EDGAR 10-K Filing

Company CIK: 937834
Filing Year: 2025
Filename: 937834_10-K_2025_0000937834-25-000003.json

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ITEM 1. BUSINESS
Item 1. Business
Business Overview & Strategy
As used in this Form 10-K, “MLIC,” the “Company,” “we,” “our” and “us” refer to Metropolitan Life Insurance Company, a New York corporation incorporated in 1868, and its subsidiaries. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, “MetLife”).
The Company is a provider of insurance, annuities and employee benefits. We are also one of the largest institutional investors in the United States (“U.S.”) with a general account portfolio invested primarily in fixed income securities (corporate, structured products, municipals, and government and agency) and mortgage loans, as well as real estate, real estate joint ventures and other limited partnerships. The Company is organized into three segments: Group Benefits, Retirement and Income Solutions (“RIS”) and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other. See Note 2 of the Notes to the Consolidated Financial Statements for further information about the Company’s business.
We believe that our trusted brand, resilient business, and position as a leader in attractive markets are the powers of our business. Over the next five years MetLife will execute on its New Frontier strategy, which was designed to accelerate growth across its global platform while delivering attractive returns and all-weather performance. New Frontier builds upon the success of MetLife’s Next Horizon strategy, which it implemented in 2019, with an aim to focus, simplify and differentiate MetLife.
Regulation
Overview
U.S. state regulators primarily regulate MLIC, with additional federal regulation of some of our products and services. New York’s insurance holding company laws apply to MetLife, Inc. and its U.S. insurance subsidiaries licensed in New York, including Metropolitan Life Insurance Company. Furthermore, consumer protection laws, privacy, anti-money laundering, securities, commodities, broker-dealer and investment adviser regulations, environmental and unclaimed property laws and regulations, and the Employee Retirement Income Security Act of 1974 (“ERISA”) also apply to some of our operations, products and services.
Set forth below is a summary of the material regulatory frameworks applicable to us.
U.S. Federal Initiatives
U.S. federal initiatives can affect our business in a variety of ways, including regulation of financial services, securities, derivatives, pensions, health care, money laundering, foreign sanctions and corrupt practices, and taxation.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) increased the federal role in regulating businesses such as ours, including, but not limited to, with respect to our investment activities. The Financial Stability Oversight Council (“FSOC”) may designate certain financial companies that pose a threat to U.S. financial stability as non-bank systemically important financial institutions (“non-bank SIFI”) subject to supervision by the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York.
In 2023, the FSOC adopted final guidance establishing a new process for designating certain financial companies as non-bank SIFIs. This revised approach evaluates risk factors such as leverage, liquidity risk and maturity mismatch, interconnections, operational risks, complexity, or opacity, inadequate risk management, concentration, and destabilizing activities, regardless of whether those risks arise from activities, firms, or otherwise. Under the guidance, the FSOC is no longer required to conduct a cost-benefit analysis and an assessment of the likelihood of a non-bank financial company’s material financial distress before considering the designation of the company. The revised process could have the effect of simplifying and shortening the FSOC’s procedures for designating certain financial companies as non-bank SIFIs, thereby subjecting such companies to additional supervision, examination, and regulation. Any such designation would create uncertainties for the non-bank financial company regarding the likelihood, frequency or impact of any formal or informal regulatory or supervisory actions or inquiries; the scope of applicable regulatory or supervisory requirements or restrictions and the related compliance measures and internal controls; and the permissibility of certain activities or transactions. It is difficult to predict the potential impact of these changes.
The Competitive Health Insurance Reform Act amended the McCarran-Ferguson Act, extending U.S. antitrust laws to encompass the “business of health insurance” and broadening U.S. regulatory authority accordingly. Consequently, we anticipate increased regulatory oversight and litigation risk for some products, including dental and vision. See “Risk Factors - Regulatory and Legal Risks - Changes in Laws or Regulation, or in Supervisory and Enforcement Policies, May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us.”
U.S. Insurance Holding Company Regulation
We are subject to U.S. state insurance holding company laws and regulations that are generally based on the National Association of Insurance Commissioners’ (“NAIC”) Insurance Holding Company System Regulatory Act and Regulation. These vary by jurisdiction, but generally require a controlled insurance company (an insurer that is a subsidiary of an insurance holding company) to register and file reports with state regulatory authorities about its capital structure, ownership, financial condition, intercompany transactions and general business operations. Furthermore, state holding company laws require the ultimate controlling person of a U.S. insurer to file an annual enterprise risk report with the lead state of the insurance holding company system. This report identifies risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole. New York has enacted laws to implement these requirements. The holding company laws also authorize state insurance commissioners to act as global group-wide supervisors for internationally active insurance groups. All states have adopted laws and regulations enhancing group-wide supervision.
State Insurance Regulation
We are licensed and regulated in each jurisdiction of domicile and/or in each jurisdiction where we conduct insurance business. The extent of insurance regulation in such jurisdictions varies, but most jurisdictions regulate the financial aspects and business conduct of insurers through broad administrative powers, including: (i) licensing companies and agents to transact business; (ii) regulating certain premium rates; (iii) reviewing and approving certain policy forms, including required policyholder disclosures; (iv) establishing statutory capital and reserve requirements and solvency standards; and (v) with respect to jurisdictions of domicile, restricting dividend payments and other transactions between affiliates.
We must file reports, generally including detailed annual financial statements, with insurance regulators in each jurisdiction in which we do business. Such authorities will periodically examine our books, records, accounts, and business practices. In 2019, MetLife entered into a consent order with the New York State Department of Financial Services (“NYDFS”) relating to unclaimed property following an open market conduct quinquennial exam, under which it paid a fine and customer restitution, and submitted remediation plans for approval. See Note 19 of the Notes to the Consolidated Financial Statements regarding any reportable contingencies related to findings resulting from our state insurance department examinations.
Organizations like the NAIC encourage insurance supervisors to establish Supervisory Colleges to facilitate cooperation among insurance supervisors to enhance their understanding of risk profiles of U.S.-based insurance groups with international operations. Our lead state regulator, the NYDFS, annually chairs Supervisory College meetings that MetLife’s key U.S. and non-U.S. regulators attend.
Surplus and Capital
Insurers must maintain their capital and surplus at or above minimum levels set in their respective jurisdictions. Regulators possess discretionary authority to limit or prohibit an insurer’s sales to policyholders if the insurer fails to meet these standards or if they find that the further transaction of business would be hazardous to policyholders.
Dividend Restrictions
New York restricts the dividends or other distributions an insurance company subsidiary may pay to its parent company and limits transactions between an insurer and its affiliates. Dividends exceeding prescribed limits and transactions above a specified size between an insurer and its affiliates require NYDFS approval. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Capital - Statutory Capital and Dividends.” See also “Dividend Restrictions” in Note 15 of the Notes to the Consolidated Financial Statements for further information regarding such limitations.
Risk-Based Capital
MLIC is subject to risk-based capital (“RBC”) requirements developed by the NAIC and adopted by New York. RBC is calculated annually based on a formula that considers various asset, premium, claim, expense and statutory reserve items, reflecting asset, insurance, interest rate, and market and business risk characteristics. Regulators use this formula as an early warning tool to identify inadequately capitalized insurers. See “Statutory Equity and Income” in Note 15 of the Notes to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Capital - Statutory Capital and Dividends.”
NAIC developments related to the RBC framework are described below.
•RBC Revisions. The NAIC approved an RBC update for mortality risk that took effect at year-end 2022, which had a modest positive impact on our reported RBC ratios. In 2023, the NAIC increased the RBC factor for structured security residual tranches from 30% to 45%, which became effective for year-end 2024 RBC filings and had an immaterial impact on RBC. The NAIC is currently reviewing the RBC treatment of collateralized loan obligations (“CLOs”). See “- Investments” for additional information.
•Bond Project. The NAIC adopted a new, principles-based definition of a bond that became effective in certain statutory accounting guidance as of January 1, 2025. This will result in new reporting and disclosure requirements, and will lead to categorical changes associated with these investments in the regulatory reports. These changes are not expected to have a material impact on RBC.
•Interest Maintenance Reserve. In 2023, the NAIC adopted an interim solution with regard to the treatment of an insurer’s negative interest maintenance reserve (“IMR”) balance, which may occur in a rising interest rate environment and can impact how accurately the insurer’s surplus and financial strength are captured in its statutory financial statements due to lower surplus and RBC ratios. The NAIC’s interim statutory accounting guidance is effective until December 31, 2025 and permits an insurer with a company action level RBC ratio greater than 150% (or an authorized control level RBC ratio greater than 300%) to admit negative IMR up to 10% of its general account capital and surplus, subject to certain restrictions and reporting obligations. These interim changes did not have an impact on RBC. The NAIC is developing a long-term solution for this issue.
•Group Capital Calculation. The NAIC’s group capital calculation (“GCC”) tool uses an RBC aggregation methodology for all entities within an insurance holding company system, including non-U.S. entities. The annual GCC filing requirement is now mandated by the majority of states, including New York. We cannot predict what impact this regulatory tool may have on our business.
Investments
State insurance laws and regulations limit how much we can invest in certain asset categories, such as below investment grade fixed income securities, real estate equity, other equity investments, and derivatives, and require diversification of investment portfolios. Investments exceeding regulatory limitations are not admitted for purposes of measuring surplus. In some instances, laws require us to divest any non-qualifying investments.
The NAIC is focused on enhancing regulatory oversight of insurers’ investments in complex assets, such as structured securities. In connection with evaluating the risks of investing in leveraged loans and CLOs, the NAIC Purposes and Procedures Manual provides that the NAIC Structured Securities Group (“SSG”) will assign risk weights to CLOs using its own modeling rather than credit ratings. The SSG will model CLO investments and evaluate tranche-level losses across all debt tranches under various collateral stress scenarios to minimize RBC arbitrage. The NAIC’s goal is to ensure that the aggregate RBC factor for owning all tranches of a CLO is similar to that required for owning all of the underlying loan collateral. Insurers are required to begin reporting the financially modeled NAIC designations for CLOs with their year-end 2025 financial statement filings. The NAIC is collaborating with interested parties to refine the process for modeling CLO investments.
Reserves and Asset Adequacy Analysis
The NAIC’s valuation manual contains a principle-based approach to the calculation of life insurance reserves. Principle-based reserving, which is designed to better address reserving for life insurance and annuity products, has been adopted by all states.
In early 2024, the NAIC launched an initiative to address declines in reserve requirements following certain offshore reinsurance transactions, which could lead the NAIC to propose higher reserve requirements for cedants that are parties to certain offshore reinsurance treaties.
We use capital markets solutions through captives to fund a portion of our statutory reserve requirements for several products, such as level premium term life products and our closed block, which are subject to the NAIC’s Valuation of Life Insurance Policies Model Regulation (commonly referred to as Regulation XXX), and universal and variable life policies with secondary guarantees subject to NAIC Actuarial Guideline 38 (commonly referred to as Guideline AXXX). NAIC Actuarial Guideline 48 (“AG 48”) enhances the statutory financial statement disclosure of an insurer’s use of captives and narrows permissible assets backing statutory reserves. The NAIC’s Term and Universal Life Insurance Reserve Financing Model Regulation codifies the same substantive requirements as AG 48. States must either adopt the model regulation or use AG 48 to satisfy the NAIC accreditation requirement.
Each year a qualified actuary must submit an opinion stating that our statutory reserves, including affiliated captive reinsurers, make adequate provision, according to accepted actuarial standards of practice, for the anticipated cash flows required by our contractual obligations and related expenses. We may increase reserves in order to submit this opinion without qualification.
In addition, the NYDFS issues annual letters on Special Considerations (each, an “SCL”) to New York-licensed insurance companies, including us, that affect year-end asset adequacy testing. An SCL could mandate assumption changes that would require us to increase, or influence our decision to release, certain asset adequacy reserves, which could materially impact our statutory capital and surplus. See “Statutory Equity and Income” in Note 15 of the Notes to the Consolidated Financial Statements.
Adjusting Non-Guaranteed Elements of Life Insurance Products
New York’s Insurance Regulation 210 sets standards for the determination and any readjustment of non-guaranteed elements (“NGEs”) that may vary at the insurer’s discretion for life insurance policies and annuity contracts delivered or issued for delivery in New York. NGEs include cost of insurance for universal life insurance policies, as well as interest crediting rates for annuities and universal life insurance policies. The regulation requires insurers to notify policyholders in advance of any change in NGEs that is adverse to policyholders and, with respect to life insurance, to notify the NYDFS prior to any such changes. The regulation generally prohibits insurers from increasing profit margins for in-force policies or adjusting NGEs in order to recoup past losses.
Guaranty Associations
Many jurisdictions require us to participate in guaranty associations that pay insurance benefits owed by insolvent or failed insurers. These associations levy assessments on member insurers based on the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. We have established liabilities for guaranty fund assessments that we consider adequate.
Cybersecurity, Privacy and Data Protection, and Innovation and Technology Regulation
We are subject to a variety of laws and regulations at the local, state and federal levels regarding the handling of personal information, including health-related and customer information and data of MetLife employees (our “Associates”). Various U.S. laws require companies such as ours to inform individuals of their privacy rights. Our personal information processing practices further dictate whether, how, and under what circumstances we may transfer, process or receive personal information, the interpretation and scope of which are constantly evolving and vary significantly across jurisdictions. Furthermore, we must comply with laws and regulations governing the security and integrity of our information systems, many of which require comprehensive information security programs, and mandatory notifications to affected individuals and regulators in the event of security breaches and other cyber incidents. Increasing cybersecurity risks and threats from various actors have increased regulatory focus on cybersecurity practices, and regulatory and legislative activity in the areas of privacy, data protection and cybersecurity continues to increase worldwide. Below, we highlight some of the key data protection and cybersecurity laws and regulations to which we are subject.
Cybersecurity
The NYDFS promulgated the New York Cybersecurity Requirements for Financial Services Companies (the “Regulation”) to promote the protection of customer information and information technology. Entities under the NYDFS’s jurisdiction, including us, must conduct risk assessments of their information systems and maintain a cybersecurity program designed to protect the confidentiality, integrity and availability of such systems and data. The Regulation mandates, among other things: (i) technical safeguards and controls relating to the governance framework for a cybersecurity program; (ii) risk-based policies, procedures and minimum standards for technology systems for data protection; (iii) minimum standards for cyber breach responses, including notice to the NYDFS of certain material events; (iv) designation of a Chief Information Security Officer (“CISO”); (v) oversight of third party service providers; and (vi) identification and documentation of material deficiencies, remediation plans and annual certifications of regulatory compliance. Covered entities that fail to comply with the Regulation may be subject to NYDFS enforcement actions, the result of which could lead to civil penalties, and other legal and reputational costs.
In 2023, the NYDFS adopted amendments to the Regulation, including: (a) implementing additional governance and oversight measures; (b) expanding the types of cybersecurity events that require timely notification to the NYDFS; (c) mandating notifications to the NYDFS within 24 hours of a cyber-ransom payment; and (d) requiring enhancements to written policies and procedures related to remote access, vulnerability management, data retention and access privileges. The majority of the new requirements became effective in 2024. We cannot predict what effect the amended Regulation will have on our business or compliance costs.
The NAIC’s Insurance Data Security Model Law (the “Cybersecurity Model Law”) requires insurers to develop and maintain a risk-based information security program, establish data security standards and notify insurance commissioners of certain cybersecurity events. Several states in which MLIC is licensed have adopted the Cybersecurity Model Law, and more may adopt it in the future. Additional compliance efforts may present an increasing demand on our systems and resources, and require significant new and ongoing investments in compliance processes, personnel, and technical infrastructure.
Privacy and Data Protection
In the U.S., we are subject to state laws imposing obligations on the processing of personal information and providing consumers specific rights over such information. For instance, the California Consumer Privacy Act (“CCPA”) requires covered companies to provide disclosures to California consumers about such companies’ data collection, use and sharing practices and gives California residents expanded rights with respect to the processing of their personal information. In 2020, the CCPA was amended by the California Privacy Rights Act, imposing additional rights and obligations. While a significant portion of our business is exempted from the CCPA, the Health Insurance Portability and Accountability Act and other state insurance laws to which we are subject grant similar rights to insureds.
Additional states either have proposed or adopted new comprehensive privacy laws, which may apply to certain portions of our business. However, several of these state laws include broad entity-wide exemptions for financial institutions. The NAIC is also developing amendments to update its Privacy of Consumer Financial and Health Information Regulation (Model 672). The proposed amendments, which are expected to be finalized in 2025, are expected to expand the definition of nonpublic personal information; add consumer rights to request access, correction and deletion of nonpublic personal information; and add requirements for contracts with third-party service providers.
Innovation and Technology
As a result of increased innovation and technology, the NAIC and insurance regulators are focused on the use of “big data” techniques, such as the use of artificial intelligence (“AI”), machine learning and automated decision-making. In 2023, the NAIC’s Innovation, Cybersecurity and Technology (H) Committee (the “(H) Committee”) adopted the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (the “AI Bulletin”). States have started to adopt the AI Bulletin, which outlines how insurance regulators should govern the development, acquisition and use of AI technologies, as well as the types of information that regulators may request during an investigation or examination of an insurer in regard to AI systems. The (H) Committee has also formed a new task force that is charged with creating a regulatory framework for the oversight of insurers’ use of third-party data and models.
Further, the NAIC and state insurance regulators have been focused on addressing unfair discrimination in the use of consumer data and technology, and some states have passed laws targeting unfair discrimination practices. In 2024, the NYDFS released its circular letter, which applies to all authorized insurers in New York. The circular letter provides guidance on how insurers should develop and manage their use of external consumer data and AI systems in underwriting and pricing so as not to harm consumers.
We expect big data and AI technologies to remain important issues for the NAIC and state and international regulators. We cannot predict which insurance regulators will adopt the AI Bulletin, or what, if any, changes to laws or regulations may be enacted with regard to “big data” or AI technologies.
Standards of Conduct, ERISA and Fiduciary Considerations
We provide products and services to certain employee benefit plans that are subject to ERISA and/or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”). ERISA and the Code impose restrictions, including fiduciary duties to perform solely in the interests of ERISA plan participants and beneficiaries, and to avoid prohibited non-exempt transactions. The applicable provisions of ERISA and the Code are subject to enforcement by the U.S. Department of Labor (the “DOL”), the Internal Revenue Service and the Pension Benefit Guaranty Corporation.
The prohibited transaction rules of ERISA and the Code generally restrict the provision of investment advice to ERISA plans and participants and to Individual Retirement Accounts (and certain other arrangements) if the investment recommendation results in fees paid to an individual advisor, the firm that employs the advisor or their affiliates that vary according to the investment recommendation chosen, unless an exemption or exception is available. Similarly, without an exemption or exception, fiduciary advisors are prohibited from receiving compensation from third parties in connection with their advice. ERISA also affects certain of our in-force insurance policies and annuity contracts, as well as insurance policies and annuity contracts we may sell in the future.
In 2021, the DOL’s final version of the prohibited transaction exemption (“PTE”) 2020-02 went into effect, which allows investment advice fiduciaries to receive compensation without violating ERISA, subject to impartial conduct standards and disclosure obligations aligned with Securities and Exchange Commission (“SEC”) rules. In the preamble to PTE 2020-02, the DOL also provided its interpretation of the five-part test used to determine whether a person is acting as an ERISA investment advice fiduciary. In April 2024, DOL finalized and published a regulation to change the definition of “fiduciary” for purposes of ERISA and parallel provisions of the Code, when a financial professional, including an insurance producer, provides investment advice, and to amend various existing PTEs that financial professionals rely on when making recommendations. Shortly thereafter, these changes were challenged in court, and in July 2024, two federal district courts entered separate stays of the effective date of the new regulation regarding the definition of “fiduciary” and the amendments to the PTEs, pending further orders of the courts. The DOL has appealed these stay orders. We are evaluating the potential impact of these developments on our business, particularly as it pertains to the sale of insurance, annuity and welfare benefit products to retirement investors.
Federal and state securities regulators have adopted standards of conduct when recommending securities, including variable insurance products. The SEC’s Regulation Best Interest requires broker-dealers to act in the best interest of retail consumers when recommending account types, securities transactions or investment strategies involving securities, including recommendations to individuals receiving recommendations about their retirement accounts. In addition, the Financial Industry Regulatory Authority (“FINRA”) rules impose requirements on broker-dealers relating to the sale of variable insurance products.
State regulators and legislatures have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives subject to a fiduciary duty when providing products and services to customers. The North American Securities Administrators Association has proposed revisions to its broker-dealer conduct model rule intended to apply Regulation Best Interest at the state level and prohibiting the use of the terms “advisor” or “adviser” without being registered as an investment adviser. Although Regulation Best Interest does not include a private right of action, some of the state proposals and adopted regulations would allow for a private right of action. As a result of these developments, it is possible that it may become more costly to provide and distribute our products and services, and that we might be subject to additional litigation and regulatory investigations regarding our compliance with those rules.
Management of Climate Risk and ESG
Climate risk has come under increased scrutiny by regulators and the NAIC. In New York, the NYDFS expects both New York domestic insurers, such as Metropolitan Life Insurance Company, and foreign authorized insurers licensed in New York, to manage material climate risks by taking actions that are proportionate to the nature, scale and complexity of their businesses. However, the NYDFS issued separate guidance for New York domestic insurers, which contains more detailed expectations, such as (i) ensuring the board of directors understands relevant climate risks; (ii) performing regular reviews of the insurer’s procedures that are designed to manage climate risks; (iii) using scenario analysis to inform the insurer’s business strategies and risk assessment; and (iv) incorporating material climate risks into its financial risk management (e.g., enterprise risk management (“ERM”) and own risk and solvency assessment). In addition, New York’s regulation governing ERM, which applies to New York domestic and foreign authorized insurers, was amended to require an insurance group’s ERM function to address climate change risk.
The NAIC has adopted a standard for insurance companies to report their climate-related risks as part of its annual Climate Risk Disclosure Survey, which applies to insurers that meet the reporting threshold of $100 million in countrywide direct premium and are licensed in one of the participating jurisdictions. The new disclosure standard is consistent with the international Task Force on Climate-Related Financial Disclosures’ framework for reporting climate-related financial information.
Pursuant to its authority under Dodd-Frank, the Federal Insurance Office (“FIO”) is also assessing how the insurance sector may mitigate climate risks and help achieve national climate-related goals. In 2023, the FIO released a report which urges insurance regulators to adopt climate-related risk-monitoring guidance in order to enhance their regulation and supervision of insurers.
The SEC is also focused on climate, and environmental, social and governance (“ESG”) risks and opportunities. In March 2024, the SEC adopted final rules requiring registrants to provide additional climate-related information in their registration statements and annual reports, including in their financial statements. In April 2024, following litigation challenging the final rules, the SEC voluntarily stayed the final rules pending completion of judicial review. In 2022, the SEC also proposed rules requiring registered investment companies, business development companies, and registered and certain unregistered investment advisers to disclose in their fund prospectuses, annual reports and Form ADV information about how funds and advisers incorporate ESG factors into their investment strategies.
In 2023, California adopted laws establishing climate disclosure and climate-related financial risk reporting requirements which apply to companies doing business in California that meet applicable revenue thresholds. Also in 2023, California adopted a law establishing disclosure requirements for entities operating within California that market, sell, purchase, or use voluntary carbon offsets, as well as those that make claims of achieving net zero emissions or carbon neutrality that operate within and make such claims within the state.
Consumer Protection Laws
As part of Dodd-Frank, Congress established the Consumer Financial Protection Bureau (“CFPB”) to supervise and regulate institutions that provide certain financial products and services to consumers. Although the consumer financial services subject to the CFPB’s jurisdiction generally exclude insurance business of the kind in which we engage, the CFPB does have authority to regulate non-insurance consumer services we provide.
Derivatives Regulation and Clearing of Treasury Securities
Dodd-Frank includes a framework of regulation of the over-the-counter (“OTC”) derivatives markets requiring clearing of certain OTC derivative transactions and imposes additional costs, including reporting and margin requirements. Centralized clearing also exposes us to the risk of a default by a clearing member or clearinghouse with respect to our cleared derivative transactions.
Dodd-Frank also expanded the definition of “swap” and mandated the SEC and U.S. Commodity Futures Trading Commission (“CFTC”) to study whether “stable value contracts” should be treated as swaps. Pursuant to the definition and the SEC’s and CFTC’s interpretive regulations, products we offer, other than stable value contracts, might also be treated as swaps. Special federal banking rules apply to certain derivatives contracts and other agreements with some banking institutions and certain of their affiliates. These rules generally limit or delay the rights of counterparties upon the insolvency of such banking institutions which could increase our counterparty risk.
In 2024, the principal U.S. federal banking regulatory agencies reproposed for public comment regulations to implement certain international “Basel III” capital standards, which could affect capital charges applicable to banks and their affiliates engaged in derivatives activities. This could increase the costs of our risk mitigation using derivatives, as well as impact the availability of derivatives from our counterparties.
In 2023, the SEC adopted rules to require that covered clearing agencies have policies and procedures reasonably designed to require every direct participant of the agency to submit for clearing eligible secondary market transactions in U.S. Treasury securities. Following a February 25, 2025 extension by the SEC, the rule effectively requires such participants to clear eligible cash transactions in U.S. Treasury securities beginning on December 31, 2026, and clear eligible repurchase and reverse repurchase transactions in U.S. Treasury securities beginning on June 30, 2027. As a result, certain transactions between such participants and us will be required to be cleared. The rule’s potential effect on the U.S. Treasury markets is uncertain.
Securities, Broker-Dealer and Investment Adviser Regulation
Federal and state securities laws and regulations apply to insurance products that meet the definition of a “security,” including variable annuity contracts and variable life insurance policies, and certain fixed interest rate or index-linked contracts with features that require them to be registered as securities or exempt from registration. As a result, some of our activities in offering and selling variable insurance contracts and policies are subject to extensive regulation under these securities laws.
Federal and state securities laws and regulations generally grant regulatory agencies broad rulemaking and enforcement powers.
Some of our activities in offering and selling variable insurance products are subject to extensive regulation under the federal securities laws and regulations administered by the SEC. We issue variable annuity contracts and variable life insurance policies with separate accounts that are registered with the SEC as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”) or are exempt from registration under the Investment Company Act. Such separate accounts are generally divided into sub-accounts, each of which invests in an underlying mutual fund which is itself a registered investment company under the Investment Company Act. In addition, the variable annuity contracts and variable life insurance policies associated with these separate accounts are registered with the SEC under the Securities Act of 1933, as amended (the “Securities Act”) or are exempt from registration under the Securities Act. We issue a fixed interest rate contract with features that require it to be registered under the Securities Act.
Certain variable contract separate accounts sponsored by our subsidiaries are exempt from registration but may be subject to other provisions of the federal securities laws.
The SEC, CFTC and FINRA from time to time propose and adopt rules and regulations that impact broker-dealers and products deemed to be securities.
Under SEC rules, the selling broker-dealers recommending our variable products and other securities offerings to end investors are required to comply with various SEC and FINRA rules and regulations, including Regulation Best Interest. SEC rules also require these selling broker-dealers to disclose the nature of services, their standard of conduct, and their conflicts of interest to their retail customers. With regard to insurance products, the NAIC revised its Suitability in Annuity Transactions Model Regulation to add a “best interest” standard for the sale of annuities, which certain states, including New York, have adopted.
Federal and state securities regulatory authorities and FINRA from time to time make inquiries and conduct examinations regarding our compliance with securities and other laws and regulations. We cooperate with such inquiries and examinations and take corrective action when warranted.
Diversity and Corporate Governance
The NAIC and state insurance regulators are evaluating issues related to diversity within the insurance industry. In New York, for example, the NYDFS expects insurers to make diversity of their leadership a business priority and a key element of their corporate governance, and it includes diversity-related questions in its examination process.
Environmental Laws and Regulations
As an owner and operator of real property in many jurisdictions, we are subject to extensive environmental laws and regulations in such jurisdictions, as well as the associated risks of environmental liabilities. In addition, we hold equity interests in companies that could potentially be subject to such liabilities. We routinely have environmental assessments performed with respect to real estate being acquired for investment and real property to be acquired through foreclosure. Based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any remediation of such properties will not have a material adverse effect on our business, results of operations or financial condition.
Unclaimed Property
We are subject to the laws and regulations of states and other jurisdictions concerning identification, reporting and escheatment of unclaimed or abandoned funds, and are subject to audit and examination for compliance with these requirements. See “- State Insurance Regulation,” which references a consent order. See also Note 19 of the Notes to the Consolidated Financial Statements.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
Any or each of the events described below may (or may continue to) adversely affect the global economy or global financial markets, or our reputation, regulatory, customer, or other relationships, results of operations, liquidity or cash flows, statutory capital position, ability to meet our obligations, credit and financial strength ratings, or financial condition. The effects may vary depending on timing, product, market, region or segment.
Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of any of them may cause others to emerge or worsen. Such combinations could materially increase the severity of the cumulative or separate impact of these risks.
These risk factors do not describe all potential risks that could affect us. You should carefully consider the risk factors together with other information contained in this Annual Report on Form 10-K, including “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes in “Financial Statements and Supplementary Data,” and other reports and materials we submit to the SEC.
Economic Environment and Capital Markets Risks
We May Face Difficult Economic Conditions
Market factors, including interest rates, credit spreads, declining equity or debt markets, derivative prices and availability, real estate conditions, foreign currency exchange rates, consumer and government spending, government default or spending reductions to avoid default, business investment, climate change, public health risks, volatility, disruptions and strength of the capital markets, deflation and inflation, and government actions in response thereto, may inhibit revenue growth, reduce investment opportunities and result in reduced investment returns or losses, derivative losses, reductions in fees generated, changes in insurance liabilities, impairments, increased valuation allowances, increases in reserves, reduced net investment income and changes in unrealized gain or loss positions.
Higher unemployment, changes to inflation, lower family income, lower corporate earnings, greater government regulation, lower business investment, lower consumer spending, elevated incidence of claims, adverse utilization of benefits relative to our best estimate expectations, lapses or surrenders of policies, reduced demand for our products, and deferred or canceled payments of insurance premiums may negatively affect our earnings and capitalization.
Interest Rate Risks
Some of our products and investments expose us to interest rate risks, including changes in the difference between short-term and long-term interest rates, which may reduce or eliminate our investment spread and net income.
Interest rate increases may harm our profitability. During rapidly increasing interest rates, we may not be able to replace the investments in our general account with higher yielding investments needed to fund the higher crediting rates required to stay competitive. This could result in a lower spread, lower profitability, decreased sales, and greater loss of existing contracts and related assets. In addition, policy loans, surrenders and withdrawals may increase as policyholders seek investments with higher perceived returns. This may result in cash outflows requiring the sale of investments on less favorable terms, resulting in investment losses and reductions in net income. Reductions in net income may in turn harm our credit instrument covenants and rating agency assessment of our financial condition. Interest rate increases may harm the value of our investment portfolio, for example, by decreasing the estimated fair value of fixed income securities, and may increase our daily settlement payments on interest rate futures and cleared swaps, resulting in increased cash outflows and liquidity needs. Furthermore, if interest rates rise, our unrealized gains on fixed income securities may decrease and our unrealized losses may increase. We would recognize the accumulated change in estimated fair value of these fixed income securities in net income upon a sale, an intent to sell, a determination it is more likely than not we will be required to sell, or if the decline in estimated fair value is due to a credit loss. During inflationary periods with rising interest rates, the value of fixed income investments falls, which could increase realized and unrealized losses, resulting in additional deferred tax assets that may not be realizable. Finally, an increase in interest rates may decrease fee income associated with a decline in the value of variable annuity account balances invested in fixed income funds.
Low interest rates and risk asset returns may reduce income from our investment portfolio, increase our liabilities for claims and future benefits, and increase the cost of risk transfer measures, decreasing our profit margins. During certain market events, such as a global credit crisis, a market downturn, or a period of sustained low market yields, we may incur significant losses due to, among other reasons, losses incurred in our general account and/or the impact of guarantees, including increases in liabilities, capital maintenance obligations and collateral requirements. In addition, during periods of sustained lower interest rates, we may need to reinvest proceeds from certain investments at lower yields, reducing our investment spread. Moreover, borrowers may prepay or redeem the fixed income securities and loans in our investment portfolio with greater frequency. Although we may be able to lower interest crediting rates to help offset decreases in spreads, our ability to lower these rates is limited to our products that have adjustable interest crediting rates, which could be limited by competition or contractually guaranteed minimum rates and may not match the timing or magnitude of changes in asset yields. As a result, our investment spread may decrease or become negative. Reductions in net income from these factors may in turn harm our credit instrument covenants or rating agency assessment of our financial condition.
During periods of declining interest rates, life insurance and annuity products may be more attractive investments to consumers, resulting in increased premium payments on certain products, repayment of policy loans and increased persistency, while our new investments carry lower returns. A market interest rate decline could also reduce our return on investments that do not support particular policy obligations. During periods of sustained lower interest rates, we may need to increase our reserves.
The measures we take to mitigate the risks of investing in a changing interest rate environment, such as mitigating the sensitivity of our fixed income investments relative to our interest rate sensitive liabilities, may not be sufficient. For some of our liability portfolios, we may not be able to invest assets at the full liability duration, thereby creating some asset/liability mismatch. In addition, asymmetrical and non-economic accounting may cause material changes to our net income and stockholder’s equity because we record our non-qualified derivatives at fair value through earnings, while certain hedged items may follow an accrual-based accounting model or are recorded at fair value through other comprehensive income.
Credit Spread Risks
Changes in credit spreads may result in market price volatility and cash flow variability. Market price volatility may result in defaults and a lack of pricing transparency, and can make valuations of our securities difficult if trading becomes less frequent, which may require us to add to our reserves. An increase in credit spreads relative to U.S. Treasury benchmarks may increase our borrowing costs and decrease certain product fee income. A sustained decrease in credit spreads could reduce the yield on our future investments. The discount rate used to calculate liabilities for future policy benefits (“FPBs”) includes a component for market credit spreads that does not necessarily align to our investment spreads. Changes in market credit spreads could result in volatility to liabilities for FPBs relative to our asset values.
Equity Risks
Downturns and volatility in equity markets may harm our savings and investment products’ revenues and investment returns, where fee income is earned based upon the fair value of our managed assets. Our variable annuity and life insurance business is highly sensitive to equity markets, and a sustained weakness or stagnation in the equity markets may decrease these products’ revenues and earnings. Furthermore, certain of our variable annuity and life products offer guaranteed benefits that increase our potential benefit exposure should equity markets decline or stagnate.
Sustained declines in long-term equity returns or interest rates may harm the funding of our pension plan obligations. An increase in equity markets could increase settlement payments on equity futures and total rate of return swaps (“TRRs”), which may increase our cash outflows and liquidity needs.
The timing of distributions from and valuations of our investments in leveraged buy-out funds, hedge funds, real estate ventures, real estate funds and other private equity funds depends on the performance of the underlying investments, distribution schedules, and the funds’ need for cash, which may differ from performance of public equity markets, which drives performance of our equity hedges. The amount of net investment income from these investments can vary substantially from period to period and significant volatility may harm our returns and net investment income. In addition, downturns or volatility in the equity markets may decrease the estimated fair value of our alternative investments and equity securities.
Real Estate Risks
Changes in leasable commercial space supply and demand, lessee behaviors, pandemics and other public health issues, creditworthiness of tenants and partners, capital markets volatility, interest rate fluctuations, commodity prices, farm incomes, housing and commercial property market conditions, and real estate investment supply and demand may adversely impact our investments in commercial, agricultural and residential mortgage loans, and real estate equity investments including joint ventures.
Political, Obligor and Counterparty Risks
Our general account investments could be adversely affected by volatility resulting from economic and political concerns, as well as volatility in specific sectors. Government entities may face budget deficits and other financial difficulties, which may harm the value of securities we hold issued by or under the auspices of such governments. A threat facing the U.S. economy is the continued disagreement over the federal debt limit, other budget questions and potential restrictions on trade with other markets. Failure to resolve these issues in a timely manner could result in a government shutdown, erratic reduction in government spending or a default on government debt, which could result in increased market volatility and reduced economic activity.
The issuers or guarantors of fixed income securities and mortgage loans we own may more frequently default on principal and interest payments they owe us. Additionally, the change in value of underlying collateral within instruments backed by securitized assets may result in a default on principal and interest payments, reducing our cash flows. The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit spreads, or other adverse events may increase the default rate of the fixed income securities and mortgage loans in our investment portfolio.
Many of our transactions with counterparties expose us to the risk of counterparty default. Such credit risk may be exacerbated if we cannot realize on the collateral held by us in secured transactions or cannot liquidate such collateral at prices sufficient to recover the full amount of the loan or derivative exposure due to us. Furthermore, potential action by governments and regulatory bodies, or lack of action by governments and central banks, as well as deterioration in the banks’ credit standing, could negatively impact these instruments, securities, transactions and investments or limit our ability to trade with them.
Our efforts to manage our total exposure to a single counterparty or limited number of counterparties within or among any of our investment, derivative, treasury, and reinsurance relationships, which we adjust from time to time, may not completely or adequately mitigate counterparty risks.
Derivatives Risks
If our counterparties, clearing brokers or central clearinghouses fail or refuse to honor their obligations under our derivatives agreements, our risks may not be fully hedged. A counterparty, clearing broker, or central clearinghouse may become insolvent or otherwise unable or unwilling to make payments or to return collateral under the terms of derivatives agreements, increasing our costs or resulting in significant losses. If the net estimated fair value of a derivative to which we are a party declines, we may need to pledge additional collateral or make increased payments. In addition, we may face increased costs to the extent we replace counterparties or clearing brokers who suffer financial difficulties. Furthermore, our derivatives valuations may change based on changes to our valuation methodology or errors in such valuation or valuation methodology.
We May Not Meet Our Liquidity Needs, Access Capital, or May Face Significantly Increased Cost of Capital Due to Adverse Capital and Credit Market Conditions
In cases of volatility, disruption, or other conditions in global financial markets, we may have to seek additional financing, the availability and cost of which could be adversely affected by market conditions, regulatory considerations, availability of credit to our industry generally, our credit ratings and credit capacity, reduced business activity, or investment losses, and the perception of our financial prospects. Our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. We may not be able to successfully obtain additional financing we need on favorable terms or at all. We may be required to return significant amounts of cash collateral on short notice under securities lending or derivatives agreements or post collateral or make payments related to specified counterparty agreements.
Our business and financial results may suffer without sufficient liquidity through impaired ability to pay claims, other operating expenses, interest on our debt, maintain our securities lending, replace certain maturing liabilities, and sustain our operations and investments. Capital and credit market volatility may limit our access to capital we need to operate or grow our business, issue the types of securities we would prefer, timely replace maturing liabilities, or satisfy regulatory requirements, any of which could decrease our profitability and significantly reduce our financial flexibility.
MetLife, Inc. May Be Unable to Access Its Credit Facility, Reducing Our Liquidity and Leading to Downgrades in Credit and Financial Strength Ratings
MetLife, Inc. may fail to comply with or fulfill all conditions under the unsecured revolving credit facility (the “Credit Facility”) MetLife, Inc. and MetLife Funding, Inc., a wholly owned subsidiary of Metropolitan Life Insurance Company (“MetLife Funding”), maintain. Lenders may fail to fund their lending commitments under the Credit Facility due to insolvency, illiquidity or other reasons. This could limit our affiliates in supporting our liquidity.
We May Lose Business Due to a Downgrade or a Potential Downgrade in Our Financial Strength or Credit Ratings
Nationally Recognized Statistical Rating Organizations (“NRSROs”) and others may, at any time, downgrade MetLife, Inc.’s or our financial strength ratings or credit ratings, lower MetLife, Inc.’s or our ratings outlooks, increase the scope or frequency of their reviews, or increase capital or other requirements to maintain ratings. Such changes could reduce our product sales, reduce cash flows from funding agreements and other capital market products, and force us to change product pricing and increase our financing costs, policy surrenders or withdrawals, collateral requirements, risk of derivative terminations, cost of reinsurance, regulatory scrutiny, or various other factors.
We May Not Find Available, Affordable or Adequate Reinsurance to Protect Us Against Losses
Reinsurers may increase our reinsurance costs, or may decline to offer us reinsurance, due to policy changes related to public health issues, market conditions, or other factors. Our risk of loss may increase if we decrease the amount of our reinsurance. Any of these could harm our ability to write future business or result in the assumption of more risk with respect to the policies we issue.
We remain liable and may incur costs as the direct insurer on all risks we reinsure as a result of a reinsurer’s insolvency, inability or unwillingness to make payments, or inability or unwillingness to maintain collateral, which could have a material adverse impact on our business, results of operations or financial condition.
Our Statutory Life Insurance Reserve Financings Costs May Increase, and We May Find Limited Market Capacity for New Financings
If our ratings decline, market capacity is limited, or on other repricing occasions, our costs to finance statutory life insurance reserves may increase. If regulators disallow assets to back statutory reserves, we would not be able to take some or all related statutory reserve credit, which may harm our statutory capitalization.
Regulatory and Legal Risks
Changes in Laws or Regulation, or in Supervisory and Enforcement Policies, May Reduce Our Profitability, Limit Our Growth, or Otherwise Adversely Affect Us
Insurance or other regulators may change licensing, permit, or approval requirements, or take other actions harmful to us. They may also take actions that harm our customers and independent sales intermediaries or their operations, which may affect our business relationships with them and their ability to purchase or distribute our products.
Governments may change regulation of financial services, insurance, variable annuities and variable life insurance, securities, derivatives, pension, health care, accounting, cybersecurity, AI, privacy and data protection, tort reform, taxation, benefit plan investment advice and related fiduciary duties, antitrust as applied to the business of health insurance or otherwise, and other areas. Laws and regulations may also affect customers, sales intermediaries, or others. We or others may fail to comply with these requirements or suffer adverse regulatory examinations or audits. Regulators and courts may also interpret rules differently from the way we have, or change interpretations of laws or rules, and legislators may change statutes. Any of these changes may harm our ability to continue to offer the products we do today or to introduce new products.
We may incur costs to comply with laws and regulations and changes to these laws and regulations may increase our expenses and regulatory capital charges. Our failure to comply with our own policies or with regulatory requirements may harm our reputation or result in sanctions or legal claims.
Compliance with solvency standards or financial condition regulations may increase our capital and reserve requirements, risk management costs, and reporting costs. See “Business - Regulation - State Insurance Regulation - Surplus and Capital” for a summary of the NAIC’s developments related to financial condition regulation. We may be subject to enhanced capital standards, supervision and additional requirements, such as group capital standards or insurer capital standards.
Our ability to react to rapidly changing economic conditions and the dynamic, competitive markets may be impaired if our product designs do not allow frequent and contemporaneous revisions of key pricing elements, or if we are unable to work collaboratively with regulators. Changes in regulatory approval processes, rules and other dynamics in the regulatory process could harm our ability to react to such changing conditions. Rules on defined benefit pension plan funding may reduce the likelihood or delay corporate plan sponsors in terminating their plans or engaging in transactions to partially or fully transfer pension obligations. This could affect the mix of our pension risk transfers and increase non-guaranteed funding products.
Governmental bodies may delay acting on or implementing regulatory or policy changes due to circumstances outside of our control, including, but not limited to, public health issues. Such delays may increase uncertainty, prolong deleterious regulations and policies, delay or prevent beneficial regulatory or policy changes, and create the potential for later, more rapid changes to which we may find it more difficult to adjust.
Our New York insurance regulator’s annual SCL for year-end asset adequacy testing may impose unforeseen assumptions or requirements that require us to increase or release reserves, which could affect our statutory capital and surplus.
Governments or Others May Increase our Taxes by Changing or Re-Interpreting Tax Laws, Making Some of Our Products Less Attractive to Consumers
Changes in tax laws or interpretations of such laws could increase our corporate taxes, reduce our earnings, and adjust the value of our deferred tax assets and liabilities. Changes may increase our effective tax rate or have implications that make our products less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types of taxes, and authorities who have not imposed taxes in the past may impose taxes.
Customers shifting away from employee benefits, life insurance and annuity contracts, or other tax-preferred products would reduce our income from these products and our asset base, reducing our earnings and potentially affecting the value of our deferred tax assets.
We May Face Increasing Litigation and Regulatory Investigations
Legal or regulatory actions, inquiries or investigations, involving us or our competitors, whether ongoing or yet to come, could harm our reputation, ability to attract or retain customers or our Associates, and business, financial condition, or results of operations, even if we or our competitors ultimately prevail. Regulators or private parties may bring class actions, individual suits, or investigations seeking large recoveries and alleging wrongs relating to matters such as sales or underwriting practices, claims payments and procedures, failure to adequately or appropriately supervise, inappropriate compensation contrary to licensing requirements, product design, disclosure, administration, investments, denial or delay of benefits, pandemic- or other public health-related practices, privacy and data protection, or data security incidents, discriminatory or inequitable practices, and breaches of fiduciary or other duties. We may be unable to anticipate the outcome of a litigation or an investigation and the amount or range of loss, including with respect to our reputation, because we do not know how adversaries, fact finders, courts, regulators, or others will evaluate evidence, the law, or accounting principles, and whether they will do so differently than we have.
Our Efforts to Meet Environmental, Social, and Governance Standards and to Enhance the Sustainability of our Businesses May Not Meet Regulators’ or Customers’ Expectations
Our regulators, customers, or those considering such a relationship with us, evaluate our business or other practices according to a variety of ESG standards and expectations. Our practices and performance are subject to increasing scrutiny with regard to various aspects of ESG performance from regulators and other stakeholders.
Others may evaluate our practices by ESG criteria that are continually evolving and not always clear or readily measurable. These standards and expectations may also, as a whole, reflect contrasting or conflicting values or agendas and are not always susceptible to consensus. Our decisions and priorities must also necessarily, and simultaneously, take account of multiple business goals and interests. Our practices may not change in the particulars or at the rate some stakeholders expect. As a result, our efforts to conduct our business in accordance with some or all these expectations may involve trade-offs. In June 2022, MetLife announced its commitment to achieve net zero greenhouse gas (“GHG”) emissions by 2050 or sooner. This commitment applies to GHG emissions from MetLife’s global owned and leased offices and vehicle fleets, employee business travel, supply chain and general account investment portfolio, including the general accounts of MetLife, Inc.’s wholly owned subsidiaries, including us, where reliable data and methodologies are available. MetLife has reoriented its climate objectives and interim targets to advance this commitment, which involves assumptions and expectations that involve risks and uncertainties. Data and measurement techniques continue to evolve. Further, because of the financed emissions included in its investment portfolio, MetLife’s ability to meet its commitments is dependent on those counterparties meeting their own carbon reduction objectives. We may fail to meet our commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not prove completely effective or fully satisfy expectations of some stakeholders. For example, some current customers and potential customers may decline to do business with us based on our sustainability practices and related policies and actions. We may also face adverse regulatory, media, or public scrutiny leading to business, reputational, or legal challenges.
Investment Risks
We May Face Defaults, Downgrades, Volatility or Other Events That Adversely Affect the Investments We Hold
In case of a major economic downturn, U.S. government default (or threatened default), acts of corporate malfeasance, widening credit risk spreads, ratings downgrades or other events, our estimated fair value of our fixed income securities and loan portfolios and corresponding earnings may decline, and the default rate of our investment portfolio may increase. These changes could harm the issuers or guarantors of securities or the underlying collateral of structured securities that we hold. We may have to hold more capital to support our securities to maintain our RBC levels if securities we hold suffer a ratings downgrade. Our intent to sell, or our assessment of the likelihood that we will be required to sell, fixed income securities may increase our write-downs or impairments. Our realized losses or impairments on these securities may harm our net income.
The default rate, loss severity or other performance of our mortgage loan investments may change. Any concentration of our mortgage loans by geography, tenancy or property type may have an adverse effect on our investment portfolio, the prices we can obtain when we sell assets, and our results of operations or financial condition. Legislation or regulations that would allow or require modifications to the terms of, or impact the value of, mortgage loans or other investments could harm our investment portfolio.
Major public health issues have affected and may continue to affect financial markets and our investment portfolio. These may continue to contribute to our risk of investment defaults, downgrades and volatility, asset impairments and lower variable investment income and returns, and may cause or exacerbate any of the investment risks we describe in these risk factors.
Market volatility affects the value of or return on our investments. It may slow or prevent us from reacting to market events as effectively as we otherwise could. When we sell our investment holdings, we may not receive the prices we seek, and may sell at a price lower than our carrying value, due to reduced liquidity during periods of market volatility or disruption, or other reasons. Borrowers may delay or fail to pay principal and interest when due, or may demand loan modifications. Tenants may delay paying rent, or fail to pay it, or demand lease modifications. We may face moratoriums on foreclosures and other enforcement actions, impairments, and loan or lease modifications, due to government action or market conditions. We may also encounter credit spread changes, increasing our borrowing costs and decreasing our product fee income. Issuer or guarantor default rates may increase.
We May Have Difficulty Selling Holdings in Our Investment Portfolio or in Our Securities Lending Program in a Timely Manner to Realize Their Full Value
When we sell holdings in our investment portfolio, we may not receive the price we seek and may sell at a price lower than our carrying value. We may face unfavorable conditions in privately-placed fixed income securities, private structured credit, certain derivative instruments, mortgage loans, policy loans, direct financing and leveraged leases, tax credit and renewable energy partnerships, private equity and real estate equity, including real estate joint ventures and funds. Our investments may suffer reduced liquidity during periods of market volatility or disruption or for other reasons. In addition, central banks’ efforts to provide market liquidity or otherwise address market conditions may not be successful or sufficient. We may realize losses that harm our financial metrics, which could harm our compliance with our credit requirements and rating agency capital adequacy measures.
We may face similar risks if we are required under our securities lending program to return significant amounts of cash collateral that we have invested. Our securities lending activities and profitability may decrease.
We May Have to Pledge Collateral or Make Payments in Derivatives Transactions
We may have to pledge additional collateral and increase payments we make under our derivatives transactions. Regulators, clearinghouses, counterparties, or clearing brokers may restrict or eliminate eligible collateral, increase our collateral requirements, or charge us to pledge such collateral, which would increase our costs, reduce our investment income, and harm our liquidity.
We May Change Our Securities and Investments Valuation, or Take Allowances and Impairments on Our Investments, or Change Our Methodologies, Estimations, and Assumptions
During periods of market disruption or rapidly changing market conditions, such as significantly rising or high interest rates, rapidly widening credit spreads or illiquidity, or infrequent trading, or when market data is limited, our assets may become less liquid. We may base our asset valuations on less observable and more subjective judgments, assumptions, or methods that may result in estimated fair values that significantly vary by period, and may exceed the investment’s sale price. The estimated fair value of our securities may also decrease due to changes in valuation methods and assumptions.
Business Risks
Our Actual Claims or Other Results May Differ From Our Estimates, Assumptions, or Models
If our actual claims experience is less favorable than the underlying underwriting, reserving, and other assumptions we used in establishing claim liabilities, we could be required to reduce value of business acquired (“VOBA”), increase our liabilities, or incur higher costs.
The amounts that we will ultimately pay to settle our liabilities, particularly when those payments may not occur until well into the future, may vary from what we expect. We may change our liability assumptions and increase our liabilities based on actual experience and accounting requirements. Our operating practices and procedures that support our policyholders and contractholder obligation assumptions, such as obtaining, accumulating, and filtering data, and our use of technology, such as database analysis and electronic communications, may affect our reserve estimates. If these practices and procedures do not accurately produce the data to support our assumptions or cause us to change our assumptions, or if enhanced technological tools become available to us, we may change those assumptions and procedures, as well as our reserves. If any of our operating practices and procedures do not accurately produce, or reproduce, data that we use to conduct any or all aspects of our business, such deviations or errors may negatively impact our business, reputation, results of operations, or financial condition. We may change our assumptions, models, or reserves due to changes in longevity. Increases in the prevalence and accuracy of genetic testing, or restrictions on its use, may exacerbate adverse selection risks.
Pandemics and other public health issues have caused and may continue to cause increased claims under many of our policies (for example, life, disability, leave, long-term care, major medical and supplemental health products), raising our resulting costs. Governments or others may fail to produce accurate population and impact data that we use in our estimates, assumptions, models, or reserves, such as death rates, infections, morbidity, hospitalization, or illness. This may cause or exacerbate any of the risks related to our estimates or assumptions. Pandemics and other public health issues may cause related or consequential long-term economic, social, political, policy, regulatory, business, demographic, or other changes to our claims or other areas subject to estimates, assumptions, models, or reserves. We may not accurately predict, prepare, and adjust to these changes.
We May Face Competition for Business
Competitive pressures, based on a number of factors including service, product features, scale, price, financial strength, claims-paying ratings, credit ratings, e-business capabilities, name recognition, performance against ESG metrics, technology, adaptation in light of pandemics and other public health issues, changes in regulation and taxes, and other factors, may adversely affect the persistency of our products and our ability to sell products in the future. We may be harmed by competition from other insurance companies, as well as non-insurance financial services companies, which may have a broader array of products, more competitive pricing, higher claims paying ability ratings, greater financial resources with which to compete, or pre-existing customer bases for financial services products. Additionally, we may lose purchasers of group insurance products that are subject to periodic re-underwriting due to more favorable terms from competitors.
We Face Technological Changes That Present New and Intensified Challenges and May Fail to Foresee or Adapt to These Changes
Our business operations rely on functioning and secure information systems and those of our vendors. Technological changes present us with new or intensified challenges, and if we are unable to foresee or adapt to these changes, our business, results of operations and financial condition may be adversely affected. For example, our assumptions, models and reserves may need to be modified if we are unable to accurately, timely, or completely process, store and retrieve the increased volume and variety of information relating to our businesses, including information related to deaths, that new technological tools for data collection and analysis make available.
Similarly, our distribution channels may become more automated to increase flexibility of access to our services and products. We may incur significant costs to implement and adapt to such changes. If we are unsuccessful, our results of operations, competitive position, reputation and customer and distribution relationships may be harmed. Steps taken to adapt to these changes, such as changes to the method of collection and analysis of data, could also expose us to litigation or other regulatory and legal actions.
Technological changes may affect our business model and how we interact with existing or prospective customers, and evolving consumer preferences may require a redesign of our products and investment composition. For example, changes in emerging technology and increasing consumer preferences for e-commerce may harm the profitability of some businesses. Likewise, the growth and availability of AI technologies, including generative AI, presents significant opportunities but also complex challenges; these include balancing and mitigating potential risks of harm posed by the development or deployment of AI technologies, as well as implementing and maintaining controls reasonably designed to ensure compliance with an evolving and increasingly complex AI regulatory landscape. We may fail to adjust our investments accordingly or suffer stranded assets. If we are unable to update our business model to match evolving consumer preferences and purchasing behavior, or the evolving technological landscape, our business, results of operations and financial condition may be adversely affected.
New technologies may impact the configuration of our information systems, and how they connect with those of our vendors, service providers and/or partners. Such technological developments may introduce or uncover information security vulnerabilities, which may result in breaches or increased costs associated with maintaining appropriate data privacy, data protection, and cybersecurity measures or enforcement actions against us by regulators. Any such vulnerability that results in a security breach or failure of our information systems, or those of third parties on which we rely, may result in litigation, regulatory action, negative impacts to our business operations, and reputational harm.
We May Face Catastrophes That Affect Liabilities for Policyholder Claims and Reinsurance Availability
Catastrophic events could increase claims, impair assets in or otherwise harm our investment portfolio, and could harm our reinsurers’ financial condition, increasing reinsurance defaults. Pandemics and other public health issues or other events, and governmental, business, and consumer reactions to them, may affect economic conditions and may cause a large number of illnesses or deaths. Any such catastrophes may also result in changes in consumer or business confidence, behavior and investment and business activity, changes to interest rates and other market risk factors, and governmental or other restrictions on economic activity for prolonged periods. We may also be called upon to make contributions to guaranty associations or similar organizations as a result of catastrophes.
We May Face Direct or Indirect Effects of Climate Change or Responses to It
Climate change may increase the frequency and severity of short-, medium-, or long-term weather-related disasters, public health incidents, wildfires, rising sea levels and pandemics, and their effects may increase over time. Changes in policy, regulation, technology or market behaviors in response to climate change may harm the value of investments we hold or harm our counterparties, including reinsurers, or increase our compliance costs. Our regulators may also increasingly focus their examinations on our management of climate-related risks.
We May Need to Fund Deficiencies in Our Closed Block, and May Not Re-Allocate Closed Block Assets
The closed block assets established in connection with our demutualization, their cash flows, and the revenue from the closed block policies may not be sufficient to provide for the policies’ guaranteed benefits. If they are not, we must fund the shortfall. We may choose, for competitive or other reasons, to support policyholder dividend payments with our general account funds. Such actions may reduce funds otherwise available for other uses. The assets of the closed block can never revert to the benefit of MLIC’s non-closed block policyholders or to MetLife, Inc. as sole shareholder of MLIC.
We May Be Required to Impair VOBA, VODA or VOCRA
Adverse changes to investment returns, mortality, morbidity, persistency, interest crediting rates, dividends paid to policyholders, expenses to administer the business, significant or sustained equity market declines, significant changes to bond spreads, and certain other economic variables, such as inflation, could cause an impairment of the value of distribution agreements acquired (“VODA”), VOBA or the value of customer relationships acquired (“VOCRA”). We may accelerate amortization or impair these assets in the period these occur.
We May Face Volatility, Higher Risk Management Costs, and Increased Counterparty Risk Due to Guarantees Within Certain of Our Products
Our liabilities for guaranteed benefits, including no-lapse guarantee benefits, guaranteed minimum death benefits, guaranteed minimum withdrawal benefits, guaranteed minimum accumulation benefits, guaranteed minimum income benefits, and certain minimum crediting rate features could increase if equity or fixed income funds decline or become more volatile, or interest rates decrease.
Our derivatives and other risk management strategies to hedge our economic exposure to these liabilities may harm our results. Our use of reinsurance, derivatives, or other risk management techniques may not sufficiently offset the costs of guarantees or protect us against losses from changes in policyholder behavior, mortality, or market events.
Policyholders may also change their behavior in unexpected ways. For example, policyholders seeking liquidity due to economic uncertainty or challenges may withdraw or surrender their policies, change their premium payment practices, exercise product options, or take other actions at times and for amounts different from those we expect.
Operational Risks
Our Risk Management Policies and Procedures, or Our Models, May Leave Us Exposed to Unidentified or Unanticipated Risk
Our ERM and business continuity policies and procedures may not be sufficiently comprehensive and may not identify or adequately protect us from every risk to which we are exposed.
Pandemics and other public health issues, and authorities’ and people’s reactions thereto may strain our risk management, and our business continuity plans, introduce or increase our operational and cybersecurity risks, and otherwise impair our ability to manage our business. They may increase the frequency and sophistication of attempts at unauthorized access to our technology systems, or those of third parties on which we rely. They may hinder our efforts to prevent money-laundering or other fraud, whether due to limited abilities to “know our customers,” strains on our programs to avoid and deter foreign corrupt practices, or otherwise, and may increase both our compliance costs and our risk of violations.
The assumptions, projections and data on which our risk management models are based may be inaccurate, and our models may not be suitable for their purpose, be misused, not operate properly, and contain errors. Our decisions and model adjustments, including determination of reserves, are based on such model output and reports and may be flawed. We may fail to identify or remediate model errors adequately. Our models may not fully predict future exposures or correctly reflect past experience.
Our evaluation of markets, clients, catastrophe occurrence or other matters may not always be accurate, complete, up-to-date or properly evaluated. We may not effectively identify and monitor all risks or appropriately limit our exposures and our Associates, vendors or non-employee sales agents may not follow our risk management policies and procedures. Past or future misconduct by our Associates, vendors or non-employee sales agents could result in investigations, violations of law, regulatory sanctions, and litigation. We may have to implement more extensive or different risk management policies and procedures due to legal and regulatory requirements.
Our Policies and Procedures May Be Insufficient to Protect Us From Operational Risks
We may make errors in any of the large number of transactions we process through our complex administrative systems. Our controls and procedures to prevent such errors may not be effective. Our controls and procedures to comply with and enforce contractual obligations may not always be effective. Mistakes can subject us to claims from our customers.
If we are unable to obtain necessary and accurate information from our customers or their employees, we may be unable to provide or verify coverage and pay claims, or we may pay claims without sufficient documentation.
The controls of our vendors on whom we rely may not meet our standards or be adequate. Our vendors could fail to perform their services accurately, consistently with applicable law or timely. Our exchange of information with vendors may be imperfect, or our vendors may suffer financial or reputational distress. Each of these may cause errors, misconduct, or discontinuation of services.
We may fail to escheat property timely and completely. As a result, we may incur charges, reserve strengthening, and expenses, regulatory examinations, or penalties.
Our practices and procedures may, at times, limit our efforts to contact all our customers, which may result in delayed, untimely, or missed customer payments.
Our associates, vendors, non-employee sales agents, customers, or others may commit fraud against us. Our policies and procedures may be ineffective in preventing, detecting or mitigating fraud and other illegal or improper acts.
Notwithstanding our compliance with regulatory and accounting requirements in relation to internal controls and our conclusion that internal control over financial reporting is effective as of the date reported, the Company’s internal controls have in the past proved, and there is a risk that they may in the future prove, to be deficient or ineffective.
We May Fail to Protect the Confidentiality, Integrity or Availability of Our Systems or Data, Including As a Result of a Failure in Our Cybersecurity or Other Information Security Systems or Our Disaster Recovery Plans or Those of Our Vendors
Our business is highly dependent upon the effective operation of our information systems, and those of our service providers, vendors, and other third parties. Our business relies on the proper functioning of these systems, including processing claims, transactions and applications, providing information to customers and distributors, performing actuarial analyses, retaining customer and business records and other core business functions. A failure to protect the confidentiality, integrity or availability of such systems, use by our Associates or agents of unauthorized tools, software or other technology to communicate with customers or business counterparties or a failure to maintain the security of our internal or external vendors’ systems, or the confidential information stored thereon, may adversely affect our ability to conduct business, result in regulatory enforcement action and litigation, and harm our results of operations, financial condition and reputation.
We, our Associates, and our vendors, like other commercial entities, continue to be targeted by or subject to computer viruses or other malicious code, unauthorized or fraudulent access, human errors, ransomware or cyber attacks, and other breaches or incidents affecting our cybersecurity and information security systems. Globally, the frequency, severity and sophistication of cybersecurity incidents have increased, and these trends may continue. While we have implemented what we believe to be reasonable and appropriate cybersecurity and data protection measures across business lines and at the enterprise level (and we contractually require our critical vendors to implement similar measures), including a formal risk-based information security program, our efforts to minimize the risk of cyber-incidents and protect our information technology may be insufficient to prevent material break-ins, attacks, fraud, security breaches or other unauthorized access to our and our vendors’ systems, including as a result of software code that contains vulnerabilities, which may increase the potential of cyber attacks or unauthorized access. We may not detect such incidents in a timely manner.
If we or our vendors fail to prevent, detect, address and mitigate such incidents, we may suffer significant financial and reputational harm. There is no assurance that our security measures or those of our vendors, including information security policies, administrative, technical and physical controls and other actions designed as preventative, will provide fully effective protection from such events.
In addition, we routinely transmit, receive and store personal, confidential and proprietary information by electronic means, including customers’ confidential health-related information. Although we attempt to keep such information confidential and secure, we may be unable to do so in all events, and we or our vendors may also fail to maintain adequate internal controls or comply with relevant policies and procedures designed to ensure the privacy and integrity of sensitive data. Such failure may result in our or our vendors’ intentional or unintentional disclosure or misuse of such personal, confidential or proprietary information, as well as others’ misappropriation of such information, which could damage our reputation, reduce demand for our products and services and subject us to significant legal and regulatory liability and expenses, which would harm our business, results of operations and financial condition.
We, our vendors, our reinsurers, and our customers may suffer disasters such as a natural catastrophe, epidemic, pandemic, industrial accident, blackout, computer virus, terrorist attack, ransomware or cyber-attack, or war, and our or their disaster recovery systems may be insufficient to safeguard our ability to conduct normal business operations, obtain reinsurance and maintain our critical business or information technology systems in such circumstances, particularly if such disasters affect computer-based data processing, transmission, storage and retrieval systems and/or destroy or otherwise adversely impact the confidentiality, integrity or availability of valuable data or the financial wherewithal of reinsurers or vendors. Our ability to conduct business effectively and maintain the security, integrity, confidentiality, availability or privacy of sensitive data could be severely compromised if, as a result of such disaster, key personnel are unavailable, or our vendors’ ability to provide goods and services and our Associates’ ability to perform their job responsibilities are impaired. We may not carry business interruption insurance sufficient to protect us from all losses that may result from such interruptions, and any insurance for liability, operational and other risks may become less readily available or more expensive in the future.
We may not be able to reliably access all the documents and records in the information storage systems we use, whether electronic or physical. We may fail to obtain or maintain all the records we need to administer and establish appropriate reserves for benefits and claims accurately and timely. If a data breach exposed any of our sensitive financial information, then customers or regulators may develop an inaccurate perception of our financial condition or results of operations. We could be compelled to publicly disclose information prematurely in order to dispel such inaccurate perceptions, or in order to fulfill our disclosure obligations, even if we do not believe the information is yet completely reliable or confirmed per our usual internal controls and disclosure controls. This may result in harm to our reputation.
Regulators’ or others’ scrutiny of cybersecurity, including new laws or regulations, could increase our compliance costs and operational burdens, especially as regulatory and legislative focus on cybersecurity matters intensifies, which could lead to more enforcement actions of such laws or regulations. See “Business - Regulation - Cybersecurity, Privacy and Data Protection, and Innovation and Technology Regulation” for additional information. Regulators, customers, or others may act against us for any cybersecurity failures. We also have an increasing challenge of attracting and retaining highly qualified personnel to assist us in combating these security threats. Our continuous technological evaluations and enhancements, including changes designed to update our protective measures, may increase our risk of a breach or gap in our security. We may incur higher costs to comply with laws on, or regulators’ scrutiny of, our use, collection, management, or transfer of data and other privacy practices. We are continuously evaluating and enhancing our cybersecurity and information security systems and creating new systems and processes. However, there can be no assurance that these measures will be effective in preventing or limiting the impact of future cybersecurity incidents.
We May Face Changes in Accounting Standards
Authorities may change accounting standards that apply to us, and we may adopt changes earlier than required. Changes in accounting rules applicable to our business may have an adverse impact on our results of operations and financial condition. For a discussion of the impact of U.S. GAAP accounting pronouncements issued but not yet implemented, see Note 1 of the Notes to the Consolidated Financial Statements.
Our Associates May Take Excessive Risks
Our Associates, including executives and others who manage sales, investments, products, wholesaling, underwriting, and others, may take excessive risks. Our compensation programs and practices, and our other controls, may not effectively deter excessive risk-taking or misconduct.
We May Have Difficulty in or Complications from Marketing and Distributing Our Products
Our product distributors may suspend, alter, reduce or terminate their distribution relationships with us if we change our strategy, if our business performance declines, as a result of rating agency actions or concerns about market-related risks, or for regulatory or other reasons. Our distributors may merge, change their business models in ways that affect us, or terminate their distribution contracts with us, and new distribution channels could emerge, harming our distribution efforts. Distributors may try to renegotiate the terms of any existing selling agreements to less favorable terms for us due to consolidation or other industry changes or for other reasons. Disruption or changes to our relationships with our distributors could harm our ability to market our products.
Our Associates or unaffiliated firms or agents may distribute our products in an inappropriate manner, or our customers may not understand them or whether they are suitable.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Properties
Not applicable.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
See Note 19 of the Notes to the Consolidated Financial Statements.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
No established public trading market exists for Metropolitan Life Insurance Company’s common equity; all of Metropolitan Life Insurance Company’s common stock is held by MetLife, Inc.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Reserved

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations
Page
Forward-Looking Statements and Other Financial Information
Current Market Conditions
Summary of Critical Accounting Estimates
Results of Operations
Investments
Derivatives
Liquidity and Capital Resources
Adopted Accounting Pronouncements
Future Adoption of Accounting Pronouncements
Non-GAAP and Other Financial Disclosures
Risk Management
Forward-Looking Statements and Other Financial Information
For purposes of this discussion, “MLIC,” the “Company,” “we,” “our” and “us” refer to Metropolitan Life Insurance Company, a New York corporation incorporated in 1868, and its subsidiaries. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, “MetLife”). Management's narrative analysis of the Company’s results of operations is presented pursuant to General Instruction I(2)(a) of Form 10-K. This narrative analysis should be read in conjunction with “Note Regarding Forward-Looking Statements,” “Risk Factors,” “Quantitative and Qualitative Disclosures About Market Risk” and the Company's consolidated financial statements included elsewhere herein.
This narrative analysis may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Note Regarding Forward-Looking Statements” for cautionary language regarding forward-looking statements.
This narrative analysis includes references to our performance measure, adjusted earnings, that is not based on accounting principles generally accepted in the United States of America (“GAAP”). See “- Non-GAAP and Other Financial Disclosures” for definitions and a discussion of this and other financial measures, and “- Results of Operations” and “- Investments” for reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP measures.
Current Market Conditions
In the U.S., the Federal Open Market Committee took various actions in 2024 to promote economic stability, including lowering interest rates during the second half of the year. Labor market conditions, inflation and financial and international developments, as well as other factors, could affect the continuation of such actions in 2025. See “- Investments - Current Environment” for additional information.
Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the consolidated financial statements. For a discussion of our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements. The most critical estimates include those used in determining:
(i)FPBs, market risk benefits (“MRBs”) and the accounting for reinsurance;
(ii)estimated fair values of investments in the absence of quoted market values;
(iii)investment allowance for credit loss (“ACL”) and impairments;
(iv)estimated fair values of freestanding derivatives;
(v)measurement of employee benefit plan liabilities;
(vi)measurement of income taxes and the valuation of deferred tax assets; and
(vii)liabilities for litigation and regulatory matters.
In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.
Future Policy Benefit Liabilities
Effective January 1, 2023, the Company adopted an accounting pronouncement related to targeted improvements to the accounting for long-duration contracts (“LDTI”) with a January 1, 2021 transition date (the “LDTI Transition Date”). Generally, FPBs are payable over an extended period of time and 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. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of FPBs for traditional long-duration non-participating products are 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. These assumptions are reviewed at least annually and updated as needed to reflect our expected experience for future periods. If net premiums exceed gross premiums (i.e., expected benefits exceed expected gross premiums), the FPBs are increased, and a corresponding adjustment is recognized in net income.
Liabilities for unpaid claims are estimated based upon our historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs.
Traditional non-participating long-duration and limited-payment contracts comprise the majority of MLIC’s FPBs, inclusive of deferred profit liabilities, as described in Note 3 of the Notes to the Consolidated Financial Statements. For such contracts, cash flow assumptions are used to project the amount and timing of expected future benefits and claim settlement expenses to be paid and the expected future premiums to be collected for a cohort. Generally, the liabilities for these products are updated retrospectively on a quarterly basis for actual experience and at least once a year for any changes in cash flow assumptions. The change in FPBs reflected in the statement of operations is calculated using a locked-in discount rate. For contracts issued prior to the LDTI Transition Date, the Company developed a cohort level locked-in discount rate that reflects 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 LDTI Transition Date), or the acquisition date for contracts acquired through an assumed in-force reinsurance transaction or a business combination. As described in Note 1 of the Notes to the Consolidated Financial Statements, for contracts issued subsequent to the LDTI Transition Date, the upper-medium grade discount rate is locked-in for the cohort and used to discount the estimated cash flows. The Company generally interprets this as a rate comparable to that of a corporate single A discount rate and reflects the duration characteristics of the liability. The FPB for all cohorts is remeasured to a current upper-medium grade discount rate at each reporting period through other comprehensive income (loss) (“OCI”).
Liabilities for universal and variable universal life secondary and paid-up guarantees (“additional insurance liabilities”) are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating the secondary and paid-up guarantee liabilities are investment income, mortality, lapse, and premium payment pattern and persistency. In addition, the projected account balance and assessments used in this calculation are impacted by the earned rate on investments and the interest crediting rates, which are typically subject to guaranteed minimums. The assumptions of investment performance and volatility for variable products’ separate account funds are consistent with historical experience of the appropriate underlying equity indices, such as the Standard & Poor’s Global Ratings (“S&P”) 500 Index. These assumptions are monitored and updated retrospectively based on market conditions and historical experience on a periodic basis.
Accounting for reinsurance generally presents the income statement effect of direct policies on a net-of-reinsurance basis by using assumptions and methodologies consistent with those used to project the future performance of the underlying direct business. Further, the potential impact of counterparty credit risks is considered when measuring the reinsurance recoverables. We periodically review actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using criteria similar to that evaluated in our security impairment process. See “- Investment Allowance for Credit Loss and Impairments.” Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit method of accounting.
We measure market risk related to our market sensitive traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables based on changes in interest rates utilizing a sensitivity analysis. The results of this sensitivity analysis are included in “Quantitative and Qualitative Disclosures About Market Risk - Risk Measurement: Sensitivity Analysis.” We have also assessed the sensitivities of hypothetical changes in significant assumptions to reported amounts related to our traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables for products including, but not limited to, those within the disaggregated rollforwards included in Note 3 of the Notes to the Consolidated Financial Statements, as reflected in the following table:
Traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables
December 31, 2024
FPBs (1) Reinsurance Recoverables Net Effect to
Pre-tax
Net Income
Net Effect to OCI
Increase / (Decrease) (In millions)
Assumptions (2):
Mortality
Effect of an increase by 1% $ (50) $ 8 $ 73 $ (15)
Effect of a decrease by 1% $ 50 $ (8) $ (74) $ 16
Morbidity (3)
Effect of an increase by 5% $ 383 $ 2 $ (435) $ 54
Effect of a decrease by 5% $ (293) $ (2) $ 342 $ (51)
Lapse (4)
Effect of an increase by 10% $ (234) $ (12) $ 310 $ (88)
Effect of a decrease by 10% $ 339 $ 13 $ (430) $ 104
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(1)FPBs are inclusive of deferred profit liabilities where applicable.
(2)All sensitivities exclude potential changes in our future premium rate assumptions.
(3)For products which are subject to morbidity risk, MLIC applied sensitivities to the incidence rate assumptions only.
(4)For MetLife Holdings long-term care products, the lapse impacts include mortality as both mortality and lapse result in termination of these contracts without any additional benefit payment.
See Note 3 of the Notes to the Consolidated Financial Statements for additional information, including the significant inputs, judgments, valuation methods and assumptions used in the establishment of FPBs, as well as the effect of changes in such factors on the measurement of our FPBs during the year. See Note 8 of the Notes to the Consolidated Financial Statements for additional information on our reinsurance programs.
Traditional participating contracts comprise a significant portion of MLIC’s FPBs, as described in Note 3 of the Notes to the Consolidated Financial Statements. For such contracts, original assumptions developed at the time of issue are locked-in and used in all future liability calculations. An additional liability would be required if the resulting liabilities are not adequate to provide for future benefits and expenses (i.e., there is a premium deficiency). For these contracts, MLIC’s risk of adverse experience may be mitigated through adjustments to the dividend scales.
For all insurance assets and liabilities, MLIC holds capital and surplus to mitigate potential adverse experience development. The Company’s approaches for managing liquidity and capital are described in “- Liquidity and Capital Resources.”
Market Risk Benefits
MRBs are contracts or contract features that guarantee benefits, such as guaranteed minimum benefits (referred to as “GMXBs”), 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 protect the contractholder from the same risk. Certain contracts may have multiple contract features or guarantees 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, which is determined based on the present value of projected future benefits minus the present value of projected future fees attributable to those benefit features. The projections of future benefits and future fees require capital market and actuarial assumptions, including expectations concerning policyholder behavior. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates. The valuation of these MRBs also includes an adjustment for our nonperformance risk and risk margins for non-capital market inputs. The nonperformance risk adjustment, which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees.
Changes in the estimated fair value of MRBs are recognized in net income, except for fair value changes attributable to a change in nonperformance risk of the Company which is recorded within OCI.
The estimated fair value of the net MRB liability may rise in volatile or declining equity markets or in a low interest rate environment. Market conditions including changes in interest rates, equity indices, market volatility and foreign currency exchange rates, variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income, and changes in our nonperformance risk could materially affect OCI.
We measure market risk related to our MRBs based on changes in interest rates, foreign currency exchange rates and equity market prices utilizing a sensitivity analysis. The results of this sensitivity analysis are included in “Quantitative and Qualitative Disclosures About Market Risk - Risk Measurement: Sensitivity Analysis.” We have also assessed the sensitivities of hypothetical changes in significant assumptions to reported amounts related to our MRBs for products included within the disaggregated rollforwards in Note 5 of the Notes to the Consolidated Financial Statements, as reflected in the following table:
December 31, 2024
MRBs
(Liabilities net of Assets) Net Effect to
Pre-tax
Net Income Net Effect to OCI
Increase / (Decrease) (In millions)
Assumptions:
Mortality
Effect of an increase by 1% $ 3 $ (2) $ (1)
Effect of a decrease by 1% $ (3) $ 2 $ 1
Lapse
Effect of an increase by 10% $ (20) $ 23 $ (3)
Effect of a decrease by 10% $ 19 $ (22) $ 3
Nonperformance risk
Effect of an increase by 50 bps $ (165) N/A $ 165
Effect of a decrease by 50 bps $ 183 N/A $ (183)
See Note 5 of the Notes to the Consolidated Financial Statements for additional information, including the significant inputs, judgments, valuation methods and assumptions used in the establishment of the MRBs, as well as the effect of changes in such factors on the measurement of our MRBs during the year. Also, see Note 12 of the Notes to the Consolidated Financial Statements for additional information on the fair value measurement of MRBs.
Estimated Fair Value of Investments
The estimated fair values of our investments are based on unadjusted quoted prices for identical investments in active markets that are readily and regularly obtainable. When such unadjusted quoted prices are not available, estimated fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring significant management judgment, including assumptions or estimates, are used to determine the estimated fair value of investments. Unobservable inputs are based on management’s assumptions about the inputs market participants would use in pricing such investments. The methodologies, assumptions and inputs utilized are described in Note 12 of the Notes to the Consolidated Financial Statements.
For the vast majority of our investments, sensitivity analysis regarding unobservable inputs is not necessary or appropriate, as they are valued using quoted prices, as described above. Quantitative information about the significant unobservable inputs used in 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 estimated fair value on a recurring basis is presented in Note 12 of the Notes to the Consolidated Financial Statements.
Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Our ability to sell investments, or the price ultimately realized for investments, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain investments.
Investment Allowance for Credit Loss and Impairments
The significant estimates and inherent uncertainties related to our evaluation of credit loss and impairments on our investment portfolio are summarized below. See “Quantitative and Qualitative Disclosures About Market Risk” for information regarding the sensitivity of our fixed maturity securities and mortgage loan portfolios to changes in interest rates and foreign currency exchange rates.
Fixed Maturity Securities
The assessment of whether a credit loss has occurred is based on our case-by-case evaluation of whether the net amount expected to be collected is less than the amortized cost basis. We consider a wide range of factors about the security issuer and use our best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. We evaluate credit loss by considering information that changes from time to time about past events, current and forecasted economic conditions, and we measure credit loss by estimating recovery value using a discounted cash flow analysis. We estimate recovery value based on our best estimate of future cash flows, which is inherently subjective, and methodologies can vary depending on the facts and circumstances specific to each security. We record an ACL for the amount of the credit loss instead of recording a reduction of the amortized cost. The evaluation processes, measurement methodologies, significant inputs and significant judgments and assumptions used to determine the amount of credit loss are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. The determination of the amount of ACL is subjective as it includes our estimates and assumptions and assessment of known and inherent risks. We revise these estimates and assumptions as conditions change and new information becomes available. The valuation of our fixed maturity securities portfolio is sensitive to changes in interest rates and the estimated fair value of the portion of our fixed maturities securities portfolio that is foreign denominated is sensitive to changes in foreign currency exchange rates.
Mortgage Loans
The ACL is established both for pools of loans with similar risk characteristics and for loans with dissimilar risk characteristics, collateral dependent loans and certain modified loans, individually on a loan specific basis. We record an allowance for expected lifetime credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that we do not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. To determine the mortgage loan ACL, we apply significant judgment to estimate expected lifetime credit loss over the contractual term of our mortgage loans adjusted for expected prepayments and any extensions; and we consider past events and current and forecasted economic conditions which are subject to inherent uncertainty and which may change from time to time. The ACL methodologies, significant inputs and significant judgments and assumptions used to determine the amount of credit loss are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. The determination of the amount of ACL is subjective as it includes our estimates and assumptions and assessment of known and inherent risks. We revise these estimates as conditions change and new information becomes available. The estimated fair value of our mortgage loan portfolio is sensitive to changes in interest rates and the estimated fair value of the portion of our mortgage loan portfolio that is foreign denominated is sensitive to changes in foreign currency exchange rates.
Leases, Real Estate and Other Asset Classes
The determination of the amount of ACL on leases and impairments on real estate and the remaining asset classes is highly subjective and is based upon our quarterly evaluation and assessment of known and inherent risks associated with the respective asset class. The evaluation processes, measurement methodologies, significant inputs and significant judgments and assumptions used to determine the amount of ACL and impairments are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. Such evaluations and assessments are revised as conditions change and new information becomes available.
Derivatives
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. See Note 12 of the Notes to the Consolidated Financial Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
See Note 11 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and hedging programs. See also “Quantitative and Qualitative Disclosures About Market Risk” for information regarding the sensitivity of our derivatives to changes in interest rates, foreign currency exchange rates, and equity market prices.
Employee Benefit Plans
The Company sponsors a U.S. nonqualified defined benefit pension plan covering MetLife employees who meet specified eligibility requirements. The calculation of the obligations and expenses associated with this plan requires an extensive use of assumptions such as the discount rate and rate of future compensation increases, as well as assumptions regarding participant demographics such as rate and age of retirement, withdrawal rates and mortality. In consultation with external actuarial firms, we determine these assumptions based upon a variety of factors such as the historical experience of the plan, currently available market and industry data, and expected benefit payout streams.
We determine the discount rate used to value the Company’s pension obligations based upon rates commensurate with current yields on high quality corporate bonds. Given our pension obligations as of December 31, 2023, the beginning of the measurement year, if we had assumed a discount rate for our pension plan that was 100 basis points higher or 100 basis points lower than the rate we assumed, the change in our net periodic benefit costs would have been as follows:
Year Ended December 31, 2024
Increase/(Decrease) in Net Periodic Pension Costs
(In millions)
Increase in discount rate by 100 bps
$ (5)
Decrease in discount rate by 100 bps
$ 4
Given our pension obligations as of December 31, 2024, the end of the measurement year, if we had assumed a discount rate for our pension plan that was 100 basis points higher or 100 basis points lower than the rate we assumed, the change in our pension benefit obligation would have been as follows:
Year Ended December 31, 2024
Increase/(Decrease) in Pension Benefit Obligations
(In millions)
Increase in discount rate by 100 bps $ (78)
Decrease in discount rate by 100 bps $ 91
These tables consider only changes in our assumed discount rate without consideration of possible changes in any of the other assumptions described above that could ultimately accompany any changes in our assumed discount rate. The assumptions used may differ materially from actual results due to, among other factors, changing market and economic conditions and changes in participant demographics. These differences may have a significant impact on the Company’s consolidated financial statements and liquidity.
See Note 17 of the Notes to the Consolidated Financial Statements for additional discussion of assumptions used in measuring liabilities relating to our employee benefit plans.
Income Taxes and Valuation of Deferred Tax Assets
Our accounting for income taxes represents our best estimate of various events and transactions. Tax laws are often complex and may be subject to differing interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions in which we conduct business.
The Company considers all available factors, both positive and negative, to determine whether, based on the weight of these factors, a partial or full valuation allowance for categories of deferred tax assets is required. The weight given to these factors is commensurate with the extent to which it can be objectively verified. Examples of factors considered in determining deferred tax asset realizability include past earnings history, projections of taxable income and tax planning strategies, including the intent and ability to hold certain securities until they recover in value. Changes in tax laws and/or statutory tax rates in countries in which we operate could have an impact on our valuation of net deferred tax assets. If there had been a 1% increase in the effective income tax rate, the change would have resulted in an approximate $137 million increase in the net deferred income tax asset balance at December 31, 2024.
See Notes 1 and 18 of the Notes to the Consolidated Financial Statements for additional information on our income taxes.
Litigation Contingencies
We are a defendant in a large number of litigation matters and are involved in a number of regulatory investigations. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities related to certain lawsuits, including our asbestos-related liability, are especially difficult to estimate due to the limitation of reliable data and uncertainty regarding numerous variables that can affect liability estimates. On a quarterly and annual basis, we review relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in our consolidated financial statements. It is possible that an adverse outcome in certain of our litigation and regulatory investigations, including asbestos-related cases, or the use of different assumptions in the determination of amounts recorded could have a material effect upon our consolidated net income or cash flows in particular quarterly or annual periods.
See Note 19 of the Notes to the Consolidated Financial Statements for additional information regarding our assessment of litigation contingencies.
Results of Operations
Overview
MLIC is a provider of insurance, annuities and employee benefits. The Company is organized into three segments: Group Benefits; RIS; and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other. See Note 2 of the Notes to the Consolidated Financial Statements for further information on the Company’s segments and Corporate & Other.
Key Financial Highlights
•Net income attributable to MLIC was $3.5 billion for the year ended December 31, 2024, compared to $1.1 billion for the year ended December 31, 2023.
•Adjusted earnings was $3.4 billion for the year ended December 31, 2024, compared to $3.5 billion for the year ended December 31, 2023.
Consolidated Results
Years Ended December 31,
2024 2023
(In millions)
Revenues
Premiums $ 27,561 $ 24,718
Universal life and investment-type product policy fees 1,500 1,664
Net investment income 11,635 11,206
Other revenues 1,775 1,673
Net investment gains (losses) (450) (1,375)
Net derivative gains (losses) (106) (1,537)
Total revenues 41,915 36,349
Expenses
Policyholder benefits and claims and policyholder dividends 29,236 26,620
Policyholder liability remeasurement (gains) losses (148) (150)
Market risk benefit remeasurement (gains) losses
(932) (703)
Interest credited to policyholder account balances 3,819 3,602
Amortization of deferred policy acquisition costs and value of business acquired
279 298
Interest expense on debt 123 132
Other expenses, net of capitalization of deferred policy acquisition costs
5,277 5,355
Total expenses
37,654 35,154
Income (loss) before provision for income tax 4,261 1,195
Provision for income tax expense (benefit) 776 60
Net income (loss)
3,485 1,135
Less: Net income (loss) attributable to noncontrolling interests (9) 41
Net income (loss) attributable to Metropolitan Life Insurance Company
$ 3,494 $ 1,094
Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023
Net income (loss) attributable to MLIC - Increased $2.4 billion primarily due to the following:
Net Investment Gains (Losses)(1) - Favorable change of $925 million ($731 million, net of income tax):
•Impairment losses in 2023 for investments disposed of in connection with a reinsurance transaction that closed in November 2023
•Higher gains on sales of real estate investments
Partially offset by:
•Higher losses on sales of fixed maturity securities
Net Derivative Gains (Losses)(2) - Favorable change of $1.4 billion ($1.1 billion, net of income tax)(3):
•Change in the value of the underlying assets - favorable impact to embedded derivatives related to funds withheld on a certain reinsurance agreement
•Key equity indexes increased less in 2024 compared to 2023 - favorable impact to the estimated fair value of long put options, short futures and TRRs
•The U.S. dollar strengthened against major currencies in 2024 compared to weakened in 2023 - favorable impact to the estimated fair value of receive U.S. dollar currency swaps
Market Risk Benefit Remeasurement (Gains) Losses(4) - Favorable change of $229 million ($181 million, net of income tax):
•Certain long-term interest rates increased more significantly in 2024 compared to 2023 and other long-term interest rates increased in 2024 compared to decreased in 2023
Partially offset by:
•Key equity indexes increased less in 2024 compared to 2023
Actuarial Assumption Review - Favorable change of $9 million ($7 million, net of income tax):
Years Ended December 31,
Variance
2024 2023
Assumptions (In millions, net of income tax)
Economic
$ (26) $ (25) $ (1)
Mortality
105 28 77
Morbidity - (84) 84
Policyholder behavior
(44) 152 (196)
Operational 49 6 43
Total $ 84 $ 77 $ 7
•Total results for 2024 and 2023 include gains of $84 million and $77 million, respectively:
◦Of the $84 million gain, a loss of $14 million was recognized in MRB remeasurement (gains) losses, a loss of $1 million was recognized in net derivative gains (losses), both of which are discussed above, and a gain of $99 million was recognized in adjusted earnings, which is discussed below
◦Of the $77 million gain, a loss of $7 million was recognized in MRB remeasurement (gains) losses, a loss of $2 million was recognized in net derivative gains (losses), both of which are discussed above, and a gain of $86 million was recognized in adjusted earnings, which is discussed below
◦The $7 million increase was primarily driven by (i) favorable mortality experience in the RIS segment in the current year and (ii) updates made in the prior year to morbidity assumptions in the MetLife Holdings segment associated with an increase in incident rates for the long-term care business, substantially offset by updates to policyholder behavior assumptions in the MetLife Holdings segment related to claim utilization experience for the long-term care business
Adjusted Earnings(5) - Unfavorable change of $115 million. See “- Consolidated Results - Adjusted Earnings.”
Taxes - Unfavorable change in effective tax rate - 18% in 2024 compared to 5% in 2023:
•2024 effective tax rate on income before provision for income tax was 18% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
◦Non-taxable investment income
◦Low income housing and other tax credits, partially offset by the impact of tax equity investments now accounted for under the proportional amortization method
•2023 effective tax rate on income before provision for income tax was 5% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
◦Low income housing and other tax credits
◦Non-taxable investment income
__________________
(1)See “- Investments - Overview” and “- Investments - Investment Portfolio Results - Net Investment Gains (Losses)” for information regarding management of our investment portfolio.
(2)See “-Derivatives - Net Derivative Gains (Losses)” for information regarding the use of derivatives to hedge market risk.
(3)Includes amounts relating to investment hedge adjustments, which are also included in adjusted earnings. See “- Investments - Investment Portfolio Results” for additional information.
(4)See Note 5 of the Notes to the Consolidated Financial Statements for further information on the Company’s MRBs.
(5)See “- Non-GAAP and Other Financial Disclosures” for information regarding adjusted earnings.
Reconciliation of net income (loss) to adjusted earnings and premiums, fees and other revenues to adjusted premiums, fees and other revenues
Years Ended December 31,
2024 2023
(In millions)
Net income (loss) $ 3,485 $ 1,135
Less: adjustments from net income (loss) to adjusted earnings:
Revenues:
Net investment gains (losses) (450) (1,375)
Net derivative gains (losses) (106) (1,537)
Premiums - -
Universal life and investment-type product policy fees - -
Net investment income (318) (789)
Other revenues 115 10
Expenses:
Policyholder benefits and claims and policyholder dividends 41 (18)
Policyholder liability remeasurement gains (losses)
- -
Market risk benefits remeasurement gains (losses)
932 703
Interest credited to policyholder account balances (“PABs”)
(83) (18)
Capitalization of deferred policy acquisition costs (“DAC”)
- -
Amortization of DAC and VOBA - -
Interest expense on debt - -
Other expenses (12) 50
Provision for income tax (expense) benefit (8) 620
Adjusted earnings $ 3,374 $ 3,489
Premiums, fees and other revenues $ 30,836 $ 28,055
Less: adjustments to premiums, fees and other revenues 115 10
Adjusted premiums, fees and other revenues $ 30,721 $ 28,045
Consolidated Results - Adjusted Earnings
Business Overview. Adjusted premiums, fees and other revenues for the year ended December 31, 2024 increased $2.8 billion, or 10%, compared to 2023. This was primarily due to growth in the pension risk transfer business and structured settlement sales in the RIS segment, as well as growth in both core and voluntary products in the Group Benefits segment, partially offset by a decrease in premiums related to our participating life contracts, which can fluctuate with claims experience, and the expected decline in the MetLife Holdings segment from business run-off. Changes in RIS premiums are generally offset by a corresponding change in policyholder benefits.
Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023
Unless otherwise stated, all amounts discussed below are net of income tax.
Adjusted Earnings - Decreased $115 million primarily due to the following business drivers:
Reinsurance Transaction - Decreased adjusted earnings by approximately $135 million as a result of the reinsurance transaction that closed in November 2023 in the MetLife Holdings segment
Market Factors - Increased adjusted earnings by $71 million:
•Variable investment income increased - higher returns on private equity funds
•Recurring investment income increased - higher yields on fixed income securities and mortgage loans, as well as the impact of tax equity investments now accounted for under the proportional amortization method, partially offset by lower income on derivatives and real estate investments
Largely offset by:
•Higher average interest crediting rates on investment-type products, primarily in the RIS segment
Volume Growth - Decreased adjusted earnings by $67 million:
•Increase in interest credited expenses on long duration products, primarily in the RIS segment
Partially offset by:
•Positive flows from pension risk transfer transactions and the specialized benefit resource business in the RIS segment
Underwriting and Other Insurance Adjustments - Decreased adjusted earnings by $108 million:
•Unfavorable change from refinements to certain insurance assets and other liabilities in both years - includes an unfavorable change from adjustments to certain deposit reinsurance assets and an unfavorable refinement in 2024 on certain life policies in the Group Benefits segment
Partially offset by:
•Favorable mortality - lower claims incidence in the life business in the Group Benefits segment
Actuarial Assumption Review - Increased adjusted earnings by $13 million:
•2024 actuarial assumption review impacting the Group Benefits, RIS and MetLife Holdings segments - favorable impact of $99 million
•2023 actuarial assumption review impacting the Group Benefits, RIS and MetLife Holdings segments - favorable impact of $86 million
Expenses - Increased adjusted earnings by $193 million:
•Interest associated with a 2024 tax refund and lower interest expense on tax positions in Corporate & Other
•Lower corporate-related expenses, including from initiatives and projects in Corporate & Other
•Litigation reserves increased less in 2024 compared to 2023
Partially offset by:
•Higher legal plan utilization and higher technology, employee-related and various other operating expenses in the Group Benefits segment
Taxes - Unfavorable change in effective tax rate - 19% in 2024 compared to 16% in 2023:
•2024 effective tax rate on income before provision for income tax was 19% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
◦Non-taxable investment income
◦Low income housing and other tax credits, partially offset by the impact of tax equity investments now accounted for under the proportional amortization method
•2023 effective tax rate on income before provision for income tax was 16% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
◦Low income housing and other tax credits
◦Non-taxable investment income
Investments
Overview
We maintain a diversified global general account investment portfolio to support our mix of liabilities in our global businesses. We position our portfolio based on relative value and our view of the economy and financial markets. We maintain our focus on appropriate level of diversification and asset quality.
We manage our investment portfolio using disciplined asset/liability management (“ALM”) principles, focusing on cash flow and duration to support our current and future liabilities. Our intent is to match the timing and amount of liability cash outflows with invested assets that have cash inflows of comparable timing and amount, while optimizing risk-adjusted investment income and risk-adjusted total return. Our investment portfolio is heavily weighted toward fixed income investments, with the vast majority of our portfolio invested in fixed maturity securities available-for-sale (“AFS”) and mortgage loans. These securities and loans have varying maturities and other characteristics which cause them to be generally well suited for matching the cash flow and duration of insurance liabilities.
Current Environment
As a large insurer with a diverse investment portfolio, we continue to be impacted by the changing global financial and economic environment, the fiscal and monetary policy of governments and central banks around the world and other governmental measures. Global inflation, supply chain disruptions, acts of war and banking sector volatility continue to impact the global economy and financial markets and have caused volatility in the global equity, credit and real estate markets. These factors may persist for some time and may continue to impact pricing levels of risk-bearing investments, as well as our business operations, investment portfolio and derivatives. See “- Results of Operations - Consolidated Results” and “- Results of Operations - Consolidated Results - Adjusted Earnings” for impacts on our derivatives and analysis of the period over period changes in investment portfolio results and “Investments - Fixed Maturity Securities AFS - Evaluation of Fixed Maturity Securities AFS for Credit Loss - Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position” in Note 10 of the Notes to the Consolidated Financial Statements for impacts on the net unrealized gain (loss) on our fixed maturity securities AFS.
Selected Country Investments
Our investment portfolio, which supports our insurance operations and related policyholder liabilities, as well as our global portfolio diversification objectives, is exposed to risks posed by local political and economic conditions. The countries included in the following table have been the most affected by these risks. The table below presents a summary of selected country fixed maturity securities AFS, at estimated fair value, on a “country of risk basis” (i.e., where the issuer primarily conducts business).
Selected Country Fixed Maturity Securities AFS at December 31, 2024
Country Sovereign (1) Financial
Services Non-Financial
Services Total (2)
(Dollars in millions)
Israel $ 39 $ 6 $ 61 $ 106
Russian Federation 11 - - 11
Ukraine 1 - - 1
Total $ 51 $ 6 $ 61 $ 118
Investment grade % 77.0 % 98.6 % 33.1 % 55.1 %
______________
(1)Sovereign includes government and agency.
(2)The par value, amortized cost, net of ACL and estimated fair value of these securities were $153 million, $134 million and $118 million, respectively, at December 31, 2024.
We manage direct and indirect investment exposure in the selected countries through fundamental analysis and we continually monitor and adjust our level of investment exposure. We do not expect that our general account investments in these countries will have a material adverse effect on our results of operations or financial condition.
Investment Portfolio Results
See “- Overview” for a discussion of our investment portfolio and a summary of how we manage our investment portfolio. The following tables present a reconciliation of net investment income under GAAP to adjusted net investment income and our yield table. The yield table presentation is consistent with how we measure our investment performance for management purposes, and we believe it enhances understanding of our investment portfolio results.
Reconciliation of Net Investment Income under GAAP to Adjusted Net Investment Income
Years Ended December 31,
2024 2023
(In millions)
Net investment income - GAAP
$ 11,635 $ 11,206
Investment hedge adjustments
399 777
Other
(80) 12
Adjusted net investment income (1) $ 11,954 $ 11,995
__________________
(1)See “Financial Measure and Segment Accounting Policies” in Note 2 of the Notes to the Consolidated Financial Statements for a discussion of the adjustments made to net investment income under GAAP in calculating adjusted net investment income.
Yield Table
Years Ended December 31,
2024 2023
Asset Class Yield% (1) Amount Yield% (1) Amount
(Dollars in millions)
Fixed maturity securities (2), (3) 4.94 % $ 7,317 4.75 % $ 7,344
Mortgage loans (3) 5.33 3,264 5.21 3,302
Real estate and real estate joint ventures (0.34) (30) 0.57 48
Policy loans 5.48 290 5.21 294
Other limited partnership interests
6.08 441 2.45 192
Cash and short-term investments 3.03 122 3.36 51
Other invested assets - 901 - 1,105
Investment income 5.03 % 12,305 4.90 % 12,336
Investment fees and expenses (0.14) (351) (0.14) (341)
Adjusted net investment income 4.89 % $ 11,954 4.76 % $ 11,995
______________
(1)We calculate annualized yields using adjusted net investment income as a percent of average quarterly asset carrying values. Adjusted net investment income excludes realized gains (losses) from sales and disposals, and includes the impact of changes in foreign currency exchange rates. Asset carrying values utilized in the calculation of yields exclude unrecognized unrealized gains (losses), collateral received in connection with our securities lending program, annuities funding structured settlement claims, freestanding derivative assets and collateral received from derivative counterparties. Invested assets reclassified to held-for-sale and ceded policy loans are included in the calculation of yields, but are otherwise excluded from asset carrying values. A yield is not presented for other invested assets, as it is not considered a meaningful measure of performance for this asset class.
(2)Fixed maturity securities in the yield table includes fair value option (“FVO”) securities; accordingly, investment income (loss) from fixed maturity securities includes amounts from FVO securities of $159 million and $147 million for the years ended December 31, 2024 and 2023, respectively, and FVO securities asset carrying values are included in the calculation of average quarterly fixed maturity securities asset carrying values in the yield calculation.
(3)Investment income from fixed maturity securities and mortgage loans includes prepayment fees.
See “- Results of Operations - Consolidated Results - Adjusted Earnings” for an analysis of the period over period changes in investment portfolio results.
Net Investment Gains (Losses)
We purchase investments to support our insurance liabilities and not to generate net investment gains and losses. However, net investment gains and losses are incurred and can change significantly from period to period due to changes in external influences, including changes in market factors such as interest rates, foreign currency exchange rates, credit spreads and equity markets; counterparty specific factors such as financial performance, credit rating and collateral valuation; and internal factors such as portfolio rebalancing. Changes in these factors from period to period can significantly impact the levels of provision for credit loss and impairments on our investment portfolio, as well as realized gains and losses on investments sold.
See “- Results of Operations - Consolidated Results” for an analysis of the year-over-year changes in realized gains (losses) on investments sold, provision (release) for credit loss and impairments and non-investment portfolio gains (losses).
Fixed Maturity Securities AFS
The following table presents public and private fixed maturity securities AFS held at:
December 31,
2024 2023
Securities by Type Estimated
Fair
Value % of Total Estimated
Fair
Value % of Total
(Dollars in millions)
Fixed maturity securities AFS
Publicly-traded $ 94,313 67.0 % $ 99,121 69.4 %
Privately-placed 46,519 33.0 43,684 30.6
Total fixed maturity securities AFS $ 140,832 100.0 % $ 142,805 100.0 %
Percentage of cash and invested assets
56.4 % 56.1 %
See Note 10 of the Notes to the Consolidated Financial Statements for information about fixed maturity securities AFS by sector, contractual maturities, and continuous gross unrealized losses, as well as realized gains (losses) on sales and disposals.
Included within fixed maturity securities AFS are structured securities, including residential mortgage-backed securities (“RMBS”), asset-backed securities and collateralized loan obligations (collectively, “ABS & CLO”) and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Products”). See “- Structured Products” for further information.
Valuation of Securities. We are responsible for the determination of the estimated fair value of our investments. We determine the estimated fair value of publicly traded securities after considering one of three primary sources of information: quoted market prices in active markets, independent pricing services, or independent broker quotations. We determine the estimated fair value of privately placed securities after considering one of three primary sources of information: market standard internal matrix pricing, market standard internal discounted cash flow techniques, or independent pricing services (after we determine the independent pricing services’ use of available observable market data). For publicly traded securities, the number of quotations obtained varies by instrument and depends on the liquidity of the particular instrument. Generally, we obtain prices from multiple pricing services to cover all asset classes and obtain multiple prices for certain securities, but ultimately utilize the price with the highest placement in the fair value hierarchy. Independent pricing services that value these instruments use market standard valuation methodologies based on data about market transactions and inputs from multiple pricing sources that are market observable or can be derived principally from or corroborated by observable market data. See Note 12 of the Notes to the Consolidated Financial Statements for a discussion of the types of market standard valuation methodologies utilized and key assumptions and observable inputs used in applying these standard valuation methodologies. When a price is not available in the active market or through an independent pricing service, management values the security primarily using market standard internal matrix pricing or discounted cash flow techniques, and non-binding quotations from independent brokers who are knowledgeable about these securities. Independent non-binding broker quotations utilize inputs that may be difficult to corroborate with observable market data. As shown in the following section, less than 1% of our fixed maturity securities AFS were valued using non-binding quotations from independent brokers at December 31, 2024.
Senior management, independent of the trading and investing functions, is responsible for the oversight of control systems and valuation policies for securities, mortgage loans, real estate and derivatives. On a quarterly basis, new transaction types and markets are reviewed and approved to ensure that observable market prices and market-based parameters are used for valuation, wherever possible, and for determining that valuation adjustments, when applied, are based upon established policies and are applied consistently over time. Senior management oversees the selection of independent third-party pricing providers and the controls and procedures to evaluate third-party pricing.
We review our valuation methodologies on an ongoing basis and revise those methodologies when necessary based on changing market conditions. Assurance is gained on the overall reasonableness and consistent application of input assumptions, valuation methodologies and compliance with fair value accounting guidance through controls designed to ensure valuations represent an exit price. Several controls are utilized, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, comparing fair value estimates to management’s knowledge of the current market, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. We ensure that prices received from independent brokers, also referred to herein as “consensus pricing,” are representative of estimated fair value by considering such pricing relative to our knowledge of the current market dynamics and current pricing for similar investments.
On a quarterly basis, we also apply a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained, or an internally developed valuation is prepared. Internally developed valuations of current estimated fair value, compared with pricing received from the independent pricing services, did not produce material differences in the estimated fair values for the majority of the portfolio; accordingly, overrides were not material. This is, in part, because internal estimates are generally based on available market evidence and estimates used by other market participants. In the absence of such market-based evidence, management’s best estimate is used.
We have reviewed the significance and observability of inputs used in the valuation methodologies to determine the appropriate fair value hierarchy level for each of our securities. Based on the results of this review and investment class analysis, each instrument is categorized as Level 1, 2 or 3 based on the lowest level significant input to its valuation. See Note 12 of the Notes to the Consolidated Financial Statements for valuation approaches and key inputs by major category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy.
Fair Value of Fixed Maturity Securities AFS
Fixed maturity securities AFS measured at estimated fair value on a recurring basis and their corresponding fair value pricing sources were as follows:
Level December 31, 2024
(Dollars in millions)
Level 1
Quoted prices in active markets for identical assets $ 10,254 7.3 %
Level 2
Independent pricing sources 109,878 78.0
Significant other observable inputs 109,878 78.0
Level 3
Independent pricing sources 15,686 11.1
Internal matrix pricing or discounted cash flow techniques 4,858 3.5
Independent broker quotations 156 0.1
Significant unobservable inputs
20,700 14.7
Total at estimated fair value $ 140,832 100.0 %
See Note 12 of the Notes to the Consolidated Financial Statements for the fixed maturity securities AFS fair value hierarchy; a rollforward of the fair value measurements for securities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs; transfers into and/or out of Level 3; and further information about the valuation approaches and inputs by level by major classes of invested assets that affect the amounts reported above.
The majority of the Level 3 fixed maturity securities AFS were concentrated in three sectors at December 31, 2024: foreign corporate securities, U.S. corporate securities and ABS & CLO. During the year ended December 31, 2024, Level 3 fixed maturity securities AFS increased by $375 million, or 1.8%. The increase was driven by purchases in excess of sales, partially offset by transfers out of Level 3 in excess of transfers into Level 3 and a decrease in estimated fair value recognized in OCI.
Fixed Maturity Securities AFS Credit Quality - Ratings
The Securities Valuation Office of the NAIC evaluates the fixed maturity securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations.” In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. If no NAIC designation is available, then, as permitted by the NAIC, an internally developed designation is used.
NAIC designations for non-agency RMBS and CMBS are based on a modeling methodology that estimates security level expected losses under a variety of economic scenarios. The modeling methodology for non-agency RMBS and CMBS issued prior to January 1, 2013 incorporates the amortized cost of the security (including any purchase discounts and prior impairments) and the likelihood of recovery of the amortized cost; while for non-agency RMBS and CMBS issued after January 1, 2013, the modeling methodology does not incorporate the amortized cost of the security. The NAIC’s objective with the modeling methodology is to increase accuracy in estimating expected losses and recovery value, and to use this credit quality assessment to determine an appropriate RBC charge for non-agency RMBS and CMBS. We utilize these NAIC designations for our non-agency RMBS and CMBS in our disclosures below. The NAIC evaluates non-agency RMBS and CMBS held by insurers on an annual basis. When we acquire non-agency RMBS and CMBS that have not been previously evaluated by the NAIC, an internally developed designation is used until a NAIC designation becomes available.
In addition to the six NAIC designations, the NAIC maintains 20 “NAIC designation categories” which is an additional, more granular credit quality categorization. These NAIC designation categories correspond more closely to the NRSRO’s alpha-numeric credit quality ratings. The NAIC maintains unique RBC factors for each of the 20 NAIC designation categories. The NAIC’s goal is to better align RBC charges on securities with the instruments’ actual credit risk.
Rating agency ratings are based on availability of applicable ratings from rating agencies on the NAIC credit rating provider list, including Moody’s Investors Service, Inc. (“Moody’s”), S&P, Fitch Ratings Inc. (“Fitch”), Morningstar DBRS, A.M. Best Company, Inc. (“A.M. Best”), Kroll Bond Rating Agency, LLC and Egan-Jones Ratings Company. If no rating is available from a rating agency, then an internally developed rating is used.
NAIC designations are generally similar to the credit quality ratings of the NRSROs, except for (i) non-agency RMBS and CMBS as described above, and (ii) securities rated Ca or C by NRSROs, included within Caa and lower in our disclosures below, that are designated NAIC 6; accordingly, NAIC designations may not correspond to NRSRO ratings.
The following table presents total fixed maturity securities AFS by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations is provided.
December 31,
2024 2023
NRSRO Rating NAIC
Designation Amortized
Cost net of ACL Unrealized
Gains (Losses) Estimated
Fair
Value % of
Total Amortized
Cost net of ACL Unrealized
Gains (Losses) Estimated
Fair
Value % of
Total
(Dollars in millions)
Aaa/Aa/A 1 $ 101,948 $ (9,220) $ 92,728 65.8 % $ 99,918 $ (6,484) $ 93,434 65.5 %
Baa 2 43,932 (3,284) 40,648 28.9 43,254 (2,271) 40,983 28.7
Subtotal investment grade
145,880 (12,504) 133,376 94.7 143,172 (8,755) 134,417 94.2
Ba 3 5,678 (166) 5,512 3.9 6,447 (269) 6,178 4.3
B 4 1,580 (53) 1,527 1.1 2,049 (66) 1,983 1.4
Caa and lower 5 418 (49) 369 0.3 186 (16) 170 0.1
In or near default
6 76 (28) 48 - 94 (37) 57 -
Subtotal below investment grade
7,752 (296) 7,456 5.3 8,776 (388) 8,388 5.8
Total fixed maturity securities AFS $ 153,632 $ (12,800) $ 140,832 100.0 % $ 151,948 $ (9,143) $ 142,805 100.0 %
The following tables present total fixed maturity securities AFS, at estimated fair value, by sector and by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of the NRSRO ratings to NAIC designations is provided.
Fixed Maturity Securities AFS - by Sector & Credit Quality Rating
NRSRO Rating Aaa/Aa/A Baa Ba B Caa and
Lower In or Near
Default Total
Estimated
Fair Value
NAIC Designation 1 2 3 4 5 6
(Dollars in millions)
December 31, 2024
U.S. corporate $ 22,156 $ 20,899 $ 2,750 $ 1,096 $ 206 $ 21 $ 47,128
Foreign corporate 6,599 15,413 1,826 317 120 10 24,285
U.S. government and agency
21,538 305 - - - - 21,843
RMBS 20,422 708 33 38 8 4 21,213
ABS & CLO 10,766 2,078 315 26 19 1 13,205
CMBS 5,238 24 16 - - 1 5,279
Municipals 4,814 100 17 - - - 4,931
Foreign government 1,195 1,121 555 50 16 11 2,948
Total fixed maturity securities AFS
$ 92,728 $ 40,648 $ 5,512 $ 1,527 $ 369 $ 48 $ 140,832
Percentage of total
65.8 % 28.9 % 3.9 % 1.1 % 0.3 % - % 100.0 %
December 31, 2023
U.S. corporate $ 24,396 $ 21,208 $ 3,270 $ 1,476 $ 127 $ 16 $ 50,493
Foreign corporate 6,948 15,786 2,093 370 8 10 25,215
U.S. government and agency
20,748 312 - - - - 21,060
RMBS 18,496 358 49 40 3 2 18,948
ABS & CLO 9,517 1,823 260 19 19 3 11,641
Municipals 6,196 101 22 - - - 6,319
CMBS 5,749 51 27 - 6 1 5,834
Foreign government 1,384 1,344 457 78 7 25 3,295
Total fixed maturity securities AFS
$ 93,434 $ 40,983 $ 6,178 $ 1,983 $ 170 $ 57 $ 142,805
Percentage of total
65.5 % 28.7 % 4.3 % 1.4 % 0.1 % - % 100.0 %
U.S. and Foreign Corporate Fixed Maturity Securities AFS
We maintain a broadly diversified portfolio of corporate fixed maturity securities AFS across many industries and issuers. This portfolio did not have any exposure to any single issuer in excess of 1% of total investments at either December 31, 2024 or 2023. The top 10 holdings comprised 1% of total investments at both December 31, 2024 and 2023. The table below presents our U.S. and foreign corporate securities portfolios by industry at:
December 31,
2024 2023
Industry Estimated
Fair
Value % of
Total Estimated
Fair
Value % of
Total
(Dollars in millions)
Finance $ 15,714 22.1 % $ 16,790 22.3 %
Consumer (cyclical and non-cyclical)
14,162 19.8 15,352 20.3
Utility 12,697 17.8 12,678 16.7
Industrial (basic, capital goods and other)
8,433 11.8 8,439 11.1
Transportation 7,095 9.9 7,069 9.3
Communications 5,191 7.3 5,453 7.2
Energy 4,672 6.5 5,330 7.0
Technology 2,164 3.0 2,189 2.9
Other 1,285 1.8 2,408 3.2
Total $ 71,413 100.0 % $ 75,708 100.0 %
Structured Products
Our investments in Structured Products are collateralized by residential mortgages, commercial mortgages, bank loans and other assets. Our investment selection criteria and monitoring include review of credit ratings, characteristics of the assets underlying the securities, borrower characteristics and the level of credit enhancement. We held $39.7 billion and $36.4 billion of Structured Products, at estimated fair value, at December 31, 2024 and 2023, respectively, as presented in the RMBS, ABS & CLO and CMBS sections below.
RMBS
Our RMBS portfolio is broadly diversified by security type and risk profile.
On a security type basis, RMBS includes collateralized mortgage obligations and pass-through mortgage-backed securities. Collateralized mortgage obligations are structured by dividing the cash flows of mortgage loans into separate pools or tranches of risk that create multiple classes of bonds with varying maturities and priority of payments. Pass-through mortgage-backed securities are secured by a mortgage loan or collection of mortgage loans. The monthly mortgage loan payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments and, for a fee, remits or passes these payments through to the holders of the pass-through securities.
On a risk profile basis, RMBS includes Agency and Non-Agency securities. Agency RMBS were guaranteed or otherwise supported by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association. Non-Agency securities include prime, prime investor, non-qualified residential mortgage (“NQM”), and alternative residential mortgage loans (“Alt-A”), and reperforming and sub-prime mortgage-backed securities. Prime (owner-occupied) and prime investor (non-owner-occupied) loans were originated to the most creditworthy borrowers with high quality credit profiles. NQM and Alt-A are classifications of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles, while reperforming loans were previously delinquent that returned to performing status.
The following table presents our RMBS portfolio by security type, risk profile and ratings profile at:
December 31,
2024 2023
Estimated
Fair
Value % of
Total Net
Unrealized
Gains (Losses) Estimated
Fair
Value % of
Total Net
Unrealized
Gains (Losses)
(Dollars in millions)
Security type
Collateralized mortgage obligations $ 12,992 61.2 % $ (844) $ 10,782 56.9 % $ (863)
Pass-through mortgage-backed securities 8,221 38.8 (1,022) 8,166 43.1 (888)
Total RMBS $ 21,213 100.0 % $ (1,866) $ 18,948 100.0 % $ (1,751)
Risk profile
Agency $ 12,370 58.3 % $ (1,451) $ 11,623 61.3 % $ (1,229)
Non-Agency
Prime and prime investor 4,035 19.0 (262) 3,112 16.4 (313)
NQM and Alt-A 1,267 6.0 (20) 1,343 7.1 (42)
Reperforming and sub-prime 2,329 11.0 (114) 1,985 10.5 (125)
Other (1) 1,212 5.7 (19) 885 4.7 (42)
Subtotal Non-Agency 8,843 41.7 % (415) 7,325 38.7 % (522)
Total RMBS $ 21,213 100.0 % $ (1,866) $ 18,948 100.0 % $ (1,751)
Ratings profile
Rated Aaa and Aa $ 17,901 84.4 % $ 16,247 85.7 %
Designated NAIC 1 $ 20,421 96.3 % $ 18,499 97.6 %
__________________
(1)Other Non-Agency RMBS are broadly diversified across several subsectors and issuers, including securities collateralized by the following mortgage loan types: single family rental, early buyout securitization and small business commercial.
We manage our exposure to reperforming and sub-prime RMBS holdings by focusing primarily on senior tranche securities, stress testing the portfolio with severe loss assumptions and closely monitoring the performance of the portfolio. Our reperforming RMBS are generally newer vintage securities and higher quality at purchase and the vast majority are investment grade under NAIC designations (e.g., NAIC 1 and NAIC 2). Our sub-prime RMBS portfolio consists predominantly of securities that were purchased at significant discounts to par value and discounts to the expected principal recovery value of these securities, and the vast majority are investment grade under NAIC designations.
ABS & CLO
Our non-mortgage loan-backed structured securities are comprised of two broad categories of securitizations: ABS & CLO. These portfolios are broadly diversified by collateral type and issuer. The following table presents our ABS & CLO portfolios by collateral type and ratings profile at:
December 31,
2024 2023
Estimated
Fair
Value % of
Total Net
Unrealized
Gains (Losses) Estimated
Fair
Value % of
Total Net
Unrealized
Gains (Losses)
(Dollars in millions)
ABS
Collateral type
Digital infrastructure $ 1,220 9.2 % $ (28) $ 879 7.6 % $ (58)
Consumer loans 848 6.5 (29) 737 6.3 (63)
Vehicle and equipment loans 718 5.4 (2) 853 7.3 (16)
Franchise 622 4.7 (30) 665 5.7 (54)
Credit card 499 3.8 4 521 4.5 (4)
Student loans 482 3.7 (20) 503 4.3 (35)
Other (1) 3,664 27.7 (119) 1,606 13.8 (120)
Total ABS $ 8,053 61.0 % $ (224) $ 5,764 49.5 % $ (350)
CLO (2) $ 5,152 39.0 % $ 4 $ 5,877 50.5 % $ (52)
Total ABS & CLO $ 13,205 100.0 % $ (220) $ 11,641 100.0 % $ (402)
ABS ratings profile
Rated Aaa and Aa $ 1,933 24.0 % $ 2,172 37.7 %
Designated NAIC 1 $ 6,018 74.7 % $ 4,184 72.6 %
CLO ratings profile
Rated Aaa and Aa $ 3,876 75.2 % $ 4,454 75.8 %
Designated NAIC 1 $ 4,622 89.7 % $ 5,334 90.8 %
ABS & CLO ratings profile
Rated Aaa and Aa $ 5,809 44.0 % $ 6,626 56.9 %
Designated NAIC 1 $ 10,640 80.6 % $ 9,518 81.8 %
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(1)Other ABS are broadly diversified across several subsectors and issuers, including securities with the following collateral types: foreign residential loans, transportation equipment and renewable energy.
(2)Includes primarily securities collateralized by broadly syndicated bank loans.
CMBS
Our CMBS portfolio is comprised primarily of conduit, single asset and single borrower securities. Conduit securities are collateralized by many commercial mortgage loans and are broadly diversified by property type, borrower and geography. The following tables present our CMBS portfolio by collateral type and ratings profile at:
December 31,
2024 2023
Estimated Fair Value % of Total Net Unrealized Gains (Losses) Estimated Fair Value % of Total Net Unrealized Gains (Losses)
(Dollars in millions)
Collateral type
Conduit $ 3,187 60.4 % $ (233) $ 3,828 65.5 % $ (413)
Single asset and single borrower 1,300 24.6 (53) 1,223 21.0 (88)
Agency 303 5.7 (41) 373 6.4 (32)
Commercial real estate collateralized loan obligations 135 2.6 (1) 226 3.9 (5)
Other 354 6.7 10 184 3.2 (4)
Total CMBS $ 5,279 100.0 % $ (318) $ 5,834 100.0 % $ (542)
Ratings profile
Rated Aaa and Aa $ 4,313 81.7 % $ 4,975 85.3 %
Designated NAIC 1 $ 5,239 99.2 % $ 5,750 98.6 %
Evaluation of Fixed Maturity Securities AFS for Credit Loss, Rollforward of Allowance for Credit Loss and Credit Loss on Fixed Maturity Securities AFS Recognized in Earnings
See Note 10 of the Notes to the Consolidated Financial Statements for information about the evaluation of fixed maturity securities AFS for credit loss, rollforward of the ACL, net credit loss provision (release) and impairment (losses), as well as realized gross gains (losses) on sales and disposals of fixed maturity securities AFS at December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022.
Securities Lending Transactions and Repurchase Agreements
We participate in securities lending transactions and repurchase agreements with unaffiliated financial institutions in the normal course of business for the purpose of enhancing the total return on our investment portfolio. We account for these arrangements as secured borrowings and record a liability in the amount of the cash received. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the securities are returned to us. Through these arrangements, we were liable for cash collateral under our control of $9.2 billion and $8.7 billion at December 31, 2024 and 2023, respectively, including a portion that may require the immediate return of cash collateral we hold. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for further information about the secured borrowings accounting and the classification of revenues and expenses.
Mortgage Loans
Our mortgage loan investments are principally collateralized by commercial, agricultural and residential properties.
Mortgage loans carried at amortized cost and the related ACL are summarized as follows at:
December 31,
2024 2023
Portfolio Segment Amortized Cost % of
Total ACL ACL as % of
Amortized Cost Amortized Cost % of
Total ACL ACL as % of
Amortized Cost
(Dollars in millions)
Commercial $ 34,692 57.3 % $ 312 0.9 % $ 37,129 58.8 % $ 210 0.6 %
Agricultural 15,208 25.1 63 0.4 % 15,831 25.1 152 1.0 %
Residential 10,628 17.6 128 1.2 % 10,133 16.1 147 1.5 %
Total
$ 60,528 100.0 % $ 503 0.8 % $ 63,093 100.0 % $ 509 0.8 %
We diversify our mortgage loan investments by both geographic region and property type to reduce the risk of concentration. Of our commercial and agricultural mortgage loans carried at amortized cost, 90% are collateralized by properties located in the U.S., with the remaining 10% collateralized by properties located primarily in Mexico, at December 31, 2024. The carrying values of our commercial and agricultural mortgage loans collateralized by properties located in California, New York and Texas were 16%, 8% and 6%, respectively, of total commercial and agricultural mortgage loans at December 31, 2024. Additionally, we manage risk when originating commercial and agricultural mortgage loan investments by generally lending up to 75% of the estimated fair value of the underlying real estate collateral. Of our residential mortgage loans carried at amortized cost, 100% are collateralized by properties located in the U.S. The carrying values of our residential mortgage loans collateralized by properties located in California, Florida and New York were 36%, 11% and 9%, respectively, of total residential mortgage loans at December 31, 2024.
Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest mortgage loan portfolio segment. The tables below present, at amortized cost, the diversification of these investments across geographic regions and property types:
December 31,
2024 2023
Amount
% of
Total Amount
% of
Total
(Dollars in millions)
Region
Pacific $ 6,146 17.7 % $ 6,407 17.3 %
Middle Atlantic 5,058 14.6 5,373 14.5
South Atlantic 4,225 12.2 4,884 13.1
Non-U.S. 4,086 11.8 4,805 12.9
West South Central 2,462 7.1 2,682 7.2
New England 1,681 4.9 1,774 4.8
Mountain 1,471 4.2 1,286 3.5
East North Central 1,108 3.2 1,359 3.7
East South Central 346 1.0 444 1.2
West North Central 291 0.8 519 1.4
Multi-Region and Other 7,818 22.5 7,596 20.4
Total amortized cost 34,692 100.0 % 37,129 100.0 %
Less: ACL 312 210
Carrying value, net of ACL $ 34,380 $ 36,919
Property Type
Office $ 12,313 35.5 % $ 13,080 35.2 %
Apartment 7,579 21.8 8,466 22.8
Retail 4,563 13.2 5,043 13.6
Single Family Rental 4,535 13.1 4,153 11.2
Industrial 3,551 10.2 4,155 11.2
Hotel 2,151 6.2 2,232 6.0
Total amortized cost 34,692 100.0 % 37,129 100.0 %
Less: ACL 312 210
Carrying value, net of ACL $ 34,380 $ 36,919
Our commercial mortgage loan investments are well positioned with exposures concentrated in high quality underlying properties located in primary markets typically with institutional investors who are better positioned to manage their assets during periods of market volatility. Our portfolio is comprised primarily of lower risk loans with higher debt-service coverage ratios (“DSCR”) and lower loan-to-value (“LTV”) ratios, as shown below.
Credit Quality - Monitoring Process. We monitor our mortgage loan investments on an ongoing basis, including a review by credit quality indicator and by the performance indicators of current, past due, restructured and under foreclosure. See below for further information on mortgage loans by credit quality indicator. See Note 10 of the Notes to the Consolidated Financial Statements for further information by performance indicator.
We review our commercial mortgage loan investments on an ongoing basis. These reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios and lower DSCR. The monitoring process for agricultural mortgage loan investments is generally similar, with a focus on higher risk loans, such as loans with higher LTV ratios. Agricultural mortgage loan investments are reviewed on an ongoing basis which include property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, including reviews on a geographic and property-type basis. We review our residential mortgage loan investments on an ongoing basis, with a focus on higher risk loans, such as nonperforming loans. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for information on our evaluation of residential mortgage loan investments and related ACL methodology.
LTV ratios and DSCR are common measures in the assessment of the quality of commercial mortgage loan investments. LTV ratios are a common measure in the assessment of the quality of agricultural mortgage loan investments. LTV ratios compare the amount of the loan to the estimated fair value of the underlying collateral. An LTV ratio greater than 100% indicates that the loan amount is greater than the collateral value. An LTV ratio of less than 100% indicates an excess of collateral value over the loan amount. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR, the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average LTV ratio was 69% and 64% at December 31, 2024 and 2023, respectively, and our average DSCR was 1.9x and 2.1x at December 31, 2024 and 2023, respectively. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan investments. For our agricultural mortgage loans, our average LTV ratio was 46% and 47% at December 31, 2024 and 2023, respectively. The values utilized in calculating our agricultural mortgage loan investments LTV ratio are developed in connection with the ongoing review of our portfolio and are routinely updated.
The distribution of our commercial mortgage loan portfolios totaling $34.7 billion at amortized cost at December 31, 2024 by key credit quality indicators of LTV and DSCR was as follows:
December 31, 2024
DSCR
LTV > 1.2x
1.0-1.2x
< 1.0x
Total
<65% 45.8 % 2.2 % 1.8 % 49.8 %
65% - 75% 18.1 % 1.7 % 0.9 % 20.7 %
76% - 80% 5.1 % 0.1 % 1.0 % 6.2 %
>80% 15.8 % 3.8 % 3.7 % 23.3 %
Total 84.8 % 7.8 % 7.4 % 100.0 %
The distribution of our agricultural mortgage loan portfolios totaling $15.2 billion at amortized cost at December 31, 2024 by the key credit quality indicator of LTV was as follows:
December 31, 2024
LTV
Total
<65% 92.2 %
65% - 75% 7.2 %
76% - 80% 0.2 %
>80% 0.4 %
Total 100.0 %
Mortgage Loan Allowance for Credit Loss. Our ACL is established for both pools of loans with similar risk characteristics and for mortgage loan investments with dissimilar risk characteristics, such as collateral dependent loans, individually and on a loan specific basis. We record 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 loan investments that the Company does not expect to collect, resulting in mortgage loan investments being presented at the net amount expected to be collected.
In determining our ACL, management (i) pools mortgage loans that share similar risk characteristics, (ii) considers expected lifetime credit loss over contractual terms of mortgage loans, as adjusted for expected prepayments and any extensions, and (iii) considers past events and current and forecasted economic conditions. Actual credit loss realized could be different from the amount of the ACL recorded. These evaluations and assessments are revised as conditions change and new information becomes available, which can cause the ACL to increase or decrease over time as such evaluations are revised. Negative credit migration, including an actual or expected increase in the level of problem loans, will result in an increase in the ACL. Positive credit migration, including an actual or expected decrease in the level of problem loans, will result in a decrease in the ACL. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for information on how the ACL is established and monitored, and activity in and balances of the ACL.
Real Estate and Real Estate Joint Ventures
Our real estate investments are comprised of wholly-owned properties, and interests in both real estate joint ventures and real estate funds which invest in a wide variety of properties and property types, consisting of single and multi-property projects, and are broadly diversified across multiple property types and geographies.
The carrying value of our real estate investments was $8.9 billion and $8.7 billion, or 3.6% and 3.4% of cash and invested assets, at December 31, 2024 and 2023, respectively.
Our real estate investments are typically stabilized properties that we intend to hold for the longer-term for portfolio diversification and long-term appreciation. Our real estate investment portfolio had appreciated to a $2.3 billion and $3.4 billion unrealized gain position at December 31, 2024 and 2023, respectively.
We continuously monitor and assess our real estate investments for impairment when facts and circumstances indicate that the real estate may be impaired. As a result of our impairment analyses, we recorded an impairment (loss) of $19 million and $0 during the years ended December 31, 2024 and 2023, respectively.
We diversify our real estate investments by property type, form of equity interest (wholly-owned, joint venture and funds) and geographic region to reduce risk of concentration. See Note 10 of the Notes to the Consolidated Financial Statements for a summary of our real estate investments, by income type, as well as income earned.
Property type diversification: Our real estate investments are categorized by property type as follows at:
December 31,
2024 2023
Property Type Carrying
Value % of
Total Carrying
Value % of
Total
(Dollars in millions)
Office $ 3,015 33.9 % $ 2,692 31.0 %
Apartment 719 8.1 866 10.0
Retail 681 7.6 691 8.0
Hotel 578 6.5 654 7.5
Land 299 3.4 259 3.0
Industrial 233 2.6 342 3.9
Other 33 0.4 13 0.1
Agriculture 18 0.2 7 0.1
Wholly-owned and real estate joint ventures $ 5,576 62.7 % $ 5,524 63.6 %
Diversified property types and multi-property 1,287 14.4 1,195 13.8
Real estate funds 2,039 22.9 1,971 22.6
Total real estate and real estate joint ventures $ 8,902 100.0 % $ 8,690 100.0 %
Geographical diversification: Wholly-owned and real estate joint ventures totaled $5.6 billion at December 31, 2024, substantially all of which were located in the U.S., at December 31, 2024, at carrying value. The portion of these properties located in Washington, D.C., Georgia, and Massachusetts were each 13%, at December 31, 2024, at carrying value.
Other Limited Partnership Interests
Other limited partnership interests are comprised of investments in private funds, including private equity funds and hedge funds. At December 31, 2024 and 2023, the carrying value of other limited partnership interests was $7.1 billion and $7.8 billion, which included $12 million and $18 million of hedge funds, respectively. Other limited partnership interests were 2.8% and 3.1% of cash and invested assets at December 31, 2024 and 2023, respectively. Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds.
We use the equity method of accounting for most of our private equity funds. We generally recognize our share of a private equity fund’s earnings in net investment income on a three-month lag, which is when the information is reported to us. Accordingly, changes in equity market levels, which can impact the underlying results of these private equity funds, are recognized in earnings within our net investment income on a three-month lag.
Other Invested Assets
The following table presents the carrying value of our other invested assets by type at:
December 31,
2024 2023
Asset Type Carrying Value % of Total Carrying Value % of Total
(Dollars in millions)
Freestanding derivatives with positive estimated fair values $ 6,012 34.0 % $ 6,506 38.2 %
Funds withheld 2,825 16.0 % 3,018 17.7 %
Operating joint venture 1,358 7.7 % 614 3.6 %
Annuities funding structured settlement claims 1,248 7.1 % 1,256 7.4 %
Affiliated investments 1,166 6.6 % 1,130 6.6 %
Company-owned life insurance policies 1,088 6.2 % 414 2.4 %
FVO securities 872 4.9 % 746 4.4 %
Tax credit and renewable energy partnerships 714 4.0 % 1,034 6.6 %
FHLBNY common stock 628 3.6 % 637 3.7 %
Leveraged leases 623 3.5 % 689 4.0 %
Equity securities 172 1.0 % 347 1.2 %
Direct financing leases 106 0.6 % 116 0.7 %
Other 862 4.8 % 533 3.5 %
Total $ 17,674 100.0 % $ 17,040 100.0 %
Percentage of cash and invested assets 7.1 % 6.7 %
See Notes 1, 8, 10 and 11 of the Notes to the Consolidated Financial Statements for information regarding freestanding derivatives with positive estimated fair values, funds withheld, which is comprised primarily of affiliated funds withheld, annuities funding structured settlement claims, affiliated investments, tax credit and renewable energy partnerships, FVO securities, leveraged and direct financing leases, Federal Home Loan Bank of New York (“FHLBNY”) common stock, our operating joint venture and equity securities.
Investment Commitments
We enter into the following commitments in the normal course of business for the purpose of enhancing the total return on our investment portfolio: mortgage loan commitments and commitments to fund partnerships, bank credit facilities, bridge loans and private corporate bond investments. See Note 19 of the Notes to the Consolidated Financial Statements for the amount of our unfunded investment commitments at December 31, 2024 and 2023. See “Net Investment Income” and “Net Investment Gains (Losses)” in Note 10 of the Notes to the Consolidated Financial Statements for information on the investment income, investment expense, gains and losses from such investments and the liability for credit loss for unfunded mortgage loan commitments. See also “- Fixed Maturity Securities AFS,” “- Mortgage Loans,” “- Real Estate and Real Estate Joint Ventures” and “- Other Limited Partnership Interests.”
Derivatives
Overview
We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. We use a variety of strategies to manage these risks, including the use of derivatives, such as market standard purchased and written credit default swap contracts. See Note 11 of the Notes to the Consolidated Financial Statements for:
•A comprehensive description of the nature of our derivatives, including the strategies for which derivatives are used in managing various risks.
•Information about the primary underlying risk exposure, gross notional amount, and estimated fair value of our derivatives by type of hedge designation, excluding embedded derivatives held at December 31, 2024 and 2023.
•The statement of operations effects of derivatives in cash flow, fair value, or nonqualifying hedging relationships for the years ended December 31, 2024, 2023 and 2022.
See “- Summary of Critical Accounting Estimates - Derivatives” for further information on the estimates and assumptions that affect derivatives. See also “Quantitative and Qualitative Disclosures About Market Risk - Management of Market Risk Exposures - Hedging Activities” for more information about our use of derivatives by major hedge program.
Net Derivative Gains (Losses)
A portion of our derivatives are designated and qualify as accounting hedges, which reduce volatility in earnings. For those derivatives not designated as accounting hedges, changes in market factors lead to the recognition of fair value changes in net derivative gains (losses) generally without an offsetting gain or loss recognized in earnings for the item being hedged, which creates volatility in earnings. We actively evaluate market risk hedging needs and strategies to ensure our free cash flow and capital objectives are met under a range of market conditions.
Certain variable annuity products with guaranteed minimum benefits are accounted for as MRBs and measured at estimated fair value. We use freestanding derivatives to hedge the market risks inherent in these variable annuity guarantees.
We continuously review and refine our hedging strategy in light of changing economic and market conditions, evolving NAIC and the NYDFS statutory requirements, and accounting rule changes. As a part of our current hedging strategy, we maintain portfolio level derivatives in our macro hedge program. These macro hedge program derivatives mitigate the potential deterioration in our capital positions from significant adverse economic conditions.
See “- Results of Operations - Consolidated Results” for an analysis of the year-over-year changes in net derivative gains (losses).
Liquidity and Capital Resources
Overview
This discussion should be read in conjunction with the following sections included elsewhere herein for additional information regarding the topics noted below:
•Notes to the Consolidated Financial Statements:
•Note 4 (funding agreements, reported in PABs, and the related pledged collateral);
•Note 14 (long-term debt, short-term debt, Credit Facility, and debt and facility covenants); and
•Note 15 (restrictions on dividends and dividend payments).
•Risk Factors:
•“- Investment Risks - We May Have Difficulty Selling Holdings in Our Investment Portfolio or in Our Securities Lending Program in a Timely Manner to Realize Their Full Value”;
•“- Economic Environment and Capital Markets Risks - We May Lose Business Due to a Downgrade or a Potential Downgrade in Our Financial Strength or Credit Ratings”; and
•“- Economic Environment and Capital Markets Risks - We May Not Meet Our Liquidity Needs, Access Capital, or May Face Significantly Increased Cost of Capital Due to Adverse Capital and Credit Market Conditions.”
Our business and results of operations are materially affected by conditions in the global financial markets and the economy generally due to our large investment portfolio and the sensitivity of our insurance liabilities and derivatives to changing market factors. Such conditions may affect our financing costs and market interest for our debt securities. For further information regarding market factors that could affect our ability to meet liquidity and capital needs, see “- Investments - Current Environment.”
Liquidity Management
Based upon the strength of our franchise, diversification of our businesses, strong financial fundamentals and the substantial funding sources available to us as described herein, we continue to believe we have access to ample liquidity to meet business requirements under current market conditions and reasonably possible stress scenarios. We continuously monitor and adjust our liquidity and capital plans for MLIC in light of market conditions, as well as changing needs and opportunities.
Short-term Liquidity and Liquid Assets
An integral part of our liquidity management includes managing our level of liquid assets. At December 31, 2024 and 2023, our short-term liquidity position was $4.7 billion and $4.1 billion, respectively, and liquid assets were $63.3 billion and $67.1 billion, respectively.
Short-term liquidity includes cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with securities lending, repurchase agreements, derivatives, and secured borrowings, as well as amounts held in the closed block.
Liquid assets include short-term liquidity and publicly traded securities, excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with securities lending, repurchase agreements, derivatives, regulatory deposits, funding agreements and secured borrowings, as well as amounts held in the closed block.
Liquidity
Liquidity refers to the ability to generate adequate amounts of cash to meet our needs. We determine our liquidity needs based on a rolling 12-month forecast by portfolio of invested assets which we monitor daily. We adjust the asset mix and asset maturities based on this rolling 12-month forecast. To support this forecast, we conduct cash flow and stress testing, which include various scenarios of the potential risk of early contractholder and policyholder withdrawal. We include provisions limiting withdrawal rights on many of our products, including general account pension products sold to employee benefit plan sponsors. Certain of these provisions prevent the customer from making withdrawals prior to the maturity date of the product. In the event of significant cash requirements beyond anticipated liquidity needs, we have various alternatives available depending on market conditions and the amount and timing of the liquidity need. These available alternatives include cash flows from operations, sales of liquid assets and global funding sources, including commercial paper and the Credit Facility.
Under certain stressful market and economic conditions, our access to liquidity may deteriorate, or the cost to access liquidity may increase. A downgrade in our credit or insurer financial strength ratings, or the credit or insurer financial strength ratings of MetLife, Inc. or its other subsidiaries, could also negatively affect our liquidity. If we require significant amounts of cash on short notice in excess of anticipated cash requirements or if we are required to post or return cash collateral in connection with derivatives or our securities lending program, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.
All general account assets within a particular legal entity, other than those which may have been pledged to a specific purpose, are generally available to fund obligations of the general account of that legal entity.
Capital
We manage our capital position to maintain our financial strength and credit ratings. See “- Rating Agencies” for information regarding such ratings. Our capital position is supported by our ability to generate strong cash flows within our operating companies and borrow funds at competitive rates, as well as by our demonstrated ability to raise additional capital to meet operating and growth needs despite adverse market and economic conditions.
Statutory Capital and Dividends
Metropolitan Life Insurance Company has statutory surplus well above levels to meet current regulatory requirements.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to identify companies that merit regulatory action. RBC is based on a formula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to Metropolitan Life Insurance Company. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. As of the date of the most recent annual statutory financial statement filed with insurance regulators, the total adjusted capital of Metropolitan Life Insurance Company was in excess of each of those RBC levels.
The amount of dividends that Metropolitan Life Insurance Company can pay to MetLife, Inc. is constrained by the amount of surplus Metropolitan Life Insurance Company holds to maintain its ratings, which provides an additional margin for risk protection and investment in its businesses. We proactively take actions to maintain capital consistent with these ratings objectives, which may include adjusting dividend amounts and deploying financial resources from internal or external sources of capital. Certain of these activities may require regulatory approval. Furthermore, the payment of dividends and other distributions to MetLife, Inc. by Metropolitan Life Insurance Company is governed by insurance laws and regulations. See “Business - Regulation - State Insurance Regulation.”
Affiliated Reinsurance Transactions
Metropolitan Life Insurance Company cedes certain products to two affiliated U.S. captive reinsurers and a wholly-owned non-U.S. reinsurer for risk and capital management purposes, as well as to manage statutory reserve requirements. The reinsurance ceded to the wholly-owned non-U.S. reinsurer is eliminated within our consolidated results of operations.
Our affiliated U.S. captive reinsurers are licensed under the Special Purpose Financial Captive law adopted by Vermont and South Carolina, their states of domicile. The statutory reserves of the affiliated ceding companies are supported by a combination of funds withheld assets, investment assets and letters of credit issued by unaffiliated financial institutions. MetLife, Inc. has entered into various support agreements in connection with the activities of these U.S. captive reinsurers.
Our wholly-owned non-U.S. reinsurer is licensed as an insurance company under the laws of the Cayman Islands. MetLife, Inc. has agreed to guarantee certain of the obligations of this non-U.S. reinsurer under a retrocession agreement with a third party.
See Note 8 of the Notes to the Consolidated Financial Statements for further information on our reinsurance activities.
Rating Agencies
Rating agencies assign insurer financial strength and credit ratings to Metropolitan Life Insurance Company and MetLife, Inc.’s other insurance subsidiaries, as well as credit ratings to MetLife, Inc. Financial strength ratings represent the opinion of rating agencies regarding the ability of an insurance company to pay obligations under insurance policies and contracts in accordance with their terms. Insurer financial strength ratings are not statements of fact nor are they recommendations to purchase, hold or sell any security, contract or policy. Each rating should be evaluated independently of any other rating.
Rating agencies use an “outlook statement” of “positive,” “stable,” ‘‘negative’’ or “developing” to indicate a medium- or long-term trend in credit fundamentals which, if continued, may lead to a rating change. A rating may have a “stable” outlook to indicate that the rating is not expected to change; however, a “stable” rating does not preclude a rating agency from changing a rating at any time, without notice. Certain rating agencies assign rating modifiers such as “CreditWatch” or “under review” to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are generally assigned in connection with certain events such as potential mergers, acquisitions, dispositions or material changes in a company’s results, in order for the rating agency to perform its analysis to fully determine the rating implications of the event.
Our insurer financial strength ratings at the date of this filing are indicated in the following table. Outlook is stable unless otherwise indicated. Additional information about financial strength ratings can be found on the websites of the respective rating agencies.
A.M. Best Fitch Moody’s S&P
Ratings Structure “A++ (Superior)” to “S (Suspended)” “AAA (Exceptionally Strong)” to “C (Distressed)” “Aaa (Highest Quality)” to “C (Lowest Rated)” “AAA (Extremely Strong)” to “SD (Selective Default)” or “D (Default)”
Metropolitan Life Insurance Company A+ AA- Aa3 AA-
2nd of 16 4th of 19 4th of 21 4th of 21
Credit ratings indicate the rating agency’s opinion regarding a debt issuer’s ability to meet the terms of debt obligations in a timely manner. They are important factors in our overall funding profile and ability to access certain types of liquidity. The level and composition of regulatory capital of Metropolitan Life Insurance Company are among the many factors considered in determining our insurer financial strength ratings and credit ratings. Each agency has its own capital adequacy evaluation methodology, and assessments are generally based on a combination of factors. A downgrade in our insurer financial strength or credit ratings, or the credit ratings or insurer financial strength ratings of MetLife, Inc. or its other subsidiaries could adversely impact us.
Summary of Primary Sources and Uses of Liquidity and Capital
Our primary sources and uses of liquidity and capital are summarized as follows:
Years Ended December 31,
2024 2023
(In millions)
Sources:
Operating activities, net $ 6,530 $ 4,835
Investing activities, net 1,869 167
Long-term debt issued - 210
Derivatives with certain financing elements and other derivative-related transactions, net
- 24
Other, net 96 -
Effect of change in foreign currency exchange rates on cash and cash equivalents balances - 2
Total sources 8,495 5,238
Uses:
Net change in PABs
3,708 2,994
Net change in payables for collateral under securities loaned and other transactions 519 2,381
Long-term debt repaid 245 -
Derivatives with certain financing elements and other derivative-related transactions, net
66 -
Dividends paid to MetLife, Inc. 3,476 2,471
Other, net - 2
Effect of change in foreign currency exchange rates on cash and cash equivalents balances 5 -
Total uses 8,019 7,848
Net increase (decrease) in cash and cash equivalents $ 476 $ (2,610)
Cash Flows from Operations
The principal cash inflows from our insurance activities come from insurance premiums, net investment income, annuity considerations and deposit funds. The principal cash outflows are the result of various life insurance, annuity and pension products, operating expenses and income tax, as well as interest expense.
Cash Flows from Investments
The principal cash inflows from our investment activities come from repayments of principal, proceeds from maturities and sales of investments and settlements of freestanding derivatives. The principal cash outflows relate to purchases of investments, issuances of policy loans and settlements of freestanding derivatives. We typically have a net cash outflow from investing activities because cash inflows from insurance operations are reinvested in accordance with our ALM discipline to fund insurance liabilities. We closely monitor and manage these risks through our comprehensive investment risk management process.
Cash Flows from Financing
The principal cash inflows from our financing activities come from issuances of debt, deposits of funds associated with PABs and lending of securities. The principal cash outflows come from repayments of debt, payments of dividends on Metropolitan Life Insurance Company’s common stock, withdrawals associated with PABs and the return of securities on loan.
Liquidity and Capital Sources
Liquidity and capital are provided by a variety of global funding sources, including: (i) short-term debt, which includes commercial paper; (ii) long-term debt; (iii) PABs, which includes funding agreements; and (iv) the Credit Facility. Additional details regarding certain of our primary sources of liquidity and capital are included in the Notes to the Consolidated Financial Statements referenced in “- Overview” and are discussed below.
The diversity of our global funding sources enhances our funding flexibility, limits dependence on any one market or source of funds and generally lowers the cost of funds. We have no reason to believe that our lending counterparties will be unable to fulfill their respective contractual obligations under our Credit Facility. As commitments under this facility may expire unused, these amounts do not necessarily reflect our actual future cash funding requirements.
At December 31, 2024 and 2023, the Company’s outstanding long-term debt of $1.6 billion and $1.9 billion, respectively, included $348 million and $437 million, respectively, which is non-recourse to the Company, subject to customary exceptions. Certain investment subsidiaries have pledged assets to secure this debt.
Certain of our debt instruments and the Credit Facility contain various administrative, reporting, legal and financial covenants. We believe we were in compliance with all applicable financial covenants at December 31, 2024.
Liquidity and Capital Uses
The primary uses of liquidity and capital include: (i) dividends on common stock paid to MetLife, Inc.; (ii) debt repayments; (iii) contractual obligations, including PABs and insurance liabilities; (iv) pledged collateral; and (v) securities lending transactions and repurchase agreements. Additional details regarding certain of our primary uses of liquidity and capital are included in the Notes to the Consolidated Financial Statements referenced in “- Overview” and are discussed below.
Support Agreements
Metropolitan Life Insurance Company is a party to a capital support commitment with its subsidiary, MetLife Funding. Under the arrangement, Metropolitan Life Insurance Company has agreed to cause such entity to meet specified capital requirements. We anticipate that in the event this arrangement places demands upon us, there will be sufficient liquidity and capital to enable us to meet such demands.
Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives and funding agreements. See Note 11 of the Notes to the Consolidated Financial Statements for information regarding derivatives.
Securities Lending Transactions and Repurchase Agreements
See “- Investments - Securities Lending Transactions and Repurchase Agreements.”
Contractual Obligations
Policyholder Account Balances
See Notes 1 and 4 of the Notes to the Consolidated Financial Statements for a description of the components of PABs, including obligations under funding agreements. See “- Insurance Liabilities” regarding the source and uncertainties associated with the estimation of the contractual obligations related to FPBs and PABs.
The sum of the estimated cash flows of $144.3 billion ($34.3 billion of which are estimated to occur in one year or less) exceeds the liability amount of $102.1 billion included on the consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the difference; (ii) differences in assumptions, between the date the liabilities were initially established and the current date; and (iii) liabilities related to accounting conventions, or which are not contractually due, which are excluded.
The estimated cash flows represent cash payments undiscounted as to interest and including assumptions related to the receipt of future premiums and deposits; withdrawals, including unscheduled or partial withdrawals; policy lapses; surrender charges; annuitization; mortality; future interest credited; policy loans and other contingent events as appropriate for the respective product type. Such estimated cash payments are also presented net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. For obligations denominated in foreign currencies, cash payments have been estimated using current spot foreign currency rates.
Insurance Liabilities
Insurance liabilities include FPBs, MRBs, at estimated fair value, other policy-related balances and policyholder dividends payable, which are all reported on the consolidated balance sheet and are more fully described in Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements. The sum of the estimated cash flows of $230.1 billion ($16.5 billion of which are estimated to occur in one year or less) exceeds the liability amounts of $137.5 billion included on the consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the difference; (ii) differences in assumptions, most significantly mortality, between the date the liabilities were initially established and the current date; and (iii) liabilities related to accounting conventions, or which are not contractually due, which are excluded.
The estimated cash flows reflect future estimated cash payments and (i) are based on mortality, morbidity, lapse and other assumptions comparable with our experience and expectations of future payment patterns; and (ii) consider future premium receipts on current policies in-force. Estimated cash payments are undiscounted as to interest, net of estimated future premiums on in-force policies and gross of any reinsurance recoverable. Payment of amounts related to policyholder dividends left on deposit are projected based on assumptions of policyholder withdrawal activity.
Actual cash payments may differ significantly from the liabilities as presented on the consolidated balance sheet and the estimated cash payments due to differences between actual experience and the assumptions used in the establishment of these liabilities and the estimation of these cash payments.
For the majority of our insurance operations, estimated contractual obligations for FPBs and PABs are derived from the annual asset adequacy analysis used to develop actuarial opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially representative of the cash flows under GAAP.
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, annuity and group pension products, as well as payments for policy surrenders, withdrawals and loans. For annuity or deposit type products, surrender or lapse behavior differs somewhat by segment. In the MetLife Holdings segment, which includes individual annuities, lapses and surrenders tend to occur in the normal course of business. For the years ended December 31, 2024 and 2023, general account surrenders and withdrawals from annuity products were $1.6 billion and $1.9 billion, respectively. In the RIS segment, which includes pension risk transfers, bank-owned life insurance and other fixed annuity contracts, as well as funding agreements and other capital market products, most of the products offered have fixed maturities or fairly predictable surrenders or withdrawals. With regard to the RIS business products that provide customers with limited rights to accelerate payments, at December 31, 2024, there were funding agreements totaling $125 million that could be put back to the Company.
Adopted Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
Future Adoption of Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
Non-GAAP and Other Financial Disclosures
In this report, the Company presents certain measures of its performance that are not calculated in accordance with GAAP. We believe that these non-GAAP financial measures enhance our investors’ understanding of our performance by highlighting the results of operations and the underlying profitability drivers of our business.
The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
Non-GAAP financial measures: Comparable GAAP financial measures:
(i) adjusted premiums, fees and other revenues (i) premiums, fees and other revenues
(ii) adjusted earnings (ii) net income (loss)
(iii) adjusted net investment income (iii) net investment income
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in “- Results of Operations” and “- Investments.” Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are not accessible on a forward-looking basis because we believe it is not possible without unreasonable effort to provide other than a range of net investment gains and losses and net derivative gains and losses, which can fluctuate significantly within or outside the range and from period to period and may have a material impact on net income.
Our definitions of non-GAAP and other financial measures discussed in this report may differ from those used by other companies.
Adjusted earnings
Adjusted earnings is used by the Company’s chief operating decision maker, its Chief Executive Officer (“CEO”), to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is our GAAP measure of segment performance. Adjusted earnings allows analysis of our performance and facilitates comparisons to industry results. For additional information relating to adjusted earnings, see “Financial Measure and Segment Accounting Policies” and “Corporate & Other” in Note 2 of the Notes to the Consolidated Financial Statements.
The following additional information is relevant to an understanding of our performance results:
•We sometimes refer to sales activity for various products. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.
•Total adjusted stockholder’s equity: total stockholder’s equity, excluding unrealized investment gains (losses), net of related offsets, deferred gains (losses) on derivatives, future policy benefits discount rate remeasurement gains (losses), MRBs instrument-specific credit risk remeasurement gains (losses) and defined benefit plans adjustment components of accumulated other comprehensive income (accumulated other comprehensive income other than foreign currency translation adjustments) and the estimated fair value of certain ceded reinsurance-related embedded derivatives, all net of income tax.
•Allocated equity: the portion of total adjusted stockholder’s equity that MetLife’s management allocates to each of its segments based on local capital requirements and economic capital. See “- Risk Management - Economic Capital.”
Risk Management
MetLife has an integrated process for managing risk, that is supported by a Risk Appetite Statement approved by the Board of Directors. Risk management is overseen and conducted through multiple Board and senior management risk committees (financial and non-financial). The risk committees are established at the enterprise and local levels, as needed, to oversee capital and risk positions, approve ALM strategies and limits, and establish certain corporate risk standards and policies. The risk committees are comprised of senior leaders from the lines of business and corporate functions which ensures comprehensive coverage and sharing of risk reporting. The ERC is responsible for reviewing all material risks impacting the enterprise and deciding on actions, if necessary, in the event risks exceed desired tolerances, taking into consideration industry best practices and the current environment to resolve or mitigate those risks.
Three Lines of Defense
MetLife operates under the “Three Lines of Defense” model. Under this model, the lines of business and corporate functions are the first and primary line of defense in identifying, measuring, monitoring, managing, and reporting risks. Global Risk Management forms the second line of defense providing strategic advisory services and effective challenge and oversight to the business and corporate functions in the first line of defense. Internal Audit serves as the third line of defense, providing independent assurance and testing over the risk and control environment and related processes and controls.
Global Risk Management
Independent from the lines of business, the centralized Global Risk Management department, led by the CRO, coordinates across all risk committees to ensure that all material risks are properly identified, measured, monitored, managed and reported across the Company. The CRO reports to the CEO and is primarily responsible for maintaining and communicating the Company’s enterprise risk policies and for monitoring and analyzing all material risks.
Global Risk Management considers and monitors a full range of risks relating to the Company’s solvency, liquidity, earnings, business operations and reputation. Global Risk Management’s primary responsibilities consist of:
•implementing an enterprise risk framework, which outlines our enterprise approach for managing financial and non-financial risk;
•developing policies and procedures for identifying, measuring, monitoring, managing and reporting those risks identified in the enterprise risk framework;
•coordinating Own Risk Solvency Assessment for Board, senior management and regulator use;
•establishing appropriate corporate risk tolerance levels;
•measuring capital on an economic basis;
•mitigating compliance risk and establishing controls;
•integrating climate risk into MetLife’s risk management framework and developing climate risk capabilities; and
•reporting to (i) the Finance and Risk Committee of MetLife, Inc.’s Board of Directors; (ii) the Compensation Committee of MetLife, Inc.’s Board of Directors; and (iii) the financial and non-financial senior management committees on various aspects of risk.
Key Risk Types
MetLife has defined each material risk to which it is exposed and has established individual frameworks to monitor, manage and report on the respective risk.
•Market Risk: is the risk of loss due to potential changes in the value of assets and liabilities arising from fluctuations in financial market, real estate, and other economic factors. Market risk is comprised of interest rate risk, equity risk, foreign currency exchange rate risk, spread risk and inflation risk.
•Credit Risk: is the risk of loss or credit rating downgrade arising from an obligor or counterparty with a direct or contingent financial obligation to MetLife that is either unable or unwilling to meet its obligation in full and on a timely basis. These risks arise from public and private fixed income assets, private loans including real estate, derivative transactions, bank deposits, reinsurance treaties and other similar contracts.
•Insurance Risk: is the risk of loss or adverse change in insurance liabilities from changes in the level, trend, and volatility of insurance and policyholder behavior experience varying from best estimate assumptions. These variances can be driven by catastrophic events such as pandemics or can be the result of misestimating base assumptions. Insurance risks to MetLife generally arise from mortality, morbidity, longevity, and policyholder behavior.
•Non-Financial Risk: is the risk of failed or inadequate internal processes, human errors, system errors or external events that may result in financial loss, non-financial damage, and/or non-compliance with applicable laws and regulations. Non-Financial risk captures operational and compliance risks, including risks such as business interruption, customer protection, financial crime, privacy, and information security risk.
•Liquidity Risk: refers to the risk that MetLife is unable to raise cash or collateral necessary to meet current obligations.
Economic Capital
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital can be deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in MetLife’s and the Company’s business. 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. For further information, see “Financial Measure and Segment Accounting Policies” in Note 2 of the Notes to the Consolidated Financial Statements.
Asset/Liability Management
MetLife actively manages our assets using an approach that is liability driven and balances quality, diversification, asset/liability matching, liquidity, concentration and investment return. The goals of the investment process are to optimize, net of income tax, risk-adjusted investment income and risk-adjusted total return while ensuring that the assets and liabilities are reasonably aligned on a cash flow and duration basis. The ALM process is the shared responsibility of the ALM, Global Risk Management, and Investments departments, with the engagement of senior members of the business segments and Finance, and is governed by the ALM Committees. The ALM Committees’ duties include reviewing and approving investment guidelines and limits, approving significant portfolio and ALM strategies and providing oversight of the ALM process. The directives of the ALM Committees are carried out and monitored through ALM Working Groups which are set up to manage risk by geography, product or portfolio type. The ALM Steering Committee oversees the activities of the underlying ALM Committees and Working Groups. The ALM Steering Committee reports to the ERC.
MetLife establishes portfolio guidelines that define ranges and limits related to asset allocation, interest rate risk, liquidity, concentration and other risks for each major business segment, legal entity or insurance product group. These guidelines support implementation of investment strategies used to adequately fund our liabilities within acceptable levels of risk. MetLife also establishes hedging programs and associated investment portfolios for different blocks of business. The ALM Working Groups monitor these strategies and programs through regular review of portfolio metrics, such as effective duration, yield curve sensitivity, convexity, value at risk, market sensitivities (to interest rates, equity market levels, equity volatility, foreign currency exchange rates and inflation), stress scenario payoffs, liquidity, asset sector concentration and credit quality.
MetLife manages credit risk through in-house fundamental credit analysis of the underlying obligors, issuers, transaction structures and real estate properties. MetLife also manages credit, market valuation and liquidity risk through industry and issuer diversification and asset allocation limits. These risk limits, approved annually by the Investment Risk Committee, promote diversification by asset sector, avoid concentrations in any single issuer and limit overall aggregate credit and equity risk exposure, as measured by MetLife’s economic capital framework. For real estate assets, MetLife manages credit and market risk through asset allocation limits and by diversifying by geography, property and product type.
Information Security Risk Management
For details on information security risk management see “Cybersecurity.”

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The following discussion on market risk should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Risk Management.”
Market Risk Exposures
We regularly analyze our exposure to interest rate, foreign currency exchange rate and equity market price risk. As a result of that analysis, we have determined that the estimated fair values of certain assets and liabilities are materially exposed to changes in interest rates, foreign currency exchange rates and equity markets. We have exposure to market risk through our insurance operations and investment activities. For purposes of this disclosure, “market risk” is defined as the risk of loss due to potential changes in the value of assets and liabilities arising from fluctuation in the financial markets and other economic factors.
Interest Rates
Our exposure to interest rate changes results most significantly from our holdings of fixed maturity securities AFS, mortgage loans, derivatives, and our interest rate sensitive liabilities. Fixed maturity securities AFS include U.S. and foreign government bonds, securities issued by government agencies, corporate bonds, mortgage-backed securities and ABS & CLO, all of which are mainly exposed to changes in medium- and long-term interest rates. The interest rate sensitive liabilities for purposes of this disclosure include FPBs, PABs related to certain investment type contracts, debt and MRBs primarily consisting of variable annuities with guaranteed minimum benefits which have the same type of interest rate exposure (medium- and long-term interest rates) as fixed maturity securities AFS. See “Risk Factors - Economic Environment and Capital Markets Risks - We May Face Difficult Economic Conditions.”
Foreign Currency Exchange Rates
Our exposure to fluctuations in foreign currency exchange rates against the U.S. dollar results most significantly from our holdings in non-U.S. dollar denominated fixed maturity and equity securities, mortgage loans, and certain insurance liabilities. The principal currencies that create foreign currency exchange rate risk in our investment portfolios and foreign currency insurance liabilities are the Japanese yen, the Euro and the British pound. We hedge foreign currency exchange rate risk with foreign currency swaps, forwards and options.
Equity Market
Along with investments in equity securities and FVO securities, we have exposure to equity market risk through certain liabilities that involve long-term guarantees on equity performance, such as MRBs for variable annuities with guaranteed minimum benefits and certain PABs. Equity exposures associated with real estate and limited partnership interests are excluded from this discussion.
Management of Market Risk Exposures
We use a variety of strategies to manage interest rate, foreign currency exchange rate and equity market risk, including the use of derivatives.
Interest Rate Risk Management
To support management of interest rate risk, we perform analysis using various models, including multi-scenario cash flow projection models that forecast cash flows of the liabilities and their supporting investments, including derivatives. These projections involve evaluating the potential gain or loss on most of our in-force business under various increasing and decreasing interest rate environments. The NYDFS regulations require that we perform some of these analyses annually as part of our review of the sufficiency of our regulatory reserves. We maintain segmented operating and surplus asset portfolios for the purpose of ALM and the allocation of investment income to product lines. In the U.S., for each segment, invested assets greater than or equal to the GAAP liabilities, net of certain non-invested assets allocated to the segment, are maintained, with any excess allocated to Corporate & Other. The business segments may reflect differences in legal entity, statutory line of business and any product market characteristic which may drive a distinct investment strategy with respect to duration, liquidity or credit quality of the invested assets.
We measure relative sensitivities of the value of our assets and liabilities to changes in key assumptions utilizing internal models. These models reflect specific product characteristics and include assumptions based on current and anticipated experience regarding lapse, mortality, morbidity and interest crediting rates. In addition, these models include asset cash flow projections reflecting interest payments, sinking fund payments, principal payments, bond calls, mortgage loan prepayments and defaults.
We employ product design, pricing and ALM strategies to reduce the potential effects of interest rate movements. Product design and pricing strategies include the use of surrender charges or restrictions on withdrawals in some products and the ability to reset crediting rates for certain products. ALM strategies include the use of derivatives. We also use reinsurance to mitigate interest rate risk.
We also use common industry metrics, such as duration and convexity, to measure the relative sensitivity of assets and liability values to changes in interest rates. In computing the duration of liabilities, we consider policyholder guarantees and how we intend to set indeterminate policy elements such as interest credits or dividends. Each asset portfolio or portfolio group has a duration target based on the liability duration and the investment objectives of that portfolio. Where a liability cash flow may exceed the maturity of available assets, we may support such liabilities with equity investments, derivatives or interest rate curve mismatch strategies.
Foreign Currency Exchange Rate Risk Management
MetLife has a well-established policy to manage foreign currency exchange rate exposures within its risk tolerance. In general, investments backing specific liabilities are currency matched. This is achieved through direct investments in matching currency or through the use of foreign currency exchange rate derivatives. Enterprise foreign currency exchange rate risk limits are established by the ERC. Management of each of the Company’s segments, with oversight from MetLife’s FX Working Group and the ALM committee for the respective segment, is responsible for managing any foreign currency exchange rate exposure.
We use foreign currency swaps, forwards and options to mitigate the liability exposure, risk of loss and financial statement volatility associated with foreign currency denominated fixed income investments and foreign currency insurance liabilities.
Equity Market Risk Management
We manage equity market risk on an integrated basis with other risks through our ALM strategies, including the dynamic hedging with derivatives of certain variable annuity guarantee benefits accounted for as MRBs, as well as reinsurance, in order to limit losses, minimize exposure to large risks, and provide additional capacity for future growth. We also manage equity market risk exposure in our investment portfolio through the use of derivatives. These derivatives include exchange-traded equity futures, equity index options contracts, TRRs and equity variance swaps.
Hedging Activities
We use derivative contracts primarily to hedge a wide range of risks including interest rate risk, foreign currency exchange rate risk, and equity market risk. Derivative hedges are designed to reduce risk on an economic basis while considering their impact on financial results under different accounting regimes, including GAAP and local statutory accounting. Our derivative hedge programs vary depending on the type of risk being hedged. Some hedge programs are asset or liability specific while others are portfolio hedges that reduce risk related to a group of liabilities or assets. Our use of derivatives by major hedge programs is as follows:
•Risks Related to Guarantee Benefits - We use a wide range of derivative contracts to mitigate the risk associated with living guarantee benefits accounted for as MRBs. These derivatives include equity and interest rate futures, interest rate swaps, currency futures/forwards, equity indexed options, TRRs, interest rate option contracts and equity variance swaps.
•Minimum Interest Rate Guarantees - For certain liability contracts, we provide the contractholder a guaranteed minimum interest rate. These contracts include certain fixed annuities and other insurance liabilities. We purchase interest rate caps and floors to reduce risk associated with these liability guarantees.
•Reinvestment Risk in Long-Duration Liability Contracts - Derivatives are used to hedge interest rate risk related to certain long-duration liability contracts. Hedges include interest rate swaps, swaptions and Treasury bond forwards.
•Foreign Currency Exchange Rate Risk - We use foreign currency swaps, futures, forwards and options to hedge foreign currency exchange rate risk. These hedges are generally used to swap foreign currency denominated bonds or equity market exposures to U.S. dollars.
•General ALM Hedging Strategies - In the ordinary course of managing our asset/liability risks, we use interest rate futures, interest rate swaps, interest rate caps, interest rate floors and inflation swaps. These hedges are designed to reduce interest rate risk or inflation risk related to the existing assets or liabilities or related to expected future cash flows.
•Macro Hedge Program - We use equity options, equity TRRs, interest rate swaptions, interest rate swaps and Treasury locks to mitigate the potential loss of legal entity statutory capital under stress scenarios.
Risk Measurement: Sensitivity Analysis
We measure market risk related to our market sensitive assets and liabilities based on changes in interest rates, foreign currency exchange rates and equity market prices utilizing a sensitivity analysis. This analysis estimates the potential changes in estimated fair value based on a hypothetical 100 basis point change (increase or decrease) in interest rates, as well as a 10% change (increase or decrease) in foreign currency exchange rates and equity market prices. We believe these changes in market rates and prices are reasonably possible in the near term. In performing the analysis summarized below, we used market rates at December 31, 2024. The sensitivity analysis separately calculates each of our market risk exposures (interest rate, foreign currency exchange rate and equity market) relating to our assets and liabilities. We modeled the impact of changes (increases and decreases) in market rates and prices on the estimated fair values of our market sensitive assets and liabilities and present the results with the most adverse level of market risk impact to the Company for each of these market risk exposures as follows:
•the net present values of our interest rate sensitive exposures resulting from a 100-basis point change (increase or decrease) in interest rates;
•estimated fair values of our foreign currency exchange rate sensitive exposures due to a 10% change (appreciation or depreciation) in the value of the U.S. dollar compared to all other currencies; and
•the estimated fair value of our equity market sensitive exposures due to a 10% change (increase or decrease) in equity market prices.
The sensitivity analysis is an estimate and should not be viewed as predictive of our future financial performance. We cannot ensure that our actual losses in any particular period will not exceed the amounts indicated in the table below. Limitations related to this sensitivity analysis include:
•liabilities do not include $8.3 billion of other policy-related balances largely consisting of claims, unearned revenue liabilities and policyholder dividends;
•the analysis excludes real estate holdings, private equity and hedge fund holdings;
•the market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including the impact of prepayment rates on mortgage loans;
•sensitivities do not include the impact on asset or liability valuation of changes in market liquidity or changes in market credit spreads;
•foreign currency exchange rate risk is not isolated for certain MRBs for variable annuities with guaranteed minimum benefits, as the risk on these instruments is reflected as equity;
•the impact on reported earnings may be materially different from the change in market values, most notably for fixed maturity securities AFS, mortgage loans, FPBs, and derivatives that qualify for hedge accounting; and
•the model assumes that the composition of assets and liabilities remains unchanged throughout the period.
Accordingly, we use such models as tools and not as substitutes for the experience and judgment of our management. Based on our analysis of the impact of a 100-basis point change (increase or decrease) in interest rates, as well as a 10% change (increase or decrease) in foreign currency exchange rates and equity market prices, we have determined that such a change could have a material adverse effect on the estimated fair value of certain assets and liabilities from interest rate, foreign currency exchange rate and equity market exposures.
The table below illustrates the potential loss in estimated fair value for each market risk exposure based on market sensitive assets and liabilities at:
December 31, 2024
(In millions)
Interest rate risk $ 2,481
Foreign currency exchange rate risk $ 42
Equity market risk $ 119
The risk sensitivities derived used a 100-basis point increase to interest rates, a 10% weakening of the U.S. dollar against foreign currencies, and a 10% decrease in equity prices. The potential losses in estimated fair value presented are for non-trading securities.
The table below provides additional detail regarding the potential gain (loss) from changes in estimated fair value at:
December 31, 2024
Interest Rate Risk Foreign Currency Exchange Rate Risk Equity Market Risk
Notional
Amount Estimated
Fair
Value (1) Assuming a
100 bps
Increase
in Interest Rates (2) Assuming a
10% Depreciation in the U.S. Dollar (3) Assuming a
10% Decrease
in Equity
Prices (4)
(In millions)
Assets
Fixed maturity securities (5) $ 141,704 $ (8,234) $ 1,561 $ (83)
Mortgage loans $ 56,824 (1,755) 238 -
Other $ 33,860 (515) 223 (52)
Total assets $ (10,504) $ 2,022 $ (135)
Liabilities
Future policy benefits $ 126,619 $ 5,911 $ - $ -
Policyholder account balances $ 83,986 1,707 (1,573) -
Market risk benefits $ 2,339 699 - (310)
Short-term and long-term debt $ 1,632 64 - -
Other $ 22,103 667 - 3
Total liabilities $ 9,048 $ (1,573) $ (307)
Derivative Instruments
Interest rate $ 81,557 $ 958 $ (900) $ - $ -
Foreign currency exchange rate $ 39,542 $ 1,760 (102) (494) -
Credit $ 10,248 $ 159 (6) 3 -
Equity market $ 13,855 $ 4 (17) - 323
Total derivative instruments $ (1,025) $ (491) $ 323
Net Change $ (2,481) $ (42) $ (119)
Prior Year Net Change $ (3,812) $ (65) $ (41)
Increase/(Decrease) $ 1,331 $ 23 $ (78)
______________
(1)The carrying value for FPBs, as reported on the consolidated balance sheets, was used for these sensitivities. See Note 1 of the Notes to the Consolidated Financial Statements for additional details on FPBs.
(2)Separate account assets and liabilities, which are interest rate sensitive, are not included herein as any interest rate risk is borne by the contractholder.
(3)Does not necessarily represent those financial instruments solely subject to foreign currency exchange rate risk. Separate account assets and liabilities, which are foreign currency exchange rate sensitive, are not included herein as any foreign currency exchange rate risk is borne by the contractholder.
(4)Does not necessarily represent those financial instruments solely subject to equity price risk. Additionally, separate account assets and liabilities, which are equity market sensitive, are not included herein as any equity market risk is borne by the contractholder.
(5)Includes FVO securities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements, Notes and Schedules
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 34)
Financial Statements at December 31, 2024 and 2023 and for the Years Ended December 31, 2024, 2023 and 2022:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Note 1 - Business, Basis of Presentation and Summary of Significant Accounting Policies
Note 2 - Segment Information
Note 3 - Future Policy Benefits
Note 4 - Policyholder Account Balances
Note 5 - Market Risk Benefits
Note 6 - Separate Accounts
Note 7 - Deferred Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles
Note 8 - Reinsurance
Note 9 - Closed Block
Note 10 - Investments
Note 11 - Derivatives
Note 12 - Fair Value
Note 13 - Leases
Note 14 - Long-term and Short-term Debt
Note 15 - Equity
Note 16 - Other Revenues and Other Expenses
Note 17 - Employee Benefit Plans
Note 18 - Income Tax
Note 19 - Contingencies, Commitments and Guarantees
Note 20 - Related Party Transactions
Financial Statement Schedules at December 31, 2024 and 2023 and for the Years Ended December 31, 2024, 2023 and 2022:
Schedule I - Consolidated Summary of Investments - Other Than Investments in Related Parties
Schedule III - Consolidated Supplementary Insurance Information
Schedule IV - Consolidated Reinsurance
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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
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 and are significant to the determination of estimated fair value. When a price is not available in the active market or from an independent pricing service, management values the security using internal matrix pricing or discounted cash flow techniques. These investments are categorized as Level 3.
Management applies considerable judgment in selecting unobservable inputs to value fixed maturity securities using internal matrix or discounted cash flow techniques. Unobservable assumptions reflect the Company’s own judgments about assumptions that a market participant would use in pricing the investment.
We have determined the fair value of fixed maturity securities valued using internal matrix pricing or discounted cash flow techniques is a critical audit matter due to the significant judgements made by management when determining the
unobservable inputs. This required complex auditor judgment and an increased extent of effort, including the use of fair value specialists and credit 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 fixed maturity securities determined using internal matrix pricing or discounted cash flow techniques as a result of unobservable inputs 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, such as maturity dates and coupon rates, used in the determination of fair values for the identified fixed maturity securities.
•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.
•With the involvement of our credit specialists, we developed an independent expectation of the credit rating for a sample of securities where an external rating was not available and compared our estimates to the Company’s estimates and evaluated differences, including the impact on the fair value of the security.
Insurance Liabilities - Certain Assumptions Related to the 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 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 lapse, incidence, claim 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 in setting assumptions used to estimate the 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 the intended application of principal assumptions in the valuation model on a sample basis.
Market Risk Benefits - Certain Assumptions Related to the 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. Market risk benefits are required to be measured at fair value.
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. Principal assumptions include mortality, withdrawal, utilization, lapse, volatility, and nonperformance risk spread.
We have identified certain assumptions related to the valuation of market risk benefits, more specifically certain guaranteed minimum benefits associated with variable annuity contracts, 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 the assumptions used in the valuation of market risk benefits, including the related methodologies 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.
◦evaluated the intended application of principal assumptions in the valuation model on a sample basis.
◦evaluated the reasonableness of the Company’s assumptions by comparing those selected by management to those independently developed by our actuarial specialist.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 11, 2025
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, 2024 and 2023
(In millions, except share and per share data)
2024 2023
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (net of allowance for credit loss of $112 and $132, respectively); and amortized cost: $153,744 and $152,080, respectively
$ 140,832 $ 142,805
Mortgage loans (net of allowance for credit loss of $503 and $509, respectively; includes $198 and $166, respectively, relating to variable interest entities)
60,025 62,584
Policy loans 5,601 5,671
Real estate and real estate joint ventures (includes $2,000 and $1,427, respectively, relating to variable interest entities, $378 and $317, respectively, under the fair value option)
8,902 8,690
Other limited partnership interests 7,054 7,765
Short-term investments, at estimated fair value 2,391 3,048
Other invested assets (net of allowance for credit loss of $0 and $14, respectively; includes $729 and $805, respectively, of leveraged and direct financing leases; $112 and $117, respectively, relating to variable interest entities)
17,674 17,040
Total investments 242,479 247,603
Cash and cash equivalents, principally at estimated fair value 7,271 6,795
Accrued investment income 1,986 2,026
Premiums, reinsurance and other receivables 28,084 28,236
Market risk benefits, at estimated fair value 246 177
Deferred policy acquisition costs and value of business acquired 3,136 3,305
Current income tax recoverable 245 112
Deferred income tax asset 2,883 2,922
Other assets 4,264 4,312
Separate account assets 79,202 83,197
Total assets $ 369,796 $ 378,685
Liabilities and Equity
Liabilities
Future policy benefits $ 126,619 $ 129,182
Policyholder account balances 102,140 103,894
Market risk benefits, at estimated fair value 2,339 2,878
Other policy-related balances 8,338 8,289
Policyholder dividends payable 231 233
Payables for collateral under securities loaned and other transactions 11,271 11,790
Long-term debt 1,553 1,887
Other liabilities 23,669 23,719
Separate account liabilities 79,202 83,197
Total liabilities 355,362 365,069
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 12,475
Retained earnings 7,444 7,645
Accumulated other comprehensive income (loss) (5,994) (6,872)
Total Metropolitan Life Insurance Company stockholder’s equity 13,930 13,253
Noncontrolling interests 504 363
Total equity 14,434 13,616
Total liabilities and equity $ 369,796 $ 378,685
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, 2024, 2023 and 2022
(In millions)
2024 2023 2022
Revenues
Premiums $ 27,561 $ 24,718 $ 31,189
Universal life and investment-type product policy fees
1,500 1,664 1,817
Net investment income
11,635 11,206 10,122
Other revenues
1,775 1,673 1,694
Net investment gains (losses)
(450) (1,375) (127)
Net derivative gains (losses)
(106) (1,537) 752
Total revenues
41,915 36,349 45,447
Expenses
Policyholder benefits and claims
28,781 26,150 33,133
Policyholder liability remeasurement (gains) losses (148) (150) (11)
Market risk benefit remeasurement (gains) losses
(932) (703) (3,379)
Interest credited to policyholder account balances
3,819 3,602 2,509
Policyholder dividends
455 470 563
Other expenses
5,679 5,785 5,703
Total expenses
37,654 35,154 38,518
Income (loss) before provision for income tax
4,261 1,195 6,929
Provision for income tax expense (benefit)
776 60 1,273
Net income (loss)
3,485 1,135 5,656
Less: Net income (loss) attributable to noncontrolling interests
(9) 41 28
Net income (loss) attributable to Metropolitan Life Insurance Company
$ 3,494 $ 1,094 $ 5,628
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, 2024, 2023 and 2022
(In millions)
2024 2023 2022
Net income (loss)
$ 3,485 $ 1,135 $ 5,656
Other comprehensive income (loss):
Unrealized investment gains (losses), net of related offsets
(2,937) 5,841 (30,335)
Deferred gains (losses) on derivatives 321 (1,078) (399)
Future policy benefits discount rate remeasurement gains (losses) 3,554 (2,957) 21,623
Market risk benefit instrument-specific credit risk remeasurement gains (losses)
(80) (59) (236)
Foreign currency translation adjustments
43 56 (177)
Defined benefit plans adjustment
40 (34) 325
Other comprehensive income (loss), before income tax
941 1,769 (9,199)
Income tax (expense) benefit related to items of other comprehensive income (loss)
(63) (321) 1,934
Other comprehensive income (loss), net of income tax
878 1,448 (7,265)
Comprehensive income (loss)
4,363 2,583 (1,609)
Less: Comprehensive income (loss) attributable to noncontrolling interest, net of income tax
(9) 41 28
Comprehensive income (loss) attributable to Metropolitan Life Insurance Company
$ 4,372 $ 2,542 $ (1,637)
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, 2024, 2023 and 2022
(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, 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
Cumulative effects of changes in accounting principles, net of income tax (219) (219) (219)
Dividends to MetLife, Inc.
(3,476) (3,476) (3,476)
Change in equity of noncontrolling interests
- 150 150
Net income (loss)
3,494 3,494 (9) 3,485
Other comprehensive income (loss), net of
income tax
878 878 878
Balance at December 31, 2024 $ 5 $ 12,475 $ 7,444 $ (5,994) $ 13,930 $ 504 $ 14,434
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, 2024, 2023 and 2022
(In millions)
2024 2023 2022
Cash flows from operating activities
Net income (loss) $ 3,485 $ 1,135 $ 5,656
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expenses
139 124 127
Amortization of premiums and accretion of discounts associated with investments, net
(820) (858) (595)
(Gains) losses on investments and from sales of businesses, net
447 1,353 127
(Gains) losses on derivatives, net
1,018 2,461 935
(Income) loss from equity method investments, net of dividends or distributions
481 1,098 890
Interest credited to policyholder account balances
3,751 3,623 2,293
Universal life and investment-type product policy fees
(1,153) (1,175) (1,163)
Change in fair value option securities
(170) 39 123
Change in accrued investment income
1 (146) (230)
Change in premiums, reinsurance and other receivables
350 (992) 215
Change in market risk benefits (688) (455) (3,141)
Change in deferred policy acquisition costs and value of business acquired, net
169 452 108
Change in income tax
(159) (267) 853
Change in other assets
(23) (77) 187
Change in insurance-related liabilities and policy-related balances
(493) (1,546) (1,330)
Change in other liabilities
(53) 84 (63)
Other, net
248 (18) 148
Net cash provided by (used in) operating activities 6,530 4,835 5,140
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities available-for-sale
29,435 30,090 54,515
Equity securities
97 104 213
Mortgage loans
7,498 6,129 8,912
Real estate and real estate joint ventures
638 354 925
Other limited partnership interests
687 415 992
Short-term investments 5,633 7,271 8,914
Purchases and originations of:
Fixed maturity securities available-for-sale
(29,188) (27,700) (49,620)
Equity securities
(49) (162) (127)
Mortgage loans
(5,642) (6,087) (12,083)
Real estate and real estate joint ventures
(684) (931) (589)
Other limited partnership interests
(508) (715) (1,036)
Short-term investments (5,050) (7,438) (6,727)
Cash received in connection with freestanding derivatives 829 1,628 2,967
Cash paid in connection with freestanding derivatives (1,716) (2,998) (3,971)
Receipts on loans to affiliates - 100 -
Purchases of loans to affiliates - - (19)
Net change in policy loans 70 58 87
Net change in other invested assets (230) 6 114
Other, net 49 43 31
Net cash provided by (used in) investing activities $ 1,869 $ 167 $ 3,498
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, 2024, 2023 and 2022
(In millions)
2024 2023 2022
Cash flows from financing activities
Policyholder account balances - deposits
$ 72,004 $ 69,794 $ 85,285
Policyholder account balances - withdrawals
(75,712) (72,788) (80,492)
Net change in payables for collateral under securities loaned and other transactions
(519) (2,381) (10,695)
Long-term debt issued
- 210 64
Long-term debt repaid
(245) - (57)
Derivatives with certain financing elements and other derivative-related transactions, net
(66) 24 308
Dividends paid to MetLife, Inc.
(3,476) (2,471) (3,539)
Other, net
96 (2) (57)
Net cash provided by (used in) financing activities
(7,918) (7,614) (9,183)
Effect of change in foreign currency exchange rates on cash and cash equivalents balances (5) 2 (7)
Change in cash and cash equivalents
476 (2,610) (552)
Cash and cash equivalents, beginning of year
6,795 9,405 9,957
Cash and cash equivalents, end of year
$ 7,271 $ 6,795 $ 9,405
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest $ 126 $ 131 $ 102
Income tax $ 495 $ 374 $ 344
Non-cash transactions:
Fair value option securities received from an affiliate
$ - $ - $ 186
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 $ 1,776 $ 1,113 $ 7,450
Fixed maturity securities available-for-sale received from an affiliate $ - $ 502 $ 139
Fixed maturity securities available-for-sale transferred to an affiliate $ - $ - $ 328
Mortgage loans disposed of in connection with a reinsurance transaction $ - $ 110 $ -
Real estate and real estate joint ventures acquired in satisfaction of debt $ 313 $ 34 $ 313
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 the sale of other limited partnership interests $ 299 $ - $ -
Investment in affiliated unsecured note received in exchange for investment in affiliated preferred stock
$ 152 $ - $ -
Policyholder account balances received in connection with affiliated reinsurance transactions $ - $ 502 $ -
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 and employee benefits. MLIC is organized into three segments: Group Benefits; Retirement and Income Solutions (“RIS”); and MetLife Holdings. In addition, the Company reports 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.
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 are eliminated.
The Company uses either the equity method of accounting or, the fair value option (“FVO”) for its investments in real estate joint ventures (“REJV”) and other limited partnership interests (“OLPI”) 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.
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 separately reports, 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.
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’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
Policyholder Account Balances
Market Risk Benefits
Deferred Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles
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. Effective January 1, 2023, the Company adopted an accounting pronouncement related to targeted improvements to the accounting for long-duration contracts (“LDTI”) with a January 1, 2021 transition date (the “LDTI Transition Date”). 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.
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
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)
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 LDTI Transition Date or inception (for contracts sold after the LDTI 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 LDTI Transition Date for contracts issued prior to the LDTI 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 LDTI 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 LDTI 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 LDTI 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 an 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 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 FPBs 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.
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
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 Standard & Poor’s 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.
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 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 LDTI 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
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)
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.
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 ceded reinsurance, as applicable.
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)
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 is included in policyholder benefits and claims. Deferred sales inducement assets were $41 million and $45 million at December 31, 2024 and 2023, respectively.
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.
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)
For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the net consideration paid (received), and the liabilities ceded (assumed) related to the underlying reinsured contracts is generally 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 policyholder benefits and claims. Any gain by the ceding entity on such retroactive agreement is deferred as a liability and is amortized over the estimated remaining settlement period.
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 LDTI Transition Date, or at the inception of the reinsurance coverage for reinsurance agreements entered into subsequent to the LDTI 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 payable including funds withheld liabilities on coinsurance or modified coinsurance agreements 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 an allowance for credit loss (“ACL”).
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 reported 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.
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)
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 other 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 include both (i) provisions for credit loss on fixed maturity securities AFS, mortgage loans and certain 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 OLPI and REJV.
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”) 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.
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.”
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)
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 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 mortgage loans, in an amount that represents the portion of the amortized cost basis of such mortgage loans that the Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected.
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. 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). Upon foreclosure, the mortgage is de-recognized, the collateral received is recognized at fair value, and any difference between the net carrying value of the mortgage loan and the fair value of the collateral received is recognized within 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.
Mortgage loans that are designated as held-for-sale are carried at the lower of amortized cost or 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)
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 when the carrying value of the real estate exceeds its estimated fair value and 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.
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 estimated 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 made 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.
The Company accounts for its interest in REJV and OLPI 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 REJV and OLPI when it holds a controlling financial interest, or it is deemed the primary beneficiary of an investee that is a VIE. Assets of certain consolidated REJV and OLPI are initially recorded at estimated fair value. The Company elects the FVO for certain REJV that are managed on a total return basis. Unrealized gains (losses) representing changes in estimated fair value for REJV and OLPI 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.
•Investment in an operating joint venture that engages in insurance underwriting activities is accounted for under the equity method.
•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.
•Company-owned life insurance policies are carried at cash surrender value.
•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.
•Tax equity investments include low income housing tax credit partnerships and renewable energy partnerships which derive a significant source of investment return in the form of income tax credits or other tax incentives. Beginning January 1, 2024, tax equity investments that meet certain criteria are accounted for using the proportional amortization method, where the initial cost of the investment is amortized in proportion to the tax credits received and recognized as a component of income tax expense (benefit). Tax equity investments which do not meet the qualification criteria for the proportional amortization method are accounted for using the equity method of accounting. See Note 18.
•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.
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)
•Net investment in leveraged leases is equal to the minimum lease payment receivables plus the unguaranteed residual value, less the unearned income, 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.
•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.
•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.
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.
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.
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)
If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as follows:
Statement of Operations Presentation: 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.
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).
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)
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.
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).
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 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.
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.
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 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.
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 $56 million, $67 million and $67 million for the years ended December 31, 2024, 2023 and 2022, 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 remaining lease term or useful life up to 20 years. The cost basis of the property, equipment and leasehold improvements was $800 million and $826 million at December 31, 2024 and 2023, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $746 million and $727 million at December 31, 2024 and 2023, 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.
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)
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.
Other Revenues
Other revenues primarily include fees related to service contracts from customers for prepaid legal plans and administrative services-only (“ASO”) contracts, as well as recordkeeping and administrative 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 2024 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, 2024 and 2023.
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and
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)
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.
Adopted Accounting Pronouncements
The table below describes the impacts of the ASUs recently adopted by the Company.
Standard Description Effective Date and Method of Adoption Impact on Financial Statements
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
The amendments in the ASU are intended to improve 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 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 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, applied on a retrospective basis.
The Company has included the enhanced disclosures within Note 2.
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, the Company adopted this update, applying a modified retrospective basis.
The Company has elected to use the proportional amortization method to account for its tax equity investments that meet the required criteria. The adoption of this update resulted in a decrease to retained earnings of $219 million, net of income tax, primarily related to the Company’s tax equity investments reported within other invested assets, as of January 1, 2024.
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, 2024 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 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as amended by ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying The Effective Date
The key amendments in this update require disclosures in the notes to financial statements around employee compensation costs, depreciation, intangible asset amortization and certain other costs and expenses. Information on selling expenses incurred is also required.
Effective for annual periods beginning January 1, 2027, and
interim periods beginning January 1, 2028, 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 2023-09, 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 five 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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
2. Segment Information
The Company is organized into three segments: Group Benefits, RIS and MetLife Holdings. In addition, the Company reports 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 U.S. These include variable, universal, term and whole life insurance, variable, fixed and index-linked annuities and long-term care insurance.
Financial Measure and Segment Accounting Policies
Adjusted earnings is used by the Company’s CODM, its chief executive officer, to evaluate performance and allocate resources. Adjusted earnings and related measures based on adjusted earnings are also the measures by which senior management’s and many other employees’ performance is evaluated for the purposes of determining their compensation under applicable compensation plans. Adjusted earnings and related measures based on adjusted earnings allow analysis of the Company’s performance relative to its business plan and facilitate comparisons to industry results.
Consistent with GAAP guidance for segment reporting, adjusted earnings is the Company’s GAAP measure of segment performance and is reported below. The Company believes the presentation of adjusted earnings enhances its investors’ understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business.
Adjusted earnings focuses 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, (iii) revenues and costs related to divested businesses, and (iv) other adjustments. Also, adjusted earnings excludes results of discontinued operations under GAAP.
Market volatility can have a significant impact on the Company’s financial results. Adjusted earnings for the Company’s segments excludes net investment gains (losses), net derivative gains (losses), MRB remeasurement gains (losses) and goodwill impairments. Further, net investment income excludes adjusted earnings adjustments relating to joint ventures accounted for under the equity method, and 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 in calculating adjusted earnings for the Company’s segments:
•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 FPBs, (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
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
2. Segment Information (continued)
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.
•Policyholder liability remeasurement gains (losses) excludes asymmetrical accounting associated with in-force reinsurance.
•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, which are applicable to the Company’s segments, are made in calculating adjusted earnings:
•Net investment income and interest credited to PABs excludes certain amounts related to contractholder-directed equity securities. Net investment income excludes returns on invested assets and cash and cash equivalents subject to ceded reinsurance arrangements with third parties (“Reinsurance adjustments”).
•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) Reinsurance adjustments, (ii) implementation of new insurance regulatory requirements and other costs, and (iii) 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.
The Company’s segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements. 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.
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.
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. Expenses 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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
2. Segment Information (continued)
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).
The financial measure and accounting policies used to prepare the Company’s segment results are the same as those used to prepare results for Corporate & Other. See “- Financial Measure and Segment Accounting Policies.”
Set forth in the tables below is certain financial information with respect to the Company’s segments for the years ended December 31, 2024, 2023 and 2022.
Year Ended December 31, 2024 Group Benefits RIS MetLife Holdings
(In millions)
Revenues
Premiums $ 21,430 $ 3,844 $ 2,289
Universal life and investment-type product policy fees 909 263 306
Net investment income (1) 1,223 6,717 3,600
Other revenues 723 278 165
Expenses
Policyholder benefits and claims and policyholder dividends 18,633 6,440 4,203
Policyholder liability remeasurement (gains) losses (1) (157) 10
Interest credited to PABs 190 2,844 369
Other expenses:
Amortization of DAC and VOBA 25 40 196
Interest expense on debt 2 15 14
Other segment expenses (2) 3,529 315 787
Provision for income tax expense (benefit) 401 332 154
Adjusted earnings $ 1,506 $ 1,273 $ 627
Year Ended December 31, 2023 Group Benefits RIS MetLife Holdings
(In millions)
Revenues
Premiums $ 20,593 $ 1,776 $ 2,346
Universal life and investment-type product policy fees 878 264 519
Net investment income (1) 1,272 6,508 3,991
Other revenues 711 256 197
Expenses
Policyholder benefits and claims and policyholder dividends 17,976 4,163 4,462
Policyholder liability remeasurement (gains) losses (26) (158) 34
Interest credited to PABs 193 2,492 582
Other expenses:
Amortization of DAC and VOBA 26 31 224
Interest expense on debt 2 14 13
Other segment expenses (2) 3,300 513 795
Provision for income tax expense (benefit) 416 365 182
Adjusted earnings $ 1,567 $ 1,384 $ 761
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, 2022 Group Benefits RIS MetLife Holdings
(In millions)
Revenues
Premiums $ 20,269 $ 8,425 $ 2,495
Universal life and investment-type product policy fees 855 267 695
Net investment income (1) 1,126 5,236 4,393
Other revenues 653 407 149
Expenses
Policyholder benefits and claims and policyholder dividends 18,157 10,666 4,757
Policyholder liability remeasurement (gains) losses 7 (85) 67
Interest credited to PABs 143 1,687 643
Other expenses:
Amortization of DAC and VOBA 26 28 237
Interest expense on debt 1 8 8
Other segment expenses (2) 3,055 340 801
Provision for income tax expense (benefit) 318 350 240
Adjusted earnings $ 1,196 $ 1,341 $ 979
__________________
(1)The percentage of net investment income from equity method invested assets by segment was as follows:
Years Ended December 31,
2024 2023 2022
Group Benefits - % - % 1 %
RIS 3 % 1 % 5 %
MetLife Holdings
4 % 2 % 7 %
(2)Includes direct and allocated expenses, pension, postretirement and postemployment benefit costs, premium taxes, other taxes, and licenses & fees, as well as commissions and other variable expenses. This line item is net of capitalization of DAC.
The Company does not report total assets by segment, as this metric is not used to allocate resources or evaluate segment performance.
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 the reconciliation of certain financial measures used in calculating segment results to those used in calculating consolidated Company results:
Years Ended December 31,
2024 2023 2022
(In millions)
Total segment adjusted earnings
$ 3,406 $ 3,712 $ 3,516
Corporate & Other
(32) (223) (510)
Total consolidated adjusted earnings
3,374 3,489 3,006
Net investment gains (losses)
(450) (1,375) (127)
Net derivative gains (losses)
(106) (1,537) 752
Market risk benefit remeasurement gains (losses)
932 703 3,379
Investment hedge adjustments
(399) (777) (576)
Other
142 12 (74)
Provision for income tax (expense) benefit (8) 620 (704)
Net income (loss)
$ 3,485 $ 1,135 $ 5,656
Segment revenues:
Group
$ 24,285 $ 23,454 $ 22,903
RIS
11,102 8,804 14,335
MetLife Holdings
6,360 7,053 7,732
Total segment revenues
41,747 39,311 44,970
Net investment gains (losses)
(450) (1,375) (127)
Net derivative gains (losses)
(106) (1,537) 752
Investment hedge adjustments
(399) (777) (576)
Other
1,123 727 428
Total consolidated revenues $ 41,915 $ 36,349 $ 45,447
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,
2024 2023 2022
(In millions)
Life insurance
$ 14,753 $ 14,721 $ 14,809
Accident & health insurance
10,952 10,460 10,111
Annuities
4,678 2,412 9,346
Other
453 462 434
Total
$ 30,836 $ 28,055 $ 34,700
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 $3.7 billion, $3.6 billion and $3.8 billion for the years ended December 31, 2024, 2023 and 2022, respectively, which represented 12%, 13% and 11% 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, 2024, 2023 or 2022.
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 Company’s FPBs on the consolidated balance sheets was as follows at:
December 31,
2024 2023
(In millions)
Traditional and Limited-Payment Contracts:
RIS - Annuities
$ 47,551 $ 48,695
MetLife Holdings - Long-term care 14,537 15,240
Deferred Profit Liabilities:
RIS - Annuities
3,086 3,000
Additional Insurance Liabilities:
MetLife Holdings - Universal and variable universal life 1,969 1,841
MetLife Holdings - Participating life 42,663 43,586
Other long-duration (1) 6,300 6,605
Short-duration and other 10,513 10,215
Total $ 126,619 $ 129,182
__________________
(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 FPBs includes disaggregated rollforwards of expected future net premiums and expected future benefits. The products grouped within these rollforwards were selected
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
3. Future Policy Benefits - (continued)
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 FPB 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.
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,
2024 2023 2022
(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)
(16) (44) -
Adjusted balance
(16) (44) -
Issuances 3,557 1,607 8,326
Net premiums collected
(3,541) (1,563) (8,326)
Balance at December 31, at original discount rate
- - -
Balance at December 31, at current discount rate at balance sheet date
$ - $ - $ -
Present Value of Expected FPBs
Balance at January 1, at current discount rate at balance sheet date
$ 48,886 $ 48,190 $ 54,172
Balance at January 1, at original discount rate $ 47,991 $ 49,194 $ 42,453
Effect of changes in cash flow assumptions (1) (234) (193) (99)
Effect of actual variances from expected experience (2) (90) (411) (136)
Adjusted balance
47,667 48,590 42,218
Issuances 3,578 1,642 8,427
Interest accrual 2,421 2,377 2,182
Benefit payments (4,475) (4,618) (3,633)
Balance at December 31, at original discount rate
49,191 47,991 49,194
Effect of changes in discount rate assumptions (1,281) 895 (1,004)
Balance at December 31, at current discount rate at balance sheet date
47,910 48,886 48,190
Cumulative amount of fair value hedging adjustments
(359) (191) (200)
Net liability for FPBs
$ 47,551 $ 48,695 $ 47,990
Undiscounted - Expected future benefit payments
$ 93,692 $ 93,959 $ 95,493
Discounted - Expected future benefit payments (at current discount rate at balance sheet date) $ 47,910 $ 48,886 $ 48,190
Weighted-average duration of the liability 9 years 9 years 9 years
Weighted-average interest accretion (original locked-in) rate 5.1 % 5.0 % 4.9 %
Weighted-average current discount rate at balance sheet date 5.6 % 5.1 % 5.5 %
__________________
(1) For the year ended December 31, 2024, the net effect of changes in cash flow assumptions was partially offset by the corresponding impact in DPL associated with the RIS segment’s annuity products of $112 million. For the year ended December 31, 2023, 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. 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, 2024, 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 $39 million. 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 each of the years ended December 31, 2024, 2023 and 2022, the net effect of changes in cash flow assumptions was primarily driven by updates in assumptions related to mortality.
For the years ended December 31, 2024 and 2022, the net effect of actual variances from expected experience was primarily driven by favorable 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 agreement and model refinements.
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, 2024, the Company recognized a net remeasurement gain related to the net effect of changes in cash flow assumptions. 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.
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.
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,
2024 2023 2022
(Dollars in millions)
Present Value of Expected Net Premiums
Balance at January 1, at current discount rate at balance sheet date
$ 5,687 $ 5,775 $ 7,058
Balance at January 1, at original discount rate
$ 5,566 $ 5,807 $ 5,699
Effect of changes in cash flow assumptions
212 (152) 272
Effect of actual variances from expected experience
74 199 120
Adjusted balance
5,852 5,854 6,091
Interest accrual 285 294 298
Net premiums collected
(569) (582) (582)
Balance at December 31, at original discount rate
5,568 5,566 5,807
Effect of changes in discount rate assumptions (93) 121 (32)
Balance at December 31, at current discount rate at balance sheet date
$ 5,475 $ 5,687 $ 5,775
Present Value of Expected FPBs
Balance at January 1, at current discount rate at balance sheet date
$ 20,927 $ 19,619 $ 27,627
Balance at January 1, at original discount rate $ 20,494 $ 20,165 $ 19,406
Effect of changes in cash flow assumptions 205 (190) 301
Effect of actual variances from expected experience 84 223 115
Adjusted balance
20,783 20,198 19,822
Interest accrual 1,089 1,070 1,043
Benefit payments (848) (774) (700)
Balance at December 31, at original discount rate
21,024 20,494 20,165
Effect of changes in discount rate assumptions (1,012) 433 (546)
Balance at December 31, at current discount rate at balance sheet date
20,012 20,927 19,619
Other adjustments
- - 1
Net liability for FPBs
$ 14,537 $ 15,240 $ 13,845
Undiscounted:
Expected future gross premiums
$ 10,644 $ 10,603 $ 11,201
Expected future benefit payments
$ 44,981 $ 45,016 $ 45,872
Discounted (at current discount rate at balance sheet date):
Expected future gross premiums $ 6,966 $ 7,139 $ 7,200
Expected future benefit payments $ 20,012 $ 20,927 $ 19,619
Weighted-average duration of the liability 14 years 15 years 15 years
Weighted -average interest accretion (original locked-in) rate
5.4 % 5.4 % 5.5 %
Weighted-average current discount rate at balance sheet date 5.8 % 5.2 % 5.6 %
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 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.
Significant Methodologies and Assumptions
The principal inputs used in the establishment of the FPBs 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
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
3. Future Policy Benefits - (continued)
assumptions include mortality, lapse, incidence, claim utilization, claim cost inflation, claim continuance, and premium rate increases.
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 the 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.
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,
2024 2023 2022
Universal and Variable Universal Life
(Dollars in millions)
Balance, at January 1 $ 1,841 $ 1,642 $ 1,623
Less: AOCI adjustment
(14) (63) 66
Balance, at January 1, before AOCI adjustment
1,855 1,705 1,557
Effect of changes in cash flow assumptions (1) 26 18
Effect of actual variances from expected experience 37 16 31
Adjusted balance
1,891 1,747 1,606
Assessments accrual 89 91 90
Interest accrual 97 90 82
Excess benefits paid (91) (73) (73)
Balance, at December 31, before AOCI adjustment 1,986 1,855 1,705
Add: AOCI adjustment
(17) (14) (63)
Balance, at December 31 1,969 1,841 1,642
Less: Reinsurance recoverables
1,969 1,841 627
Balance, at December 31, net of reinsurance
$ - $ - $ 1,015
Weighted-average duration of the liability 16 years 17 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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
3. Future Policy Benefits - (continued)
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.
The Company’s gross premiums or assessments and interest expense recognized in the consolidated statements of operations for long-duration contracts, excluding MetLife Holdings’ participating life contracts, were as follows:
Years Ended December 31,
2024 2023 2022
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
$ 3,617 $ 2,421 $ 1,584 $ 2,377 $ 8,353 $ 2,182
MetLife Holdings - Long-term care 724 804 731 776 734 745
Deferred Profit Liabilities:
RIS - Annuities
N/A 150 N/A 144 N/A 136
Additional Insurance Liabilities:
MetLife Holdings - Universal and variable universal life 370 97 452 90 470 82
Other long-duration 888 306 887 304 821 301
Total $ 5,599 $ 3,778 $ 3,654 $ 3,691 $ 10,378 $ 3,446
__________________
(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% of the Company’s life insurance in-force at both December 31, 2024 and 2023. Participating policies represented 10%, 11% and 13% of gross traditional life insurance premiums for the years ended December 31, 2024, 2023 and 2022, respectively.
Liabilities for Unpaid Claims and Claim Expenses
The following is information about incurred and paid claims development by segment at December 31, 2024. 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 2024 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, 2024
Years Ended December 31, Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Dollars in millions)
2015 $ 7,040 $ 7,015 $ 7,014 $ 7,021 $ 7,024 $ 7,025 $ 7,026 $ 7,026 $ 7,028 $ 7,030 $ 1 219,340
2016 7,125 7,085 7,095 7,104 7,105 7,104 7,107 7,109 7,110 1 221,405
2017 7,432 7,418 7,425 7,427 7,428 7,428 7,432 7,434 2 264,746
2018 7,757 7,655 7,646 7,650 7,651 7,652 7,659 3 253,393
2019 7,935 7,900 7,907 7,917 7,914 7,921 4 255,494
2020 8,913 9,367 9,389 9,384 9,388 6 302,292
2021 10,555 10,795 10,777 10,783 10 335,468
2022 9,640 9,653 9,662 21 335,417
2023 9,584 9,471 43 314,144
2024 9,909 1,226 264,726
Total 86,367
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance (83,214)
All outstanding liabilities for incurral years prior to 2015, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance $ 3,159
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(In millions)
2015 $ 5,524 $ 6,913 $ 6,958 $ 6,974 $ 7,008 $ 7,018 $ 7,022 $ 7,024 $ 7,027 $ 7,029
2016 5,582 6,980 7,034 7,053 7,086 7,096 7,100 7,106 7,109
2017 5,761 7,292 7,355 7,374 7,400 7,414 7,427 7,431
2018 6,008 7,521 7,578 7,595 7,629 7,646 7,652
2019 6,178 7,756 7,820 7,853 7,898 7,908
2020 6,862 9,103 9,242 9,296 9,353
2021 8,008 10,476 10,640 10,689
2022 7,101 9,399 9,536
2023 6,929 9,225
2024 7,282
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance $ 83,214
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2024:
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 75.9% 21.6% 1.0% 0.3% 0.5% 0.2% 0.1% 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, 2024
Years Ended December 31, Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Dollars in millions)
2015 $ 1,082 $ 1,105 $ 1,093 $ 1,100 $ 1,087 $ 1,081 $ 1,067 $ 1,086 $ 1,078 $ 1,069 $ - 21,220
2016 1,131 1,139 1,159 1,162 1,139 1,124 1,123 1,086 1,108 - 17,974
2017 1,244 1,202 1,203 1,195 1,165 1,181 1,101 1,135 - 16,329
2018 1,240 1,175 1,163 1,147 1,170 1,102 1,150 - 15,216
2019 1,277 1,212 1,169 1,177 1,103 1,166 - 15,426
2020 1,253 1,223 1,155 1,100 1,158 - 15,813
2021 1,552 1,608 1,477 1,586 - 19,663
2022 1,641 1,732 1,578 7 18,364
2023 1,725 1,722 41 20,089
2024 1,890 840 12,419
Total 13,562
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance (6,981)
All outstanding liabilities for incurral years prior to 2015, net of reinsurance
1,468
Total unpaid claims and claim adjustment expenses, net of reinsurance
$ 8,049
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(In millions)
2015 $ 50 $ 264 $ 427 $ 524 $ 601 $ 665 $ 718 $ 764 $ 801 $ 844
2016 49 267 433 548 628 696 750 769 839
2017 56 290 476 579 655 719 718 812
2018 54 314 497 594 666 663 775
2019 57 342 522 620 621 764
2020 59 355 535 560 706
2021 95 505 620 902
2022 76 609 721
2023 84 520
2024 98
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance $ 6,981
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2024:
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% 24.2% 13.5% 9.3% 6.7% 6.0% 4.9% 4.8% 4.9% 4.0%
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 increased in 2024 compared to the 2023 incurral year due to the growth in the size of the business. For Group Long-term Disability, first year incurred claims and allocated loss adjustment expenses increased in 2024 compared to 2023 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 $6.8 billion and $6.7 billion at December 31, 2024 and 2023, respectively. Using interest rates ranging from 3% to 8%, based on the incurral year, the total discount applied to these liabilities was $1.5 billion and $1.3 billion at December 31, 2024 and 2023, respectively. The amount of interest accretion recognized was $464 million, $516 million and $461 million for the years ended December 31, 2024, 2023 and 2022, 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, 2024
(In millions)
Short-Duration:
Unpaid claims and allocated claims adjustment expenses, net of reinsurance:
Group Benefits:
Group Life - Term
$ 3,159
Group Long-term Disability
8,049
Total $ 11,208
Other insurance lines - all segments combined 897
Total unpaid claims and allocated claims adjustment expenses, net of reinsurance 12,105
Reinsurance recoverables on unpaid claims:
Group Benefits:
Group Life - Term
Group Long-term Disability
Total 307
Other insurance lines - all segments combined
Total reinsurance recoverable on unpaid claims
Total unpaid claims and allocated claims adjustment expense
12,441
Discounting
(1,506)
Liability for unpaid claims and claim adjustment liabilities - short-duration
10,935
Liability for unpaid claims and claim adjustment liabilities - all long-duration lines 763
Total liability for unpaid claims and claim adjustment expense (includes $7.0 billion of FPBs and $4.7 billion of other policy-related balances)
$ 11,698
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,
2024 2023 2022
(In millions)
Balance at January 1, $ 11,609 $ 11,300 $ 10,820
Less: Reinsurance recoverables
1,740 1,633 1,857
Net balance at January 1, 9,869 9,667 8,963
Incurred related to:
Current year
20,371 19,983 19,997
Prior years (1)
(264) 14 359
Total incurred
20,107 19,997 20,356
Paid related to:
Current year
(15,047) (14,484) (14,439)
Prior years
(5,235) (5,311) (5,213)
Total paid
(20,282) (19,795) (19,652)
Net balance at December 31, 9,694 9,869 9,667
Add: Reinsurance recoverables
2,004 1,740 1,633
Balance at December 31, $ 11,698 $ 11,609 $ 11,300
__________________
(1)For the year ended December 31, 2024, incurred claims and claim adjustment expenses associated with prior years decreased due to favorable claims experience in the current year. 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 2023. For the year ended December 31, 2022, incurred claims and claim adjustment expenses include expenses associated with prior years but reported in 2022 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 Company’s PABs on the consolidated balance sheets were as follows at:
December 31, 2024 December 31, 2023
(In millions)
Group Benefits - Group life
$ 7,469 $ 7,605
RIS:
Capital markets investment products and stable value GICs
57,799 58,554
Annuities and risk solutions
11,673 10,650
MetLife Holdings - Annuities 9,513 10,888
Other 15,686 16,197
Total $ 102,140 $ 103,894
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,
2024 2023 2022
(Dollars in millions)
Balance at January 1,
$ 7,605 $ 7,954 $ 7,889
Deposits
3,481 3,227 3,227
Policy charges
(658) (635) (612)
Surrenders and withdrawals (3,132) (3,121) (2,680)
Benefit payments
(13) (12) (10)
Net transfers from (to) separate accounts
(3) - (2)
Interest credited 189 192 142
Balance at December 31,
$ 7,469 $ 7,605 $ 7,954
Weighted-average annual crediting rate
2.5 % 2.5 % 1.8 %
At period end:
Cash surrender value $ 7,407 $ 7,543 $ 7,900
Net amount at risk, excluding offsets from reinsurance:
In the event of death (1)
$ 263,198 $ 250,033 $ 244,638
__________________
(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, 2024
Equal to or greater than 0% but less than 2%
$ 456 $ - $ 726 $ 4,086 $ 5,268
Equal to or greater than 2% but less than 4%
1,247 100 61 1 1,409
Equal to or greater than 4%
682 - 39 37 758
Products with either a fixed rate or no GMCR
N/A N/A N/A N/A 34
Total $ 2,385 $ 100 $ 826 $ 4,124 $ 7,469
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 GMCR
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 GMCR
N/A N/A N/A N/A 127
Total $ 2,106 $ 952 $ 4,503 $ 266 $ 7,954
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 $12.8 billion and $13.0 billion at December 31, 2024 and 2023, respectively. These advances are collateralized by residential mortgage-backed securities (“RMBS”) with an estimated fair value of $16.4 billion and $15.9 billion at December 31, 2024 and 2023, respectively. 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, 2024 and 2023. 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 at both December 31, 2024 and 2023.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
4. Policyholder Account Balances (continued)
Information regarding the RIS segment’s capital markets investment products and stable value GICs in PABs was as follows:
Years Ended December 31,
2024 2023 2022
(Dollars in millions)
Balance at January 1,
$ 58,554 $ 58,508 $ 58,495
Deposits
65,802 62,605 74,689
Surrenders and withdrawals (67,924) (65,444) (75,129)
Interest credited 2,190 1,907 1,190
Effect of foreign currency translation and other, net
(823) 978 (737)
Balance at December 31,
$ 57,799 $ 58,554 $ 58,508
Weighted-average annual crediting rate
3.8 % 3.3 % 2.1 %
Cash surrender value at period end
$ 1,524 $ 1,583 $ 1,706
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, 2024
Equal to or greater than 0% but less than 2%
$ - $ - $ - $ 2,675 $ 2,675
Products with either a fixed rate or no GMCR
N/A N/A N/A N/A 55,124
Total $ - $ - $ - $ 2,675 $ 57,799
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 GMCR
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 GMCR
N/A N/A N/A N/A 55,454
Total $ - $ - $ 1 $ 3,053 $ 58,508
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 annuity 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,
2024 2023 2022
(Dollars in millions)
Balance at January 1,
$ 10,650 $ 10,244 $ 10,009
Deposits
1,776 850 912
Policy charges
(123) (160) (135)
Surrenders and withdrawals (518) (215) (176)
Benefit payments
(576) (547) (555)
Net transfers from (to) separate accounts
27 53 (1)
Interest credited 472 427 396
Other
(35) (2) (206)
Balance at December 31,
$ 11,673 $ 10,650 $ 10,244
Weighted-average annual crediting rate
4.3 % 4.2 % 4.0 %
At period end:
Cash surrender value $ 7,462 $ 6,798 $ 6,365
Net amount at risk, excluding offsets from reinsurance:
In the event of death (1)
$ 33,128 $ 33,148 $ 33,908
__________________
(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 annuity 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, 2024
Equal to or greater than 0% but less than 2%
$ - $ - $ 11 $ 2,083 $ 2,094
Equal to or greater than 2% but less than 4%
195 32 357 28 612
Equal to or greater than 4%
3,623 - 165 6 3,794
Products with either a fixed rate or no GMCR
N/A N/A N/A N/A 5,173
Total $ 3,818 $ 32 $ 533 $ 2,117 $ 11,673
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 GMCR
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 GMCR
N/A N/A N/A N/A 4,440
Total $ 3,958 $ 161 $ 105 $ 1,580 $ 10,244
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 include 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,
2024 2023 2022
(Dollars in millions)
Balance at January 1,
$ 10,888 $ 12,598 $ 13,692
Deposits 153 172 229
Policy charges
(11) (12) (13)
Surrenders and withdrawals (1,609) (1,916) (1,453)
Benefit payments (382) (408) (406)
Net transfers from (to) separate accounts 146 72 198
Interest credited 318 359 375
Other
10 23 (24)
Balance at December 31,
$ 9,513 $ 10,888 $ 12,598
Weighted-average annual crediting rate
3.2 % 3.1 % 2.9 %
At period end:
Cash surrender value $ 8,891 $ 10,181 $ 11,688
Net amount at risk, excluding offsets from reinsurance (1):
In the event of death (2)
$ 2,540 $ 2,821 $ 4,354
At annuitization or exercise of other living benefits (3)
$ 709 $ 646 $ 917
__________________
(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 annuity 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, 2024
Equal to or greater than 0% but less than 2%
$ 2 $ 140 $ 441 $ 75 $ 658
Equal to or greater than 2% but less than 4%
1,639 5,669 519 107 7,934
Equal to or greater than 4%
392 151 6 - 549
Products with either a fixed rate or no GMCR
N/A N/A N/A N/A 372
Total $ 2,033 $ 5,960 $ 966 $ 182 $ 9,513
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 GMCR
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 GMCR
N/A N/A N/A N/A 529
Total $ 10,908 $ 939 $ 194 $ 28 $ 12,598
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 Company’s MRB assets and MRB liabilities on the consolidated balance sheets were as follows at:
December 31,
2024 2023
Asset Liability Net Asset Liability Net
(In millions)
MetLife Holdings - Annuities $ 231 $ 2,300 $ 2,069 $ 156 $ 2,858 $ 2,702
Other
15 39 24 21 20 (1)
Total
$ 246 $ 2,339 $ 2,093 $ 177 $ 2,878 $ 2,701
Rollforwards
The following information about the direct and assumed liabilities (assets) 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
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
5. Market Risk Benefits (continued)
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:
Years Ended December 31,
2024 2023 2022
(In millions)
Balance at January 1,
$ 2,702 $ 3,071 $ 5,715
Balance, beginning of period, before effect of cumulative changes in the instrument-specific credit risk $ 2,741 $ 3,164 $ 6,017
Attributed fees collected 295 315 316
Benefit payments (89) (57) (42)
Effect of changes in interest rates (717) (156) (3,584)
Effect of changes in capital markets (431) (734) 896
Effect of changes in equity index volatility 39 (120) 41
Actual policyholder behavior different from expected behavior 180 115 3
Effect of changes in future expected policyholder behavior and other assumptions (1)
19 9 (317)
Effect of foreign currency translation and other, net (2)
45 219 72
Effect of changes in risk margin (56) (14) (238)
Balance, end of period, before the cumulative effect of changes in the instrument-specific credit risk 2,026 2,741 3,164
Cumulative effect of changes in the instrument-specific credit risk 43 (39) (93)
Balance at December 31, $ 2,069 $ 2,702 $ 3,071
At period end:
Net amount at risk, excluding offsets from hedging (3):
In the event of death (4)
$ 2,540 $ 2,821 $ 4,354
At annuitization or exercise of other living benefits (5)
$ 709 $ 646 $ 917
Weighted-average attained age of contractholders:
In the event of death (4)
71 years 70 years 69 years
At annuitization or exercise of other living benefits (5)
70 years 70 years 69 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 annuity 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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
5. Market Risk Benefits (continued)
(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.
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 (assets) was as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Balance at January 1,
$ (1) $ 25 $ 286
Balance, beginning of period, before effect of cumulative changes in the instrument-specific credit risk $ 2 $ 34 $ 322
Attributed fees collected 2 2 2
Effect of changes in interest rates (23) (9) (156)
Effect of changes in capital markets - - (2)
Actual policyholder behavior different from expected behavior - (26) (5)
Effect of changes in future expected policyholder behavior and other assumptions 1 1 (2)
Effect of foreign currency translation and other, net 47 - (125)
Balance, end of period, before the cumulative effect of changes in the instrument-specific credit risk 29 2 34
Cumulative effect of changes in the instrument-specific credit risk (5) (3) (9)
Balance at December 31, $ 24 $ (1) $ 25
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
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 $54.1 billion and $54.7 billion at December 31, 2024 and 2023, 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 $25.1 billion and $28.5 billion at December 31, 2024 and 2023, respectively. The latter category consisted primarily of GICs. The average interest rate credited on these contracts was 2.6% at both December 31, 2024 and 2023.
Separate Account Liabilities
The Company’s separate account liabilities on the consolidated balance sheets were as follows at:
December 31, 2024 December 31, 2023
(In millions)
RIS:
Stable Value and Risk Solutions
$ 32,761 $ 35,562
Annuities
11,001 11,659
MetLife Holdings - Annuities 27,766 29,162
Other
7,674 6,814
Total
$ 79,202 $ 83,197
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, 2022
$ 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
Premiums and deposits 1,655 145 235
Policy charges (218) (21) (602)
Surrenders and withdrawals (5,376) (918) (3,782)
Benefit payments (87) - (491)
Investment performance 1,301 83 3,399
Net transfers from (to) general account (28) - (146)
Other
(48) 53 (9)
Balance, December 31, 2024
$ 32,761 $ 11,001 $ 27,766
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
Cash surrender value at December 31, 2024 (2)
$ 28,089 N/A 27,640
_______________
(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, 2024
Group Benefits
RIS
MetLife Holdings Total
(In millions)
Fixed maturity securities:
Bonds:
Government and agency
$ - $ 9,865 $ - $ 9,865
Public utilities - 1,075 - 1,075
Municipals - 219 - 219
Corporate bonds:
Materials - 244 - 244
Communications
- 800 - 800
Consumer - 1,862 - 1,862
Energy - 952 - 952
Financial - 3,403 - 3,403
Industrial and other - 769 - 769
Technology - 513 - 513
Total corporate bonds - 8,543 - 8,543
Total bonds - 19,702 - 19,702
Mortgage-backed securities - 8,842 - 8,842
Asset-backed securities and collateralized loan obligations (collectively, “ABS & CLO”)
- 1,904 - 1,904
Redeemable preferred stock - 8 - 8
Total fixed maturity securities - 30,456 - 30,456
Equity securities
- 2,726 - 2,726
Mutual funds 1,319 4,069 34,024 39,412
Other invested assets - 1,268 - 1,268
Total investments 1,319 38,519 34,024 73,862
Other assets
- 5,340 - 5,340
Total $ 1,319 $ 43,859 $ 34,024 $ 79,202
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
6. Separate Accounts (continued)
December 31, 2023
Group Benefits
RIS
MetLife Holdings Total
(In millions)
Fixed maturity securities:
Bonds:
Government and agency
$ - $ 10,112 $ - $ 10,112
Public utilities - 1,066 - 1,066
Municipals - 346 - 346
Corporate bonds:
Materials - 251 - 251
Communications - 1,019 - 1,019
Consumer - 2,108 - 2,108
Energy - 1,089 - 1,089
Financial - 3,764 - 3,764
Industrial and other - 840 - 840
Technology - 561 - 561
Total corporate bonds - 9,632 - 9,632
Total bonds - 21,156 - 21,156
Mortgage-backed securities - 9,515 - 9,515
ABS & CLO - 2,341 - 2,341
Redeemable preferred stock - 9 - 9
Total fixed maturity securities - 33,021 - 33,021
Equity securities
- 3,119 - 3,119
Mutual funds 1,159 3,672 34,728 39,559
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)
7. Deferred Policy Acquisition Costs, Value of Business Acquired, Unearned Revenue and Other Intangibles
DAC and VOBA
Information regarding total DAC and VOBA, DAC by segment, and Corporate & Other, was as follows at:
Group Benefits
RIS
MetLife Holdings (1)
Corporate & Other Total
(In millions)
DAC:
Balance at January 1, 2022
$ 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 (2)
- - (272) - (272)
Balance at December 31, 2023
255 155 2,723 158 3,291
Capitalizations 14 97 (1) - 110
Amortization (25) (38) (196) (18) (277)
Balance at December 31, 2024
$ 244 $ 214 $ 2,526 $ 140 $ 3,124
Total DAC and VOBA:
Balance at December 31, 2022
$ 3,757
Balance at December 31, 2023
$ 3,305
Balance at December 31, 2024
$ 3,136
__________________
(1)Includes DAC balances primarily related to whole life, variable annuities, term life, long-term care, and universal life products.
(2)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.
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)
Information regarding other intangibles was as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
VODA and VOCRA:
Balance at January 1,
$ 84 $ 99 $ 116
Amortization
(13) (15) (17)
Balance at December 31,
$ 71 $ 84 $ 99
Accumulated amortization
$ 386 $ 373 $ 358
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
MetLife Holdings Total
(In millions)
Balance at January 1, 2022
$ 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 (1)
- (241) (241)
Balance at December 31, 2023
16 5 21
Deferrals 2 - 2
Amortization (4) - (4)
Balance at December 31, 2024
$ 14 $ 5 $ 19
__________________
(1) 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 for various insurance products by accepting risk from affiliates and unaffiliated companies.
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 a 90% quota share of its Group Term Life business and a 50% quota share of its Group Dental business for capital management purposes. The Company also reinsures a 90% quota share of its vision business to an affiliate. 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 the Company’s results of operations. For the Group Benefits segment, the Company purchases catastrophe coverage to reinsure risks issued within territories that the Company believes are subject to the greatest catastrophic risks. For its other segments, the Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks. Excess of retention reinsurance agreements provide for a portion of a risk to remain with the direct writing company and quota share reinsurance agreements provide for the direct writing company to transfer a fixed percentage of all risks of a class of policies.
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, 2024 and 2023, 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 $1.3 billion and $1.4 billion of unsecured unaffiliated reinsurance recoverable balances at December 31, 2024 and 2023, respectively.
At December 31, 2024, the Company had $9.0 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $8.2 billion, or 91%, were with the Company’s five largest unaffiliated ceded reinsurers, including $898 million of net unaffiliated ceded reinsurance recoverables which were unsecured. 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.
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,
2024 2023 2022
(In millions)
Premiums
Direct premiums $ 27,678 $ 25,027 $ 31,265
Reinsurance assumed 1,029 847 872
Reinsurance ceded (1,146) (1,156) (948)
Net premiums $ 27,561 $ 24,718 $ 31,189
Universal life and investment-type product policy fees
Direct universal life and investment-type product policy fees $ 2,052 $ 2,019 $ 2,079
Reinsurance assumed 18 (17) 30
Reinsurance ceded (570) (338) (292)
Net universal life and investment-type product policy fees $ 1,500 $ 1,664 $ 1,817
Other revenues
Direct other revenues $ 1,012 $ 1,025 $ 1,025
Reinsurance assumed 159 125 54
Reinsurance ceded 604 523 615
Net other revenues $ 1,775 $ 1,673 $ 1,694
Policyholder benefits and claims
Direct policyholder benefits and claims $ 29,260 $ 26,768 $ 33,433
Reinsurance assumed 1,016 708 856
Reinsurance ceded (1,495) (1,326) (1,156)
Net policyholder benefits and claims $ 28,781 $ 26,150 $ 33,133
Policyholder liability remeasurement (gains) losses
Direct policyholder liability remeasurement (gains) losses $ (109) $ (87) $ 43
Reinsurance assumed (18) (48) (39)
Reinsurance ceded (21) (15) (15)
Net policyholder liability remeasurement (gains) losses $ (148) $ (150) $ (11)
MRBs remeasurement (gains) losses
Direct MRBs remeasurement (gains) losses
$ (924) $ (701) $ (3,389)
Reinsurance assumed (8) (2) 10
Reinsurance ceded - - -
Net MRBs remeasurement (gains) losses
$ (932) $ (703) $ (3,379)
Interest credited to PABs
Direct interest credited to PABs
$ 3,564 $ 3,276 $ 2,418
Reinsurance assumed 367 354 109
Reinsurance ceded (112) (28) (18)
Net interest credited to PABs
$ 3,819 $ 3,602 $ 2,509
Other expenses
Direct other expenses $ 5,283 $ 5,365 $ 5,026
Reinsurance assumed 72 280 97
Reinsurance ceded 324 140 580
Net other expenses $ 5,679 $ 5,785 $ 5,703
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,
2024 2023
Direct Assumed Ceded Total
Balance
Sheet Direct Assumed Ceded Total
Balance
Sheet
(In millions)
Assets
Premiums, reinsurance and other
receivables
$ 3,707 $ 856 $ 23,521 $ 28,084 $ 3,287 $ 736 $ 24,213 $ 28,236
MRBs
239 7 - 246 170 7 - 177
DAC and VOBA
3,450 140 (454) 3,136 3,628 158 (481) 3,305
Total assets $ 7,396 $ 1,003 $ 23,067 $ 31,466 $ 7,085 $ 901 $ 23,732 $ 31,718
Liabilities
FPBs
$ 123,596 $ 3,023 $ - $ 126,619 $ 125,885 $ 3,297 $ - $ 129,182
PABs
93,135 9,005 - 102,140 94,825 9,069 - 103,894
MRBs
2,328 11 - 2,339 2,863 15 - 2,878
Other policy-related balances 8,345 307 (314) 8,338 8,186 384 (281) 8,289
Other liabilities 8,197 2,013 13,459 23,669 7,800 2,112 13,807 23,719
Total liabilities $ 235,601 $ 14,359 $ 13,145 $ 263,105 $ 239,559 $ 14,877 $ 13,526 $ 267,962
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 premium, reinsurance and other receivables in the table above are deposit assets on reinsurance of $13.5 billion and $14.3 billion at December 31, 2024 and 2023, respectively. Also, included in other liabilities in the table above are deposit liabilities on reinsurance of $1.3 billion and $1.5 billion at December 31, 2024 and 2023, respectively.
In November 2023, the Company completed a risk transfer transaction with a subsidiary of Global Atlantic Financial Group (“Global Atlantic”), 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 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,
2024 2023 2022
(In millions)
Premiums
Reinsurance assumed $ 5 $ (19) $ 7
Reinsurance ceded (401) (372) (139)
Net premiums $ (396) $ (391) $ (132)
Universal life and investment-type product policy fees
Reinsurance assumed $ 24 $ 4 $ -
Reinsurance ceded (1) (6) (4)
Net universal life and investment-type product policy fees $ 23 $ (2) $ (4)
Other revenues
Reinsurance assumed $ 142 $ 91 $ 78
Reinsurance ceded 470 471 472
Net other revenues $ 612 $ 562 $ 550
Policyholder benefits and claims
Reinsurance assumed $ 40 $ (121) $ 52
Reinsurance ceded (334) (310) (142)
Net policyholder benefits and claims $ (294) $ (431) $ (90)
Policyholder liability remeasurement (gains) losses
Reinsurance assumed $ (7) $ (40) $ (47)
Reinsurance ceded 3 (11) (9)
Net policyholder liability remeasurement (gains) losses $ (4) $ (51) $ (56)
Interest credited to PABs
Reinsurance assumed $ 357 $ 344 $ 97
Reinsurance ceded (10) (11) (12)
Net interest credited to PABs
$ 347 $ 333 $ 85
Other expenses
Reinsurance assumed $ 46 $ 239 $ 36
Reinsurance ceded 424 220 651
Net other expenses $ 470 $ 459 $ 687
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,
2024 2023
Assumed Ceded Assumed Ceded
(In millions)
Assets
Premiums, reinsurance and other receivables $ 163 $ 11,048 $ 164 $ 11,302
DAC and VOBA
140 (156) 158 (160)
Total assets $ 303 $ 10,892 $ 322 $ 11,142
Liabilities
FPBs
$ 2,028 $ - $ 2,236 $ -
PABs
8,845 - 9,040 -
Other policy-related balances 66 (47) 65 (35)
Other liabilities 856 9,748 957 10,267
Total liabilities $ 11,795 $ 9,701 $ 12,298 $ 10,232
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 ($46) million and ($39) million at December 31, 2024 and 2023, respectively. Net derivative gains (losses) associated with these embedded derivatives were $7 million, $11 million and $59 million for the years ended December 31, 2024, 2023 and 2022, 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 ($415) million and ($265) million at December 31, 2024 and 2023, respectively. Net derivative gains (losses) associated with the embedded derivative were $150 million, ($158) million and $1.5 billion for the years ended December 31, 2024, 2023 and 2022, 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 $885 million and $822 million of unsecured affiliated reinsurance recoverable balances at December 31, 2024 and 2023, 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 $9.3 billion and $9.6 billion at December 31, 2024 and 2023, respectively. Also, included in the table above are deposit liabilities on affiliated reinsurance of $689 million and $764 million at December 31, 2024 and 2023, 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,
2024 2023
(In millions)
Closed Block Liabilities
FPBs
$ 35,015 $ 36,142
Other policy-related balances
315 319
Policyholder dividends payable
174 174
Current income tax payable 6 -
Other liabilities
854 668
Total closed block liabilities
36,364 37,303
Assets Designated to the Closed Block
Investments:
Fixed maturity securities AFS, at estimated fair value
18,958 19,939
Mortgage loans
5,720 6,151
Policy loans
3,829 3,960
Real estate and REJV
659 668
Other invested assets
523 506
Total investments
29,689 31,224
Cash and cash equivalents
930 717
Accrued investment income
367 383
Premiums, reinsurance and other receivables
45 54
Current income tax recoverable
- 3
Deferred income tax asset
470 312
Total assets designated to the closed block
31,501 32,693
Excess of closed block liabilities over assets designated to the closed block
4,863 4,610
AOCI:
Unrealized investment gains (losses), net of income tax
(1,256) (820)
Unrealized gains (losses) on derivatives, net of income tax
183 130
Total amounts included in AOCI
(1,073) (690)
Maximum future earnings to be recognized from closed block assets and liabilities
$ 3,790 $ 3,920
Information regarding the closed block policyholder dividend obligation was as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Balance at January 1,
$ - $ - $ 1,682
Change in unrealized investment and derivative gains (losses)
- - (1,682)
Balance at December 31,
$ - $ - $ -
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,
2024 2023 2022
(In millions)
Revenues
Premiums
$ 874 $ 922 $ 1,104
Net investment income
1,362 1,362 1,382
Net investment gains (losses)
(28) 7 (51)
Net derivative gains (losses)
15 - 33
Total revenues
2,223 2,291 2,468
Expenses
Policyholder benefits and claims
1,621 1,706 1,890
Policyholder dividends
354 366 458
Other expenses
82 86 90
Total expenses
2,057 2,158 2,438
Revenues, net of expenses before provision for income tax expense (benefit)
166 133 30
Provision for income tax expense (benefit)
36 28 6
Revenues, net of expenses and provision for income tax expense (benefit)
$ 130 $ 105 $ 24
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, 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, broadly syndicated bank loans, and other assets. 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,
2024 2023
Amortized
Cost Gross Unrealized Estimated
Fair
Value Amortized
Cost Gross Unrealized Estimated
Fair
Value
Sector ACL
Gains Losses ACL
Gains Losses
(In millions)
U.S. corporate
$ 50,394 $ (45) $ 609 $ 3,830 $ 47,128 $ 52,479 $ (62) $ 1,126 $ 3,050 $ 50,493
Foreign corporate
27,536 (15) 248 3,484 24,285 27,520 (2) 536 2,839 25,215
U.S. government and agency
25,163 - 87 3,407 21,843 23,100 - 243 2,283 21,060
RMBS
23,080 (1) 203 2,069 21,213 20,700 (1) 228 1,979 18,948
ABS & CLO 13,432 (7) 86 306 13,205 12,049 (6) 30 432 11,641
CMBS
5,605 (8) 38 356 5,279 6,387 (11) 28 570 5,834
Municipals
5,373 - 100 542 4,931 6,429 - 318 428 6,319
Foreign government
3,161 (36) 97 274 2,948 3,416 (50) 156 227 3,295
Total fixed maturity securities AFS
$ 153,744 $ (112) $ 1,468 $ 14,268 $ 140,832 $ 152,080 $ (132) $ 2,665 $ 11,808 $ 142,805
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, 2024:
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 $ 4,919 $ 24,675 $ 27,313 $ 54,624 $ 42,101 $ 153,632
Estimated fair value
$ 4,820 $ 23,977 $ 25,864 $ 46,474 $ 39,697 $ 140,832
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,
2024 2023
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 $ 8,413 $ 273 $ 21,608 $ 3,536 $ 3,537 $ 95 $ 25,752 $ 2,924
Foreign corporate 5,143 253 13,141 3,221 714 64 16,982 2,775
U.S government and agency 4,619 164 9,432 3,243 4,322 228 9,980 2,055
RMBS 4,483 93 10,674 1,976 1,470 37 12,813 1,941
ABS & CLO 1,388 15 4,296 289 937 20 8,250 410
CMBS 607 10 2,942 347 587 23 4,096 542
Municipals 724 22 1,895 520 262 10 2,102 418
Foreign government 691 23 1,181 246 431 12 1,452 212
Total fixed maturity securities AFS $ 26,068 $ 853 $ 65,169 $ 13,378 $ 12,260 $ 489 $ 81,427 $ 11,277
Investment grade $ 24,320 $ 767 $ 62,876 $ 13,122 $ 11,499 $ 453 $ 77,325 $ 10,849
Below investment grade 1,748 86 2,293 256 761 36 4,102 428
Total fixed maturity securities AFS $ 26,068 $ 853 $ 65,169 $ 13,378 $ 12,260 $ 489 $ 81,427 $ 11,277
Total number of securities in an unrealized loss position 3,637 6,786 1,679 8,441
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 increased $2.5 billion for the year ended December 31, 2024 to $14.2 billion primarily due to an increase in interest rates and the impact of weakening foreign currencies on certain non-functional currency denominated fixed maturity securities.
As shown in the table 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, 2024 relate to investment grade securities. These unrealized losses are principally due to narrowing credit spreads since purchase and, with respect to fixed-rate securities, rising interest rates since purchase.
As of December 31, 2024, $256 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 consumer, communications and transportation sectors within corporate securities and in foreign government securities. These unrealized losses are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty and, with respect to fixed-rate securities, rising interest rates since purchase.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
At December 31, 2024, 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, 2024.
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 ACL 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, 2024
(In millions)
Balance at January 1, $ 62 $ 2 $ 50 $ 1 $ 6 $ 11 $ 132
ACL not previously recorded 37 13 - - - - 50
Changes for securities with previously recorded ACL 4 - 1 - 1 1 7
Securities sold or exchanged (58) - (15) - - (4) (77)
Balance at December 31, $ 45 $ 15 $ 36 $ 1 $ 7 $ 8 $ 112
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)
Balance at December 31, $ 62 $ 2 $ 50 $ 1 $ 6 $ 11 $ 132
Mortgage Loans
Mortgage Loans by Portfolio Segment
Mortgage loans are summarized as follows at:
December 31,
2024 2023
Portfolio Segment Carrying
Value % of
Total Carrying
Value % of
Total
(Dollars in millions)
Commercial $ 34,692 57.8 % $ 37,129 59.3 %
Agricultural 15,208 25.3 15,831 25.3
Residential 10,628 17.7 10,133 16.2
Total amortized cost 60,528 100.8 63,093 100.8
ACL
(503) (0.8) (509) (0.8)
Total mortgage loans
$ 60,025 100.0 % $ 62,584 100.0 %
The amount of net (discounts) premiums and deferred (fees) expenses, included within total amortized cost, primarily attributable to residential mortgage loans was ($791) million and ($720) million at December 31, 2024 and 2023, respectively. The accrued interest income for commercial, agricultural and residential mortgage loans at December 31, 2024 was $178 million, $158 million and $92 million, respectively. The accrued interest income for commercial, agricultural and residential mortgage loans at December 31, 2023 was $196 million, $166 million and $79 million,
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
respectively. The accrued interest income related to mortgage loans is included in accrued investment income on the consolidated balance sheets.
Purchases of mortgage loans, consisting primarily of residential mortgage loans, from unaffiliated parties, were $1.5 billion, $1.1 billion and $2.3 billion for the years ended December 31, 2024, 2023 and 2022, respectively.
Sales of mortgage loans, consisting primarily of commercial mortgage loans, to unaffiliated parties, were $0, $141 million and $0 for the years ended December 31, 2024, 2023 and 2022, respectively.
For the years ended December 31, 2024, 2023 and 2022, the Company contributed commercial mortgage loans with an amortized cost of $181 million, $14 million and $306 million, respectively, to REJVs which subsequently completed foreclosure on those mortgage loans.
For the year ended December 31, 2024, the Company acquired wholly-owned real estate by completing foreclosures on commercial mortgage loans with an amortized cost of $31 million.
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, 2024, 2023 and 2022 was $48 million, $22 million and $167 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 $171 million, $536 million and $576 million for the years ended December 31, 2024, 2023 and 2022, 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, 2024, 2023 and 2022 was $2.0 billion, $2.1 billion and $4.8 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 $4.4 billion, $2.5 billion and $2.6 billion for the years ended December 31, 2024, 2023 and 2022, 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. The Company’s aggregate participation interests in affiliated mortgage secured loans included in commercial and agricultural mortgage loans was $11.9 billion and $13.1 billion for the years ended December 31, 2024 and 2023, respectively.
Rollforward of ACL for Mortgage Loans by Portfolio Segment
The rollforward of ACL for mortgage loans, by portfolio segment, is as follows:
Years Ended December 31,
2024 2023 2022
Commercial Agricultural Residential Total Commercial Agricultural Residential Total Commercial Agricultural Residential Total
(In millions)
Balance at January 1, $ 210 $ 152 $ 147 $ 509 $ 174 $ 105 $ 169 $ 448 $ 260 $ 79 $ 197 $ 536
Provision (release) (1)
114 31 (19) 126 50 83 (22) 111 (3) 47 (20) 24
Charge-offs, net of recoveries (12) (120) - (132) (14) (36) - (50) (83) (21) (8) (112)
Balance at December 31, $ 312 $ 63 $ 128 $ 503 $ 210 $ 152 $ 147 $ 509 $ 174 $ 105 $ 169 $ 448
__________________
(1)Includes releases totaling $33 million for the year ended December 31, 2024 related to discounted payoff losses on commercial mortgage loans reclassified to realized gains (losses) on investments sold or disposed.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
The gross charge-offs of mortgage loans by origination year and portfolio segment for the year ended December 31, 2024 is as follows:
2024 2023 2022 2021 2020 Prior Total
(In millions)
Commercial $ - $ - $ - $ - $ 3 $ 9 $ 12
Agricultural - - - 16 27 77 120
Total $ - $ - $ - $ 16 $ 30 $ 86 $ 132
ACL 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 mortgage 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 and subsequent performance are considered in determining any ACL recorded.
These mortgage loan modifications are summarized as follows:
Years Ended December 31,
2024 2023
Maturity Extension (1)
Weighted Average Life Increase Maturity Extension Weighted Average Life Increase
Amortized Cost
Affected Loans (in Years) % of Book Value Amortized Cost Affected Loans (in Years) % of Book Value
(Dollars in millions)
Commercial $ 555 3 Years 1.6 % $ 419 Less than one year 1.0 %
__________________
(1)Includes commercial mortgage loans with an amortized cost of $189 million that received interest rate reductions from 7.6% to 6.5% in addition to maturity extensions.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
For the years ended December 31, 2024 and 2023, all commercial mortgage loans which were modified to borrowers experiencing financial difficulties and still outstanding were current. For the year ended December 31, 2024, commercial mortgage loans with an amortized cost of $171 million, which were previously extended, became delinquent and foreclosed within 12 months of modification.
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, 2024:
Credit Quality Indicator 2024 2023 2022 2021 2020 Prior Revolving
Loans Total % of
Total
(Dollars in millions)
LTV ratios:
Less than 65% $ 1,756 $ 1,394 $ 1,239 $ 1,546 $ 713 $ 8,195 $ 2,440 $ 17,283 49.8 %
65% to 75% 462 342 2,518 1,086 216 2,548 - 7,172 20.7
76% to 80% 189 - 155 210 209 1,405 - 2,168 6.2
Greater than 80% 123 111 747 929 788 5,371 - 8,069 23.3
Total $ 2,530 $ 1,847 $ 4,659 $ 3,771 $ 1,926 $ 17,519 $ 2,440 $ 34,692 100.0 %
DSCR:
> 1.20x $ 1,864 $ 1,260 $ 3,793 $ 3,323 $ 1,729 $ 15,022 $ 2,440 $ 29,431 84.8 %
1.00x - 1.20x 247 372 482 387 160 1,056 - 2,704 7.8
<1.00x 419 215 384 61 37 1,441 - 2,557 7.4
Total $ 2,530 $ 1,847 $ 4,659 $ 3,771 $ 1,926 $ 17,519 $ 2,440 $ 34,692 100.0 %
The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at December 31, 2024:
Credit Quality Indicator 2024 2023 2022 2021 2020 Prior Revolving
Loans Total % of
Total
(Dollars in millions)
LTV ratios:
Less than 65% $ 508 $ 794 $ 1,826 $ 1,434 $ 1,770 $ 6,350 $ 1,337 $ 14,019 92.2 %
65% to 75% 44 55 159 207 106 499 22 1,092 7.2
76% to 80% - - 24 - 3 - 9 36 0.2
Greater than 80% - - - - 14 46 1 61 0.4
Total $ 552 $ 849 $ 2,009 $ 1,641 $ 1,893 $ 6,895 $ 1,369 $ 15,208 100.0 %
The amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at December 31, 2024:
Credit Quality Indicator 2024 2023 2022 2021 2020 Prior Revolving
Loans Total % of
Total
(Dollars in millions)
Performance indicators:
Performing $ 834 $ 311 $ 1,764 $ 1,098 $ 146 $ 6,138 $ - $ 10,291 96.8 %
Nonperforming (1) 7 15 66 13 8 228 - 337 3.2
Total $ 841 $ 326 $ 1,830 $ 1,111 $ 154 $ 6,366 $ - $ 10,628 100.0 %
__________________
(1)Includes residential mortgage loans in process of foreclosure with an amortized cost of $111 million and $134 million at December 31, 2024 and 2023, respectively.
Past Due and Nonaccrual Mortgage Loans
The Company has a high quality, well performing mortgage loan portfolio, with 98% and 99% of all mortgage loans classified as performing at December 31, 2024 and 2023, respectively. The Company defines delinquency consistent with
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
industry practice, when mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual mortgage loans at amortized cost, prior to ACL by portfolio segment, were as follows:
Past Due Past Due
and Still Accruing Interest Nonaccrual
Portfolio Segment December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023
(In millions)
Commercial $ 378 $ 19 $ - $ - $ 578 $ 303
Agricultural 243 40 171 - 82 206
Residential 337 343 - - 337 343
Total $ 958 $ 402 $ 171 $ - $ 997 $ 852
Real Estate and REJV
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 REJV. 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,
2024 2023 2024 2023 2022
Income Type Carrying Value Income
(In millions)
Wholly-owned real estate:
Leased real estate $ 1,640 $ 1,594 $ 157 $ 171 $ 198
Other real estate 538 506 280 287 243
REJV
6,724 6,590 (100) (75) 308
Total real estate and REJV
$ 8,902 $ 8,690 $ 337 $ 383 $ 749
Depreciation expense on real estate investments was $95 million, $81 million and $86 million for the years ended December 31, 2024, 2023 and 2022, respectively. Real estate investments were net of accumulated depreciation of $734 million and $638 million at December 31, 2024 and 2023, respectively.
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,
2024 2023 2024 2023 2022
Property Type Carrying Value Income
(In millions)
Leased real estate investments:
Office
$ 907 $ 848 $ 102 $ 114 $ 74
Apartment 316 324 23 23 34
Retail 278 280 21 23 35
Industrial
114 119 11 11 55
Land 25 23 - - -
Total leased real estate investments
$ 1,640 $ 1,594 $ 157 $ 171 $ 198
Future contractual receipts under operating leases at December 31, 2024 were $114 million in 2025, $108 million in 2026, $100 million in 2027, $85 million in 2028, $65 million in 2029, $186 million thereafter and, in total, were $659 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 company-owned life insurance policies (see Note 1).
Tax Equity Investments
The Company invests in certain tax equity investments, including low income housing tax credit partnerships and renewable energy partnerships. The carrying value of tax equity investments, reported in other invested assets on the condensed consolidated balance sheets, was $714 million and $1.0 billion at December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, income tax credits and other income tax benefits of $149 million and amortized expense of $134 million were recognized net as a component of income tax expense in the Company’s consolidated statement of operations.
FVO Securities and Equity Securities
The following table presents FVO securities and equity securities by asset type.
December 31,
2024 2023
Cost Net Unrealized Gains (Losses) (1) Estimated Fair Value Cost Net Unrealized Gains (Losses) (1) Estimated Fair Value
Asset Type
(In millions)
FVO securities (2)
$ 296 $ 576 $ 872 $ 379 $ 367 $ 746
Equity securities
Common stock (3)
$ 139 $ 9 $ 148 $ 118 $ 45 $ 163
Non-redeemable preferred stock 22 2 24 177 7 184
Total equity securities $ 161 $ 11 $ 172 $ 295 $ 52 $ 347
__________________
(1) Represents cumulative changes in estimated fair value, recognized in earnings.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
(2) Includes fixed maturity and equity securities to support asset and liability management strategies for certain insurance products and investments in certain separate accounts.
(3) Includes common stock and certain mutual funds.
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 $4.9 billion and $3.5 billion, at estimated fair value, at December 31, 2024 and 2023, 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, 2024 and 2023.
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,
2024 2023
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 $ 6,038 $ 6,202 $ 6,098 $ 5,528 $ 5,684 $ 5,565
Repurchase agreements $ 3,019 $ 2,975 $ 2,925 $ 3,029 $ 2,975 $ 2,913
__________________
(1)These securities were included within fixed maturity securities AFS at December 31, 2024 and within fixed maturity securities AFS, short-term investments and cash equivalents at December 31, 2023.
(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,
2024 2023
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 $ 1,767 $ 3,023 $ 1,412 $ - $ 6,202 $ 943 $ 2,523 $ 2,218 $ - $ 5,684
Repurchase agreements:
U.S. government and agency $ - $ 2,975 $ - $ - $ 2,975 $ - $ 2,975 $ - $ - $ 2,975
________________
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
(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.
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 agreement 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,
2024 2023
(In millions)
Invested assets on deposit (regulatory deposits)
$ 102 $ 105
Invested assets pledged as collateral (1)
21,252 21,177
Total invested assets on deposit and pledged as collateral
$ 21,354 $ 21,282
__________________
(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 $628 million and $637 million, at redemption value, at December 31, 2024 and 2023, respectively.
Collectively Significant Equity Method Investments
The Company held equity method investments of $15.3 billion at December 31, 2024, comprised primarily of OLPI (private equity funds and hedge funds), REJV and 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 $2.6 billion of unfunded commitments at December 31, 2024.
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: 2024 and 2022.
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 $936.6 billion and $991.6 billion at December 31, 2024 and 2023, respectively. Aggregate total liabilities of these entities totaled $114.8 billion and $114.1 billion at December 31, 2024 and 2023, respectively. Aggregate net income (loss) of these entities totaled $47.2 billion, $24.7 billion and ($8.3) billion for the years ended December 31, 2024, 2023 and 2022, 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,
2024 2023
Asset Type Total
Assets Total
Liabilities Total
Assets Total
Liabilities
(In millions)
Real estate and REJV
$ 2,004 $ 3 $ 1,427 $ -
Mortgage loan joint ventures 210 - 171 -
Renewable energy partnership (primarily other invested assets) 57 - 65 -
Investment funds (primarily other invested assets) 65 1 61 -
Total
$ 2,336 $ 4 $ 1,724 $ -
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,
2024 2023
Asset Type Carrying
Amount Maximum
Exposure
to Loss (1) Carrying
Amount Maximum
Exposure
to Loss (1)
(In millions)
Fixed maturity securities AFS (2) $ 37,602 $ 37,602 $ 35,370 $ 35,370
OLPI
6,746 8,590 7,319 9,452
Other invested assets
985 1,129 1,318 1,405
Other investments (REJV and mortgage loans)
475 661 104 267
Total
$ 45,808 $ 47,982 $ 44,111 $ 46,494
__________________
(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 OLPI, REJV, and mortgage loans is equal to the carrying amounts plus any unrecognized 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, 2024, 2023 and 2022.
Net Investment Income
The composition of net investment income by asset type was as follows:
Years Ended December 31,
Asset Type 2024 2023 2022
(In millions)
Fixed maturity securities AFS
$ 7,477 $ 7,492 $ 6,458
Mortgage loans
3,264 3,302 2,615
Policy loans
290 294 288
Real estate and REJV
337 383 749
OLPI
441 191 433
Cash, cash equivalents and short-term investments
380 382 147
FVO securities
159 147 (143)
Operating joint venture
145 18 34
Equity securities
19 7 11
Other
432 297 410
Subtotal investment income 12,944 12,513 11,002
Less: Investment expenses
1,309 1,307 880
Net investment income
$ 11,635 $ 11,206 $ 10,122
Net Investment Income Information
Net realized and unrealized gains (losses) recognized in net investment income:
Net realized gains (losses) from sales and disposals
$ (15) $ - $ (13)
Net unrealized gains (losses) from changes in estimated fair value (primarily FVO securities and REJV)
233 216 (33)
Net realized and unrealized gains (losses) recognized in net investment income
$ 218 $ 216 $ (46)
Changes in estimated fair value subsequent to purchase of FVO securities still held at the end of the respective periods and recognized in net investment income:
$ 171 $ 140 $ (145)
Equity method investments net investment income (primarily REJV, OLPI, tax credit and renewable energy partnerships and an operating joint venture)
$ 548 $ 51 $ 625
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 2024 2023 2022
(In millions)
Fixed maturity securities AFS (1) $ (514) $ (1,284) $ (851)
Equity securities (15) 5 6
Mortgage loans (1) (180) (174) (42)
Real estate and REJV (excluding changes in estimated fair value) 229 102 561
OLPI (excluding changes in estimated fair value) (2)
(43) 9 4
Other gains (losses) 26 18 72
Subtotal (497) (1,324) (250)
Change in estimated fair value of OLPI and REJV 3 (6) (14)
Non-investment portfolio gains (losses) 44 (45) 137
Subtotal 47 (51) 123
Net investment gains (losses) $ (450) $ (1,375) $ (127)
Transaction Type
Realized gains (losses) on investments sold or disposed (1), (2)
$ (288) $ (193) $ (146)
Impairment (losses) (1)
(65) (994) (38)
Recognized gains (losses):
Change in ACL recognized in earnings (105) (144) (77)
Unrealized net gains (losses) recognized in earnings (36) 1 (3)
Total recognized gains (losses) (141) (143) (80)
Non-investment portfolio gains (losses) 44 (45) 137
Net investment gains (losses) $ (450) $ (1,375) $ (127)
Net Investment Gains (Losses) Information
Changes in estimated fair value subsequent to purchase of equity securities still held at the end of the respective periods and recognized in net investment gains (losses)
$ (35) $ 7 $ 8
Other gains (losses) include:
Gains (losses) on disposed investments which were previously in a qualified cash flow hedge relationship $ 3 $ (10) $ 48
Gains (losses) on leveraged leases and renewable energy partnerships $ 15 $ 26 $ 33
Foreign currency gains (losses) $ 33 $ (61) $ 97
Net Realized Investment Gains (Losses) From Sales and Disposals of Investments:
Recognized in net investment gains (losses)
$ (288) $ (193) $ (146)
Recognized in net investment income
(15) - (13)
Net realized investment gains (losses) from sales and disposals of investments $ (303) $ (193) $ (159)
__________________
(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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
(2)Includes a net loss of $38 million during the year ended December 31, 2024 for private equity investments sold. For the year ended December 31, 2024, the Company sold $638 million in portfolios of investments to a fund for proceeds of $600 million in cash and receivables secured by the value of the fund. An affiliate has entered into an agreement to serve as the investment manager of the fund for which it will receive a management fee.
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 2024 2023 2022
(In millions)
Proceeds $ 14,303 $ 19,803 $ 42,903
Gross investment gains $ 180 $ 354 $ 469
Gross investment (losses) (650) (655) (1,221)
Realized gains (losses) on sales and disposals (470) (301) (752)
Net credit loss (provision) release (change in ACL recognized in earnings) 20 (18) (61)
Impairment (losses) (64) (965) (38)
Net credit loss (provision) release and impairment (losses) (44) (983) (99)
Net investment gains (losses) $ (514) $ (1,284) $ (851)
Equity Securities
Realized gains (losses) on sales and disposals $ 24 $ (2) $ (6)
Unrealized net gains (losses) recognized in earnings (39) 7 12
Net investment gains (losses) $ (15) $ 5 $ 6
Related Party Investment Transactions
The Company transfers invested assets primarily consisting of fixed maturity securities AFS, mortgage loans and real estate and REJV to and from affiliates. Invested assets transferred to and from were as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Estimated fair value of invested assets transferred to affiliates
$ 386 $ 718 $ 472
Amortized cost of invested assets transferred to affiliates
$ 403 $ 756 $ 432
Net investment gains (losses) recognized on transfers
$ (16) $ (38) $ 40
Estimated fair value of invested assets transferred from affiliates
$ 102 $ 1,178 $ 497
Estimated fair value of derivative liabilities transferred from affiliates $ - $ - $ 64
Recurring related party investments were as follows at:
December 31,
2024 2023
Investment Type/Balance Sheet Category Related Party Carrying Value
(In millions)
Affiliated investments (1) MetLife, Inc. $ 1,014 $ 1,130
Affiliated investments (2)
Metropolitan General Insurance Company
152 150
Affiliated funds withheld (3)
MTL
2,604 2,820
Other invested assets $ 3,770 $ 4,100
________________
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
10. Investments (continued)
(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. These affiliated investments earned investment income of $19 million, $20 million and $16 million for the years ended December 31, 2024, 2023, and 2022, respectively.
(2)In December 2024, MLIC exchanged its investment in the affiliated preferred stock of Metropolitan General Insurance Company for an investment in the affiliate’s unsecured note which matures December 2034 and bears interest, payable semi-annually, at a rate per annum of 6.47%. At December 31, 2023, the affiliated preferred stock had a dividend yield of 7.50% that was cumulative and payable annually in arrears, and the shares were redeemable, at the affiliate's option, after December 15, 2028. These affiliated investments earned investment income of $12 million and $0 for the years ended December 31, 2024 and 2023, respectively.
(3)Represents affiliated fund withheld, reported in other invested assets, related to an agreement the Company, through its wholly-owned subsidiary, entered into to assume certain group annuity contracts issued in connection with a qualifying pension risk transfer on a modified coinsurance basis from MTL.
The Company incurred investment advisory charges from an affiliate of $306 million, $301 million and $272 million for the years ended December 31, 2024, 2023, and 2022, respectively.
See “- Variable Interest Entities” for information on investments in affiliated REJV and affiliated mortgage loan joint ventures.
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.
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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
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 (i) mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, (ii) against changes in value of securities the Company owns or anticipates acquiring, (iii) against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and (iv) 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. In certain instances, the Company may enter into a combination of transactions to hedge changes in interest rates within a pre-determined range through the purchase and sale of options. 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.
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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
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 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 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,
2024 2023
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
$ 4,801 $ 1,018 $ 630 $ 4,443 $ 1,257 $ 508
Foreign currency swaps
Foreign currency exchange rate
1,450 32 67 1,459 55 1
Subtotal
6,251 1,050 697 5,902 1,312 509
Cash flow hedges:
Interest rate swaps
Interest rate
3,788 - 329 3,789 1 246
Interest rate forwards
Interest rate
- - - 970 - 175
Foreign currency swaps
Foreign currency exchange rate
32,634 2,305 1,018 30,342 1,977 846
Subtotal
36,422 2,305 1,347 35,101 1,978 1,267
Total qualifying hedges
42,673 3,355 2,044 41,003 3,290 1,776
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps
Interest rate
15,405 1,400 742 15,516 1,476 638
Interest rate floors
Interest rate
5,519 34 - 13,921 39 -
Interest rate caps
Interest rate
15,700 128 - 28,890 355 -
Interest rate futures
Interest rate
93 - - 25 - -
Interest rate options
Interest rate
30,209 201 122 39,226 361 27
Synthetic GICs
Interest rate
6,042 - - 6,145 - -
Foreign currency swaps
Foreign currency exchange rate
4,170 496 2 4,304 446 24
Foreign currency forwards
Foreign currency exchange rate
1,288 22 8 1,176 8 10
Credit default swaps - purchased
Credit
729 13 1 809 3 7
Credit default swaps - written
Credit
9,519 152 5 10,007 186 4
Equity futures
Equity market
720 3 - 941 3 -
Equity index options
Equity market
11,336 166 198 17,703 339 193
Equity total return swaps
Equity market
1,799 42 9 1,912 - 218
Total non-designated or nonqualifying derivatives
102,529 2,657 1,087 140,575 3,216 1,121
Total
$ 145,202 $ 6,012 $ 3,131 $ 181,578 $ 6,506 $ 2,897
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 either December 31, 2024 or 2023. 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, 2024
Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to PABs
OCI
(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)
$ - $ - N/A $ (176) $ (47) N/A
Hedged items
- - N/A 150 42 N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)
2 - N/A - (90) N/A
Hedged items
(1) - N/A - 90 N/A
Subtotal 1 - N/A (26) (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 $ (293)
Amount of gains (losses) reclassified from AOCI into income
33 3 - - - (36)
Foreign currency exchange rate derivatives: (1)
Amount of gains (losses) deferred in AOCI
N/A N/A N/A N/A N/A 95
Amount of gains (losses) reclassified from AOCI into income
4 (560) - - - 556
Foreign currency transaction gains (losses) on hedged items
- 569 - - - -
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
37 13 - - - 321
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)
- N/A (510) N/A N/A N/A
Foreign currency exchange rate derivatives (1)
- N/A 171 N/A N/A N/A
Credit derivatives - purchased (1)
- N/A 9 N/A N/A N/A
Credit derivatives - written (1)
- N/A 29 N/A N/A N/A
Equity derivatives (1)
(56) N/A (520) N/A N/A N/A
Foreign currency transaction gains (losses) on hedged items
- N/A (113) N/A N/A N/A
Subtotal
(56) N/A (934) N/A N/A N/A
Earned income on derivatives
189 - 411 (11) (175) -
Synthetic GICs N/A N/A 10 N/A N/A N/A
Embedded derivatives
N/A N/A 407 N/A N/A N/A
Total
$ 171 $ 13 $ (106) $ (37) $ (180) $ 321
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, 2023
Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to PABs
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 PABs
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)
__________________
(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, 2024 December 31, 2023 December 31, 2024 December 31, 2023
(In millions)
Fixed maturity securities AFS $ 115 $ 120 $ - $ 1
Mortgage loans $ 98 $ 345 $ (1) $ (10)
FPBs
$ (2,583) $ (2,863) $ 359 $ 191
PABs
$ (2,122) $ (1,844) $ 187 $ 2
__________________
(1)Includes ($91) million and ($113) million of hedging adjustments on discontinued hedging relationships at December 31, 2024 and 2023, 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 $12 million, $23 million, and $25 million for the years ended December 31, 2024, 2023 and 2022, respectively.
At December 31, 2024 and 2023, 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 four years and five years, respectively.
At December 31, 2024 and 2023, the balance in AOCI associated with cash flow hedges was $1.2 billion and $894 million, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
At December 31, 2024, the Company expected to reclassify $213 million of deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.
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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
December 31,
2024 2023
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) $ - $ - 0.0 $ - $ 10 0.5
Credit default swaps referencing indices 72 4,126 2.2 80 3,831 2.7
Subtotal 72 4,126 2.2 80 3,841 2.7
Baa
Single name credit default swaps (3) - 55 1.3 1 55 2.3
Credit default swaps referencing indices 68 5,209 4.1 102 5,982 5.6
Subtotal 68 5,264 4.1 103 6,037 5.5
Ba
Credit default swaps referencing indices 2 25 2.0 2 25 3.0
Subtotal 2 25 2.0 2 25 3.0
B
Credit default swaps referencing indices 6 89 3.5 1 74 5.0
Subtotal 6 89 3.5 1 74 5.0
Caa
Credit default swaps referencing indices (1) 15 2.0 (4) 30 2.5
Subtotal (1) 15 2.0 (4) 30 2.5
Total $ 147 $ 9,519 3.3 $ 182 $ 10,007 4.4
__________________
(1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service, Inc. (“Moody’s”), S&P and Fitch Ratings Inc. 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.
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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
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. 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 the of Dodd-Frank Wall Street Reform and Consumer Protection Act) 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 International Swaps and Derivatives Association, Inc. 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.
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,
2024 2023
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)
$ 6,033 $ 3,132 $ 6,534 $ 2,892
OTC-cleared (1)
85 5 112 13
Exchange-traded
3 - 3 -
Total gross estimated fair value of derivatives presented on the consolidated balance sheets (1) 6,121 3,137 6,649 2,905
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral
(2,531) (2,531) (2,350) (2,350)
OTC-cleared
(4) (4) (4) (4)
Cash collateral: (3), (4)
OTC-bilateral
(2,000) - (2,872) -
OTC-cleared
(78) - (105) (1)
Securities collateral: (5)
OTC-bilateral
(1,487) (601) (1,283) (542)
OTC-cleared
- (1) - (8)
Exchange-traded
- - - -
Net amount after application of master netting agreements and collateral
$ 21 $ - $ 35 $ -
__________________
(1)At December 31, 2024 and 2023, derivative assets included income (expense) accruals reported in accrued investment income or in other liabilities of $109 million and $143 million, respectively, and derivative liabilities included (income) expense accruals reported in accrued investment income or in other liabilities of $6 million and $8 million, respectively.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
(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, 2024 and 2023, the Company received excess cash collateral of $16 million and $154 million, respectively, and provided excess cash collateral of $4 million at both periods, which are not included in the table above due to the foregoing limitation.
(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, 2024, 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, 2024 and 2023, the Company received excess securities collateral with an estimated fair value of $355 million and $286 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At December 31, 2024 and 2023, the Company provided excess securities collateral with an estimated fair value of $824 million and $1.1 billion, respectively, for its OTC-bilateral derivatives, $423 million and $495 million, respectively, for its OTC-cleared derivatives, and $36 million and $56 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. The Company’s netting agreements for derivatives generally contain provisions that require both Metropolitan Life Insurance Company and the counterparty to maintain specified minimum financial strength or credit ratings above investment grade level from Moody’s, S&P, or both. In those agreements, if a party’s financial strength or credit rating were to fall below the applicable minimum 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 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, 2024 December 31, 2023
Derivatives Subject to Financial Strength-Contingent Provisions
Derivatives Not Subject to Financial Strength-Contingent Provisions
Total Derivatives subject to Financial Strength-contingent provisions
Derivatives Not Subject to Financial Strength-Contingent Provisions
Total
(In millions)
Estimated fair value of derivatives in a net liability position (1) $ 580 $ 21 $ 601 $ 542 - $ 542
Estimated fair value of collateral provided:
Fixed maturity securities AFS $ 962 23 $ 985 $ 896 - $ 896
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
11. Derivatives (continued)
__________________
(1)After taking into consideration the existence of netting agreements.
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 2024 2023
(In millions)
Embedded derivatives within asset host contracts:
Assumed on affiliated reinsurance Other invested assets $ 181 $ 41
Funds withheld on affiliated assumed reinsurance
Other invested assets (13) (26)
Total $ 168 $ 15
Embedded derivatives within liability host contracts:
Assumed on affiliated reinsurance
Other liabilities
$ - $ 104
Funds withheld on affiliated ceded reinsurance
Other liabilities (461) (304)
Fixed annuities with equity indexed returns PABs
172 163
Total $ (289) $ (37)
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, 2024
Fair Value Hierarchy
Level 1 Level 2 Level 3 Total
Estimated
Fair Value
(In millions)
Assets
Fixed maturity securities AFS:
U.S. corporate
$ - $ 40,202 $ 6,926 $ 47,128
Foreign corporate
- 16,120 8,165 24,285
U.S. government and agency 10,254 11,589 - 21,843
RMBS - 20,000 1,213 21,213
ABS & CLO - 9,329 3,876 13,205
CMBS
- 4,778 501 5,279
Municipals
- 4,924 7 4,931
Foreign government - 2,936 12 2,948
Total fixed maturity securities AFS
10,254 109,878 20,700 140,832
Short-term investments 2,350 40 1 2,391
Other investments 46 67 1,371 1,484
Derivative assets: (1)
Interest rate
- 2,781 - 2,781
Foreign currency exchange rate
- 2,855 - 2,855
Credit
- 165 - 165
Equity market
3 205 3 211
Total derivative assets
3 6,006 3 6,012
Embedded derivatives within asset host contracts (2)
- - 168 168
MRBs
- - 246 246
Separate account assets (3)
13,688 64,655 859 79,202
Total assets (4)
$ 26,341 $ 180,646 $ 23,348 $ 230,335
Liabilities
Derivative liabilities: (1)
Interest rate
$ - $ 1,823 $ - $ 1,823
Foreign currency exchange rate
- 1,095 - 1,095
Credit
- 6 - 6
Equity market
- 207 - 207
Total derivative liabilities
- 3,131 - 3,131
Embedded derivatives within liability host contracts (2)
- - (289) (289)
MRBs
- - 2,339 2,339
Separate account liabilities (3)
- 2 - 2
Total liabilities
$ - $ 3,133 $ 2,050 $ 5,183
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
12. Fair Value (continued)
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
CMBS - 5,499 335 5,834
Municipals
- 6,319 - 6,319
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 (2)
- - 15 15
MRBs
- - 177 177
Separate account assets (3)
13,945 68,284 968 83,197
Total assets (4)
$ 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 (2)
- - (37) (37)
MRBs
- - 2,878 2,878
Separate account liabilities (3)
4 4 - 8
Total liabilities
$ 4 $ 2,726 $ 3,016 $ 5,746
__________________
(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)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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
12. Fair Value (continued)
(3)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.
(4)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. The estimated fair value of such investments was $46 million and $48 million at December 31, 2024 and 2023, respectively.
The following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities, Short-term Investments and Other Investments
When available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management’s judgment.
When quoted prices in active markets are not available, the determination of estimated fair value 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 and 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 Input:
• NAV
__________________
(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)
• N/A
• swap yield curves (2)
• dividend yield curves (2)
• basis curves (2)
• credit curves (2)
• equity volatility (1), (2)
• repurchase rates
• credit spreads • correlation between model inputs (1)
• interest rate volatility (1), (2) • 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 related to certain affiliated 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 affiliated reinsurance and experience refund related to certain assumed affiliated 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.
MRBs
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:
December 31, 2024 December 31, 2023 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) 49 - 126 94 4 - 131 95 Increase
• Market pricing • Quoted prices (4) 13 - 100 94 - - 110 93 Increase
RMBS • Market pricing • Quoted prices (4) - - 128 95 - - 112 93 Increase (5)
ABS & CLO • Market pricing • Quoted prices (4) 44 - 113 98 78 - 101 94 Increase (5)
Derivatives
Interest rate • Present value techniques
• Swap yield (6) - - - - 367 - 399 385 Increase (7)
MRBs
Direct and assumed guaranteed minimum benefits
• Option pricing techniques
• Mortality rates:
Ages 0 - 40
0.01% - 0.13% 0.05% 0.01% - 0.13% 0.05% (8)
Ages 41 - 60
0.05% - 0.68% 0.22% 0.05% - 0.67% 0.22% (8)
Ages 61 - 115
0.35% - 100% 1.14% 0.35% - 100% 1.23% (8)
• Lapse rates:
Durations 1 - 10
0.80% - 20.10% 12.86% 0.80% - 20.10% 8.72% Decrease (9)
Durations 11 - 20
3.10% - 10.10% 6.05% 3.10% - 10.10% 4.34% Decrease (9)
Durations 21 - 116
1% - 10.10% 8.20% 0.10% - 10.10% 4.59% Decrease (9)
• Utilization rates 0.20% - 16.25% 0.79% 0.20% - 22% 0.44% Increase (10)
• Withdrawal rates 0% - 7.75% 4.77% 0.25% - 7.75% 4.47% (11)
• Long-term equity volatilities
16.63% - 22.27% 18.77% 16.37% - 21.85% 18.55% Increase (12)
• Nonperformance risk spread
0.33% - 0.66% 0.64% 0.38% - 0.70% 0.73% Decrease (13)
__________________
(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.
(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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
12. Fair Value (continued)
(8)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.
(9)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.
(10)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.
(11)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 MRBs. 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.
(12)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.
(13)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 affiliated 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), excluding MRBs (see Note 5):
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities AFS
Corporate (6) Structured Products Municipals Foreign
Government Short-term
Investments
(In millions)
Balance, January 1, 2023
$ 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
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
(129) 25 - (1) -
Total realized/unrealized gains (losses) included in AOCI
(526) 174 - (2) -
Purchases (3) 3,253 1,751 - 2 1
Sales (3) (1,717) (1,679) - (1) (15)
Issuances (3) - - - - -
Settlements (3) - - - - -
Transfers into Level 3 (4) 150 2,257 7 - -
Transfers out of Level 3 (4) (3,055) (134) - - -
Balance, December 31, 2024
$ 15,091 $ 5,590 $ 7 $ 12 $ 1
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 net
income (loss) for the instruments still held at
December 31, 2024: (5)
$ (93) $ 30 $ - $ (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) $ -
Changes in unrealized gains (losses) included in
AOCI for the instruments still held at
December 31, 2024: (5)
$ (539) $ 140 $ - $ (2) $ -
Gains (Losses) Data for the year ended
December 31, 2022
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 $ -
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)
Other Investments Net
Derivatives (7)
Net Embedded
Derivatives (8)
Separate
Accounts (9)
(In millions)
Balance, January 1, 2023
$ 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
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
160 (10) 407 (27)
Total realized/unrealized gains (losses) included in AOCI
- (31) - -
Purchases (3) 38 - - 132
Sales (3) (197) - - (201)
Issuances (3) - - - -
Settlements (3) - 211 (2) -
Transfers into Level 3 (4) 53 - - -
Transfers out of Level 3 (4) - (7) - (13)
Balance, December 31, 2024
$ 1,371 $ 3 $ 457 $ 859
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 net income (loss) for the instruments still held at December 31, 2024: (5)
$ 141 $ (3) $ 407 $ -
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) $ - $ -
Changes in unrealized gains (losses) included in
AOCI for the instruments still held at
December 31, 2024: (5)
$ - $ - $ - $ -
Gains (Losses) Data for the year ended
December 31, 2022
Total realized/unrealized gains (losses) included in
net income (loss) (1), (2)
$ (16) $ (140) $ 1,610 $ 25
Total realized/unrealized gains (losses) included in AOCI
$ - $ (547) $ - $ -
__________________
(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). 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.
(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,
2024 2023
(In millions)
Carrying value after measurement:
Mortgage loans (1)
$ 499 $ 295
Years Ended December 31,
2024 2023 2022
(In millions)
Realized gains (losses) net:
Mortgage loans (1)
$ (117) $ (162) $ (13)
__________________
(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. The following tables exclude: cash and cash equivalents, which are primarily classified as Level 1, and accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities (i.e. time deposits), which are primarily classified as Level 2. The Company believes that due to the short-term nature of these excluded financial instruments, the estimated fair value approximates carrying value.
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, 2024
Fair Value Hierarchy
Carrying
Value Level 1 Level 2 Level 3 Total
Estimated
Fair Value
(In millions)
Assets
Mortgage loans
$ 60,025 $ - $ - $ 56,824 $ 56,824
Policy loans
$ 5,601 $ - $ - $ 5,863 $ 5,863
Other invested assets
$ 2,117 $ - $ 1,734 $ 409 $ 2,143
Premiums, reinsurance and other receivables $ 13,390 $ - $ 345 $ 13,212 $ 13,557
Liabilities
PABs
$ 86,061 $ - $ - $ 83,986 $ 83,986
Long-term debt
$ 1,552 $ - $ 1,632 $ - $ 1,632
Other liabilities
$ 11,160 $ - $ 259 $ 10,862 $ 11,121
Separate account liabilities
$ 25,873 $ - $ 25,873 $ - $ 25,873
December 31, 2023
Fair Value Hierarchy
Carrying
Value Level 1 Level 2 Level 3 Total
Estimated
Fair Value
(In millions)
Assets
Mortgage loans
$ 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
PABs
$ 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
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 six years.
ROU Assets and Lease Liabilities
ROU assets and lease liabilities for operating leases were:
December 31, 2024 December 31, 2023
(In millions)
ROU assets $ 340 $ 416
Lease liabilities $ 408 $ 498
Lease Costs
The components of operating lease costs were as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Operating lease cost $ 88 $ 104 $ 116
Sublease income (79) (87) (73)
Other Information
Supplemental other information related to operating leases was as follows:
December 31, 2024 December 31, 2023
(Dollars in millions)
Cash paid for amounts included in the measurement of lease liability - operating cash flows $ 102 $ 114
ROU assets obtained in exchange for new lease liabilities $ - $ 3
Weighted-average remaining lease term 5 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, 2024
(In millions)
2025 $ 107
2026 103
2027 93
2028 71
2029 37
Thereafter
Total undiscounted cash flows
Less: interest 53
Present value of lease liability
$ 408
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,
2024 2023
Interest Rates (1)
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 $ (6) $ 694 $ 700 $ (7) $ 693
Surplus notes
7.80% - 7.80% 2025 250 - 250 400 - 400
Other notes 5.34% - 8.39% 2027 - 2038 610 (2) 608 796 (3) 793
Financing lease obligations
1 - 1 1 - 1
Total long-term debt
1,561 (8) 1,553 1,897 (10) 1,887
__________________
(1)Range of interest rates are for the year ended December 31, 2024.
The aggregate maturities of long-term debt at December 31, 2024 for the next five years and thereafter are $250 million in 2025, $0 in 2026, $51 million in 2027, $428 million in 2028, $0 in 2029 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, Missouri Reinsurance, Inc. (“MoRe”), a wholly-owned subsidiary of the Company, 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, MoRe issued to MetLife, Inc. a $60 million 5.23% promissory note. The promissory note was payable semi-annually and matured in December 2024.
Short-term Debt
Short-term debt with maturities of one year or less was as follows:
December 31,
(Dollars in millions)
Commercial paper
$ -
Average daily balance
$ 54
Average days outstanding
80 days
There was no short-term debt issued or repaid for the year ended December 31, 2024. For the years ended December 31, 2023 and 2022, the weighted average interest rate on short-term debt was 4.80% and 1.60%, 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 $122 million, $132 million and $104 million for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts include $68 million, $65 million and $53 million of interest expense related to affiliated debt for the years ended December 31, 2024, 2023 and 2022, respectively.
Credit Facility
At December 31, 2024, 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, $2 million and $4 million for the years ended December 31, 2024, 2023 and 2022, respectively, and were included in other expenses.
Information on the Credit Facility at December 31, 2024 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
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, 2024 and is not responsible for any reimbursement obligations under such letters of credit.
(2)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, 2024.
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 (“authorized control level 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 authorized control level RBC (“Company Action Level RBC”). The Company Action Level RBC ratios for Metropolitan Life Insurance Company were in excess of 360% and in excess of 370% at December 31, 2024 and 2023, 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 $326 million and the aggregate actual regulatory capital and surplus of such operations was $1.0 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 $1.5 billion and $1.4 billion at December 31, 2024 and 2023, 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 $2.5 billion, $3.4 billion and $2.7 billion at December 31, 2024, 2023 and 2022, respectively. Statutory capital and surplus, including the aforementioned prescribed practices, was $9.8 billion and $11.6 billion at December 31, 2024 and 2023, 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 $3.5 billion and $2.5 billion in dividends to MetLife, Inc. for the years ended December 31, 2024 and 2023, 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 $2.7 billion to MetLife, Inc. without prior regulatory approval by the end of 2025.
AOCI
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 FPBs Discount Rate Remeasurement Gains (Losses)
MRBs Instrument-Specific Credit Risk Remeasurement Gains(Losses)
Foreign
Currency
Translation
Adjustments Defined
Benefit
Plans
Adjustment Total
(In millions)
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)
OCI before reclassifications (3,545) (198) 3,554 (80) 43 28 (198)
Deferred income tax benefit (expense) 909 42 (775) 17 (11) (6) 176
AOCI before reclassifications, net of income tax (9,131) 549 1,972 (30) (111) (143) (6,894)
Amounts reclassified from AOCI 608 519 - - - 12 1,139
Deferred income tax benefit (expense) (128) (109) - - - (2) (239)
Amounts reclassified from AOCI, net of income tax 480 410 - - - 10 900
Balance at December 31, 2024 $ (8,651) $ 959 $ 1,972 $ (30) $ (111) $ (133) $ (5,994)
__________________
(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,
2024 2023 2022
AOCI Components Amounts Reclassified from AOCI Consolidated Statements of
Operations Locations
(In millions)
Unrealized investment gains (losses):
Unrealized investment gains (losses)
$ (557) $ (1,404) $ (810) Net investment gains (losses)
Unrealized investment gains (losses)
- 5 6 Net investment income
Unrealized investment gains (losses)
(51) (22) (58) Net derivative gains (losses)
Unrealized investment gains (losses), before income tax
(608) (1,421) (862)
Income tax (expense) benefit
128 286 181
Unrealized investment gains (losses), net of income tax
(480) (1,135) (681)
Deferred gains (losses) on derivatives - cash flow hedges:
Interest rate derivatives
33 50 59 Net investment income
Interest rate derivatives
3 87 51 Net investment gains (losses)
Foreign currency exchange rate derivatives
4 4 5 Net investment income
Foreign currency exchange rate derivatives
(560) 684 (417) Net investment gains (losses)
Credit derivatives
1 1 - Net investment gains (losses)
Gains (losses) on cash flow hedges, before income tax
(519) 826 (302)
Income tax (expense) benefit
109 (173) 63
Gains (losses) on cash flow hedges, net of income tax
(410) 653 (239)
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)
(14) (12) (49)
Amortization of prior service (costs) credit
2 2 2
Amortization of defined benefit plan items, before income tax
(12) (10) (47)
Income tax (expense) benefit
2 2 10
Amortization of defined benefit plan items, net of income tax
(10) (8) (37)
Total reclassifications, net of income tax
$ (900) $ (490) $ (957)
__________________
(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,
2024 2023 2022
(In millions)
Prepaid legal plans $ 438 $ 446 $ 421
ASO contracts
267 250 226
Recordkeeping and administrative services (1) 149 148 166
Other revenue from service contracts from customers 42 43 34
Total revenues from service contracts from customers 896 887 847
Other (2) 879 786 847
Total other revenues $ 1,775 $ 1,673 $ 1,694
__________________
(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,
2024 2023 2022
(In millions)
Amortization of DAC and VOBA $ 279 $ 298 $ 297
Interest expense on debt 122 132 104
General and administrative expenses (1)
2,535 2,799 2,743
Commissions and other variable expenses 2,181 2,098 2,290
Capitalization of DAC (110) (118) (189)
Premium taxes, other taxes, and licenses & fees 451 377 342
Pension, postretirement and postemployment benefit costs 221 199 116
Total other expenses $ 5,679 $ 5,785 $ 5,703
__________________
(1)Includes ($117) million, ($116) million and $52 million for the years ended December 31, 2024, 2023 and 2022, 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 20 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. Effective January 1, 2023, nonqualified defined benefit pension plans were amended to provide benefits 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,
2024 2023
Pension Benefits
(In millions)
Change in benefit obligations:
Benefit obligations at January 1,
$ 988 $ 962
Service costs
11 10
Interest costs
50 52
Net actuarial (gains) losses (1) (25) 43
Benefits paid
(76) (79)
Benefit obligations at December 31, 948 988
Change in plan assets:
Estimated fair value of plan assets at January 1,
- -
Employer contributions
76 79
Benefits paid
(76) (79)
Estimated fair value of plan assets at December 31, - -
Over (under) funded status at December 31, $ (948) $ (988)
Amounts recognized on the consolidated balance sheets:
Other liabilities
$ (948) $ (988)
Amount recognized $ (948) $ (988)
AOCI:
Net actuarial (gains) losses
$ 181 $ 220
Prior service costs (credit)
(3) (5)
AOCI, before income tax
$ 178 $ 215
Accumulated benefit obligation
$ 928 $ 967
__________________
(1)For the years ended December 31, 2024 and 2023, significant sources of actuarial (gains) losses for pension benefits include the impact of changes to the financial assumptions of ($39) million and $32 million, respectively, plan experience of $14 million and $21 million, respectively, and demographic assumptions of $0 and ($10) million, 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,
2024 2023 2024 2023
PBO Exceeds Estimated Fair Value
of Plan Assets ABO Exceeds Estimated Fair Value
of Plan Assets
(In millions)
PBO
$ 948 $ 988 $ 948 $ 988
ABO
$ 928 $ 967 $ 928 $ 967
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,
2024 2023 2022
(In millions)
Net periodic benefit costs:
Service costs
$ 11 $ 10 $ 15
Interest costs
50 52 37
Amortization of net actuarial (gains) losses
14 12 41
Amortization of prior service costs (credit)
(2) (2) (2)
Total net periodic benefit costs (credit) 73 72 91
Other changes in plan assets and benefit obligations recognized in OCI:
Net actuarial (gains) losses
(25) 43 (280)
Amortization of net actuarial gains (losses)
(14) (12) (41)
Amortization of prior service (costs) credit
2 2 2
Total recognized in OCI
(37) 33 (319)
Total recognized in net periodic benefit costs and OCI
$ 36 $ 105 $ (228)
Assumptions
Assumptions used in determining the benefit obligation for the plan were as follows:
Pension Benefits
December 31, 2024
Weighted average discount rate
5.70%
Weighted average interest crediting rate
4.31%
Rate of compensation increase
2.50% - 8.00%
December 31, 2023
Weighted average discount rate
5.25%
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, 2024
Weighted average discount rate
5.25%
Weighted average interest crediting rate
4.30%
Rate of compensation increase
2.50% - 8.00%
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%
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, and therefore benefit payments equal employer contributions. The Company expects to make benefit payments of $80 million in 2025.
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)
2025 $ 75
2026 $ 75
2027 $ 74
2028 $ 79
2029 $ 101
2030-2034 $ 385
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,
2024 2023 2022
(In millions)
Current:
U.S. federal
$ 723 $ 353 $ 309
U.S. state and local
4 14 11
Non-U.S.
15 14 14
Subtotal
742 381 334
Deferred:
U.S. federal
34 (321) 939
Subtotal
34 (321) 939
Provision for income tax expense (benefit)
$ 776 $ 60 $ 1,273
The Company’s income (loss) before income tax expense (benefit) was as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Income (loss):
U.S.
$ 4,113 $ 1,176 $ 6,895
Non-U.S.
148 19 34
Total
$ 4,261 $ 1,195 $ 6,929
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,
2024 2023 2022
(In millions)
Tax provision at U.S. statutory rate $ 895 $ 251 $ 1,455
Tax effect of:
Dividend received deduction (18) (17) (19)
Tax-exempt income (32) (28) 7
Prior year tax (4) 8 22
Low income housing tax credits 6 (116) (143)
Other tax credits (33) (30) (36)
Foreign tax rate differential (27) 1 (10)
Other, net
(11) (9) (3)
Provision for income tax expense (benefit) $ 776 $ 60 $ 1,273
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,
2024 2023
(In millions)
Deferred income tax assets:
Policyholder liabilities and receivables
$ 616 $ 1,591
Net operating loss carryforwards (1)
78 76
Employee benefits
463 473
Litigation-related and government mandated 90 83
Net unrealized investment losses
2,444 1,741
Other
192 204
Total gross deferred income tax assets
3,883 4,168
Less: Valuation allowance
78 75
Total net deferred income tax assets
3,805 4,093
Deferred income tax liabilities:
Investments, including derivatives
824 1,005
Intangibles
17 20
DAC 81 146
Total deferred income tax liabilities
922 1,171
Net deferred income tax asset (liability)
$ 2,883 $ 2,922
__________________
(1)The Company has recorded a deferred tax asset of $78 million primarily related to U.S. state net operating loss carryforwards and an offsetting valuation allowance for the year ended December 31, 2024. U.S. state net operating loss carryforwards will expire between 2027 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 to (from) MetLife, Inc. included $56 million and ($57) million at December 31, 2024 and 2023, 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 2022, the IRS reviewed and acknowledged acceptance of the 2014 through 2016 amended federal income tax returns filed in 2021 and closed the years to further audit.
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.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
18. Income Tax (continued)
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
Years Ended December 31,
2024 2023 2022
(In millions)
Balance at January 1,
$ 39 $ 37 $ 23
Additions for tax positions of prior years
- - 24
Reductions for tax positions of prior years (1)
- - (12)
Additions for tax positions of current year
2 2 2
Balance at December 31,
$ 41 $ 39 $ 37
Unrecognized tax benefits that, if recognized, would impact the effective rate
$ 41 $ 39 $ 37
__________________
(1)The decrease in 2022 is primarily related to non-cash benefits from a tax audit settlement.
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 lender, 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, 2024. 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, 2024, 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,
2024 2023 2022
(In millions, except number of claims)
Asbestos personal injury claims at year end
57,760 57,488 58,073
Number of new claims during the year
2,936 2,565 2,610
Settlement payments during the year (1)
$ 47.4 $ 50.6 $ 50.5
__________________
(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 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 $406 million at December 31, 2024. The recorded liability was $364 million at December 31, 2023.
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. In December 2020, the Appellate Division of the New York State Supreme Court, First Department, reversed the court’s order granting MetLife, Inc. and MLIC’s motion to dismiss and remanded the case. The Relator filed a Fourth Amended Complaint in January 2023. On October 13, 2024, the trial court denied the defendants’ motion to dismiss the 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.
Insolvency Assessments
Many jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers or those that may become impaired, insolvent or fail. These associations levy assessments, up to prescribed limits, on all member insurers in a particular jurisdiction on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. In addition, certain jurisdictions have government owned or controlled organizations providing life, health and property and casualty insurance to their citizens, whose activities could place additional stress on the adequacy of guaranty fund assessments. Many of these organizations have the power to levy assessments similar to those of the guaranty associations. Some jurisdictions permit member insurers to recover assessments paid through full or partial premium tax offsets.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
19. Contingencies, Commitments and Guarantees (continued)
Assets and liabilities held for insolvency assessments are as follows:
December 31,
(In millions)
Other Assets:
Premium tax offset for future discounted and undiscounted assessments $ 45
Premium tax offset currently available for paid assessments 66
Total $ 111
Other Liabilities:
Insolvency assessments $ 61
Commitments
Mortgage Loan Commitments
The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $1.5 billion and $3.3 billion at December 31, 2024 and 2023, 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 $4.0 billion and $4.4 billion at December 31, 2024 and 2023, respectively.
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 $524 million, with a cumulative maximum of $622 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, 2024 and 2023 for indemnities and guarantees.
20. 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
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements - (continued)
20. Related Party Transactions (continued)
these agreements, recorded in other expenses, were $3.0 billion, $3.0 billion and $2.7 billion for the years ended December 31, 2024, 2023 and 2022, respectively. Total revenues received from affiliates related to these agreements were $52 million, $52 million and $48 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The Company had net payables to affiliates, related to the items discussed above, of $88 million and $56 million at December 31, 2024 and 2023, 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, 2024
(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 $ 25,163 $ 21,843 $ 21,843
Public utilities 5,003 4,695 4,695
Municipals 5,373 4,931 4,931
Foreign government 3,161 2,948 2,948
All other corporate bonds 72,194 65,988 65,988
Total bonds 110,894 100,405 100,405
Mortgage-backed, asset-backed and collateralized loan obligations securities 42,117 39,697 39,697
Redeemable preferred stock 733 730 730
Total fixed maturity securities AFS 153,744 140,832 140,832
Mortgage loans 60,528 60,025
Policy loans 5,601 5,601
Real estate and REJV
8,623 8,623
Real estate acquired in satisfaction of debt 279 279
OLPI
7,054 7,054
Short-term investments 2,412 2,391
Other invested assets 17,674 17,674
Total investments $ 255,915 $ 242,479
______________
(1)Includes investments in related parties of $3.9 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 REJV and OLPI, 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, 2024 and 2023
(In millions)
DAC
and
VOBA FPBs,
Other Policy-Related
Balances and
Policyholder Dividend
Obligation
PABs
MRB (Assets) Liabilities (1)
Policyholder
Dividends
Payable Unearned
Premiums (2), (3) UREV (2)
Group Benefits
$ 244 $ 17,870 $ 7,469 $ - $ - $ 444 $ -
RIS
226 53,330 69,981 24 - - 14
MetLife Holdings
2,526 63,638 15,936 2,069 231 152 5
Corporate & Other
140 119 8,754 - - - -
Total
$ 3,136 $ 134,957 $ 102,140 $ 2,093 $ 231 $ 596 $ 19
Group Benefits
$ 255 $ 17,547 $ 7,605 $ - $ - $ 359 $ -
RIS
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
_____________
(1)MRB assets and liabilities are presented net.
(2)Amounts are included within the FPBs, other policy-related balances and policyholder dividend obligation column.
(3)Includes premiums received in advance.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule III
Consolidated Supplementary Insurance Information - (continued)
Years Ended December 31, 2024, 2023 and 2022
(In millions)
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 PABs
Market Risk Benefit Remeasurement (Gains) Losses
Amortization of
DAC and
VOBA
Charged to
Other
Expenses Other
Expenses (1)
Group Benefits
$ 22,339 $ 1,156 $ 18,821 $ - $ 25 $ 3,532
RIS
4,107 6,531 9,148 25 40 330
MetLife Holdings
2,595 3,437 4,162 (957) 196 1,256
Corporate & Other
20 511 321 - 18 737
Total
$ 29,061 $ 11,635 $ 32,452 $ (932) $ 279 $ 5,855
Group Benefits
$ 21,472 $ 1,127 $ 18,143 $ - $ 26 $ 3,302
RIS
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
Group Benefits
$ 21,124 $ 1,076 $ 18,307 $ - $ 26 $ 3,056
RIS
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
_____________
(1)Includes other expenses and policyholder dividends, excluding amortization of DAC and VOBA charged to other expenses.
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Schedule IV
Consolidated Reinsurance
December 31, 2024, 2023 and 2022
(Dollars in millions)
Gross Amount
Ceded (1)
Assumed (1)
Net Amount
% Amount
Assumed
to Net
Life insurance in-force $ 4,388,485 $ 146,790 $ 702,733 $ 4,944,428 14.2 %
Insurance premium
Life insurance (2)
$ 16,564 $ 652 $ 984 $ 16,896 5.8 %
Accident & health insurance 11,114 494 45 10,665 0.4 %
Total insurance premium $ 27,678 $ 1,146 $ 1,029 $ 27,561 3.7 %
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 %
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 %
______________
(1) For the year ended December 31, 2024, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $12.1 billion and $232 million, respectively, and life insurance premiums of $401 million and $5 million, respectively. 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.
(2) Includes annuities with life contingencies.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”). The Company has designed these controls and procedures to ensure that information the Company is required to disclose in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to Company management, including the CEO and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.
Management, including the CEO and CFO, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the CEO and CFO concluded that the disclosure controls and procedures were effective as of December 31, 2024.
There were no changes to the Company’s internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. In fulfilling this responsibility, management’s estimates and judgments must assess the expected benefits and related costs of control procedures. The Company’s internal control objectives include providing management with reasonable, but not absolute, assurance that the Company has safeguarded assets against loss from unauthorized use or disposition, and that the Company has executed transactions in accordance with management’s authorization and recorded them properly to permit the preparation of consolidated financial statements in conformity with GAAP.
Management evaluated the design and operating effectiveness of the Company’s internal control over financial reporting based on the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In the opinion of management, Metropolitan Life Insurance Company maintained effective internal control over financial reporting as of December 31, 2024.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
Securities trading plans
During the three months ended December 31, 2024, none of our Section 16 officers or directors (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any “non-Rule 10b5-1 trading arrangement” (as defined in Section 408(c) of Regulation S-K).

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
Deloitte & Touche LLP (“Deloitte”), the independent auditor of MetLife, Inc., has served as the independent auditor of the Company since at least 1968. Its long-term knowledge of the MetLife group of companies, combined with its insurance industry expertise and global presence, has enabled it to carry out audits of the Company’s consolidated financial statements with effectiveness and efficiency. Deloitte is a registered public accounting firm with the Public Company Accounting Oversight Board (United States) (“PCAOB”) as required by the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the Rules of the PCAOB.
Under current legal requirements, the lead or concurring audit partner for MetLife may not serve in that role for more than five consecutive fiscal years, and the Audit Committee ensures the regular rotation of the audit engagement team partners as required by law. The Chair of the Audit Committee, together with other members of the Audit Committee and management of MetLife, Inc., is actively involved in the selection process for the lead and concurring partners.
Independent Auditor’s Fees for 2024 and 2023
The table below presents fees for professional services rendered by Deloitte for the audit of the Company’s annual consolidated financial statements, audit-related services, tax services and all other services for the years ended December 31, 2024 and 2023. All fees shown in the table were related to services that were approved by the Audit Committee.
2024 2023
(In millions)
Audit fees (1) $ 21.3 $ 23.6
Audit-related fees (2) $ 3.7 $ 3.6
Tax fees (3) $ 1.1 $ 0.7
All other fees (4) $ - $ -
______________
(1)Fees for services to perform an audit or review in accordance with auditing standards of the PCAOB and services that generally only the Company’s independent auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the SEC.
(2)Fees for assurance and related services, such as merger and acquisition due diligence requests, consultation services on internal control matters, and attestation services related to internal control over financial reporting, including System and Organization Control (SOC) audit reports, as mandated by Statement on Standards for Attestation Engagements No. 18 (SSAE 18), as well as compliance reports and employee benefit plan audits.
(3)Fees for tax compliance, consultation, and planning services. Tax compliance generally involves preparation of original and amended tax returns, claims for refunds and tax payment planning services. Tax consultation and tax planning encompass a diverse range of advisory services, including assistance in connection with tax audits and filing appeals, transfer pricing, tax advice related to mergers, acquisitions and divestitures, advice related to employee benefit plans and requests for rulings or technical advice from taxing authorities.
(4)Fees for other types of permitted services, including consulting, financial advisory services, and actuarial services.
Approval of Fees
The Audit Committee approves Deloitte’s audit and non-audit services in advance as required under Sarbanes-Oxley and SEC rules. Before the commencement of each fiscal year, the Audit Committee appoints the independent auditor to perform pre-approved audit services and pre-approved audit-related, tax and other permitted non-audit services that MetLife expects to be performed for the fiscal year. The Audit Committee or a designated member of the Audit Committee to whom authority has been delegated may, from time to time, pre-approve additional audit and non-audit services to be performed by MetLife’s independent auditor. Any pre-approval of services between Audit Committee meetings must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee is responsible for approving fees for the audit and for any audit-related, tax or other permitted non-audit services. If the audit, audit-related, tax and other permitted non-audit fees for a particular period or service exceed the amounts previously approved, the Audit Committee determines whether or not to approve the additional fees.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this report:
1. Financial Statements
The financial statements are listed in the Index to Consolidated Financial Statements, Notes and Schedules on page 69.
2. Financial Statement Schedules
The financial statement schedules are listed in the Index to Consolidated Financial Statements, Notes and Schedules on page 69.
3. Exhibits
The exhibits are listed in the Exhibit Index which begins on page 212.