Company may cede up to 100% of all the risks of these policies.
RIS
The
Company’s RIS segment has engaged in reinsurance activities on an opportunistic basis. Also, the Company assumes certain group annuity
contracts issued in connection with pension risk transfers from an affiliate.
MetLife
Holdings
For
its life products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or on a quota share
basis. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages.
Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics.
In 2023, the Company reinsured an in-force block of universal life, variable universal life, universal life with secondary guarantees
and fixed annuities to a third party on a 100% quota share basis.
Catastrophe
Coverage
The
Company has exposure to catastrophes which could contribute to significant fluctuations in its results of operations. For its Group Benefits
segment, the Company purchases catastrophe coverage to reinsure risks issued within territories that it believes are subject to the greatest
catastrophic risks. For its other segments, the Company uses excess of retention and quota share reinsurance agreements to provide greater
diversification of risk and minimize exposure to larger risks. Excess of retention reinsurance agreements provide for a portion of a risk
to remain with the direct writing company and quota share reinsurance agreements provide for the direct writing company to transfer a
fixed percentage of all risks of a class of policies.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance (continued)
Reinsurance
Recoverables
The
Company reinsures its business through a diversified group of well-capitalized reinsurers. The Company analyzes recent trends in arbitration
and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of
its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated
as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The
Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld
accounts, and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance,
which at December 31, 2023 and 2022, were not significant.
The
Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld
accounts and irrevocable letters of credit. The Company had $1.4 billion and $1.3 billion of unsecured unaffiliated reinsurance
recoverable balances at December 31, 2023 and 2022, respectively.
At
December 31, 2023, the Company had $9.6 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $8.9 billion,
or 93%, were with the Company’s five largest unaffiliated ceded reinsurers, including $925 million of net unaffiliated ceded
reinsurance recoverables which were unsecured. At December 31, 2022, the Company had $2.0 billion of net unaffiliated ceded
reinsurance recoverables. Of this total, $1.6 billion, or 80%, were with the Company’s five largest unaffiliated ceded reinsurers,
including $1.1 billion of net unaffiliated ceded reinsurance recoverables which were unsecured.
The
Company has reinsured, with an unaffiliated third-party reinsurer, 59% of the closed block through a modified coinsurance agreement. The
Company accounts for this agreement under the deposit method of accounting. The Company, having the right of offset, has offset the modified
coinsurance deposit liability with the deposit recoverable.
The
amounts on the consolidated statements of operations include the impact of reinsurance. Information regarding the significant effects
of reinsurance was as follows:
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Premiums |
|
|
|
|
|
Direct
premiums |
$ |
25,027 |
|
|
$ |
31,265 |
|
|
$ |
23,005 |
|
Reinsurance
assumed |
847 |
|
|
872 |
|
|
4,121 |
|
Reinsurance
ceded |
(1,156) |
|
|
(948) |
|
|
(938) |
|
Net
premiums |
$ |
24,718 |
|
|
$ |
31,189 |
|
|
$ |
26,188 |
|
Universal
life and investment-type product policy fees |
|
|
|
|
|
Direct
universal life and investment-type product policy fees |
$ |
2,019 |
|
|
$ |
2,079 |
|
|
$ |
2,173 |
|
Reinsurance
assumed |
(17) |
|
|
30 |
|
|
(16) |
|
Reinsurance
ceded |
(338) |
|
|
(292) |
|
|
(283) |
|
Net
universal life and investment-type product policy fees |
$ |
1,664 |
|
|
$ |
1,817 |
|
|
$ |
1,874 |
|
Other
revenues |
|
|
|
|
|
Direct
other revenues |
$ |
1,025 |
|
|
$ |
1,025 |
|
|
$ |
1,066 |
|
Reinsurance
assumed |
125 |
|
|
54 |
|
|
13 |
|
Reinsurance
ceded |
523 |
|
|
615 |
|
|
537 |
|
Net
other revenues |
$ |
1,673 |
|
|
$ |
1,694 |
|
|
$ |
1,616 |
|
Policyholder
benefits and claims |
|
|
|
|
|
Direct
policyholder benefits and claims |
$ |
26,768 |
|
|
$ |
33,433 |
|
|
$ |
26,322 |
|
Reinsurance
assumed |
708 |
|
|
856 |
|
|
3,962 |
|
Reinsurance
ceded |
(1,326) |
|
|
(1,156) |
|
|
(1,200) |
|
Net
policyholder benefits and claims |
$ |
26,150 |
|
|
$ |
33,133 |
|
|
$ |
29,084 |
|
Policyholder
liability remeasurement (gains) losses |
|
|
|
|
|
Direct
policyholder liability remeasurement (gains) losses |
$ |
(87) |
|
|
$ |
43 |
|
|
$ |
(19) |
|
Reinsurance
assumed |
(48) |
|
|
(39) |
|
|
31 |
|
Reinsurance
ceded |
(15) |
|
|
(15) |
|
|
(12) |
|
Net
policyholder liability remeasurement (gains) losses |
$ |
(150) |
|
|
$ |
(11) |
|
|
$ |
— |
|
Market
risk benefits remeasurement (gains) losses |
|
|
|
|
|
Direct
market risk benefits remeasurement (gains) losses |
$ |
(701) |
|
|
$ |
(3,389) |
|
|
$ |
(758) |
|
Reinsurance
assumed |
(2) |
|
|
10 |
|
|
— |
|
Reinsurance
ceded |
— |
|
|
— |
|
|
— |
|
Net
market risk benefits remeasurement (gains) losses |
$ |
(703) |
|
|
$ |
(3,379) |
|
|
$ |
(758) |
|
Interest
credited to policyholder account balances |
|
|
|
|
|
Direct
interest credited to policyholder account balances |
$ |
3,276 |
|
|
$ |
2,418 |
|
|
$ |
2,157 |
|
Reinsurance
assumed |
354 |
|
|
109 |
|
|
43 |
|
Reinsurance
ceded |
(28) |
|
|
(18) |
|
|
(15) |
|
Net
interest credited to policyholder account balances |
$ |
3,602 |
|
|
$ |
2,509 |
|
|
$ |
2,185 |
|
Other
expenses |
|
|
|
|
|
Direct
other expenses |
$ |
5,365 |
|
|
$ |
5,026 |
|
|
$ |
4,551 |
|
Reinsurance
assumed |
280 |
|
|
97 |
|
|
162 |
|
Reinsurance
ceded |
140 |
|
|
580 |
|
|
987 |
|
Net
other expenses |
$ |
5,785 |
|
|
$ |
5,703 |
|
|
$ |
5,700 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance (continued)
The
amounts on the consolidated balance sheets include the impact of reinsurance. Information regarding the significant effects of reinsurance
was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
Direct |
|
Assumed |
|
Ceded |
|
Total
Balance Sheet |
|
Direct |
|
Assumed |
|
Ceded |
|
Total
Balance Sheet |
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums,
reinsurance and other
receivables |
$ |
3,287 |
|
|
$ |
736 |
|
|
$ |
24,213 |
|
|
$ |
28,236 |
|
|
$ |
2,952 |
|
|
$ |
1,302 |
|
|
$ |
16,537 |
|
|
$ |
20,791 |
|
Market
risk benefits |
170 |
|
|
7 |
|
|
— |
|
|
177 |
|
|
167 |
|
|
7 |
|
|
— |
|
|
174 |
|
Deferred
policy acquisition costs and
value
of business acquired |
3,628 |
|
|
158 |
|
|
(481) |
|
|
3,305 |
|
|
3,860 |
|
|
120 |
|
|
(223) |
|
|
3,757 |
|
Total
assets |
$ |
7,085 |
|
|
$ |
901 |
|
|
$ |
23,732 |
|
|
$ |
31,718 |
|
|
$ |
6,979 |
|
|
$ |
1,429 |
|
|
$ |
16,314 |
|
|
$ |
24,722 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
policy benefits |
$ |
125,885 |
|
|
$ |
3,297 |
|
|
$ |
— |
|
|
$ |
129,182 |
|
|
$ |
123,335 |
|
|
$ |
3,579 |
|
|
$ |
— |
|
|
$ |
126,914 |
|
Policyholder
account balances |
94,825 |
|
|
9,069 |
|
|
— |
|
|
103,894 |
|
|
97,162 |
|
|
6,245 |
|
|
— |
|
|
103,407 |
|
Market
risk benefits |
2,863 |
|
|
15 |
|
|
— |
|
|
2,878 |
|
|
3,255 |
|
|
15 |
|
|
— |
|
|
3,270 |
|
Other
policy-related balances |
8,186 |
|
|
384 |
|
|
(281) |
|
|
8,289 |
|
|
7,596 |
|
|
358 |
|
|
(23) |
|
|
7,931 |
|
Other
liabilities |
7,800 |
|
|
2,112 |
|
|
13,807 |
|
|
23,719 |
|
|
8,718 |
|
|
2,160 |
|
|
13,617 |
|
|
24,495 |
|
Total
liabilities |
$ |
239,559 |
|
|
$ |
14,877 |
|
|
$ |
13,526 |
|
|
$ |
267,962 |
|
|
$ |
240,066 |
|
|
$ |
12,357 |
|
|
$ |
13,594 |
|
|
$ |
266,017 |
|
Reinsurance
agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the
deposit method of accounting. Included in the above table are deposit assets on reinsurance of $14.3 billion and $11.6 billion
at December 31, 2023 and 2022, respectively. Also, included in the table above are deposit liabilities on reinsurance of $1.5 billion
and $1.7 billion at December 31, 2023 and 2022, respectively.
In November 2023, the Company completed a risk transfer transaction with a subsidiary of Global Atlantic Financial Group, a retirement
and life insurance company, to reinsure an in-force block of universal life, variable universal life, universal life with secondary guarantees,
and fixed annuities, which are reported in the MetLife Holdings segment. The Company entered into a reinsurance agreement on a coinsurance
basis for the general account products and on a modified coinsurance basis for the separate account products. The Company recorded reinsurance
recoverables and deposit receivables of $7.5 billion at December 31, 2023 reported in premiums, reinsurance and other receivables.
At inception of the agreement, in addition to recording the amount recoverable, the Company i) transferred to the reinsurer $7.2 billion
of assets primarily consisting of fixed maturity securities AFS and mortgage loans supporting the general account liabilities reduced
by a $1.7 billion pre-tax ceding commission, ii) retained $4.5 billion separate account assets under the modified coinsurance
arrangement and iii) recorded the net cost of reinsurance of $240 million within other liabilities, related to universal life, variable
universal life and universal life with secondary guarantees reinsured. The net cost of reinsurance will be amortized on a basis consistent
with the methodologies and assumptions used for amortizing DAC related to the underlying reinsured contracts in policyholder benefits
and claims.
As
part of this transaction, an affiliate entered into investment advisory and other agreements with a subsidiary of Global Atlantic Financial
Group to serve as the investment manager for certain of the transferred general account assets. With certain exceptions, the agreements
contemplate a term of five years.
Related
Party Reinsurance Transactions
The
Company has reinsurance agreements with certain of MetLife, Inc.’s subsidiaries, including MetLife Reinsurance Company of Charleston
(“MRC”), MetLife Reinsurance Company of Vermont, Metropolitan Tower Life Insurance Company (“MTL”), Superior Vision
Insurance, Inc. and MetLife Insurance K.K., all of which are related parties.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance (continued)
Information
regarding the significant effects of affiliated reinsurance included on the consolidated statements of operations was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Premiums |
|
|
|
|
|
Reinsurance
assumed |
$ |
(19) |
|
|
$ |
7 |
|
|
$ |
3,237 |
|
Reinsurance
ceded |
(372) |
|
|
(139) |
|
|
(114) |
|
Net
premiums |
$ |
(391) |
|
|
$ |
(132) |
|
|
$ |
3,123 |
|
Universal
life and investment-type product policy fees |
|
|
|
|
|
Reinsurance
assumed |
$ |
4 |
|
|
$ |
— |
|
|
$ |
1 |
|
Reinsurance
ceded |
(6) |
|
|
(4) |
|
|
(9) |
|
Net
universal life and investment-type product policy fees |
$ |
(2) |
|
|
$ |
(4) |
|
|
$ |
(8) |
|
Other
revenues |
|
|
|
|
|
Reinsurance
assumed |
$ |
91 |
|
|
$ |
78 |
|
|
$ |
(11) |
|
Reinsurance
ceded |
471 |
|
|
472 |
|
|
505 |
|
Net
other revenues |
$ |
562 |
|
|
$ |
550 |
|
|
$ |
494 |
|
Policyholder
benefits and claims |
|
|
|
|
|
Reinsurance
assumed |
$ |
(121) |
|
|
$ |
52 |
|
|
$ |
3,141 |
|
Reinsurance
ceded |
(310) |
|
|
(142) |
|
|
(146) |
|
Net
policyholder benefits and claims |
$ |
(431) |
|
|
$ |
(90) |
|
|
$ |
2,995 |
|
Policyholder
liability remeasurement (gains) losses |
|
|
|
|
|
Reinsurance
assumed |
$ |
(40) |
|
|
$ |
(47) |
|
|
$ |
10 |
|
Reinsurance
ceded |
(11) |
|
|
(9) |
|
|
(2) |
|
Net
policyholder liability remeasurement (gains) losses |
$ |
(51) |
|
|
$ |
(56) |
|
|
$ |
8 |
|
Interest
credited to policyholder account balances |
|
|
|
|
|
Reinsurance
assumed |
$ |
344 |
|
|
$ |
97 |
|
|
$ |
31 |
|
Reinsurance
ceded |
(11) |
|
|
(12) |
|
|
(12) |
|
Net
interest credited to policyholder account balances |
$ |
333 |
|
|
$ |
85 |
|
|
$ |
19 |
|
Other
expenses |
|
|
|
|
|
Reinsurance
assumed |
$ |
239 |
|
|
$ |
36 |
|
|
$ |
89 |
|
Reinsurance
ceded |
220 |
|
|
651 |
|
|
1,065 |
|
Net
other expenses |
$ |
459 |
|
|
$ |
687 |
|
|
$ |
1,154 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
8.
Reinsurance (continued)
Information
regarding the significant effects of affiliated reinsurance included on the consolidated balance sheets was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
2023 |
|
2022 |
|
|
Assumed |
|
Ceded |
|
Assumed |
|
Ceded |
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
|
Premiums,
reinsurance and other receivables |
|
$ |
164 |
|
|
$ |
11,302 |
|
|
$ |
723 |
|
|
$ |
11,303 |
|
Deferred
policy acquisition costs and value of business acquired |
|
158 |
|
|
(160) |
|
|
120 |
|
|
(164) |
|
Total
assets |
|
$ |
322 |
|
|
$ |
11,142 |
|
|
$ |
843 |
|
|
$ |
11,139 |
|
Liabilities |
|
|
|
|
|
|
|
|
Future
policy benefits |
|
$ |
2,236 |
|
|
$ |
— |
|
|
$ |
2,484 |
|
|
$ |
— |
|
Policyholder
account balances |
|
9,040 |
|
|
— |
|
|
6,216 |
|
|
— |
|
Other
policy-related balances |
|
65 |
|
|
(35) |
|
|
61 |
|
|
(23) |
|
Other
liabilities |
|
957 |
|
|
10,267 |
|
|
910 |
|
|
10,380 |
|
Total
liabilities |
|
$ |
12,298 |
|
|
$ |
10,232 |
|
|
$ |
9,671 |
|
|
$ |
10,357 |
|
Effective
April 1, 2021, the Company, through its wholly-owned subsidiary, Missouri Reinsurance, Inc. (“MoRe”), entered into an agreement
to assume certain group annuity contracts issued in connection with a qualifying pension risk transfer on a modified coinsurance basis
from MTL. The significant reinsurance effects to the Company were primarily in future policy benefits of $2.2 billion and $2.4 billion
and other invested assets of $2.8 billion and $3.0 billion at December 31, 2023 and 2022, respectively. Also, the Company recorded
policyholder benefits and claims of ($130) million, $50 million and $3.1 billion and other expenses of $194 million,
$24 million and $89 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The
Company ceded two blocks of business to an affiliate on a 75%
coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as embedded derivatives, which are separately
accounted for at estimated fair value on the Company’s consolidated balance sheets. The embedded derivatives related to the funds
withheld associated with this reinsurance agreement are included within other liabilities and were ($39) million and ($28) million
at December 31, 2023 and 2022, respectively. Net derivative gains (losses) associated with these embedded derivatives were $11 million,
$59 million and $15 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Certain
contractual features of the closed block agreement with MRC qualify as embedded derivatives, which are separately accounted for at estimated
fair value on the Company’s consolidated balance sheets. The embedded derivative related to the funds withheld associated with this
reinsurance agreement was included within other liabilities and was ($265) million and ($423) million at December 31, 2023
and 2022, respectively. Net derivative gains (losses) associated with the embedded derivative were ($158) million, $1.5 billion
and $341 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The
Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld
accounts and irrevocable letters of credit. The Company had $822 million and $757 million of unsecured affiliated reinsurance
recoverable balances at December 31, 2023 and 2022, respectively.
Affiliated
reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded
using the deposit method of accounting. Included in the above table are deposit assets on affiliated reinsurance of $9.6 billion
and $9.7 billion at December 31, 2023 and 2022, respectively. Also, included in the table above are deposit liabilities on affiliated
reinsurance of $764 million and $874 million at December 31, 2023 and 2022, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
9.
Closed Block
On
April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company converted from a mutual life insurance
company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an
order by the New York Superintendent of Insurance approving Metropolitan Life Insurance Company’s plan of reorganization, as amended (the
“Plan of Reorganization”). On the Demutualization Date, Metropolitan Life Insurance Company established a closed block for
the benefit of holders of certain individual life insurance policies of Metropolitan Life Insurance Company. Assets have been allocated
to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies
included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies,
including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation
of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments
in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience
assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience.
The
closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed
block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated
to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what
was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than
or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999
had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders
and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such
payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed
block remains in-force. The expected life of the closed block is over 100 years from the Demutualization Date.
The
Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to
the Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders
as additional dividends as described below. The excess of closed block liabilities over closed block assets at the Demutualization Date
(adjusted to eliminate the impact of related amounts in AOCI) represents the estimated maximum future earnings from the closed block expected
to result from operations, attributed net of income tax, to the closed block. Earnings of the closed block are recognized in income over
the period the policies and contracts in the closed block remain in-force.
If,
over the period the closed block remains in existence, the actual cumulative earnings of the closed block are greater than the expected
cumulative earnings of the closed block, the Company will pay the excess to closed block policyholders as additional policyholder dividends
unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative earnings
in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed
block are less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income.
However, the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings
until the actual cumulative earnings equal the expected cumulative earnings.
At
least annually, management performs a premium deficiency test using best estimate assumptions to determine whether the projected future
earnings of the closed block are sufficient to support the payment of future closed block contractual benefits. The most recent deficiency
test demonstrated that the projected future earnings of the closed block are sufficient to support the payment of future closed block
contractual benefits.
Experience
within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly
impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based
upon policy count within the closed block.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
9.
Closed Block (continued)
Closed
block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses
outside the closed block based on the nature of the particular item.
Information
regarding the liabilities and assets designated to the closed block was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
|
|
(In
millions) |
Closed
Block Liabilities |
|
|
|
|
Future
policy benefits |
|
$ |
36,142 |
|
|
$ |
37,222 |
|
Other
policy-related balances |
|
319 |
|
|
273 |
|
Policyholder
dividends payable |
|
174 |
|
|
181 |
|
Other
liabilities |
|
668 |
|
|
455 |
|
Total
closed block liabilities |
|
37,303 |
|
|
38,131 |
|
Assets
Designated to the Closed Block |
|
|
|
|
Investments: |
|
|
|
|
Fixed
maturity securities available-for-sale, at estimated fair value |
|
19,939 |
|
|
19,648 |
|
Mortgage
loans |
|
6,151 |
|
|
6,564 |
|
Policy
loans |
|
3,960 |
|
|
4,084 |
|
Real
estate and real estate joint ventures |
|
668 |
|
|
635 |
|
Other
invested assets |
|
506 |
|
|
705 |
|
Total
investments |
|
31,224 |
|
|
31,636 |
|
Cash
and cash equivalents |
|
717 |
|
|
437 |
|
Accrued
investment income |
|
383 |
|
|
375 |
|
Premiums,
reinsurance and other receivables |
|
54 |
|
|
52 |
|
Current
income tax recoverable |
|
3 |
|
|
88 |
|
Deferred
income tax asset |
|
312 |
|
|
423 |
|
Total
assets designated to the closed block |
|
32,693 |
|
|
33,011 |
|
Excess
of closed block liabilities over assets designated to the closed block |
|
4,610 |
|
|
5,120 |
|
AOCI: |
|
|
|
|
Unrealized
investment gains (losses), net of income tax |
|
(820) |
|
|
(1,357) |
|
Unrealized
gains (losses) on derivatives, net of income tax |
|
130 |
|
|
262 |
|
Total
amounts included in AOCI |
|
(690) |
|
|
(1,095) |
|
Maximum
future earnings to be recognized from closed block assets and liabilities |
|
$ |
3,920 |
|
|
$ |
4,025 |
|
Information
regarding the closed block policyholder dividend obligation was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Balance
at January 1, |
|
$ |
— |
|
|
$ |
1,682 |
|
|
$ |
2,969 |
|
Change
in unrealized investment and derivative gains (losses) |
|
— |
|
|
(1,682) |
|
|
(1,287) |
|
Balance
at December 31, |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,682 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
9.
Closed Block (continued)
Information
regarding the closed block revenues and expenses was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Revenues |
|
|
|
|
|
|
Premiums |
|
$ |
922 |
|
|
$ |
1,104 |
|
|
$ |
1,298 |
|
Net
investment income |
|
1,362 |
|
|
1,382 |
|
|
1,541 |
|
Net
investment gains (losses) |
|
7 |
|
|
(51) |
|
|
(36) |
|
Net
derivative gains (losses) |
|
— |
|
|
33 |
|
|
18 |
|
Total
revenues |
|
2,291 |
|
|
2,468 |
|
|
2,821 |
|
Expenses |
|
|
|
|
|
|
Policyholder
benefits and claims |
|
1,706 |
|
|
1,890 |
|
|
2,150 |
|
Policyholder
dividends |
|
366 |
|
|
458 |
|
|
626 |
|
Other
expenses |
|
86 |
|
|
90 |
|
|
96 |
|
Total
expenses |
|
2,158 |
|
|
2,438 |
|
|
2,872 |
|
Revenues,
net of expenses before provision for income tax expense (benefit) |
|
133 |
|
|
30 |
|
|
(51) |
|
Provision
for income tax expense (benefit) |
|
28 |
|
|
6 |
|
|
(11) |
|
Revenues,
net of expenses and provision for income tax expense (benefit) |
|
$ |
105 |
|
|
$ |
24 |
|
|
$ |
(40) |
|
Metropolitan
Life Insurance Company charges the closed block with federal income taxes, state and local premium taxes and other state or local taxes,
as well as investment management expenses relating to the closed block as provided in the Plan of Reorganization. Metropolitan Life Insurance
Company also charges the closed block for expenses of maintaining the policies included in the closed block.
10.
Investments
See
Note 12 for information about the fair value hierarchy for investments and the related valuation methodologies.
Investment
Risks and Uncertainties
Investments
are exposed to the following primary sources of risk: credit, interest rate, liquidity, market valuation, currency and real estate risk.
The financial statement risks, stemming from such investment risks, are those associated with the determination of estimated fair values,
the diminished ability to sell certain investments in times of strained market conditions, the recognition of ACL and impairments, the
recognition of income on certain investments and the potential consolidation of VIEs. The use of different methodologies, assumptions
and inputs relating to these financial statement risks may have a material effect on the amounts presented within the consolidated financial
statements.
The
determination of ACL and impairments is highly subjective and is based upon quarterly evaluations and assessments of known and inherent
risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information
becomes available.
The
recognition of income on certain investments (e.g. structured securities, including mortgage-backed securities, asset-backed securities
and collateralized loan obligations (“ABS & CLO”), certain structured investment transactions and FVO securities) is dependent
upon certain factors such as prepayments and defaults, and changes in such factors could result in changes in amounts to be earned.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Fixed
Maturity Securities AFS
Fixed
Maturity Securities AFS by Sector
The
following table presents fixed maturity securities AFS by sector. U.S. corporate and foreign corporate sectors include redeemable preferred
stock. RMBS includes agency, prime, prime investor, non-qualified residential mortgage, alternative, reperforming and sub-prime mortgage-backed
securities. ABS & CLO includes securities collateralized by consumer loans, corporate loans and broadly syndicated bank loans. Municipals
includes taxable and tax-exempt revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political
subdivisions. Commercial mortgage-backed securities (“CMBS”) primarily includes securities collateralized by multiple commercial
mortgage loans. RMBS, ABS & CLO and CMBS are, collectively, “Structured Products.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2023 |
|
2022 |
|
|
Amortized
Cost |
|
|
|
Gross
Unrealized |
|
Estimated Fair Value |
|
Amortized
Cost |
|
|
|
Gross
Unrealized |
|
Estimated Fair Value |
Sector |
|
|
Allowance
for Credit Loss |
|
Gains |
|
Losses |
|
Allowance
for Credit Loss |
|
Gains |
|
Losses |
|
|
|
(In
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
corporate |
|
$ |
52,479 |
|
|
$ |
(62) |
|
|
$ |
1,126 |
|
|
$ |
3,050 |
|
|
$ |
50,493 |
|
|
$ |
55,280 |
|
|
$ |
(28) |
|
|
$ |
649 |
|
|
$ |
4,811 |
|
|
$ |
51,090 |
|
Foreign
corporate |
|
27,520 |
|
|
(2) |
|
|
536 |
|
|
2,839 |
|
|
25,215 |
|
|
28,328 |
|
|
(3) |
|
|
206 |
|
|
4,538 |
|
|
23,993 |
|
U.S.
government and agency |
|
23,100 |
|
|
— |
|
|
243 |
|
|
2,283 |
|
|
21,060 |
|
|
24,409 |
|
|
— |
|
|
333 |
|
|
2,384 |
|
|
22,358 |
|
RMBS |
|
20,700 |
|
|
(1) |
|
|
228 |
|
|
1,979 |
|
|
18,948 |
|
|
21,539 |
|
|
— |
|
|
177 |
|
|
2,383 |
|
|
19,333 |
|
ABS
& CLO |
|
12,049 |
|
|
(6) |
|
|
30 |
|
|
432 |
|
|
11,641 |
|
|
12,639 |
|
|
— |
|
|
9 |
|
|
812 |
|
|
11,836 |
|
Municipals |
|
6,429 |
|
|
— |
|
|
318 |
|
|
428 |
|
|
6,319 |
|
|
7,880 |
|
|
— |
|
|
256 |
|
|
672 |
|
|
7,464 |
|
CMBS |
|
6,387 |
|
|
(11) |
|
|
28 |
|
|
570 |
|
|
5,834 |
|
|
6,691 |
|
|
(15) |
|
|
7 |
|
|
640 |
|
|
6,043 |
|
Foreign
government |
|
3,416 |
|
|
(50) |
|
|
156 |
|
|
227 |
|
|
3,295 |
|
|
3,711 |
|
|
(68) |
|
|
140 |
|
|
324 |
|
|
3,459 |
|
Total
fixed maturity securities AFS |
|
$ |
152,080 |
|
|
$ |
(132) |
|
|
$ |
2,665 |
|
|
$ |
11,808 |
|
|
$ |
142,805 |
|
|
$ |
160,477 |
|
|
$ |
(114) |
|
|
$ |
1,777 |
|
|
$ |
16,564 |
|
|
$ |
145,576 |
|
Methodology
for Amortization of Premium and Accretion of Discount on Structured Products
Amortization
of premium and accretion of discount on Structured Products considers the estimated timing and amount of prepayments of the underlying
loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the
originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for Structured Products are
estimated using inputs obtained from third-party specialists and based on management’s knowledge of the current market. For credit-sensitive
and certain prepayment-sensitive Structured Products, the effective yield is recalculated on a prospective basis. For all other Structured
Products, the effective yield is recalculated on a retrospective basis.
Maturities
of Fixed Maturity Securities AFS
The
amortized cost, net of ACL, and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at
December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due
in One
Year
or Less |
|
Due
After One
Year
Through
Five
Years |
|
Due
After Five
Years
Through Ten
Years |
|
Due
After Ten
Years |
|
Structured
Products |
|
Total
Fixed
Maturity
Securities
AFS |
|
(In
millions) |
Amortized
cost, net of ACL |
$ |
4,011 |
|
|
$ |
24,416 |
|
|
$ |
27,330 |
|
|
$ |
57,073 |
|
|
$ |
39,118 |
|
|
$ |
151,948 |
|
Estimated
fair value |
$ |
3,949 |
|
|
$ |
23,787 |
|
|
$ |
26,459 |
|
|
$ |
52,187 |
|
|
$ |
36,423 |
|
|
$ |
142,805 |
|
Actual
maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS not
due at a single maturity date have been presented in the year of final contractual maturity. Structured Products are shown separately,
as they are not due at a single maturity.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Continuous
Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector
The
following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position
without an ACL by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
2023 |
|
2022 |
|
Less
than 12 Months |
|
Equal
to or Greater than 12 Months |
|
Less
than 12 Months |
|
Equal
to or Greater than 12 Months |
Sector
& Credit Quality |
Estimated Fair Value |
|
Gross Unrealized Losses |
|
Estimated Fair Value |
|
Gross Unrealized Losses |
|
Estimated Fair Value |
|
Gross Unrealized Losses |
|
Estimated Fair Value |
|
Gross Unrealized Losses |
|
(Dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
corporate |
$ |
3,537 |
|
|
$ |
95 |
|
|
$ |
25,752 |
|
|
$ |
2,924 |
|
|
$ |
34,358 |
|
|
$ |
3,953 |
|
|
$ |
3,383 |
|
|
$ |
856 |
|
Foreign
corporate |
714 |
|
|
64 |
|
|
16,982 |
|
|
2,775 |
|
|
16,834 |
|
|
3,350 |
|
|
3,977 |
|
|
1,188 |
|
U.S.
government and agency |
4,322 |
|
|
228 |
|
|
9,980 |
|
|
2,055 |
|
|
13,489 |
|
|
1,895 |
|
|
2,756 |
|
|
489 |
|
RMBS |
1,470 |
|
|
37 |
|
|
12,813 |
|
|
1,941 |
|
|
11,622 |
|
|
1,280 |
|
|
4,585 |
|
|
1,103 |
|
ABS
& CLO |
937 |
|
|
20 |
|
|
8,250 |
|
|
410 |
|
|
7,725 |
|
|
499 |
|
|
3,009 |
|
|
313 |
|
Municipals |
262 |
|
|
10 |
|
|
2,102 |
|
|
418 |
|
|
3,526 |
|
|
616 |
|
|
133 |
|
|
56 |
|
CMBS |
587 |
|
|
23 |
|
|
4,096 |
|
|
542 |
|
|
4,376 |
|
|
426 |
|
|
1,254 |
|
|
213 |
|
Foreign
government |
431 |
|
|
12 |
|
|
1,452 |
|
|
212 |
|
|
1,803 |
|
|
209 |
|
|
306 |
|
|
115 |
|
Total
fixed maturity securities AFS |
$ |
12,260 |
|
|
$ |
489 |
|
|
$ |
81,427 |
|
|
$ |
11,277 |
|
|
$ |
93,733 |
|
|
$ |
12,228 |
|
|
$ |
19,403 |
|
|
$ |
4,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
grade |
$ |
11,499 |
|
|
$ |
453 |
|
|
$ |
77,325 |
|
|
$ |
10,849 |
|
|
$ |
88,059 |
|
|
$ |
11,710 |
|
|
$ |
17,470 |
|
|
$ |
3,897 |
|
Below
investment grade |
761 |
|
|
36 |
|
|
4,102 |
|
|
428 |
|
|
5,674 |
|
|
518 |
|
|
1,933 |
|
|
436 |
|
Total
fixed maturity securities AFS |
$ |
12,260 |
|
|
$ |
489 |
|
|
$ |
81,427 |
|
|
$ |
11,277 |
|
|
$ |
93,733 |
|
|
$ |
12,228 |
|
|
$ |
19,403 |
|
|
$ |
4,333 |
|
Total
number of securities in an unrealized loss position |
1,679 |
|
|
|
|
8,441 |
|
|
|
|
10,688 |
|
|
|
|
2,110 |
|
|
|
Evaluation
of Fixed Maturity Securities AFS for Credit Loss
Evaluation
and Measurement Methodologies
Management
considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated
fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security
are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the credit
loss evaluation process include, but are not limited to: (i) the extent to which the estimated fair value has been below amortized
cost, (ii) adverse conditions specifically related to a security, an industry sector or sub-sector, or an economically depressed
geographic area, adverse change in the financial condition of the issuer of the security, changes in technology, discontinuance of a segment
of the business that may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security
and likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal payments,
(v) whether the issuer, or series of issuers or an industry has suffered a catastrophic loss or has exhausted natural resources,
(vi) whether the Company has the intent to sell or will more likely than not be required to sell, including transfers in connection
with reinsurance transactions, a particular security before the decline in estimated fair value below amortized cost recovers, (vii) with
respect to Structured Products, changes in forecasted cash flows after considering the changes in the financial condition of the underlying
loan obligors and quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of
the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the
security, (viii) changes in the rating of the security by a rating agency, and (ix) other subjective factors, including concentrations
and information obtained from regulators.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
The
methodology and significant inputs used to determine the amount of credit loss are as follows:
•The
Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows. The
discount rate is generally the effective interest rate of the security at the time of purchase for fixed-rate securities and the spot
rate at the date of evaluation of credit loss for floating-rate securities.
•When
determining collectability and the period over which value is expected to recover, the Company applies considerations utilized in its
overall credit loss evaluation process which incorporates information regarding the specific security, fundamentals of the industry and
geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated
using assumptions derived from management’s single best estimate, the most likely outcome in a range of possible outcomes, after
giving consideration to a variety of variables that include, but are not limited to: payment terms of the security; the likelihood that
the issuer can service the interest and principal payments; the quality and amount of any credit enhancements; the security’s position
within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; any private and public sector
programs to restructure foreign government securities and municipals; and changes to the rating of the security or the issuer by rating
agencies.
•Additional
considerations are made when assessing the features that apply to certain Structured Products including, but not limited to: the quality
of underlying collateral, historical performance of the underlying loan obligors, historical rent and vacancy levels, changes in the financial
condition of the underlying loan obligors, expected prepayment speeds, current and forecasted loss severity, consideration of the payment
terms of the underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the payment priority
within the tranche structure of the security.
With
respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is given in the
credit loss analysis as to whether there has been any deterioration in the credit of the issuer and the likelihood of recovery in value
of the securities that are in a severe unrealized loss position. Consideration is also given as to whether any perpetual hybrid securities
with an unrealized loss, regardless of credit rating, have deferred any dividend payments.
In
periods subsequent to the recognition of an initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases
or decreases in the expected cash flow from the security result in corresponding decreases or increases in the ACL which are recognized
in earnings and reported within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below
zero. Full or partial write-offs are deducted from the ACL in the period the security, or a portion thereof, is considered uncollectible.
Recoveries of amounts previously written off are recorded to the ACL in the period received. When the Company has the intent to sell
the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized
cost, any ACL is written off and the amortized cost is written down to estimated fair value through a charge within net investment gains
(losses), which becomes the new amortized cost of the security.
Evaluation
of Fixed Maturity Securities AFS in an Unrealized Loss Position
Gross
unrealized losses on securities without an ACL decreased $4.8 billion for the year ended December 31, 2023 to $11.8 billion
primarily due to interest rate volatility, narrowing credit spreads, impairments in connection with a reinsurance transaction and, to
a lesser extent, the strengthening of foreign currencies on certain non-functional currency denominated fixed maturity securities.
As
shown above, most of the gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position
for 12 months or greater at December 31, 2023 relate to investment grade securities. These unrealized losses are principally due to widening
credit spreads since purchase and, with respect to fixed-rate securities, rising interest rates since purchase.
As
of December 31, 2023, $428 million of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized
loss position for 12 months or greater on below investment grade securities were concentrated in the transportation, consumer and communications
sectors within corporate securities and in foreign government securities. These unrealized losses are the result of significantly wider
credit spreads resulting from higher
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
risk
premiums since purchase, largely due to economic and market uncertainty and, with respect to fixed-rate securities, rising interest rates
since purchase.
At
December 31, 2023, the Company did not intend to sell its securities in an unrealized loss position without an ACL, and it was not more
likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized
cost. Therefore, the Company concluded that these securities had not incurred a credit loss and should not have an ACL at December 31,
2023.
Future
provisions for credit loss will depend primarily on economic fundamentals, issuer performance (including changes in the present value
of future cash flows expected to be collected), changes in credit ratings and collateral valuation.
Rollforward
of Allowance for Credit Loss for Fixed Maturity Securities AFS By Sector
The
rollforward of ACL for fixed maturity securities AFS by sector is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Corporate |
|
Foreign Corporate |
|
Foreign Government |
|
|
|
RMBS |
|
ABS
& CLO |
|
|
|
CMBS |
|
Total |
Year
Ended December 31, 2023 |
|
(In
millions) |
Balance
at January 1, |
|
$ |
28 |
|
|
$ |
3 |
|
|
$ |
68 |
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
$ |
15 |
|
|
$ |
114 |
|
ACL
not previously recorded |
|
31 |
|
|
— |
|
|
— |
|
|
|
|
2 |
|
|
6 |
|
|
|
|
1 |
|
|
40 |
|
Changes
for securities with previously recorded ACL |
|
7 |
|
|
(1) |
|
|
(2) |
|
|
|
|
(1) |
|
|
— |
|
|
|
|
5 |
|
|
8 |
|
Securities
sold or exchanged |
|
(4) |
|
|
— |
|
|
(16) |
|
|
|
|
— |
|
|
— |
|
|
|
|
(10) |
|
|
(30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-offs |
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
Balance
at December 31, |
|
$ |
62 |
|
|
$ |
2 |
|
|
$ |
50 |
|
|
|
|
$ |
1 |
|
|
$ |
6 |
|
|
|
|
$ |
11 |
|
|
$ |
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Corporate |
|
Foreign Corporate |
|
Foreign Government |
|
|
|
RMBS |
|
ABS
& CLO |
|
|
|
CMBS |
|
Total |
Year
Ended December 31, 2022 |
|
(In
millions) |
Balance
at January 1, |
|
$ |
30 |
|
|
$ |
10 |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
$ |
13 |
|
|
$ |
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACL
not previously recorded |
|
13 |
|
|
12 |
|
|
103 |
|
|
|
|
— |
|
|
— |
|
|
|
|
2 |
|
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
for securities with previously recorded ACL |
|
17 |
|
|
3 |
|
|
(15) |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
sold or exchanged |
|
(10) |
|
|
(22) |
|
|
(20) |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(52) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-offs |
|
(22) |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(22) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, |
|
$ |
28 |
|
|
$ |
3 |
|
|
$ |
68 |
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
$ |
15 |
|
|
$ |
114 |
|
Mortgage
Loans
Mortgage
Loans by Portfolio Segment
Mortgage
loans are summarized as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Portfolio
Segment |
|
Carrying Value |
|
%
of Total |
|
Carrying Value |
|
%
of Total |
|
|
(Dollars
in millions) |
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
37,129 |
|
|
59.3 |
% |
|
$ |
37,196 |
|
|
59.4 |
% |
Agricultural |
|
15,831 |
|
|
25.3 |
|
|
15,869 |
|
|
25.4 |
|
Residential |
|
10,133 |
|
|
16.2 |
|
|
9,953 |
|
|
15.9 |
|
Total
amortized cost |
|
63,093 |
|
|
100.8 |
|
|
63,018 |
|
|
100.7 |
|
Allowance
for credit loss |
|
(509) |
|
|
(0.8) |
|
|
(448) |
|
|
(0.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
mortgage loans |
|
$ |
62,584 |
|
|
100.0 |
% |
|
$ |
62,570 |
|
|
100.0 |
% |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
The
amount of net (discounts) premiums and deferred (fees) expenses, included within total amortized cost, primarily attributable to residential
mortgage loans was ($720) million and ($717) million at December 31, 2023 and 2022, respectively. The accrued interest income excluded
from total amortized cost for commercial, agricultural and residential mortgage loans at December 31, 2023 was $196 million, $166 million
and $79 million, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential
mortgage loans at December 31, 2022 was $171 million, $147 million and $70 million, respectively.
Purchases
of mortgage loans from unaffiliated parties, consisting primarily of residential mortgage loans, were $1.1 billion, $2.3 billion
and $1.4 billion for the years ended December 31, 2023, 2022 and 2021, respectively.
During
the year ended December 31, 2023, the Company disposed of commercial mortgage loans with an amortized cost of $141 million in connection
with a reinsurance transaction. The disposition resulted in a loss of $31 million for the year ended December 31, 2023.
The
Company originates and acquires unaffiliated mortgage loans and simultaneously sells a portion to affiliates under master participation
agreements. The aggregate amount of mortgage loan participation interests in unaffiliated mortgage loans sold by the Company to affiliates
for the years ended December 31, 2023, 2022 and 2021 was $22 million, $167 million and $277 million, respectively. In connection
with the mortgage loan participations, the Company collected principal and interest payments from unaffiliated borrowers on behalf of
affiliates and remitted such receipts to the affiliates in the amount of $536 million, $576 million and $1.0 billion for
the years ended December 31, 2023, 2022 and 2021, respectively.
The
Company acquires mortgage loans from its affiliated mortgage origination company. The affiliate originates and acquires mortgage loans
and the Company simultaneously purchases participation interests under a master participation agreement. The aggregate amount of mortgage
loan and mortgage secured loan participation interests purchased by the Company from such affiliate for the years ended December 31, 2023,
2022 and 2021 was $2.1 billion, $4.8 billion and $4.7 billion, respectively. In connection with mortgage loan and mortgage
secured loan participations, the affiliate collected principal and interest payments on the Company’s behalf and the affiliate remitted
such payments to the Company in the amount of $2.5 billion, $2.6 billion and $1.9 billion for the years ended December
31, 2023, 2022 and 2021, respectively.
During
the second quarter of 2023, the Company assigned mortgage loans with a previously recorded amortized cost of $5.3 billion to its
affiliated mortgage origination company. In connection with the assignment, this affiliate contemporaneously assumed the Company’s
rights and obligations associated with the assigned mortgage loans. In exchange, the Company received $5.3 billion of mortgage secured
loans from this affiliate, secured by the same mortgage loans assigned. As of December 31, 2023, the Company’s aggregate participation
interests in affiliated mortgage secured loans included in commercial and agricultural mortgage loans was $13.1 billion.
During
the years ended December 31, 2023 and 2022, the Company contributed commercial mortgage loans with an amortized cost of $14 million
and $306 million, respectively, to joint ventures in anticipation of subsequent foreclosure or deed-in-lieu of foreclosure transactions.
During the years ended December 31, 2023 and 2022, the joint ventures completed foreclosure or deed-in-lieu of foreclosure transactions
on loans with an amortized cost of $35 million and $285 million, respectively. During the year ended December 31, 2023, no gains
or losses were recognized on foreclosures or deed-in-lieu of foreclosures within joint ventures as the estimated fair value of the real
estate collateralizing the foreclosures or deed-in-lieu of foreclosures approximated amortized cost. The real estate collateralizing the
2022 foreclosures or deed-in-lieu of foreclosures had an estimated fair value in excess of amortized cost. Therefore, during the year
ended December 31, 2022, the Company recognized its pro rata share of $19 million within net investment gains (losses) upon consummation
of the foreclosures or deed-in-lieu of foreclosures. See “— Real Estate and Real Estate Joint Ventures” for the carrying
value of wholly-owned real estate acquired through foreclosure.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Rollforward
of Allowance for Credit Loss for Mortgage Loans by Portfolio Segment
The
rollforward of ACL for mortgage loans, by portfolio segment, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
Commercial |
|
Agricultural |
|
Residential |
|
Total |
|
Commercial |
|
Agricultural |
|
Residential |
|
Total |
|
Commercial |
|
Agricultural |
|
Residential |
|
Total |
|
(In
millions) |
Balance
at January 1, |
$ |
174 |
|
|
$ |
105 |
|
|
$ |
169 |
|
|
$ |
448 |
|
|
$ |
260 |
|
|
$ |
79 |
|
|
$ |
197 |
|
|
$ |
536 |
|
|
$ |
199 |
|
|
$ |
97 |
|
|
$ |
221 |
|
|
$ |
517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
(release) |
50 |
|
|
83 |
|
|
(22) |
|
|
111 |
|
|
(3) |
|
|
47 |
|
|
(20) |
|
|
24 |
|
|
61 |
|
|
6 |
|
|
(25) |
|
|
42 |
|
Initial
credit losses on PCD loans (1) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
3 |
|
Charge-offs,
net of recoveries |
(14) |
|
|
(36) |
|
|
— |
|
|
(50) |
|
|
(83) |
|
|
(21) |
|
|
(8) |
|
|
(112) |
|
|
— |
|
|
(24) |
|
|
(2) |
|
|
(26) |
|
Balance
at December 31, |
$ |
210 |
|
|
$ |
152 |
|
|
$ |
147 |
|
|
$ |
509 |
|
|
$ |
174 |
|
|
$ |
105 |
|
|
$ |
169 |
|
|
$ |
448 |
|
|
$ |
260 |
|
|
$ |
79 |
|
|
$ |
197 |
|
|
$ |
536 |
|
__________________
(1)Represents
the initial credit losses on purchased mortgage loans accounted for as PCD.
Allowance
for Credit Loss Methodology
The
Company records an allowance for expected lifetime credit loss in earnings within net investment gains (losses) in an amount that represents
the portion of the amortized cost basis of mortgage loans that the Company does not expect to collect, resulting in mortgage loans being
presented at the net amount expected to be collected. In determining the Company’s ACL, management applies significant judgment
to estimate expected lifetime credit loss, including: (i) pooling mortgage loans that share similar risk characteristics, (ii) considering
expected lifetime credit loss over the contractual term of its mortgage loans adjusted for expected prepayments and any extensions, and
(iii) considering past events and current and forecasted economic conditions. Each of the Company’s commercial, agricultural and
residential mortgage loan portfolio segments are evaluated separately. The ACL is calculated for each mortgage loan portfolio segment
based on inputs unique to each loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar
risk characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of ACL. On an ongoing basis,
mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent
mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable),
are evaluated individually for credit loss. The ACL for loans evaluated individually are established using the same methodologies for
all three portfolio segments. For example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the
estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change
in the estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in
the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains (losses).
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Commercial
and Agricultural Mortgage Loan Portfolio Segments
Within
each loan portfolio segment, commercial and agricultural loans are pooled by internal risk rating. Estimated lifetime loss rates, which
vary by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a quarterly basis
to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which can change over time. The
estimated lifetime loss rates are based on several loan portfolio segment-specific factors, including (i) the Company’s experience
with defaults and loss severity, (ii) expected default and loss severity over the forecast period, (iii) current and forecasted economic
conditions including growth, inflation, interest rates and unemployment levels, (iv) loan specific characteristics including loan-to-value
(“LTV”) ratios, and (v) internal risk ratings. These evaluations are revised as conditions change and new information becomes
available. The Company uses its several decades of historical default and loss severity experience which capture multiple economic cycles.
The Company uses a forecast of economic assumptions for a two-year period for most of its commercial and agricultural mortgage loans,
while a one-year period is used for loans originated in certain markets. After the applicable forecast period, the Company reverts to
its historical loss experience using a straight-line basis over two years. For evaluations of commercial mortgage loans, in addition to
historical experience, management considers factors that include the impact of a rapid change to the economy, which may not be reflected
in the loan portfolio, recent loss and recovery trend experience as compared to historical loss and recovery experience, and loan specific
characteristics including debt service coverage ratios (“DSCR”). In estimating expected lifetime credit loss over the term
of its commercial mortgage loans, the Company adjusts for expected prepayment and extension experience during the forecast period using
historical prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e., floating
rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical prepayment experience.
For evaluations of agricultural mortgage loans, in addition to historical experience, management considers factors that include increased
stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. In estimating
expected lifetime credit loss over the term of its agricultural mortgage loans, the Company’s experience is much less sensitive
to the position in the economic cycle and by loan profile; accordingly, historical prepayment experience is used, while extension terms
are not prevalent with the Company’s agricultural mortgage loans.
Commercial
mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an analysis of the property financial statements
and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV
ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified
as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios and lower DSCR. Agricultural mortgage loans are
reviewed on an ongoing basis, which review includes, but is not limited to, property inspections, market analysis, estimated valuations
of the underlying collateral, LTV ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The
monitoring process for agricultural mortgage loans also focuses on higher risk loans.
For
commercial mortgage loans, the primary credit quality indicator is the DSCR, which compares a property’s net operating income to
amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR, the higher the risk of experiencing
a credit loss. The Company also reviews the LTV ratio of its commercial mortgage loan portfolio. LTV ratios compare the unpaid principal
balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the LTV ratio, the higher the risk
of experiencing a credit loss. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio
is routinely updated for all but the lowest risk loans as part of the Company’s ongoing review of its commercial mortgage loan portfolio.
For
agricultural mortgage loans, the Company’s primary credit quality indicator is the LTV ratio. The values utilized in calculating
this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio and are routinely updated.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
After
commercial and agricultural mortgage loans are approved, the Company makes commitments to lend and, typically, borrowers draw down on
some or all of the commitments. The timing of mortgage loan funding is based on the commitment expiration dates. A liability for credit
loss for unfunded commercial and agricultural mortgage loan commitments that is not unconditionally cancellable is recognized in earnings
and is reported within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above and the
amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the commitment is funded
or expires, the liability is adjusted accordingly.
Residential
Mortgage Loan Portfolio Segment
The
Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing residential mortgage loans,
including both performing loans purchased within 12 months of origination and reperforming loans purchased after they have been performing
for at least 12 months post-modification. Residential mortgage loans are pooled by loan type (i.e., new origination and reperforming)
and pooled by similar risk profiles (including consumer credit score and LTV ratios). Estimated lifetime loss rates, which vary by loan
type and risk profile, are applied to the amortized cost of each loan excluding accrued investment income on a quarterly basis to develop
the ACL. The estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results
over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic conditions including
growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics including consumer credit scores,
LTV ratios, payment history and home prices. These evaluations are revised as conditions change and new information becomes available.
The Company uses industry historical experience which captures multiple economic cycles as the Company has purchased most of its residential
mortgage loans in the last five years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential
mortgage loans. After the applicable forecast period, the Company reverts to industry historical loss experience using a straight-line
basis over one year.
For
residential mortgage loans, the Company’s primary credit quality indicator is whether the loan is performing or nonperforming. The
Company generally defines nonperforming residential mortgage loans as those that are 60 or more days past due and/or in nonaccrual status
which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss.
Modifications
to Borrowers Experiencing Financial Difficulty
The
Company may modify mortgage loans to borrowers. Each mortgage loan modification is evaluated to determine whether the borrower was experiencing
financial difficulties. Disclosed below are those modifications, in materially impacted segments, where the borrower was determined to
be experiencing financial difficulties and the mortgage loans were modified by any of the following means: principal forgiveness, interest
rate reduction, other-than-insignificant payment delay or term extension. The amount, timing and extent of modifications granted are considered
in determining any ACL recorded. Mortgage loans are summarized as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
Maturity
Extension |
|
|
|
|
|
|
|
Weighted
Average Life Increase |
|
|
|
%
of Total BV |
|
Amortized
Cost |
|
|
|
|
|
|
|
Affected
Loans (in Years) |
|
|
|
|
|
(Dollars
in millions) |
Commercial |
$ |
419 |
|
|
|
|
|
|
|
|
Less
than one year |
|
|
|
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2023, the Company did not have a significant amount of mortgage loans that were modified to borrowers
experiencing financial difficulty that are not considered current.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Credit
Quality of Mortgage Loans by Portfolio Segment
The
amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality Indicator |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior |
|
Revolving Loans |
|
Total |
|
%
of Total |
|
|
(Dollars in millions) |
LTV
ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
than 65% |
|
$ |
1,609 |
|
|
$ |
1,228 |
|
|
$ |
1,795 |
|
|
$ |
989 |
|
|
$ |
1,980 |
|
|
$ |
8,873 |
|
|
$ |
2,698 |
|
|
$ |
19,172 |
|
|
51.7 |
% |
65%
to 75% |
|
226 |
|
|
3,030 |
|
|
1,416 |
|
|
937 |
|
|
1,024 |
|
|
3,549 |
|
|
— |
|
|
10,182 |
|
|
27.4 |
|
76%
to 80% |
|
— |
|
|
359 |
|
|
227 |
|
|
111 |
|
|
843 |
|
|
996 |
|
|
— |
|
|
2,536 |
|
|
6.8 |
|
Greater
than 80% |
|
31 |
|
|
587 |
|
|
723 |
|
|
611 |
|
|
659 |
|
|
2,628 |
|
|
— |
|
|
5,239 |
|
|
14.1 |
|
Total |
|
$ |
1,866 |
|
|
$ |
5,204 |
|
|
$ |
4,161 |
|
|
$ |
2,648 |
|
|
$ |
4,506 |
|
|
$ |
16,046 |
|
|
$ |
2,698 |
|
|
$ |
37,129 |
|
|
100.0 |
% |
DSCR: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
>
1.20x |
|
$ |
1,309 |
|
|
$ |
4,221 |
|
|
$ |
3,777 |
|
|
$ |
2,375 |
|
|
$ |
3,963 |
|
|
$ |
13,609 |
|
|
$ |
2,698 |
|
|
$ |
31,952 |
|
|
86.1 |
% |
1.00x
- 1.20x |
|
459 |
|
|
393 |
|
|
368 |
|
|
— |
|
|
331 |
|
|
1,427 |
|
|
— |
|
|
2,978 |
|
|
8.0 |
|
<1.00x |
|
98 |
|
|
590 |
|
|
16 |
|
|
273 |
|
|
212 |
|
|
1,010 |
|
|
— |
|
|
2,199 |
|
|
5.9 |
|
Total |
|
$ |
1,866 |
|
|
$ |
5,204 |
|
|
$ |
4,161 |
|
|
$ |
2,648 |
|
|
$ |
4,506 |
|
|
$ |
16,046 |
|
|
$ |
2,698 |
|
|
$ |
37,129 |
|
|
100.0 |
% |
The
amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality Indicator |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior |
|
Revolving Loans |
|
Total |
|
%
of Total |
|
|
(Dollars in millions) |
LTV
ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
than 65% |
|
$ |
772 |
|
|
$ |
1,985 |
|
|
$ |
1,474 |
|
|
$ |
1,977 |
|
|
$ |
1,512 |
|
|
$ |
5,596 |
|
|
$ |
1,293 |
|
|
$ |
14,609 |
|
|
92.3 |
% |
65%
to 75% |
|
22 |
|
|
82 |
|
|
201 |
|
|
126 |
|
|
24 |
|
|
489 |
|
|
118 |
|
|
1,062 |
|
|
6.7 |
|
76%
to 80% |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Greater
than 80% |
|
5 |
|
|
— |
|
|
— |
|
|
5 |
|
|
133 |
|
|
12 |
|
|
5 |
|
|
160 |
|
|
1.0 |
|
Total |
|
$ |
799 |
|
|
$ |
2,067 |
|
|
$ |
1,675 |
|
|
$ |
2,108 |
|
|
$ |
1,669 |
|
|
$ |
6,097 |
|
|
$ |
1,416 |
|
|
$ |
15,831 |
|
|
100.0 |
% |
The
amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at December 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality Indicator |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior |
|
Revolving Loans |
|
Total |
|
%
of Total |
|
|
(Dollars
in millions) |
Performance
indicators: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing |
|
$ |
243 |
|
|
$ |
1,855 |
|
|
$ |
880 |
|
|
$ |
151 |
|
|
$ |
565 |
|
|
$ |
6,096 |
|
|
$ |
— |
|
|
$ |
9,790 |
|
|
96.6 |
% |
Nonperforming
(1) |
|
1 |
|
|
32 |
|
|
15 |
|
|
8 |
|
|
32 |
|
|
255 |
|
|
— |
|
|
343 |
|
|
3.4 |
|
Total |
|
$ |
244 |
|
|
$ |
1,887 |
|
|
$ |
895 |
|
|
$ |
159 |
|
|
$ |
597 |
|
|
$ |
6,351 |
|
|
$ |
— |
|
|
$ |
10,133 |
|
|
100.0 |
% |
__________________
(1)Includes
residential mortgage loans in process of foreclosure of $134 million and $143 million at December 31, 2023 and 2022, respectively.
LTV
ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. The amortized cost of
commercial and agricultural mortgage loans with an LTV ratio in excess of 100% was $1.0 billion, or 2%, of total commercial and agricultural
mortgage loans at December 31, 2023.
Past
Due and Nonaccrual Mortgage Loans
The
Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both December
31, 2023 and 2022. The Company defines delinquency consistent with industry practice,
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
when
mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual mortgage loans
at amortized cost, prior to ACL by portfolio segment, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
Due |
|
Past
Due and Still Accruing Interest |
|
Nonaccrual |
Portfolio
Segment |
|
December
31, 2023 |
|
December
31, 2022 |
|
December
31, 2023 |
|
December
31, 2022 |
|
December
31, 2023 |
|
December
31, 2022 |
|
|
(In
millions) |
Commercial |
|
$ |
19 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
303 |
|
|
$ |
158 |
|
Agricultural |
|
40 |
|
|
120 |
|
|
— |
|
|
18 |
|
|
206 |
|
|
131 |
|
Residential |
|
343 |
|
|
428 |
|
|
— |
|
|
— |
|
|
343 |
|
|
429 |
|
Total |
|
$ |
402 |
|
|
$ |
548 |
|
|
$ |
— |
|
|
$ |
18 |
|
|
$ |
852 |
|
|
$ |
718 |
|
Real
Estate and Real Estate Joint Ventures
The
Company’s real estate investment portfolio is diversified by property type, geography and income stream, including income from operating
leases, operating income and equity in earnings from equity method real estate joint ventures. Real estate investments, by income type,
as well as income earned, were as follows at and for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
Income
Type |
|
Carrying
Value |
|
Income |
|
|
(In
millions) |
Wholly-owned
real estate: |
|
|
|
|
|
|
|
|
|
|
Leased
real estate |
|
$ |
1,594 |
|
|
$ |
1,618 |
|
|
$ |
171 |
|
|
$ |
198 |
|
|
$ |
209 |
|
Other
real estate |
|
506 |
|
|
487 |
|
|
287 |
|
|
243 |
|
|
186 |
|
Real
estate joint ventures |
|
6,590 |
|
|
6,311 |
|
|
(75) |
|
|
308 |
|
|
180 |
|
Total
real estate and real estate joint ventures |
|
$ |
8,690 |
|
|
$ |
8,416 |
|
|
$ |
383 |
|
|
$ |
749 |
|
|
$ |
575 |
|
The
carrying value of wholly-owned real estate acquired through foreclosure was $190 million and $179 million at December 31, 2023
and 2022, respectively. Depreciation expense on real estate investments was $81 million, $86 million and $86 million for
the years ended December 31, 2023, 2022 and 2021, respectively. Real estate investments were net of accumulated depreciation of $638 million
and $566 million at December 31, 2023 and 2022, respectively.
Leases
Leased
Real Estate Investments - Operating Leases
The
Company, as lessor, leases investment real estate, principally commercial real estate for office, apartment and retail use, through a
variety of operating lease arrangements, which typically include tenant reimbursement for property operating costs and options to renew
or extend the lease. In some circumstances, leases may include an option for the lessee to purchase the property. In addition, certain
leases of retail space may stipulate that a portion of the income earned is contingent upon the level of the tenants’ revenues.
The Company has elected a practical expedient of not separating non-lease components related to reimbursement of property operating costs
from associated lease components. These property operating costs have the same timing and pattern of transfer as the related lease component,
because they are incurred over the same period of time as the operating lease. Therefore, the combined component is accounted for
as a single operating lease. Risk is managed through lessee credit analysis, property type diversification, and geographic diversification.
Leased real estate investments and income earned, by property type, were as follows at and for the periods indicated:
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
Years
Ended December 31, |
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
|
|
Property
Type |
|
Carrying
Value |
|
Income |
|
|
|
|
(In
millions) |
|
|
Leased
real estate investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Office |
|
$ |
848 |
|
|
$ |
797 |
|
|
$ |
114 |
|
|
$ |
74 |
|
|
$ |
73 |
|
|
|
Apartment |
|
324 |
|
|
328 |
|
|
23 |
|
|
34 |
|
|
40 |
|
|
|
Retail |
|
280 |
|
|
298 |
|
|
23 |
|
|
35 |
|
|
44 |
|
|
|
Industrial |
|
119 |
|
|
171 |
|
|
11 |
|
|
55 |
|
|
52 |
|
|
|
Land |
|
23 |
|
|
24 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
Total
leased real estate investments |
|
$ |
1,594 |
|
|
$ |
1,618 |
|
|
$ |
171 |
|
|
$ |
198 |
|
|
$ |
209 |
|
|
|
Future
contractual receipts under operating leases at December 31, 2023 were $99 million in 2024, $101 million in 2025, $93 million
in 2026, $84 million in 2027, $71 million in 2028, $223 million thereafter and, in total, were $671 million.
Other
Invested Assets
Other
invested assets is comprised primarily of freestanding derivatives with positive estimated fair values (see Note 11), funds withheld
(see Note 1), annuities funding structured settlement claims (see Note 1), affiliated investments (see “— Related Party Investment
Transactions”), tax credit and renewable energy partnerships (see Note 1), FVO securities and equity securities (see “— FVO
Securities and Equity Securities”), leveraged and direct financing leases (see Note 1), FHLBNY common stock (see “— Invested
Assets on Deposit and Pledged as Collateral”), an operating joint venture (see Note 1) and COLI (see Note 1).
Tax
Credit Partnerships
The
carrying value of tax credit partnerships was $518
million
and $749 million at December 31, 2023 and 2022, respectively. Losses from tax credit partnerships included within net investment
income were $145 million,
$175 million and $197 million for the years ended December 31, 2023, 2022 and 2021, respectively.
FVO
Securities and Equity Securities
The
following table presents FVO securities and equity securities by security type. Common stock includes common stock and certain mutual
funds. FVO securities includes fixed maturity and equity securities to support asset and liability management strategies for certain insurance
products and investments in certain separate accounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
2023 |
|
2022 |
|
|
Cost |
|
Net
Unrealized Gains (Losses) (1) |
|
Estimated
Fair Value |
|
Cost |
|
Net
Unrealized Gains (Losses) (1) |
|
Estimated
Fair Value |
Security
Type |
|
|
|
|
|
|
|
|
(In
millions) |
FVO
securities |
|
$ |
379 |
|
|
$ |
367 |
|
|
$ |
746 |
|
|
$ |
673 |
|
|
$ |
171 |
|
|
$ |
844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities |
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock |
|
$ |
118 |
|
|
$ |
45 |
|
|
$ |
163 |
|
|
$ |
119 |
|
|
$ |
47 |
|
|
$ |
166 |
|
Non-redeemable
preferred stock |
|
177 |
|
|
7 |
|
|
184 |
|
|
77 |
|
|
(3) |
|
|
74 |
|
Total
equity securities |
|
$ |
295 |
|
|
$ |
52 |
|
|
$ |
347 |
|
|
$ |
196 |
|
|
$ |
44 |
|
|
$ |
240 |
|
__________________
(1)
Represents cumulative changes in estimated fair value, recognized in earnings, and not in OCI.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Cash
Equivalents
Cash
equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time
of purchase, was $3.5 billion and $6.6 billion, principally at estimated fair value, at December 31, 2023 and 2022, respectively.
Concentrations
of Credit Risk
There
were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its
agencies, at both December 31, 2023 and 2022.
Securities
Lending Transactions and Repurchase Agreements
Securities,
Collateral and Reinvestment Portfolio
A
summary of these transactions and agreements accounted for as secured borrowings were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Securities
(1) |
|
|
|
|
|
|
|
Securities
(1) |
|
|
|
|
Agreement
Type |
|
|
|
Estimated
Fair Value |
|
Cash
Collateral Received from Counterparties (2) |
|
Reinvestment
Portfolio at Estimated Fair Value |
|
|
|
Estimated
Fair Value |
|
Cash
Collateral Received from Counterparties (2) |
|
Reinvestment
Portfolio at Estimated Fair Value |
|
|
|
|
|
|
|
|
(In
millions) |
|
|
|
|
|
|
Securities
lending |
|
|
|
$ |
5,528 |
|
|
$ |
5,684 |
|
|
$ |
5,565 |
|
|
|
|
$ |
6,601 |
|
|
$ |
6,773 |
|
|
$ |
6,625 |
|
Repurchase
agreements |
|
|
|
$ |
3,029 |
|
|
$ |
2,975 |
|
|
$ |
2,913 |
|
|
|
|
$ |
3,176 |
|
|
$ |
3,125 |
|
|
$ |
3,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
(1)These
securities were included within fixed maturity securities AFS, short-term investments and cash equivalents at December 31, 2023 and within
fixed maturity securities AFS and short-term investments at December 31, 2022.
(2)The
liability for cash collateral is included within payables for collateral under securities loaned and other transactions.
Contractual
Maturities
Contractual
maturities of these transactions and agreements accounted for as secured borrowings were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Remaining
Maturities |
|
|
|
|
|
Remaining
Maturities |
|
|
Security
Type |
|
Open (1) |
|
1 Month or
Less |
|
Over
1 Month to 6 Months |
|
Over
6 Months to 1 Year |
|
Total |
|
|
|
Open (1) |
|
1
Month or Less |
|
Over
1 Month to 6 Months |
|
Over
6 Months to 1 Year |
|
Total |
|
|
|
(In millions) |
Cash
collateral liability by security type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
lending: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
government and agency |
|
$ |
943 |
|
|
$ |
2,523 |
|
|
$ |
2,218 |
|
|
$ |
— |
|
|
$ |
5,684 |
|
|
|
|
$ |
935 |
|
|
$ |
4,233 |
|
|
$ |
1,605 |
|
|
$ |
— |
|
|
$ |
6,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase
agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
government and agency |
|
$ |
— |
|
|
$ |
2,975 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,975 |
|
|
|
|
$ |
— |
|
|
$ |
3,125 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
________________
(1)The
related security could be returned to the Company on the next business day, which would require the Company to immediately return the
cash collateral.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
If
the Company is required to return significant amounts of cash collateral on short notice and is forced to sell investments to meet the
return obligation, it may have difficulty selling such collateral that is invested in a timely manner, be forced to sell investments in
a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both.
The
securities lending and repurchase agreements reinvestment portfolios consist principally of high quality, liquid, publicly-traded fixed
maturity securities AFS, short-term investments, cash equivalents or cash. If the securities in the reinvestment portfolio become less
liquid, liquidity resources within the general account are available to meet any potential cash demands when securities are put back by
the counterparty.
Invested
Assets on Deposit and Pledged as Collateral
Invested
assets on deposit and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans,
which are presented at carrying value and were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
(In
millions) |
Invested
assets on deposit (regulatory deposits) |
$ |
105 |
|
|
$ |
98 |
|
|
|
|
|
Invested
assets pledged as collateral (1) |
21,177 |
|
|
20,612 |
|
Total
invested assets on deposit and pledged as collateral |
$ |
21,282 |
|
|
$ |
20,710 |
|
__________________
(1)The
Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4),
derivative transactions (see Note 11) and secured debt (see Note 14).
See
“— Securities Lending Transactions and Repurchase Agreements” for information regarding securities supporting securities
lending transactions and repurchase agreements and Note 9 for information regarding investments designated to the closed block. In
addition, the Company’s investment in FHLBNY common stock, included within other invested assets, which is considered restricted
until redeemed by the issuer, was $637 million and $659 million, at redemption value, at December 31, 2023 and 2022,
respectively.
Collectively
Significant Equity Method Investments
The
Company held equity method investments
of $16.0 billion at December 31, 2023, comprised primarily of other limited partnership interests (private equity funds and hedge
funds), real estate joint ventures (including real estate funds), tax credit and renewable energy partnerships and an operating joint
venture. The Company’s maximum exposure to loss related to these equity method investments was limited to the carrying value of
these investments plus $3.0 billion of unfunded commitments
at December 31, 2023.
As
described in Note 1, the Company generally recognizes its share of earnings in its equity method investments within net investment
income using a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s
reporting period differs from the Company’s reporting period. Aggregate net investment income from these equity method investments
exceeded 10% of the Company’s consolidated pre-tax income (loss) for two of the three most recent annual periods: 2022 and 2021.
The
following aggregated summarized financial data reflects the latest available financial information and does not represent the Company’s
proportionate share of the assets, liabilities, or earnings of such entities. Aggregate total assets of these entities totaled
$991.6 billion and $1.0 trillion at December 31, 2023 and 2022, respectively. Aggregate total liabilities of these entities totaled
$114.1 billion and $119.8 billion at December 31, 2023 and 2022, respectively. Aggregate net income (loss) of these entities
totaled $24.7 billion, ($8.3) billion and $218.6 billion for the years ended December 31, 2023, 2022 and 2021,
respectively. Aggregate net income (loss)
from the underlying entities in which the Company invests is primarily comprised of investment income, including recurring investment
income (loss) and realized and unrealized investment gains (losses).
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Variable
Interest Entities
The
Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant
activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator
of the entity. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and
obligations associated with each party’s relationship with or involvement in the entity.
Consolidated
VIEs
Creditors
or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company,
as the Company’s obligation to the VIEs is limited to the amount of its committed investment.
The
following table presents the total assets and total liabilities relating to investment related VIEs for which the Company has concluded
that it is the primary beneficiary and which are consolidated at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Asset
Type |
|
Total
Assets |
|
Total
Liabilities |
|
Total
Assets |
|
Total
Liabilities |
|
|
(In
millions) |
Real
estate joint ventures |
|
$ |
1,427 |
|
|
$ |
— |
|
|
$ |
1,357 |
|
|
$ |
— |
|
Mortgage
loan joint ventures |
|
171 |
|
|
— |
|
|
147 |
|
|
— |
|
Renewable
energy partnership (primarily other invested assets) |
|
65 |
|
|
— |
|
|
76 |
|
|
— |
|
Investment
funds (primarily other invested assets) |
|
61 |
|
|
— |
|
|
98 |
|
|
— |
|
Total |
|
$ |
1,724 |
|
|
$ |
— |
|
|
$ |
1,678 |
|
|
$ |
— |
|
Unconsolidated
VIEs
The
carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the
primary beneficiary and which have not been consolidated were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Asset
Type |
|
Carrying
Amount |
|
Maximum
Exposure to Loss (1) |
|
Carrying
Amount |
|
Maximum
Exposure to Loss (1) |
|
|
(In
millions) |
Fixed
maturity securities AFS (2) |
|
$ |
35,370 |
|
|
$ |
35,370 |
|
|
$ |
35,813 |
|
|
$ |
35,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
limited partnership interests |
|
7,319 |
|
|
9,452 |
|
|
7,299 |
|
|
9,716 |
|
Other
invested assets |
|
1,318 |
|
|
1,405 |
|
|
1,342 |
|
|
1,509 |
|
Real
estate joint ventures |
|
104 |
|
|
267 |
|
|
86 |
|
|
88 |
|
Total |
|
$ |
44,111 |
|
|
$ |
46,494 |
|
|
$ |
44,540 |
|
|
$ |
47,126 |
|
__________________
(1)The
maximum exposure to loss relating to fixed maturity securities AFS and FVO securities is equal to their carrying amounts or the carrying
amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests (“OLPI”) and real
estate joint ventures (“REJV”) is equal to the carrying amounts plus any unfunded commitments. For certain of its investments
in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties.
For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax
credits guaranteed by third parties. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
(2)For
variable interests in Structured Products included within fixed maturity securities AFS, the Company’s involvement is limited to
that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.
As
described in Note 19, the Company makes commitments to fund partnership investments in the normal course of business. Excluding
these commitments, the Company did not provide financial or other support to investees designated as VIEs for each of the years ended
December 31, 2023, 2022 and 2021.
Net
Investment Income
The
composition of net investment income by asset type was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
Asset
Type |
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
|
|
|
|
|
|
|
Fixed
maturity securities AFS |
|
$ |
7,492 |
|
|
$ |
6,458 |
|
|
$ |
6,101 |
|
Mortgage
loans |
|
3,302 |
|
|
2,615 |
|
|
2,661 |
|
Policy
loans |
|
294 |
|
|
288 |
|
|
292 |
|
Real
estate and REJV |
|
383 |
|
|
749 |
|
|
575 |
|
OLPI |
|
191 |
|
|
433 |
|
|
3,161 |
|
Cash,
cash equivalents and short-term investments |
|
382 |
|
|
147 |
|
|
11 |
|
FVO
securities |
|
147 |
|
|
(143) |
|
|
102 |
|
Operating
joint venture |
|
18 |
|
|
34 |
|
|
65 |
|
Equity
securities |
|
7 |
|
|
11 |
|
|
16 |
|
Other |
|
297 |
|
|
410 |
|
|
142 |
|
Subtotal
investment income |
|
12,513 |
|
|
11,002 |
|
|
13,126 |
|
Less:
Investment expenses |
|
1,307 |
|
|
880 |
|
|
640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
$ |
11,206 |
|
|
$ |
10,122 |
|
|
$ |
12,486 |
|
|
|
|
|
|
|
|
Net
Investment Income (“NII”) Information |
|
|
|
|
|
|
Net
realized and unrealized gains (losses) recognized in NII: |
|
|
|
|
|
|
Net
realized gains (losses) from sales and disposals (primarily Residential - FVO mortgage loans and FVO securities) |
|
$ |
— |
|
|
$ |
(13) |
|
|
$ |
22 |
|
Net
unrealized gains (losses) from changes in estimated fair value (primarily FVO securities and REJV) |
|
216 |
|
|
(33) |
|
|
168 |
|
Net
realized and unrealized gains (losses) recognized in NII |
|
$ |
216 |
|
|
$ |
(46) |
|
|
$ |
190 |
|
|
|
|
|
|
|
|
Changes
in estimated fair value subsequent to purchase of FVO securities still held at the end of the respective periods and recognized in NII: |
|
$ |
140 |
|
|
$ |
(145) |
|
|
$ |
77 |
|
|
|
|
|
|
|
|
Equity
method investments NII (primarily REJV, OLPI, tax credit and renewable energy partnerships and an operating joint venture) |
|
$ |
51 |
|
|
$ |
625 |
|
|
$ |
3,235 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Net
Investment Gains (Losses)
Net
Investment Gains (Losses) by Asset Type and Transaction Type
The
composition of net investment gains (losses) by asset type and transaction type was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
Asset
Type |
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
maturity securities AFS (1) |
|
$ |
(1,284) |
|
|
$ |
(851) |
|
|
$ |
(49) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities |
|
5 |
|
|
6 |
|
|
40 |
|
Mortgage
loans (1) |
|
(174) |
|
|
(42) |
|
|
(34) |
|
Real
estate and REJV (excluding changes in estimated fair value) |
|
102 |
|
|
561 |
|
|
568 |
|
OLPI
(excluding changes in estimated fair value) |
|
9 |
|
|
4 |
|
|
(15) |
|
Other
gains (losses) |
|
18 |
|
|
72 |
|
|
109 |
|
Subtotal |
|
(1,324) |
|
|
(250) |
|
|
619 |
|
Change
in estimated fair value of OLPI and REJV |
|
(6) |
|
|
(14) |
|
|
45 |
|
Non-investment
portfolio gains (losses) |
|
(45) |
|
|
137 |
|
|
(12) |
|
|
|
|
|
|
|
|
Subtotal |
|
(51) |
|
|
123 |
|
|
33 |
|
Net
investment gains (losses) |
|
$ |
(1,375) |
|
|
$ |
(127) |
|
|
$ |
652 |
|
|
|
|
|
|
|
|
Transaction
Type |
|
|
|
|
|
|
Realized
gains (losses) on investments sold or disposed |
|
$ |
(193) |
|
|
$ |
(146) |
|
|
$ |
579 |
|
Impairment
(losses) (1) |
|
(994) |
|
|
(38) |
|
|
(24) |
|
Recognized
gains (losses): |
|
|
|
|
|
|
Change
in allowance for credit loss recognized in earnings |
|
(144) |
|
|
(77) |
|
|
(41) |
|
Unrealized
net gains (losses) recognized in earnings |
|
1 |
|
|
(3) |
|
|
150 |
|
Total
recognized gains (losses) |
|
(1,330) |
|
|
(264) |
|
|
664 |
|
Non-investment
portfolio gains (losses) |
|
(45) |
|
|
137 |
|
|
(12) |
|
Net
investment gains (losses) |
|
$ |
(1,375) |
|
|
$ |
(127) |
|
|
$ |
652 |
|
|
|
|
|
|
|
|
Net
Investment Gains (Losses) (“NIGL”) Information |
|
|
|
|
|
|
Changes
in estimated fair value subsequent to purchase of equity securities still held at the end of the respective periods and recognized in
NIGL |
|
$ |
7 |
|
|
$ |
8 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
Other
gains (losses) include: |
|
|
|
|
|
|
Gains
(losses) on disposed investments which were previously in a qualified cash flow hedge relationship |
|
$ |
(10) |
|
|
$ |
48 |
|
|
$ |
91 |
|
Gains
(losses) on leveraged leases and renewable energy partnerships |
|
$ |
26 |
|
|
$ |
33 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
Foreign
currency gains (losses) |
|
$ |
(61) |
|
|
$ |
97 |
|
|
$ |
62 |
|
|
|
|
|
|
|
|
Net
Realized Investment Gains (Losses) From Sales and Disposals of Investments: |
|
|
|
|
|
|
Recognized
in NIGL |
|
$ |
(193) |
|
|
$ |
(146) |
|
|
$ |
579 |
|
Recognized
in NII |
|
— |
|
|
(13) |
|
|
22 |
|
Net
realized investment gains (losses) from sales and disposals of investments |
|
$ |
(193) |
|
|
$ |
(159) |
|
|
$ |
601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
(1)Includes
a net loss of $895 million during the year ended December 31, 2023 for investments disposed of in connection with a reinsurance transaction.
The net loss was comprised of ($946) million of impairments and $82 million of realized gains on disposal for fixed maturity
securities AFS, ($29) million of adjustments to mortgage loans, reflected as impairments, (calculated at lower of amortized cost
or estimated fair value) and ($2) million of realized losses on disposal for mortgage loans. See Note 8 for further information on
this reinsurance transaction.
Fixed
Maturity Securities AFS and Equity Securities – Composition of Net Investment Gains (Losses)
The
composition of net investment gains (losses) for these securities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
Fixed
Maturity Securities AFS |
|
2023 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions) |
Proceeds |
|
$ |
19,803 |
|
|
$ |
42,903 |
|
|
$ |
27,587 |
|
|
|
|
|
|
|
Gross
investment gains |
|
$ |
354 |
|
|
$ |
469 |
|
|
$ |
232 |
|
|
|
|
|
|
|
Gross
investment (losses) |
|
(655) |
|
|
(1,221) |
|
|
(256) |
|
|
|
|
|
|
|
Realized
gains (losses) on sales and disposals |
|
(301) |
|
|
(752) |
|
|
(24) |
|
|
|
|
|
|
|
Net
credit loss (provision) release (change in ACL recognized in earnings) |
|
(18) |
|
|
(61) |
|
|
(1) |
|
|
|
|
|
|
|
Impairment
(losses) |
|
(965) |
|
|
(38) |
|
|
(24) |
|
|
|
|
|
|
|
Net
credit loss (provision) release and impairment (losses) |
|
(983) |
|
|
(99) |
|
|
(25) |
|
|
|
|
|
|
|
Net
investment gains (losses) |
|
$ |
(1,284) |
|
|
$ |
(851) |
|
|
$ |
(49) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Realized
gains (losses) on sales and disposals |
|
$ |
(2) |
|
|
$ |
(6) |
|
|
$ |
(61) |
|
|
|
|
|
|
|
Unrealized
net gains (losses) recognized in earnings |
|
7 |
|
|
12 |
|
|
101 |
|
|
|
|
|
|
|
Net
investment gains (losses) |
|
$ |
5 |
|
|
$ |
6 |
|
|
$ |
40 |
|
|
|
|
|
|
|
Related
Party Investment Transactions
The
Company transfers invested assets primarily consisting of fixed maturity securities AFS, mortgage loans and real estate and real estate
joint ventures to and from affiliates. Invested assets transferred were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Estimated
fair value of invested assets transferred to affiliates |
|
$ |
718 |
|
|
$ |
472 |
|
|
$ |
795 |
|
Amortized
cost of invested assets transferred to affiliates |
|
$ |
756 |
|
|
$ |
432 |
|
|
$ |
776 |
|
Net
investment gains (losses) recognized on transfers |
|
$ |
(38) |
|
|
$ |
40 |
|
|
$ |
19 |
|
|
|
|
|
|
|
|
Estimated
fair value of invested assets transferred from affiliates |
|
$ |
1,178 |
|
|
$ |
497 |
|
|
$ |
1,346 |
|
Estimated
fair value of derivative liabilities transferred from affiliates |
|
$ |
— |
|
|
$ |
64 |
|
|
$ |
— |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
10.
Investments (continued)
Recurring
related party investments and related net investment income were as follows at and for the periods ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
Years
Ended December 31, |
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
Investment
Type/Balance Sheet Category |
|
Related
Party |
|
Carrying
Value |
|
Net
Investment Income |
|
|
|
|
(In
millions) |
Affiliated
investments (1) |
|
MetLife,
Inc. |
|
$ |
1,130 |
|
|
$ |
1,207 |
|
|
$ |
20 |
|
|
$ |
16 |
|
|
$ |
31 |
|
Affiliated
investments (2) |
|
American
Life Insurance Company |
|
— |
|
|
100 |
|
|
1 |
|
|
1 |
|
|
2 |
|
Affiliated
investments (3) |
|
Metropolitan
General Insurance Company |
|
150 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other
invested assets |
|
|
|
$ |
1,280 |
|
|
$ |
1,307 |
|
|
$ |
21 |
|
|
$ |
17 |
|
|
$ |
33 |
|
________________
(1)Represents
an investment in affiliated senior unsecured notes which have maturity dates from July 2026 to December 2031 and bear interest, payable
semi-annually, at rates per annum ranging from 1.61% to 2.16%. In July 2023, ¥37.3 billion (the equivalent of $258 million)
of 1.60% affiliated senior unsecured notes matured and were refinanced with ¥37.3 billion 2.16% affiliated senior unsecured
notes due July 2030.
(2)Represents
an affiliated surplus note which was prepaid in June 2023. The surplus note had an original maturity date in June 2025 and bore interest,
payable semi-annually, at a rate per annum of 1.88%.
(3)Represents
an investment in affiliated preferred stock with a dividend yield of 7.50% that will be cumulative and payable annually in arrears. The
shares can be redeemed, at MetLife General Insurance Company’s option, after December 15, 2028.
The
Company incurred investment advisory charges from an affiliate of $301 million, $272 million and $292 million for the years
ended December 31, 2023, 2022, and 2021, respectively.
See
“— Variable Interest Entities” for information on investments in affiliated real estate joint ventures and affiliated
mortgage loan joint ventures.
See
Note 8 “— Related Party Reinsurance Transactions” for information about affiliated funds withheld.
11.
Derivatives
Accounting for Derivatives
See
Note 1 for a description of the Company’s accounting policies for derivatives and Note 12 for information about the fair
value hierarchy for derivatives.
Derivative
Strategies
The
Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate,
credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.
Derivatives
are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial
indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s
OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral
contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards,
futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically
replicate investment risks and returns which are not readily available in the cash markets.
Interest
Rate Derivatives
The
Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps,
interest rate total return swaps, caps, floors, swaptions, futures and forwards.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Interest
rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure
arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with
another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated
by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging
relationships.
The
Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise
unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. government
and agency, or other fixed maturity securities AFS. Structured interest rate swaps are included in interest rate swaps and are not designated
as hedging instruments.
Interest
rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between
the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional
amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms
of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the
counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest
rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes
interest rate total return swaps in nonqualifying hedging relationships.
The
Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates above a specified
level, and against interest rate exposure arising from mismatches between assets and liabilities, and interest rate floors primarily to
protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. In certain instances, the Company
locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes
interest rate caps and floors in nonqualifying hedging relationships.
In
exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts,
the value of which is determined by the different classes of interest rate securities, to post variation margin on a daily basis in an
amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements.
The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded
interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the
duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring,
to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to
hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded interest
rate futures in nonqualifying hedging relationships.
Swaptions
are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption
is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact
of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and
receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included
in interest rate options.
The
Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment
for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and nonqualifying hedging
relationships.
Synthetic
GICs are contracts that simulate the performance of traditional GICs through the use of financial instruments. The contractholder owns
the underlying assets, and the Company provides a guarantee (or “wrap”) on the participant funds for an annual risk charge.
The Company’s maximum exposure to loss on synthetic GICs is the notional amount, in the event the values of all of the underlying
assets were reduced to zero. The Company’s risk is substantially lower due to contractual provisions that limit the portfolio
to high quality assets, which are pre-approved and monitored for compliance, as well as the collection of risk charges. In addition,
the crediting rates reset periodically to amortize market value gains and losses over a period equal to the duration of the wrapped portfolio,
subject to a 0% floor. While plan participants may transact at book value, contractholder withdrawals may only occur immediately
at market value, or at book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Foreign
Currency Exchange Rate Derivatives
The
Company uses foreign currency exchange rate derivatives, including foreign currency swaps and foreign currency forwards, to reduce the
risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies.
In
a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between
one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount.
The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes
foreign currency swaps in fair value, cash flow and nonqualifying hedging relationships.
In
a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency
at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified
future date. The Company utilizes foreign currency forwards in nonqualifying hedging relationships.
Credit
Derivatives
The
Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit
default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit
event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities
of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty
equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to
pay debt obligations and involuntary restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention
for sovereign obligors. In each case, payout on a credit default swap is triggered only after the relevant third-party, Credit Derivatives
Determinations Committee determines that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging
relationships.
The
Company enters into written credit default swaps to synthetically create credit investments that are either more expensive to acquire
or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such
as U.S. government and agency, or other fixed maturity securities AFS. These credit default swaps are not designated as hedging instruments.
The
Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at
the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these
transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these
transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships.
Equity
Derivatives
The
Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance
swaps, exchange-traded equity futures and equity total return swaps.
Equity
index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the
Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the underlying equity index within
a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise
and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances,
the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through
the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.
Equity
variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the
Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity
volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
In
exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which
is determined by the different classes of equity securities, to post variation margin on a daily basis in an amount equal to the difference
in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters
into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures
are used primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes
exchange-traded equity futures in nonqualifying hedging relationships.
In
an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic
risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No
cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap.
The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return
swaps can be used as hedges or to synthetically create investments. The Company utilizes equity total return swaps in nonqualifying hedging
relationships.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Primary
Risks Managed by Derivatives
The
following table presents the primary underlying risk exposure, gross notional amount and estimated fair value of the Company’s derivatives,
excluding embedded derivatives, held at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary Underlying Risk Exposure |
|
December 31, |
|
2023 |
|
2022 |
|
|
|
Estimated Fair Value |
|
|
|
Estimated Fair Value |
|
Gross Notional Amount |
|
Assets |
|
Liabilities |
|
Gross Notional Amount |
|
Assets |
|
Liabilities |
|
|
|
(In
millions) |
Derivatives
Designated as Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps |
Interest
rate |
|
$ |
4,443 |
|
|
$ |
1,257 |
|
|
$ |
508 |
|
|
$ |
4,036 |
|
|
$ |
1,353 |
|
|
$ |
443 |
|
Foreign
currency swaps |
Foreign
currency exchange rate |
|
1,459 |
|
|
55 |
|
|
1 |
|
|
565 |
|
|
74 |
|
|
— |
|
Subtotal |
|
5,902 |
|
|
1,312 |
|
|
509 |
|
|
4,601 |
|
|
1,427 |
|
|
443 |
|
Cash
flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps |
Interest
rate |
|
3,789 |
|
|
1 |
|
|
246 |
|
|
3,739 |
|
|
7 |
|
|
239 |
|
Interest
rate forwards |
Interest
rate |
|
970 |
|
|
— |
|
|
175 |
|
|
2,227 |
|
|
— |
|
|
404 |
|
Foreign
currency swaps |
Foreign
currency exchange rate |
|
30,342 |
|
|
1,977 |
|
|
846 |
|
|
29,290 |
|
|
2,453 |
|
|
1,364 |
|
Subtotal |
|
35,101 |
|
|
1,978 |
|
|
1,267 |
|
|
35,256 |
|
|
2,460 |
|
|
2,007 |
|
Total
qualifying hedges |
|
41,003 |
|
|
3,290 |
|
|
1,776 |
|
|
39,857 |
|
|
3,887 |
|
|
2,450 |
|
Derivatives
Not Designated or Not Qualifying as Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps |
Interest
rate |
|
15,516 |
|
|
1,476 |
|
|
638 |
|
|
15,358 |
|
|
1,579 |
|
|
704 |
|
Interest
rate floors |
Interest
rate |
|
13,921 |
|
|
39 |
|
|
— |
|
|
23,371 |
|
|
114 |
|
|
— |
|
Interest
rate caps |
Interest
rate |
|
28,890 |
|
|
355 |
|
|
— |
|
|
46,666 |
|
|
903 |
|
|
— |
|
Interest
rate futures |
Interest
rate |
|
25 |
|
|
— |
|
|
— |
|
|
414 |
|
|
— |
|
|
1 |
|
Interest
rate options |
Interest
rate |
|
39,226 |
|
|
361 |
|
|
27 |
|
|
39,712 |
|
|
434 |
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synthetic
GICs |
Interest
rate |
|
6,145 |
|
|
— |
|
|
— |
|
|
13,044 |
|
|
— |
|
|
— |
|
Foreign
currency swaps |
Foreign
currency exchange rate |
|
4,304 |
|
|
446 |
|
|
24 |
|
|
4,739 |
|
|
720 |
|
|
5 |
|
Foreign
currency forwards |
Foreign
currency exchange rate |
|
1,176 |
|
|
8 |
|
|
10 |
|
|
1,328 |
|
|
16 |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
default swaps — purchased |
Credit |
|
809 |
|
|
3 |
|
|
7 |
|
|
843 |
|
|
16 |
|
|
— |
|
Credit
default swaps — written |
Credit |
|
10,007 |
|
|
186 |
|
|
4 |
|
|
9,074 |
|
|
113 |
|
|
26 |
|
Equity
futures |
Equity
market |
|
941 |
|
|
3 |
|
|
— |
|
|
1,063 |
|
|
2 |
|
|
— |
|
Equity
index options |
Equity
market |
|
17,703 |
|
|
339 |
|
|
193 |
|
|
14,143 |
|
|
585 |
|
|
179 |
|
Equity
variance swaps |
Equity
market |
|
— |
|
|
— |
|
|
— |
|
|
90 |
|
|
4 |
|
|
— |
|
Equity
total return swaps |
Equity
market |
|
1,912 |
|
|
— |
|
|
218 |
|
|
1,922 |
|
|
23 |
|
|
103 |
|
Total
non-designated or nonqualifying derivatives |
|
140,575 |
|
|
3,216 |
|
|
1,121 |
|
|
171,767 |
|
|
4,509 |
|
|
1,079 |
|
Total |
|
$ |
181,578 |
|
|
$ |
6,506 |
|
|
$ |
2,897 |
|
|
$ |
211,624 |
|
|
$ |
8,396 |
|
|
$ |
3,529 |
|
Based
on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a
hedging relationship at both December 31, 2023 and 2022. The Company’s use of derivatives includes (i) derivatives that serve as
macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria
required under the portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity
risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation
of a highly effective hedging relationship; (iii) derivatives that economically hedge MRBs that do not qualify for hedge accounting
because the changes in estimated fair value of the MRBs are already recorded in net income; and (iv) written credit default swaps and
interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not
involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value
changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
The
Effects of Derivatives on the Consolidated Statements of Operations and Comprehensive Income (Loss)
The
following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow,
nonqualifying hedging relationships and embedded derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
|
Net
Investment Income |
|
Net
Investment Gains (Losses) |
|
Net
Derivative Gains (Losses) |
|
Policyholder
Benefits and Claims |
|
Interest
Credited to Policyholder Account Balances |
|
OCI |
|
|
(In millions) |
Gain
(Loss) on Fair Value Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
$ |
(3) |
|
|
$ |
— |
|
|
N/A |
|
$ |
— |
|
|
$ |
29 |
|
|
N/A |
Hedged
items |
|
3 |
|
|
— |
|
|
N/A |
|
(26) |
|
|
(31) |
|
|
N/A |
Foreign
currency exchange rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
(39) |
|
|
— |
|
|
N/A |
|
— |
|
|
20 |
|
|
N/A |
Hedged
items |
|
38 |
|
|
— |
|
|
N/A |
|
— |
|
|
(24) |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
(1) |
|
|
— |
|
|
N/A |
|
(26) |
|
|
(6) |
|
|
N/A |
Gain
(Loss) on Cash Flow Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
$ |
(75) |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
50 |
|
|
87 |
|
|
— |
|
|
— |
|
|
— |
|
|
(137) |
|
Foreign
currency exchange rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
(177) |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
4 |
|
|
684 |
|
|
— |
|
|
— |
|
|
— |
|
|
(688) |
|
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
(671) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Credit
derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
— |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
54 |
|
|
101 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,078) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives (1) |
|
— |
|
|
N/A |
|
(842) |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency exchange rate derivatives (1) |
|
— |
|
|
N/A |
|
(288) |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — purchased (1) |
|
— |
|
|
N/A |
|
(22) |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — written (1) |
|
— |
|
|
N/A |
|
113 |
|
|
N/A |
|
N/A |
|
N/A |
Equity
derivatives (1) |
|
(52) |
|
|
N/A |
|
(1,042) |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
N/A |
|
85 |
|
|
N/A |
|
N/A |
|
N/A |
Subtotal |
|
(52) |
|
|
N/A |
|
(1,996) |
|
|
N/A |
|
N/A |
|
N/A |
Earned
income on derivatives |
|
184 |
|
|
— |
|
|
808 |
|
|
4 |
|
|
(145) |
|
|
— |
|
Synthetic
GICs |
|
N/A |
|
N/A |
|
17 |
|
|
N/A |
|
N/A |
|
N/A |
Embedded
derivatives |
|
N/A |
|
N/A |
|
(366) |
|
|
N/A |
|
N/A |
|
N/A |
Total |
|
$ |
185 |
|
|
$ |
101 |
|
|
$ |
(1,537) |
|
|
$ |
(22) |
|
|
$ |
(151) |
|
|
$ |
(1,078) |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2022 |
|
|
Net
Investment Income |
|
Net
Investment Gains (Losses) |
|
Net
Derivative Gains (Losses) |
|
Policyholder
Benefits and Claims |
|
Interest
Credited to Policyholder Account Balances |
|
OCI |
|
|
(In millions) |
Gain
(Loss) on Fair Value Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
$ |
8 |
|
|
$ |
— |
|
|
N/A |
|
$ |
(959) |
|
|
$ |
(231) |
|
|
N/A |
Hedged
items |
|
(8) |
|
|
— |
|
|
N/A |
|
905 |
|
|
226 |
|
|
N/A |
Foreign
currency exchange rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
105 |
|
|
— |
|
|
N/A |
|
— |
|
|
— |
|
|
N/A |
Hedged
items |
|
(105) |
|
|
— |
|
|
N/A |
|
— |
|
|
— |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
— |
|
|
— |
|
|
N/A |
|
(54) |
|
|
(5) |
|
|
N/A |
Gain
(Loss) on Cash Flow Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
$ |
(1,467) |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
59 |
|
|
51 |
|
|
— |
|
|
— |
|
|
— |
|
|
(110) |
|
Foreign
currency exchange rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
766 |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
5 |
|
|
(417) |
|
|
— |
|
|
— |
|
|
— |
|
|
412 |
|
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
411 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Credit
derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
— |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
64 |
|
|
45 |
|
|
— |
|
|
— |
|
|
— |
|
|
(399) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives (1) |
|
3 |
|
|
N/A |
|
(2,190) |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency exchange rate derivatives (1) |
|
2 |
|
|
N/A |
|
564 |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — purchased (1) |
|
— |
|
|
N/A |
|
44 |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — written (1) |
|
— |
|
|
N/A |
|
(66) |
|
|
N/A |
|
N/A |
|
N/A |
Equity
derivatives (1) |
|
29 |
|
|
N/A |
|
491 |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
N/A |
|
(300) |
|
|
N/A |
|
N/A |
|
N/A |
Subtotal |
|
34 |
|
|
N/A |
|
(1,457) |
|
|
N/A |
|
N/A |
|
N/A |
Earned
income on derivatives |
|
370 |
|
|
— |
|
|
599 |
|
|
112 |
|
|
(120) |
|
|
— |
|
Synthetic
GICs |
|
N/A |
|
N/A |
|
— |
|
|
N/A |
|
N/A |
|
N/A |
Embedded
derivatives |
|
N/A |
|
N/A |
|
1,610 |
|
|
N/A |
|
N/A |
|
N/A |
Total |
|
$ |
468 |
|
|
$ |
45 |
|
|
$ |
752 |
|
|
$ |
58 |
|
|
$ |
(125) |
|
|
$ |
(399) |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2021 |
|
|
Net
Investment Income |
|
Net
Investment Gains (Losses) |
|
Net
Derivative Gains (Losses) |
|
Policyholder
Benefits and Claims |
|
Interest
Credited to Policyholder Account Balances |
|
OCI |
|
|
(In millions) |
Gain
(Loss) on Fair Value Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
$ |
6 |
|
|
$ |
— |
|
|
N/A |
|
$ |
(372) |
|
|
$ |
(83) |
|
|
N/A |
Hedged
items |
|
(6) |
|
|
— |
|
|
N/A |
|
327 |
|
|
78 |
|
|
N/A |
Foreign
currency exchange rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as hedging instruments (1) |
|
49 |
|
|
— |
|
|
N/A |
|
— |
|
|
— |
|
|
N/A |
Hedged
items |
|
(43) |
|
|
— |
|
|
N/A |
|
— |
|
|
— |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
6 |
|
|
— |
|
|
N/A |
|
(45) |
|
|
(5) |
|
|
N/A |
Gain
(Loss) on Cash Flow Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
$ |
(570) |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
57 |
|
|
87 |
|
|
— |
|
|
— |
|
|
— |
|
|
(144) |
|
Foreign
currency exchange rate derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
600 |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
4 |
|
|
(229) |
|
|
— |
|
|
— |
|
|
— |
|
|
225 |
|
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
227 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Credit
derivatives: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of gains (losses) deferred in AOCI |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
— |
|
Amount
of gains (losses) reclassified from AOCI into income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
61 |
|
|
85 |
|
|
— |
|
|
— |
|
|
— |
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate derivatives (1) |
|
2 |
|
|
N/A |
|
(1,523) |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency exchange rate derivatives (1) |
|
— |
|
|
N/A |
|
264 |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — purchased (1) |
|
— |
|
|
N/A |
|
2 |
|
|
N/A |
|
N/A |
|
N/A |
Credit
derivatives — written (1) |
|
— |
|
|
N/A |
|
23 |
|
|
N/A |
|
N/A |
|
N/A |
Equity
derivatives (1) |
|
(1) |
|
|
N/A |
|
(1,308) |
|
|
N/A |
|
N/A |
|
N/A |
Foreign
currency transaction gains (losses) on hedged items |
|
— |
|
|
N/A |
|
(65) |
|
|
N/A |
|
N/A |
|
N/A |
Subtotal |
|
1 |
|
|
N/A |
|
(2,607) |
|
|
N/A |
|
N/A |
|
N/A |
Earned
income on derivatives |
|
167 |
|
|
— |
|
|
648 |
|
|
168 |
|
|
(121) |
|
|
— |
|
Synthetic
GICs |
|
N/A |
|
N/A |
|
— |
|
|
N/A |
|
N/A |
|
N/A |
Embedded
derivatives |
|
N/A |
|
N/A |
|
330 |
|
|
— |
|
|
N/A |
|
N/A |
Total |
|
$ |
235 |
|
|
$ |
85 |
|
|
$ |
(1,629) |
|
|
$ |
123 |
|
|
$ |
(126) |
|
|
$ |
111 |
|
__________________
(1)Excludes
earned income on derivatives.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Fair
Value Hedges
The
Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest
rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities; and (ii) foreign currency swaps
to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities.
The
following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated
and qualifying as hedged items in fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Line Item |
|
Carrying
Amount of the Hedged Assets/(Liabilities) |
|
Cumulative
Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets/(Liabilities) (1) |
|
|
|
|
December
31, 2023 |
|
|
|
December
31, 2022 |
|
December
31, 2023 |
|
December
31, 2022 |
|
|
|
|
(In
millions) |
|
Fixed
maturity securities AFS |
|
$ |
120 |
|
|
|
|
$ |
247 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
|
Mortgage
loans |
|
$ |
345 |
|
|
|
|
$ |
319 |
|
|
$ |
(10) |
|
|
$ |
(18) |
|
|
|
Future
policy benefits |
|
$ |
(2,863) |
|
|
|
|
$ |
(2,816) |
|
|
$ |
191 |
|
|
$ |
200 |
|
|
|
Policyholder
account balances |
|
$ |
(1,844) |
|
|
|
|
$ |
(1,735) |
|
|
$ |
2 |
|
|
$ |
80 |
|
|
|
__________________
(1)Includes
($113) million and ($136) million of hedging adjustments on discontinued hedging relationships at December 31, 2023 and 2022, respectively.
All
components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The
Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest
rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities; (ii) foreign currency swaps to hedge
the foreign currency cash flow exposure of foreign currency denominated assets and liabilities; (iii) interest rate forwards and
credit forwards to lock in the price to be paid for forward purchases of investments; and (iv) interest rate swaps and interest rate
forwards to hedge the forecasted purchases of fixed rate investments.
In
certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of
occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date,
the Company reclassified amounts from AOCI into income. These amounts were $23 million, $25 million, and $6 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
At
December 31, 2023 and 2022, the maximum length of time over which the Company was hedging its exposure to variability in future cash
flows for forecasted transactions did not exceed five years and six years, respectively.
At
December 31, 2023 and 2022, the balance in AOCI associated with cash flow hedges was $894 million and $2.0 billion, respectively.
All
components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
At
December 31, 2023, the Company expected to reclassify $210 million of deferred net gains (losses) on derivatives in AOCI to earnings within
the next 12 months.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Credit
Derivatives
In
connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a
premium to insure credit risk. Such credit derivatives are included within the effects of derivatives on the consolidated statements of
operations and comprehensive income (loss) table. If a credit event occurs, as defined by the contract, the contract may be cash settled
or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par
quantities of the referenced credit obligation. The Company can terminate these contracts at any time through cash settlement with the
counterparty at an amount equal to the then current estimated fair value of the credit default swaps.
The
following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written
credit default swaps at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Rating
Agency Designation of Referenced Credit Obligations (1) |
|
Estimated Fair
Value of Credit Default Swaps |
|
Maximum
Amount
of Future
Payments under
Credit
Default
Swaps |
|
Weighted Average Years
to Maturity (2) |
|
Estimated Fair
Value of Credit Default Swaps |
|
Maximum
Amount
of Future
Payments under
Credit
Default
Swaps |
|
Weighted Average Years
to Maturity (2) |
|
|
(Dollars
in millions) |
Aaa/Aa/A |
|
|
|
|
|
|
|
|
|
|
|
|
Single
name credit default swaps (3) |
|
$ |
— |
|
|
$ |
10 |
|
|
0.5 |
|
$ |
1 |
|
|
$ |
10 |
|
|
1.5 |
Credit
default swaps referencing indices |
|
80 |
|
|
3,831 |
|
|
2.7 |
|
79 |
|
|
4,251 |
|
|
3.4 |
Subtotal |
|
80 |
|
|
3,841 |
|
|
2.7 |
|
80 |
|
|
4,261 |
|
|
3.4 |
Baa |
|
|
|
|
|
|
|
|
|
|
|
|
Single
name credit default swaps (3) |
|
1 |
|
|
55 |
|
|
2.3 |
|
— |
|
|
40 |
|
|
2.5 |
Credit
default swaps referencing indices |
|
102 |
|
|
5,982 |
|
|
5.6 |
|
13 |
|
|
4,598 |
|
|
5.9 |
Subtotal |
|
103 |
|
|
6,037 |
|
|
5.5 |
|
13 |
|
|
4,638 |
|
|
5.8 |
Ba |
|
|
|
|
|
|
|
|
|
|
|
|
Single
name credit default swaps (3) |
|
— |
|
|
— |
|
|
0.0 |
|
1 |
|
|
45 |
|
|
0.7 |
Credit
default swaps referencing indices |
|
2 |
|
|
25 |
|
|
3.0 |
|
2 |
|
|
25 |
|
|
4.0 |
Subtotal |
|
2 |
|
|
25 |
|
|
3.0 |
|
3 |
|
|
70 |
|
|
1.9 |
B |
|
|
|
|
|
|
|
|
|
|
|
|
Credit
default swaps referencing indices |
|
1 |
|
|
74 |
|
|
5.0 |
|
1 |
|
|
75 |
|
|
4.5 |
Subtotal |
|
1 |
|
74 |
|
5.0 |
|
1 |
|
75 |
|
4.5 |
Caa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
default swaps referencing indices |
|
(4) |
|
|
30 |
|
|
2.5 |
|
(10) |
|
|
30 |
|
|
3.5 |
Subtotal |
|
(4) |
|
|
30 |
|
|
2.5 |
|
(10) |
|
|
30 |
|
|
3.5 |
Total |
|
$ |
182 |
|
|
$ |
10,007 |
|
|
4.4 |
|
$ |
87 |
|
|
$ |
9,074 |
|
|
4.6 |
__________________
(1)The
rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”),
S&P and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.
(2)The
weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.
(3)Single
name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Credit
Risk on Freestanding Derivatives
The
Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current
credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting
date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such
agreements.
The
Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties in jurisdictions
in which it understands that close-out netting should be enforceable and establishing and monitoring exposure limits. The Company’s
OTC-bilateral derivative transactions are governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master
Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of
early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early
termination, close-out netting permits the Company (subject to financial regulations such as the Orderly Liquidation Authority under Title
II of Dodd-Frank) to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions
and to apply collateral to the obligations without application of the automatic stay, upon the counterparty’s bankruptcy. All of
the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting
of collateral in connection with its OTC-bilateral derivatives as required by applicable law. Additionally, the Company is required to
pledge initial margin for certain new OTC-bilateral derivative transactions to third-party custodians.
The
Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected
through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin),
and the Company has minimal exposure to credit-related losses in the event of nonperformance by brokers and central clearinghouses to
such derivatives.
See
Note 12
for a description of the impact of credit risk on the valuation of derivatives.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
The
estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting
agreements and collateral were as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
2022 |
Derivatives
Subject to a Master Netting Arrangement or a Similar Arrangement |
|
Assets |
|
Liabilities |
|
Assets |
|
Liabilities |
|
|
(In
millions) |
Gross
estimated fair value of derivatives: |
|
|
|
|
|
|
|
|
OTC-bilateral
(1) |
|
$ |
6,534 |
|
|
$ |
2,892 |
|
|
$ |
8,456 |
|
|
$ |
3,499 |
|
OTC-cleared
(1) |
|
112 |
|
|
13 |
|
|
57 |
|
|
29 |
|
Exchange-traded |
|
3 |
|
|
— |
|
|
2 |
|
|
1 |
|
Total
gross estimated fair value of derivatives presented on the consolidated balance sheets (1) |
|
6,649 |
|
|
2,905 |
|
|
8,515 |
|
|
3,529 |
|
Gross
amounts not offset on the consolidated balance sheets: |
|
|
|
|
|
|
|
|
Gross
estimated fair value of derivatives: (2) |
|
|
|
|
|
|
|
|
OTC-bilateral |
|
(2,350) |
|
|
(2,350) |
|
|
(3,317) |
|
|
(3,317) |
|
OTC-cleared |
|
(4) |
|
|
(4) |
|
|
(14) |
|
|
(14) |
|
Cash
collateral: (3), (4) |
|
|
|
|
|
|
|
|
OTC-bilateral |
|
(2,872) |
|
|
— |
|
|
(4,044) |
|
|
— |
|
OTC-cleared |
|
(105) |
|
|
(1) |
|
|
(18) |
|
|
(1) |
|
Securities
collateral: (5) |
|
|
|
|
|
|
|
|
OTC-bilateral |
|
(1,283) |
|
|
(542) |
|
|
(1,078) |
|
|
(182) |
|
OTC-cleared |
|
— |
|
|
(8) |
|
|
— |
|
|
(14) |
|
Exchange-traded |
|
— |
|
|
— |
|
|
— |
|
|
(1) |
|
Net
amount after application of master netting agreements and collateral |
|
$ |
35 |
|
|
$ |
— |
|
|
$ |
44 |
|
|
$ |
— |
|
__________________
(1)At
December 31, 2023 and 2022, derivative assets included income (expense) accruals reported in accrued investment income or in other
liabilities of $143 million and $119 million, respectively, and derivative liabilities included (income) expense accruals reported
in accrued investment income or in other liabilities of $8 million and $0, respectively.
(2)Estimated
fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.
(3)Cash
collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the central clearinghouse treats variation margin
as collateral, is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation
to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.
(4)The
receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared
derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset
in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At December 31,
2023 and 2022, the Company received excess cash collateral of $154 million and $210 million, respectively, and provided excess cash
collateral of $4 million and $1 million, respectively, which are not included in the table above due to the foregoing limitation.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
(5)Securities
collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain
constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at December 31, 2023, none of the collateral
had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance
sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of
securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting
agreements and cash collateral. At December 31, 2023 and 2022, the Company received excess securities collateral with an estimated
fair value of $286 million and $366 million, respectively, for its OTC-bilateral derivatives, which are not included in the
table above due to the foregoing limitation. At December 31, 2023 and 2022, the Company provided excess securities collateral with
an estimated fair value of $1.1 billion and $934 million, respectively, for its OTC-bilateral derivatives, $495 million and
$442 million, respectively, for its OTC-cleared derivatives, and $56 million and $96 million, respectively, for its exchange-traded
derivatives, which are not included in the table above due to the foregoing limitation.
The
Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position,
after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches
a minimum transfer amount. All of the Company’s netting agreements for derivatives contain provisions that require both Metropolitan
Life Insurance Company and the counterparty to maintain a specific investment grade financial strength or credit rating from each of Moody’s
and S&P. If a party’s financial strength or credit rating were to fall below that specific investment grade financial strength
or credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions
and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.
The
following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net liability position
after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral
pledged.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
2023 |
|
|
|
|
|
2022 |
|
|
|
|
|
|
Derivatives
Subject to Financial
Strength-Contingent
Provisions |
|
|
|
|
|
|
(In
millions) |
Estimated
fair value of derivatives in a net liability position (1) |
|
$ |
542 |
|
|
|
|
|
|
$ |
182 |
|
|
|
|
|
Estimated
fair value of collateral provided: |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
maturity securities AFS |
|
$ |
896 |
|
|
|
|
|
|
$ |
221 |
|
|
|
|
|
__________________
(1)After
taking into consideration the existence of netting agreements.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
11.
Derivatives (continued)
Embedded
Derivatives
The
Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from
their host contracts and accounted for as freestanding derivatives.
The
following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been
separated from their host contracts at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
Balance Sheet
Location |
|
2023 |
|
2022 |
|
|
|
(In
millions) |
Embedded
derivatives within asset host contracts: |
|
|
|
|
Assumed
on affiliated reinsurance |
Other
invested assets |
|
$ |
41 |
|
|
$ |
149 |
|
Funds
withheld on affiliated reinsurance |
Other
invested assets |
|
(26) |
|
|
— |
|
Total |
|
$ |
15 |
|
|
$ |
149 |
|
Embedded
derivatives within liability host contracts: |
|
|
|
|
|
|
|
|
|
|
|
Assumed
on affiliated reinsurance |
Other
liabilities |
|
$ |
104 |
|
|
$ |
— |
|
Funds
withheld on affiliated reinsurance |
Other
liabilities |
|
(304) |
|
|
(450) |
|
Fixed
annuities with equity indexed returns |
Policyholder
account balances |
|
163 |
|
|
141 |
|
|
|
|
|
|
|
Total |
|
$ |
(37) |
|
|
$ |
(309) |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value
When
developing estimated fair values, the Company considers three broad valuation approaches: (i) the market approach, (ii) the
income approach, and (iii) the cost approach. The Company determines the most appropriate valuation approach to use, given what is
being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and
liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its
valuation. The input levels are as follows:
|
|
|
|
|
|
Level
1 |
Unadjusted
quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume
for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities AFS. |
|
|
|
|
|
|
Level
2 |
Quoted
prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices
for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant
inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term
of the assets or liabilities. |
|
|
|
|
|
|
Level
3 |
Unobservable
inputs that are supported by little or no market activity and are significant to the determination of estimated fair value of the assets
or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants
would use in pricing the asset or liability. |
Financial
markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity.
The Company’s ability to sell securities, as well as the price ultimately realized for these securities, depends upon the demand
and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities.
Considerable
judgment is often required in interpreting the market data used to develop estimates of fair value, and the use of different assumptions
or valuation methodologies may have a material effect on the estimated fair value amounts.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
Recurring
Fair Value Measurements
The
assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy,
including those items for which the Company has elected the FVO, are presented below at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
Fair
Value Hierarchy |
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total Estimated
Fair Value |
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
Fixed
maturity securities AFS: |
|
|
|
|
|
|
|
U.S.
corporate |
$ |
— |
|
|
$ |
41,718 |
|
|
$ |
8,775 |
|
|
$ |
50,493 |
|
Foreign
corporate |
— |
|
|
16,875 |
|
|
8,340 |
|
|
25,215 |
|
U.S.
government and agency |
8,963 |
|
|
12,097 |
|
|
— |
|
|
21,060 |
|
RMBS
|
3 |
|
|
17,616 |
|
|
1,329 |
|
|
18,948 |
|
ABS
& CLO |
— |
|
|
10,109 |
|
|
1,532 |
|
|
11,641 |
|
Municipals |
— |
|
|
6,319 |
|
|
— |
|
|
6,319 |
|
CMBS |
— |
|
|
5,499 |
|
|
335 |
|
|
5,834 |
|
Foreign
government |
— |
|
|
3,281 |
|
|
14 |
|
|
3,295 |
|
Total
fixed maturity securities AFS |
8,966 |
|
|
113,514 |
|
|
20,325 |
|
|
142,805 |
|
|
|
|
|
|
|
|
|
Short-term
investments |
2,745 |
|
|
288 |
|
|
15 |
|
|
3,048 |
|
Other
investments |
76 |
|
|
77 |
|
|
1,317 |
|
|
1,470 |
|
Derivative
assets: (1) |
|
|
|
|
|
|
|
Interest
rate |
— |
|
|
3,489 |
|
|
— |
|
|
3,489 |
|
Foreign
currency exchange rate |
— |
|
|
2,486 |
|
|
— |
|
|
2,486 |
|
Credit |
— |
|
|
181 |
|
|
8 |
|
|
189 |
|
Equity
market |
3 |
|
|
332 |
|
|
7 |
|
|
342 |
|
Total
derivative assets |
3 |
|
|
6,488 |
|
|
15 |
|
|
6,506 |
|
Embedded
derivatives within asset host contracts (4) |
— |
|
|
— |
|
|
15 |
|
|
15 |
|
Market
risk benefits |
— |
|
|
— |
|
|
177 |
|
|
177 |
|
Separate
account assets (2) |
13,945 |
|
|
68,284 |
|
|
968 |
|
|
83,197 |
|
Total
assets (3) |
$ |
25,735 |
|
|
$ |
188,651 |
|
|
$ |
22,832 |
|
|
$ |
237,218 |
|
Liabilities |
|
|
|
|
|
|
|
Derivative
liabilities: (1) |
|
|
|
|
|
|
|
Interest
rate |
$ |
— |
|
|
$ |
1,419 |
|
|
$ |
175 |
|
|
$ |
1,594 |
|
Foreign
currency exchange rate |
— |
|
|
881 |
|
|
— |
|
|
881 |
|
Credit |
— |
|
|
11 |
|
|
— |
|
|
11 |
|
Equity
market |
— |
|
|
411 |
|
|
— |
|
|
411 |
|
Total
derivative liabilities |
— |
|
|
2,722 |
|
|
175 |
|
|
2,897 |
|
Embedded
derivatives within liability host contracts (4) |
— |
|
|
— |
|
|
(37) |
|
|
(37) |
|
Market
risk benefits |
— |
|
|
— |
|
|
2,878 |
|
|
2,878 |
|
Separate
account liabilities (2) |
4 |
|
|
4 |
|
|
— |
|
|
8 |
|
Total
liabilities |
$ |
4 |
|
|
$ |
2,726 |
|
|
$ |
3,016 |
|
|
$ |
5,746 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
Fair
Value Hierarchy |
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total Estimated
Fair Value |
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
Fixed
maturity securities AFS: |
|
|
|
|
|
|
|
U.S.
corporate |
$ |
— |
|
|
$ |
43,147 |
|
|
$ |
7,943 |
|
|
$ |
51,090 |
|
Foreign
corporate |
— |
|
|
17,203 |
|
|
6,790 |
|
|
23,993 |
|
U.S.
government and agency |
9,126 |
|
|
13,232 |
|
|
— |
|
|
22,358 |
|
RMBS |
4 |
|
|
17,804 |
|
|
1,525 |
|
|
19,333 |
|
ABS
& CLO |
— |
|
|
10,329 |
|
|
1,507 |
|
|
11,836 |
|
Municipals |
— |
|
|
7,464 |
|
|
— |
|
|
7,464 |
|
CMBS |
— |
|
|
5,702 |
|
|
341 |
|
|
6,043 |
|
Foreign
government |
— |
|
|
3,444 |
|
|
15 |
|
|
3,459 |
|
Total
fixed maturity securities AFS |
9,130 |
|
|
118,325 |
|
|
18,121 |
|
|
145,576 |
|
|
|
|
|
|
|
|
|
Short-term
investments |
2,677 |
|
|
35 |
|
|
47 |
|
|
2,759 |
|
Other
investments |
246 |
|
|
212 |
|
|
1,022 |
|
|
1,480 |
|
Derivative
assets: (1) |
|
|
|
|
|
|
|
Interest
rate |
— |
|
|
4,390 |
|
|
— |
|
|
4,390 |
|
Foreign
currency exchange rate |
— |
|
|
3,263 |
|
|
— |
|
|
3,263 |
|
Credit |
— |
|
|
47 |
|
|
82 |
|
|
129 |
|
Equity
market |
2 |
|
|
605 |
|
|
7 |
|
|
614 |
|
Total
derivative assets |
2 |
|
|
8,305 |
|
|
89 |
|
|
8,396 |
|
Embedded
derivatives within asset host contracts (4) |
— |
|
|
— |
|
|
149 |
|
|
149 |
|
Market
risk benefits |
— |
|
|
— |
|
|
174 |
|
|
174 |
|
Separate
account assets (2) |
16,206 |
|
|
72,022 |
|
|
1,013 |
|
|
89,241 |
|
Total
assets (3) |
$ |
28,261 |
|
|
$ |
198,899 |
|
|
$ |
20,615 |
|
|
$ |
247,775 |
|
Liabilities |
|
|
|
|
|
|
|
Derivative
liabilities: (1) |
|
|
|
|
|
|
|
Interest
rate |
$ |
1 |
|
|
$ |
1,421 |
|
|
$ |
405 |
|
|
$ |
1,827 |
|
Foreign
currency exchange rate |
— |
|
|
1,394 |
|
|
— |
|
|
1,394 |
|
Credit |
— |
|
|
11 |
|
|
15 |
|
|
26 |
|
Equity
market |
— |
|
|
282 |
|
|
— |
|
|
282 |
|
Total
derivative liabilities |
1 |
|
|
3,108 |
|
|
420 |
|
|
3,529 |
|
Embedded
derivatives within liability host contracts (4) |
— |
|
|
— |
|
|
(309) |
|
|
(309) |
|
Market
risk benefits |
— |
|
|
— |
|
|
3,270 |
|
|
3,270 |
|
Separate
account liabilities (2) |
8 |
|
|
15 |
|
|
18 |
|
|
41 |
|
Total
liabilities |
$ |
9 |
|
|
$ |
3,123 |
|
|
$ |
3,399 |
|
|
$ |
6,531 |
|
__________________
(1)Derivative
assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other
liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the
consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable
Inputs (Level 3) tables.
(2)Investment
performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is
reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account
assets. Separate account liabilities presented in the tables above represent derivative liabilities.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
(3)Total
assets included in the fair value hierarchy exclude OLPI that are measured at estimated fair value using the net asset value (“NAV”)
per share (or its equivalent) practical expedient. At December 31, 2023 and
2022,
the estimated fair value of such investments was $48 million and
$61
million, respectively.
(4)Embedded
derivatives within asset host contracts are presented within other invested assets on the consolidated balance sheets. Embedded derivatives
within liability host contracts are presented within PABs and other liabilities on the consolidated balance sheets.
The
following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities,
Short-term Investments and Other Investments
When
available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly
obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not
involve management’s judgment.
When
quoted prices in active markets are not available, the determination of estimated fair value of securities is based on market standard
valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for
certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived
principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation
methodologies rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived
principally from, or corroborated by, observable market data. These unobservable inputs can be based, in large part, on management’s
judgment or estimation and cannot be supported by reference to market activity. Unobservable inputs are based on management’s assumptions
about the inputs market participants would use in pricing such investments.
The
estimated fair value of short-term investments and other investments is determined on a basis consistent with the methodologies described
herein.
The
valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair
value hierarchy are presented below. The primary valuation approaches are the market approach, which considers recent prices from market
transactions involving identical or similar assets or liabilities, and the income approach, which converts expected future amounts (e.g.,
cash flows) to a single current, discounted amount. The valuation of most instruments listed below is determined using independent pricing
sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable
inputs.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instrument |
|
Level 2
Observable
Inputs |
Level 3
Unobservable
Inputs |
Fixed
maturity securities AFS |
U.S.
corporate and Foreign corporate securities |
|
Valuation
Approaches: Principally the market and income approaches. |
Valuation
Approaches: Principally the market approach. |
|
Key
Inputs: |
Key
Inputs: |
|
• |
quoted
prices in markets that are not active |
• |
illiquidity
premium |
|
• |
benchmark
yields; spreads off benchmark yields; new issuances; issuer ratings |
• |
delta
spread adjustments to reflect specific credit-related issues |
|
• |
trades
of identical or comparable securities; duration |
• |
credit
spreads |
|
• |
privately-placed
securities are valued using the additional key inputs: |
• |
quoted
prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity
than securities classified in Level 2 |
|
|
• |
market
yield curve; call provisions |
|
|
|
• |
observable
prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer |
•
|
independent
non-binding broker quotations |
|
|
• |
delta
spread adjustments to reflect specific credit-related issues |
|
|
U.S.
government and agency securities, Municipals and Foreign government securities |
|
Valuation
Approaches: Principally the market approach. |
Valuation
Approaches: Principally the market approach. |
|
Key
Inputs: |
Key
Inputs: |
|
• |
quoted
prices in markets that are not active |
• |
independent
non-binding broker quotations |
|
• |
benchmark
U.S. Treasury yield or other yields |
• |
quoted
prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity
than securities classified in Level 2 |
|
• |
the
spread off the U.S. Treasury yield curve for the identical security |
|
|
• |
issuer
ratings and issuer spreads; broker-dealer quotations |
• |
credit
spreads |
|
• |
comparable
securities that are actively traded |
|
|
Structured
Products |
|
Valuation
Approaches: Principally the market and income approaches. |
Valuation
Approaches: Principally the market and income approaches. |
|
Key
Inputs: |
Key
Inputs: |
|
• |
quoted
prices in markets that are not active |
• |
credit
spreads |
|
• |
spreads
for actively traded securities; spreads off benchmark yields |
• |
quoted
prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity
than securities classified in Level 2 |
|
• |
expected
prepayment speeds and volumes |
|
|
• |
current
and forecasted loss severity; ratings; geographic region |
• |
independent
non-binding broker quotations |
|
• |
weighted
average coupon and weighted average maturity |
• |
credit
ratings |
|
• |
average
delinquency rates; DSCR |
|
|
|
• |
credit
ratings |
|
|
|
• |
issuance-specific
information, including, but not limited to: |
|
|
|
|
• |
collateral
type; structure of the security; vintage of the loans |
|
|
|
|
• |
payment
terms of the underlying assets |
|
|
|
|
• |
payment
priority within the tranche; deal performance |
|
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instrument |
Level 2
Observable
Inputs |
Level 3
Unobservable
Inputs |
Short-term
investments and Other investments |
|
• |
Certain
short-term investments and certain other investments are of a similar nature and class to the fixed maturity securities AFS described
above; while certain other investments are similar to equity securities. The valuation approaches and observable inputs used in their
valuation are also similar to those described above. Other investments contain equity securities valued using quoted prices in markets
that are not considered active. |
• |
Certain
short-term investments and certain other investments are of a similar nature and class to the fixed maturity securities AFS described
above, while certain other investments are similar to equity securities. The valuation approaches and unobservable inputs used in their
valuation are also similar to those described above. Other investments contain equity securities that use key unobservable inputs such
as credit ratings; issuance structures, in addition to those described above for fixed maturities AFS. Other investments also include
certain REJV and use the valuation approach and key inputs as described for OLPI below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separate
account assets and Separate account liabilities (1) |
Mutual
funds and hedge funds without readily determinable fair values as prices are not published publicly |
|
Key
Input: |
• |
N/A |
|
• |
quoted
prices or reported NAV provided by the fund managers |
|
|
OLPI |
|
•
|
N/A |
Valued
giving consideration to the underlying holdings
of
the partnerships and adjusting, if appropriate. |
|
|
|
Key
Inputs: |
|
|
|
• |
liquidity;
bid/ask spreads; performance record of the fund manager |
|
|
|
• |
other
relevant variables that may impact the exit value of the particular partnership interest |
__________________
(1)Estimated
fair value equals carrying value, based on the value of the underlying assets, including: mutual fund interests, fixed maturity securities,
equity securities, derivatives, hedge funds, OLPI, short-term investments and cash and cash equivalents. The estimated fair value of fixed
maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents is determined on a basis consistent
with the assets described under “— Securities, Short-term Investments and Other Investments” and “— Derivatives
— Freestanding Derivatives.”
Derivatives
The
estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives, or through
the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of estimated fair value, when quoted market
values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with
what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates,
foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes
in estimates and assumptions used in the pricing models.
The
significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market
or can be derived principally from, or corroborated by, observable market data. With respect to certain OTC-bilateral and OTC-cleared
derivatives, management may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot
be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management
judgment or estimation. Unobservable inputs are based on management’s assumptions about the inputs market participants would use
in pricing such derivatives.
Most
inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when
they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs,
may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
The
credit risk of both the counterparty and the Company is considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared
derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of
netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves
which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for
those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant
derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments
are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is, in
part, due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties.
An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.
Freestanding
Derivatives
Level 2
Valuation Approaches and Key Inputs:
This
level includes all types of derivatives utilized by the Company with the exception of exchange-traded derivatives included within Level 1
and those derivatives with unobservable inputs as described in Level 3.
Level 3
Valuation Approaches and Key Inputs:
These
valuation methodologies generally use the same inputs as described in the corresponding sections for Level 2 measurements of derivatives.
However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the
market or cannot be derived principally from, or corroborated by, observable market data.
Freestanding
derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques,
whereas valuations of option-based derivatives utilize option pricing models. Key inputs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instrument |
|
Interest
Rate |
|
Foreign
Currency Exchange Rate |
|
Credit |
|
Equity
Market |
Inputs
common to Level 2 and Level 3 by instrument type |
• |
swap
yield curves |
• |
swap
yield curves |
• |
swap
yield curves |
• |
swap
yield curves |
• |
basis
curves |
• |
basis
curves |
• |
credit
curves |
• |
spot
equity index levels |
• |
interest
rate volatility (1) |
• |
currency
spot rates |
• |
recovery
rates |
• |
dividend
yield curves |
|
|
|
•
|
cross
currency basis curves |
|
|
•
|
equity
volatility (1) |
|
|
|
|
|
|
|
|
|
Level 3 |
• |
swap
yield curves (2) |
• |
swap
yield curves (2) |
• |
swap
yield curves (2) |
• |
dividend
yield curves (2) |
|
• |
basis
curves (2) |
• |
basis
curves (2) |
• |
credit
curves (2) |
• |
equity
volatility (1), (2) |
|
• |
repurchase
rates |
• |
cross
currency basis curves (2) |
• |
credit
spreads |
• |
correlation
between model inputs (1) |
|
• |
interest
rate volatility (1), (2) |
• |
currency
correlation |
• |
repurchase
rates |
|
|
|
|
|
|
|
• |
independent
non-binding broker quotations |
|
|
__________________
(1)Option-based
only.
(2)Extrapolation
beyond the observable limits of the curve(s).
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
Embedded
Derivatives
Embedded
derivatives principally include equity-indexed annuity contracts
and
investment risk within funds withheld related to certain reinsurance agreements. Embedded derivatives are recorded at estimated fair value
with changes in estimated fair value reported in net income.
The
estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance and experience refund related
to certain assumed reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company
in a reference portfolio backing the reinsurance liability. The estimated fair value of the underlying assets is determined as described
in “— Investments — Securities, Short-term Investments and Other Investments.” The estimated fair
value of these embedded derivatives is included, along with their underlying host contracts, in other liabilities and other invested assets
on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit
spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value
of these embedded derivatives that could materially affect net income.
The
estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder
using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s
actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes,
to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering
the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns
in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in
nonperformance risk.
Market
Risk Benefits
See
Note 5 for information on the Company’s valuation approaches and key inputs for MRBs.
Transfers
between Levels
Overall,
transfers between levels occur when there are changes in the observability of inputs and market activity.
Transfers
into or out of Level 3:
Assets
and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs
when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there
are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3
when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant
increase in market activity, a specific event, or one or more significant input(s) becoming observable.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
Assets
and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
The
following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement,
and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured
at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
December
31, 2022 |
|
Impact
of Increase in Input on Estimated Fair Value (2) |
|
Valuation
Techniques |
|
Significant Unobservable Inputs |
|
Range |
|
Weighted Average (1) |
|
Range |
|
Weighted Average (1) |
|
Fixed
maturity securities AFS (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. corporate and
foreign corporate |
• |
Matrix
pricing |
|
• |
Offered
quotes (4) |
|
4 |
- |
131 |
|
95 |
|
— |
- |
126 |
|
89 |
|
Increase |
|
• |
Market
pricing |
|
• |
Quoted
prices (4) |
|
— |
- |
110 |
|
93 |
|
20 |
- |
107 |
|
92 |
|
Increase |
RMBS |
• |
Market
pricing |
|
• |
Quoted
prices (4) |
|
— |
- |
112 |
|
93 |
|
— |
- |
106 |
|
93 |
|
Increase
(5) |
ABS
& CLO |
• |
Market
pricing |
|
• |
Quoted
prices (4) |
|
78 |
- |
101 |
|
94 |
|
74 |
- |
101 |
|
91 |
|
Increase
(5) |
Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate |
• |
Present
value techniques |
|
• |
Swap
yield (6) |
|
367 |
- |
399 |
|
385 |
|
372 |
- |
392 |
|
381 |
|
Increase
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
• |
Present
value techniques |
|
• |
Credit
spreads (8) |
|
— |
- |
— |
|
— |
|
84 |
- |
138 |
|
101 |
|
Decrease
(7) |
|
• |
Consensus
pricing |
|
• |
Offered
quotes (9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
Risk Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
and assumed guaranteed minimum benefits |
• |
Option
pricing techniques |
|
• |
Mortality
rates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ages
0 - 40 |
|
0.01% |
- |
0.13% |
|
0.05% |
|
0.01% |
- |
0.08% |
|
0.05% |
|
(10) |
|
|
|
|
|
Ages
41 - 60 |
|
0.05% |
- |
0.67% |
|
0.22% |
|
0.05% |
- |
0.43% |
|
0.20% |
|
(10) |
|
|
|
|
|
Ages
61 - 115 |
|
0.35% |
- |
100% |
|
1.23% |
|
0.34% |
- |
100% |
|
1.44% |
|
(10) |
|
|
|
|
• |
Lapse
rates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Durations
1 - 10 |
|
0.80% |
- |
20.10% |
|
8.72% |
|
0.50% |
- |
37.50% |
|
8.96% |
|
Decrease
(11) |
|
|
|
|
|
Durations
11 - 20 |
|
3.10% |
- |
10.10% |
|
4.34% |
|
0.70% |
- |
35.75% |
|
6.52% |
|
Decrease
(11) |
|
|
|
|
|
Durations
21 - 116 |
|
0.10% |
- |
10.10% |
|
4.59% |
|
1.60% |
- |
35.75% |
|
2.89% |
|
Decrease
(11) |
|
|
|
|
• |
Utilization
rates |
|
0.20% |
- |
22% |
|
0.44% |
|
0.20% |
- |
22% |
|
0.38% |
|
Increase
(12) |
|
|
|
|
• |
Withdrawal
rates |
|
0.25% |
- |
7.75% |
|
4.47% |
|
0.25% |
- |
10% |
|
4.02% |
|
(13) |
|
|
|
|
• |
Long-term
equity volatilities |
|
16.37% |
- |
21.85% |
|
18.55% |
|
16.46% |
- |
22.01% |
|
18.49% |
|
Increase
(14) |
|
|
|
|
• |
Nonperformance
risk spread |
|
0.38% |
- |
0.70% |
|
0.73% |
|
0.34% |
- |
0.74% |
|
0.75% |
|
Decrease
(15) |
__________________
(1)The
weighted average for fixed maturity securities AFS and derivatives is determined based on the estimated fair value of the securities and
derivatives. The weighted average for MRBs is determined based on a combination of account values and experience data.
(2)The
impact of a decrease in input would have resulted in the opposite impact on estimated fair value. For MRBs, changes to direct and assumed
guaranteed minimum benefits are based on liability positions.
(3)Significant
increases (decreases) in expected default rates in isolation would have resulted in substantially lower (higher) valuations.
(4)Range
and weighted average are presented in accordance with the market convention for fixed maturity securities AFS of dollars per hundred dollars
of par.
(5)Changes
in the assumptions used for the probability of default would have been accompanied by a directionally similar change in the assumption
used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.
(6)Ranges
represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different
types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology
uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input
used in the valuation.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
(7)Changes
in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset
positions.
(8)Represents
the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable
inputs are primarily comprised of written credit default swaps.
(9)At
December 31, 2023 and 2022, independent non-binding broker quotations were used in the determination of less than 1% and 1%, respectively,
of the total net derivative estimated fair value.
(10)Mortality
rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality
improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected
for purposes of valuing the MRBs. For contracts that contain only a GMDB, any increase (decrease) in mortality rates result in an increase
(decrease) in the estimated fair value of MRBs. Generally, for contracts that contain both a GMDB and a living benefit (e.g., GMIB, GMWB,
GMAB), any increase (decrease) in mortality rates result in a decrease (increase) in the estimated fair value of MRBs.
(11)Base
lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder
account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the
base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse
rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout
the period over which cash flows are projected for purposes of valuing the MRBs.
(12)The
utilization rate assumption estimates the percentage of contractholders with GMIBs or a lifetime withdrawal benefit who will elect to
utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is
greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization
rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs.
(13)The
withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each
year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any
given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the MRB. For GMWBs,
any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs
and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.
(14)Long-term
equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given
contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the
MRBs.
(15)Nonperformance
risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on
the duration of the cash flow being discounted for purposes of valuing the MRBs.
All
other classes of securities classified within Level 3, including those within Other investments, Separate account assets, and Embedded
derivatives within funds withheld related to certain ceded reinsurance, use the same valuation techniques and significant unobservable
inputs as previously described for Level 3 securities. Generally, all other classes of assets and liabilities classified within Level 3
that are not included above use the same valuation techniques and significant unobservable inputs as previously described for Level 3.
The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is
similar in nature to that described in the preceding table. The valuation techniques and significant unobservable inputs used in the fair
value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined using significant
unobservable inputs (Level 3) are summarized in “— Nonrecurring Fair Value Measurements.”
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
The
following tables summarize the change of all assets (liabilities) measured at estimated fair value on a recurring basis using significant
unobservable inputs (Level 3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
|
Fixed
Maturity Securities AFS |
|
|
|
|
|
|
Corporate
(6) |
|
|
|
Structured
Products |
|
|
|
Foreign Government |
|
|
|
Short-term
Investments |
|
|
(In
millions) |
Balance,
January 1, 2022 |
|
$ |
14,935 |
|
|
|
|
$ |
4,600 |
|
|
|
|
$ |
12 |
|
|
|
|
$ |
2 |
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
(25) |
|
|
|
|
38 |
|
|
|
|
(37) |
|
|
|
|
— |
|
Total
realized/unrealized gains (losses) included in AOCI |
|
(3,334) |
|
|
|
|
(356) |
|
|
|
|
6 |
|
|
|
|
— |
|
Purchases
(3) |
|
3,168 |
|
|
|
|
750 |
|
|
|
|
— |
|
|
|
|
47 |
|
Sales
(3) |
|
(1,231) |
|
|
|
|
(795) |
|
|
|
|
(2) |
|
|
|
|
(2) |
|
Issuances
(3) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Settlements
(3) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Transfers
into Level 3 (4) |
|
1,614 |
|
|
|
|
204 |
|
|
|
|
45 |
|
|
|
|
— |
|
Transfers
out of Level 3 (4) |
|
(394) |
|
|
|
|
(1,068) |
|
|
|
|
(9) |
|
|
|
|
— |
|
Balance,
December 31, 2022 |
|
14,733 |
|
|
|
|
3,373 |
|
|
|
|
15 |
|
|
|
|
47 |
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
(46) |
|
|
|
|
(2) |
|
|
|
|
2 |
|
|
|
|
— |
|
Total
realized/unrealized gains (losses) included in AOCI |
|
881 |
|
|
|
|
44 |
|
|
|
|
(3) |
|
|
|
|
1 |
|
Purchases
(3) |
|
3,402 |
|
|
|
|
268 |
|
|
|
|
— |
|
|
|
|
15 |
|
Sales
(3) |
|
(1,673) |
|
|
|
|
(609) |
|
|
|
|
— |
|
|
|
|
(48) |
|
Issuances
(3) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Settlements
(3) |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Transfers
into Level 3 (4) |
|
221 |
|
|
|
|
195 |
|
|
|
|
— |
|
|
|
|
— |
|
Transfers
out of Level 3 (4) |
|
(403) |
|
|
|
|
(73) |
|
|
|
|
— |
|
|
|
|
— |
|
Balance,
December 31, 2023 |
|
$ |
17,115 |
|
|
|
|
$ |
3,196 |
|
|
|
|
$ |
14 |
|
|
|
|
$ |
15 |
|
Changes
in unrealized gains (losses) included in net
income
(loss) for the instruments still held at
December
31, 2021: (5) |
|
$ |
(7) |
|
|
|
|
$ |
41 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
Changes
in unrealized gains (losses) included in net
income
(loss) for the instruments still held at
December
31, 2022: (5) |
|
$ |
(21) |
|
|
|
|
$ |
32 |
|
|
|
|
$ |
(37) |
|
|
|
|
$ |
— |
|
Changes
in unrealized gains (losses) included in net
income
(loss) for the instruments still held at
December
31, 2023: (5) |
|
$ |
(24) |
|
|
|
|
$ |
16 |
|
|
|
|
$ |
2 |
|
|
|
|
$ |
— |
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2021: (5) |
|
$ |
(731) |
|
|
|
|
$ |
10 |
|
|
|
|
$ |
(1) |
|
|
|
|
$ |
— |
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2022: (5) |
|
$ |
(3,326) |
|
|
|
|
$ |
(341) |
|
|
|
|
$ |
7 |
|
|
|
|
$ |
— |
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2023: (5) |
|
$ |
844 |
|
|
|
|
$ |
24 |
|
|
|
|
$ |
(3) |
|
|
|
|
$ |
— |
|
Gains
(Losses) Data for the year ended
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
$ |
(40) |
|
|
|
|
$ |
45 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
Total
realized/unrealized gains (losses) included in
AOCI |
|
$ |
(745) |
|
|
|
|
$ |
8 |
|
|
|
|
$ |
(1) |
|
|
|
|
$ |
— |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
|
Residential
Mortgage Loans
- FVO |
|
Other
Investments |
|
Net
Derivatives
(7) |
|
Net
Embedded
Derivatives
(8) |
|
Separate Accounts
(9) |
|
|
|
|
(In
millions) |
Balance,
January 1, 2022 |
|
$ |
127 |
|
|
$ |
894 |
|
|
$ |
86 |
|
|
$ |
(1,236) |
|
|
$ |
1,958 |
|
|
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
(8) |
|
|
(16) |
|
|
(140) |
|
|
1,610 |
|
|
25 |
|
|
|
Total
realized/unrealized gains (losses) included in AOCI |
|
— |
|
|
— |
|
|
(547) |
|
|
— |
|
|
— |
|
|
|
Purchases
(3) |
|
— |
|
|
262 |
|
|
82 |
|
|
— |
|
|
196 |
|
|
|
Sales
(3) |
|
(108) |
|
|
(19) |
|
|
— |
|
|
— |
|
|
(1,164) |
|
|
|
Issuances
(3) |
|
— |
|
|
— |
|
|
(3) |
|
|
— |
|
|
(2) |
|
|
|
Settlements
(3) |
|
(11) |
|
|
— |
|
|
191 |
|
|
84 |
|
|
4 |
|
|
|
Transfers
into Level 3 (4) |
|
— |
|
|
3 |
|
|
— |
|
|
— |
|
|
1 |
|
|
|
Transfers
out of Level 3 (4) |
|
— |
|
|
(102) |
|
|
— |
|
|
— |
|
|
(23) |
|
|
|
Balance,
December 31, 2022 |
|
— |
|
|
1,022 |
|
|
(331) |
|
|
458 |
|
|
995 |
|
|
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
— |
|
|
147 |
|
|
(24) |
|
|
(366) |
|
|
(27) |
|
|
|
Total
realized/unrealized gains (losses) included in AOCI |
|
— |
|
|
— |
|
|
(5) |
|
|
— |
|
|
— |
|
|
|
Purchases
(3) |
|
— |
|
|
152 |
|
|
— |
|
|
— |
|
|
166 |
|
|
|
Sales
(3) |
|
— |
|
|
(4) |
|
|
— |
|
|
— |
|
|
(176) |
|
|
|
Issuances
(3) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
Settlements
(3) |
|
— |
|
|
— |
|
|
201 |
|
|
(40) |
|
|
1 |
|
|
|
Transfers
into Level 3 (4) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13 |
|
|
|
Transfers
out of Level 3 (4) |
|
— |
|
|
— |
|
|
(1) |
|
|
— |
|
|
(4) |
|
|
|
Balance,
December 31, 2023 |
|
$ |
— |
|
|
$ |
1,317 |
|
|
$ |
(160) |
|
|
$ |
52 |
|
|
$ |
968 |
|
|
|
Changes
in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2021: (5) |
|
$ |
(10) |
|
|
$ |
170 |
|
|
$ |
(7) |
|
|
$ |
330 |
|
|
$ |
— |
|
|
|
Changes
in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2022: (5) |
|
$ |
— |
|
|
$ |
(22) |
|
|
$ |
(17) |
|
|
$ |
1,610 |
|
|
$ |
— |
|
|
|
Changes
in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2023: (5) |
|
$ |
— |
|
|
$ |
150 |
|
|
$ |
(24) |
|
|
$ |
(366) |
|
|
$ |
— |
|
|
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2021: (5) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(128) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2022: (5) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(454) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Changes
in unrealized gains (losses) included in
AOCI
for the instruments still held at
December
31, 2023: (5) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(5) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Gains
(Losses) Data for the year ended
December
31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
realized/unrealized gains (losses) included in
net
income (loss) (1), (2) |
|
$ |
(5) |
|
|
$ |
183 |
|
|
$ |
(69) |
|
|
$ |
330 |
|
|
$ |
8 |
|
|
|
Total
realized/unrealized gains (losses) included in AOCI |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(352) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
__________________
(1)Amortization
of premium/accretion of discount is included within net investment income. Impairments and changes in ACL charged to net income (loss)
on certain securities are included in net investment gains (losses), while changes in estimated fair value of residential mortgage
loans — FVO are included in net investment income. Lapses associated with net embedded derivatives are included in net derivative
gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded
derivatives are reported in net derivative gains (losses).
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
(2)Interest
and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.
(3)Items
purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are
included in settlements.
(4)Items
transferred into and then out of Level 3 in the same period are excluded from the rollforward.
(5)Changes
in unrealized gains (losses) included in net income (loss) and included in AOCI relate to assets and liabilities still held
at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives
and net embedded derivatives are reported in net derivative gains (losses).
(6)Comprised
of U.S. and foreign corporate securities.
(7)Freestanding
derivative assets and liabilities are presented net for purposes of the rollforward.
(8)Embedded
derivative assets and liabilities are presented net for purposes of the rollforward.
(9)Investment
performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account
liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure,
these changes are presented within net income (loss). Separate account assets and liabilities are presented net for the purposes of the
rollforward.
Nonrecurring
Fair Value Measurements
The
following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods and still
held at the reporting dates (for example, when there is evidence of impairment), using significant unobservable inputs (Level 3).
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
2023 |
|
2022 |
|
(In
millions) |
Carrying
value after measurement: |
Mortgage
loans (1) |
$ |
295 |
|
|
$ |
222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Realized
gains (losses) net: |
|
Mortgage
loans (1) |
$ |
(162) |
|
|
$ |
(13) |
|
|
$ |
(91) |
|
|
__________________
(1)Estimated
fair values of impaired mortgage loans are based on the underlying collateral or discounted cash flows. See Note 10.
Fair
Value of Financial Instruments Carried at Other Than Fair Value
The
following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than
fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for
collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities, such
as time deposits, and therefore are not included in the three-level hierarchy table disclosed in the “— Recurring Fair Value
Measurements” section. The Company believes that due to the short-term nature of these excluded assets, which are primarily classified
in Level 2, the estimated fair value approximates carrying value. All remaining balance sheet amounts excluded from the tables below
are not considered financial instruments subject to this disclosure.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
12.
Fair Value (continued)
The
carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy,
are summarized as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
|
|
|
Fair
Value Hierarchy |
|
|
|
|
Carrying
Value |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total Estimated Fair
Value |
|
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
|
|
|
Mortgage
loans (1) |
|
$ |
62,584 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
59,511 |
|
|
$ |
59,511 |
|
Policy
loans |
|
$ |
5,671 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,042 |
|
|
$ |
6,042 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
invested assets |
|
$ |
1,778 |
|
|
$ |
— |
|
|
$ |
1,794 |
|
|
$ |
— |
|
|
$ |
1,794 |
|
Premiums,
reinsurance and other receivables |
|
$ |
14,028 |
|
|
$ |
— |
|
|
$ |
221 |
|
|
$ |
14,053 |
|
|
$ |
14,274 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Policyholder
account balances |
|
$ |
87,518 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
86,093 |
|
|
$ |
86,093 |
|
Long-term
debt |
|
$ |
1,886 |
|
|
$ |
— |
|
|
$ |
1,958 |
|
|
$ |
— |
|
|
$ |
1,958 |
|
Other
liabilities |
|
$ |
11,481 |
|
|
$ |
— |
|
|
$ |
141 |
|
|
$ |
11,333 |
|
|
$ |
11,474 |
|
Separate
account liabilities |
|
$ |
29,204 |
|
|
$ |
— |
|
|
$ |
29,204 |
|
|
$ |
— |
|
|
$ |
29,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2022 |
|
|
|
|
Fair
Value Hierarchy |
|
|
|
|
Carrying
Value |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total Estimated Fair
Value |
|
|
(In
millions) |
Assets |
|
|
|
|
|
|
|
|
|
|
Mortgage
loans (1) |
|
$ |
62,570 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
58,858 |
|
|
$ |
58,858 |
|
Policy
loans |
|
$ |
5,729 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,143 |
|
|
$ |
6,143 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
invested assets |
|
$ |
1,978 |
|
|
$ |
— |
|
|
$ |
1,979 |
|
|
$ |
— |
|
|
$ |
1,979 |
|
Premiums,
reinsurance and other receivables |
|
$ |
12,036 |
|
|
$ |
— |
|
|
$ |
454 |
|
|
$ |
11,826 |
|
|
$ |
12,280 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Policyholder
account balances |
|
$ |
85,957 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
83,594 |
|
|
$ |
83,594 |
|
Long-term
debt |
|
$ |
1,676 |
|
|
$ |
— |
|
|
$ |
1,758 |
|
|
$ |
— |
|
|
$ |
1,758 |
|
Other
liabilities |
|
$ |
12,546 |
|
|
$ |
— |
|
|
$ |
671 |
|
|
$ |
11,842 |
|
|
$ |
12,513 |
|
Separate
account liabilities |
|
$ |
38,391 |
|
|
$ |
— |
|
|
$ |
38,391 |
|
|
$ |
— |
|
|
$ |
38,391 |
|
_________________
(1)Includes
mortgage loans measured at estimated fair value on a nonrecurring basis.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
13.
Leases
The
Company, as lessee, has entered into various lease and sublease agreements primarily for office space. The Company has operating leases
and subleases with remaining lease terms of less than one year to seven years.
ROU
assets and lease liabilities for operating leases were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
December
31, 2022 |
|
|
(In
millions) |
ROU
assets |
|
$ |
416 |
|
|
$ |
498 |
|
Lease
liabilities |
|
$ |
498 |
|
|
$ |
589 |
|
Lease
Costs
The
components of operating lease costs were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In
millions) |
Operating
lease cost |
|
$ |
104 |
|
|
$ |
116 |
|
|
$ |
120 |
|
Sublease
income |
|
(87) |
|
|
(73) |
|
|
(91) |
|
Other
Information
Supplemental
other information related to operating leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
December
31, 2022 |
|
|
(Dollars
in millions) |
Cash
paid for amounts included in the measurement of lease liability - operating cash flows |
|
$ |
114 |
|
|
$ |
124 |
|
ROU
assets obtained in exchange for new lease liabilities |
|
$ |
3 |
|
|
$ |
4 |
|
Weighted-average
remaining lease term |
|
6
years |
|
6
years |
Weighted-average
discount rate |
|
4.0 |
% |
|
4.0 |
% |
Maturities
of Lease Liabilities
Maturities
of operating lease liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
|
(In
millions) |
2024 |
|
$ |
107 |
|
2025 |
|
107 |
|
2026 |
|
104 |
|
2027 |
|
93 |
|
2028 |
|
70 |
|
Thereafter |
|
88 |
|
Total
undiscounted cash flows |
|
569 |
|
Less:
interest |
|
71 |
|
Present
value of lease liability |
|
$ |
498 |
|
See
Note 10 for
information about the Company’s investments in leased real estate.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
14.
Long-term and Short-term Debt
Long-term
and short-term debt outstanding was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
Interest
Rates (1) |
|
|
|
|
|
2023 |
|
2022 |
|
Range |
|
Maturity |
|
Face Value |
|
Unamortized Discount
and Issuance Costs |
|
Carrying Value |
|
Face Value |
|
Unamortized Discount
and Issuance Costs |
|
Carrying Value
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions) |
Surplus
notes - affiliated |
7.38% |
|
- |
|
7.38% |
|
2037 |
|
$ |
700 |
|
|
$ |
(7) |
|
|
$ |
693 |
|
|
$ |
700 |
|
|
$ |
(7) |
|
|
$ |
693 |
|
Surplus
notes |
7.80% |
|
- |
|
7.88% |
|
2024 |
- |
2025 |
|
400 |
|
|
— |
|
|
400 |
|
|
400 |
|
|
(1) |
|
|
399 |
|
Other
notes |
2.12% |
|
- |
|
8.43% |
|
2024 |
- |
2038 |
|
796 |
|
|
(3) |
|
|
793 |
|
|
586 |
|
|
(2) |
|
|
584 |
|
Financing
lease obligations |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
Total
long-term debt |
|
|
|
|
|
|
|
|
|
|
1,897 |
|
|
(10) |
|
|
1,887 |
|
|
1,686 |
|
|
(10) |
|
|
1,676 |
|
Total
short-term debt |
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
99 |
|
|
— |
|
|
99 |
|
Total |
|
|
|
|
|
|
|
|
|
|
$ |
1,897 |
|
|
$ |
(10) |
|
|
$ |
1,887 |
|
|
$ |
1,785 |
|
|
$ |
(10) |
|
|
$ |
1,775 |
|
__________________
(1)Range
of interest rates are for the year ended December 31, 2023.
The
aggregate maturities of long-term debt at December 31, 2023 for the next five years and thereafter are $335 million in 2024,
$250 million in 2025, $0 in 2026, $51 million in 2027, $427 million in 2028 and $824 million thereafter.
Financing
lease obligations are collateralized and rank highest in priority, followed by other notes. Payments of interest and principal on the
Company’s surplus notes, which are subordinate to all other obligations of Metropolitan Life Insurance Company, and are senior to
obligations of MetLife, Inc., may be made only with the prior approval of the New York State Department of Financial Services (“NYDFS”).
Other
Notes
In
March 2023, MoRe borrowed funds from MetLife, Inc. under a term loan agreement, interest on which is payable semi-annually. The terms
of the promissory notes are as follows:
•$80 million
5.34% fixed rate due March 2028;
•$80 million
5.68% fixed rate due March 2033; and
•$50 million
6.05% fixed rate due March 2038.
In
December 2022 and 2021, MoRe issued to MetLife, Inc. a $60 million 5.23% promissory note and a $35 million 2.12% promissory
note, respectively. Both notes are payable semi-annually and mature in December 2024.
Short-term
Debt
Short-term
debt with maturities of one year or less was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
(Dollars
in millions) |
Commercial
paper |
$ |
— |
|
|
$ |
99 |
|
Average
daily balance |
$ |
54 |
|
|
$ |
100 |
|
Average
days outstanding |
80
days |
|
131
days |
For
the years ended December 31, 2023, 2022 and 2021, the weighted average interest rate on short-term debt was 4.80%, 1.60% and 0.23%,
respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
14.
Long-term and Short-term Debt (continued)
Interest
Expense
Interest
expense included in other expenses was $132 million, $104 million and $96 million for the years ended December 31,
2023, 2022 and 2021, respectively. These amounts include $65 million, $53 million and $52 million of interest expense related
to affiliated debt for the years ended December 31, 2023, 2022 and 2021, respectively.
Credit
Facility
At
December 31, 2023, MetLife, Inc. and MetLife Funding, Inc., a wholly-owned subsidiary of Metropolitan Life Insurance Company (“MetLife
Funding”), maintained a $3.0 billion unsecured revolving credit facility (the “Credit Facility”). When drawn upon,
this facility bears interest at varying rates in accordance with the agreement.
The
Credit Facility is used for general corporate purposes, to support the borrowers’ commercial paper programs and for the issuance
of letters of credit. The Company’s total fees associated with the Credit Facility were $2 million, $4 million and $7 million
for the years ended December 31, 2023, 2022 and 2021, respectively, and were included in other expenses.
Information
on the Credit Facility at December 31, 2023 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrower(s) |
|
Expiration |
|
Maximum Capacity |
|
Letters
of Credit Used by the Company (1) |
|
Letters
of Credit Used by Affiliates (1) |
|
Drawdowns |
|
Unused Commitments |
|
|
|
|
(In
millions) |
MetLife,
Inc. and MetLife Funding, Inc. |
|
May
2028 (2) |
|
$ |
3,000 |
|
|
$ |
7 |
|
|
$ |
290 |
|
|
$ |
— |
|
|
$ |
2,703 |
|
__________________
(1)MetLife,
Inc. and MetLife Funding are severally liable for their respective obligations under the Credit Facility. MetLife Funding was not an applicant
under letters of credit outstanding as of December 31, 2023 and is not responsible for any reimbursement obligations under such letters
of credit.
(2)In
May 2023, the Credit Facility was amended and restated to, among other things, extend the maturity date. All borrowings under the Credit
Facility must be repaid by May 8, 2028, except that letters of credit outstanding on that date may remain outstanding until no later than
May 8, 2029.
Debt
and Facility Covenants
Certain
of the Company’s debt instruments and the Credit Facility contain various administrative, reporting, legal and financial covenants.
The Company believes it was in compliance with all applicable financial covenants at December 31, 2023.
15.
Equity
Statutory
Equity and Income
Metropolitan
Life Insurance Company prepares statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted
by the NYDFS. The National Association of Insurance Commissioners (“NAIC”) has adopted the Codification of Statutory Accounting
Principles (“Statutory Codification”). Statutory Codification is intended to standardize regulatory accounting and reporting
to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted
practices. Modifications by the NYDFS may impact the effect of Statutory Codification on the statutory capital and surplus of Metropolitan
Life Insurance Company.
New
York, the state of domicile of Metropolitan Life Insurance Company, imposes risk-based capital (“RBC”) requirements that
were developed by the NAIC. Regulatory compliance is determined by a ratio of a company’s total adjusted capital, calculated in
the manner prescribed by the NAIC (“TAC”), with modifications by the state insurance department, to its authorized control
level RBC, calculated in the manner prescribed by the NAIC (“ACL RBC”), based on the statutory-based financial statements.
Companies below specific trigger levels or ratios are classified by their respective levels, each of which requires specified corrective
action. The minimum level of TAC before corrective action commences is twice ACL RBC (“CAL RBC”). The CAL RBC ratios for Metropolitan
Life Insurance Company were in excess of 370% and in excess of 340% at December 31, 2023 and 2022, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
15.
Equity (continued)
Metropolitan
Life Insurance Company’s ancillary foreign insurance operations are regulated by applicable authorities of the jurisdictions in
which each entity operates and are subject to minimum capital and solvency requirements in those jurisdictions before corrective action
commences. The aggregate required capital and surplus of Metropolitan Life Insurance Company’s foreign insurance operations was
$293 million and the aggregate actual regulatory capital and surplus of such operations was $1.5 billion as of the date of the
most recently required capital adequacy calculation for each jurisdiction. The Company’s foreign insurance operations exceeded the
minimum capital and solvency requirements as of the date of the most recent fiscal year-end capital adequacy calculation for each jurisdiction.
Statutory
accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing FPBs using
different actuarial assumptions, reporting surplus notes as surplus instead of debt and valuing securities on a different basis.
In
addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant
assets not admitted by Metropolitan Life Insurance Company are net deferred income tax assets resulting from temporary differences between
statutory accounting principles basis and tax basis not expected to reverse and become recoverable within three years. Further, statutory
accounting principles do not give recognition to purchase accounting adjustments.
New
York has adopted certain prescribed accounting practices, primarily consisting of the continuous Commissioners’ Annuity Reserve
Valuation Method, which impacts deferred annuities, and the New York Special Considerations Letter, which mandates certain assumptions
in asset adequacy testing. The collective impact of these prescribed accounting practices decreased the statutory capital and surplus
of Metropolitan Life Insurance Company by $1.4 billion and $1.3 billion at December 31, 2023 and 2022, respectively, compared
to what capital and surplus would have been had it been measured under NAIC guidance.
Statutory
net income (loss) of Metropolitan Life Insurance Company, a New York domiciled insurer, was $3.4 billion, $2.7 billion and $3.5 billion
at December 31, 2023, 2022 and 2021, respectively. Statutory capital and surplus, including the aforementioned prescribed practice, was
$11.6 billion and $10.9 billion at December 31, 2023 and 2022, respectively. All such amounts are derived from the statutory–basis
financial statements as filed with the NYDFS.
Dividend
Restrictions
Under
the New York State Insurance Law, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay
stockholder dividends to MetLife, Inc. in any calendar year based on either of two standards. Under one standard, Metropolitan Life Insurance
Company is permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive unassigned
funds (surplus), excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax), for the immediately preceding
calendar year), in an amount up to the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding
calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital
gains), not to exceed 30% of surplus to policyholders as of the end of the immediately preceding calendar year. In addition, under this
standard, Metropolitan Life Insurance Company may not, without prior insurance regulatory clearance, pay any dividends in any calendar
year immediately following a calendar year for which its net gain from operations, excluding realized capital gains, was negative. Under
the second standard, if dividends are paid out of other than earned surplus, Metropolitan Life Insurance Company may, without prior insurance
regulatory clearance, pay an amount up to the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding
calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital
gains). In addition, Metropolitan Life Insurance Company will be permitted to pay a dividend to MetLife, Inc. in excess of the amounts
allowed under both standards only if it files notice of its intention to declare such a dividend and the amount thereof with the New York
Superintendent of Financial Services (the “Superintendent”) and the Superintendent either approves the distribution of the
dividend or does not disapprove the dividend within 30 days of its filing. Under the New York State Insurance Law, the Superintendent
has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such
dividends to its stockholder.
Metropolitan
Life Insurance Company paid $2.5 billion and $3.5 billion in dividends to MetLife, Inc. for the years ended December 31, 2023 and 2022,
respectively, including amounts where regulatory approval was obtained as required. Under
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
15.
Equity (continued)
New
York State Insurance Law, Metropolitan Life Insurance Company has calculated that it may pay approximately $3.5 billion to MetLife,
Inc. without prior regulatory approval by the end of 2024.
Accumulated
Other Comprehensive Income (Loss)
Information
regarding changes in the balances of each component of AOCI attributable to Metropolitan Life Insurance Company was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
Investment Gains
(Losses),
Net of
Related Offsets
(1) |
|
Deferred Gains
(Losses) on Derivatives |
|
Future
Policy Benefits Discount Rate Remeasurement Gains (Losses) |
|
Market
Risk Benefits Instrument-Specific Credit Risk Remeasurement Gains(Losses) |
|
Foreign Currency Translation Adjustments |
|
Defined Benefit Plans Adjustment |
|
Total |
|
(In
millions) |
Balance
at December 31, 2020 |
$ |
10,384 |
|
|
$ |
1,791 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(53) |
|
|
$ |
(460) |
|
|
$ |
11,662 |
|
Cumulative
effects of changes in accounting principles, net of income tax |
6,588 |
|
|
— |
|
|
(19,596) |
|
|
21 |
|
|
— |
|
|
— |
|
|
(12,987) |
|
Balance
at January 1, 2021 |
16,972 |
|
|
1,791 |
|
|
(19,596) |
|
|
21 |
|
|
(53) |
|
|
(460) |
|
|
(1,325) |
|
OCI
before reclassifications |
(5,443) |
|
|
30 |
|
|
5,118 |
|
|
311 |
|
|
9 |
|
|
44 |
|
|
69 |
|
Deferred
income tax benefit (expense) |
1,191 |
|
|
(8) |
|
|
(1,075) |
|
|
(65) |
|
|
(1) |
|
|
(9) |
|
|
33 |
|
AOCI
before reclassifications, net of income tax |
12,720 |
|
|
1,813 |
|
|
(15,553) |
|
|
267 |
|
|
(45) |
|
|
(425) |
|
|
(1,223) |
|
Amounts
reclassified from AOCI |
102 |
|
|
81 |
|
|
— |
|
|
— |
|
|
— |
|
|
38 |
|
|
221 |
|
Deferred
income tax benefit (expense) |
(23) |
|
|
(22) |
|
|
— |
|
|
— |
|
|
— |
|
|
(8) |
|
|
(53) |
|
Amounts
reclassified from AOCI, net of income tax |
79 |
|
|
59 |
|
|
— |
|
|
— |
|
|
— |
|
|
30 |
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2021 |
12,799 |
|
|
1,872 |
|
|
(15,553) |
|
|
267 |
|
|
(45) |
|
|
(395) |
|
|
(1,055) |
|
OCI
before reclassifications |
(31,197) |
|
|
(701) |
|
|
21,623 |
|
|
(236) |
|
|
(177) |
|
|
278 |
|
|
(10,410) |
|
Deferred
income tax benefit (expense) |
6,556 |
|
|
147 |
|
|
(4,541) |
|
|
49 |
|
|
35 |
|
|
(58) |
|
|
2,188 |
|
AOCI
before reclassifications, net of income tax |
(11,842) |
|
|
1,318 |
|
|
1,529 |
|
|
80 |
|
|
(187) |
|
|
(175) |
|
|
(9,277) |
|
Amounts
reclassified from AOCI |
862 |
|
|
302 |
|
|
— |
|
|
— |
|
|
— |
|
|
47 |
|
|
1,211 |
|
Deferred
income tax benefit (expense) |
(181) |
|
|
(63) |
|
|
— |
|
|
— |
|
|
— |
|
|
(10) |
|
|
(254) |
|
Amounts
reclassified from AOCI, net of income tax |
681 |
|
|
239 |
|
|
— |
|
|
— |
|
|
— |
|
|
37 |
|
|
957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2022 |
(11,161) |
|
|
1,557 |
|
|
1,529 |
|
|
80 |
|
|
(187) |
|
|
(138) |
|
|
(8,320) |
|
OCI
before reclassifications |
4,420 |
|
|
(252) |
|
|
(2,957) |
|
|
(59) |
|
|
56 |
|
|
(44) |
|
|
1,164 |
|
Deferred
income tax benefit (expense) |
(889) |
|
|
53 |
|
|
621 |
|
|
12 |
|
|
(12) |
|
|
9 |
|
|
(206) |
|
AOCI
before reclassifications, net of income tax |
(7,630) |
|
|
1,358 |
|
|
(807) |
|
|
33 |
|
|
(143) |
|
|
(173) |
|
|
(7,362) |
|
Amounts
reclassified from AOCI |
1,421 |
|
|
(826) |
|
|
— |
|
|
— |
|
|
— |
|
|
10 |
|
|
605 |
|
Deferred
income tax benefit (expense) |
(286) |
|
|
173 |
|
|
— |
|
|
— |
|
|
— |
|
|
(2) |
|
|
(115) |
|
Amounts
reclassified from AOCI, net of income tax |
1,135 |
|
|
(653) |
|
|
— |
|
|
— |
|
|
— |
|
|
8 |
|
|
490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2023 |
$ |
(6,495) |
|
|
$ |
705 |
|
|
$ |
(807) |
|
|
$ |
33 |
|
|
$ |
(143) |
|
|
$ |
(165) |
|
|
$ |
(6,872) |
|
__________________
(1)Primarily
unrealized gains (losses) on fixed maturity securities.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
15.
Equity (continued)
Information
regarding amounts reclassified out of each component of AOCI was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31, |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
AOCI
Components |
|
Amounts
Reclassified from AOCI |
|
Consolidated
Statements of Operations Locations |
|
|
(In
millions) |
|
|
Net
unrealized investment gains (losses): |
|
|
|
|
|
|
|
|
Net
unrealized investment gains (losses) |
|
$ |
(1,404) |
|
|
$ |
(810) |
|
|
$ |
(67) |
|
|
Net investment gains (losses) |
Net
unrealized investment gains (losses) |
|
5 |
|
|
6 |
|
|
(13) |
|
|
Net
investment income |
Net
unrealized investment gains (losses) |
|
(22) |
|
|
(58) |
|
|
(22) |
|
|
Net
derivative gains (losses) |
Net
unrealized investment gains (losses), before income tax |
|
(1,421) |
|
|
(862) |
|
|
(102) |
|
|
|
Income
tax (expense) benefit |
|
286 |
|
|
181 |
|
|
23 |
|
|
|
Net
unrealized investment gains (losses), net of income tax |
|
(1,135) |
|
|
(681) |
|
|
(79) |
|
|
|
Deferred
gains (losses) on derivatives - cash flow hedges: |
|
|
|
|
|
|
|
|
Interest
rate derivatives |
|
50 |
|
|
59 |
|
|
57 |
|
|
Net
investment income |
Interest
rate derivatives |
|
87 |
|
|
51 |
|
|
87 |
|
|
Net
investment gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency exchange rate derivatives |
|
4 |
|
|
5 |
|
|
4 |
|
|
Net
investment income |
Foreign
currency exchange rate derivatives |
|
684 |
|
|
(417) |
|
|
(229) |
|
|
Net
investment gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
derivatives |
|
1 |
|
|
— |
|
|
— |
|
|
Net
investment gains (losses) |
|
|
|
|
|
|
|
|
|
Gains
(losses) on cash flow hedges, before income tax |
|
826 |
|
|
(302) |
|
|
(81) |
|
|
|
Income
tax (expense) benefit |
|
(173) |
|
|
63 |
|
|
22 |
|
|
|
Gains
(losses) on cash flow hedges, net of income tax |
|
653 |
|
|
(239) |
|
|
(59) |
|
|
|
Defined
benefit plans adjustment: (1) |
|
|
|
|
|
|
|
|
Amortization
of net actuarial gains (losses) |
|
(12) |
|
|
(49) |
|
|
(43) |
|
|
|
Amortization
of prior service (costs) credit |
|
2 |
|
|
2 |
|
|
5 |
|
|
|
Amortization
of defined benefit plan items, before income tax |
|
(10) |
|
|
(47) |
|
|
(38) |
|
|
|
Income
tax (expense) benefit |
|
2 |
|
|
10 |
|
|
8 |
|
|
|
Amortization
of defined benefit plan items, net of income tax |
|
(8) |
|
|
(37) |
|
|
(30) |
|
|
|
Total
reclassifications, net of income tax |
|
$ |
(490) |
|
|
$ |
(957) |
|
|
$ |
(168) |
|
|
|
__________________
(1)These
AOCI components are included in the computation of net periodic benefit costs. See Note 17.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
16.
Other Revenues and Other Expenses
Other
Revenues
Information
on other revenues, which primarily includes fees related to service contracts from customers, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
|
2023 |
|
2022 |
|
2021 |
|
|
(In millions) |
Prepaid
legal plans |
|
$ |
446 |
|
|
$ |
421 |
|
|
$ |
395 |
|
Administrative
services-only contracts |
|
250 |
|
|
226 |
|
|
219 |
|
Recordkeeping
and administrative services (1) |
|
148 |
|
|
166 |
|
|
211 |
|
Other
revenue from service contracts from customers |
|
43 |
|
|
34 |
|
|
35 |
|
Total
revenues from service contracts from customers |
|
887 |
|
|
847 |
|
|
860 |
|
Other
(2) |
|
786 |
|
|
847 |
|
|
756 |
|
Total
other revenues |
|
$ |
1,673 |
|
|
$ |
1,694 |
|
|
$ |
1,616 |
|
__________________
(1)
Related to products and businesses no longer actively marketed by the Company.
(2)
Primarily includes reinsurance ceded. See Note 8.
Other
Expenses
Information
on other expenses was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
General
and administrative expenses (1) |
$ |
2,799 |
|
|
$ |
2,743 |
|
|
$ |
2,331 |
|
Pension,
postretirement and postemployment benefit costs |
199 |
|
|
116 |
|
|
112 |
|
Premium
taxes, other taxes, and licenses & fees |
377 |
|
|
342 |
|
|
332 |
|
Commissions
and other variable expenses |
2,098 |
|
|
2,290 |
|
|
2,551 |
|
Capitalization
of DAC |
(118) |
|
|
(189) |
|
|
(63) |
|
Amortization
of DAC and VOBA |
298 |
|
|
297 |
|
|
341 |
|
Interest
expense on debt |
132 |
|
|
104 |
|
|
96 |
|
Total
other expenses |
$ |
5,785 |
|
|
$ |
5,703 |
|
|
$ |
5,700 |
|
__________________
(1)Includes
($116) million, $52 million and ($113) million for the years ended December 31, 2023, 2022 and 2021, respectively, for the net change
in cash surrender value of investments in certain life insurance policies, net of premiums paid.
Capitalization
of DAC and Amortization of DAC and VOBA
See
Note 7 for additional information on DAC and VOBA including impacts of capitalization and amortization. See also Note 9 for
a description of the DAC amortization impact associated with the closed block.
Expenses
related to Debt
See
Note 14 for additional information on interest expense on debt, including affiliated interest expense.
Affiliated
Expenses
See
Notes 8 and 21 for a discussion of affiliated expenses related to reinsurance and service agreement transactions, respectively, included
in the table above.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
17.
Employee Benefit Plans
Pension
Benefit Plans
The
Company sponsors a U.S. nonqualified defined benefit pension plan covering MetLife employees who meet specified eligibility requirements
of the sponsor and its participating affiliates. Participating affiliates are allocated a proportionate share of net expense related to
the plan. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides
benefits that are primarily based upon years of credited service and final average earnings. The cash balance formula utilizes hypothetical
or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as interest credits, determined
annually based upon the annual rate of interest on 30-year U.S. Treasury securities, for each account balance. In September 2018, the
nonqualified defined benefit pension plan was amended, effective January 1, 2023, to provide benefit accruals for all active participants
under the cash balance formula and to cease future accruals under the traditional formula. The pension plan sponsored by the Company provides
supplemental benefits in excess of limits applicable to a qualified plan which is sponsored by an affiliate.
Obligations
and Funded Status
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
2023 |
|
2022 |
|
Pension
Benefits |
|
(In
millions) |
Change
in benefit obligations: |
|
|
|
Benefit
obligations at January 1, |
$ |
962 |
|
|
$ |
1,274 |
|
Service
costs |
10 |
|
|
15 |
|
Interest
costs |
52 |
|
|
37 |
|
Net
actuarial (gains) losses (1) |
43 |
|
|
(280) |
|
Settlements
and curtailments |
— |
|
|
— |
|
Benefits
paid |
(79) |
|
|
(84) |
|
Benefit
obligations at December 31, |
988 |
|
|
962 |
|
Change
in plan assets: |
|
|
|
Estimated
fair value of plan assets at January 1, |
— |
|
|
— |
|
Employer
contributions |
79 |
|
|
84 |
|
Benefits
paid |
(79) |
|
|
(84) |
|
Estimated
fair value of plan assets at December 31, |
— |
|
|
— |
|
Over
(under) funded status at December 31, |
$ |
(988) |
|
|
$ |
(962) |
|
Amounts recognized on the
consolidated balance sheets: |
|
|
|
Other
liabilities |
$ |
(988) |
|
|
$ |
(962) |
|
Amount
recognized |
$ |
(988) |
|
|
$ |
(962) |
|
AOCI: |
|
|
|
Net
actuarial (gains) losses |
$ |
220 |
|
|
$ |
189 |
|
Prior
service costs (credit) |
(5) |
|
|
(7) |
|
AOCI,
before income tax |
$ |
215 |
|
|
$ |
182 |
|
Accumulated
benefit obligation |
$ |
967 |
|
|
$ |
940 |
|
__________________
(1)For
the years ended December 31, 2023 and 2022, significant sources of actuarial (gains) losses for pension benefits include the impact of
changes to the financial assumptions of $32 million and ($291) million, respectively, plan experience of $21 million and $11 million,
respectively, and demographic assumptions of ($10) million and $0, respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
17.
Employee Benefit Plans (continued)
Information
regarding pension plans with PBOs and/or accumulated benefit obligations (“ABO”) in excess of plan assets was as follows at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
PBO
Exceeds Estimated Fair Value of Plan Assets |
|
ABO
Exceeds Estimated Fair Value of Plan Assets |
|
(In
millions) |
Projected
benefit obligations |
$ |
988 |
|
|
$ |
961 |
|
|
$ |
988 |
|
|
$ |
961 |
|
Accumulated
benefit obligations |
$ |
967 |
|
|
$ |
940 |
|
|
$ |
967 |
|
|
$ |
940 |
|
Net
Periodic Benefit Costs
The
components of net periodic benefit costs and benefit obligations recognized in OCI were as follows for pension benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Net
periodic benefit costs: |
|
|
|
|
|
Service
costs |
$ |
10 |
|
|
$ |
15 |
|
|
$ |
17 |
|
Interest
costs |
52 |
|
|
37 |
|
|
37 |
|
Settlement
and curtailment (gains) losses |
— |
|
|
— |
|
|
(3) |
|
Amortization
of net actuarial (gains) losses |
12 |
|
|
41 |
|
|
43 |
|
Amortization
of prior service costs (credit) |
(2) |
|
|
(2) |
|
|
(2) |
|
Total
net periodic benefit costs (credit) |
72 |
|
|
91 |
|
|
92 |
|
Other
changes in plan assets and benefit obligations recognized in OCI: |
|
|
|
|
|
Net
actuarial (gains) losses |
43 |
|
|
(280) |
|
|
(42) |
|
Prior
service costs (credit) |
— |
|
|
— |
|
|
— |
|
Settlement
and curtailment (gains) losses |
— |
|
|
— |
|
|
1 |
|
Amortization
of net actuarial gains (losses) |
(12) |
|
|
(41) |
|
|
(43) |
|
Amortization
of prior service (costs) credit |
2 |
|
|
2 |
|
|
2 |
|
Total
recognized in OCI |
33 |
|
|
(319) |
|
|
(82) |
|
Total
recognized in net periodic benefit costs and OCI |
$ |
105 |
|
|
$ |
(228) |
|
|
$ |
10 |
|
Assumptions
Assumptions
used in determining the benefit obligation for the plan were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits |
December
31, 2023 |
|
|
|
Weighted
average discount rate |
5.25% |
Weighted
average interest crediting rate |
4.00% |
Rate
of compensation increase |
2.50% |
- |
8.00% |
December
31, 2022 |
|
|
|
Weighted
average discount rate |
5.60% |
Weighted
average interest crediting rate |
4.00% |
Rate
of compensation increase |
2.50% |
- |
8.00% |
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
17.
Employee Benefit Plans (continued)
Assumptions
used in determining the net periodic benefit cost for the plan were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits |
Year
Ended December 31, 2023 |
|
|
|
Weighted
average discount rate |
5.60% |
Weighted
average interest crediting rate |
4.00% |
Rate
of compensation increase |
2.50% |
- |
8.00% |
Year
Ended December 31, 2022 |
|
|
|
Weighted
average discount rate |
2.95% |
Weighted
average interest crediting rate |
3.46% |
Rate
of compensation increase |
2.50% |
- |
8.00% |
Year
Ended December 31, 2021 |
|
|
|
Weighted
average discount rate |
3.01% |
Weighted
average interest crediting rate |
3.24% |
Rate
of compensation increase |
2.50% |
- |
8.00% |
The
weighted average discount rate for the plan is determined annually based on the yield, measured on a yield to worst basis, of a hypothetical
portfolio constructed of high quality debt instruments available on the measurement date, which would provide the necessary future cash
flows to pay the aggregate PBO when due.
The
weighted average interest crediting rate is determined annually based on the plan selected rate, long-term financial forecasts of that
rate and the demographics of the plan participants.
Expected
Future Contributions and Benefit Payments
Benefit
payments due under the nonqualified pension plan are primarily funded from the Company’s general assets as they become due under
the provisions of the plan. The Company expects to make benefit payments of $80 million in 2024.
Gross
benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to be as follows:
|
|
|
|
|
|
|
Pension
Benefits |
|
(In
millions) |
2024 |
$ |
78 |
|
2025 |
$ |
73 |
|
2026 |
$ |
73 |
|
2027 |
$ |
74 |
|
2028 |
$ |
79 |
|
2029-2033 |
$ |
399 |
|
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
18. Income Tax
The
Company’s provision for income tax was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Current: |
|
|
|
|
|
U.S.
federal |
$ |
353 |
|
|
$ |
309 |
|
|
$ |
(89) |
|
U.S.
state and local |
14 |
|
|
11 |
|
|
5 |
|
Non-U.S. |
14 |
|
|
14 |
|
|
43 |
|
Subtotal |
381 |
|
|
334 |
|
|
(41) |
|
Deferred: |
|
|
|
|
|
U.S.
federal |
(321) |
|
|
939 |
|
|
576 |
|
Non-U.S. |
— |
|
|
— |
|
|
(6) |
|
Subtotal |
(321) |
|
|
939 |
|
|
570 |
|
Provision
for income tax expense (benefit) |
$ |
60 |
|
|
$ |
1,273 |
|
|
$ |
529 |
|
The
Company’s income (loss) before income tax expense (benefit) was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Income
(loss): |
|
|
|
|
|
U.S. |
$ |
1,176 |
|
|
$ |
6,895 |
|
|
$ |
4,139 |
|
Non-U.S. |
19 |
|
|
34 |
|
|
105 |
|
Total |
$ |
1,195 |
|
|
$ |
6,929 |
|
|
$ |
4,244 |
|
The
reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Tax
provision at U.S. statutory rate |
$ |
251 |
|
|
$ |
1,455 |
|
|
$ |
891 |
|
Tax
effect of: |
|
|
|
|
|
Dividend
received deduction |
(17) |
|
|
(19) |
|
|
(39) |
|
Tax-exempt
income |
(28) |
|
|
7 |
|
|
(27) |
|
Prior
year tax |
8 |
|
|
22 |
|
|
(13) |
|
Low
income housing tax credits |
(116) |
|
|
(143) |
|
|
(178) |
|
Other
tax credits |
(30) |
|
|
(36) |
|
|
(38) |
|
Foreign
tax rate differential |
1 |
|
|
(10) |
|
|
(7) |
|
Other,
net (1) |
(9) |
|
|
(3) |
|
|
(60) |
|
Provision
for income tax expense (benefit) |
$ |
60 |
|
|
$ |
1,273 |
|
|
$ |
529 |
|
__________________
(1)For
the year ended December 31, 2021, Other, net primarily includes a tax benefit of $53 million related to a non-cash transfer of assets
from a wholly-owned United Kingdom subsidiary to Metropolitan Life Insurance Company.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
18.
Income Tax (continued)
Deferred
income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income
tax assets and liabilities consisted of the following at:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
(In
millions) |
Deferred
income tax assets: |
|
|
|
Policyholder
liabilities and receivables |
$ |
1,591 |
|
|
$ |
772 |
|
|
|
|
|
Net
operating loss carryforwards (1) |
76 |
|
|
72 |
|
Employee
benefits |
473 |
|
|
457 |
|
|
|
|
|
|
|
|
|
Tax
credit carryforwards |
— |
|
|
508 |
|
Litigation-related
and government mandated |
83 |
|
|
74 |
|
Net
unrealized investment losses |
1,741 |
|
|
2,699 |
|
Other |
204 |
|
|
76 |
|
Total
gross deferred income tax assets |
4,168 |
|
|
4,658 |
|
Less:
Valuation allowance |
75 |
|
|
71 |
|
Total
net deferred income tax assets |
4,093 |
|
|
4,587 |
|
Deferred
income tax liabilities: |
|
|
|
|
|
|
|
Investments,
including derivatives |
1,005 |
|
|
1,441 |
|
Intangibles |
20 |
|
|
23 |
|
DAC |
146 |
|
|
203 |
|
Total
deferred income tax liabilities |
1,171 |
|
|
1,667 |
|
Net
deferred income tax asset (liability) |
$ |
2,922 |
|
|
$ |
2,920 |
|
__________________
(1)The
Company has recorded a deferred tax asset of $76 million primarily related to U.S. state net operating loss carryforwards and an offsetting
valuation allowance for the year ended December 31, 2023. U.S. state net operating loss carryforwards will expire between 2024 and 2042,
whereas other jurisdictions have an unlimited carryforward period.
The
Company participates in a tax sharing agreement with MetLife, Inc., as described in Note 1. Pursuant to this tax sharing agreement,
the amounts due from MetLife, Inc. included $57 million and $52 million at December 31, 2023 and 2022, respectively.
The
Company files income tax returns with the U.S. federal government and various U.S. state and local jurisdictions, as well as non-U.S.
jurisdictions. The Company is under continuous examination by the Internal Revenue Service (“IRS”) and other tax authorities
in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction
and subsidiary. The Company is no longer subject to U.S. federal, state, or local income tax examinations for years prior to 2017.
In
2022, the IRS began a federal income tax audit of MetLife, Inc. and subsidiaries for tax years 2017-2019. The audit is ongoing and to
date, no material issues have been raised and no adjustments have been proposed.
In
2021, the Company filed amended federal income tax returns with the IRS for MetLife, Inc. and subsidiaries for tax years 2014 through
2016. In 2022, the IRS reviewed and acknowledged acceptance of the 2014 through 2016 amended federal income tax returns and closed the
years to further audit.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
18.
Income Tax (continued)
The
Company’s overall liability for unrecognized tax benefits may increase or decrease in the next 12 months. For example, U.S. federal
tax legislation and regulation could impact unrecognized tax benefits. A reasonable estimate of the increase or decrease cannot be made
at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material
change to its consolidated financial statements, although the resolution of income tax matters could impact the Company’s effective
tax rate for a particular future period.
A
reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In
millions) |
Balance
at January 1, |
$ |
37 |
|
|
$ |
23 |
|
|
$ |
35 |
|
Additions
for tax positions of prior years |
— |
|
|
24 |
|
|
— |
|
Reductions
for tax positions of prior years (1) |
— |
|
|
(12) |
|
|
(14) |
|
Additions
for tax positions of current year |
2 |
|
|
2 |
|
|
2 |
|
|
|
|
|
|
|
Balance
at December 31, |
$ |
39 |
|
|
$ |
37 |
|
|
$ |
23 |
|
Unrecognized
tax benefits that, if recognized, would impact the effective rate |
$ |
39 |
|
|
$ |
37 |
|
|
$ |
23 |
|
__________________
(1)The
decreases in 2022 and 2021 are primarily related to non-cash benefits from tax audit settlements.
The
Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
19.
Contingencies, Commitments and Guarantees
Contingencies
Litigation
The
Company is a defendant in a large number of litigation matters. Putative or certified class action litigation and other litigation and
claims and assessments against the Company, in addition to those discussed below and those otherwise provided for in the Company’s
consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection
with its activities as an insurer, mortgage lending bank, employer, investor, investment advisor, broker-dealer, and taxpayer.
The
Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from state regulators, including
state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the U.S.
Securities and Exchange Commission; federal governmental authorities, including congressional committees; and the Financial Industry Regulatory
Authority, as well as from local and national regulators and government authorities in jurisdictions outside the United States where the
Company conducts business. The issues involved in information requests and regulatory matters vary widely, but can include inquiries or
investigations concerning the Company’s compliance with applicable insurance and other laws and regulations. The Company cooperates
in these inquiries.
It
is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. The Company establishes liabilities
for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably
estimated. In certain circumstances where liabilities have been established there may be coverage under one or more corporate insurance
policies, pursuant to which there may be an insurance recovery. Insurance recoveries are recognized as gains when any contingencies relating
to the insurance claim have been resolved, which is the earlier of when the gains are realized or realizable. It is possible that some
of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be
reasonably estimated at December 31, 2023. While the potential future charges could be material in the particular quarterly or annual
periods in which they are recorded, based on information currently known to management, management does not believe any such charges are
likely to have a material effect on the Company’s financial position. Given the large and/or indeterminate amounts sought in certain
of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from
time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.
Matters
as to Which an Estimate Can Be Made
For
some matters, the Company is able to estimate a reasonably possible range of loss. For matters where a loss is believed to be reasonably
possible, but not probable, the Company has not made an accrual. As of December 31, 2023, the Company estimates the aggregate range of
reasonably possible losses in excess of amounts accrued for these matters to be $0 to $125 million.
Matters
as to Which an Estimate Cannot Be Made
For
other matters, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable
to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment
of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation
of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations.
On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals,
disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
19.
Contingencies, Commitments and Guarantees (continued)
Asbestos-Related
Claims
Metropolitan
Life Insurance Company is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These
suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual
and punitive damages. Metropolitan Life Insurance Company has never engaged in the business of manufacturing or selling asbestos-containing
products, nor has Metropolitan Life Insurance Company issued liability or workers’ compensation insurance to companies in the business
of manufacturing or selling asbestos-containing products. The lawsuits principally have focused on allegations with respect to certain
research, publication and other activities of one or more of Metropolitan Life Insurance Company’s employees during the period from
the 1920s through approximately the 1950s and allege that Metropolitan Life Insurance Company learned or should have learned of certain
health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life
Insurance Company believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however,
is uncertain and can be impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of
the alleged injury and factors unrelated to the ultimate legal merit of the claims asserted against Metropolitan Life Insurance Company.
Metropolitan
Life Insurance Company’s defenses include that: (i) Metropolitan Life Insurance Company owed no duty to the plaintiffs; (ii) plaintiffs
did not rely on any actions of Metropolitan Life Insurance Company; (iii) Metropolitan Life Insurance Company’s conduct was
not the cause of the plaintiffs’ injuries; and (iv) plaintiffs’ exposure occurred after the dangers of asbestos were
known. During the course of the litigation, certain trial courts have granted motions dismissing claims against Metropolitan Life Insurance
Company, while other trial courts have denied Metropolitan Life Insurance Company’s motions. There can be no assurance that Metropolitan
Life Insurance Company will receive favorable decisions on motions in the future. While most cases brought to date have settled, Metropolitan
Life Insurance Company intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims
at trials.
The
approximate total number of asbestos personal injury claims pending against Metropolitan Life Insurance Company as of the dates indicated,
the approximate number of new claims during the years ended on those dates and the approximate total settlement payments made to resolve
asbestos personal injury claims at or during those years are set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2023 |
|
2022 |
|
2021 |
|
(In millions, except number of claims) |
Asbestos
personal injury claims at year end |
57,488 |
|
|
58,073 |
|
|
58,785 |
|
Number
of new claims during the year |
2,565 |
|
|
2,610 |
|
|
2,824 |
|
Settlement
payments during the year (1) |
$ |
50.6 |
|
|
$ |
50.5 |
|
|
$ |
53.0 |
|
__________________
(1)Settlement
payments represent payments made by Metropolitan Life Insurance Company during the year in connection with settlements made in that year
and in prior years. Amounts do not include Metropolitan Life Insurance Company’s attorneys’ fees and expenses.
The
number of asbestos cases that may be brought, the aggregate amount of any liability that Metropolitan Life Insurance Company may incur,
and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year.
The
ability of Metropolitan Life Insurance Company to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and
the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult
to predict the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims,
the disease mix and severity of disease in pending and future claims, the willingness of courts to allow plaintiffs to pursue claims against
Metropolitan Life Insurance Company when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the
impact of any possible future adverse verdicts and their amounts.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
19.
Contingencies, Commitments and Guarantees (continued)
The
ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the
future. In the Company’s judgment, there is a future point after which losses cease to be probable and reasonably estimable. It
is reasonably possible that the Company’s total exposure to asbestos claims may be materially greater than the asbestos liability
currently accrued and that future charges to income may be necessary, but management does not believe any such charges are likely to have
a material effect on the Company’s financial position.
The
Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses
for asbestos-related claims. Metropolitan Life Insurance Company’s recorded asbestos liability covers pending claims, claims not
yet asserted, and legal defense costs and is based on estimates and includes significant assumptions underlying its analysis.
Metropolitan
Life Insurance Company reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims
experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting
asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis.
Based upon its regular reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its recorded
liability for asbestos-related claims. The frequency of severe claims relating to asbestos has not declined as expected, and MLIC has
reflected this in its provisions. Accordingly, MLIC increased its recorded liability for asbestos-related claims to $364 million
at December 31, 2023. The recorded liability was $320 million at December 31, 2022.
Total
Asset Recovery Services, LLC. v. MetLife, Inc., et al. (Supreme Court of the State of New York, County of New York, filed December 27,
2017)
Total
Asset Recovery Services (the “Relator”) brought an action under the qui tam provision of the New York False Claims Act (the
“Act”) on behalf of itself and the State of New York. The Relator originally filed this action under seal in 2010, and the
complaint was unsealed on December 19, 2017. The Relator alleges that MetLife, Inc., Metropolitan Life Insurance Company, and several
other insurance companies violated the Act by filing false unclaimed property reports with the State of New York from 1986 to 2017, to
avoid having to escheat the proceeds of more than 25,000 life insurance policies, including policies for which the defendants escheated
funds as part of their demutualizations in the late 1990s. The Relator seeks treble damages and other relief. The Appellate Division of
the New York State Supreme Court, First Department, reversed the court’s order granting MetLife, Inc. and Metropolitan Life Insurance
Company’s motion to dismiss and remanded the case to the trial court where the Relator has filed an amended complaint. The Company
intends to defend the action vigorously.
Matters
Related to Group Annuity Benefits
In
2018, the Company announced that it identified a material weakness in its internal control over financial reporting related to the practices
and procedures for estimating reserves for certain group annuity benefits. Several regulators have made inquiries into the issue and it
is possible that other jurisdictions may pursue similar investigations or inquiries. The Company could be exposed to lawsuits and additional
legal actions relating to the issue. These may result in payments, including damages, fines, penalties, interest and other amounts assessed
or awarded by courts or regulatory authorities under applicable escheat, tax, securities, Employee Retirement Income Security Act of 1974,
or other laws or regulations. The Company could incur significant costs in connection with these actions.
Commitments
Mortgage
Loan Commitments
The
Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $3.3 billion and
$2.7 billion at December 31, 2023 and 2022, respectively.
Commitments
to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments
The
Company commits to fund partnership investments and to lend funds under bank credit facilities, bridge loans and private corporate bond
investments. The amounts of these unfunded commitments were $4.4 billion and $4.8 billion at December 31, 2023 and 2022,
respectively.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
19.
Contingencies, Commitments and Guarantees (continued)
Guarantees
In
the normal course of its business, the Company has provided certain indemnities and guarantees to third parties such that it may be required
to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has
provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities
and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company.
In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar
to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time
limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes
of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation
ranging from less than $1 million to $208 million, with a cumulative maximum of $306 million, while in other cases such
limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe
that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes
that it is unlikely the Company will have to make any material payments under these indemnities or guarantees.
In
addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its
agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally
not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum
potential amount that could become due under these indemnities in the future.
The
Company’s recorded liabilities were $2 million at both December 31, 2023 and 2022, for indemnities and guarantees.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Notes
to the Consolidated Financial Statements — (continued)
20.
Quarterly Results of Operations (Unaudited)
The
unaudited quarterly results of operations for 2023 and 2022 are summarized in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|
|
(In
millions) |
2023 |
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
8,717 |
|
|
$ |
8,776 |
|
|
$ |
9,324 |
|
|
$ |
9,532 |
|
Total
expenses |
|
$ |
8,912 |
|
|
$ |
8,188 |
|
|
$ |
7,634 |
|
|
$ |
10,420 |
|
Net
income (loss) |
|
$ |
(91) |
|
|
$ |
510 |
|
|
$ |
1,379 |
|
|
$ |
(663) |
|
Less:
Net income (loss) attributable to noncontrolling interests |
|
$ |
(2) |
|
|
$ |
43 |
|
|
$ |
— |
|
|
$ |
— |
|
Net
income (loss) attributable to Metropolitan Life Insurance Company |
|
$ |
(89) |
|
|
$ |
467 |
|
|
$ |
1,379 |
|
|
$ |
(663) |
|
2022 |
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
9,517 |
|
|
$ |
9,448 |
|
|
$ |
17,646 |
|
|
$ |
8,836 |
|
Total
expenses |
|
$ |
7,232 |
|
|
$ |
7,379 |
|
|
$ |
15,793 |
|
|
$ |
8,114 |
|
Net
income (loss) |
|
$ |
1,882 |
|
|
$ |
1,684 |
|
|
$ |
1,510 |
|
|
$ |
580 |
|
Less:
Net income (loss) attributable to noncontrolling interests |
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
2 |
|
|
$ |
24 |
|
Net
income (loss) attributable to Metropolitan Life Insurance Company |
|
$ |
1,882 |
|
|
$ |
1,682 |
|
|
$ |
1,508 |
|
|
$ |
556 |
|
21. Related
Party Transactions
Service
Agreements
The
Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided
under these agreements include personnel, policy administrative functions and distribution services. The bases for such charges are modified
and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual cost incurred by the Company and/or
its affiliates. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $3.0 billion,
$2.7 billion and $2.5 billion for the years ended December 31, 2023, 2022 and 2021, respectively. Total revenues received from affiliates
related to these agreements were $52 million, $48 million and $40 million for the years ended December 31, 2023, 2022 and
2021, respectively.
The
Company had net payables to affiliates, related to the items discussed above, of $56 million and $188 million at December 31, 2023
and 2022, respectively.
See
Notes 1, 8, 10, 14 and 15 for additional information on related party transactions.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule I
Consolidated
Summary of Investments —
Other
Than Investments in Related Parties (1)
December 31,
2023
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Types
of Investments |
Cost
or Amortized Cost (2) |
|
Estimated Fair
Value |
|
Amount
at Which Shown on Balance Sheet |
Fixed
maturity securities AFS: |
|
|
|
|
|
Bonds: |
|
|
|
|
|
U.S.
government and agency |
$ |
23,100 |
|
|
$ |
21,060 |
|
|
$ |
21,060 |
|
Public
utilities |
5,569 |
|
|
5,385 |
|
|
5,385 |
|
Municipals |
6,429 |
|
|
6,319 |
|
|
6,319 |
|
Foreign
government |
3,416 |
|
|
3,295 |
|
|
3,295 |
|
All
other corporate bonds |
73,720 |
|
|
69,596 |
|
|
69,596 |
|
Total
bonds |
112,234 |
|
|
105,655 |
|
|
105,655 |
|
Mortgage-backed,
asset-backed and collateralized loan obligations securities |
39,136 |
|
|
36,423 |
|
|
36,423 |
|
Redeemable
preferred stock |
710 |
|
|
727 |
|
|
727 |
|
Total
fixed maturity securities AFS |
152,080 |
|
|
142,805 |
|
|
142,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
loans |
63,093 |
|
|
|
|
62,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy
loans |
5,671 |
|
|
|
|
5,671 |
|
Real
estate and real estate joint ventures |
8,500 |
|
|
|
|
8,500 |
|
Real
estate acquired in satisfaction of debt |
190 |
|
|
|
|
190 |
|
Other
limited partnership interests |
7,765 |
|
|
|
|
7,765 |
|
Short-term
investments |
3,008 |
|
|
|
|
3,048 |
|
Other
invested assets |
17,054 |
|
|
|
|
17,040 |
|
Total
investments |
$ |
257,361 |
|
|
|
|
$ |
247,603 |
|
______________
(1)Includes
investments in related parties of $4.1 billion;
see Notes 8, 10 and 11 of the Notes to Consolidated Financial Statements for further information.
(2)Amortized
cost for fixed maturity securities AFS, mortgage loans, policy loans and short-term investments represents original cost reduced by repayments
and adjusted for amortization of premium or accretion of discount; for real estate, cost represents original cost reduced by impairments
and depreciation; for real estate joint ventures and other limited partnership interests, cost represents original cost reduced for impairments
and adjusted for equity in earnings and distributions.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule III
Consolidated
Supplementary Insurance Information
December 31,
2023 and 2022
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
DAC and VOBA |
|
Future Policy Benefits, Other
Policy-Related Balances and Policyholder Dividend Obligation |
|
Policyholder Account Balances |
|
Market
Risk Benefits (Assets) Liabilities (1) |
|
Policyholder Dividends Payable |
|
Unearned Premiums (2), (3) |
|
Unearned Revenue (2) |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (4) |
|
$ |
255 |
|
|
$ |
17,547 |
|
|
$ |
7,605 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
359 |
|
|
$ |
— |
|
RIS
(4) |
|
169 |
|
|
54,367 |
|
|
69,758 |
|
|
(1) |
|
|
— |
|
|
— |
|
|
16 |
|
MetLife
Holdings |
|
2,723 |
|
|
65,434 |
|
|
17,598 |
|
|
2,702 |
|
|
233 |
|
|
152 |
|
|
5 |
|
Corporate
& Other |
|
158 |
|
|
123 |
|
|
8,933 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total |
|
$ |
3,305 |
|
|
$ |
137,471 |
|
|
$ |
103,894 |
|
|
$ |
2,701 |
|
|
$ |
233 |
|
|
$ |
511 |
|
|
$ |
21 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (4) |
|
$ |
263 |
|
|
$ |
16,727 |
|
|
$ |
7,954 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
298 |
|
|
$ |
— |
|
RIS
(4) |
|
154 |
|
|
53,116 |
|
|
69,545 |
|
|
25 |
|
|
— |
|
|
2 |
|
|
18 |
|
MetLife
Holdings |
|
3,220 |
|
|
64,871 |
|
|
19,828 |
|
|
3,071 |
|
|
240 |
|
|
155 |
|
|
227 |
|
Corporate
& Other |
|
120 |
|
|
131 |
|
|
6,080 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total |
|
$ |
3,757 |
|
|
$ |
134,845 |
|
|
$ |
103,407 |
|
|
$ |
3,096 |
|
|
$ |
240 |
|
|
$ |
455 |
|
|
$ |
245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________
(1)MRBs
assets and liabilities are presented net.
(2)Amounts
are included within the future policy benefits, other policy-related balances and policyholder dividend obligation column.
(3)Includes
premiums received in advance.
(4)See
Note 2 for information on the reorganization of the Company’s segments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule III
Consolidated
Supplementary Insurance Information — (continued)
Years
Ended December 31, 2023, 2022 and 2021
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
Premiums and
Universal Life and Investment-Type Product Policy Fees |
|
Net Investment Income |
|
Policyholder
Benefits and Claims, Policyholder Liability Remeasurement (Gains) Losses and Interest Credited to Policyholder Account Balances |
|
Market
Risk Benefit Remeasurement (Gains) Losses |
|
Amortization of DAC and VOBA Charged
to Other Expenses |
|
Other Expenses (1) |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (2) |
|
$ |
21,472 |
|
|
$ |
1,127 |
|
|
$ |
18,143 |
|
|
$ |
— |
|
|
$ |
26 |
|
|
$ |
3,302 |
|
RIS
(2) |
|
2,039 |
|
|
6,111 |
|
|
6,527 |
|
|
(34) |
|
|
31 |
|
|
527 |
|
MetLife
Holdings |
|
2,865 |
|
|
3,757 |
|
|
4,617 |
|
|
(669) |
|
|
224 |
|
|
1,278 |
|
Corporate
& Other |
|
6 |
|
|
211 |
|
|
315 |
|
|
— |
|
|
17 |
|
|
850 |
|
Total |
|
$ |
26,382 |
|
|
$ |
11,206 |
|
|
$ |
29,602 |
|
|
$ |
(703) |
|
|
$ |
298 |
|
|
$ |
5,957 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (2) |
|
$ |
21,124 |
|
|
$ |
1,076 |
|
|
$ |
18,307 |
|
|
$ |
— |
|
|
$ |
26 |
|
|
$ |
3,056 |
|
RIS
(2) |
|
8,692 |
|
|
4,980 |
|
|
12,353 |
|
|
(290) |
|
|
28 |
|
|
347 |
|
MetLife
Holdings |
|
3,190 |
|
|
4,132 |
|
|
4,904 |
|
|
(3,089) |
|
|
237 |
|
|
1,372 |
|
Corporate
& Other |
|
— |
|
|
(66) |
|
|
67 |
|
|
— |
|
|
6 |
|
|
1,194 |
|
Total |
|
$ |
33,006 |
|
|
$ |
10,122 |
|
|
$ |
35,631 |
|
|
$ |
(3,379) |
|
|
$ |
297 |
|
|
$ |
5,969 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Group
Benefits (2) |
|
$ |
20,468 |
|
|
$ |
1,105 |
|
|
$ |
18,943 |
|
|
$ |
— |
|
|
$ |
26 |
|
|
$ |
2,799 |
|
RIS
(2) |
|
4,095 |
|
|
5,855 |
|
|
7,222 |
|
|
117 |
|
|
29 |
|
|
412 |
|
MetLife
Holdings |
|
3,499 |
|
|
5,496 |
|
|
5,104 |
|
|
(875) |
|
|
286 |
|
|
1,579 |
|
Corporate
& Other |
|
— |
|
|
30 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,301 |
|
Total |
|
$ |
28,062 |
|
|
$ |
12,486 |
|
|
$ |
31,269 |
|
|
$ |
(758) |
|
|
$ |
341 |
|
|
$ |
6,091 |
|
_____________
(1)Includes
other expenses and policyholder dividends, excluding amortization of DAC and VOBA charged to other expenses.
(2)See
Note 2 for information on the reorganization of the Company’s segments.
Metropolitan
Life Insurance Company
(A
Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule IV
Consolidated
Reinsurance
December
31, 2023, 2022 and 2021
(Dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount |
|
Ceded
(1) |
|
Assumed
(1) |
|
Net
Amount |
|
% Amount
Assumed to Net |
2023 |
|
|
|
|
|
|
|
|
|
|
Life
insurance in-force |
|
$ |
4,276,976 |
|
|
$ |
160,983 |
|
|
$ |
660,504 |
|
|
$ |
4,776,497 |
|
|
13.8 |
% |
Insurance
premium |
|
|
|
|
|
|
|
|
|
|
Life
insurance (2) |
|
$ |
14,418 |
|
|
$ |
704 |
|
|
$ |
807 |
|
|
$ |
14,521 |
|
|
5.6 |
% |
Accident
& health insurance |
|
10,609 |
|
|
452 |
|
|
40 |
|
|
10,197 |
|
|
0.4 |
% |
Total
insurance premium |
|
$ |
25,027 |
|
|
$ |
1,156 |
|
|
$ |
847 |
|
|
$ |
24,718 |
|
|
3.4 |
% |
2022 |
|
|
|
|
|
|
|
|
|
|
Life
insurance in-force |
|
$ |
4,074,989 |
|
|
$ |
149,129 |
|
|
$ |
538,168 |
|
|
$ |
4,464,028 |
|
|
12.1 |
% |
Insurance
premium |
|
|
|
|
|
|
|
|
|
|
Life
insurance (2) |
|
$ |
21,248 |
|
|
$ |
769 |
|
|
$ |
830 |
|
|
$ |
21,309 |
|
|
3.9 |
% |
Accident
& health insurance |
|
10,017 |
|
|
179 |
|
|
42 |
|
|
9,880 |
|
|
0.4 |
% |
Total
insurance premium |
|
$ |
31,265 |
|
|
$ |
948 |
|
|
$ |
872 |
|
|
$ |
31,189 |
|
|
2.8 |
% |
2021 |
|
|
|
|
|
|
|
|
|
|
Life
insurance in-force |
|
$ |
3,991,763 |
|
|
$ |
164,834 |
|
|
$ |
546,176 |
|
|
$ |
4,373,105 |
|
|
12.5 |
% |
Insurance
premium |
|
|
|
|
|
|
|
|
|
|
Life
insurance (2) |
|
$ |
13,628 |
|
|
$ |
792 |
|
|
$ |
4,080 |
|
|
$ |
16,916 |
|
|
24.1 |
% |
Accident
& health insurance |
|
9,377 |
|
|
146 |
|
|
41 |
|
|
9,272 |
|
|
0.4 |
% |
Total
insurance premium |
|
$ |
23,005 |
|
|
$ |
938 |
|
|
$ |
4,121 |
|
|
$ |
26,188 |
|
|
15.7 |
% |
______________
(1) For
the year ended December 31, 2023, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $12.1 billion
and $338 million, respectively, and life insurance premiums of $372 million and ($19) million, respectively. For the year
ended December 31, 2022, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $12.7 billion and
$2.0 billion, respectively, and life insurance premiums of $139 million and $7 million, respectively. For the year ended
December 31, 2021, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $13.7 billion and
$1.9 billion, respectively, and life insurance premiums of $114 million and $3.2 billion, respectively.
(2) Includes
annuities with life contingencies.