10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

OR

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

		FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-15787

MetLife, Inc.

(Exact name of registrant as specified in its charter)


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

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

(212) 578-2211

(Registrant’s telephone number, including area code)

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

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


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

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

At May 2, 2008, 710,306,273 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Part I — Financial Information


Item 1.	*Financial Statements*

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

March 31, 2008 (Unaudited) and December 31, 2007

(In millions, except share and per share data)


	March 31,			December 31,
	2008			2007

Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $244,270 and $238,761, respectively)	$	244,088		$	242,242
Equity securities available-for-sale, at estimated fair value (cost: $5,842 and $5,891, respectively)		5,533			6,050
Trading securities, at estimated fair value (cost: $831 and $768, respectively)		808			779
Mortgage and consumer loans		47,777			47,030
Policy loans		10,739			10,419
Real estate and real estate joint ventures held-for-investment		6,962			6,768
Real estate held-for-sale		1			1
Other limited partnership interests		6,349			6,155
Short-term investments		2,612			2,648
Other invested assets		14,357			12,642

Total investments		339,226			334,734
Cash and cash equivalents		10,874			10,368
Accrued investment income		3,382			3,630
Premiums and other receivables		14,998			14,607
Deferred policy acquisition costs and value of business acquired		22,085			21,521
Current income tax recoverable		430			303
Goodwill		5,094			4,910
Other assets		8,473			8,330
Separate account assets		152,570			160,159

Total assets	$	557,132		$	558,562

Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits	$	134,047		$	132,262
Policyholder account balances		141,530			137,349
Other policyholder funds		10,631			10,176
Policyholder dividends payable		993			994
Policyholder dividend obligation		119			789
Short-term debt		632			667
Long-term debt		9,652			9,628
Collateral financing arrangements		5,792			5,732
Junior subordinated debt securities		4,474			4,474
Shares subject to mandatory redemption		159			159
Deferred income tax liability		1,462			2,457
Payables for collateral under securities loaned and other transactions		46,649			44,136
Other liabilities		15,423			14,401
Separate account liabilities		152,570			160,159

Total liabilities		524,133			523,383

Contingencies, Commitments and Guarantees (Note 7)

Stockholders’ Equity
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference		1			1
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 786,766,664 shares issued; 709,434,506 and 729,223,440 shares outstanding at March 31, 2008 and December 31, 2007, respectively		8			8
Additional paid-in capital		17,600			17,098
Retained earnings		20,526			19,884
Treasury stock, at cost; 77,332,158 shares and 57,543,224 shares at March 31, 2008 and December 31, 2007, respectively		(4,108	)		(2,890	)
Accumulated other comprehensive income (loss)		(1,028	)		1,078

Total stockholders’ equity		32,999			35,179

Total liabilities and stockholders’ equity	$	557,132		$	558,562

See accompanying notes to interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Income

For the Three Months Ended March 31, 2008 and 2007 (Unaudited)

(In millions, except per share data)


	Three Months Ended
	March 31,
	2008			2007

Revenues
Premiums	$	7,593		$	6,765
Universal life and investment-type product policy fees		1,417			1,280
Net investment income		4,508			4,521
Other revenues		395			384
Net investment gains (losses)		(886	)		(38	)

Total revenues		13,027			12,912

Expenses
Policyholder benefits and claims		7,743			6,773
Interest credited to policyholder account balances		1,311			1,376
Policyholder dividends		430			424
Other expenses		2,676			2,896

Total expenses		12,160			11,469

Income from continuing operations before provision for income tax		867			1,443
Provision for income tax		217			416

Income from continuing operations		650			1,027
Loss from discontinued operations, net of income tax		(2	)		(10	)

Net income		648			1,017
Preferred stock dividends		33			34

Net income available to common shareholders	$	615		$	983

Income from continuing operations available to common shareholders per common share
Basic	$	0.86		$	1.32

Diluted	$	0.84		$	1.29

Net income available to common shareholders per common share
Basic	$	0.85		$	1.31

Diluted	$	0.84		$	1.28

See accompanying notes to interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statement of Stockholders’ Equity
For the Three Months Ended March 31, 2008 (Unaudited)

(In millions)


													Accumulated Other
													Comprehensive Income (Loss)
													Net			Foreign		Defined
					Additional					Treasury			Unrealized			Currency		Benefit
	Preferred		Common		Paid-in		Retained			Stock			Investment			Translation		Plans
	Stock		Stock		Capital		Earnings			at Cost			Gains (Losses)			Adjustments		Adjustment			Total

Balance at December 31, 2007	$	1	$	8	$	17,098	$	19,884		$	(2,890	)	$	971		$	347	$	(240	)	$	35,179
Cumulative effect of a change in accounting principles, net of income tax (Note 1)								27						(10	)							17

Balance at January 1, 2008		1		8		17,098		19,911			(2,890	)		961			347		(240	)		35,196
Treasury stock transactions, net						502					(1,218	)										(716	)
Dividends on preferred stock								(33	)													(33	)
Comprehensive income:
Net income								648														648
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax														(60	)							(60	)
Unrealized investment gains (losses), net of related offsets and income tax														(2,188	)							(2,188	)
Foreign currency translation adjustments, net of income tax																	153					153
Defined benefit plans adjustment, net of income tax																			(1	)		(1	)

Other comprehensive income (loss)																						(2,096	)

Comprehensive income (loss)																						(1,448	)

Balance at March 31, 2008	$	1	$	8	$	17,600	$	20,526		$	(4,108	)	$	(1,287	)	$	500	$	(241	)	$	32,999

See accompanying notes to interim condensed consolidated financial statements.

MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2008 and 2007 (Unaudited)

(In millions)


	Three Months Ended
	March 31,
	2008			2007

Net cash provided by operating activities	$	3,590		$	2,210

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		22,117			29,349
Equity securities		351			693
Mortgage and consumer loans		1,832			1,757
Real estate and real estate joint ventures		87			151
Other limited partnership interests		258			409
Purchases of:
Fixed maturity securities		(27,223	)		(34,653	)
Equity securities		(299	)		(698	)
Mortgage and consumer loans		(2,702	)		(3,529	)
Real estate and real estate joint ventures		(311	)		(547	)
Other limited partnership interests		(391	)		(496	)
Net change in short-term investments		49			202
Purchases of businesses, net of cash received of $23 and $0, respectively		(305	)		—
Proceeds from sales of businesses		—			25
Net change in other invested assets		(857	)		522
Net change in policy loans		(320	)		51
Other, net		(24	)		(22	)

Net cash used in investing activities		(7,738	)		(6,786	)

Cash flows from financing activities
Policyholder account balances:
Deposits		13,893			12,479
Withdrawals		(10,546	)		(12,315	)
Net change in payables for collateral under securities loaned and other transactions		2,513			2,294
Net change in short-term debt		(35	)		1,926
Long-term debt issued		80			390
Long-term debt repaid		(62	)		(37	)
Collateral financing arrangements issued		60			—
Dividends on preferred stock		(33	)		(34	)
Treasury stock acquired		(1,250	)		(758	)
Stock options exercised		17			29
Other, net		17			40

Net cash provided by financing activities		4,654			4,014

Change in cash and cash equivalents		506			(562	)
Cash and cash equivalents, beginning of period		10,368			7,107

Cash and cash equivalents, end of period	$	10,874		$	6,545

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Interest	$	161		$	77

Income tax	$	151		$	1,231

Non-cash transactions during the period:
Business acquisitions:
Assets acquired	$	1,270		$	—
Cash paid		(328	)		—

Liabilities assumed	$	942		$	—

See accompanying notes to interim condensed consolidated financial statements.

MetLife, Inc.

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)


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

Business

“MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”). MetLife is a leading provider of insurance and other financial services with operations throughout the United States and the regions of Latin America, Europe, and Asia Pacific. Through its domestic and international subsidiaries and affiliates, MetLife offers life insurance, annuities, automobile and homeowners insurance, retail banking and other financial services to individuals, as well as group insurance, reinsurance and retirement & savings products and services to corporations and other institutions.

Basis of Presentation

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


	(i)	the fair value of investments in the absence of quoted market values;

	(ii)	investment impairments;

	(iii)	the recognition of income on certain investment entities;

	(iv)	the application of the consolidation rules to certain investments;

	(v)	the existence and fair value of embedded derivatives requiring bifurcation;

	(vi)	the fair value of and accounting for derivatives;

	(vii)	the capitalization and amortization of deferred policy acquisition costs (“DAC”) and the establishment and amortization of value of business acquired (“VOBA”);

	(viii)	the measurement of goodwill and related impairment, if any;

	(ix)	the liability for future policyholder benefits;

	(x)	accounting for income taxes and the valuation of deferred tax assets;

	(xi)	accounting for reinsurance transactions;

	(xii)	accounting for employee benefit plans; and


	(xiii)	the liability for litigation and regulatory matters.

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

The accompanying unaudited interim condensed consolidated financial statements include the accounts of: (i) the Holding Company and its subsidiaries; (ii) partnerships and joint ventures in which the Company has control; and (iii) variable interest entities (“VIEs”) for which the Company is deemed to be the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 5. Intercompany accounts and transactions have been eliminated.

MetLife, Inc.

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

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

Minority interest related to consolidated entities included in other liabilities was $1.7 billion and $1.8 billion at March 31, 2008 and December 31, 2007, respectively.

The accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at March 31, 2008, its consolidated results of operations for the three months ended March 31, 2008 and 2007, its consolidated cash flows for the three months ended March 31, 2008 and 2007, and its consolidated statement of stockholders’ equity for the three months ended March 31, 2008, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2007 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), which includes all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2007 Annual Report.

Adoption of New Accounting Pronouncements

Fair Value

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a consistent framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and requires enhanced disclosures about fair value measurements.

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition. However, in certain cases, the transaction price may not represent fair value. Prior to SFAS 157, the fair value of a liability was often based on a settlement price concept, which assumed the liability was extinguished. Under SFAS 157, fair value is based on the amount that would be paid to transfer a liability to a third party with the same credit standing. SFAS 157 requires that fair value be a market-based measurement in which the fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant. Accordingly, fair value is no longer determined based solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, SFAS 157 requires consideration of three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The approaches are not new, but SFAS 157 requires that entities determine the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs. SFAS 157 prioritizes the inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not available. The Company has categorized its assets and liabilities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority

MetLife, Inc.

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

to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. SFAS 157 defines the input levels as follows:


	Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.

	Level 2	Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs 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 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 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. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Effective January 1, 2008, the Company adopted SFAS 157 and applied the provisions of the statement prospectively to assets and liabilities measured at fair value. The adoption of SFAS 157 changed the valuation of certain freestanding derivatives by moving from a mid to bid pricing convention as it relates to certain volatility inputs as well as the addition of liquidity adjustments and adjustments for risks inherent in a particular input or valuation technique. The adoption of SFAS 157 also changed the valuation of the Company’s embedded derivatives, most significantly the valuation of embedded derivatives associated with certain riders on variable annuity contracts. The change in valuation of embedded derivatives associated with riders on annuity contracts resulted from the incorporation of risk margins associated with non capital market inputs and the inclusion of the Company’s own credit standing in their valuation. At January 1, 2008, the impact of adopting SFAS 157 on assets and liabilities measured at fair value was $30 million ($19 million, net of income tax) and was recognized as a change in estimate in the accompanying unaudited condensed consolidated statement of income where it was presented in the respective income statement caption to which the item measured at fair value is presented. There were no significant changes in fair value of items measured at fair value and reflected in accumulated other comprehensive income (loss). The addition of risk margins and the Company’s own credit spread in the valuation of embedded derivatives associated with annuity contracts may result in significant volatility in the Company’s consolidated net income in future periods. Note 14 presents the fair value of all assets and liabilities required to be measured at fair value as well as the expanded fair value disclosures required by SFAS 157.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 permits entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to recognize related unrealized gains and losses in earnings. The fair value option is applied on an instrument-by-instrument basis upon adoption of the standard, upon the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election is an irrevocable election. Effective January 1, 2008, the Company elected the fair value option on fixed maturity and equity securities backing certain pension products sold in Brazil. Such securities will now be presented as trading securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”) on the consolidated balance sheet with subsequent changes in fair value recognized in net investment income. Previously, these securities were accounted for as available-for-sale securities in accordance with SFAS 115 and unrealized gains and losses on these securities were recorded as a separate component of accumulated other comprehensive income (loss). The Company’s insurance joint venture in Japan also elected the fair value option for certain of its existing single premium deferred annuities and the assets supporting such liabilities. The fair value option was elected to achieve improved reporting of the asset/liability matching associated with these products. Adoption of SFAS 159 by the Company and its

MetLife, Inc.

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

Japanese joint venture resulted in an increase in retained earnings of $27 million, net of income tax, at January 1, 2008. The election of the fair value option resulted in the reclassification of $10 million, net of income tax, of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings on January 1, 2008.

Effective January 1, 2008, the Company adopted FASB Staff Position (“FSP”) No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP 157-1”). FSP 157-1 amends SFAS 157 to provide a scope out exception for lease classification and measurement under SFAS No. 13, Accounting for Leases. The Company also adopted FSP No. FAS 157-2, Effective Date of FASB Statement No. 157 which delays the effective date of SFAS 157 for certain nonfinancial assets and liabilities that are recorded at fair value on a nonrecurring basis. The effective date is delayed until January 1, 2009 and impacts balance sheet items including nonfinancial assets and liabilities in a business combination and the impairment testing of goodwill and long-lived assets.

Other

Effective January 1, 2008, the Company adopted FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39 (“FSP 39-1”). FSP 39-1 amends FASB Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts (“FIN 39”), to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP 39-1 also amends FIN 39 for certain terminology modifications. Upon adoption of FSP 39-1, the Company did not change its accounting policy of not offsetting fair value amounts recognized for derivative instruments under master netting arrangements. The adoption of FSP 39-1 did not have an impact on the Company’s unaudited interim condensed consolidated financial statements.

Effective January 1, 2008, the Company adopted SEC Staff Accounting Bulletin (“SAB”) No. 109, Written Loan Commitments Recorded at Fair Value through Earnings (“SAB 109”), which amends SAB No. 105, Application of Accounting Principles to Loan Commitments. SAB 109 provides guidance on (i) incorporating expected net future cash flows when related to the associated servicing of a loan when measuring fair value; and (ii) broadening the SEC staff’s view that internally-developed intangible assets should not be recorded as part of the fair value of a derivative loan commitment or to written loan commitments that are accounted for at fair value through earnings. Internally-developed intangible assets are not considered a component of the related instruments. The adoption of SAB 109 did not have an impact on the Company’s unaudited interim condensed consolidated financial statements.

Effective January 1, 2008, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”) Implementation Issue E-23, Clarification of the Application of the Shortcut Method (“Issue E-23”). Issue E-23 amended SFAS 133 by permitting interest rate swaps to have a non-zero fair value at inception when applying the shortcut method of assessing hedge effectiveness, as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by SFAS 157, is solely attributable to a bid-ask spread. In addition, entities are not precluded from applying the shortcut method of assessing hedge effectiveness in a hedging relationship of interest rate risk involving an interest bearing asset or liability in situations where the hedged item is not recognized for accounting purposes until settlement date as long as the period between trade date and settlement date of the hedged item is consistent with generally established conventions in the marketplace. The adoption of Issue E-23 did not have an impact on the Company’s unaudited interim condensed consolidated financial statements.

MetLife, Inc.

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

Future Adoption of New Accounting Pronouncements

Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations — A Replacement of FASB Statement No. 141 (“SFAS 141(r)”) and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (“SFAS 160”). Under SFAS 141(r) and SFAS 160:


	•	All business combinations (whether full, partial or “step” acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions.

	•	Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date.

	•	The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date.

	•	Certain acquired contingent liabilities are recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies.

	•	Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense.

	•	Noncontrolling interests (formerly known as “minority interests”) are valued at fair value at the acquisition date and are presented as equity rather than liabilities.

	•	When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized.

	•	Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions.

	•	When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized.

The pronouncements are effective for fiscal years beginning on or after December 15, 2008 and apply prospectively to business combinations. Presentation and disclosure requirements related to noncontrolling interests must be retrospectively applied. The Company is currently evaluating the impact of SFAS 141(r) on its accounting for future acquisitions and the impact of SFAS 160 on its consolidated financial statements.

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). This change is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(r) and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date.

Derivatives

MetLife, Inc.

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

disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements.

Other

In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (“FSP 140-3”). FSP 140-3 provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. FSP 140-3 is effective prospectively for financial statements issued for fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of FSP 140-3 on its consolidated financial statements.

In December 2007, the FASB ratified as final the consensus on Emerging Issues Task Force (“EITF”) Issue No. 07-6, Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause (“EITF 07-6”). EITF 07-6 addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity. The consensus concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. EITF 07-6 applies prospectively to new arrangements entered into and assessments on existing transactions performed in fiscal years beginning after December 15, 2008. The Company does not expect the adoption of EITF 07-6 to have a material impact on its consolidated financial statements.


2.	Acquisitions

In 2008, the Company completed, in its International and Institutional segments, acquisitions which were accounted for using the purchase method of accounting. As a result of these acquisitions, goodwill and other intangible assets increased by $169 million and $149 million, respectively.

MetLife, Inc.

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


3.	Investments

Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized gain and loss, and estimated fair value of the Company’s fixed maturity and equity securities, the percentage that each sector represents by the respective total holdings at:


	March 31, 2008
	Cost or
	Amortized		Gross Unrealized				Estimated		% of
	Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	78,251	$	1,749	$	3,797	$	76,203		31.2	%
Residential mortgage-backed securities		57,024		874		1,379		56,519		23.2
Foreign corporate securities		37,242		1,835		1,294		37,783		15.6
U.S. Treasury/agency securities		20,246		1,855		14		22,087		9.0
Commercial mortgage-backed securities		19,214		121		687		18,648		7.6
Foreign government securities		13,511		1,969		131		15,349		6.3
Asset-backed securities		12,739		49		1,210		11,578		4.7
State and political subdivision securities		5,726		154		258		5,622		2.3
Other fixed maturity securities		317		10		28		299		0.1

Total fixed maturity securities	$	244,270	$	8,616	$	8,798	$	244,088		100.0	%

Common stock	$	2,540	$	390	$	167	$	2,763		49.9	%
Non-redeemable preferred stock		3,302		43		575		2,770		50.1

Total equity securities	$	5,842	$	433	$	742	$	5,533		100.0	%


	December 31, 2007
	Cost or
	Amortized		Gross Unrealized				Estimated		% of
	Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	77,875	$	1,725	$	2,174	$	77,426		32.0	%
Residential mortgage-backed securities		56,267		611		389		56,489		23.3
Foreign corporate securities		37,359		1,740		794		38,305		15.8
U.S. Treasury/agency securities		19,771		1,487		13		21,245		8.8
Commercial mortgage-backed securities		17,676		251		199		17,728		7.3
Foreign government securities		13,535		1,924		188		15,271		6.3
Asset-backed securities		11,549		41		549		11,041		4.6
State and political subdivision securities		4,394		140		115		4,419		1.8
Other fixed maturity securities		335		13		30		318		0.1

Total fixed maturity securities	$	238,761	$	7,932	$	4,451	$	242,242		100.0	%

Common stock	$	2,488	$	568	$	108	$	2,948		48.7	%
Non-redeemable preferred stock		3,403		61		362		3,102		51.3

Total equity securities	$	5,891	$	629	$	470	$	6,050		100.0	%

MetLife, Inc.

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

The Company is not exposed to any significant concentrations of credit risk in its equity securities portfolio. The Company is exposed to concentrations of credit risk related to U.S. Treasury securities and obligations of U.S. government and agencies. Additionally, at March 31, 2008 and December 31, 2007, the Company had exposure to fixed maturity securities backed by sub-prime mortgage loans with estimated fair values of $1.9 billion and $2.2 billion, respectively, and unrealized losses of $441 million and $219 million, respectively. These securities are classified within asset-backed securities in the immediately preceding tables. At March 31, 2008, 33% of the asset-backed securities backed by sub-prime mortgage loans have been guaranteed by financial guarantee insurers, of which 57% were guaranteed by financial guarantee insurers who are Aaa rated.

Overall, at March 31, 2008, $7.1 billion of the estimated fair value of the Company’s fixed maturity securities were credit enhanced by financial guarantee insurers of which $3.0 billion, $2.6 billion and $1.5 billion, are included within state and political subdivisions, U.S. corporate securities and asset-backed securities, respectively, and 80% were guaranteed by financial guarantee insurers who are Aaa rated.

Unrealized Loss for Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the estimated fair value and gross unrealized loss of the Company’s fixed maturity (aggregated by sector) and equity securities in an unrealized loss position, aggregated by length of time that the securities have been in a continuous unrealized loss position at:


	March 31, 2008
					Equal to or Greater
	Less than 12 months				than 12 months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	31,829	$	2,510	$	12,137	$	1,287	$	43,966	$	3,797
Residential mortgage-backed securities		20,398		1,157		2,254		222		22,652		1,379
Foreign corporate securities		11,446		823		5,352		471		16,798		1,294
U.S. Treasury/agency securities		692		4		260		10		952		14
Commercial mortgage-backed securities		9,338		355		3,982		332		13,320		687
Foreign government securities		2,118		108		433		23		2,551		131
Asset-backed securities		8,641		886		1,439		324		10,080		1,210
State and political subdivision securities		1,886		206		461		52		2,347		258
Other fixed maturity securities		38		28		1		—		39		28

Total fixed maturity securities	$	86,386	$	6,077	$	26,319	$	2,721	$	112,705	$	8,798

Equity securities	$	2,347	$	511	$	827	$	231	$	3,174	$	742

Total number of securities in an unrealized loss position		8,576				2,627

MetLife, Inc.

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


	December 31, 2007
					Equal to or Greater
	Less than 12 months				than 12 months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	29,237	$	1,431	$	12,119	$	743	$	41,356	$	2,174
Residential mortgage-backed securities		14,404		279		6,195		110		20,599		389
Foreign corporate securities		11,189		484		6,321		310		17,510		794
U.S. Treasury/agency securities		432		3		625		10		1,057		13
Commercial mortgage-backed securities		2,518		102		3,797		97		6,315		199
Foreign government securities		3,593		161		515		27		4,108		188
Asset-backed securities		7,627		442		1,271		107		8,898		549
State and political subdivision securities		1,334		81		476		34		1,810		115
Other fixed maturity securities		91		30		1		—		92		30

Total fixed maturity securities	$	70,425	$	3,013	$	31,320	$	1,438	$	101,745	$	4,451

Equity securities	$	2,771	$	398	$	543	$	72	$	3,314	$	470

Total number of securities in an unrealized loss position		8,395				3,063

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

The following tables present the cost or amortized cost, gross unrealized loss and number of securities for fixed maturity and equity securities, where the estimated fair value had declined and remained below cost or amortized cost by less than 20% or 20% or more at:


	March 31, 2008
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	63,587	$	11,531	$	2,543	$	3,091		6,096		1,399
Six months or greater but less than nine months		11,734		146		883		66		993		50
Nine months or greater but less than twelve months		11,948		20		999		6		1,029		49
Twelve months or greater		26,407		46		1,937		15		2,261		92

Total	$	113,676	$	11,743	$	6,362	$	3,178


	December 31, 2007
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	49,463	$	1,943	$	1,670	$	555		6,339		644
Six months or greater but less than nine months		17,353		23		844		7		1,461		31
Nine months or greater but less than twelve months		9,410		7		568		2		791		1
Twelve months or greater		31,731		50		1,262		13		3,192		32

Total	$	107,957	$	2,023	$	4,344	$	577

MetLife, Inc.

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

At March 31, 2008 and December 31, 2007, $6.4 billion and $4.3 billion, respectively, of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 6% and 4%, respectively, of the cost or amortized cost of such securities.

At March 31, 2008, $3.2 billion of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 27% of the cost or amortized cost of such securities. Of such unrealized losses of $3.2 billion, $3.1 billion related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2007, $577 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 29% of the cost or amortized cost of such securities. Of such unrealized losses of $577 million, $555 million related to securities that were in an unrealized loss position for a period of less than six months.

The Company held 140 fixed maturity and equity securities, each with a gross unrealized loss at March 31, 2008 of greater than $10 million. These securities represented 23%, or $2.2 billion in the aggregate, of the gross unrealized loss on fixed maturity and equity securities. The Company held 30 fixed maturity and equity securities, each with a gross unrealized loss at December 31, 2007 of greater than $10 million. These securities represented 9%, or $459 million in the aggregate, of the gross unrealized loss on fixed maturity and equity securities.

At March 31, 2008 and December 31, 2007, the Company had $9.5 billion and $4.9 billion, respectively, of gross unrealized losses related to its fixed maturity and equity securities. These securities are concentrated, calculated as a percentage of gross unrealized loss, as follows:


	March 31,			December 31,
	2008			2007

Sector:
U.S. corporate securities		40	%		44	%
Foreign corporate securities		14			16
Asset-backed securities		13			11
Residential mortgage-backed securities		15			8
Foreign government securities		1			4
Commercial mortgage-backed securities		7			4
Other		10			13

Total		100	%		100	%

Industry:
Finance		32	%		34	%
Industrial		3			18
Mortgage-backed		22			12
Utility		6			8
Government		2			4
Consumer		9			3
Other		26			21

Total		100	%		100	%

As disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities are other-than-temporarily impaired. One of the criteria which the Company considers in its other-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an

MetLife, Inc.

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

amount equal to or greater than cost or amortized cost. The Company’s intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an other-than-temporary impairment loss will be recognized.

Based upon the Company’s current evaluation of the securities in accordance with its impairment policy, the cause of the decline being attributable to a rise in market rates caused principally by a current widening of credit spreads which resulted from a lack of market liquidity and a short-term market dislocation versus a long-term deterioration in credit quality, and the Company’s current intent and ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover, the Company has concluded that the aforementioned securities are not other-than-temporarily impaired.

Securities Lending

The Company participates in a securities lending program whereby blocks of securities, which are included in fixed maturity and equity securities, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $43.1 billion and $41.1 billion and an estimated fair value of $44.2 billion and $42.1 billion were on loan under the program at March 31, 2008 and December 31, 2007, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $45.1 billion and $43.3 billion at March 31, 2008 and December 31, 2007, respectively. Security collateral of $19 million and $40 million on deposit from customers in connection with the securities lending transactions at March 31, 2008 and December 31, 2007, respectively, may not be sold or repledged and is not reflected in the unaudited interim condensed consolidated financial statements.

MetLife, Inc.

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

Net Investment Income

The components of net investment income are as follows:


	Three Months Ended
	March 31,
	2008		2007
	(In millions)

Fixed maturity securities	$	3,637	$	3,598
Equity securities		71		40
Mortgage and consumer loans		715		675
Policy loans		165		157
Real estate and real estate joint ventures		177		235
Other limited partnership interests		132		311
Cash, cash equivalents and short-term investments		111		147
Other		112		153

Total investment income		5,120		5,316
Less: Investment expenses		612		795

Net investment income	$	4,508	$	4,521

Net Investment Gains (Losses)

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


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Fixed maturity securities	$	(204	)	$	(92	)
Equity securities		(10	)		62
Mortgage and consumer loans		(27	)		—
Real estate and real estate joint ventures		(2	)		2
Other limited partnership interests		(3	)		2
Derivatives		(523	)		(51	)
Other		(117	)		39

Net investment gains (losses)	$	(886	)	$	(38	)

The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management’s decision to sell securities based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives.

Losses from fixed maturity and equity securities deemed other-than-temporarily impaired, included within net investment gains (losses), were $140 million and $3 million for the three months ended March 31, 2008 and 2007, respectively.

Trading Securities

MetLife, Inc.

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

strategies for certain insurance products. Trading securities and short sale agreement liabilities are recorded at fair value with subsequent changes in fair value recognized in net investment income related to fixed maturity securities.

At March 31, 2008 and December 31, 2007, trading securities were $808 million and $779 million, respectively, and liabilities associated with the short sale agreements in the trading securities portfolio, which were included in other liabilities, were $29 million and $107 million, respectively. The Company had pledged $282 million and $407 million of its assets, primarily consisting of trading securities, as collateral to secure the liabilities associated with the short sale agreements in the trading securities portfolio at March 31, 2008 and December 31, 2007, respectively.

During the three months ended March 31, 2008 and 2007, interest and dividends earned on trading securities in addition to the net realized and unrealized gains (losses) recognized on the trading securities and the related short sale agreement liabilities included within net investment income totaled ($51) million, and $15 million, respectively. Included within unrealized gains (losses) on such trading securities and short sale agreement liabilities are changes in fair value of ($42) million and $8 million for the three months ended March 31, 2008 and 2007, respectively.


4.	Derivative Financial Instruments

Types of Derivative Financial Instruments

The following table presents the notional amount and current market or fair value of derivative financial instruments, excluding embedded derivatives, held at:


	March 31, 2008						December 31, 2007
			Current Market						Current Market
	Notional		or Fair Value				Notional		or Fair Value
	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Interest rate swaps	$	39,144	$	1,355	$	1,488	$	62,519	$	785	$	768
Interest rate floors		48,517		866		—		48,937		621		—
Interest rate caps		26,826		18		—		45,498		50		—
Financial futures		8,070		14		20		10,817		89		57
Foreign currency swaps		21,414		2,034		2,023		21,399		1,480		1,724
Foreign currency forwards		5,456		91		80		4,185		76		16
Options		2,610		1,094		1		2,043		713		1
Financial forwards		12,300		141		12		4,600		122		2
Credit default swaps		3,169		62		31		6,850		58		35
Synthetic GICs		3,888		—		—		3,670		—		—
Other		353		3		1		250		43		—

Total	$	171,747	$	5,678	$	3,656	$	210,768	$	4,037	$	2,603

The above table does not include notional amounts for equity futures, equity variance swaps, and equity options. At March 31, 2008 and December 31, 2007, the Company owned 8,621 and 4,658 equity future contracts, respectively. Fair values of equity futures are included in financial futures in the preceding table. At March 31, 2008 and December 31, 2007, the Company owned 754,562 and 695,485 equity variance swaps, respectively. Fair values of equity variance swaps are included in financial forwards in the preceding table. At March 31, 2008 and December 31, 2007, the Company owned 79,725,122 and 77,374,937 equity options, respectively. Fair values of equity options are included in options in the preceding table.

MetLife, Inc.

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

This information should be read in conjunction with Note 4 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report.

The Company commenced the use of inflation swaps during the first quarter of 2008. Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in other in the preceding table.

Hedging

The following table presents the notional amount and fair value of derivatives by type of hedge designation at:


	March 31, 2008						December 31, 2007
	Notional		Fair Value				Notional		Fair Value
	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Fair value	$	9,958	$	1,063	$	158	$	10,006	$	650	$	99
Cash flow		4,656		185		361		4,717		161		321
Foreign Operations		2,789		16		117		1,872		11		119
Non-qualifying		154,344		4,414		3,020		194,173		3,215		2,064

Total	$	171,747	$	5,678	$	3,656	$	210,768	$	4,037	$	2,603

The following table presents the settlement payments recorded in income for the:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Qualifying hedges:
Net investment income	$	(2	)	$	9
Interest credited to policyholder account balances		21			(11	)
Other expenses		—			1
Non-qualifying hedges:
Net investment income		(2	)		—
Net investment gains (losses)		8			62

Total	$	25		$	61

Fair Value Hedges

The Company designates and accounts for the following as fair value hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert fixed rate investments to floating rate investments; and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities.

MetLife, Inc.

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

The Company recognized net investment gains (losses) representing the ineffective portion of all fair value hedges as follows:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Changes in the fair value of derivatives	$	345		$	(13	)
Changes in the fair value of the items hedged		(340	)		14

Net ineffectiveness of fair value hedging activities	$	5		$	1

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

Cash Flow Hedges

The Company designates and accounts for the following as cash flow hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert floating rate investments to fixed rate investments; (ii) interest rate swaps to convert floating rate liabilities to fixed rate liabilities; and (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities.

For the three months ended March 31, 2008 and 2007, the Company did not recognize any net investment gains (losses) which represented the ineffective portion of all cash flow hedges. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. The net amounts reclassified into net investment gains (losses) for the three months ended March 31, 2008 and 2007 related to such discontinued cash flow hedges were losses of $4 million and $3 million, respectively. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the three months ended March 31, 2008 and 2007.

The following table presents the components of other comprehensive income (loss), before income tax, related to cash flow hedges:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Other comprehensive income (loss) balance at the beginning of the period	$	(270	)	$	(208	)
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges		(35	)		(24	)
Amounts reclassified to net investment gains (losses)		(58	)		(1	)
Amounts reclassified to net investment income		2			5
Amortization of transition adjustment		—			(1	)

Other comprehensive income (loss) balance at the end of the period	$	(361	)	$	(229	)

At March 31, 2008, $21 million of the deferred net loss on derivatives accumulated in other comprehensive income (loss) is expected to be reclassified to earnings within the next 12 months.

MetLife, Inc.

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

Hedges of Net Investments in Foreign Operations

The Company uses forward exchange contracts, foreign currency swaps, options and non-derivative financial instruments to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on the forward exchange contracts based upon the change in forward rates. There was no ineffectiveness recorded for the three months ended March 31, 2008 and 2007.

The Company’s consolidated statement of stockholders’ equity for the three months ended March 31, 2008 includes losses of $5 million related to foreign currency contracts and non-derivative financial instruments used to hedge its net investments in foreign operations. At March 31, 2008 and December 31, 2007, the cumulative foreign currency translation loss recorded in accumulated other comprehensive income (loss) related to these hedges was $374 million and $369 million, respectively. When net investments in foreign operations are sold or substantially liquidated, the amounts in accumulated other comprehensive income (loss) are reclassified to the consolidated statements of income, while a pro rata portion will be reclassified upon partial sale of the net investments in foreign operations.

Non-qualifying Derivatives and Derivatives for Purposes Other Than Hedging

The Company enters into the following derivatives that do not qualify for hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest rate swaps, purchased caps and floors, and interest rate futures to economically hedge its exposure to interest rates; (ii) foreign currency forwards, swaps and option contracts to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; (iv) equity futures, equity index options, interest rate futures and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (v) swap spread locks to economically hedge invested assets against the risk of changes in credit spreads; (vi) financial forwards to buy and sell securities; (vii) synthetic guaranteed interest contracts; (viii) credit default swaps and total rate of return swaps to synthetically create investments; (ix) basis swaps to better match the cash flows of assets and related liabilities; (x) credit default swaps held in relation to trading portfolios; (xi) swaptions to hedge interest rate risk; and (xii) inflation swaps to reduce risk generated from inflation-indexed liabilities.

The following table presents changes in fair value related to derivatives that do not qualify for hedge accounting:


	Three Months Ended
	March 31,
	2008		2007
	(In millions)

Net investment gains (losses), excluding embedded derivatives	$	66	$	(173	)
Policyholder benefits and claims	$	57	$	(1	)
Net investment income (1)	$	76	$	—


(1)		Changes in fair value related to economic hedges of equity method investments in joint ventures that do not qualify for hedge accounting and changes in fair value related to derivatives held in relation to trading portfolios.

Embedded Derivatives

The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts principally include: variable annuities with guaranteed minimum withdrawal, guaranteed minimum accumulation and certain guaranteed minimum income riders; guaranteed investment contracts with equity or bond indexing crediting rates; assumed reinsurance on equity indexed annuities and those related to funds withheld on assumed reinsurance.

MetLife, Inc.

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

The following table presents the fair value of the Company’s embedded derivatives at:


	March 31,			December 31,
	2008			2007
	(In millions)

Net embedded derivatives within asset host contracts	$	(161	)	$	(29	)
Net embedded derivatives within liability host contracts	$	1,386		$	879

The following table presents changes in fair value related to embedded derivatives:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Net investment gains (losses)	$	(579	)	$	53
Interest credited to policyholder account balances	$	(20	)	$	(9	)
Other expenses	$	7		$	1

Credit Risk

The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date. The credit exposure of the Company’s derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date.

The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.

The Company enters into various collateral arrangements, which require both the pledging and accepting of collateral in connection with its derivative instruments. As of March 31, 2008 and December 31, 2007, the Company was obligated to return cash collateral under its control of $1,511 million and $833 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. As of March 31, 2008 and December 31, 2007, the Company had also accepted collateral consisting of various securities with a fair market value of $860 million and $678 million, respectively, which are held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, but as of March 31, 2008 and December 31, 2007, none of the collateral had been sold or repledged.

As of March 31, 2008 and December 31, 2007, the Company provided collateral of $346 million and $162 million, respectively, which is included in fixed maturity securities in the consolidated balance sheets. In addition, the Company has exchange traded futures, which require the pledging of collateral. As of March 31, 2008 and December 31, 2007, the Company pledged collateral of $206 million and $167 million, respectively, which is included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral. As of March 31, 2008 and December 31, 2007, the Company provided cash collateral of $82 million and $102 million, respectively, which is included in premiums and other receivables in the consolidated balance sheet.

MetLife, Inc.

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


5.	Closed Block

On April 7, 2000, (the “Demutualization Date”), MLIC converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.

Information regarding the closed block liabilities and assets designated to the closed block is as follows:


	March 31,			December 31,
	2008			2007
	(In millions)

Closed Block Liabilities
Future policy benefits	$	43,328		$	43,362
Other policyholder funds		324			323
Policyholder dividends payable		733			709
Policyholder dividend obligation		119			789
Payables for collateral under securities loaned and other transactions		6,308			5,610
Other liabilities		393			290

Total closed block liabilities		51,205			51,083

Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $30,412 and $29,631, respectively)		30,900			30,481
Equity securities available-for-sale, at estimated fair value (cost: $1,578 and $1,555, respectively)		1,739			1,875
Mortgage loans on real estate		7,367			7,472
Policy loans		4,297			4,290
Real estate and real estate joint ventures held-for-investment		305			297
Short-term investments		10			14
Other invested assets		855			829

Total investments		45,473			45,258
Cash and cash equivalents		350			333
Accrued investment income		461			485
Deferred income tax assets		610			640
Premiums and other receivables		140			151

Total assets designated to the closed block		47,034			46,867

Excess of closed block liabilities over assets designated to the closed block		4,171			4,216

Amounts included in accumulated other comprehensive income (loss):
Unrealized investment gains (losses), net of income tax of $232 and $424, respectively		422			751
Unrealized gains (losses) on derivative instruments, net of income tax of ($23) and ($19), respectively		(39	)		(33	)
Allocated to policyholder dividend obligation, net of income tax of ($43) and ($284), respectively		(76	)		(505	)

Total amounts included in accumulated other comprehensive income (loss)		307			213

Maximum future earnings to be recognized from closed block assets and liabilities	$	4,478		$	4,429

Information regarding the closed block policyholder dividend obligation is as follows:


	Three Months Ended			Year Ended
	March 31, 2008			December 31, 2007
	(In millions)

Balance at beginning of period	$	789		$	1,063
Change in unrealized investment and derivative gains (losses)		(670	)		(274	)

Balance at end of period	$	119		$	789

MetLife, Inc.

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

Information regarding the closed block revenues and expenses is as follows:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	651		$	676
Net investment income and other revenues		564			583
Net investment gains (losses)		(65	)		13

Total revenues		1,150			1,272

Expenses
Policyholder benefits and claims		803			808
Policyholder dividends		371			367
Other expenses		56			59

Total expenses		1,230			1,234

Revenues, net of expenses before income tax		(80	)		38
Income tax		(31	)		13

Revenues, net of expenses and income tax	$	(49	)	$	25

The change in the maximum future earnings of the closed block is as follows:


	Three Months Ended
	March 31,
	2008		2007
	(In millions)

Balance at end of period	$	4,478	$	4,451
Less:
Cumulative effect of a change in accounting principle, net of income tax		—		(4	)
Balance at beginning of period		4,429		4,480

Change during period	$	49	$	(25	)

MLIC charges the closed block with federal income taxes, state and local premium taxes, and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.

MetLife, Inc.

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


6.	Insurance

Insurance Liabilities

Insurance liabilities are as follows:


	Future Policy Benefits				Policyholder Account Balances				Other Policyholder Funds
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2008		2007		2008		2007		2008		2007
	(In millions)

Institutional
Group life	$	3,370	$	3,326	$	14,267	$	13,997	$	2,518	$	2,364
Retirement & savings		38,273		37,947		54,380		51,586		214		213
Non-medical health & other		10,785		10,617		516		501		588		597
Individual Traditional life		52,572		52,493		—		—		1,481		1,480
Universal variable life		1,034		985		15,037		14,898		1,609		1,572
Annuities		3,126		3,063		37,998		37,807		74		76
Other		—		—		2,472		2,410		—		—
Auto & Home		3,217		3,273		—		—		40		51
International		10,706		9,826		5,496		4,961		1,403		1,296
Reinsurance		6,340		6,159		6,593		6,657		2,483		2,297
Corporate & Other		4,624		4,573		4,771		4,532		221		230

Total	$	134,047	$	132,262	$	141,530	$	137,349	$	10,631	$	10,176


7.	Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a large number of litigation matters. In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the United States permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrate to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. Thus, unless stated below, the specific monetary relief sought is not noted.

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be inherently impossible to ascertain with any degree of certainty. Inherent uncertainties can include how fact finders will view individually and in their totality documentary evidence, the credibility and effectiveness of witnesses’ testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

MetLife, Inc.

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

On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and contingencies to be reflected in the Company’s consolidated financial statements. The review includes senior legal and financial personnel. Unless stated below, estimates of possible losses or ranges of loss for particular matters cannot in the ordinary course be made with a reasonable degree of certainty. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities have been established for a number of the matters noted below. 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 estimated as of March 31, 2008.

Demutualization Actions

Several lawsuits were brought in 2000 challenging the fairness of the Plan and the adequacy and accuracy of MLIC’s disclosure to policyholders regarding the Plan. The actions discussed below name as defendants some or all of MLIC, the Holding Company, and individual directors. MLIC, the Holding Company, and the individual directors believe they have meritorious defenses to the plaintiffs’ claims and are contesting vigorously all of the plaintiffs’ claims in these actions.

Fiala, et al. v. Metropolitan Life Ins. Co., et al. (Sup. Ct., N.Y. County, filed March 17, 2000). The plaintiffs in the consolidated state court class actions seek compensatory relief and punitive damages against MLIC, the Holding Company, and individual directors. On January 30, 2007, the trial court signed an order certifying a litigation class of present and former policyholders on plaintiffs’ claim that defendants violated section 7312 of the New York Insurance Law, but denying plaintiffs’ motion to certify a litigation class with respect to a common law fraud claim. Plaintiffs and defendants have appealed from this order. The court has directed various forms of class notice.

In re MetLife Demutualization Litig. (E.D.N.Y., filed April 18, 2000). In this class action against MLIC and the Holding Company, plaintiffs served a second consolidated amended complaint in 2004. Plaintiffs assert violations of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the Plan, claiming that the Policyholder Information Booklets failed to disclose certain material facts and contained certain material misstatements. They seek rescission and compensatory damages. By orders dated July 19, 2005 and August 29, 2006, the federal trial court certified a litigation class of present and former policyholders. The court has not yet directed the manner and form of class notice. MLIC and the Holding Company have served a motion for summary judgment, and plaintiffs have served a motion for partial summary judgment.

Asbestos-Related Claims

MLIC is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive damages. MLIC has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products nor has MLIC issued liability or workers’ compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits principally have focused on allegations with respect to certain research, publication and other activities of one or more of MLIC’s employees during the period from the 1920’s through approximately the 1950’s and allege that MLIC learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. MLIC believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain and can be impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of the alleged injury, and factors unrelated to the ultimate legal merit of the claims asserted against MLIC. MLIC employs a number of resolution strategies to manage its asbestos loss exposure, including seeking resolution of pending litigation by judicial rulings and settling litigation under appropriate circumstances.

Claims asserted against MLIC have included negligence, intentional tort and conspiracy concerning the health risks associated with asbestos. MLIC’s defenses (beyond denial of certain factual allegations) include that: (i) MLIC

MetLife, Inc.

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

owed no duty to the plaintiffs — it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of MLIC; (iii) MLIC’s conduct was not the cause of the plaintiffs’ injuries; (iv) plaintiffs’ exposure occurred after the dangers of asbestos were known; and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial courts have granted motions dismissing claims against MLIC, while other trial courts have denied MLIC’s motions to dismiss. There can be no assurance that MLIC will receive favorable decisions on motions in the future. While most cases brought to date have settled, MLIC intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials.

As reported in the 2007 Annual Report, MLIC received approximately 7,200 asbestos-related claims in 2007. During the three months ended March 31, 2008 and 2007, MLIC received approximately 2,000 and 1,600 new asbestos-related claims, respectively. See Note 16 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report for historical information concerning asbestos claims and MLIC’s increase in its recorded liability at December 31, 2002. The number of asbestos cases that may be brought or the aggregate amount of any liability that MLIC may ultimately incur is uncertain.

The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. MLIC’s recorded asbestos liability is based on its estimation of the following elements, as informed by the facts presently known to it, its understanding of current law, and its past experiences: (i) the probable and reasonably estimable liability for asbestos claims already asserted against MLIC, including claims settled but not yet paid; (ii) the probable and reasonably estimable liability for asbestos claims not yet asserted against MLIC, but which MLIC believes are reasonably probable of assertion; and (iii) the legal defense costs associated with the foregoing claims. Significant assumptions underlying MLIC’s analysis of the adequacy of its recorded liability with respect to asbestos litigation include: (i) the number of future claims; (ii) the cost to resolve claims; and (iii) the cost to defend claims.

MLIC reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants, and the jurisdictions in which claims are pending. MLIC regularly reevaluates its exposure from asbestos litigation and has updated its liability analysis for asbestos-related claims through March 31, 2008.

The ability of MLIC to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict with any certainty the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against MLIC when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts.

The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company’s judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company’s total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on the Company’s financial position.

MetLife, Inc.

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

During 1998, MLIC paid $878 million in premiums for excess insurance policies for asbestos-related claims. The excess insurance policies for asbestos-related claims provide for recovery of losses up to $1.5 billion, which is in excess of a $400 million self-insured retention. The Company’s initial option to commute the excess insurance policies for asbestos-related claims arises at the end of 2008. Thereafter, the Company will have a commutation right every five years. The excess insurance policies for asbestos-related claims are also subject to annual and per claim sublimits. Amounts exceeding the sublimits during 2007, 2006 and 2005 were approximately $16 million, $8 million and $0, respectively. The Company continues to study per claim averages, and there can be no assurance as to the number and cost of claims resolved in the future, including related defense costs, and the applicability of the sublimits to these costs. Amounts are recoverable under the policies annually with respect to claims paid during the prior calendar year. Although amounts paid by MLIC in any given year that may be recoverable in the next calendar year under the policies will be reflected as a reduction in the Company’s operating cash flows for the year in which they are paid, management believes that the payments will not have a material adverse effect on the Company’s liquidity.

Each asbestos-related policy contains an experience fund and a reference fund that provide for payments to MLIC at the commutation date if the reference fund is greater than zero at commutation or pro rata reductions from time to time in the loss reimbursements to MLIC if the cumulative return on the reference fund is less than the return specified in the experience fund. The return in the reference fund is tied to performance of the Standard & Poor’s (“S&P”) 500 Index and the Lehman Brothers Aggregate Bond Index. A claim with respect to the prior year was made under the excess insurance policies in each year from 2003 through 2007 for the amounts paid with respect to asbestos litigation in excess of the retention. As the performance of the indices impacts the return in the reference fund, it is possible that loss reimbursements to the Company and the recoverable amount with respect to later periods may be less than the amount of the recorded losses. Foregone loss reimbursements may be recovered upon commutation depending upon future performance of the reference fund. If at some point in the future, the Company believes the liability for probable and reasonably estimable losses for asbestos-related claims should be increased, an expense would be recorded and the insurance recoverable would be adjusted subject to the terms, conditions and limits of the excess insurance policies. Portions of the change in the insurance recoverable would be recorded as a deferred gain and amortized into income over the estimated remaining settlement period of the insurance policies. The foregone loss reimbursements were approximately $62.2 million with respect to claims for the period of 2002 through 2007 and are estimated, as of March 31, 2008, to be approximately $88.2 million in the aggregate, including future years.

Sales Practices Claims

Over the past several years, MLIC; New England Mutual Life Insurance Company, New England Life Insurance Company and New England Securities Corporation (collectively “New England”); General American Life Insurance Company (“GALIC”); Walnut Street Securities, Inc. (“Walnut Street Securities”) and MetLife Securities, Inc. (“MSI”) have faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products.

As of March 31, 2008, there were approximately 140 sales practices litigation matters pending against the Company. The Company continues to vigorously defend against the claims in these matters. Some sales practices claims have been resolved through settlement. Other sales practices claims have been won by dispositive motions or have gone to trial. Most of the current cases seek substantial damages, including in some cases punitive and treble damages and attorneys’ fees. Additional litigation relating to the Company’s marketing and sales of individual life insurance, mutual funds or other products may be commenced in the future.

Two putative class action lawsuits involving sales practices claims are pending against MLIC in Canada. In Jacynthe Evoy-Larouche v. Metropolitan Life Ins. Co. (Que. Super. Ct., filed March 1998), plaintiff alleges misrepresentations regarding dividends and future payments for life insurance policies and seeks unspecified damages. In Ace Quan v. Metropolitan Life Ins. Co. (Ont. Gen. Div., filed April 1997), plaintiff alleges breach of

MetLife, Inc.

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

contract and negligent misrepresentations relating to, among other things, life insurance premium payments and seeks damages, including punitive damages.

Regulatory authorities in a small number of states have had investigations or inquiries relating to MLIC’s, New England’s, GALIC’s, MSI’s or Walnut Street Securities’ sales of individual life insurance policies or annuities or other products. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief. The Company may continue to resolve investigations in a similar manner. The Company believes adequate provision has been made in its unaudited interim condensed consolidated financial statements for all probable and reasonably estimable losses for sales practices claims against MLIC, New England, GALIC, MSI and Walnut Street Securities.

Property and Casualty Actions

Katrina-Related Litigation. There are a number of lawsuits, including a few putative class actions and “mass” actions, pending in Louisiana and Mississippi against Metropolitan Property and Casualty Insurance Company relating to Hurricane Katrina. The lawsuits include claims by policyholders for coverage for damages stemming from Hurricane Katrina, including for damages resulting from flooding or storm surge. The deadline for filing actions in Louisiana has expired. It is reasonably possible that additional actions will be filed in other states. The Company intends to continue to defend vigorously against these matters, although appropriate matters may be resolved as part of the ordinary claims adjustment process.

Shipley v. St. Paul Fire and Marine Ins. Co. and Metropolitan Property and Casualty Ins. Co. (Ill. Cir. Ct., Madison County, filed February 26 and July 2, 2003). Two putative nationwide class actions have been filed against Metropolitan Property and Casualty Insurance Company in Illinois. One suit claims breach of contract and fraud due to the alleged underpayment of medical claims arising from the use of a purportedly biased provider fee pricing system. A motion for class certification has been filed and briefed. The second suit currently alleges breach of contract arising from the alleged use of preferred provider organizations to reduce medical provider fees covered by the medical claims portion of the insurance policy. A motion for class certification has been filed and briefed. A third putative nationwide class action relating to the payment of medical providers, Innovative Physical Therapy, Inc. v. MetLife Auto & Home, et ano (D. N.J., filed November 12, 2007) has been filed against Metropolitan Property and Casualty Insurance Company in federal court in New Jersey. The Company is vigorously defending against the claims in these matters.

Regulatory Matters

The Company receives and responds to subpoenas or other inquiries from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the SEC; federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority seeking a broad range of information. The issues involved in information requests and regulatory matters vary widely. Certain regulators have requested information and documents regarding contingent commission payments to brokers, the Company’s awareness of any “sham” bids for business, bids and quotes that the Company submitted to potential customers, incentive agreements entered into with brokers, or compensation paid to intermediaries. Regulators also have requested information relating to market timing and late trading of mutual funds and variable insurance products and, generally, the marketing of products. The Company has received a subpoena from the Office of the U.S. Attorney for the Southern District of California asking for documents regarding the insurance broker Universal Life Resources. The Company has been cooperating fully with these inquiries.

In 2005, MSI received a notice from the Illinois Department of Securities asserting possible violations of the Illinois Securities Act in connection with sales of a former affiliate’s mutual funds. A response has been submitted and in January 2008, MSI received notice of the commencement of an administrative action by the Illinois

MetLife, Inc.

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

Department of Securities. MSI has filed a motion to dismiss the action. MSI intends to vigorously defend against the claims in this matter.

Other Litigation

In Re Ins. Brokerage Antitrust Litig. (D. N.J., filed February 24, 2005). In this multi-district proceeding, plaintiffs filed a class action complaint consolidating claims from several separate actions that had been filed in or transferred to the District of New Jersey in 2004 and 2005. The consolidated complaint alleged that the Holding Company, MLIC, several non-affiliated insurance companies and several insurance brokers violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Employee Retirement Income Security Act of 1974 (“ERISA”), and antitrust laws and committed other misconduct in the context of providing insurance to employee benefit plans and to persons who participate in such employee benefit plans. In August and September 2007, the court issued orders granting defendants’ motions to dismiss with prejudice the federal antitrust and the RICO claims. In January 2008, the court issued an order granting defendants’ summary judgment motion on the ERISA claims, and in February 2008, the court dismissed the remaining state law claims on jurisdictional grounds. Plaintiffs have filed a notice of appeal of the court’s decisions. A putative class action alleging that the Holding Company and other non-affiliated defendants violated state laws was transferred to the District of New Jersey but was not consolidated with other related actions. Plaintiffs’ motion to remand this action to state court in Florida is pending.

The American Dental Association, et al. v. MetLife Inc., et al. (S.D. Fla., filed May 19, 2003). The American Dental Association and three individual providers have sued the Holding Company, MLIC and other non-affiliated insurance companies in a putative class action lawsuit. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are being wrongfully reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal racketeering and various state law theories of liability. The district court granted in part and denied in part the Company’s motion to dismiss. The plaintiffs have filed an amended complaint, and the Company will file another motion to dismiss.

Thomas, et al. v. Metropolitan Life Ins. Co., et al. (W.D. Okla., filed January 31, 2007). A putative class action complaint was filed against MLIC and MSI. Plaintiffs assert legal theories of violations of the federal securities laws and violations of state laws with respect to the sale of certain proprietary products by the Company’s agency distribution group. Plaintiffs seek rescission, compensatory damages, interest, punitive damages and attorneys’ fees and expenses. In January and May 2008, the court issued orders granting the defendants’ motion to dismiss in part, dismissing all of plaintiffs’ claims except for claims under the Investment Advisers Act. The Company is vigorously defending against the remaining claims in this matter.

MLIC also has been named as a defendant in a number of welding and mixed dust lawsuits filed in various state and federal courts. The Company is continuing to vigorously defend against these claims.

Summary

Putative or certified class action litigation and other litigation and claims and assessments against the Company, in addition to those discussed previously 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, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

MetLife, Inc.

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

material adverse effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Commitments

Commitments to Fund Partnership Investments

The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $4.5 billion and $4.3 billion at March 31, 2008 and December 31, 2007, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years.

Mortgage Loan Commitments

Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which 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 $800 million, with a cumulative maximum of $2.4 billion, 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.

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.

MetLife, Inc.

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

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.

During the three months ended March 31, 2008, the Company recorded $7 million of additional liabilities for guarantees related to certain investment transactions. The term for these liabilities varies, with a maximum of 18 years. The maximum potential amount of future payments the Company could be required to pay under these guarantees is $225 million. The Company’s recorded liabilities were $13 million and $6 million at March 31, 2008 and December 31, 2007, respectively, for indemnities, guarantees and commitments.

In connection with synthetically created investment transactions, the Company writes credit default swap obligations that generally require payment of principal outstanding due in exchange for the referenced credit obligation. If a credit event, as defined by the contract, occurs the Company’s maximum amount at risk, assuming the value of the referenced credits becomes worthless, was $905 million at March 31, 2008. The credit default swaps expire at various times during the next eight years.


8.	Employee Benefit Plans

Pension and Other Postretirement Benefit Plans

Certain subsidiaries of the Holding Company (the “Subsidiaries”) sponsor and/or administer various qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited service and either final average or career average earnings. As of March 31, 2008, virtually all of the Subsidiaries’ obligations have been calculated using the traditional formula. The cash balance formula utilizes hypothetical or notional accounts, which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. The non-qualified pension plans provide supplemental benefits, in excess of amounts permitted by governmental agencies, to certain executive level employees.

The Subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Employees of the Subsidiaries who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for one of the Subsidiaries, may become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits.

The Subsidiaries have issued group annuity and life insurance contracts supporting approximately 98% of all pension and postretirement employee benefit plan assets sponsored by the Subsidiaries.

A December 31 measurement date is used for all of the Subsidiaries’ defined benefit pension and other postretirement benefit plans.

MetLife, Inc.

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

The components of net periodic benefit cost were as follows:


							Other Postretirement
	Pension Benefits						Benefits
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
	(In millions)

Service cost	$	43		$	41		$	6		$	7
Interest cost		97			90			26			26
Expected return on plan assets		(133	)		(128	)		(23	)		(22	)
Amortization of prior service cost (credit)		4			3			(9	)		(9	)
Amortization of net actuarial (gains) losses		5			17			—			—

Net periodic benefit cost	$	16		$	23		$	—		$	2

The components of net periodic benefit cost amortized from accumulated other comprehensive income (loss) were as follows:


							Other Postretirement
	Pension Benefits						Benefits
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2008			2007			2008			2007
	(In millions)

Amortization of prior service cost (credit)	$	4		$	3		$	(9	)	$	(9	)
Amortization of net actuarial (gains) losses		5			17			—			—

Subtotal		9			20			(9	)		(9	)
Deferred income tax		(4	)		(8	)		3			3

Components of net periodic benefit cost amortized from accumulated other comprehensive income (loss), net of income tax	$	5		$	12		$	(6	)	$	(6	)

As disclosed in Note 17 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report, the Company expected to make, though no contributions were required to be made, discretionary contributions of up to $150 million to the Subsidiaries’ qualified pension plans during 2008. As of March 31, 2008, no discretionary contributions were made to those plans. The Company funds benefit payments for its non-qualified pension and other postretirement plans as due through its general assets.

MetLife, Inc.

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


9.	Equity

Preferred Stock

Information on the declaration, record and payment dates, as well as per share and aggregate dividend amounts, for the Company’s Floating Rate Non-Cumulative Preferred Stock, Series A (the “Series A preferred shares”) and 6.50% Non-Cumulative Preferred Stock, Series B (the “Series B preferred shares,” together with the Series A preferred shares, collectively, the “Preferred Shares”) is as follows for the three months ended March 31, 2008 and 2007:


			Dividend
			Series A		Series A		Series B		Series B
Declaration Date	Record Date	Payment Date	Per Share		Aggregate		Per Share		Aggregate
			(In millions, except per share data)

March 5, 2008	February 29, 2008	March 17, 2008	$	0.3785745	$	9	$	0.4062500	$	24
March 5, 2007	February 28, 2007	March 15, 2007	$	0.3975000	$	10	$	0.4062500	$	24

See Note 18 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report for further information.

Common Stock

At January 1, 2007, the Company had $216 million remaining under its October 2004 stock repurchase program authorization. In February 2007, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program which began after the completion of the $1 billion common stock repurchase program authorized in October 2004. In September 2007, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program which began after the completion of the February 2007 program. In January 2008, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program, which began after the completion of the September 2007 program. Under these authorizations, the Company may purchase its common stock from the MetLife Policyholder Trust, in the open market (including pursuant to the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934) and in privately negotiated transactions.

In February 2008, the Company entered into an accelerated common stock repurchase agreement with a major bank. Under the agreement, the Company paid the bank $711 million in cash and the bank delivered an initial amount of 11.2 million shares of the Company’s outstanding common stock that the bank borrowed from third parties. Final settlement of the agreement is scheduled to take place during the second quarter of 2008. The final number of shares the Company is repurchasing under the terms of the agreement and the timing of the final settlement will depend on, among other things, prevailing market conditions and the market prices of the common stock during the repurchase period. The Company recorded the shares initially repurchased as treasury stock.

In December 2007, the Company entered into an accelerated common stock repurchase agreement with a major bank. Under the terms of the agreement, the Company paid the bank $450 million in cash in January 2008 in exchange for 6.6 million shares of the Company’s outstanding common stock that the bank borrowed from third parties. Also in January 2008, the bank delivered 1.1 million additional shares of the Company’s common stock to the Company resulting in a total of 7.7 million shares being repurchased under the agreement. At December 31, 2007, the Company recorded the obligation to pay $450 million to the bank as a reduction of additional paid-in capital. Upon settlement with the bank, the Company increased additional paid-in capital and reduced treasury stock.

In November 2007, the Company repurchased 11.6 million shares of its outstanding common stock at an initial cost of $750 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the stock sold to the Company from third parties and purchased the common stock in the open market to return to such third parties. Also, in November 2007, the Company received a cash adjustment of $19 million based on the trading prices of the common stock during the repurchase period, for a final purchase price of $731 million.

MetLife, Inc.

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

The Company recorded the shares initially repurchased as treasury stock and recorded the amount received as an adjustment to the cost of the treasury stock.

In March 2007, the Company repurchased 11.9 million shares of its outstanding common stock at an aggregate cost of $750 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the common stock sold to the Company from third parties and purchased common stock in the open market to return to such third parties. In June 2007, the Company paid a cash adjustment of $17 million for a final purchase price of $767 million. The Company recorded the shares initially repurchased as treasury stock and recorded the amount paid as an adjustment to the cost of the treasury stock.

In December 2006, the Company repurchased 4.0 million shares of its outstanding common stock at an aggregate cost of $232 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the common stock sold to the Company from third parties and purchased the common stock in the open market to return to such third parties. In February 2007, the Company paid a cash adjustment of $8 million for a final purchase price of $240 million. The Company recorded the shares initially repurchased as treasury stock and recorded the amount paid as an adjustment to the cost of the treasury stock.

The Company repurchased 1.5 million shares through open market purchases for $89 million during the three months ended March 31, 2008. The Company also repurchased 3.1 million shares through open market purchases for $200 million during the year ended December 31, 2007.

The Company repurchased 20.4 million and 11.9 million shares of its common stock for $1.3 billion and $750 million during the three months ended March 31, 2008 and 2007, respectively. During the three months ended March 31, 2008 and 2007, 0.6 million and 1.0 million shares of common stock were issued from treasury stock for $32 million and $42 million, respectively. At March 31, 2008, $261 million remains on the Company’s January 2008 common stock repurchase program. See Note 15 for further information with respect to activity associated with the Company’s common stock repurchase program subsequent to March 31, 2008.

Stock-Based Compensation Plans

Description of Plans

The MetLife, Inc. 2000 Stock Incentive Plan, as amended (the “Stock Incentive Plan”), authorized the granting of awards in the form of options to buy shares of the Company’s common stock (“Stock Options”) that either qualify as incentive Stock Options under Section 422A of the Internal Revenue Code or are non-qualified. The MetLife, Inc. 2000 Directors Stock Plan, as amended (the “Directors Stock Plan”), authorized the granting of awards in the form of the Company’s common stock, non-qualified Stock Options, or a combination of the foregoing to outside Directors of the Company. Under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan, as amended (the “2005 Stock Plan”), awards granted may be in the form of Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Shares or Performance Share Units, Cash-Based Awards, and Stock-Based Awards (each as defined in the 2005 Stock Plan). Under the MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan (the “2005 Directors Stock Plan”), awards granted may be in the form of non-qualified Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, or Stock-Based Awards (each as defined in the 2005 Directors Stock Plan). The Stock Incentive Plan, Directors Stock Plan, 2005 Stock Plan and the 2005 Directors Stock Plan, are hereinafter collectively referred to as the “Incentive Plans.”

As of March 31, 2008, the aggregate number of shares remaining available for issuance pursuant to the 2005 Stock Plan and the 2005 Directors Stock Plan was 55,572,090 and 1,917,520, respectively.

Compensation expense of $53 million and $59 million, and income tax benefits of $19 million and $21 million, related to the Incentive Plans was recognized for the three months ended March 31, 2008 and 2007, respectively. Compensation expense is principally related to the issuance of Stock Options and Performance Shares. The majority of awards granted by the Company are made in the first quarter of each year. As a result of the Company’s policy of recognizing stock-based compensation over the shorter of the stated requisite service period or period until

MetLife, Inc.

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

attainment of retirement eligibility, a greater proportion of the aggregate fair value for awards granted on or after January 1, 2006 is recognized immediately on the grant date.

Stock Options

All Stock Options granted had an exercise price equal to the closing price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and have a maximum term of ten years. Certain Stock Options granted under the Stock Incentive Plan and the 2005 Stock Plan have or will become exercisable over a three year period commencing with the date of grant, while other Stock Options have or will become exercisable three years after the date of grant. Stock Options issued under the Directors Stock Plan were exercisable immediately. The date at which a Stock Option issued under the 2005 Directors Stock Plan becomes exercisable is determined at the time such Stock Option is granted.

During the three months ended March 31, 2008, the Company granted 3,241,350 Stock Option awards with a weighted average exercise price of $60.51 for which the total fair value on the date of grant was $57 million. The number of Stock Options outstanding as of March 31, 2008 was 27,053,621 with a weighted average exercise price of $41.49.

Compensation expense of $21 million and $24 million related to Stock Options was recognized for the three months ended March 31, 2008 and 2007, respectively.

As of March 31, 2008, there was $68 million of total unrecognized compensation costs related to Stock Options. It is expected that these costs will be recognized over a weighted average period of 2.28 years.

Performance Shares

Beginning in 2005, certain members of management were awarded Performance Shares under (and as defined in) the 2005 Stock Plan. Participants are awarded an initial target number of Performance Shares with the final number of Performance Shares payable being determined by the product of the initial target multiplied by a factor of 0.0 to 2.0. The factor applied is based on measurements of the Company’s performance with respect to: (i) the change in annual net operating earnings per share, as defined; and (ii) the proportionate total shareholder return, as defined, with reference to the three-year performance period relative to other companies in the S&P Insurance Index with reference to the same three-year period. Performance Share awards will normally vest in their entirety at the end of the three-year performance period (subject to certain contingencies) and will be payable entirely in shares of the Company’s common stock.

During the three months ended March 31, 2008, the Company granted 913,975 Performance Share awards for which the total fair value on the date of grant was $53 million. The number of Performance Shares outstanding as of March 31, 2008 was 3,598,700 with a weighted average fair value of $50.82. These amounts represent aggregate initial target awards and do not reflect potential increases or decreases resulting from the final performance factor to be determined following the end of the respective performance period. The three-year performance period associated with the Performance Shares awarded for 2005 was completed effective December 31, 2007. The final performance factor will be applied to the 965,525 Performance Shares associated with the 2005 grant outstanding as of December 31, 2007 and will result in the issuance of approximately 1,931,050 shares of the Company’s common stock.

Compensation expense of $32 million and $35 million related to Performance Shares was recognized for the three months ended March 31, 2008 and 2007, respectively.

As of March 31, 2008, there was $95 million of total unrecognized compensation costs related to Performance Share awards. It is expected that these costs will be recognized over a weighted average period of 2.16 years.

MetLife, Inc.

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

Comprehensive Income (Loss)

The components of comprehensive income (loss) are as follows:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Net income	$	648		$	1,017
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax		(60	)		(14	)
Unrealized investment gains (losses), net of related offsets and income tax		(2,188	)		265
Foreign currency translation adjustment, net of income tax		153			27
Defined benefit plans adjustment, net of income tax		(1	)		6

Other comprehensive income (loss):		(2,096	)		284

Comprehensive income (loss)	$	(1,448	)	$	1,301


10.	Other Expenses

Information on other expenses is as follows:


	Three Months Ended March 31,
	2008			2007
	(In millions)

Compensation	$	852		$	866
Commissions		1,065			925
Interest and debt issue costs		319			252
Amortization of DAC and VOBA		415			780
Capitalization of DAC		(811	)		(851	)
Rent, net of sublease income		90			74
Minority interest		21			84
Insurance tax		191			181
Other		534			585

Total other expenses	$	2,676		$	2,896

MetLife, Inc.

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


11.	Earnings Per Common Share

The following table presents the weighted average shares used in calculating basic earnings per common share and those used in calculating diluted earnings per common share for each income category presented below:


	Three Months Ended
	March 31,
	2008		2007
	(In millions, except share
	and per share data)

Weighted average common stock outstanding for basic earnings per common share		720,392,991		752,658,844
Incremental common shares from assumed:
Stock purchase contracts underlying common equity units		3,597,970		5,973,435
Exercise or issuance of stock-based awards		8,731,181		10,475,352

Weighted average common stock outstanding for diluted earnings per common share		732,722,142		769,107,631

Earnings per common share:
Income from continuing operations	$	650	$	1,027
Preferred stock dividends		33		34

Income from continuing operations available to common shareholders	$	617	$	993

Basic	$	0.86	$	1.32

Diluted	$	0.84	$	1.29

Net income	$	648	$	1,017
Preferred stock dividends		33		34

Net income available to common shareholders	$	615	$	983

Basic	$	0.85	$	1.31

Diluted	$	0.84	$	1.28

The Company distributed and sold 82.8 million 6.375% common equity units for $2,070 million in proceeds in a registered public offering on June 21, 2005. These common equity units include stock purchase contracts issued by the Company. The stock purchase contracts are reflected in diluted earnings per common share using the treasury stock method, and are dilutive when the average closing price of the Company’s common stock for each of the 20 trading days before the close of the accounting period is greater than or equal to the threshold appreciation price of $53.10. During the periods ended March 31, 2008 and 2007, the average closing price for each of the 20 trading days before March 31, 2008 and 2007, was greater than the threshold appreciation price. Accordingly, the stock purchase contracts were included in diluted earnings per common share. See Note 13 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report for a description of the common equity units.


12.	Business Segment Information

The Company is a leading provider of insurance and other financial services with operations throughout the United States and the regions of Latin America, Europe, and Asia Pacific. The Company’s business is divided into five operating segments: Institutional, Individual, Auto & Home, International and Reinsurance, as well as Corporate & Other. These segments are managed separately because they either provide different products and services, require different strategies or have different technology requirements.

Institutional offers a broad range of group insurance and retirement & savings products and services, including group life insurance, non-medical health insurance, such as short and long-term disability, long-term care, and

MetLife, Inc.

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

dental insurance, and other insurance products and services. Individual offers a wide variety of protection and asset accumulation products, including life insurance, annuities and mutual funds. Auto & Home provides personal lines property and casualty insurance, including private passenger automobile, homeowners and personal excess liability insurance. International provides life insurance, accident and health insurance, annuities and retirement & savings products to both individuals and groups. Through the Company’s majority-owned subsidiary, Reinsurance Group of America, Inc. (“RGA”), the Reinsurance segment provides reinsurance of life and annuity policies in North America and various international markets. Additionally, reinsurance of critical illness policies is provided in select international markets.

Corporate & Other contains the excess capital not allocated to the business segments, various start-up entities, including MetLife Bank and run-off entities, as well as interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of all intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings, as well as intersegment transactions. Additionally, the Company’s asset management business, including amounts reported as discontinued operations, is included in the results of operations for Corporate & Other. See Note 13 for disclosures regarding discontinued operations, including real estate.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months ended March 31, 2008 and 2007. The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in consolidation. The Company allocates equity to each segment based upon the economic capital model that allows the Company to effectively manage its capital. The Company evaluates the performance of each segment based upon net income, excluding net investment gains (losses), net of income tax, adjustments related to net investment gains (losses), net of income tax, the impact from the cumulative effect of changes in accounting, net of income tax and discontinued operations, other than discontinued real estate, net of income tax, less preferred stock dividends. The Company allocates certain non-recurring items, such as expenses associated with certain legal proceedings, to Corporate & Other.

MetLife, Inc.

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


For the Three Months Ended							Auto &								Corporate &
March 31, 2008	Institutional			Individual			Home			International		Reinsurance			Other			Total
	(In millions)

Statement of Income:
Premiums	$	3,573		$	1,067		$	744		$	904	$	1,298		$	7		$	7,593
Universal life and investment-type product policy fees		224			903			—			290		—			—			1,417
Net investment income		2,030			1,697			53			269		189			270			4,508
Other revenues		190			148			10			7		30			10			395
Net investment gains (losses)		(731	)		(103	)		(11	)		135		(156	)		(20	)		(886	)
Policyholder benefits and claims		3,912			1,377			478			826		1,140			10			7,743
Interest credited to policyholder account balances		684			506			—			47		74			—			1,311
Policyholder dividends		—			427			1			2		—			—			430
Other expenses		574			988			204			428		129			353			2,676

Income from continuing operations before provision for income tax		116			414			113			302		18			(96	)		867
Provision for income tax		31			137			22			116		6			(95	)		217

Income from continuing operations		85			277			91			186		12			(1	)		650
Loss from discontinued operations, net of income tax		(1	)		(1	)		—			—		—			—			(2	)

Net income	$	84		$	276		$	91		$	186	$	12		$	(1	)	$	648


For the Three Months Ended						Auto &								Corporate &
March 31, 2007	Institutional			Individual		Home		International			Reinsurance			Other			Total
	(In millions)

Statement of Income:
Premiums	$	3,125		$	1,075	$	716	$	715		$	1,126		$	8		$	6,765
Universal life and investment-type product policy fees		191			853		—		236			—			—			1,280
Net investment income		1,915			1,732		48		250			206			370			4,521
Other revenues		190			146		11		13			18			6			384
Net investment gains (losses)		(88	)		15		12		24			(6	)		5			(38	)
Policyholder benefits and claims		3,475			1,363		430		592			902			11			6,773
Interest credited to policyholder account balances		726			507		—		78			65			—			1,376
Policyholder dividends		—			422		1		1			—			—			424
Other expenses		600			1,049		202		387			325			333			2,896

Income from continuing operations before provision for income tax		532			480		154		180			52			45			1,443
Provision for income tax		180			165		41		49			18			(37	)		416

Income from continuing operations		352			315		113		131			34			82			1,027
Income (loss) from discontinued operations, net of income tax		4			—		—		(31	)		—			17			(10	)

Net income	$	356		$	315	$	113	$	100		$	34		$	99		$	1,017

MetLife, Inc.

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

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:


	March 31,		December 31,
	2008		2007
	(In millions)

Institutional	$	205,989	$	204,005
Individual		243,484		250,691
Auto & Home		5,521		5,672
International		29,529		26,357
Reinsurance		21,612		21,331
Corporate & Other		50,997		50,506

Total	$	557,132	$	558,562

Net investment income and net investment gains (losses) are based upon the actual results of each segment’s specifically identifiable asset portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.

Revenues derived from any customer did not exceed 10% of consolidated revenues for the three months ended March 31, 2008 and 2007. Revenues from U.S. operations were $10.8 billion and $11.2 billion for the three months ended March 31, 2008 and 2007, respectively, which represented 83% and 87%, respectively, of consolidated revenues.


13.	Discontinued Operations

Real Estate

The Company actively manages its real estate portfolio with the objective of maximizing earnings through selective acquisitions and dispositions. Income related to real estate classified as held-for-sale or sold is presented in discontinued operations. These assets are carried at the lower of depreciated cost or fair value less expected disposition costs.

The following information presents the components of income (loss) from discontinued real estate operations:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Investment income	$	—		$	7
Investment expense		(2	)		(4	)
Net investment gains		—			5

Total revenues		(2	)		8
Provision for income tax		—			3

Income (loss) from discontinued operations, net of income tax	$	(2	)	$	5

The carrying value of real estate related to discontinued operations was $1 million at both March 31, 2008 and December 31, 2007.

MetLife, Inc.

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

The following table presents the discontinued real estate operations by segment:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Net investment income
Institutional	$	(1	)	$	2
Individual		(1	)		—
Corporate & Other		—			1

Total net investment income	$	(2	)	$	3

Net investment gains (losses)
Institutional	$	—		$	5
Individual		—			—
Corporate & Other		—			—

Total net investment gains (losses)	$	—		$	5

Operations

On August 31, 2007, MetLife Insurance Limited (“MetLife Australia”) completed the sale of its annuities and pension businesses to a third party for $25 million in cash consideration resulting in a gain upon disposal of $41 million, net of income tax. The Company reclassified the assets and liabilities of the annuities and pension businesses within MetLife Australia, which is reported in the International segment, to assets and liabilities of subsidiaries held-for-sale and the operations of the business to discontinued operations for all periods presented. Included within the assets to be sold were certain fixed maturity securities in a loss position for which the Company recognized a net investment loss on a consolidated basis of $34 million, net of income tax, for the three months ended March 31, 2007, because the Company no longer had the intent to hold such securities.

The following table presents the amounts related to the operations and financial position of MetLife Australia’s annuities and pension businesses:


	Three Months Ended
	March 31, 2007
	(In millions)

Revenues	$	25
Expenses		21

Income before provision for income tax		4
Provision for income tax		1
Net investment gain (loss), net of income tax		(34	)

Income (loss) from discontinued operations, net of income tax	$	(31	)

On January 31, 2005, the Company completed the sale of SSRM Holdings, Inc. (“SSRM”) to a third party. The Company reported the operations of SSRM in discontinued operations. Under the terms of the sale agreement, MetLife has had an opportunity to receive additional payments based on, among other things, certain revenue retention and growth measures. The purchase price is also subject to reduction over five years, depending on retention of certain MetLife-related business. In the first quarter of 2007, the Company received a payment of $16 million, net of income tax, as a result of the revenue retention and growth measure provision in the sales agreement.

MetLife, Inc.

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


14.	Fair Value

Assets and Liabilities Measured at Fair Value

Recurring Fair Value Measurements

The fair value of the Company’s financial instruments which are measured at fair value in the consolidated financial statements is estimated as follows:


	•	Fixed Maturity, Equity and Trading Securities and Short-Term Investments — When available, the estimated fair value of the Company’s fixed maturity, equity and trading securities as well as certain short-term investments are 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 judgment.

When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or other similar techniques. The assumptions and inputs in applying these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity, estimated duration and management’s assumptions regarding liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management’s judgments about financial instruments.

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. Such observable inputs include benchmarking prices for similar assets in active, liquid markets, quoted prices in markets that are not active and observable yields and spreads in the market.

When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, 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 judgment or estimation, and cannot be supported by reference to market activity. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities.

The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings.


	•	Derivatives — The 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 over-the-counter derivatives. The determination of fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be 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 (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models.

MetLife, Inc.

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

inputs that are significant to the fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: broker quotes, credit correlation assumptions, references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such instruments.

The credit risk of both the counterparty and the Company are considered in determining the fair value for all over-the-counter derivatives after taking into account the effects of netting agreements and collateral arrangements. Most inputs for over-the-counter derivatives are mid market inputs but, in certain cases, bid level inputs are used when they are deemed more representative of exit value.

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.


	•	Embedded Derivatives — Embedded derivatives principally include certain variable annuity riders, certain guaranteed investment contracts with equity or bond indexed crediting rates, assumed reinsurance on equity indexed annuities and those related to funds withheld on assumed reinsurance. Embedded derivatives are recorded in the financial statements at fair value with changes in fair value adjusted through net income.

The Company offers certain variable annuity products with guaranteed minimum benefit riders. These include guaranteed minimum withdrawal benefit (“GMWB”) riders, guaranteed minimum accumulation benefit (“GMAB”) riders, and certain guaranteed minimum income benefit (“GMIB”) riders. GMWB, GMAB and certain GMIB riders are embedded derivatives, which are measured at fair value separately from the host variable annuity contract, with changes in fair value reported in net investment gains (losses). These embedded derivatives are classified within policyholder account balances. The fair value for these riders is estimated using the present value of future benefits minus the present value of future fees using actuarial and capital market assumptions related to the projected cash flows over the expected lives of the contracts. A risk neutral valuation methodology is used under which the cash flows from the riders are projected under multiple capital market scenarios using observable risk free rates. Effective January 1, 2008, upon adoption of SFAS No. 157, the valuation of these riders now includes an adjustment for the Company’s own credit and risk margins for non-capital market inputs. The Company’s own credit adjustment is determined taking into consideration publicly available information relating to the Company’s debt as well as it claims paying ability. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment. These riders may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in the Company’s own credit standing; and variations in actuarial assumptions regarding policyholder behavior and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of the riders that could materially affect net income.

The fair value of the embedded equity and bond indexed derivatives contained in certain guaranteed investment contracts is determined using market standard swap valuation models and observable market inputs, including an adjustment for the Company’s own credit that takes into consideration publicly available information relating to the Company’s debt as well as its claims paying ability. The fair value of these embedded derivatives are included, along with their guaranteed investment contract host, within policyholder account balances with changes in fair value recorded in net investment gains (losses). Changes in equity and bond indices, interest rates and the Company’s credit standing may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income.

MetLife, Inc.

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

The fair value of the embedded derivatives in the assumed reinsurance on equity indexed annuities is determined using a market standard method, which includes an estimate of future equity option purchases and an adjustment for the Company’s own credit that takes into consideration the Company’s claims paying ability. The capital market inputs to the model, such as equity indexes, equity volatility, interest rates and the credit adjustment, are generally observable. However, the valuation models also use inputs requiring certain actuarial assumptions such as future interest margins, policyholder behavior and explicit risk margins related to non-capital market inputs, that are generally not observable and may require use of significant management judgment. The fair value of these embedded derivatives is included within policyholder account balances, along with the reinsurance host contract, with changes in fair value recorded in interest credited to policyholder account balances. The Company also retrocedes reinsurance on equity indexed annuities. The embedded derivatives on such retrocessions are computed in a similar manner and are included within premiums and other receivables with changes in fair value recorded in other expenses. Market conditions including, but not limited to, changes in interest rates, equity indices and equity volatility; changes in the Company’s own credit standing; and variations in actuarial assumptions may result in significant fluctuations in the fair value of these embedded derivatives which could materially affect net income.

The fair value of the embedded derivatives within funds withheld at interest related to certain assumed reinsurance is determined based on the change in fair value of the underlying assets in a reference portfolio backing the funds withheld receivable. The fair value of the underlying assets is generally based on observable market data using valuation methods similar to those used for assets held directly by the Company. However, the valuation also requires certain inputs, based on actuarial assumptions regarding policyholder behavior, which are generally not observable and may require use of significant management judgment. The fair value of these embedded derivatives are included, along with their funds withheld hosts, in other invested assets with changes in fair value recorded in net investment gains (losses). Changes in the credit spreads on the underlying assets, interest rates, market volatility or assumptions regarding policyholder behavior may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income.

The accounting for embedded derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. If interpretations change, there is a risk that features previously not bifurcated may require bifurcation and reporting at fair value in the unaudited interim condensed consolidated financial statements and respective changes in fair value could materially affect net income.


	•	Separate Account Assets — Separate account assets are carried at fair value and reported as a summarized total on the consolidated balance sheet in accordance with Statement of Position (“SOP”) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. The fair value of separate account assets are based on the fair value of the underlying assets owned by the separate account. Assets within the Company’s separate accounts include: mutual funds, fixed maturity securities, equity securities, mortgage loans, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. The fair value of mutual funds is based upon quoted prices or reported net assets values (“NAVs”) provided by the fund manager and are reviewed by management to determine whether such values require adjustment to represent exit value. The fair values of fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents held by separate accounts are determined on a basis consistent with the methodologies described herein for similar financial instruments held within the general account. The fair value of hedge funds is based upon NAVs provided by the fund manager and are reviewed by management to determine whether such values require adjustment to represent exit value. The fair value of mortgage loans is

MetLife, Inc.

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

determined by discounting expected future cash flows, using current interest rates for similar loans with similar credit risk. Other limited partnership interests are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables which may impact the exit value of the particular partnership interest.

The fair value of assets and liabilities measured at fair value on a recurring basis, including financial instruments for which the Company has elected the fair value option, and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
	Fair Value Measurements at Reporting Date Using
	Quoted Prices in
	Active Markets for		Significant Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs			Total
	(Level 1)		(Level 2)		(Level 3)			Fair Value
	(In millions)

Assets
Fixed maturity securities:
U.S. corporate securities	$	—	$	67,988	$	8,215		$	76,203
Residential mortgage-backed securities		—		54,653		1,866			56,519
Foreign corporate securities		2		30,159		7,622			37,783
U.S. Treasury/agency securities		5,737		16,288		62			22,087
Commercial mortgage-backed securities		—		18,096		552			18,648
Foreign government securities		558		13,878		913			15,349
Asset-backed securities		—		7,407		4,171			11,578
State and political subdivision securities		8		5,477		137			5,622
Other fixed maturity securities		11		15		273			299

Total fixed maturity securities		6,316		213,961		23,811			244,088

Equity securities:
Common stock		1,965		589		209			2,763
Non-redeemable preferred stock		113		700		1,957			2,770

Total equity securities		2,078		1,289		2,166			5,533

Trading securities		233		396		179			808
Short-term investments (1)		1,348		798		156			2,302
Derivative assets (2)		14		4,434		1,230			5,678
Net embedded derivatives within asset host contracts (3)		—		—		(144	)		(144	)
Separate account assets (4)		117,653		33,336		1,581			152,570

Total assets	$	127,642	$	254,214	$	28,979		$	410,835

Liabilities
Derivative liabilities (2)	$	20	$	3,621	$	15		$	3,656
Net embedded derivatives within liability host contracts (3)		—		25		1,361			1,386
Trading liabilities (5)		29		—		—			29

Total liabilities	$	49	$	3,646	$	1,376		$	5,071


(1)		Short-term investments as presented in the table above differ from the amounts presented in the consolidated balance sheet because certain short-term investments are not measured at fair value (e.g. time deposits, money market funds, etc.).

(2)		Derivative assets are presented within other invested assets and derivatives liabilities are presented within other liabilities. The amounts are presented gross in the table above to reflect the presentation in the consolidated balance sheet, but are presented net for purposes of the rollforward in the following table.

(3)		Net embedded derivatives within asset host contracts are principally presented within other invested assets with certain amounts included within premiums and other receivables. Fixed maturity securities also

MetLife, Inc.

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


		includes embedded derivatives of ($17) million. Net embedded derivatives within liability host contracts are presented within policyholder account balances.

(4)		Separate account assets are measured at fair value. 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 fair value of separate account assets as prescribed by SOP 03-1.

(5)		Trading liabilities are presented within other liabilities.

The Company has categorized its assets and liabilities into the three-level fair value hierarchy, as defined in Note 1, based upon the priority of the inputs to the respective valuation technique. The following summarizes the types of assets and liabilities included within the three-level fair value hierarchy presented in the preceding table.


	Level 1	This category includes certain U.S. Treasury and agency fixed maturity securities, exchange-traded common stock, and certain short-term money market securities. As it relates to derivatives, this level includes financial futures including exchange-traded equity and interest rate futures. Separate account assets classified within this level principally include mutual funds. Also included are assets held within separate accounts which are similar in nature to those classified in this level for the general account.

	Level 2	This category includes fixed maturity securities priced principally through independent pricing services. These fixed maturity securities include most U.S. Treasury and agency securities as well as the majority of U.S. and foreign corporate securities, residential mortgage-backed securities, commercial mortgage-backed securities, state and political subdivision securities, foreign government securities, and asset-backed securities. Equity securities classified as Level 2 securities consist principally of non-redeemable preferred stock priced principally through independent pricing services and certain equity securities where market quotes are available but are not considered actively traded. Short-term investments and trading securities included within Level 2 are of a similar nature to these fixed maturity and equity securities. As it relates to derivatives, this level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded futures included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. Separate account assets classified within this level are generally similar to those classified within this level for the general account. Hedge funds owned by separate accounts are also included within this level. Embedded derivatives include embedded equity derivatives contained in certain guaranteed investment contracts.


	Level 3	This category includes fixed maturity securities priced principally through independent broker quotes or market standard valuation methodologies. This level consists of less liquid fixed maturity securities with very limited trading activity or where less price transparency exists around the inputs to the valuation methodologies including: U.S. and foreign corporate securities — including below investment grade private placements; residential mortgage-backed securities; asset backed securities — including all of those supported by sub-prime mortgage loans; and other fixed maturities securities such as structured securities. Equity securities classified as Level 3 securities consist principally of common stock of privately held companies and non-redeemable preferred stock where there has been very limited trading activity or where less price transparency exists around the inputs to the valuation. Short-term investments and trading securities included within Level 3 are of a similar nature to these fixed maturity and equity securities. As it relates to derivatives this category includes: financial forwards including swap spread locks with maturities which extend beyond observable periods and equity variance swaps with unobservable volatility inputs; foreign currency swaps which are cancelable and priced through broker quotes; interest rate swaps with maturities which extend beyond the observable portion of the yield curve; credit default swaps based upon baskets of credits having unobservable credit correlations as well as credit default swaps with maturities which extend beyond the observable portion of the credit curves and credit default swaps

MetLife, Inc.

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


		priced through brokers or with liquidity adjustments; foreign currency forwards priced via broker quotes; equity options with unobservable volatility inputs; and interest rate caps and floors referencing unobservable yield curves and/or which include liquidity and volatility adjustments. Separate account assets classified within this level are generally similar to those classified within this level for the general account; however, they also include mortgage loans, and other limited partnership interests. Embedded derivatives included within this level include embedded derivatives associated with variable annuity riders, assumed reinsurance on equity indexed annuities as well as embedded derivatives related to funds withheld on assumed reinsurance.

A rollforward of the fair value measurements for all assets and liabilities measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended March 31, 2008 is as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	for the Three Months Ended March 31, 2008
										Total Realized/Unrealized
										Gains (Losses) included in:
				Impact of												Purchases,
	Balance,			SFAS 157			Balance,						Other			Sales,			Transfer In			Balance,
	December 31,			and SFAS 159			January 1,						Comprehensive			Issuances and			and/or Out of			March 31,
	2007			Adoption (1)			2008			Earnings (2, 3)			Income (Loss)			Settlements (4)			Level 3 (5)			2008
	(In millions)

Fixed maturity securities	$	24,854		$	(8	)	$	24,846		$	(19	)	$	(788	)	$	144		$	(372	)	$	23,811
Equity securities		2,385			—			2,385			(36	)		(179	)		3			(7	)		2,166
Trading securities		183			8			191			(5	)		—			2			(9	)		179
Short-term investments		179			—			179			—			—			2			(25	)		156
Net derivatives (6)		789			(1	)		788			402			—			25			—			1,215
Separate account assets (7)		1,464			—			1,464			(8	)		—			159			(34	)		1,581
Net embedded derivatives (8)		(843	)		41			(802	)		(661	)		—			(42	)		—			(1,505	)


(1)		Impact of SFAS 157 adoption represents the amount recognized in earnings as a change in estimate upon the adoption of SFAS 157 associated with Level 3 financial instruments held at January 1, 2008.

(2)		Amortization of premium/discount is included within net investment income which is reported within the earnings caption of total gains/losses. Impairments are included within net investment gains (losses) which is reported within the earnings caption of total gains/losses. Lapses associated with embedded derivatives are included with the earnings caption of total gains/losses.

(3)		Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(4)		The amount reported within purchases, sales, issuances and settlements is the purchase/issuance price (for purchases and issuances) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased/issued or sold/settled. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any.

(5)		Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers in (out) of Level 3 occurred at the beginning of the period. Items transferred in and out in the same period are excluded from the rollforward.

(6)		Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(7)		Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities.

(8)		Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(9)		Amounts presented do not reflect any associated hedging activities. Actual earnings associated with Level 3, inclusive of hedging activities, could differ materially.

MetLife, Inc.

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

The table below summarizes both realized and unrealized gains and losses for the three months ended March 31, 2008 due to changes in fair value recorded in earnings for Level 3 assets and liabilities:


	Total Gains and Losses
	Classification of Realized/Unrealized Gains (Losses) included in Earnings
	for the Three Months Ended March 31, 2008:
							Interest
	Net			Net			Credited to
	Investment			Investment			Policyholder			Other
	Income			Gains (Losses)			Account Balances			Expenses		Total
	(In millions)

Fixed maturity securities	$	32		$	(51	)	$	—		$	—	$	(19	)
Equity securities		—			(36	)		—			—		(36	)
Trading securities		(5	)		—			—			—		(5	)
Net derivatives		23			379			—			—		402
Net embedded derivatives		—			(630	)		(38	)		7		(661	)

The table below summarizes the portion of unrealized gains and losses recorded in earnings for the three months ended March 31, 2008 for Level 3 assets and liabilities that are still held at March 31, 2008.


	Changes in Unrealized Gains (Losses)
	for the Three Months Ended March 31, 2008 Relating to Assets Held at March 31, 2008:
							Interest
	Net			Net			Credited to
	Investment			Investment			Policyholder			Other
	Income			Gains (Losses)			Account Balances			Expenses		Total
	(In millions)

Fixed maturity securities	$	33		$	(26	)	$	—		$	—	$	7
Equity securities		—			(37	)		—			—		(37	)
Trading securities		(3	)		—			—			—		(3	)
Net derivatives		23			373			—			—		396
Net embedded derivatives		—			(633	)		(53	)		8		(678	)

Nonrecurring Fair Value Measurements

Certain non-financial assets are measured at fair value on a non-recurring basis (e.g. goodwill and other intangibles considered impaired). At March 31, 2008, the Company held $474 million in impaired mortgage loans, of which $435 million relate to mortgage loans held-for-sale, that were recorded based on the fair value of the underlying collateral or broker quotes, if lower. These impaired mortgage loans were recorded at fair value and represent a nonrecurring fair value measurement. The fair value is categorized as Level 3. Included within net investment gains (losses) for such impaired mortgage loans are net impairments of $29 million for the three months ended March 31, 2008.


15.	Subsequent Events

On April 22, 2008, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program, which will begin after the completion of the $1 billion common stock repurchase program authorized in January 2008.

On April 8, 2008, MetLife Capital Trust X, a VIE consolidated by the Company, issued $750 million of exchangeable surplus trust securities.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

For purposes of this discussion, “MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999 (the “Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”). Following this summary is a discussion addressing the consolidated results of operations and financial condition of the Company for the periods indicated. This discussion should be read in conjunction with MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), the forward-looking statement information included below and the Company’s unaudited interim condensed consolidated financial statements included elsewhere herein.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the operations and financial results and the business and the products of MetLife, Inc. and its subsidiaries, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend” and other similar expressions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such forward-looking statements are not guarantees of future performance.

Actual results may differ materially from those included in the forward-looking statements as a result of risks and uncertainties including, but not limited to, the following: (i) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect the Company’s ability to raise capital; (ii) heightened competition, including with respect to pricing, entry of new competitors, the development of new products by new and existing competitors and for personnel; (iii) investment losses and defaults, and changes to investment valuations; (iv) unanticipated changes in industry trends; (v) catastrophe losses; (vi) ineffectiveness of risk management policies and procedures; (vii) changes in accounting standards, practices and/or policies; (viii) changes in assumptions related to deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”) or goodwill; (ix) discrepancies between actual claims experience and assumptions used in setting prices for the Company’s products and establishing the liabilities for the Company’s obligations for future policy benefits and claims; (x) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (xi) adverse results or other consequences from litigation, arbitration or regulatory investigations; (xii) downgrades in the Company’s and its affiliates’ claims paying ability, financial strength or credit ratings; (xiii) regulatory, legislative or tax changes that may affect the cost of, or demand for, the Company’s products or services; (xiv) MetLife, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (xv) deterioration in the experience of the “closed block” established in connection with the reorganization of MLIC; (xvi) economic, political, currency and other risks relating to the Company’s international operations; (xvii) the effects of business disruption or economic contraction due to terrorism or other hostilities; (xviii) the Company’s ability to identify and consummate on successful terms any future acquisitions, and to successfully integrate acquired businesses with minimal disruption; and (xix) other risks and uncertainties described from time to time in MetLife’s filings with the SEC.

The Company specifically disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Executive Summary

MetLife is a leading provider of insurance and other financial services with operations throughout the United States and the regions of Latin America, Europe, and Asia Pacific. Through its domestic and international subsidiaries and affiliates, MetLife, Inc. offers life insurance, annuities, automobile and homeowners insurance, retail banking and other financial services to individuals, as well as group insurance, reinsurance and retirement & savings products and services to corporations and other institutions. MetLife is organized into five operating segments: Institutional, Individual, Auto & Home, International and Reinsurance, as well as Corporate & Other.

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007

The Company reported $615 million in net income available to common shareholders and earnings per diluted common share of $0.84 for the three months ended March 31, 2008 compared to $983 million in net income available to common shareholders and earnings per diluted common share of $1.28 for the three months ended March 31, 2007. Net income available to common shareholders decreased by $368 million, or 37%, for the three months ended March 31, 2008 compared to the 2007 period.

The decrease in net income available to common shareholders was principally due to an increase in net investment losses of $551 million, net of income tax, primarily due to increased losses on derivatives, primarily interest rate swaps due to declining short-term interest rates, foreign exchange swaps due to the decline in the U.S. dollar with respect to several foreign currencies, increased losses on various guaranteed minimum benefit riders, partially offset by a gain from the widening of the Company’s own credit spread, an increase in foreign currency translation losses and impairments on fixed maturity and equity securities and mortgage and consumer loans.

The net effect of increases in premiums, fees and other revenues of $634 million, net of income tax, across all of the Company’s operating segments and increases in policyholder benefit and claims and policyholder dividends of $634 million, net of income tax, was attributable to overall business growth.

A decrease in interest credited to policyholder account balances of $42 million, net of income tax, resulted from the decline in average crediting rates, which was largely due to the impact of lower short-term interest rates in the current period, offset by an increase solely from growth in the average policyholder account balance, primarily the result of continued growth in the global GIC and funding agreement products all of which occurred within the Institutional segment. Additionally, interest credited declined within the International segment as a result of a reduction in interest credited to unit-linked policyholder liabilities resulting from losses in the related trading portfolios.

The decrease in other expenses of $143 million, net of income tax, was principally driven by lower DAC amortization resulting from higher net investment losses, higher DAC amortization in the prior period due to the adoption of Statement of Position (“SOP”) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (“SOP 05-1”) and lower DAC amortization in the current period resulting from the change in the value of embedded derivatives associated with modified coinsurance arrangements primarily as a result of the impact of widening credit spreads in the U.S. debt markets and changes in risk-free rates used in the computation of the value of the embedded derivatives. Other expenses also decreased due to a reduction in minority interest expense, lower corporate support expenses, and the reduction of a servicing obligation in Argentina. Offsetting these decreases were higher interest expense as well as the impact of foreign currency and business growth within the International segment.

The remainder of the variance is due to the change in effective tax rates between periods.

Acquisitions

Industry Trends

The Company’s segments continue to be influenced by a variety of trends that affect the industry.

Financial and Economic Environment. The stress experienced by global capital markets that began in the second half of 2007 continued and increased during the first quarter of 2008. During 2007 and the first quarter of 2008, the global capital markets reassessed the credit risk inherent in sub-prime mortgage loans, which led to a broad repricing of credit risk assets and strained market liquidity. Global central banks intervened to stabilize market conditions and protect against downside risks to economic growth. The U.S. Federal Reserve intervened to provide emergency funding to the nation’s fifth largest investment bank during the first quarter of 2008 in addition to using new techniques to improve market liquidity. Still, market and economic conditions deteriorated further. The economic community’s consensus outlook of global economic growth is lower for calendar year 2008, with a majority of economists forecasting a recessionary environment. The global capital markets have adjusted towards this consensus outlook, with interest rates

and equity prices falling and risk spreads widening further during the first quarter of 2008. Slow growth and recessionary periods are often associated with declining asset prices, lower interest rates, credit rating agency downgrades and increasing default losses. The global capital markets are also less liquid now than in more normal environments. Liquidity conditions impact the cost of purchasing and selling assets and, at times, the ability to purchase or sell assets. These adjustments in the global capital markets have also resulted in higher realized and expected volatility.

Factors such as consumer spending, business investment, government spending, the volatility and strength of the capital markets, and inflation all affect the business and economic environment and, ultimately, the amount and profitability of our business. In an economic downturn characterized by higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending, the demand for financial and insurance products could be adversely affected. Adverse changes in the economy could affect earnings negatively and could have a material adverse effect on our business, results of operations and financial condition. The current mortgage crisis has also raised the possibility of future legislative and regulatory actions. We cannot predict whether or when such actions may occur, or what impact, if any, such actions could have on our business, results of operations and financial condition.

Demographics. In the coming decade, a key driver shaping the actions of the life insurance industry will be the rising income protection, wealth accumulation and needs of the retiring Baby Boomers. As a result of increasing longevity, retirees will need to accumulate sufficient savings to finance retirements that may span 30 or more years. Helping the Baby Boomers to accumulate assets for retirement and subsequently to convert these assets into retirement income represents an opportunity for the life insurance industry.

Life insurers are well positioned to address the Baby Boomers’ rapidly increasing need for savings tools and for income protection. The Company believes that, among life insurers, those with strong brands, high financial strength ratings and broad distribution, are best positioned to capitalize on the opportunity to offer income protection products to Baby Boomers.

Moreover, the life insurance industry’s products and the needs they are designed to address are complex. The Company believes that individuals approaching retirement age will need to seek information to plan for and manage their retirements and that, in the workplace, as employees take greater responsibility for their benefit options and retirement planning, they will need information about their possible individual needs. One of the challenges for the life insurance industry will be the delivery of this information in a cost effective manner.

Competitive Pressures. The life insurance industry remains highly competitive. The product development and product life-cycles have shortened in many product segments, leading to more intense competition with respect to product features. Larger companies have the ability to invest in brand equity, product development, technology and risk management, which are among the fundamentals for sustained profitable growth in the life insurance industry. In addition, several of the industry’s products can be quite homogeneous and subject to intense price competition. Sufficient scale, financial strength and financial flexibility are becoming prerequisites for sustainable growth in the life insurance industry. Larger market participants tend to have the capacity to invest in additional distribution capability and the information technology needed to offer the superior customer service demanded by an increasingly sophisticated industry client base.

Regulatory Changes. The life insurance industry is regulated at the state level, with some products and services also subject to federal regulation. As life insurers introduce new and often more complex products, regulators refine capital requirements and introduce new reserving standards for the life insurance industry. Regulations recently adopted or currently under review can potentially impact the reserve and capital requirements of the industry. In addition, regulators have undertaken market and sales practices reviews of several markets or products, including equity-indexed annuities, variable annuities and group products.

Pension Plans. On August 17, 2006, President Bush signed the Pension Protection Act of 2006 (“PPA”) into law. The PPA is considered to be the most sweeping pension legislation since the adoption of the Employee Retirement Income Security Act of 1974 (“ERISA”) on September 2, 1974. The provisions of the PPA may, over time, have a significant impact on demand for pension, retirement savings, and lifestyle protection products in both the institutional and retail markets. The impact of the legislation may have a positive effect on the life insurance and financial services industries in the future.

Summary of Critical Accounting Estimates


	(i)	the fair value of investments in the absence of quoted market values;

	(ii)	investment impairments;

	(iii)	the recognition of income on certain investment entities;

	(iv)	the application of the consolidation rules to certain investments;

	(v)	the existence and fair value of embedded derivatives requiring bifurcation;

	(vi)	the fair value of and accounting for derivatives;

	(vii)	the capitalization and amortization of DAC and the establishment and amortization of VOBA;

	(viii)	the measurement of goodwill and related impairment, if any;

	(ix)	the liability for future policyholder benefits;

	(x)	accounting for income taxes and the valuation of deferred tax assets;

	(xi)	accounting for reinsurance transactions;

	(xii)	accounting for employee benefit plans; and

	(xiii)	the liability for litigation and regulatory matters.

The application of purchase accounting requires the use of estimation techniques in determining the fair values of assets acquired and liabilities assumed — the most significant of which relate to the aforementioned critical estimates. In applying the Company’s accounting policies, which are more fully described in the 2007 Annual Report, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s businesses and operations. Actual results could differ from these estimates.

Investments

The Company’s principal investments are in fixed maturity, equity and trading securities, mortgage and consumer loans, policy loans, real estate, real estate joint ventures and other limited partnership interests, short-term investments, and other invested assets. The Company’s investments are exposed to three primary sources of risk: credit, interest rate and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the determination of fair values, the recognition of impairments, the recognition of income on certain investments, and the potential consolidation of previously unconsolidated entities.

The Company’s investments in fixed maturity and equity securities, which are classified as available-for-sale, investments in trading securities, and certain short-term investments are reported at their estimated fair value. In determining the estimated fair value of these securities, various methodologies, assumptions and inputs are utilized, as described further below.

When available, the estimated fair value of securities 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 judgment.

applying these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity, estimated duration and management’s assumptions regarding liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management’s judgments about financial instruments.

The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings.

One of the significant estimates related to available-for-sale securities is the evaluation of investments for other-than-temporary impairments. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in fair value. The Company’s review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of securities: (i) securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%; (ii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for less than six months; and (iii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for six months or greater. Additionally, 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 by the Company in the impairment evaluation process include, but are not limited to:


	(i)	the length of time and the extent to which the market value has been below cost or amortized cost;

	(ii)	the potential for impairments of securities when the issuer is experiencing significant financial difficulties;

	(iii)	the potential for impairments in an entire industry sector or sub-sector;

	(iv)	the potential for impairments in certain economically depressed geographic locations;

	(v)	the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources;

	(vi)	the Company’s ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost;

	(vii)	unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and

	(viii)	other subjective factors, including concentrations and information obtained from regulators and rating agencies.

The cost of fixed maturity and equity securities is adjusted for impairments in value deemed to be other-than-temporary in the period in which the determination is made. These impairments are included within net investment gains (losses) and the cost basis of the fixed maturity and equity securities is reduced accordingly. The Company does not change the revised cost basis for subsequent recoveries in value.

The determination of the amount of allowances and impairments on other invested asset classes is highly subjective and is based upon the Company’s periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised.

The recognition of income on certain investments (e.g. loan-backed securities, including mortgage-backed and asset-backed securities, certain structured investment transactions, trading securities, etc.) is dependent upon market conditions, which could result in prepayments and changes in amounts to be earned.

Additionally, when the Company enters into certain structured investment transactions, real estate joint ventures and other limited partnerships for which the Company may be deemed to be the primary beneficiary under Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46(r), Consolidation of Variable Interest Entities — An Interpretation of Accounting Research Bulletin No. 51 (“FIN 46(r)”), it may be required to consolidate such investments. The accounting rules for the determination of the primary beneficiary are complex and require evaluation of the contractual rights and obligations associated with each party involved in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

The use of different methodologies and assumptions as to the determination of the fair value of investments, the timing and amount of impairments, the recognition of income, or consolidation of investments may have a material effect on the amounts presented within the consolidated financial statements.

Derivative Financial Instruments

The Company enters into freestanding derivative transactions including swaps, forwards, futures and option contracts. The Company uses derivatives primarily to manage various risks. The risks being managed are variability in cash flows or changes in fair values related to financial instruments and currency exposure associated with net investments in certain foreign operations. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market.

The 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 over-the-counter derivatives. The determination of fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be 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 (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models.

The significant inputs to the pricing models for most over-the-counter derivatives are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves, and volatility. However, certain over-the-counter derivatives may rely on inputs that are significant to the fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: broker quotes, credit correlation assumptions, references to emerging market currencies, and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility, or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such instruments.

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. Also, fluctuations in the fair value of derivatives which have not been designated for hedge accounting may result in significant volatility in net income.

The accounting for derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under these accounting standards. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact on the consolidated financial statements of the Company from that previously reported. Measurements of ineffectiveness of hedging relationships are also subject to interpretations and estimations and different interpretations or estimates may have a material effect on the amount reported in net income.

Embedded Derivatives

Embedded derivatives principally include certain variable annuity riders, certain guaranteed investment contracts with equity or bond indexed crediting rates, assumed reinsurance on equity indexed annuities and those related to funds withheld on assumed reinsurance. Embedded derivatives are recorded in the financial statements at fair value with changes in fair value adjusted through net income.

The Company offers certain variable annuity products with guaranteed minimum benefit riders. These include guaranteed minimum withdrawal benefit (“GMWB”) riders, guaranteed minimum accumulation benefit (“GMAB”) riders, and certain guaranteed minimum income benefit (“GMIB”) riders. GMWB, GMAB and certain GMIB riders are embedded derivatives, which are measured at fair value separately from the host variable annuity contract, with changes in fair value reported in net investment gains (losses). These embedded derivatives are classified within policyholder account balances. The fair value for these riders is estimated using the present value of future benefits minus the present value of future fees using actuarial and capital market assumptions related to the projected cash flows over the expected lives of the contracts. A risk neutral valuation methodology is used under which the cash flows from the riders are projected under multiple capital market scenarios using observable risk free rates. Effective January 1, 2008, upon adoption of Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”), the valuation of these riders now includes an adjustment for the Company’s own credit and risk margins for non-capital market inputs. The Company’s own credit adjustment is determined taking into consideration publicly available information relating to the Company’s debt as well as it claims paying ability. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment. These riders may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in the Company’s own credit standing; and variations in actuarial assumptions regarding policyholder behavior and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of the riders that could materially affect net income.

rates and the Company’s credit standing may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income.

Deferred Policy Acquisition Costs and Value of Business Acquired

The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that vary with and relate to the production of new business are deferred as DAC. Such costs consist principally of commissions and agency and policy issue expenses. VOBA is an intangible asset that reflects the estimated fair value of in-force contracts in a life insurance company acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in-force at the acquisition date. VOBA is based on actuarially determined projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns and other factors. Actual experience on the purchased business may vary from these projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated in the financial statements for reporting purposes.

DAC for property and casualty insurance contracts, which is primarily composed of commissions and certain underwriting expenses, is amortized on a pro rata basis over the applicable contract term or reinsurance treaty.

DAC and VOBA on life insurance or investment-type contracts are amortized in proportion to gross premiums, gross margins or gross profits, depending on the type of contract as described below.

The Company amortizes DAC and VOBA related to non-participating and non-dividend-paying traditional contracts (term insurance, non-participating whole life insurance, non-medical health insurance, and traditional group life insurance) over the entire premium paying period in proportion to the present value of actual historic and

expected future gross premiums. The present value of expected premiums is based upon the premium requirement of each policy and assumptions for mortality, morbidity, persistency, and investment returns at policy issuance, or policy acquisition, as it relates to VOBA, that include provisions for adverse deviation and are consistent with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes.

The Company amortizes DAC and VOBA related to participating, dividend-paying traditional contracts over the estimated lives of the contracts in proportion to actual and expected future gross margins. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The future gross margins are dependent principally on investment returns, policyholder dividend scales, mortality, persistency, expenses to administer the business, creditworthiness of reinsurance counterparties, and certain economic variables, such as inflation. For participating contracts (dividend paying traditional contracts within the closed block) future gross margins are also dependent upon changes in the policyholder dividend obligation. Of these factors, the Company anticipates that investment returns, expenses, persistency, and other factor changes and policyholder dividend scales are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross margins with the actual gross margins for that period. When the actual gross margins change from previously estimated gross margins, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross margins exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross margins are below the previously estimated gross margins. Each reporting period, the Company also updates the actual amount of business in-force, which impacts expected future gross margins.

The Company amortizes DAC and VOBA related to fixed and variable universal life contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties, the effect of any hedges used, and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns, expenses, and persistency are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits.

Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period. Returns that are higher than the Company’s long-term expectation produce higher account balances, which increases the Company’s future fee expectations and decreases future benefit payment expectations on minimum death benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower than the Company’s long-term expectation. The Company’s practice to determine the impact of gross profits resulting from returns on separate accounts assumes that long-term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these changes and only changes the assumption when its long-term expectation changes. The effect of an increase/(decrease) by 100 basis points in the assumed future rate of return is reasonably likely to result in a decrease/(increase) in the DAC and VOBA balances of approximately $100 million with an offset to the Company’s unearned revenue liability of approximately $25 million for this factor.

The Company also reviews periodically other long-term assumptions underlying the projections of estimated gross margins and profits. These include investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency, and expenses to administer business. Management annually updates assumptions used in the calculation of estimated gross margins and profits which may have significantly changed. If the update of assumptions causes expected future gross margins and profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes expected future gross margins and profits to decrease.

Over the past two years, the Company’s most significant assumption updates resulting in a change to expected future gross margins and profits and the amortization of DAC and VOBA have been updated due to revisions to expected future investment returns, expenses, in-force or persistency assumptions and policyholder dividends on contracts included within the Individual segment. The Company expects these assumptions to be the ones most reasonably likely to cause significant changes in the future. Changes in these assumptions can be offsetting and the Company is unable to predict their movement or offsetting impact over time.

Goodwill

Goodwill is the excess of cost over the fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test.

Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment, at the “reporting unit” level. A reporting unit is the operating segment or a business one level below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that level. For purposes of goodwill impairment testing, goodwill within Corporate & Other is allocated to reporting units within the Company’s business segments. If the carrying value of a reporting unit’s goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income. The fair values of the reporting units are determined using a market multiple, a discounted cash flow model, or a cost approach. The critical estimates necessary in determining fair value are projected earnings, comparative market multiples and the discount rate.

Liability for Future Policy Benefits

The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance, traditional annuities and non-medical health insurance. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of expected future benefits to be paid, reduced by the present value of expected future premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. Utilizing these assumptions, liabilities are established on a block of business basis. If experience is less favorable than assumptions, additional liabilities may be required, resulting in a charge to policyholder benefits and claims.

Liabilities for future policy benefits for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest.

Liabilities for unpaid claims and claim expenses for property and casualty insurance are included in future policyholder benefits and represent the amount estimated for claims that have been reported but not settled and claims incurred but not reported. Other policyholder funds include claims that have been reported but not settled and claims incurred but not reported on life and non-medical health insurance. Liabilities for unpaid claims are estimated based upon the Company’s historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur.

Future policy benefit liabilities for minimum death and certain income benefit guarantees relating to certain annuity contracts and secondary and paid up guarantees relating to certain life policies are based on estimates of the expected value of benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. Liabilities for universal and variable life secondary guarantees and paid-up guarantees are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating these liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk.

The Company periodically reviews its estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies and guarantees in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur.

Income Taxes

Income taxes represent the net amount of income taxes that the Company expects to pay to or receive from various taxing jurisdictions in connection with its operations. The Company provides for federal, state and foreign income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. 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 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, consideration is given to, among other things, the following:


	(i)	future taxable income exclusive of reversing temporary differences and carryforwards;

	(ii)	future reversals of existing taxable temporary differences;

	(iii)	taxable income in prior carryback years; and

	(iv)	tax planning strategies.

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 is recorded in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The Company may be required to change its provision for income taxes when the ultimate deductibility of certain items is challenged by taxing authorities or when estimates used in determining valuation allowances on deferred tax assets significantly change, or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the consolidated financial statements in the period these changes occur.

Reinsurance

The Company enters into reinsurance transactions as both a provider and a purchaser of reinsurance for its life and property and casualty insurance products. 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 previously. Additionally, for each of its reinsurance contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. The Company reviews all contractual features, particularly 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 the Company determines that a reinsurance contract does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the contract using the deposit method of accounting.

Employee Benefit Plans

Certain subsidiaries of the Holding Company sponsor and/or administer pension and other postretirement plans covering employees who meet specified eligibility requirements. The obligations and expenses associated with these plans require an extensive use of assumptions such as the discount rate, expected rate of return on plan assets, rate of future compensation increases, healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of retirements, withdrawal rates and mortality. Management, in consultation with its external consulting actuarial firm, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data and expected benefit payout streams. 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 effect on the Company’s consolidated financial statements and liquidity.

Litigation Contingencies

The Company is a party to a number of legal actions and is involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company’s financial position. 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 the Company’s asbestos-related liability, are especially difficult to estimate due to the limitation of available data and uncertainty regarding numerous variables that can affect liability estimates. The data and variables that impact the assumptions used to estimate the Company’s asbestos-related liability include the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against the 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. 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 in the Company’s consolidated financial statements. It is possible that an adverse outcome in certain of the Company’s 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 the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Economic Capital

Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in MetLife’s businesses. As a part of the economic capital process, a portion of net investment income is credited to the segments based on the level of allocated equity. This is in contrast to the standardized regulatory risk-based capital (“RBC”) formula, which is not as refined in its risk calculations with respect to the nuances of the Company’s businesses.

Results of Operations

Discussion of Results

The following table presents consolidated financial information for the Company for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	7,593		$	6,765
Universal life and investment-type product policy fees		1,417			1,280
Net investment income		4,508			4,521
Other revenues		395			384
Net investment gains (losses)		(886	)		(38	)

Total revenues		13,027			12,912

Expenses
Policyholder benefits and claims		7,743			6,773
Interest credited to policyholder account balances		1,311			1,376
Policyholder dividends		430			424
Other expenses		2,676			2,896

Total expenses		12,160			11,469

Income from continuing operations before provision for income tax		867			1,443
Provision for income tax		217			416

Income from continuing operations		650			1,027
Income (loss) from discontinued operations, net of income tax		(2	)		(10	)

Net income		648			1,017
Preferred stock dividends		33			34

Net income available to common shareholders	$	615		$	983

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — The Company

Income from Continuing Operations

Income from continuing operations decreased by $377 million, or 37%, to $650 million for the three months ended March 31, 2008 from $1,027 million for the comparable 2007 period.

The following table provides the change from the prior period in income from continuing operations by segment:


				% of Total
	$ Change			$ Change
	(In millions)

Institutional	$	(267	)		71	%
Corporate & Other		(83	)		22
Individual		(38	)		10
Auto & Home		(22	)		6
Reinsurance		(22	)		6
International		55			(15	)

Total change, net of income tax	$	(377	)		100	%

The Institutional segment’s income from continuing operations decreased primarily due to higher net investment losses, partially offset by an increase in interest margins, an increase in underwriting results, and lower expenses related to DAC amortization resulting from the implementation of Statement of Position (“SOP”) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (“SOP 05-1”) in the prior year, partially offset by an increase in non-deferrable volume-related expenses and corporate support expenses.

Corporate & Other’s income from continuing operations decreased primarily due to lower net investment income, higher interest expenses, higher net investment losses and higher legal costs, partially offset by a lower corporate expenses, lower interest credited to bankholder deposits, lower interest on uncertain tax positions, and higher other revenues.

The Individual segment’s income from continuing operations decreased primarily due to an increase in net investment losses, unfavorable underwriting results in life products, an increase in interest credited to policyholder account balances, a decrease in interest margins and an increase in policyholder dividends. These decreases in income from continuing operations were partially offset by higher fee income from separate account products, lower DAC amortization, lower annuity benefits, higher net investment income on blocks of business not driven by interest margins and lower expenses driven by a write-off of a receivable in the prior year, partially offset by an increase in non-deferrable volume-related expenses.

The Auto & Home segment’s income from continuing operations decreased primarily due to an increase in policyholder benefits and claims, as a result of higher claim frequencies, an increase in catastrophe losses, a reduction in favorable development of prior year losses, higher earned exposures, and an increase in unallocated claims adjusting expenses, partially offset by lower losses due to severity. This decrease in income from continuing operations was partially offset by an increase in premiums related to increased exposures, the change in estimate on auto rate refunds due to a regulatory examination and an decrease in catastrophe reinsurance costs. Also offsetting the decrease in income from continuing operations was an increase in net investment income. Negatively impacting net income was a decrease in other revenues and net investment gains, and an increase in other expenses. Also, income taxes contributed to income from continuing operations due to the favorable resolution of a prior year audit and a greater proportion of tax advantaged income.

The Reinsurance segment’s income from continuing operations decreased primarily due to an increase in policyholder benefits and claims, an increase in net investment losses which was due to a decrease in the fair value of embedded derivatives associated with the reinsurance of annuity products on a funds withheld basis, a decrease in net investment income, an increase in interest credited to policyholder account balances, offset by an increase in premiums from new facultative and automatic treaties and renewal premiums on existing blocks of business, an increase in other revenues and a decrease in other expenses.

The increase in the International segment’s income from continuing operations was primarily attributable to an increase in investment gains and the following factors:


	•	An increase in Argentina’s income from continuing operations primarily due to a reduction in the liability for pension servicing obligations, as well as a decrease in claims and market indexed liabilities resulting from


		pension reform. Argentina also benefited more significantly in the prior year from the utilization of tax loss carryforwards against which valuation allowances had been previously established.


	•	Ireland’s income from continuing operations increased primarily due to foreign currency transactions gains, partially offset by the utilization in the prior year of net operating losses for which a valuation allowance had been previously established.

	•	Hong Kong’s income from continuing operations increased due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007, as well as business growth.

	•	Chile’s income from continuing operations increased due to higher institutional sales and growth in the annuity business.

	•	Australia’s and the United Kingdom’s income from continuing operations increased due to business growth.

	•	Mexico’s income from continuing operations decreased primarily due to an increase in certain policyholder liabilities caused by an increase in the unrealized investment results on the invested assets supporting those liabilities relative to the prior year, the favorable impact in the prior year of a decrease in experience refunds on Mexico’s institutional business, higher expenses related to business growth and the infrastructure costs and an increase in litigation liabilities as well as a valuation allowance established against net operating losses. This decrease in income from continuing operations was partially offset by the reinstatement of premiums from prior years and growth in the institutional business.

	•	Japan’s income from continuing operations decreased due to an increase in the costs of guaranteed annuity benefits, the impact of a refinement in assumptions for the guaranteed annuity business partially offset by the favorable impact from the utilization of the fair value option for certain fixed annuities, an increase from hedging activities on guaranteed annuity benefits and an increase in assumed reinsurance premiums.

	•	Taiwan’s income from continuing operations decreased primarily due to an increase in liabilities resulting from a refinement of methodologies related to the estimation of profit emergence on certain blocks of business.

	•	South Korea’s income from continuing operations decreased due to higher claims and operating expenses, including an increase in DAC amortization related to market performance, partially offset by higher revenues from business growth and higher investment yields.

	•	Income from continuing operations decreased in the home office due to higher economic capital charges and higher spending on growth and infrastructure initiatives.

Revenues and Expenses

Premiums, Fees and Other Revenues

Premiums, fees and other revenues increased by $976 million, or 12%, to $9,405 million for the three months ended March 31, 2008 from $8,429 million for the comparable 2007 period.

The following table provides the change from the prior period in premiums, fees and other revenues by segment:


			% of Total
	$ Change		$ Change
	(In millions)

Institutional	$	481		49	%
International		237		24
Reinsurance		184		19
Individual		44		5
Auto & Home		27		3
Corporate & Other		3		—

Total change	$	976		100	%

The growth in the Institutional segment was due to increases in the retirement & savings, non-medical health & other and group life businesses. The retirement & savings increased primarily due to increases in premium in the pension closeout and structured settlement businesses. The non-medical health & other business increased

primarily due to growth in the dental, disability, individual disability insurance (“IDI”) and accidental death & dismemberment (“AD&D”) businesses. Partially offsetting the increase in non-medical health & other is a decrease in the long-term care (“LTC”) business, net of a decrease resulting from a shift to deposit liability-type contracts in the prior year, partially offset by growth in the business. The group life business increased primarily due to business growth in term life and increases in corporate-owned life insurance and universal life products, partially offset by decreases in assumed reinsurance and life insurance sold to postretirement benefit plans.

The growth in the International segment was primarily due to the following factors:


	•	Chile’s premiums, fees and other revenues increased primarily due to higher annuity sales, as well as higher institutional premiums from its traditional and bank distribution channels.

	•	Premiums, fees and other revenues increased in Hong Kong primarily due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007, as well as business growth.

	•	An increase in Mexico’s premiums, fees and other revenues due to growth in its individual and institutional businesses, as well as the reinstatement of premiums from prior years, offset by a decrease in experience refunds in the prior year on Mexico’s institutional business.

	•	South Korea’s premiums, fees and other revenues increased primarily due to growth in its traditional business, as well as its guaranteed annuity and variable universal life businesses.

	•	Australia’s premiums, fees and other revenues increased primarily due to growth in the institutional business in-force and an increase in retention levels.

	•	India’s and the United Kingdom’s premiums, fees and other revenues increased primarily due to business growth.

	•	Premiums, fees and other revenues increased in connection with Japan due to an increase in reinsurance assumed.

These increases in premiums, fees and other revenues were partially offset by a decrease in Argentina primarily due to pension reform, partially offset by growth in its institutional and bancassurance businesses.

The growth in the Reinsurance segment was primarily attributable to premiums from new facultative and automatic treaties and renewal premiums on existing blocks of business in all RGA’s operating segments. In addition, other revenues increased due to an increase in surrender charges on asset-intensive business reinsured and an increase in fees associated with financial reinsurance.

The growth in the Individual segment was primarily due to higher fee income from variable life and annuity and investment-type products and growth in premiums from other life products, partially offset by a decrease in premiums associated with the Company’s closed block business.

The growth in the Auto & Home segment was primarily due to an increase in premiums related to increased exposures, a change in estimate on auto rate refunds from a regulatory examination in the prior year and a decrease in catastrophe reinsurance costs, partially offset by a reduction in average earned premium per policy, and a decrease in premiums from various involuntary programs.

Net Investment Income

Net investment income decreased by $13 million, or less than 1%, to $4,508 million for the three months ended March 31, 2008 from $4,521 million for the comparable 2007 period. Management attributes $351 million of this change to a decrease in yields and $338 million of this change to growth in the average asset base. The decrease in net investment income attributable to lower yields was primarily due to lower returns on other limited partnership interests including hedge funds, real estate joint ventures, other invested assets including derivatives, and short term investments, partially offset by improved securities lending results, and higher returns on equity securities and fixed maturity securities. The decrease in net investment income attributable to lower yields was partially offset by growth in the average asset base, resulting in business growth over the prior year which has primarily been invested within other limited partnership interests including hedge funds, real estate joint ventures, mortgage loans, and fixed maturity securities.

Interest Margin

Interest margin, which represents the difference between interest earned and interest credited to policyholder account balances decreased in the Individual segment for the three months ended March 31, 2008 as compared to the prior year. Interest margins increased in retirement & savings, group life and non-medical health & other, all within the Institutional segment. Interest earned approximates net investment income on investable assets attributed to the segment with minor adjustments related to the consolidation of certain separate accounts and other minor non-policyholder elements. Interest credited is the amount attributed to insurance products, recorded in policyholder benefits and claims, and the amount credited to policyholder account balances for investment-type products, recorded in interest credited to policyholder account balances. Interest credited on insurance products reflects the current period impact of the interest rate assumptions established at issuance or acquisition. Interest credited to policyholder account balances is subject to contractual terms, including some minimum guarantees. This tends to move gradually over time to reflect market interest rate movements and may reflect actions by management to respond to competitive pressures and, therefore, generally does not introduce volatility in expense.

Net Investment Gains (Losses)

Net investment losses increased by $848 million to a loss of $886 million for the three months ended March 31, 2008 from a loss of $38 million for the comparable 2007 period. The increase in net investment losses is primarily due to increased losses on derivatives, primarily interest rate swaps due to declining short-term interest rates, foreign exchange swaps due to the decline in the U.S. dollar with respect to several foreign currencies, increased losses on various guaranteed minimum benefit riders, partially offset by a gain from the widening of the Company’s own credit spread, an increase in foreign currency translation losses and impairments on fixed maturity and equity securities and mortgage and consumer loans.

Underwriting

Underwriting results are generally the difference between the portion of premium and fee income intended to cover mortality, morbidity or other insurance costs, less claims incurred, and the change in insurance-related liabilities. Underwriting results are significantly influenced by mortality, morbidity or other insurance-related experience trends, as well as the reinsurance activity related to certain blocks of business. Consequently, results can fluctuate from period to period. Underwriting results, excluding catastrophes, in the Auto & Home segment were less favorable for the three months ended March 31, 2008, as the combined ratio, excluding catastrophes, increased to 87.6% from 86.3% for the three months ended March 31, 2007. Underwriting results were favorable in the retirement & savings and non-medical health & other businesses and less favorable in the group life business in the Institutional segment. Underwriting results were unfavorable in the life products in the Individual segment. Adverse mortality in the Reinsurance segment also decreased underwriting results.

Other Expenses

Other expenses decreased by $220 million, or 8%, to $2,676 million for the three months ended March 31, 2008 from $2,896 million for the comparable 2007 period.

The following table provides the change from the prior period in other expenses by segment:


				% of Total
	$ Change			$ Change
	(In millions)

Reinsurance	$	(196	)		89	%
Individual		(61	)		28
Institutional		(26	)		12
International		41			(19	)
Corporate & Other		20			(9	)
Auto & Home		2			(1	)

Total change	$	(220	)		100	%

The Reinsurance segment contributed to the year over year decrease in other expenses primarily due to a decrease in expenses associated with DAC, a decrease in minority interest expense and a decrease in interest

expense due primarily to a decrease in interest rates on variable rate debt. There decreases were partially offset by an increase in compensation and overhead-related expenses associated with RGA’s international expansion and general growth in operations.

The Individual segment contributed to the year over year decrease in other expenses primarily due to lower DAC amortization and the write-off of a receivable in the prior year, partially offset by an increase in non-deferrable volume-related expenses, which include those expenses associated with information technology, compensation and direct departmental spending.

The Institutional segment contributed to the year over year decrease primarily due to a decrease in DAC amortization associated with the implementation of SOP 05-1 in the prior year. Additionally there were decreases in non-deferrable volume-related expenses and corporate support expenses.

The decreases in other expenses were partially offset by an increase in other expenses in the International segment. This increase was driven by the following factors:


	•	South Korea’s other expenses increased primarily due to business growth, as well as an increase in DAC amortization related to market performance.

	•	Mexico’s other expenses increased due to higher expenses related to business growth and infrastructure, as well as an increase in litigation liabilities.

	•	Other expenses increased in Hong Kong due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007.

	•	Other expenses increased in Chile primarily due to business growth, as well as higher compensation costs and higher spending on infrastructure and marketing programs.

	•	Other expenses increased in India primarily due to increased staffing and growth initiatives.

	•	The United Kingdom’s other expenses increased due to higher commissions related to business growth, partially offset by changes in foreign currency transaction gains.

	•	Other expenses increased in Australia primarily due to business growth.

	•	Other expenses increased in the home office primarily due to higher spending on growth and infrastructure initiatives.

	•	The increases in other expenses were partially offset by a decrease in Argentina’s other expenses primarily due to a reduction in the liability for servicing obligations resulting from a refinement of assumptions and methodology related to pension reform, partially offset by higher commissions from growth in the institutional and bancassurance businesses.

	•	The increases in other expenses were also partially offset by a decrease in Ireland’s other expenses due to foreign currency transaction gains.

The decreases in other expenses were partially offset by an increase in Corporate & Other primarily due to higher interest expense, higher legal costs, partially offset by lower corporate support expenses, including incentive compensation, rent, start-up costs, and lower information technology costs.

These decreases in other expenses were partially offset by an increase in the Auto & Home segment primarily related to higher compensation costs.

Net Income

Income tax expense for the three months ended March 31, 2008 was $217 million, or 25% of income from continuing operations before provision for income tax, compared with $416 million, or 29%, of such income, for the comparable 2007 period. The 2008 and 2007 effective tax rates differ from the corporate tax rate of 35% primarily due to the impact of non-taxable investment income and tax credits for investments in low income housing. In addition, the decrease in effective tax rate from 29% for the first quarter of 2007 to 25% for the first quarter of 2008

is primarily attributable to changes in the ratio of permanent differences to income from continuing operations before provision for income tax.

Income from discontinued operations, net of income tax, increased by $8 million, or 80%, to a loss of $2 million for the three months ended March 31, 2008 from a loss of $10 million for the comparable 2007 period. This increase is primarily due to a net investment loss of $34 million, net of income tax, that the Company recognized during the three months ended March 31, 2007, with no similar amount recognized during the three months ended March 31, 2008, on certain fixed income securities in a loss position which the Company no longer had the intent to hold. These fixed maturity securities were included within the assets to be sold of the annuities and pension business of MetLife Australia. Partially offsetting this increase is a gain of $16 million, net of income tax, related to additional proceeds from the sale off SSRM which was recorded during the three months ended March 31, 2007. Also offsetting the increase were lower net investment income and net investment gains (losses) of $7 million from discontinued operations related to real estate properties sold or held-for-sale during the three months ended March 31, 2008 as compared to March 31, 2007.

Institutional

The Company’s Institutional segment offers a broad range of group insurance and retirement & savings products and services to corporations and other institutions and their respective employees. Group insurance products and services include group life insurance, non-medical health insurance products and related administrative services, as well as other benefits, such as employer-sponsored auto and homeowners insurance provided through the Auto & Home segment and prepaid legal services plans. The Company’s Institutional segment also offers group insurance products as employer-paid benefits or as voluntary benefits where all or a portion of the premiums are paid by the employee. Retirement & savings products and services include an array of annuity and investment products, including defined contribution plans, guaranteed interest products and other stable value products, accumulation and income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets.

The following table presents consolidated financial information for the Institutional segment for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	3,573		$	3,125
Universal life and investment-type product policy fees		224			191
Net investment income		2,030			1,915
Other revenues		190			190
Net investment gains (losses)		(731	)		(88	)

Total revenues		5,286			5,333

Expenses
Policyholder benefits and claims		3,912			3,475
Interest credited to policyholder account balances		684			726
Other expenses		574			600

Total expenses		5,170			4,801

Income from continuing operations before provision for income tax		116			532
Provision for income tax		31			180

Income from continuing operations		85			352
Income (loss) from discontinued operations, net of income tax		(1	)		4

Net income	$	84		$	356

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — Institutional

Income from Continuing Operations

Income from continuing operations decreased by $267 million, or 76%, to $85 million for the three months ended March 31, 2008 from $352 million for the comparable 2007 period.

Included in this decrease was lower earnings of $418 million, net of income tax, from higher net investment losses, partially offset by an increase of $17 million, net of income tax, resulting from a decrease in policyholder benefits and claims related to net investment gains (losses). Excluding the impact from net investment gains (losses), income from continuing operations increased by $134 million, net of income tax, compared to the prior period.

An increase in interest margins of $85 million, net of income tax, compared to the prior period, contributed to the increase in income from continuing operations. Management attributes this increase to retirement & savings, group life and non-medical health & other of $45 million, $36 million and $4 million, net of income tax respectively. Interest margin is the difference between interest earned and interest credited to policyholder account balances. Interest earned approximates net investment income on investable assets attributed to the segment with minor adjustments related to the consolidation of certain separate accounts and other minor non-policyholder elements. Interest credited is the amount attributed to insurance products, recorded in policyholder benefits and claims, and the amount credited to policyholder account balances for investment-type products, recorded in interest credited to policyholder account balances. Interest credited on insurance products reflects the current period impact of the interest rate assumptions established at issuance or acquisition. Interest credited to policyholder account balances is subject to contractual terms, including some minimum guarantees. This tends to move gradually over time to reflect market interest rate movements, and may reflect actions by management to respond to competitive pressures and, therefore, generally does not introduce volatility in expense.

In addition, other expenses contributed to this increase in income from continuing operations, primarily due to lower expenses related to DAC amortization of $16 million, net of income tax, primarily due to the impact of an $18 million, net of income tax, charge due to the impact of the implementation of SOP 05-1 in the prior period. The remaining increase in operating expenses was more than offset by the remaining increase in premiums, fees, and other revenues.

An increase in underwriting results of $16 million, net of income tax, compared to the prior period, contributed to the increase in income from continuing operations. Management attributes this increase primarily to the retirement & savings and non-medical health & other and businesses of $24 million and $7 million, both net of income tax, respectively. Partially offsetting these increases was a decline of $15 million, net of income tax, in the group life business.

Underwriting results are generally the difference between the portion of premium and fee income intended to cover mortality, morbidity, or other insurance costs less claims incurred, and the change in insurance-related liabilities. Underwriting results are significantly influenced by mortality, morbidity, or other insurance-related experience trends, as well as the reinsurance activity related to certain blocks of business. Consequently, results can fluctuate from period to period.

Revenues

Total revenues, excluding net investment gains (losses), increased by $596 million, or 11%, to $6,017 million for the three months ended March 31, 2008 from $5,421 million for the comparable 2007 period.

The increase of $481 million in premiums, fees and other revenues was largely due to increases in the retirement & savings, non-medical health & other and group life businesses of $225 million, $169 million and $87 million, respectively. The increase in retirement & savings is primarily due to increases in premium in the pension closeout and structured settlement businesses of $191 million and $37 million, respectively, both primarily due to higher sales. The increase in pension closeouts is primarily due to a large domestic sale and the first significant sale in the United Kingdom business in the current period. Premiums, fees and other revenues from

retirement & savings products are significantly influenced by large transactions and, as a result, can fluctuate from period to period. The growth in non-medical health & other is largely due to increases in the dental, disability, IDI and AD&D businesses of $178 million. The growth in the dental business is due to organic growth in the business and the impact of a recent acquisition. The increases in disability, IDI and AD&D are primarily due to continued growth in the business. Partially offsetting these increases is a decline in the LTC business of $15 million, primarily attributable to a $37 million decrease, which management attributed to a shift to deposit liability-type contracts during the latter part of the prior year, partially offset by growth in the business. Group life increased $87 million, which management primarily attributes to a $90 million increase in term life, primarily attributable to the net impact of an increase in sales, partially offset by a decrease in assumed reinsurance. In addition, corporate-owned life insurance and universal life products increased $13 million and $4 million, respectively. The increase in corporate-owned life insurance is largely attributable to higher experience rated refunds in the prior period. Partially offsetting these increases is a decrease in life insurance sold to postretirement benefit plans of $20 million, primarily the result of the impact of a large sale in the prior period.

Net investment income increased by $115 million. Management attributes $195 million of this increase to growth in the average asset base, primarily within fixed maturity securities, mortgage loans, real estate joint ventures, and other limited partnership interests, principally driven by continued business growth, particularly in the funding agreement, global GIC, and the non-medical health & other businesses. Management attributes an $80 million reduction in net investment income to a decrease in yields, primarily due to lower returns on real estate joint ventures and other limited partnership interests, partially offset by an increase in yields on equity securities, fixed maturity securities and improved securities lending results.

Expenses

Total expenses increased by $369 million, or 8%, to $5,170 million for the three months ended March 31, 2008 from $4,801 million for the comparable 2007 period.

The increase in expenses was primarily attributable to policyholder benefits and claims of $437 million, partially offset by lower interest credited to policyholder account balances of $42 million and lower other expenses of $26 million.

The increase in policyholder benefits and claims of $437 million included a $27 million decrease related to net investment gains (losses). Excluding the decrease related to net investment gains (losses), policyholder benefits and claims increased by $464 million. Retirement & savings’ policyholder benefits increased $216 million, which was primarily attributable to the pension closeout and structured settlement businesses of $170 million and $40 million, respectively. The increase in pension closeouts is primarily due to the aforementioned increase in premiums and the impact of a favorable liability refinement in the prior period of $3 million, partially offset by favorable mortality in the current period. The increase in structured settlements is largely due to the aforementioned increase in premiums and an increase in interest credited to future policyholder balances, partially offset by favorable mortality in the current period. The remaining $6 million increase is across several products, primarily attributable to the impact of a $5 million favorable liability refinement in the prior period. Non-medical health & other’s policyholder benefits and claims increased by $138 million, largely due to the aforementioned growth in the dental, disability, IDI and AD&D businesses. Partially offsetting these increases in premiums, fees and other revenues was favorable morbidity in our disability business, primarily due to an increase in claim closures in the current period. An increase in LTC of $8 million is attributable to business growth, an increase in interest credited to future policyholder balances and the impact of unfavorable claim experience in the current period, partially offset by the aforementioned $37 million shift to deposit liability-type contracts. Group life’s policyholder benefits and claims increased $110 million, mostly due to increases in the term life, universal life and corporate owned life insurance products of $107 million, $19 million and $9 million, respectively, partially offset by a decrease of $25 million in life insurance sold to postretirement benefit plans. The increases in term life and universal life were primarily due to the aforementioned increase in premiums, fees and other revenues and included the impact of less favorable mortality experience in the current period. The decrease in life insurance sold to postretirement benefit plans was commensurate with the aforementioned decrease in premiums.

Management attributes the decrease of $42 million in interest credited to policyholder account balances to a $136 million decrease from a decrease in average crediting rates, which was largely due to the impact of lower

short-term interest rates in the current period, and a $94 million increase solely from growth in the average policyholder account balance, primarily the result of continued growth in the global GIC and funding agreement products.

Lower other expenses of $26 million included a decrease in DAC amortization of $24 million, primarily due to a $27 million charge associated with the impact of DAC and VOBA amortization, from the implementation of SOP 05-1 in the prior period. Non-deferrable volume related expenses and corporate support expenses also decreased by $2 million. Non-deferrable volume related expenses include those expenses associated with information technology, compensation, and direct departmental spending. Direct departmental spending includes expenses associated with advertising, consultants, travel, printing and postage.

Individual

The Company’s Individual segment offers a wide variety of protection and asset accumulation products aimed at serving the financial needs of its customers throughout their entire life cycle. Products offered by Individual include insurance products, such as traditional, variable and universal life insurance, and variable and fixed annuities. In addition, Individual sales representatives distribute disability insurance and LTC insurance products offered through the Institutional segment, investment products such as mutual funds, as well as other products offered by the Company’s other businesses.

The following table presents consolidated financial information for the Individual segment for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	1,067		$	1,075
Universal life and investment-type product policy fees		903			853
Net investment income		1,697			1,732
Other revenues		148			146
Net investment gains (losses)		(103	)		15

Total revenues		3,712			3,821

Expenses
Policyholder benefits and claims		1,377			1,363
Interest credited to policyholder account balances		506			507
Policyholder dividends		427			422
Other expenses		988			1,049

Total expenses		3,298			3,341

Income from continuing operations before provision for income tax		414			480
Provision for income tax		137			165

Income from continuing operations		277			315
Income (loss) from discontinued operations, net of income tax		(1	)		—

Net income	$	276		$	315

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — Individual

Income from Continuing Operations

Income from continuing operations decreased by $38 million, or 12%, to $277 million for the three months ended March 31, 2008 from $315 million for the comparable 2007 period. Included in this decrease was an increase in net investment losses of $77 million, net of income tax. Excluding the impact of net investment gains (losses), income from continuing operations increased by $39 million from the comparable 2007 period.

The increase in income from continuing operations was driven by the following items:


	•	Higher fee income from separate account products of $31 million, net of income tax, primarily related to higher average account balances resulting from business growth over the prior year, partially offset by unfavorable equity market performance during the current period.

	•	Lower DAC amortization of $31 million, net of income tax, primarily resulting from net investment losses in the current period and prior period revisions to management’s assumptions used to determine estimated gross profits and margins. These decreases were partially offset by business growth and an increase in amortization resulting from changes in management’s assumptions used to determine estimated gross profits and margins associated with unfavorable equity market performance during the current period.

	•	Lower annuity benefits of $21 million, net of income tax, primarily due to hedging gains, net of guaranteed annuity benefit rider costs.

	•	Higher net investment income on blocks of business not driven by interest margins of $12 million, net of income tax.

	•	Lower expenses of $8 million, net of income tax, primarily due to a write-off of a receivable from one of the Company’s joint venture partners in the prior period, partially offset by higher non-deferrable volume related expenses.

These aforementioned increases in income from continuing operations were partially offset by the following items:


	•	Unfavorable underwriting results in life products of $33 million, net of income tax. Underwriting results are generally the difference between the portion of premium and fee income intended to cover mortality, morbidity or other insurance costs less claims incurred and the change in insurance-related liabilities. Underwriting results are significantly influenced by mortality, morbidity, or other insurance-related experience trends, as well as the reinsurance activity related to certain blocks of business. Consequently, results can fluctuate from period to period.

	•	A decrease in interest margins of $21 million, net of income tax. Interest margins relate primarily to the general account portion of investment-type products. Management attributed a $29 million decrease to the deferred annuity business offset by a $8 million increase to other investment-type products, both net of income tax. Interest margin is the difference between interest earned and interest credited to policyholder account balances related to the general account on these businesses. Interest earned approximates net investment income on invested assets attributed to these businesses with net adjustments for other non-policyholder elements. Interest credited approximates the amount recorded in interest credited to policyholder account balances. Interest credited to policyholder account balances is subject to contractual terms, including some minimum guarantees, and may reflect actions by management to respond to competitive pressures. Interest credited to policyholder account balances tends to move gradually over time to reflect market interest rate movements, subject to any minimum guarantees and, therefore, generally does not introduce volatility in expense.

	•	An increase in interest credited to policyholder account balances of $13 million, net of income tax, due primarily to lower amortization of the excess interest reserves on acquired annuity and universal life blocks of business.

	•	An increase in policyholder dividends of $3 million, net of income tax, due to growth in the business.

The change in effective tax rates between periods accounts for the remainder of the increase in income from continuing operations.

Revenues

Total revenues, excluding net investment gains (losses), increased by $9 million, or less than 1%, to $3,815 million for the three months ended March 31, 2008 from $3,806 million for the comparable 2007 period.

Premiums decreased by $8 million primarily due to a decrease in immediate annuity premiums of $3 million and a $25 million decline in premiums associated with the Company’s closed block of business in line with expectations. These decreases were partially offset by growth in premiums from other life products of $20 million driven by increased renewals of traditional life business.

Universal life and investment-type product policy fees combined with other revenues increased by $52 million primarily related to higher average account balances resulting from business growth over the prior year, partially offset by unfavorable equity market performance during the current period. Policy fees from variable life and annuity and investment-type products are typically calculated as a percentage of the average assets in policyholder accounts. The value of these assets can fluctuate depending on equity performance.

Net investment income decreased by $35 million. Net investment income from the general account portion of investment-type products decreased by $36 million, while other businesses increased by $1 million. Management attributes $15 million of the decrease to a lower average asset base across various investment types. Additionally, management attributes $20 million to a decrease in yields primarily due to lower returns on other limited partnership interests and real estate joint ventures, partially offset by higher securities lending results and higher returns on fixed maturity securities.

Expenses

Total expenses decreased by $43 million, or 1%, to $3,298 million for the three months ended March 31, 2008 from $3,341 million for the comparable 2007 period.

Policyholder benefits and claims increased by $14 million primarily due to unfavorable mortality in the life products, including the closed block, of $55 million. Offsetting this increase were hedging gains, net of guaranteed annuity benefit rider costs, which decreased policyholder benefits and claims by $33 million. Additionally, policyholder benefits and claims decreased by $8 million commensurate with the decrease in premiums discussed above.

Interest credited to policyholder account balances decreased by $1 million. Interest credited on the general account portion of investment-type products decreased by $21 million, while other businesses remained flat. Of the $21 million decrease on the general account portion of investment-type products, management attributed $13 million to lower average policyholder account balances resulting from a decrease in cash flows from annuities and $8 million to lower crediting rates. Partially offsetting these decreases was lower amortization of the excess interest reserves on acquired annuity and universal life blocks of business of $20 million primarily driven by lower lapses in the current year.

Policyholder dividends increased by $5 million due to growth in the business.

Lower other expenses of $61 million include lower DAC amortization of $48 million primarily relating to net investment losses in the current period and prior period revisions to management’s assumptions used to determine estimated gross profits and margins. These decreases were partially offset by business growth and an increase in amortization resulting from changes in management’s assumptions used to determine estimated gross profits and margins associated with unfavorable equity market performance during the current period. The remaining decrease in other expenses of $13 million is driven by a $24 million decrease associated with a write-off of a receivable from one of the Company’s joint venture partners in the prior period partially offset by an increase in non-deferrable volume-related expenses of $11 million, which includes those expenses associated with information technology, compensation and direct departmental spending. Direct departmental spending includes expenses associated with consultants, travel, printing and postage.

International

International provides life insurance, accident and health insurance, credit insurance, annuities and retirement & savings products to both individuals and groups. The Company focuses on emerging markets primarily within the Latin America, Europe and Asia Pacific regions.

The following table presents consolidated financial information for the International segment for the periods indicated:


	Three Months Ended
	March 31,
	2008		2007
	(In millions)

Revenues
Premiums	$	904	$	715
Universal life and investment-type product policy fees		290		236
Net investment income		269		250
Other revenues		7		13
Net investment gains (losses)		135		24

Total revenues		1,605		1,238

Expenses
Policyholder benefits and claims		826		592
Interest credited to policyholder account balances		47		78
Policyholder dividends		2		1
Other expenses		428		387

Total expenses		1,303		1,058

Income from continuing operations before provision for income tax		302		180
Provision for income tax		116		49

Income from continuing operations		186		131
Income (loss) from discontinued operations, net of income tax		—		(31	)

Net income	$	186	$	100

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — International

Income from Continuing Operations

Income from continuing operations increased by $55 million, or 42%, to $186 million for the three months ended March 31, 2008 from $131 million for the comparable 2007 period. This increase includes the impact of net investment gains of $72 million, net of income tax, and changes in foreign exchange rates of $6 million, net of income tax.

Excluding the impact of net investment gains (losses) and of changes in foreign currency exchange rates, income from continuing operations decreased by $23 million from the comparable 2007 period.

Income from continuing operations decreased in:


	•	Mexico by $33 million, net of income tax, primarily due to an increase in certain policyholder liabilities caused by an increase in the unrealized investment results on the invested assets supporting those liabilities relative to the prior year, the favorable impact in the prior year of a decrease in experience refunds on Mexico’s institutional business, higher expenses related to business growth and infrastructure costs, an increase in litigation liabilities, as well as a valuation allowance established against net operating losses.


		These decreases were partially offset by the reinstatement of premiums from prior periods and growth in the individual and institutional businesses.


	•	Japan by $23 million, net of income tax, due to a decrease of $53 million, net of income tax, in the Company’s earnings from its investment in Japan resulting from an increase in the costs of guaranteed annuity benefits, the impact of a refinement in assumptions for the guaranteed annuity business, partially offset by the favorable impact from the utilization of the fair value option for certain fixed annuities, an increase of $26 million, net of income tax, from hedging activities associated with Japan’s guaranteed annuity benefit and an increase of $4 million, net of income tax, in fees from assumed reinsurance.

	•	Taiwan by $2 million, net of income tax, primarily due to an increase in liabilities resulting from a refinement of methodologies related to the estimation of profit emergence on certain blocks of business.

	•	South Korea by $1 million, net of income tax, primarily due to higher claims and operating expenses, including an increase in DAC amortization related to market performance, partially offset by higher revenues from business growth and higher investment yields.

	•	The home office by $4 million, net of income tax, due to higher economic capital charges and higher spending on growth and infrastructure initiatives.

Partially offsetting these decreases, income from continuing operations increased in:


	•	Argentina by $15 million, net of income tax, primarily due to a reduction in the liability for pension servicing obligations of $23 million, net of income tax, resulting from a refinement of assumptions and the availability of statistics from the government regarding the number of participants transferring to the government-sponsored plan under pension reform which was effective January 1, 2008, partially offset by a decrease in claims and market-indexed policyholder liabilities resulting from pension reform, under which fund administrators no longer provide death and disability coverage to the plan participants. Argentina also benefited more significantly in the prior year from the utilization of deferred tax assets against which valuation allowances had previously been established.

	•	Ireland by $10 million, net of income tax, due to foreign currency transaction gains and a tax benefit in the current period, partially offset by the utilization in the prior year of net operating losses for which a valuation allowance had been previously established.

	•	Hong Kong by $9 million, net of income tax, due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007, as well as business growth.

	•	Chile by $2 million due to higher institutional sales and growth in the annuity business.

	•	Australia and the United Kingdom by $2 million and $2 million, respectively, primarily due to business growth.

Revenues

Total revenues, excluding net investment gains (losses), increased by $256 million, or 21%, to $1,470 million for the three months ended March 31, 2008 from $1,214 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $61 million, total revenues increased by $195 million, or 15%, from the comparable 2007 period.

Premiums, fees and other revenues increased by $237 million, or 25%, to $1,201 million for the three months ended March 31, 2008 from $964 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $47 million, premiums, fees and other revenues increased by $190 million, or 19%, from the comparable 2007 period.

Premiums, fees and other revenues increased in:


	•	Chile by $66 million primarily due to higher annuity sales as well as higher institutional premiums from its traditional and bank distribution channels.


	•	Hong Kong by $40 million primarily due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007, as well as business growth.

	•	Mexico by $38 million due to growth in its individual and institutional businesses, as well as the reinstatement of $8 million of premiums from prior periods, offset by a decrease of $13 million in experience refunds in the prior year on Mexico’s institutional business.

	•	South Korea by $24 million due to growth in its traditional business as well as in its guaranteed annuity and variable universal life businesses.

	•	Australia by $15 million as a result of growth in the institutional business and an increase in retention levels.

	•	India and the United Kingdom by $7 million and $6 million, respectively, due to business growth.

	•	The Company’s Japan operation by $6 million due to an increase in fees from assumed reinsurance.

Partially offsetting these increases, premiums, fees and other revenues decreased in Argentina by $17 million primarily due to a decrease in premiums due to pension reform, under which fund administrators no longer provide death and disability coverage to the plan participants, partially offset by growth in its institutional and bancassurance business.

Contributions from the other countries account for the remainder of the change in premiums, fees and other revenues.

Net investment income increased by $19 million, or 8%, to $269 million for the three months ended March 31, 2008 from $250 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $14 million, net investment income increased by $5 million, or 2% from the comparable 2007 period.

Net investment income increased in:


	•	Chile by $26 million due to the impact of higher inflation rates on indexed securities, the valuations and returns of which are linked to inflation rates, as well as an increase in invested assets.

	•	Mexico by $16 million due to an increase in invested assets, as well as the lengthening of the duration of the portfolio, partially offset by a decrease in short-term yields.

	•	South Korea by $4 million due to increases in invested assets and higher yields.

	•	Argentina by $3 million primarily due to increases in invested assets partially offset by lower trading gains due to the reduction of holdings within the trading portfolio which had supported death and disability reserves that were eliminated due to pension reform.

Partially offsetting these increases, net investment income decreased in:


	•	Hong Kong by $31 million despite the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007 because of the negative investment income for the period due to the losses on the trading securities portfolio which supports unit-linked policyholder liabilities.

	•	Japan by $13 million due to a decrease of $53 million, net of income tax, in the Company’s investment in Japan due to an increase in the costs of guaranteed annuity benefits, the impact of a refinement in assumptions for the guaranteed annuity business, partially offset by the favorable impact from the utilization of the fair value option for certain fixed annuities and an increase of $40 million from hedging activities associated with Japan’s guaranteed annuity.

	•	The home office of $4 million primarily due to an increase in the amount charged for economic capital.

Contributions from the other countries account for the remainder of the change in net investment income.

Expenses

Total expenses increased by $245 million, or 23%, to $1,303 million for the three months ended March 31, 2008 from $1,058 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $53 million, total expenses increased by $192 million, or 17%, from the comparable 2007 period.

Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased by $204 million, or 30%, to $875 million for the three months ended March 31, 2008 from $671 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $34 million, policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased by $170 million, or 24%, from the comparable 2007 period.

Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased in:


	•	Chile by $87 million primarily due to an increase in the annuity and institutional business mentioned above, as well as an increase in inflation indexed policyholder liabilities commensurate with the increase in net investment income from inflation-indexed assets.

	•	Mexico by $78 million, primarily due to an increase in certain policyholder liabilities of $56 million caused by an increase in the unrealized investment results on the invested assets supporting those liabilities relative to the prior year, as well as an increase in policyholder benefits of $12 million commensurate with the growth in premiums discussed above and an increase in interest credited to policyholder account balances of $10 million commensurate with the growth in investment income discussed above.

	•	Australia by $10 million due to growth in the institutional business and an increase in retention levels.

	•	Taiwan by $4 million primarily due to an increase in liabilities resulting from a refinement of methodologies related to the estimation of profit emergence on a certain block of business.

	•	South Korea by $4 million primarily due to higher claims from business growth.

	•	India by $2 million due to business growth.

Partially offsetting these increases in policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances were decreases in:


	•	Argentina by $12 million primarily due to a decrease in claims and market-indexed policyholder liabilities resulting from pension reform, under which fund administrators no longer provide death and disability coverage to the plan participants.

	•	Hong Kong by $7 million despite the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007 because of negative interest credited to unit-linked policyholder liabilities which reflects the losses of the trading portfolio backing these liabilities as discussed in the net investment income section above.

Increases in other countries account for the remainder of the change.

Other expenses increased by $41 million, or 11%, to $428 million for the three months ended March 31, 2008 from $387 million for the comparable 2007 period. Excluding the impact of changes in foreign currency exchange rates of $19 million, total expenses increased by $22 million, or 5%, from the comparable 2007 period.

Other expenses increased in:


	•	South Korea by $26 million due to business growth, as well as an increase in DAC amortization related to market performance.

	•	Mexico by $13 million primarily due to higher expenses related to business growth and infrastructure costs, as well as an increase in litigation liabilities.

	•	Hong Kong by $6 million due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the resulting consolidation of the operation beginning in the third quarter of 2007.


	•	Chile by $6 million primarily due to the growth discussed above as well as higher compensation costs and higher spending on infrastructure and marketing programs.

	•	India by $6 million primarily due to increased staffing and growth initiatives.

	•	The United Kingdom by $3 million due to higher commissions related to the growth discussed above partially offset by foreign currency transaction gains.

	•	Australia by $2 million primarily due to business growth.

	•	The home office of $5 million primarily due to higher spending on growth and infrastructure initiatives.

Partially offsetting these increases in other expenses were decreases in:


	•	Argentina by $33 million, primarily due to a reduction in the liability for pension servicing obligations resulting from a refinement of assumptions and methodology, as well as the availability of government statistics regarding the number of participants transferring to the government-sponsored plan under the pension reform plan which was effective January 1, 2008. Under the pension reform plan, the Company retains the obligation for administering certain existing and future participants’ accounts for which they receive no revenue. Partially offsetting this decrease are higher commissions from growth in the institutional and bancassurance businesses discussed above.

	•	Ireland by $14 million due to foreign currency transaction gains.

Increases in other countries account for the remainder of the change.

Auto & Home

Auto & Home, operating through Metropolitan Property and Casualty Insurance Company and its subsidiaries, offers personal lines property and casualty insurance directly to employees at their employer’s worksite, as well as to individuals through a variety of retail distribution channels, including the agency distribution group, independent agents, property and casualty specialists and direct response marketing. Auto & Home primarily sells auto insurance and homeowners insurance.

The following table presents consolidated financial information for the Auto & Home segment for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	744		$	716
Net investment income		53			48
Other revenues		10			11
Net investment gains (losses)		(11	)		12

Total revenues		796			787

Expenses
Policyholder benefits and claims		478			430
Policyholder dividends		1			1
Other expenses		204			202

Total expenses		683			633

Income before provision for income tax		113			154
Provision for income tax		22			41

Net income	$	91		$	113

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — Auto & Home

Net Income

Net income decreased by $22 million, or 19%, to $91 million for the three months ended March 31, 2008 from $113 million for the comparable 2007 period.

The decrease in net income was primarily attributable to an increase in policyholder benefits and claims of $31 million, net of income tax, comprised of an increase of $15 million, net of income tax, related to higher claim frequencies, an increase of $9 million, net of income tax, in catastrophe losses, an increase of $7 million, net of income tax, from a reduction in favorable development of prior year losses, and an increase of $6 million, net of income tax, related to higher earned exposures and an increase of $2 million, net of income tax, in unallocated claims adjusting expenses primarily resulting from an increase in compensation costs negatively impacting net income. Offsetting these increases was $8 million, net of income tax, of lower losses due to severity.

Offsetting this decrease in net income was an increase in premiums of $18 million, net of income tax, comprised of an increase of $12 million, net of income tax, related to increased exposures, an increase of $8 million, net of income tax, resulting from the change in estimate in the prior year on auto rate refunds due to a regulatory examination and a decrease of $5 million, net of income tax, in catastrophe reinsurance costs. Offsetting these increases in premiums was a decrease of $5 million, net of income tax, related to a reduction in average earned premium per policy and a decrease of $2 million, net of income tax, in premiums on various involuntary programs.

In addition, net investment income increased by $3 million, net of income tax, primarily due to an increase in net investment income related to a realignment of economic capital and an increase in net investment income from higher yields mostly offset by a smaller asset base.

Negatively impacting net income was a decrease of $1 million, net of income tax, in other revenues and an increase of $1 million, net of income tax, in other expenses. In addition, net investment gains (losses) decreased by $15 million, net of income tax.

Also, income taxes contributed $4 million to net income, over the expected amount, due to the favorable resolution of a prior year audit and a greater proportion of tax advantaged investment income.

Revenues

Total revenues, excluding net investment gains (losses), increased by $32 million, or 4%, to $807 million for the three months ended March 31, 2008 from $775 million for the comparable 2007 period.

Premiums increased by $28 million due to an increase of $18 million related to increased exposures and an increase of $13 million resulting from an accrual in the prior year associated with auto rate refunds from a regulatory examination. Also favorably impacting premiums was a decrease of $8 million in catastrophe reinsurance costs. Offsetting these increases in premiums was a decrease of $8 million related to a reduction in average earned premium per policy and a decrease of $3 million in premiums from various involuntary programs.

Net investment income increased by $5 million primarily due to a realignment of economic capital and an increase in net investment income from higher yields mostly offset by a smaller asset base.

Expenses

Total expenses increased by $50 million, or 8%, to $683 million for the three months ended March 31, 2008 from $633 million for the comparable 2007 period.

Policyholder benefits and claims increased by $48 million comprised of an increase of $23 million from higher claim frequencies, particularly in the automobile comprehensive coverage and in the homeowners wind coverage. These coverages were impacted due to more adverse non-catastrophe weather conditions in the first quarter of 2008 compared to the same period in 2007. There were also increases of $14 million in catastrophe losses in policyholder benefits and claims, $11 million due to less favorable development of prior year losses, $10 million related to higher earned exposures and an increase of $3 million in unallocated loss adjustment expenses, primarily resulting from an

increase in claims-related compensation costs. Offsetting these increases was $13 million of lower losses due to severity.

Other expenses increased by $2 million primarily as a result of higher compensation costs.

Underwriting results, excluding catastrophes, in the Auto & Home segment were favorable for the three months ended March 31, 2008 although lower than the comparable period of 2007 as the combined ratio, excluding catastrophes, increased to 87.6% from 86.3% for the three months ended March 31, 2007.

Reinsurance

The Company’s Reinsurance segment is comprised of the life reinsurance business of Reinsurance Group of America, Incorporated (“RGA”), a publicly traded company. At March 31, 2008, the Company’s ownership in RGA was 52%. RGA’s operations in North America are its largest and include operations of its Canadian and U.S. subsidiaries. In addition to these operations, RGA has subsidiary companies, branch offices, or representative offices in Australia, Barbados, Bermuda, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, Poland, South Africa, South Korea, Spain, Taiwan and the United Kingdom.

The following table presents consolidated financial information for the Reinsurance segment for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	1,298		$	1,126
Net investment income		189			206
Other revenues		30			18
Net investment gains (losses)		(156	)		(6	)

Total revenues		1,361			1,344

Expenses
Policyholder benefits and claims		1,140			902
Interest credited to policyholder account balances		74			65
Other expenses		129			325

Total expenses		1,343			1,292

Income before provision for income tax		18			52
Provision for income tax		6			18

Net income	$	12		$	34

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — Reinsurance

Net Income

Net income decreased by $22 million, or 65%, to $12 million for the three months ended March 31, 2008 from $34 million for the comparable 2007 period.

The decrease in net income was attributable to a 26% increase in policyholder benefits and claims, an 8% decrease in net investment income, a 14% increase in interest credited to policyholder account balances, offset by a 67% increase in other revenues, a 15% increase in premium and a 60% decrease in other expense. The decrease in premiums, net of the increase in policyholder benefits and claims, was a $43 million reduction to net income, which was primarily due to adverse claims experience in the U.S. and the United Kingdom. Policyholder benefits and claims as a percentage of premiums were 88% compared to 80% in the prior year. The decrease in net investment

income, net of interest credited to policyholder account balances, reduced net income by $17 million and was primarily due to an after-tax non-cash increase in interest credited from changes in risk free interest rates used in the present value calculations of embedded derivatives associated with equity indexed annuity treaties The increase in other revenues added $8 million to net income and was primarily related to an increase in investment product fees on asset-intensive business and financial reinsurance fees during 2008.

The decrease in other expenses contributed $127 million to net income, net of income tax. The decrease in other expenses was primarily related to a reduction of expenses associated with DAC, including reinsurance allowances paid resulting from the change in value of embedded derivatives included within net investment losses and interest credited to policyholder account balances, a decrease in minority interest and interest expense, partially offset by an increase in compensation and overhead-related expenses associated with RGA’s international expansion.

These increases in net income were partially offset by a $98 million increase in net investment losses, all net of income tax. The increase in net investment losses was primarily due to a decrease in the fair value of embedded derivatives associated with the reinsurance of annuity products on a funds withheld basis, primarily a result of the impact of widening credit spreads in the U.S. debt markets.

Additionally, a component of the increase in net income was a $2 million increase associated with foreign currency exchange rate movements.

Revenues

Total revenues, excluding net investment gains (losses), increased by $167 million, or 12%, to $1,517 million for the three months ended March 31, 2008 from $1,350 million for the comparable 2007 period.

The increase in revenues was primarily associated with growth in premiums of $172 million from new facultative and automatic treaties and renewal premiums on existing blocks of business in all RGA operating segments, including the U.S., which contributed $56 million; Asia Pacific, which contributed $54 million; Canada, which contributed $40 million; Europe and South Africa, which contributed $21 million, and Corporate, which contributed $1 million. Premium levels are significantly influenced by large transactions and reporting practices of ceding companies and, as a result, can fluctuate from period to period.

Net investment income decreased by $17 million primarily due to a decrease of $57 million related to a reduction in equity option market values relative to the comparable period within certain funds withheld portfolios associated with the reinsurance of equity indexed annuity products, which is generally offset by an adjustment to interest credited to policyholder account balances. This decrease is substantially offset by an increase in the asset base, primarily due to positive operating cash flows, and slightly higher yields.

Other revenues increased by $12 million primarily due to an increase in surrender charges on asset-intensive business reinsured and an increase in fees associated with financial reinsurance.

Additionally, a component of the increase in total revenues, excluding net investment gains (losses), was a $53 million increase associated with foreign currency exchange rate movements.

Expenses

Total expenses increased by $51 million, or 4%, to $1,343 million for the three months ended March 31, 2008 from $1,292 million for the comparable 2007 period.

This increase in total expenses was primarily attributable to an increase of $238 million in policyholder benefits and claims, primarily associated with adverse claims experience in the U.S. and the United Kingdom, our two largest mortality markets, and growth in insurance in-force of $237 billion. Additionally, interest credited to policyholder account balances increased by $9 million, primarily due to a $65 million increase in the current period related to changes in risk free rates used in the present value calculations of embedded derivatives associated with equity-indexed annuity treaties (“EIAs”), generally offset by a reduction in interest credited to policyholder account balances associated with the aforementioned equity option market value decreases within certain funds withheld portfolios.

Other expenses decreased by $196 million due to a $171 million decrease in expenses associated with DAC, including reinsurance allowances paid, a $32 million decrease in minority interest expense and a $2 million decrease in interest expense due primarily to a decrease in interest rates on variable rate debt. Included in the $171 million decrease in expenses associated with DAC was a $164 million reduction of DAC amortization due to the change in the value of embedded derivatives associated with modified coinsurance arrangements, primarily a result of the impact of widening credit spreads in the U.S. debt markets and changes in risk free rates used in the present value calculations of embedded derivatives associated with EIAs. An offsetting increase of $9 million was primarily due to compensation and overhead-related expenses associated with RGA’s international expansion and general growth in operations.

Additionally, a component of the increase in total expenses was a $49 million increase associated with foreign currency exchange rate movements.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the business segments, various start-up entities, including MetLife Bank, and run-off entities, as well as interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of all intersegment amounts, which generally relate to intersegment loans, which bear interest at rates commensurate with related borrowings, as well as intersegment transactions.

The following table presents consolidated financial information for Corporate & Other for the periods indicated:


	Three Months Ended
	March 31,
	2008			2007
	(In millions)

Revenues
Premiums	$	7		$	8
Net investment income		270			370
Other revenues		10			6
Net investment gains (losses)		(20	)		5

Total revenues		267			389

Expenses
Policyholder benefits and claims		10			11
Other expenses		353			333

Total expenses		363			344

Income (loss) from continuing operations before benefit for income tax		(96	)		45
Benefit for income tax		(95	)		(37	)

Income from continuing operations		(1	)		82
Income from discontinued operations, net of income tax		—			17

Net income (loss)		(1	)		99
Preferred stock dividends		33			34

Net income (loss) available to common shareholders	$	(34	)	$	65

Three Months Ended March 31, 2008 compared with the Three Months Ended March 31, 2007 — Corporate & Other

Income from Continuing Operations

Income from continuing operations decreased by $83 million, to a loss of $1 million for the three months ended March 31, 2008 from $82 million for the comparable 2007 period. Included in this decrease was an increase in net investment losses of $16 million, net of income tax. Excluding the impact of net investment gains (losses), income from continuing operations decreased by $67 million.

The decrease in income from continuing operations was primarily attributable to lower net investment income, higher interest expense, and higher legal costs of $65 million, $51 million, and $2 million respectively, each of which were net of income tax. This decrease was partially offset by lower corporate expenses, lower interest credited to bankholder deposits, lower interest on uncertain tax positions, and higher other revenues of $33 million, $4 million, $3 million, and $2 million respectively, each of which were net of income tax. Tax benefits increased by $9 million over the comparable 2007 period due to the actual and the estimated tax rate allocated to the various segments.

Revenues

Total revenues, excluding net investment gains (losses), decreased by $97 million, or 25%, to $287 million for the three months ended March 31, 2008 from $384 million for the comparable 2007 period.

This decrease was primarily due to a decrease in net investment income of $100 million, mainly on reduced yields on other limited partnerships including hedge funds and real estate and real estate joint ventures partially offset by higher securities lending results. This decrease in yields was partially offset by a higher asset base related to the investment of proceeds from issuances of junior subordinated debt in December 2007 and collateral financing arrangements to support statutory reserves in May 2007 and December 2007 partially offset by repurchases of outstanding common stock, the prepayment of shares subject to mandatory redemption in October 2007 and the reduction of commercial paper outstanding. A slight repositioning of the portfolio from short-term investments to leveraged leases resulted in higher leveraged lease income. Also included as a component of total revenues was the elimination of intersegment amounts which was offset within total expenses.

Expenses

Total expenses increased by $19 million, or 6%, to $363 million for the three months ended March 31, 2008 from $344 million for the comparable 2007 period.

Interest expense was higher by $78 million due to the issuances of junior subordinated debt in December 2007 and collateral financing arrangements in May 2007 and December 2007, partially offset by the prepayment of shares subject to mandatory redemption in October 2007 and the reduction of commercial paper outstanding. Legal costs were higher by $3 million primarily due to a decrease in the prior year of $7 million of legal liabilities resulting from the settlement of certain cases partially offset by lower amortization and valuation of an asbestos insurance recoverable of $4 million. Corporate expenses were lower by $50 million primarily due to a reduction in deferred compensation expenses of $33 million and lower corporate support expenses of $17 million, which included incentive compensation, rent, start-up costs, and information technology costs. As a result of lower interest rates, interest credited to bankholder deposits decreased by $7 million at MetLife Bank. Interest on uncertain tax positions was lower by $4 million as a result of a settlement payment to the Internal Revenue Service (“IRS”) in December 2007 and a decrease in published IRS interest rates. Also included as a component of total expenses was the elimination of intersegment amounts which were offset within total revenues.

Liquidity and Capital Resources

The Company

Capital

RBC requirements are used as minimum capital requirements by the National Association of Insurance Commissioners (“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 and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate 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 each of the Holding Company’s domestic insurance subsidiaries. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not exceed certain RBC levels. As of the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital of each of these subsidiaries was in excess of each of those RBC levels.

Asset/Liability Management

The Company actively manages its assets using an approach that balances quality, diversification, asset/liability matching, liquidity 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 managed on a cash flow and duration basis. The asset/liability management process is the shared responsibility of the Portfolio Management Unit, the Financial Management and Oversight Asset/Liability Management Unit, and the operating business segments under the supervision of the various product line specific Asset/Liability Management Committees (“ALM Committees”). The ALM Committees’ duties include reviewing and approving target portfolios on a periodic basis, establishing investment guidelines and limits and providing oversight of the asset/liability management process. The portfolio managers and asset sector specialists, who have responsibility on a day-to-day basis for risk management of their respective investing activities, implement the goals and objectives established by the ALM Committees.

The Company establishes target asset portfolios for each major insurance product, which represent the investment strategies used to profitably fund its liabilities within acceptable levels of risk. These strategies are monitored through regular review of portfolio metrics, such as effective duration, yield curve sensitivity, convexity, liquidity, asset sector concentration and credit quality. In executing these asset/liability matching strategies, management regularly reevaluates the estimates used in determining the approximate amounts and timing of payments to or on behalf of policyholders for insurance liabilities. Many of these estimates are inherently subjective and could impact the Company’s ability to achieve its asset/liability management goals and objectives.

Liquidity

Liquidity refers to a company’s ability to generate adequate amounts of cash to meet its needs. The Company’s liquidity position (cash and cash equivalents and short-term investments, excluding securities lending) was $12.5 billion and $12.3 billion at March 31, 2008 and December 31, 2007, respectively. Liquidity needs are determined from a rolling 12-month forecast by portfolio and are monitored daily. Asset mix and maturities are adjusted based on forecast. Cash flow testing and stress testing provide additional perspectives on liquidity. The Company believes that it has sufficient liquidity to fund its cash needs under various scenarios that include the potential risk of early contractholder and policyholder withdrawal. The Company includes provisions limiting withdrawal rights on many of its products, including general account institutional pension products (generally group annuities, including GICs, and certain deposit fund liabilities) 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 unanticipated cash requirements beyond normal liquidity, the Company has multiple alternatives available based on market conditions and the amount and timing of the liquidity need. These options include cash flows from operations, the sale of liquid assets, global funding sources and various credit facilities.

The Company’s ability to sell investment assets could be limited by accounting rules, including rules relating to the intent and ability to hold impaired securities until the market value of those securities recovers.

In extreme circumstances, all general account assets within a statutory legal entity are available to fund any obligation of the general account within that legal entity.

A disruption in the financial markets could limit the Holding Company’s access to or cost of liquidity.

Liquidity Sources

Cash Flows from Operations. The Company’s principal cash inflows from its insurance activities come from insurance premiums, annuity considerations and deposit funds. A primary liquidity concern with respect to these cash inflows is the risk of early contractholder and policyholder withdrawal.

The Company’s principal cash inflows from its investment activities come from repayments of principal, proceeds from maturities and sales of invested assets and investment income. The primary liquidity concerns with respect to these cash inflows are the risk of default by debtors and market volatilities. The Company closely monitors and manages these risks through its credit risk management process.

Liquid Assets. An integral part of the Company’s liquidity management is the amount of liquid assets it holds. Liquid assets include cash, cash equivalents, short-term investments, and marketable fixed maturity and equity securities. Liquid assets exclude assets relating to securities lending activities. At March 31, 2008 and December 31, 2007, the Company had $188.9 billion and $188.4 billion in liquid assets, respectively.

Global Funding Sources. Liquidity is also provided by a variety of both short-term and long-term instruments, including repurchase agreements, commercial paper, medium- and long-term debt, junior subordinated debt securities, shares subject to mandatory redemption, capital securities and stockholders’ equity. The diversity of the Company’s funding sources enhances funding flexibility, limits dependence on any one source of funds and generally lowers the cost of funds.

At March 31, 2008 and December 31, 2007, the Company had outstanding $632 million and $667 million in short-term debt, respectively, and $9.7 billion and $9.6 billion in long-term debt, respectively. At March 31, 2008 and December 31, 2007, the Company had outstanding $5.8 billion and $5.7 billion in collateral financing arrangements, respectively. At both March 31, 2008 and December 31, 2007, the Company had outstanding $4.5 billion in junior subordinated debt and $159 million in shares subject to mandatory redemption.

Credit Facilities. The Company maintains committed and unsecured credit facilities aggregating $4.0 billion as of March 31, 2008. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. The facilities can be used for general corporate purposes and, at March 31, 2008 $3.0 billion of the facilities also served as back-up lines of credit for the Company’s commercial paper programs.

Information on these credit facilities as of March 31, 2008 is as follows:


				Letter of
				Credit				Unused
Borrower(s)	Expiration	Capacity		Issuances		Drawdowns		Commitments
		(In millions)

MetLife, Inc. and MetLife Funding, Inc.	June 2012 (1)	$	3,000	$	2,152	$	—	$	848
MetLife Bank, N.A.	July 2008		200		—		—		200
Reinsurance Group of America, Incorporated	May 2009		30		—		30		—
Reinsurance Group of America, Incorporated	March 2011		46		—		—		46
Reinsurance Group of America, Incorporated	September 2012 (2)		750		358		—		392

Total		$	4,026	$	2,510	$	30	$	1,486


(1)		Proceeds are available to be used for general corporate purposes, to support their commercial paper programs and for the issuance of letters of credit. All borrowings under the credit agreement must be repaid by June 2012, except that letters of credit outstanding upon termination may remain outstanding until June 2013. The borrowers and the lenders under this facility may agree to extend the term of all or part of the facility to no later than June 2014, except that letters of credit outstanding upon termination may remain outstanding until June 2015.

(2)		Under the credit agreement, RGA may borrow and obtain letters of credit for general corporate purposes for its own account or for the account of its subsidiaries.

Committed Facilities. Information on committed facilities as of March 31, 2008 is as follows:


						Letter of
						Credit		Unused		Maturity
Account Party/Borrower(s)	Expiration	Capacity		Drawdowns		Issuances		Commitments		(Years)
		(In millions)

Exeter Reassurance Company Ltd., MetLife, Inc., & Missouri Reinsurance (Barbados), Inc.	June 2016 (1)	$	500	$	—	$	490	$	10		8
Exeter Reassurance Company Ltd.	December 2027 (2)		650		—		410		240		19
Timberlake Financial L.L.C.	June 2036		1,000		850		—		150		28
MetLife Reinsurance Company of South Carolina & MetLife, Inc.	June 2037		3,500		2,442		—		1,058		29
MetLife Reinsurance Company of Vermont & MetLife, Inc.	December 2037 (2)		2,896		—		1,266		1,630		29

Total		$	8,546	$	3,292	$	2,166	$	3,088


(1)		Letters of credit and replacements or renewals thereof issued under this facility of $280 million, $10 million and $200 million are set to expire no later than December 2015, March 2016 and June 2016, respectively.

(2)		The Holding Company is a guarantor under this agreement.

Letters of Credit. At March 31, 2008, the Company had outstanding $4.8 billion in letters of credit from various financial institutions, of which $2.2 billion and $2.5 billion were part of committed and credit facilities, respectively. As commitments associated with letters of credit and financing arrangements may expire unused, these amounts do not necessarily reflect the Company’s actual future cash funding requirements.

Liquidity Uses

Insurance Liabilities. The Company’s principal cash outflows primarily relate to the liabilities associated with its various life insurance, property and casualty, annuity and group pension products, operating expenses and income tax, as well as principal and interest on its outstanding debt obligations. Liabilities arising from its insurance activities primarily relate to benefit payments under the aforementioned products, as well as payments for policy surrenders, withdrawals and loans.

Investment and Other. Additional cash outflows include those related to obligations of securities lending activities, investments in real estate, limited partnerships and joint ventures, as well as litigation-related liabilities.

Contractual Obligations. At March 31, 2008, the Company’s contractual obligations had not changed significantly, in both amount and timing, from that reported at December 31, 2007 in the 2007 Annual Report.

Support Agreements. The Holding Company and several of its subsidiaries (each, an “Obligor”) are parties to various capital support commitments, guarantees and contingent reinsurance agreements with certain subsidiaries of the Holding Company and a corporation in which the Holding Company owns approximately 50% of the equity. Under these arrangements, each Obligor, with respect to the applicable entity, has agreed to cause such entity to meet specified capital and surplus levels, has guaranteed certain contractual obligations or has agreed to provide, upon the occurrence of certain contingencies, reinsurance for such entity’s insurance liabilities or for certain policies reinsured by such entity. Management does not anticipate that these arrangements will place any significant demands upon the Company’s liquidity resources.

Litigation. Putative or certified class action litigation and other litigation, and claims and assessments against the Company, in addition to those discussed elsewhere herein 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, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict or determine the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses except as noted elsewhere herein in connection with

specific matters. In some of the matters referred to herein, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations, it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcome of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s net income or cash flows in particular quarterly or annual periods.

Fair Value. Management does not believe increases and decreases in the aggregate fair value of our assets and liabilities will adversely impact our liquidity and capital resources. See also “— Quantitative and Qualitative Disclosures About Market Risk.”

Other. Based on management’s analysis of its expected cash inflows from operating activities, the dividends it receives from subsidiaries, including MLIC, that are permitted to be paid without prior insurance regulatory approval and its portfolio of liquid assets and other anticipated cash flows, management believes there will be sufficient liquidity to enable the Company to make payments on debt, make cash dividend payments on its common and preferred stock, pay all operating expenses, and meet its cash needs. The nature of the Company’s diverse product portfolio and customer base lessens the likelihood that normal operations will result in any significant strain on liquidity.

Consolidated Cash Flows. Net cash provided by operating activities increased by $1.4 billion to $3.6 billion for the three months ended March 31, 2008 as compared to $2.2 billion for the three months ended March 31, 2007 primarily due to higher premiums, fees and other revenues.

Net cash provided by financing activities was $4.7 billion and $4.0 billion for the three months ended March 31, 2008 and 2007, respectively. Accordingly, net cash provided by financing activities increased by $0.7 billion for the three months ended March 31, 2008 as compared to the same period in the prior year. Net cash provided by financing activities increased primarily as a result of an increase of $3.2 billion in net cash provided by policyholder account balances and a $0.2 billion increase in the amount of securities lending cash collateral received in connection with the Company’s securities lending program. These increases were partially offset by a decrease in short-term debt borrowings of $2.0 billion, an increase of $0.5 billion in shares acquired under the Company’s common stock repurchase program and a net decrease in long-term debt issued of $0.3 billion.

Net cash used in investing activities was $7.7 billion and $6.8 billion for the three months ended March 31, 2008 and 2007, respectively. Accordingly, net cash used in investing activities increased by $0.9 billion for the three months ended March 31, 2008 as compared to the same period in the prior year. In the current year, cash available for the purchase of invested assets increased by $0.7 billion as a result of the increase in cash provided by financing activities discussed above. Also, cash available for investment increased by $1.4 billion from cash provided by operating activities discussed above. The increase in net cash used in investing activities resulted primarily from an increase in other invested assets of $1.4 billion, an increase in policy loans of $0.4 billion and a decrease in cash invested in short-term investments of $0.2 billion. In addition, the 2008 period includes $0.3 billion of cash used to purchase businesses. These increases in net cash used in investing activities were partially offset by a decrease in the net origination of mortgage and consumer loans of $0.9 billion, a decrease in net purchases of fixed maturity securities of $0.2 billion, as well as a decrease in the net purchases of real estate and real estate joint ventures of $0.2 billion.

The Holding Company

Capital

Restrictions and Limitations on Bank Holding Companies and Financial Holding Companies — Capital. The Holding Company and its insured depository institution subsidiary, MetLife Bank, are subject to risk-based and leverage capital guidelines issued by the federal banking regulatory agencies for banks and financial holding companies. The federal banking regulatory agencies are required by law to take specific prompt corrective actions with respect to institutions that do not meet minimum capital standards. As of their most recently filed reports with the federal banking

regulatory agencies, MetLife, Inc. and MetLife Bank met the minimum capital standards as per federal banking regulatory agencies with all of MetLife Bank’s risk-based and leverage capital ratios meeting the federal banking regulatory agencies’ “well capitalized” standards and all of MetLife, Inc.’s risk-based and leverage capital ratios meeting the “adequately capitalized” standards.

Liquidity

Liquidity is managed to preserve stable, reliable and cost-effective sources of cash to meet all current and future financial obligations and is provided by a variety of sources, including a portfolio of liquid assets, a diversified mix of short- and long-term funding sources from the wholesale financial markets and the ability to borrow through committed credit facilities. The Holding Company is an active participant in the global financial markets through which it obtains a significant amount of funding. These markets, which serve as cost-effective sources of funds, are critical components of the Holding Company’s liquidity management. Decisions to access these markets are based upon relative costs, prospective views of balance sheet growth and a targeted liquidity profile. A disruption in the financial markets could limit the Holding Company’s access to liquidity.

The Holding Company’s ability to maintain regular access to competitively priced wholesale funds is fostered by its current high credit ratings from the major credit rating agencies. Management views its capital ratios, credit quality, stable and diverse earnings streams, diversity of liquidity sources and its liquidity monitoring procedures as critical to retaining high credit ratings.

Liquidity is monitored through the use of internal liquidity risk metrics, including the composition and level of the liquid asset portfolio, timing differences in short-term cash flow obligations, access to the financial markets for capital and debt transactions and exposure to contingent draws on the Holding Company’s liquidity.

Liquidity Sources

Dividends. The primary source of the Holding Company’s liquidity is dividends it receives from its insurance subsidiaries. The Holding Company’s insurance subsidiaries are subject to regulatory restrictions on the payment of dividends imposed by the regulators of their respective domiciles. The dividend limitation for U.S. insurance subsidiaries is based on the surplus to policyholders as of the immediately preceding calendar year and statutory net gain from operations for the immediately preceding calendar year. Statutory accounting practices, as prescribed by insurance regulators of various states in which the Company conducts business, differ in certain respects from accounting principles used in financial statements prepared in conformity with GAAP. The significant differences relate to the treatment of DAC, certain deferred income tax, required investment reserves, reserve calculation assumptions, goodwill and surplus notes. Management of the Holding Company cannot provide assurances that the Holding Company’s insurance subsidiaries will have statutory earnings to support payment of dividends to the Holding Company in an amount sufficient to fund its cash requirements and pay cash dividends and that the applicable insurance departments will not disapprove any dividends that such insurance subsidiaries must submit for approval.

The table below sets forth the dividends permitted to be paid by the respective insurance subsidiary without insurance regulatory approval:


	2008
	Permitted w/o
Company	Approval (1)

Metropolitan Life Insurance Company	$	1,299
MetLife Insurance Company of Connecticut	$	1,026
Metropolitan Tower Life Insurance Company	$	113
Metropolitan Property and Casualty Insurance Company	$	—


(1)		Reflects dividend amounts that may be paid during 2008 without prior regulatory approval. However, if paid before a specified date during 2008, some or all of such dividends may require regulatory approval.

During the three months ended March 31, 2008, no dividends were paid to the Holding Company.

Liquid Assets. An integral part of the Holding Company’s liquidity management is the amount of liquid assets it holds. Liquid assets include cash, cash equivalents, short-term investments and marketable fixed maturity securities. Liquid assets exclude assets relating to securities lending activities. At March 31, 2008 and December 31, 2007, the Holding Company had $1.2 billion and $2.3 billion in liquid assets, respectively.

Global Funding Sources. Liquidity is also provided by a variety of short-term and long-term instruments, commercial paper, medium- and long-term debt, junior subordinated debt securities, collateral financing arrangements, capital securities and stockholders’ equity. The diversity of the Holding Company’s funding sources enhances funding flexibility and limits dependence on any one source of funds and generally lowers the cost of funds. Other sources of the Holding Company’s liquidity include programs for short- and long-term borrowing, as needed.

At March 31, 2008 and December 31, 2007, the Holding Company had $313 million and $310 million in short-term debt outstanding, respectively. At March 31, 2008 and December 31, 2007, the Holding Company had outstanding $7.0 billion, $500 million, $3.4 billion and $2.4 billion of unaffiliated long-term debt, affiliated long-term debt, junior subordinated debt securities and collateral financing arrangements, respectively.

Preferred Stock. During the three months ended March 31, 2008, the Holding Company issued no new preferred stock.

See “— Liquidity and Capital Resources — The Holding Company — Liquidity Uses — Dividends” for dividends paid on the Company’s preferred stock.

Credit Facilities. The Holding Company and MetLife Funding entered into a $3.0 billion credit agreement with various financial institutions, the proceeds of which are available to be used for general corporate purposes, to support their commercial paper programs and for the issuance of letters of credit. All borrowings under the credit agreement must be repaid by June 2012, except that letters of credit outstanding upon termination may remain outstanding until June 2013. The borrowers and the lenders under this facility may agree to extend the term of all or part of the facility to no later than June 2014, except that letters of credit outstanding upon termination may remain outstanding until June 2015.

At March 31, 2008, $2.2 billion of letters of credit have been issued under these unsecured credit facilities on behalf of the Holding Company.

Committed Facilities. Information on committed facilities as of March 31, 2008 is as follows:


						Letter of
						Credit		Unused		Maturity
Account Party/Borrower(s)	Expiration	Capacity		Drawdowns		Issuances		Commitments		(Years)
		(In millions)

Exeter Reassurance Company Ltd., MetLife, Inc., & Missouri Reinsurance (Barbados), Inc.	June 2016 (1)	$	500	$	—	$	490	$	10		8
Exeter Reassurance Company Ltd.	December 2027 (2)		650		—		410		240		19
MetLife Reinsurance Company of South Carolina & MetLife, Inc.	June 2037		3,500		2,442		—		1,058		29
MetLife Reinsurance Company of Vermont & MetLife, Inc.	December 2037 (2)		2,896		—		1,266		1,630		29

Total		$	7,546	$	2,442	$	2,166	$	2,938


(1)		Letters of credit and replacements or renewals thereof issued under this facility of $280 million, $10 million and $200 million are set to expire no later than December 2015, March 2016 and June 2016, respectively.

(2)		The Holding Company is a guarantor under this agreement.

Letters of Credit. At March 31, 2008, the Holding Company had $2.2 billion in outstanding letters of credit, all of which are associated with the aforementioned credit facilities, from various financial institutions. As commitments associated with letters of credit and financing arrangements may expire unused, these amounts do not necessarily reflect the Holding Company’s actual future cash funding requirements.

Liquidity Uses

The primary uses of liquidity of the Holding Company include debt service, cash dividends on common and preferred stock, capital contributions to subsidiaries, payment of general operating expenses, acquisitions and the repurchase of the Holding Company’s common stock.

Dividends. Information on the declaration, record and payment dates, as well as per share and aggregate dividend amounts, for the Holding Company’s Floating Rate Non-Cumulative Preferred Stock, Series A (the “Series A preferred shares”) and 6.50% Non-Cumulative Preferred Stock, Series B (the “Series B preferred shares,” together with the Series A preferred shares, collectively, the “Preferred Shares”) is as follows for the three months ended March 31, 2008 and 2007:


			Dividend
			Series A		Series A		Series B		Series B
Declaration Date	Record Date	Payment Date	Per Share		Aggregate		Per Share		Aggregate
			(In millions, except per share data)

March 5, 2008	February 29, 2008	March 17, 2008	$	0.3785745	$	9	$	0.4062500	$	24
March 5, 2007	February 28, 2007	March 15, 2007	$	0.3975000	$	10	$	0.4062500	$	24

Affiliated Capital Transactions. During the three months ended March 31, 2008, the Holding Company invested an aggregate of $430 million in various affiliates.

Share Repurchase. At December 31, 2007, the Company had $511 million remaining under its cumulative stock repurchase program authorizations. The $511 million authorization was reduced by $450 million to $61 million upon settlement of the accelerated stock repurchase agreement executed during December 2007 but for which no settlement occurred until January 2008. Under the terms of the agreement, the Company paid the bank $450 million in cash in January 2008 in exchange for 6.6 million shares of the Company’s outstanding common stock that the bank borrowed from third parties. Also in January 2008, the bank delivered 1.1 million additional shares of the Company’s common stock to the Company resulting in a total of 7.7 million shares being repurchased under the agreement. Upon settlement with the bank in January 2008, the Company increased additional paid-in capital and reduced treasury stock. In January 2008, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program which began after the completion of the September 2007 program. Under these authorizations, the Holding Company may purchase its common stock from the MetLife Policyholder Trust, in the open market (including pursuant to the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act) and in privately negotiated transactions.

In February 2008, the Holding Company entered into an accelerated common stock repurchase agreement with a major bank. Under the agreement, the Company paid the bank $711 million in cash and the bank delivered an initial amount of 11.2 million shares of the Company’s outstanding common stock that the bank borrowed from third parties. Final settlement of the agreement is scheduled to take place during the second quarter of 2008. The final number of shares the Company is repurchasing under the terms of the agreement and the timing of the final settlement will depend on, among other things, prevailing market conditions and the market prices of the common stock during the repurchase period. The Company recorded the shares initially repurchased as treasury stock.

The Company also repurchased 1.5 million shares through open market purchases for $89 million during the three months ended March 31, 2008.

The Company repurchased 20.4 million shares of its common stock for $1.3 billion during the three months ended March 31, 2008. During the three months ended March 31, 2008, 0.6 million shares of common stock were issued from treasury stock for $32 million.

In April 2008, the Holding Company’s Board of Directors authorized an additional $1 billion common stock repurchase program which will begin after the completion of the January 2008 program. Subsequent to the April 2008 authorization, the amount remaining under these repurchase programs was $1,261 million. See “— Subsequent Events.”

Future common stock repurchases will be dependent upon several factors, including the Company’s capital position, its financial strength and credit ratings, general market conditions and the price of MetLife, Inc.’s common stock.

Support Agreements. The Holding Company is party to various capital support commitments with certain of its subsidiaries and a corporation in which it owns 50% of the equity. Under these arrangements, the Holding Company has agreed to cause each such entity to meet specified capital and surplus levels. Management does not anticipate that these arrangements will place any significant demands upon the Holding Company’s liquidity resources.

Based on management’s analysis and comparison of its current and future cash inflows from the dividends it receives from subsidiaries that are permitted to be paid without prior insurance regulatory approval, its portfolio of liquid assets, anticipated securities issuances and other anticipated cash flows, management believes there will be sufficient liquidity to enable the Holding Company to make payments on debt, make cash dividend payments on its common and preferred stock, contribute capital to its subsidiaries, pay all operating expenses and meet its cash needs.

Subsequent Events

On April 8, 2008, MetLife Capital Trust X, a variable interest entity (“VIE”) consolidated by the Company, issued $750 million of exchangeable surplus trust securities.

Off-Balance Sheet Arrangements

Commitments to Fund Partnership Investments

The Company makes commitments to fund partnership investments in the normal course of business for the purpose of enhancing the Company’s total return on its investment portfolio. The amounts of these unfunded commitments were $4.5 billion and $4.3 billion at March 31, 2008 and December 31, 2007, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to become material.

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $3.9 billion and $4.0 billion at March 31, 2008 and December 31, 2007, respectively. The purpose of these loans is to enhance the Company’s total return on its investment portfolio. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to become material.

Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments

The Company commits to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $891 million and $1.2 billion at March 31, 2008 and December 31, 2007, respectively. The purpose of these commitments and any related fundings is to enhance the Company’s total return on its investment portfolio. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to become material.

Lease Commitments

The Company, as lessee, has entered into various lease and sublease agreements for office space, data processing and other equipment. There have been no material changes in the Company’s commitments under such lease agreements from that reported at December 31, 2007, included in the 2007 Annual Report.

Credit Facilities and Letters of Credit

The Company maintains committed and unsecured credit facilities and letters of credit with various financial institutions. See “— Liquidity and Capital Resources — The Company — Liquidity Sources — Credit Facilities” and ‘‘— Letters of Credit” for further descriptions of such arrangements.

Share-Based Arrangements

In connection with the issuance of common equity units, the Holding Company issued forward stock purchase contracts under which the Holding Company will issue, in 2008 and 2009, between 39.0 and 47.8 million shares of its common stock, depending upon whether the share price is greater than $43.35 and less than $53.10.

Guarantees

The Company has also guaranteed minimum investment returns on certain international retirement funds in accordance with local laws. Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.

Collateral for Securities Lending

The Company has non-cash collateral for securities lending on deposit from customers, which cannot be sold or repledged, and which has not been recorded on its consolidated balance sheets. The amount of this collateral was $19 million and $40 million at March 31, 2008 and December 31, 2007, respectively.

Adoption of New Accounting Pronouncements

Fair Value

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a consistent framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and requires enhanced disclosures about fair value measurements.

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition. However, in certain cases, the transaction price may not represent fair value. Prior to SFAS 157, the fair value of a liability was often based on a settlement price concept, which assumed the liability was extinguished. Under SFAS 157, fair value is based on the amount that would be paid to transfer a liability to a third party with the same credit standing. SFAS 157 requires that fair value be a market-based measurement in which the fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant. Accordingly, fair value is no longer determined based solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, SFAS 157 requires consideration of three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The approaches are not new but SFAS 157 requires that entities determine the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs. SFAS 157 prioritizes the inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not available. The Company has categorized its assets and liabilities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. SFAS 157 defines the input levels as follows:


	Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.

	Level 2	Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs 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 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 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. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

respective income statement caption to which the item measured at fair value is presented. There were no significant changes in fair value of items measured at fair value and reflected in accumulated other comprehensive income (loss). The addition of risk margins and the Company’s own credit spread in the valuation of embedded derivatives associated with annuity contracts may result in significant volatility in the Company’s consolidated net income in future periods. The impact of adopting SFAS 157 also changed the fair value measurement for assets and liabilities which are not measured at fair value in the financial statements but for which disclosures of fair value are required under SFAS No. 107, Disclosures about Fair Value of Financial Instruments (“SFAS 107”).

Other

through earnings. Internally-developed intangible assets are not considered a component of the related instruments. The adoption of SAB 109 did not have an impact on the Company’s unaudited interim condensed consolidated financial statements.

Future Adoption of New Accounting Pronouncements

Business Combinations


	•	All business combinations (whether full, partial or “step” acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions.

	•	Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date.

	•	The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date.

	•	Certain acquired contingent liabilities are recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies.

	•	Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense.

	•	Noncontrolling interests (formerly known as “minority interests”) are valued at fair value at the acquisition date and are presented as equity rather than liabilities.

	•	When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized.

	•	Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions.

	•	When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized.

Other Intangible Assets (“SFAS 142”). This change is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(r) and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date.

Derivatives

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements.

Other

Investments

The Company’s primary investment objective is to optimize, net of income tax, risk-adjusted investment income and risk-adjusted total return while ensuring that assets and liabilities are managed on a cash flow and duration basis. The Company is exposed to three primary sources of investment risk:


	•	credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest;

	•	interest rate risk, relating to the market price and cash flow variability associated with changes in market interest rates; and

	•	market valuation risk.

The Company manages risk through in-house fundamental analysis of the underlying obligors, issuers, transaction structures and real estate properties. The Company also manages credit risk and market valuation risk through industry and issuer diversification and asset allocation. For real estate and agricultural assets, the Company manages credit risk and market valuation risk through geographic, property type and product type diversification and asset allocation. The Company manages interest rate risk as part of its asset and liability management strategies; product design, such as the use of market value adjustment features and surrender charges; and proactive monitoring and management of certain non-guaranteed elements of its products, such as the resetting of credited interest and dividend rates for policies that permit such adjustments. The Company also uses certain derivative instruments in the management of credit and interest rate risks.

Composition of Investment Portfolio Results

The following table illustrates the net investment income, net investment gains (losses), annualized yields on average ending assets and ending carrying value for each of the components of the Company’s investment portfolio:


	At or for the
	Three Months Ended March 31,
	2008			2007
	(In millions)
Fixed Maturity Securities
Yield (1)		6.46	%		6.15	%
Investment income (2)	$	3,278		$	3,065
Investment gains (losses)	$	(204	)	$	(92	)
Ending carrying value (2)	$	244,896		$	248,693
Mortgage and Consumer Loans
Yield (1)		6.18	%		6.36	%
Investment income (3)	$	689		$	632
Investment gains (losses)	$	(27	)	$	—
Ending carrying value	$	47,777		$	43,936
Real Estate and Real Estate Joint Ventures (4)
Yield (1)		5.06	%		11.60	%
Investment income	$	87		$	151
Investment gains (losses)	$	(2	)	$	7
Ending carrying value	$	6,963		$	5,427
Policy Loans
Yield (1)		6.23	%		6.16	%
Investment income	$	165		$	157
Ending carrying value	$	10,739		$	10,177
Equity Securities and Other Limited Partnership Interests
Yield (1)		7.03	%		15.25	%
Investment income	$	200		$	345
Investment gains (losses)	$	(13	)	$	64
Ending carrying value	$	11,882		$	10,082
Cash and Short-Term Investments
Yield (1)		3.05	%		6.16	%
Investment income	$	96		$	123
Investment gains (losses)	$	1		$	—
Ending carrying value	$	13,486		$	9,028
Other Invested Assets (5)
Yield (1)		3.39	%		8.99	%
Investment income	$	106		$	212
Investment gains (losses)	$	(648	)	$	(74	)
Ending carrying value	$	14,357		$	9,713
Total Investments
Gross investment income yield (1)		6.13	%		6.67	%
Investment fees and expenses yield		(0.16	)%		(0.15	)%

Net Investment Income Yield		5.97	%		6.52	%

Gross investment income	$	4,621		$	4,685
Investment fees and expenses		(122	)		(103	)

Net Investment Income	$	4,499		$	4,582

Ending carrying value	$	350,100		$	337,056

Gross investment gains	$	405		$	308
Gross investment losses		(532	)		(289	)
Writedowns		(186	)		(3	)

Subtotal	$	(313	)	$	16
Derivative and other instruments not qualifying for hedge accounting		(580	)		(111	)

Investment Gains (Losses)	$	(893	)	$	(95	)
Minority interest — investment gains (losses)		25			4
Investment gains (losses) tax benefit (provision)		308			33

Investment Gains (Losses), Net of Income Tax	$	(560	)	$	(58	)


(1)		Yields are based on quarterly average asset carrying values, excluding recognized and unrealized investment gains (losses), and for yield calculation purposes, average assets exclude collateral associated with the Company’s securities lending program.

(2)		Fixed maturity securities include $808 million and $777 million in ending carrying value and ($51) million and $15 million of investment income related to trading securities for the three months ended March 31, 2008 and 2007, respectively.

(3)		Investment income from mortgage and consumer loans includes prepayment fees.

(4)		Included in investment income from real estate and real estate joint ventures is ($2) million and $3 million of gains related to discontinued operations for the three months ended March 31, 2008 and 2007, respectively. Included in investment gains (losses) from real estate and real estate joint ventures is $0 million and $5 million of gains related to discontinued operations for the three months ended March 31, 2008 and 2007, respectively.

(5)		Included in investment income from other invested assets are scheduled periodic settlement payments on derivative instruments that do not qualify for hedge accounting under SFAS No. 133, Accounting for Derivative Instruments and Hedging (“SFAS 133”), of ($7) million and $58 million for the three months ended March 31, 2008 and 2007, respectively. These amounts are excluded from investment gains (losses). Additionally, excluded from investment gains (losses) is $14 million and $4 million for the three months ended March 31, 2008 and 2007, respectively, related to settlement payments on derivatives used to hedge interest rate and currency risk on policyholder account balances that do not qualify for hedge accounting. Such amounts are included within interest credited to policyholder account balances.

Fixed Maturity and Equity Securities Available-for-Sale

Fixed maturity securities consisted principally of publicly traded and privately placed fixed maturity securities, and represented 70% of total cash and invested assets at both March 31, 2008 and December 31, 2007. Based on estimated fair value, public fixed maturity securities represented $207.2 billion, or 85%, and $205.4 billion, or 85%, of total fixed maturity securities at March 31, 2008 and December 31, 2007, respectively. Based on estimated fair value, private fixed maturity securities represented $36.9 billion, or 15%, and $36.8 billion, or 15%, of total fixed maturity securities at March 31, 2008 and December 31, 2007, respectively.

The Company determines the estimated fair value of its publicly traded fixed maturity, equity, and trading securities as well as its short-term investments generally through the use of independent pricing services. Independent pricing services that value these instruments use direct market quotes or market standard valuation methodologies. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or similar techniques. The assumptions and inputs in applying these market standard valuation methodologies include, but are not limited to, interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, credit spreads, benchmark yields, coupon rate, call provisions, sinking fund requirements, maturity, estimated duration, and management’s assumptions regarding liquidity, prepayments and estimated future cash flows. When a price is not available from an independent pricing service, the Company will value the security primarily using independent broker quotations.

For privately placed fixed maturity securities, the Company determines the estimated fair value through independent pricing services or, discounted cash flow techniques. The discounted cash flow valuations rely upon the estimated future cash flows of the security, credit spreads of comparable public securities, secondary transactions, and takes into account, among other factors, the credit quality of the issuer and the reduced liquidity associated with privately placed debt securities.

The Company has reviewed the significance and observability of inputs used in the valuation methodologies to determine the appropriate SFAS 157 fair value hierarchy level for each of its securities. Based on the results of this review and investment class analyses, each instrument is categorized as Level 1, 2, or 3 based on the priority of the inputs to the respective valuation methodologies. While prices for U.S. Treasury fixed maturity securities, exchange-traded common stock, and certain short-term money market securities have been classified into Level 1, most securities valued by independent pricing services have been classified into Level 2 because the significant inputs used in pricing these securities are market observable or can be corroborated using market

100

observable information. Most investment grade privately placed fixed maturity securities have been classified within Level 2, while below investment grade or distressed privately placed fixed maturity securities have been classified within Level 3. Where estimated fair values are determined by independent broker quotations, these instruments have been classified as Level 3 due to the general lack of transparency in the process that independent brokers use to develop these price quotations.

Senior management, independent of the trading and investing functions, is responsible for the oversight of control systems and valuation policies, including reviewing and approving new transaction types and markets, for ensuring that observable market prices and market-based parameters are used for valuation wherever possible and for determining that judgmental valuation adjustments, if any, are based upon established policies and are applied consistently over time. Management reviews its valuation methodologies on an ongoing basis and ensures that any changes to valuation methodologies are justified. Management employs control systems and procedures that include confirmation that independent pricing services use market-based parameters for valuation wherever possible, comparisons with similar observable positions, comparisons with actual trade data, and discussions with senior business leaders familiar with the similar investments and the markets in which they trade.

The Securities Valuation Office of the NAIC evaluates the fixed maturity investments of insurers for regulatory reporting purposes and assigns securities to one of six investment categories called “NAIC designations.” The NAIC ratings are similar to the rating agency designations of the Nationally Recognized Statistical Rating Organizations (“NRSROs”) for marketable bonds. NAIC ratings 1 and 2 include bonds generally considered investment grade (rated “Baa3” or higher by Moody’s Investors Services (“Moody’s”), or rated “BBB — ” or higher by Standard & Poor’s (“S&P”) and Fitch Ratings Insurance Group (“Fitch”)), by such rating organizations. NAIC ratings 3 through 6 include bonds generally considered below investment grade (rated “Ba1” or lower by Moody’s, or rated “BB+” or lower by S&P and Fitch).

The following table presents the Company’s total fixed maturity securities by NRSRO designation and the equivalent ratings of the NAIC, as well as the percentage, based on estimated fair value, that each designation is comprised of at:


		March 31, 2008							December 31, 2007
		Cost or							Cost or
NAIC	Rating Agency	Amortized		Estimated		% of			Amortized		Estimated		% of
Rating	Designation (1)	Cost		Fair Value		Total			Cost		Fair Value		Total
		(In millions)

1	Aaa/Aa/A	$	178,863	$	179,729		73.7	%	$	172,711	$	175,651		72.5	%
2	Baa		48,169		47,813		19.6			48,265		48,914		20.2
3	Ba		10,439		10,280		4.2			10,676		10,738		4.4
4	B		6,179		5,731		2.3			6,632		6,481		2.7
5	Caa and lower		600		503		0.2			476		445		0.2
6	In or near default		20		32		—			1		13		—

	Total fixed maturity securities	$	244,270	$	244,088		100.0	%	$	238,761	$	242,242		100.0	%


(1)		Amounts presented are based on rating agency designations. Comparisons between NAIC ratings and rating agency designations are published by the NAIC. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s, S&P and Fitch. If no rating is available from a rating agency, then the MetLife rating is used.

The Company held fixed maturity securities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $16.5 billion and $17.7 billion at March 31, 2008 and December 31, 2007, respectively. These securities had net unrealized losses of $692 million and $108 million at March 31, 2008 and December 31, 2007, respectively. Non-income producing fixed maturity securities were $32 million and $13 million at March 31, 2008 and December 31, 2007, respectively. Net unrealized gains associated with non-income producing fixed maturity securities were $12 million at both March 31, 2008 and December 31, 2007.

101


	March 31, 2008
	Cost or
	Amortized		Gross Unrealized				Estimated		% of
	Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	78,251	$	1,749	$	3,797	$	76,203		31.2	%
Residential mortgage-backed securities		57,024		874		1,379		56,519		23.2
Foreign corporate securities		37,242		1,835		1,294		37,783		15.6
U.S. Treasury/agency securities		20,246		1,855		14		22,087		9.0
Commercial mortgage-backed securities		19,214		121		687		18,648		7.6
Foreign government securities		13,511		1,969		131		15,349		6.3
Asset-backed securities		12,739		49		1,210		11,578		4.7
State and political subdivision securities		5,726		154		258		5,622		2.3
Other fixed maturity securities		317		10		28		299		0.1

Total fixed maturity securities	$	244,270	$	8,616	$	8,798	$	244,088		100.0	%

Common stock	$	2,540	$	390	$	167	$	2,763		49.9	%
Non-redeemable preferred stock		3,302		43		575		2,770		50.1

Total equity securities (1)	$	5,842	$	433	$	742	$	5,533		100.0	%


	December 31, 2007
	Cost or
	Amortized		Gross Unrealized				Estimated		% of
	Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	77,875	$	1,725	$	2,174	$	77,426		32.0	%
Residential mortgage-backed securities		56,267		611		389		56,489		23.3
Foreign corporate securities		37,359		1,740		794		38,305		15.8
U.S. Treasury/agency securities		19,771		1,487		13		21,245		8.8
Commercial mortgage-backed securities		17,676		251		199		17,728		7.3
Foreign government securities		13,535		1,924		188		15,271		6.3
Asset-backed securities		11,549		41		549		11,041		4.6
State and political subdivision securities		4,394		140		115		4,419		1.8
Other fixed maturity securities		335		13		30		318		0.1

Total fixed maturity securities	$	238,761	$	7,932	$	4,451	$	242,242		100.0	%

Common stock	$	2,488	$	568	$	108	$	2,948		48.7	%
Non-redeemable preferred stock		3,403		61		362		3,102		51.3

Total equity securities (1)	$	5,891	$	629	$	470	$	6,050		100.0	%


(1)		Equity securities primarily consist of investments in common and preferred stocks and mutual fund interests. Such securities include private equity securities with an estimated fair value of $633 million and $599 million at March 31, 2008 and December 31, 2007, respectively.

102

exposure to fixed maturity securities backed by sub-prime mortgage loans with estimated fair values of $1.9 billion and $2.2 billion, respectively, and unrealized losses of $441 million and $219 million, respectively. These securities are classified within asset-backed securities in the immediately preceding tables. At March 31, 2008, 33% of the asset-backed securities backed by sub-prime mortgage loans have been guaranteed by financial guarantee insurers, of which 57% were guaranteed by financial guarantee insurers who are Aaa rated.

The fair value of fixed maturity securities and equity securities measured at fair value on a recurring basis and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
					Equity
	Fixed Maturity Securities				Securities
	(In millions)

Quoted prices in active markets for identical assets (Level 1)	$	6,316	3	%	$	2,078	38	%
Significant other observable inputs (Level 2)		213,961	87			1,289	23
Significant unobservable inputs (Level 3)		23,811	10			2,166	39

Total fair value	$	244,088	100	%	$	5,533	100	%


	March 31, 2008
	Fair Value Measurements at Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Fair Value
	(In millions)

Fixed maturity securities:
U.S. corporate securities	$	—	$	67,988	$	8,215	$	76,203
Residential mortgage-backed securities		—		54,653		1,866		56,519
Foreign corporate securities		2		30,159		7,622		37,783
U.S. Treasury/agency securities		5,737		16,288		62		22,087
Commercial mortgage-backed securities		—		18,096		552		18,648
Foreign government securities		558		13,878		913		15,349
Asset-backed securities		—		7,407		4,171		11,578
State and political subdivision securities		8		5,477		137		5,622
Other fixed maturity securities		11		15		273		299

Total fixed maturity securities	$	6,316	$	213,961	$	23,811	$	244,088

Equity securities:
Common stock	$	1,965	$	589	$	209	$	2,763
Non-redeemable preferred stock		113		700		1,957		2,770

Total equity securities	$	2,078	$	1,289	$	2,166	$	5,533

103

A rollforward of the fair value measurements for fixed maturity securities and equity securities measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended March 31, 2008 is as follows:


	Three Months Ended
	March 31, 2008
	Fixed Maturity			Equity
	Securities			Securities
	(In millions)

Balance, December 31, 2007	$	24,854		$	2,385
Impact of SFAS 157 and SFAS 159 adoption		(8	)		—

Balance, January 1, 2008		24,846			2,385
Total realized/unrealized gains (losses) included in:
Earnings		(19	)		(36	)
Other comprehensive income (loss)		(788	)		(179	)
Purchases, sales, issuances and settlements		144			3
Transfer in and/or out of Level 3		(372	)		(7	)

Balance, March 31, 2008	$	23,811		$	2,166

See “— Summary of Critical Accounting Estimates — Investments” for further information on the estimates and assumptions that affect the amounts reported above.

Fixed Maturity and Equity Security Impairment. The Company classifies all of its fixed maturity and equity securities as available-for-sale and marks them to market through other comprehensive income, except for non-marketable private equities, which are generally carried at cost and trading securities which are carried at fair value with subsequent changes in fair value recognized in net investment income. All securities with gross unrealized losses at the consolidated balance sheet date are subjected to the Company’s process for identifying other-than-temporary impairments. The Company writes down to fair value securities that it deems to be other-than-temporarily impaired in the period the securities are deemed to be so impaired. The assessment of whether such impairment has occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in fair value. Management considers a wide range of factors, as described in “— Summary of Critical Accounting Estimates — Investments,” 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.

The Company’s review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of securities: (i) securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%; (ii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for less than six months; and (iii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for six months or greater. While all of these securities are monitored for potential impairment, the Company’s experience indicates that the first two categories do not present as great a risk of impairment, and often, fair values recover over time as the factors that caused the declines improve.

The Company records impairments as investment losses and adjusts the cost basis of the fixed maturity and equity securities accordingly. The Company does not change the revised cost basis for subsequent recoveries in value. Impairments of fixed maturity and equity securities were $140 million and $3 million for the three months ended March 31, 2008 and 2007, respectively. The Company’s three largest impairments totaled $85 million and $3 million for the three months ended March 31, 2008 and 2007, respectively. During the three months ended March 31, 2008 and 2007, the Company sold or disposed of fixed maturity and equity securities at a loss that had a fair value of $5.8 billion and $12.1 billion, respectively. Gross losses excluding impairments for fixed maturity and equity securities were $319 million and $249 million for the three months ended March 31, 2008 and 2007, respectively.

104


	March 31, 2008
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	63,587	$	11,531	$	2,543	$	3,091		6,096		1,399
Six months or greater but less than nine months		11,734		146		883		66		993		50
Nine months or greater but less than twelve months		11,948		20		999		6		1,029		49
Twelve months or greater		26,407		46		1,937		15		2,261		92

Total	$	113,676	$	11,743	$	6,362	$	3,178


	December 31, 2007
	Cost or Amortized Cost				Gross Unrealized Loss				Number of Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	49,463	$	1,943	$	1,670	$	555		6,339		644
Six months or greater but less than nine months		17,353		23		844		7		1,461		31
Nine months or greater but less than twelve months		9,410		7		568		2		791		1
Twelve months or greater		31,731		50		1,262		13		3,192		32

Total	$	107,957	$	2,023	$	4,344	$	577

105


	March 31,			December 31,
	2008			2007

Sector:
U.S. corporate securities		40	%		44	%
Foreign corporate securities		14			16
Asset-backed securities		13			11
Residential mortgage-backed securities		15			8
Foreign government securities		1			4
Commercial mortgage-backed securities		7			4
Other		10			13

Total		100	%		100	%

Industry:
Finance		32	%		34	%
Industrial		3			18
Mortgage-backed		22			12
Utility		6			8
Government		2			4
Consumer		9			3
Other		26			21

Total		100	%		100	%

As described previously, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities are other-than-temporarily impaired. One of the criteria which the Company considers in its other-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an amount equal to or greater than cost or amortized cost. The Company’s intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an other-than-temporary impairment loss will be recognized.

106

Corporate Fixed Maturity Securities. The table below shows the major industry types that comprise the corporate fixed maturity holdings at:


	March 31, 2008					December 31, 2007
	Estimated		% of			Estimated		% of
	Fair Value		Total			Fair Value		Total
			(In millions)

Industrial	$	37,777		33.1	%	$	40,399		34.9	%
Foreign (1)		37,783		33.2			38,305		33.1
Finance		20,759		18.2			22,013		19.0
Utility		14,113		12.4			13,780		11.9
Other		3,554		3.1			1,234		1.1

Total	$	113,986		100.0	%	$	115,731		100.0	%


(1)		Includes U.S. dollar-denominated debt obligations of foreign obligors, and other foreign investments.

The Company maintains a diversified corporate fixed maturity portfolio across industries and issuers. The portfolio does not have exposure to any single issuer in excess of 1% of the total invested assets of the portfolio. At March 31, 2008 and December 31, 2007, the Company’s combined holdings in the ten issuers to which it had the greatest exposure totaled $8.4 billion and $7.8 billion, respectively, each less than 3% of the Company’s total invested assets at such dates. The exposure to the largest single issuer of corporate fixed maturity securities held at March 31, 2008 and December 31, 2007 was $1.6 billion and $1.2 billion, respectively.

The Company has hedged all of its material exposure to foreign currency risk in its corporate fixed maturity portfolio. In the Company’s international insurance operations, both its assets and liabilities are generally denominated in local currencies.

Structured Securities. The following table shows the types of structured securities the Company held at:


	March 31, 2008					December 31, 2007
	Estimated		% of			Estimated		% of
	Fair Value		Total			Fair Value		Total
	(In millions)

Residential mortgage-backed securities:
Collateralized mortgage obligations	$	36,165		41.7	%	$	37,372		43.8	%
Pass-through securities		20,354		23.5			19,117		22.4

Total residential mortgage-backed securities		56,519		65.2			56,489		66.2
Commercial mortgage-backed securities		18,648		21.5			17,728		20.8
Asset-backed securities		11,578		13.3			11,041		13.0

Total	$	86,745		100.0	%	$	85,258		100.0	%

The majority of the residential mortgage-backed securities are guaranteed or otherwise supported by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association. Alternative residential mortgage loans (“Alt-A”) are a classification of mortgage loans where the risk profile of the borrower falls between prime and sub-prime. At March 31, 2008 and December 31, 2007, $56.1 billion and $56.2 billion, respectively, or 99% for both, of the residential mortgage-backed securities were rated Aaa/AAA by Moody’s, S&P or Fitch. At March 31, 2008 and December 31, 2007, the Company’s Alt-A residential mortgage-backed securities exposure was $5.8 billion and $6.4 billion, respectively, with an unrealized loss of $679 million and $143 million, respectively.

At March 31, 2008 and December 31, 2007, $16.7 billion and $15.5 billion, respectively, or 90% and 87%, respectively, of the commercial mortgage-backed securities were rated Aaa/AAA by Moody’s, S&P or Fitch.

The Company’s asset-backed securities are diversified both by sector and by issuer. At March 31, 2008 and December 31, 2007, the largest exposures in the Company’s asset-backed securities portfolio were credit card

107

receivables and automobile receivables of 43% and 11% of the total holdings, respectively. At March 31, 2008 and December 31, 2007, $7.1 billion and $6.0 billion, respectively, or 61% and 54%, respectively, of total asset-backed securities were rated Aaa/AAA by Moody’s, S&P or Fitch.

The Company’s asset-backed securities included in the structured securities table above include exposure to residential mortgage-backed securities backed by sub-prime mortgage loans. Sub-prime mortgage lending is the origination of residential mortgage loans to customers with weak credit profiles. The Company’s exposure exists through investment in asset-backed securities which are supported by sub-prime mortgage loans. The slowing U.S. housing market, greater use of affordable mortgage products, and relaxed underwriting standards for some originators of below-prime loans have recently led to higher delinquency and loss rates, especially within the 2006 vintage year. Vintage year refers to the year of origination and not to the year of purchase. These factors have caused a pull-back in market liquidity and repricing of risk, which has led to an increase in unrealized losses from March 31, 2007 to March 31, 2008. Based upon the analysis of the Company’s exposure to sub-prime mortgage loans through its investment in asset-backed securities, the Company expects to receive payments in accordance with the contractual terms of the securities.

The following table shows the Company’s exposure to asset-backed securities supported by sub-prime mortgage loans by credit quality and by vintage year:


	March 31, 2008
	Aaa				Aa				A				Baa				Below Investment Grade				Total
	Cost or				Cost or				Cost or				Cost or				Cost or				Cost or
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value
	(In millions)

2003 & Prior	$	218	$	192	$	122	$	111	$	24	$	19	$	14	$	12	$	2	$	2	$	380	$	336
2004		157		128		434		324		25		21		40		33		1		—		657		506
2005		547		467		269		216		22		16		2		1		—		—		840		700
2006		231		200		68		42		—		—		3		3		16		7		318		252
2007		143		115		17		8		11		8		—		—		—		—		171		131
2008		—		—		—		—		—		—		—		—		—		—		—		—

Total	$	1,296	$	1,102	$	910	$	701	$	82	$	64	$	59	$	49	$	19	$	9	$	2,366	$	1,925


	December 31, 2007
	Aaa				Aa				A				Baa				Below Investment Grade				Total
	Cost or				Cost or				Cost or				Cost or				Cost or				Cost or
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value
	(In millions)

2003 & Prior	$	234	$	223	$	132	$	125	$	19	$	17	$	14	$	13	$	4	$	2	$	403	$	380
2004		212		195		446		414		27		24		—		—		1		—		686		633
2005		551		502		278		252		22		18		5		4		—		—		856		776
2006		258		235		69		47		—		—		—		—		—		—		327		282
2007		152		142		17		9		—		—		—		—		—		—		169		151

Total	$	1,407	$	1,297	$	942	$	847	$	68	$	59	$	19	$	17	$	5	$	2	$	2,441	$	2,222

At March 31, 2008 and December 31, 2007, the Company had $1.9 billion and $2.2 billion, respectively, of asset-backed securities supported by sub-prime mortgage loans as outlined in the tables above. At March 31, 2008, approximately 94% of the portfolio is rated Aaa, Aa or better of which 80% was in vintage year 2005 and prior. At December 31, 2007, approximately 96% of the portfolio was rated Aaa, Aa or better of which 80% was in vintage year 2005 and prior. These older vintages benefit from better underwriting, improved enhancement levels and higher residential property price appreciation. At March 31, 2008, all of the $1.9 billion of asset-backed securities supported by sub-prime mortgage loans were classified as Level 3 securities.

108

Asset-backed securities also include collateralized debt obligations backed by sub-prime mortgage loans at an aggregate cost of $42 million with a fair value of $32 million at March 31, 2008 and an aggregate cost of $64 million with a fair value of $48 million at December 31, 2007, which are not included in the tables above.

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

The Company had investment assets on deposit with regulatory agencies with a fair market value of $1.8 billion at both March 31, 2008 and December 31, 2007, consisting primarily of fixed maturity and equity securities. Company securities held in trust to satisfy collateral requirements had a cost or amortized cost of $8.6 billion and $7.1 billion at March 31, 2008 and December 31, 2007, respectively, consisting primarily of fixed maturity and equity securities.

Certain of the Company’s fixed maturity securities are pledged as collateral for various transactions as described in “— Composition of Investment Portfolio Results — Derivative Financial Instruments — Credit Risk.”

Trading Securities

The Company has a trading securities portfolio to support investment strategies that involve the active and frequent purchase and sale of securities, the execution of short sale agreements and asset and liability matching strategies for certain insurance products. Trading securities and short sale agreement liabilities are recorded at fair value with subsequent changes in fair value recognized in net investment income related to fixed maturity securities.

The fair value of trading securities measured at fair value on a recurring basis and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
	Trading				Trading
	Securities				Liabilities
	(In millions)

Quoted prices in active markets for identical assets and liabilities (Level 1)	$	233	29	%	$	29	100	%
Significant other observable inputs (Level 2)		396	49			—	—
Significant unobservable inputs (Level 3)		179	22			—	—

Total fair value	$	808	100	%	$	29	100	%

109

A rollforward of the fair value measurements for trading securities measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended March 31, 2008 is as follows:


	Three Months Ended
	March 31, 2008
	(In millions)

Balance, December 31, 2007	$	183
Impact of SFAS 157 and SFAS 159 adoption		8

Balance, January 1, 2008		191
Total realized/unrealized gains (losses) included in:
Earnings		(5	)
Other comprehensive income (loss)		—
Purchases, sales, issuances and settlements		2
Transfer in and/or out of Level 3		(9	)

Balance, March 31, 2008	$	179

During the three months ended March 31, 2008 and 2007, interest and dividends earned on trading securities in addition to the net realized and unrealized gains (losses) recognized on the trading securities and the related short sale agreement liabilities included within net investment income totaled ($51) million and $15 million, respectively. Included within unrealized gains (losses) on such trading securities and short sale agreement liabilities are changes in fair value of ($42) million and $8 million for the three months ended March 31, 2008 and 2007, respectively.

See “— Summary of Critical Accounting Estimates — Investments” for further information on the estimates and assumptions that affect the amounts reported above.

Mortgage and Consumer Loans

The Company’s mortgage and consumer loans are principally collateralized by commercial, agricultural and residential properties, as well as automobiles. Mortgage and consumer loans comprised 13.6% of the Company’s total cash and invested assets at both March 31, 2008 and December 31, 2007. The carrying value of mortgage and consumer loans is stated at original cost net of repayments, amortization of premiums, accretion of discounts and valuation allowances. The following table shows the carrying value of the Company’s mortgage and consumer loans by type at:


	March 31, 2008					December 31, 2007
	Carrying		% of			Carrying		% of
	Value		Total			Value		Total
			(In millions)

Commercial mortgage loans	$	36,032		75.4	%	$	35,501		75.5	%
Agricultural mortgage loans		10,641		22.3			10,484		22.3
Consumer loans		1,104		2.3			1,045		2.2

Total	$	47,777		100.0	%	$	47,030		100.0	%

At March 31, 2008 and December 31, 2007, $443 million and $5 million, or 1% and less than 1%, respectively, of the Company’s mortgage and consumer loans were held-for-sale. Mortgage and consumer loans held-for-sale are carried at the lower of amortized cost or fair value. At March 31, 2008, the Company held $474 million in impaired mortgage loans, of which $435 million relate to mortgage loans held-for-sale, that were recorded based on the fair value of the underlying collateral or broker quotes, if lower. These impaired mortgage loans were recorded at fair value and represent a nonrecurring fair value measurement. The fair value is categorized as Level 3. Included within net investment gains (losses) for such impaired mortgage loans are net impairments of $29 million for the three months ended March 31, 2008.

110

Commercial Mortgage Loans. The Company diversifies its commercial mortgage loans by both geographic region and property type. The following table presents the distribution across geographic regions and property types for commercial mortgage loans at:


	March 31, 2008					December 31, 2007
	Carrying		% of			Carrying		% of
	Value		Total			Value		Total
			(In millions)

Region
Pacific	$	8,645		24.0	%	$	8,620		24.3	%
South Atlantic		8,199		22.8			8,021		22.6
Middle Atlantic		5,127		14.2			5,110		14.4
International		3,759		10.4			3,642		10.3
East North Central		2,918		8.1			2,957		8.3
West South Central		2,977		8.3			2,925		8.2
New England		1,582		4.4			1,499		4.2
Mountain		1,212		3.3			1,086		3.1
West North Central		853		2.4			1,046		2.9
East South Central		502		1.4			503		1.4
Other		258		0.7			92		0.3

Total	$	36,032		100.0	%	$	35,501		100.0	%

Property Type
Office	$	15,650		43.4	%	$	15,471		43.6	%
Retail		8,021		22.3			7,557		21.3
Apartments		4,255		11.8			4,437		12.5
Hotel		3,263		9.1			3,282		9.2
Industrial		3,033		8.4			2,880		8.1
Other		1,810		5.0			1,874		5.3

Total	$	36,032		100.0	%	$	35,501		100.0	%

Restructured, Potentially Delinquent, Delinquent or Under Foreclosure. The Company monitors its mortgage loan investments on an ongoing basis, including reviewing loans that are restructured, potentially delinquent, delinquent or under foreclosure. These loan classifications are consistent with those used in industry practice.

The Company defines restructured mortgage loans as loans in which the Company, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The Company defines potentially delinquent loans as loans that, in management’s opinion, have a high probability of becoming delinquent. The Company defines delinquent mortgage loans, consistent with industry practice, as loans in which two or more interest or principal payments are past due. The Company defines mortgage loans under foreclosure as loans in which foreclosure proceedings have formally commenced.

The Company reviews all mortgage loans on an ongoing basis. These reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis and tenant creditworthiness.

The Company records valuation allowances for certain of the loans that it deems impaired. The Company’s valuation allowances are established both on a loan specific basis for those loans where a property or market specific risk has been identified that could likely result in a future default, as well as for pools of loans with similar high risk characteristics where a property specific or market risk has not been identified. Loan specific valuation allowances are established for the excess carrying value of the mortgage loan over the present value of expected future cash

111

flows discounted at the loan’s original effective interest rate, the value of the loan’s collateral, or the loan’s market value if the loan is being sold. Valuation allowances for pools of loans are established based on property types and loan to value risk factors. The Company records valuation allowances as investment losses. The Company records subsequent adjustments to allowances as investment gains (losses).

The following table presents the amortized cost and valuation allowance for commercial mortgage loans distributed by loan classification at:


	March 31, 2008										December 31, 2007
								% of										% of
	Amortized		% of			Valuation		Amortized			Amortized		% of			Valuation		Amortized
	Cost (1)		Total			Allowance		Cost			Cost (1)		Total			Allowance		Cost
	(In millions)

Performing	$	36,234		100.0	%	$	207		0.6	%	$	35,665		100.0	%	$	168		0.5	%
Restructured		—		—			—		—	%		—		—			—		—	%
Potentially delinquent		3		—			—		—	%		3		—			—		—	%
Delinquent or under foreclosure		2		—			—		—	%		1		—			—		—	%

Total	$	36,239		100.0	%	$	207		0.6	%	$	35,669		100.0	%	$	168		0.5	%


(1)		Amortized cost is equal to carrying value before valuation allowances.

The following table presents the changes in valuation allowances for commercial mortgage loans for the:


	Three Months Ended
	March 31, 2008
	(In millions)

Balance, beginning of period	$	168
Additions		67
Deductions		(28	)

Balance, end of period	$	207

Agricultural Mortgage Loans. The Company diversifies its agricultural mortgage loans by both geographic region and product type.

Of the $10.6 billion of agricultural mortgage loans outstanding at March 31, 2008, 56.9%, were subject to rate resets prior to maturity. A substantial portion of these loans has been successfully renegotiated and remain outstanding to maturity. The process and policies for monitoring the agricultural mortgage loans and classifying them by performance status are generally the same as those for the commercial loans.

The following table presents the amortized cost and valuation allowances for agricultural mortgage loans distributed by loan classification at:


	March 31, 2008										December 31, 2007
								% of										% of
	Amortized		% of			Valuation		Amortized			Amortized		% of			Valuation		Amortized
	Cost (1)		Total			Allowance		Cost			Cost (1)		Total			Allowance		Cost
	(In millions)

Performing	$	10,598		99.4	%	$	13		0.1	%	$	10,440		99.4	%	$	12		0.1	%
Restructured		2		—			—		—	%		2		—			—		—	%
Potentially delinquent		51		0.5			4		7.8	%		47		0.4			4		8.5	%
Delinquent or under foreclosure		14		0.1			7		50.0	%		19		0.2			8		42.1	%

Total	$	10,665		100.0	%	$	24		0.2	%	$	10,508		100.0	%	$	24		0.2	%


(1)		Amortized cost is equal to carrying value before valuation allowances.

112

The following table presents the changes in valuation allowances for agricultural mortgage loans for the:


	Three Months Ended
	March 31, 2008
	(In millions)

Balance, beginning of period	$	24
Additions		5
Deductions		(5	)

Balance, end of period	$	24

Consumer Loans. Consumer loans consist of residential mortgages and auto loans.

The following table presents the amortized cost and valuation allowances for consumer loans distributed by loan classification at:


	March 31, 2008										December 31, 2007
								% of										% of
	Amortized		% of			Valuation		Amortized			Amortized		% of			Valuation		Amortized
	Cost (1)		Total			Allowance		Cost			Cost (1)		Total			Allowance		Cost
	(In millions)

Performing	$	1,065		96.0	%	$	5		0.5	%	$	1,006		95.7	%	$	5		0.5	%
Restructured		—		—			—		—	%		—		—			—		—	%
Potentially delinquent		16		1.4			—		—	%		19		1.8			—		—	%
Delinquent or under foreclosure		29		2.6			1		3.4	%		26		2.5			1		4.0	%

Total	$	1,110		100.0	%	$	6		0.5	%	$	1,051		100.0	%	$	6		0.6	%


(1)		Amortized cost is equal to carrying value before valuation allowances.

Real Estate Holdings

The Company’s real estate holdings consist of commercial properties located primarily in the United States. At March 31, 2008 and December 31, 2007, the carrying value of the Company’s real estate, real estate joint ventures and real estate held-for-sale was $7.0 billion and $6.8 billion, respectively, or 2.0% for both, of total cash and invested assets. The carrying value of real estate is stated at depreciated cost net of impairments and valuation allowances. The carrying value of real estate joint ventures is stated at the Company’s equity in the real estate joint ventures net of impairments and valuation allowances.

The following table presents the carrying value of the Company’s real estate holdings at:


	March 31, 2008					December 31, 2007
	Carrying		% of			Carrying		% of
Type	Value		Total			Value		Total
	(In millions)

Real estate	$	4,002		57.5	%	$	3,994		59.0	%
Real estate joint ventures		2,957		42.5			2,771		41.0
Foreclosed real estate		3		—			3		—

		6,962		100.0			6,768		100.0
Real estate held-for-sale		1		—			1		—

Total real estate holdings	$	6,963		100.0	%	$	6,769		100.0	%

The Company’s carrying value of real estate held-for-sale of $1 million at both March 31, 2008 and December 31, 2007, have been reduced by impairments of $1 million at both March 31, 2008 and December 31, 2007.

The Company records real estate acquired upon foreclosure of commercial and agricultural mortgage loans at the lower of estimated fair value or the carrying value of the mortgage loan at the date of foreclosure.

113

Certain of the Company’s investments in real estate joint ventures meet the definition of a VIE under FIN 46(r). See “— Variable Interest Entities.”

Other Limited Partnership Interests

The carrying value of other limited partnership interests (which primarily represent ownership interests in pooled investment funds that principally make private equity investments in companies in the United States and overseas) was $6.3 billion and $6.2 billion at March 31, 2008 and December 31, 2007, respectively. Included within other limited partnership interests at March 31, 2008 and December 31, 2007 are $1.6 billion of hedge funds. The Company uses the equity method of accounting for investments in limited partnership interests in which it has more than a minor interest, has influence over the partnership’s operating and financial policies, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method for minor interest investments and when it has virtually no influence over the partnership’s operating and financial policies. The Company’s investments in other limited partnership interests represented 1.8% of cash and invested assets at both March 31, 2008 and December 31, 2007.

Management anticipates that investment income and the related yields on other limited partnership interests may decline during 2008 due to increased volatility in the equity and credit markets.

Some of the Company’s investments in other limited partnership interests meet the definition of a VIE under FIN 46(r). See “— Composition of Investment Portfolio Results — Variable Interest Entities.”

Other Invested Assets

The Company’s other invested assets consisted principally of leveraged leases of $2.2 billion at both March 31, 2008 and December 31, 2007, funds withheld at interest of $4.4 billion and $4.5 billion at March 31, 2008 and December 31, 2007, respectively, and standalone derivatives with positive fair values of $5.7 billion and $4.0 billion at March 31, 2008 and December 31, 2007, respectively. The leveraged leases are recorded net of non-recourse debt. The Company participates in lease transactions, which are diversified by industry, asset type and geographic area. The Company regularly reviews residual values and writes down residuals to expected values as needed. Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. For agreements written on a modified coinsurance basis and certain agreements written on a coinsurance basis, assets supporting the reinsured policies equal to the net statutory reserves are withheld and continue to be legally owned by the ceding company. Interest accrues to these funds withheld at rates defined by the treaty terms and may be contractually specified or directly related to the investment portfolio. The Company’s other invested assets represented 4.1% and 3.7% of cash and invested assets at March 31, 2008 and December 31, 2007, respectively.

Derivative Financial Instruments

Derivatives. The Company uses a variety of derivatives, including swaps, forwards, futures and option contracts, to manage its various risks. Additionally, the Company uses derivatives to synthetically create investments as permitted by its insurance subsidiaries’ Derivatives Use Plans approved by the applicable state insurance departments.

114

The following table presents the notional amount and current market or fair value of derivative financial instruments, excluding embedded derivatives, held at:


	March 31, 2008						December 31, 2007
			Current Market						Current Market
	Notional		or Fair Value				Notional		or Fair Value
	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Interest rate swaps	$	39,144	$	1,355	$	1,488	$	62,519	$	785	$	768
Interest rate floors		48,517		866		—		48,937		621		—
Interest rate caps		26,826		18		—		45,498		50		—
Financial futures		8,070		14		20		10,817		89		57
Foreign currency swaps		21,414		2,034		2,023		21,399		1,480		1,724
Foreign currency forwards		5,456		91		80		4,185		76		16
Options		2,610		1,094		1		2,043		713		1
Financial forwards		12,300		141		12		4,600		122		2
Credit default swaps		3,169		62		31		6,850		58		35
Synthetic GICs		3,888		—		—		3,670		—		—
Other		353		3		1		250		43		—

Total	$	171,747	$	5,678	$	3,656	$	210,768	$	4,037	$	2,603

The fair value of derivatives measured at fair value on a recurring basis and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
	Derivative
	Assets				Derivative Liabilities
	(In millions)

Quoted prices in active markets for identical assets and liabilities (Level 1)	$	14	—	%	$	20	1	%
Significant other observable inputs (Level 2)		4,434	78			3,621	99
Significant unobservable inputs (Level 3)		1,230	22			15	—

Total fair value	$	5,678	100	%	$	3,656	100	%

115

A rollforward of the fair value measurements for derivatives measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended March 31, 2008 is as follows:


	Three Months Ended
	March 31, 2008
	(In millions)

Balance, December 31, 2007	$	789
Impact of SFAS 157 and SFAS 159 adoption		(1	)

Balance, January 1, 2008		788
Total realized/unrealized gains (losses) included in:
Earnings		402
Other comprehensive income (loss)		—
Purchases, sales, issuances and settlements		25
Transfer in and/or out of Level 3		—

Balance, March 31, 2008	$	1,215

See “— Summary of Critical Accounting Estimates — Derivative Financial Instruments” for further information on the estimates and assumptions that affect the amounts reported above.

Credit Risk. The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date. The credit exposure of the Company’s derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date.

116

Embedded Derivatives. The fair value of embedded derivatives measured at fair value on a recurring basis and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
	Net Embedded Derivatives Within
	Asset Host Contracts					Liability Host Contracts
	(In millions)

Quoted prices in active markets for identical assets and liabilities (Level 1)	$	—		—	%	$	—	—	%
Significant other observable inputs (Level 2)		—		—			25	2
Significant unobservable inputs (Level 3)		(144	)	100			1,361	98

Total fair value	$	(144	)	100	%	$	1,386	100	%

A rollforward of the fair value measurements for embedded derivatives measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended March 31, 2008 is as follows:


	Three Months Ended
	March 31, 2008
	(In millions)

Balance, December 31, 2007	$	843
Impact of SFAS 157 and SFAS 159 adoption		(41	)

Balance, January 1, 2008		802
Total realized/unrealized gains (losses) included in:
Earnings		661
Other comprehensive income (loss)		—
Purchases, sales, issuances and settlements		42
Transfer in and/or out of Level 3		—

Balance, March 31, 2008	$	1,505

See “— Summary of Critical Accounting Estimates — Embedded Derivatives” for further information on the estimates and assumptions that affect the amounts reported above.

Variable Interest Entities

The following table presents the total assets of and maximum exposure to loss relating to VIEs for which the Company has concluded that: (i) it is the primary beneficiary and which are consolidated in the Company’s consolidated financial statements at March 31, 2008; and (ii) it holds significant variable interests but it is not the primary beneficiary and which have not been consolidated:


	March 31, 2008
	Primary Beneficiary				Not Primary Beneficiary
			Maximum				Maximum
	Total		Exposure		Total		Exposure
	Assets (1)		to Loss (2)		Assets (1)		to Loss (2)
	(In millions)

Asset-backed securitizations and collateralized debt obligations	$	1,253	$	1,253	$	1,447	$	162
Real estate joint ventures (3)		45		22		285		33
Other limited partnership interests (4)		2		1		36,263		3,315
Trust preferred securities (5)		106		106		47,432		3,266
Other investments (6)		1,100		1,100		3,369		306

Total	$	2,506	$	2,482	$	88,796	$	7,082

117


(1)		The assets of the asset-backed securitizations and collateralized debt obligations are reflected at fair value. The assets of the real estate joint ventures, other limited partnership interests, trust preferred securities and other investments are reflected at the carrying amounts at which such assets would have been reflected on the Company’s consolidated balance sheet had the Company consolidated the VIE from the date of its initial investment in the entity.

(2)		The maximum exposure to loss relating to the asset-backed securitizations and collateralized debt obligations is equal to the carrying amounts of retained interests. In addition, the Company provides collateral management services for certain of these structures for which it collects a management fee. The maximum exposure to loss relating to real estate joint ventures, other limited partnership interests, trust preferred securities and other investments is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by other partners. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(3)		Real estate joint ventures include partnerships and other ventures which engage in the acquisition, development, management and disposal of real estate investments.

(4)		Other limited partnership interests include partnerships established for the purpose of investing in public and private debt and equity securities.

(5)		Trust preferred securities are complex, uniquely structured investments which contain features of both equity and debt, may have an extended or no stated maturity, and may be callable at the issuer’s option after a defined period of time.

(6)		Other investments include securities that are not trust preferred securities, asset-backed securitizations or collateralized debt obligations.

Securities Lending

The Company participates in a securities lending program whereby blocks of securities, which are included in fixed maturity and equity securities, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $43.1 billion and $41.1 billion and an estimated fair value of $44.2 billion and $42.1 billion were on loan under the program at March 31, 2008 and December 31, 2007, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $45.1 billion and $43.3 billion at March 31, 2008 and December 31, 2007, respectively. Security collateral of $19 million and $40 million, on deposit from customers in connection with the securities lending transactions at March 31, 2008 and December 31, 2007, respectively, may not be sold or repledged and is not reflected in the unaudited interim condensed consolidated financial statements.

Separate Accounts

The Company had $152.6 billion and $160.2 billion held in its separate accounts, for which the Company does not bear investment risk, as of March 31, 2008 and December 31, 2007, respectively. The Company manages each separate account’s assets in accordance with the prescribed investment policy that applies to that specific separate account. The Company establishes separate accounts on a single client and multi-client commingled basis in compliance with insurance laws. Effective with the adoption of Statement of Position (“SOP”) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, on January 1, 2004, the Company reported separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if:


	•	such separate accounts are legally recognized;

	•	assets supporting the contract liabilities are legally insulated from the Company’s general account liabilities;

	•	investments are directed by the contractholder; and

	•	all investment performance, net of contract fees and assessments, is passed through to the contractholder.

118

The Company reports separate account assets meeting such criteria at their fair value. 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 in the consolidated statements of income.

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. Separate accounts not meeting the above criteria are combined on a line-by-line basis with the Company’s general account assets, liabilities, revenues and expenses.

The fair value of separate accounts measured at fair value on a recurring basis and their corresponding fair value hierarchy, are summarized as follows:


	March 31, 2008
	(In millions)

Quoted prices in active markets for identical assets (Level 1)	$	117,653	77	%
Significant other observable inputs (Level 2)		33,336	22
Significant unobservable inputs (Level 3)		1,581	1

Total fair value	$	152,570	100	%


Item 3.	*Quantitative and Qualitative Disclosures About Market Risk*

The Company regularly analyzes its exposure to interest rate, equity market and foreign currency exchange risks. As a result of that analysis, the Company has determined that the fair value of its interest rate sensitive invested assets is materially exposed to changes in interest rates, and that the amount of that risk has decreased from that reported at December 31, 2007 in the 2007 Annual Report. The equity and foreign currency portfolios do not expose the Company to material market risks, nor has the Company’s exposure to those risks materially changed from that reported on December 31, 2007 in the 2007 Annual Report.

The Company analyzes interest rate risk using various models including multi-scenario cash flow projection models that forecast cash flows of certain liabilities and their supporting investments, including derivative instruments. As disclosed in the 2007 Annual Report, the Company uses a variety of strategies to manage interest rate, equity market, and foreign currency exchange risk, including the use of derivative instruments.

The Company’s management processes for measuring, managing and monitoring market risk remain as described in the 2007 Annual Report. Some of those processes utilize interim manual reporting and estimation techniques when the Company integrates newly acquired operations.

Risk Measurement: Sensitivity Analysis

The Company measures market risk related to its holdings of invested assets and other financial instruments, including certain market risk sensitive insurance contracts, based on changes in interest rates, equity market prices and currency exchange rates, utilizing a sensitivity analysis. This analysis estimates the potential changes in fair value based on a hypothetical 10% change (increase or decrease) in interest rates, equity market prices and currency exchange rates. The Company believes that a 10% change (increase or decrease) in these market rates and prices is reasonably possible in the near-term. In performing this analysis, the Company used market rates at March 31, 2008 to re-price its invested assets and other financial instruments. The sensitivity analysis separately calculated each of MetLife’s market risk exposures (interest rate, equity market price and foreign currency exchange rate) related to its trading and non-trading invested assets and other financial instruments. The sensitivity analysis performed included the market risk sensitive holdings described above. The Company modeled the impact of changes in market rates and prices on the fair values of its invested assets as follows:


	•	the net present values of its interest rate sensitive exposures resulting from a 10% change (increase or decrease) in interest rates;

	•	the market value of its equity positions due to a 10% change (increase or decrease) in equity prices; and

119


	•	the U.S. dollar equivalent balances of the Company’s currency exposures due to a 10% change (increase or decrease) in currency exchange rates.

The sensitivity analysis is an estimate and should not be viewed as predictive of the Company’s future financial performance. The Company cannot assure that its actual losses in any particular year will not exceed the amounts indicated in the table below. Limitations related to this sensitivity analysis include:


	•	the market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis;

	•	for derivatives that qualify as hedges, the impact on reported earnings may be materially different from the change in market values;

	•	the analysis excludes other significant real estate holdings and liabilities pursuant to insurance contracts; and

	•	the model assumes that the composition of assets and liabilities remains unchanged throughout the year.

Accordingly, the Company uses such models as tools and not substitutes for the experience and judgment of its investments, asset/liability management and corporate risk personnel. Based on its analysis of the impact of a 10% change (increase or decrease) in market rates and prices, MetLife has determined that such a change could have a material adverse effect on the fair value of its interest rate sensitive invested assets. Based upon its analysis of the impact of a 10% change (increase or decrease) in equity markets or in currency exchange rates, the equity and foreign currency portfolios do not expose the Company to material market risk.

The table below illustrates the potential loss in fair value of the Company’s interest rate sensitive financial instruments at March 31, 2008. In addition, the potential loss with respect to the fair value of currency exchange rates and the Company’s equity price sensitive positions at March 31, 2008 is set forth in the table below.

The potential loss in fair value for each market risk exposure of the Company’s portfolio at March 31, 2008 was:


	March 31, 2008
	(In millions)

Non-trading:
Interest rate risk	$	3,670
Equity price risk	$	140
Foreign currency exchange rate risk	$	765
Trading:
Interest rate risk	$	10

120

The table below provides additional detail regarding the potential loss in fair value of the Company’s non-trading interest sensitive financial instruments at March 31, 2008 by type of asset or liability.


	March 31, 2008
						Assuming a
						10% Increase
	Notional		Estimated			in the Yield
	Amount		Fair Value			Curve
	(In millions)

Assets
Fixed maturity securities			$	244,088		$	(4,276	)
Equity securities				5,533			—
Mortgage and consumer loans				48,605			(364	)
Policy loans				12,145			(233	)
Short-term investments				2,612			(9	)
Cash and cash equivalents				10,874			—
Mortgage loan commitments	$	3,943		(84	)		(24	)
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments	$	891		(89	)		—
Commitments to fund partnership investments	$	4,542		—			—

Total assets						$	(4,906	)

Liabilities
Policyholder account balances			$	102,454		$	1,421
Short-term debt				632			—
Long-term debt				9,446			251
Collateral financing agreements				4,323			60
Junior subordinated debt securities underlying common equity units				4,124			100
Shares subject to mandatory redemption				192			6
Payables for collateral under securities loaned and other transactions				46,649			—

Total liabilities						$	1,838

Other
Derivative instruments (designated hedges or otherwise)
Interest rate swaps	$	39,144	$	(133	)	$	(310	)
Interest rate floors		48,517		866			(58	)
Interest rate caps		26,826		18			10
Financial futures		8,070		(6	)		(48	)
Foreign currency swaps		21,414		11			(83	)
Foreign currency forwards		5,456		11			—
Options		2,610		1,093			(109	)
Financial forwards		12,300		129			(5	)
Credit default swaps		3,169		31			—
Synthetic GICs		3,888		—			—
Other		353		2			1

Total other						$	(602	)

Net change						$	(3,670	)

This quantitative measure of risk has decreased by $1,500 million, or 29%, to $3,670 million at March 31, 2008 from $5,170 million at December 31, 2007. This decrease in risk is primarily due to a decline of approximately $1,290 million resulting from lower interest rates which have the effect of creating a smaller change in the yield

121

curve and a decrease in the impact on liabilities of $648 million resulting from a change in the method of estimating fair value in connection with the adoption of SFAS 157 as well as decrease of $29 million resulting from other items. These decreases were partially offset by an increase of $51 million from growth in the asset portfolio as well as an increase of $350 million resulting from a increase in the duration of the asset portfolio. The decrease in the amount of derivatives employed by the Company also had the impact of increasing the risk by approximately $66 million.


Item 4.	*Controls and Procedures*

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the three months ended March 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II — Other Information


Item 1.	*Legal Proceedings*

The following should be read in conjunction with (i) Part I, Item 3, of the 2007 Annual Report and (ii) Note 7 to the unaudited interim condensed consolidated financial statements in Part I of this report.

Demutualization Actions

Several lawsuits were brought in 2000 challenging the fairness of MLIC’s plan of reorganization, as amended (the “Plan”) and the adequacy and accuracy of MLIC’s disclosure to policyholders regarding the Plan. The actions discussed below name as defendants some or all of MLIC, the Holding Company, and individual directors. MLIC, the Holding Company, and the individual directors believe they have meritorious defenses to the plaintiffs’ claims and are contesting vigorously all of the plaintiffs’ claims in these actions.

Asbestos-Related Claims

122

asbestos-related claims, respectively. See Note 16 of the Notes to Consolidated Financial Statements included in the 2007 Annual Report for historical information concerning asbestos claims and MLIC’s increase in its recorded liability at December 31, 2002. The number of asbestos cases that may be brought or the aggregate amount of any liability that MLIC may ultimately incur is uncertain.

Sales Practices Claims

Other Litigation

Summary

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses, except as noted previously in connection with specific matters. In some of the matters referred to previously, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, 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,

123

from time to time, have a material adverse effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.


Item 2.	*Unregistered Sales of Equity Securities and Use of Proceeds*

Issuer Purchases of Equity Securities

Purchases of common stock made by or on behalf of the Company or its affiliates during the quarter ended March 31, 2008 are set forth below:


							(d) Maximum Number
							(or Approximate Dollar
					(c) Total Number of		Value) of Shares
					Shares Purchased as		That May Yet Be
	(a) Total Number		(b) Average		Part of Publicly		Purchased Under
	of Shares		Price Paid		Announced		the Plans or
Period	Purchased (1)		per Share		Plans or Programs (2)		Programs

January 1 — January 31, 2008		7,696,060	$	58.52		7,690,222	$	1,060,735,127
February 1 — February 28, 2008		12,711,550	$	62.93		12,711,550	$	260,735,127
March 1 — March 31, 2008		60	$	57.79		—	$	260,735,127

Total		20,407,670	$	61.27		20,401,772	$	260,735,127


(1)		During the periods January 1 — January 31, 2008, February 1 — February 28, 2008 and March 1 — March 31, 2008, separate account affiliates of the Company purchased 5,838 shares, 0 shares and 60 shares, respectively, of common stock on the open market in nondiscretionary transactions to rebalance index funds. Except as disclosed above, there were no shares of common stock which were repurchased by the Company other than through a publicly announced plan or program.

(2)		In December 2007, the Company entered into an accelerated common stock repurchase agreement with a major bank. Under the terms of the agreement, the Company paid the bank $450 million in cash in January 2008 in exchange for 6,646,692 shares of the Company’s outstanding common stock that the bank borrowed from third parties. Also in January 2008, the bank delivered 1,043,530 additional shares of the Company’s common stock to the Company resulting in a total of 7,690,222 shares being repurchased under the agreement. At December 31, 2007, the Company recorded the obligation to pay $450 million to the bank as a reduction of additional paid-in capital. Upon settlement with the bank in January 2008, the Company increased additional paid-in capital and reduced treasury stock.

Furthermore, the payment of dividends and other distributions to the Holding Company by its insurance subsidiaries is regulated by insurance laws and regulations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Holding Company — Liquidity Sources — Dividends.”


Item 4.	*Submission of Matters to a Vote of Security Holders*

MetLife, Inc.’s Annual Meeting of stockholders was held on April 22, 2008 (the “2008 Annual Meeting”). The matters that were voted upon at the 2008 Annual Meeting, and the number of votes cast for, against or withheld, as well as the number of abstentions as to each such matter, as applicable, are set forth below:


	(1)	Election of Directors — The stockholders elected five Class III Directors, each for a term expiring at MetLife, Inc.’s 2011 Annual Meeting.


Nominee Name	Votes For		Votes Withheld

Sylvia Mathews Burwell		638,003,499		9,180,103
Eduardo Castro-Wright		640,780,535		6,403,067
Cheryl W. Grisé		638,231,073		8,952,529
William C. Steere, Jr.		639,579,645		7,603,957
Lulu C. Wang		640,595,156		6,588,446

124


	Page

Part I — Financial Information
Item 1. Financial Statements at March 31, 2008 (Unaudited) and December 31, 2007 and for the Three Months Ended March 31, 2008 and 2007 (Unaudited)		4
Interim Condensed Consolidated Balance Sheets		4
Interim Condensed Consolidated Statements of Income		5
Interim Condensed Consolidated Statement of Stockholders’ Equity		6
Interim Condensed Consolidated Statements of Cash Flows		7
Notes to Interim Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		52
Item 3. Quantitative and Qualitative Disclosures About Market Risk		119
Item 4. Controls and Procedures		122
Part II — Other Information
Item 1. Legal Proceedings		122
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		124
Item 4. Submission of Matters to a Vote of Security Holders		124
Item 6. Exhibits		126
Signatures		127
Exhibit Index		E-1
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION


Votes For	Votes Against	Abstained

637,495,487	4,736,728	4,951,387


Exhibit
No.			Description

	31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


		/s/ C. Robert Henrikson C. Robert Henrikson
		Chairman, President and
		Chief Executive Officer


		/s/ William J. Wheeler William J. Wheeler
		Executive Vice President and
		Chief Financial Officer


		/s/ C. Robert Henrikson
		C. Robert Henrikson
		Chairman, President and
		Chief Executive Officer