8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

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

Date of report (Date of earliest event reported) November 29, 2010

MetLife, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-15787	13-4075851
(Commission File Number)	(IRS Employer Identification No.)
200 Park Avenue, New York, New York	10166-0188
(Address of Principal Executive Offices)	(Zip Code)

212-578-2211

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events.

As previously disclosed, MetLife, Inc., on November 1, 2010, completed its acquisition (the “Acquisition”) of American Life Insurance Company and Delaware American Life Insurance Company (together, “ALICO”) pursuant to a Stock Purchase Agreement, dated as of March 7, 2010, as amended (the “Amended Stock Purchase Agreement”), by and among MetLife, Inc., American International Group, Inc. (“AIG”) and ALICO Holdings LLC.

Pursuant to the Amended Stock Purchase Agreement, MetLife, Inc. purchased all of the outstanding shares of the capital stock of ALICO for consideration transferred of $16,400 million, which included cash of $7,206 million and securities of MetLife, Inc. valued at $9,194 million based on the opening share price of MetLife, Inc.’s common stock on November 1, 2010.

Item 9.01. Financial Statements and Exhibits.

(a)	Financial Statements of Businesses Acquired.
	The combined balance sheet of ALICO as of November 30, 2009 and the related statements of income, equity and cash flows of ALICO for the year ended November 30, 2009, together with the notes related thereto were previously filed on Form 8-K by MetLife, Inc. on August 2, 2010. Therein, MetLife, Inc. indicated that it would file unaudited pro forma financial statements in accordance with Regulation S-X following the completion of the Acquisition within the time limits set forth in Form 8-K.
	The following unaudited condensed combined financial statements of ALICO, which have been furnished to MetLife, Inc. by AIG, are attached hereto as Exhibit 99.1 and incorporated herein by reference:

(i)	Unaudited condensed combined balance sheets as of August 31, 2010 and November 30, 2009;
(ii)	Unaudited condensed combined statements of income and cash flows for the nine months ended August 31, 2010 and August 31, 2009, unaudited condensed combined statement of equity for the nine months ended August 31, 2010; and
(iii)	Notes to the unaudited condensed combined financial statements.

(b)	Pro Forma Financial Information.
	The following unaudited pro forma condensed combined financial statements of MetLife, Inc., giving effect to the Acquisition, are attached hereto as Exhibit 99.2 and incorporated herein by reference:

(i)	Unaudited pro forma condensed combined balance sheet as of September 30, 2010;
(ii)	Unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 and for the year ended December 31, 2009; and
(iii)	Notes to unaudited pro forma condensed combined financial statements.

(d)     Exhibits.

99.1	Unaudited condensed combined balance sheets of ALICO as of August 31, 2010 and November 30, 2009, and the related unaudited condensed combined statements of income and cash flows of ALICO for the nine months ended August 31, 2010 and August 31, 2009, and the unaudited condensed combined statement of equity for the nine months ended August 31, 2010, together with the notes thereto.
99.2	Unaudited pro forma condensed combined balance sheet of MetLife, Inc. as of September 30, 2010 and unaudited pro forma condensed combined statements of operations of MetLife, Inc. for the nine months ended September 30, 2010 and for the year ended December 31, 2009, together with the notes thereto.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

METLIFE, INC.
By:	/s/ Gwenn L. Carr
	Name:	Gwenn L. Carr
	Title:	Executive Vice President

Date: November 29, 2010

EXHIBIT INDEX

99.1	Unaudited condensed combined balance sheets of ALICO as of August 31, 2010 and November 30, 2009, and the related unaudited condensed combined statements of income and cash flows of ALICO for the nine months ended August 31, 2010 and August 31, 2009, and the unaudited condensed combined statement of equity for the nine months ended August 31, 2010, together with the notes thereto.
99.2	Unaudited pro forma condensed combined balance sheet of MetLife, Inc. as of September 30, 2010 and unaudited pro forma condensed combined statements of operations of MetLife, Inc. for the nine months ended September 30, 2010 and for the year ended December 31, 2009, together with the notes thereto.

EX-99.1

Exhibit 99.1

American Life Insurance Company and the Transferred Subsidiaries

Index to the Condensed Combined Financial Statements

	Page
Condensed Combined Balance Sheets as of August 31, 2010 and November 30, 2009		F – 2
Condensed Combined Statements of Income for the nine months ended August 31, 2010 and 2009		F – 3
Condensed Combined Statement of Equity for the nine months ended August 31, 2010		F – 4
Condensed Combined Statements of Cash Flows for the nine months ended August 31, 2010 and 2009		F – 5
Notes to the Condensed Combined Financial Statements		F – 6

F-1

American Life Insurance Company and the Transferred Subsidiaries

Condensed Combined Balance Sheets (Unaudited)

	August 31,		November 30,
	2010		2009
	(in millions)
Assets:
Investments:
Fixed maturity securities:
Bonds available for sale, at fair value (amortized cost: 2010 - $74,773; 2009 -$71,552)	$	77,235	$	71,469
Bonds held for trading, at fair value		7,421		8,226
Equity securities:
Equity securities available for sale, at fair value (cost: 2010 - $613; 2009 - $400)		655		510
Equity securities held for trading, at fair value		5,378		5,729
Mortgage and other loans receivable, net of allowances (2010 - $60; 2009 -$57)		1,103		1,230
Policy loans		1,554		1,555
Short-term investments (portion measured at fair value: 2010 -$1,348; 2009 - $2,689)		5,283		6,321
Other invested assets (portion measured at fair value: 2010 - $503; 2009 - $698)		1,975		2,246
Total investments		100,604		97,286
Cash		1,046		1,094
Accrued investment income		1,084		984
Premiums due and other insurance balances receivable, net of allowances		1,105		1,123
Deferred policy acquisition costs		10,871		10,988
Other assets		1,310		1,271
Separate account assets		236		297
Total assets	$	116,256	$	113,043
Liabilities:
Policyholder Funds:
Future policy benefits for life and accident and health insurance contracts	$	26,773	$	25,986
Policyholder contract deposits (portion measured at fair value: 2010 - $1,835; 2009 - $1,792)		64,582		65,222
Other policyholder funds		4,473		3,972
Total policyholder liabilities		95,828		95,180
Current and deferred federal and foreign income taxes		2,703		1,153
Long-term debt		46		1,112
Other liabilities (portion measured at fair value: 2010 - $3; 2009 - $11)		1,988		2,316
Separate account liabilities		236		297
Total liabilities		100,801		100,058
Commitments, contingencies and guarantees (see Note 7)		—		—
Redeemable non-controlling interest in partially owned consolidated subsidiaries		95		164
Controlling shareholder’s equity:
Shareholder’s net investment		12,882		11,566
Accumulated other comprehensive income		2,296		1,105
Total controlling shareholder’s equity		15,178		12,671
Non-controlling interest		182		150
Total equity		15,360		12,821
Total liabilities and equity	$	116,256	$	113,043

(See Note 9 for details of related party balances)

See accompanying notes to these Condensed Combined Financial Statements

F-2

American Life Insurance Company and the Transferred Subsidiaries

Condensed Combined Statements of Income (Unaudited)

	For the Nine Months Ended
	August 31,
	2010			2009
	(in millions)
Revenues:
Premium income and other considerations	$	7,620		$	7,295
Net investment income		2,810			3,932
Net realized capital gains (losses):
Other-than-temporary impairments on available for sale securities, net		(373	)		(464	)
Portion of other-than-temporary impairments on available for sale fixed maturity securities recognized in Accumulated other comprehensive income		(4	)		76
Net other-than-temporary impairments on available for sale fixed maturity securities recognized in net income		(377	)		(388	)
Other realized capital gains (losses)		519			(490	)
Total net realized capital gains (losses)		142			(878	)
Other income		5			8
Total revenues	$	10,577		$	10,357
Benefits, claims and expenses:
Policyholder benefits and claims incurred	$	5,913		$	6,762
Policy acquisition and other expenses		2,985			2,997
Interest expense		36			14
Total benefits, claims and expenses	$	8,934		$	9,773
Income from operations before income tax expense		1,643			584
Income tax expense		581			166
Net income		1,062			418
Less: Net income attributable to non-controlling interest		31			35
Net income attributable to controlling shareholder’s interest	$	1,031		$	383

(See Note 9 for details of income and expenses from related parties.)

See accompanying notes to these Condensed Combined Financial Statements.

F-3

American Life Insurance Company and the Transferred Subsidiaries

Condensed Combined Statement of Equity (Unaudited)

				Accumulated Other Comprehensive Income (Loss)
				Net Unrealized			Foreign Currency						Total Controlling
	Shareholder’s Net			Investment Gains			Translation			Defined Benefit			Shareholder’s			Non-controlling
(in millions)	Investment			(Losses)			Adjustments			Plans Adjustment			Equity			Interest			Total Equity
Balance at December 1, 2009	$	11,566		$	(205	)	$	1,421		$	(111	)	$	12,671		$	150		$	12,821
Dividends paid		—			—			—			—			—			(7	)		(7	)
Cash contribution from controlling shareholder		300			—			—			—			300			—			300
Cumulative effect of change in accounting principle		3			(3	)		—			—			—			—			—
Other changes, net of income tax		(18	)		—			—			—			(18	)		(7	)		(25	)
Comprehensive income:
Net income*		1,031			—			—			—			1,031			27			1,058
Other comprehensive income (loss):
Unrealized investment gains (losses), net of related offsets and income tax		—			1,494			—			—			1,494			19			1,513
Foreign currency translation adjustments, net of income tax		—			—			(302	)		—			(302	)		—			(302	)
Defined benefit plans adjustment, net of income tax		—			—			—			2			2			—			2
Other comprehensive income (loss)		—			1,494			(302	)		2			1,194			19			1,213
Comprehensive income		1,031			1,494			(302	)		2			2,225			46			2,271
Balance at August 31, 2010	$	12,882		$	1,286		$	1,119		$	(109	)	$	15,178		$	182		$	15,360

* Net income presented excludes losses of redeemable non-controlling interests of $4 million.

See accompanying notes to these Condensed Combined Financial Statements.

F-4

American Life Insurance Company and the Transferred Subsidiaries

Condensed Combined Statements of Cash Flows (Unaudited)

	For the Nine Months Ended
	August 31
	2010			2009
	(in millions)
Cash flows from operating activities:
Net cash provided by operating activities	$	2,871		$	451
Cash flows from investing activities:
Proceeds from (payments for):
Sales of fixed maturity securities available for sale		4,473			1,505
Maturities of fixed maturity securities available for sale		2,695			2,440
Sales of equity securities available for sale		297			158
Sales of trading securities		1,738			2,096
Sales or distributions of other invested assets		294			316
Payments received on mortgage and other loans receivable		591			676
Purchases of fixed maturity securities available for sale		(11,181	)		(9,708	)
Purchases of equity securities available for sale		(535	)		(132	)
Purchases of trading securities		(1,182	)		(1,360	)
Purchases of other invested assets		(232	)		(390	)
Other trading activities, net		377			96
Mortgage and other loans receivable issued		(479	)		(397	)
Change in securities lending invested collateral		279			1,572
Net additions to real estate, fixed assets, and other assets		(106	)		(85	)
Net change in short-term investments		456			2,435
Net change in derivative assets and liabilities		438			(32	)
Net cash used in investing activities		(2,077	)		(810	)
Cash flows from financing activities:
Proceeds from (payments for):
Policyholder contract deposits		7,628			8,723
Policyholder contract withdrawals		(7,427	)		(11,580	)
Issuance of long term debt		5			420
Repayments on long term debt		(1,077	)		(22	)
Change in securities lending payable		(253	)		(1,601	)
Disbursements to non-controlling interest		(17	)		(7	)
Cash contribution from controlling shareholder		300			—
Dividends paid to controlling shareholder		—			(215	)
Other, net		(5	)		5
Net cash used in financing activities		(846	)		(4,277	)
Effect of exchange rate changes on cash		4			158
Change in cash		(48	)		(4,478	)
Cash at beginning of period		1,094			5,423
Cash at end of period	$	1,046		$	945
Supplementary disclosure of cash flow information:
Cash paid (received) for:
Interest	$	36		$	15
Taxes		(45	)		271
Non-cash financing activities:
Amounts credited to policyholder accounts included in financing activities	$	2,384		$	4,989
Non-cash settlement of securities lending payable		—			111

See accompanying notes to these Condensed Combined Financial Statements.

F-5

American Life Insurance Company and the Transferred Subsidiaries

Index of Notes to the Condensed Combined Financial Statements (Unaudited)

		Page
Note 1.	Description of Business and Basis of Presentation		F–7
Note 2.	Summary of Significant Accounting Policies		F–8
Note 3.	Fair Value Measurements		F–9
Note 4.	Investments		F–22
Note 5.	Variable Interest Entities		F–33
Note 6.	Derivatives		F–35
Note 7.	Commitments, Contingencies, and Guarantees		F–36
Note 8.	Employee Compensation and Benefits Plans		F–39
Note 9.	Related Party Transactions		F–40
Note 10.	Income Taxes		F–45
Note 11.	Subsequent Events		F–46

F-6

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

1. Description of Business and Basis of Presentation

These condensed combined financial statements comprise the financial position and operating results of the managed insurance businesses of American Life Insurance Company (“ALICO”) and Delaware American Life Insurance Company (“DELAM”), along with their consolidated subsidiaries (hereinafter referred to as “the Company” or “American Life Insurance Company and the Transferred Subsidiaries”). The fiscal third quarter of ALICO ended August 31 and the fiscal third quarter of DELAM ended September 30. For purposes of these condensed combined financial statements and accompanying notes, all financial data as of and for the nine months ended August 31, includes the financial position and operating results of DELAM as of and for the nine months ended September 30. The effects to these condensed combined financial statements and accompanying notes by including DELAM using the nine months ended September 30 are not material. Unless otherwise indicated, all references in these condensed combined financial statements and accompanying notes represent the Company’s financial position as of August 31, 2010 and November 30, 2009, and its results of operations for the nine months ended August 31, 2010 and 2009.

The condensed combined financial statements also include certain international life insurance businesses that have been managed by the Company but were previously legally owned by American International Group, Inc. (“AIG” or the “Parent”) or other AIG subsidiaries. These combinations have been accounted for as reorganizations of entities under common control and all prior financial statements presented have been adjusted so as to reflect the Company’s financial position and results of operations as if the purchased and contributed businesses were always a part of the Company. Consolidated subsidiaries include those entities in which the Company has a controlling financial interest, either through a majority voting interest or as the primary beneficiary of a variable interest entity. (See Note 5 for further information on the Company’s consolidated variable interest entities.)

Effective November 30, 2009, in connection with an AIG restructuring plan, AIG contributed all of the outstanding common shares of ALICO to a special purpose vehicle, ALICO Holdings, LLC (“ALICO Holdings”) in exchange for all common and preferred membership interests in ALICO Holdings. Additionally, AIG transferred the preferred membership interests in ALICO Holdings to the Federal Reserve Bank of New York (“FRBNY”) in satisfaction of $9.0 billion in outstanding obligations to the FRBNY’s credit facility provided to AIG. AIG holds all outstanding common interests of ALICO Holdings.

On March 7, 2010, AIG and ALICO Holdings entered into a definitive agreement for the sale of the Company to MetLife, Inc. (MetLife) for approximately $15.5 billion, including $6.8 billion in cash and the remainder in equity securities of MetLife, subject to closing adjustments. The transaction is expected to close in 2010 and is subject to certain regulatory approvals and other customary closing conditions.

These condensed combined financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for complete condensed combined financial statements and should be read in conjunction with the combined financial statements and the related notes as of and for the year ended November 30, 2009. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim periods should not be considered indicative of the results to be expected for the full year. In the opinion of Management, these condensed combined financial statements contain the normal recurring adjustments necessary for fair statement of the results presented herein. All significant intercompany accounts and transactions have been eliminated.

As a result of current analysis and review of certain bank account terms, approximately $548 million of non-interest bearing cash has been reclassified from short-term investments to cash on the accompanying November 30, 2009 balance sheet and the beginning cash balance on the accompanying Statement of Cash Flows for the nine-month period ended August 31, 2009 has been increased by approximately $1,213 million.

Certain other reclassifications and disclosure changes have been made to prior period amounts to conform to the current period presentation.

F-7

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

The Company considers its most critical accounting estimates to be those with respect to items considered by Management in:

• estimating future policy benefits for life and accident and health insurance contracts,

• determining estimated gross profits for investment-oriented products,

• assessing the recoverability of deferred policy acquisition costs (DAC),

• evaluating other-than-temporary impairments in the valuation of investments,

• estimating the fair value measurements of certain assets and liabilities, and

• estimating income taxes, including the recoverability of deferred income tax assets.

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, the Company’s consolidated financial condition, results of operations and cash flows could be materially affected.

Adoption of Recent Accounting Standards:

The Company adopted the following accounting standards during the nine month period ended August 31, 2010:

Accounting for Transfers of Financial Assets

In June 2009, the FASB issued an accounting standard addressing transfer of financial assets that removes the concept of a qualifying special-purpose entity (QSPE) from the FASB Accounting Standards Codification and removes the exception from applying the consolidation rules to QSPEs. The new standard is effective for the Company’s interim and annual periods beginning December 1, 2009. The Company adopted the standard in the nine month interim period ending August 31, 2010. The adoption of the accounting standard did not have a material effect on the Company’s combined financial condition, results of operations, or cash flows.

Consolidation of Variable Interest Entities

In June 2009, the FASB issued an accounting standard that amends the rules addressing consolidation of variable interest entities with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly affect the entity’s economic performance and has (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. The new standard also requires enhanced financial reporting by enterprises involved with variable-interest entities. The new standard became effective for all of the Company’s interim and annual periods beginning December 1, 2009. In February 2010, the FASB issued an update to the aforementioned accounting standard that defers the revised consolidation rules for variable interest entities with attributes of, or similar to, an investment company or money market fund. The primary effect of this deferral for the Company is that it will continue to apply the consolidation rules in effect before the amended guidance

F-8

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

discussed above for its interests in eligible entities, such as certain mutual funds. The adoption of the accounting standard did not have a material effect on the Company’s combined financial condition, results of operations, or cash flows. (See Note 5, Variable Interest Entities.)

Accounting for Embedded Credit Derivatives

In March 2010, the FASB issued an accounting standard that amends the accounting for embedded credit derivative features in structured securities that redistribute credit risk in the form of subordination of one financial instrument to another. The new standard clarifies how to determine whether embedded credit derivative features, including those in collateralized debt obligations (CDOs), credit-linked notes (CLNs), synthetic CDOs and CLNs and other synthetic securities (e.g., commercial and residential mortgage-backed securities issued by securitization entities that wrote credit derivatives), are considered to be embedded derivatives that require bifurcation and separate accounting. The new standard is effective for interim and annual periods beginning on July 1, 2010 for the Company. The Company accounts for its investments in synthetic securities otherwise requiring bifurcation at fair value, with changes in fair value recognized in earnings. Adoption of this standard resulted in reclassification of $42 million of synthetic securities from Bonds available for sale to Bond trading securities and a reclassification of $3 million of unrealized gains from Accumulated other comprehensive income to Shareholder’s net investment as of July 1, 2010. The Company does not expect the adoption of this new standard to be material to its combined financial condition, results of operations or cash flows.

Improving Disclosures about Fair Value Measurements

In January 2010, the FASB issued an accounting standard that amends the requirements for fair value measurement disclosures. This standard requires additional fair value measurement disclosures including the amount of and reasons for transfers in and out of Level 1 and Level 2 fair value measurements. It also changes the requirement to disclose purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 fair value measurements to a gross basis rather than a net basis. In addition, the standard clarifies that the level of disaggregation required for existing fair value disclosures should be provided for each class of assets and liabilities. Also, disclosures about inputs and valuation techniques, as well as changes to those inputs and valuation techniques from previous periods, should be disclosed for Level 2 and Level 3 fair value measurements on an interim and annual basis. The new standard became effective for all of the Company’s interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in the recurring Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and interim periods within those fiscal years. The adoption of the accounting standard did not have a material effect on the Company’s combined financial condition, results of operations, or cash flows, but did result in additional disclosure in Footnote 3 of the Condensed Combined Financial Statements.

3. Fair Value Measurements

Fair Value Measurements on a Recurring Basis

The Company measures at fair value on a recurring basis, financial instruments in its trading and available for sale securities portfolios, derivative assets and liabilities, securities lending invested collateral, non-traded equity investments, certain private limited partnerships, certain hedge funds included in Other invested assets, certain Short-term investments, separate and variable account assets and certain Policyholder contract deposits. The fair value of a financial instrument is the amount that the Company believes would be received at a sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date.

F-9

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The degree of judgment used in measuring the fair value of financial instruments generally correlates with the level of pricing observability. Financial instruments with quoted prices in active markets generally have more pricing observability and thus require less judgment in measuring fair value. Conversely, financial instruments traded in other-than-active markets or that do not have quoted prices have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. An active market is one in which transactions for the particular asset or liability being valued occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. An other-than-active market is one in which there are few transactions, prices are not current, price quotations vary substantially either over time or among market makers, or in which little information is released publicly for the particular asset or liability being valued. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, characteristics specific to the transaction and overall general market conditions.

Fair Value Hierarchy

Assets and liabilities recorded at fair value in the condensed Combined Balance Sheet are measured and classified in a hierarchy for disclosure purposes consisting of three “levels” based on the observability of inputs available in the marketplace as discussed below:

• Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that the Company has the ability to access for identical assets or liabilities- Market price data generally is obtained from exchange or dealer markets. The Company does not adjust the quoted price for such instruments. Assets and liabilities measured at fair value on a recurring basis and classified as Level 1 include actively traded listed common stocks and derivative contracts, separate account assets and most mutual funds.

• Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly- Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Assets and liabilities measured at fair value on a recurring basis and classified as Level 2 generally include certain government and agency securities, most investment-grade and high-yield corporate bonds, certain residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and collateralized debt obligations/asset backed securities (CDO/ABS), certain listed equities, state, municipal and provincial obligations, hybrid securities, mutual fund and certain derivative contracts.

• Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable- These measurements include circumstances in which there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, the Company considers factors specific to the asset or liability. Assets and liabilities measured at fair value on a recurring basis and classified as Level 3 include certain RMBS, CMBS and CDO/ABS, corporate debt, certain government and agency securities, certain derivative contracts, policyholder contract deposits carried at fair value, certain mutual fund, private equity and real estate fund investments, and direct private equity investments. The Company’s non-financial instrument assets that are measured at fair value on a non-recurring basis generally are classified as Level 3.

F-10

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Valuation Methodologies

The following is a description of the valuation inputs and methodologies used for instruments carried at fair value on a recurring basis:

Incorporation of Credit Risk in Fair Value Measurements

A key component to the fair value measurement is the incorporation of nonperformance risk, including credit risk. The credit risk of the counterparty is incorporated into the calculation of the credit risk adjustment for fair value measurements in an asset position. Fair values for fixed maturity securities based on observable market prices for identical or similar instruments implicitly incorporate counterparty credit risk. The Company’s own credit risk is incorporated into the calculation of the credit risk adjustment for fair value measurements in a liability position. The Company also uses the assumptions that a market participant would use in pricing the asset or liability. This includes a market participant’s assumptions about the risk of default and how that risk will be valued.

Generally, the current credit exposure of the Company’s derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received. The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties.

Fixed Maturity Securities — Trading and Available for Sale

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Whenever available, the Company obtains quoted prices in active markets for identical assets at the balance sheet date to measure at fair value fixed maturity securities in its trading and available for sale portfolios. Market price data generally is obtained from dealer markets.

The Company estimates the fair value of fixed maturity securities not traded in active markets by referring to traded securities with similar attributes, using dealer quotations, a matrix pricing methodology, discounted cash flow analyses and/or internal valuation models. This methodology considers such factors as the issuer’s industry, the security’s rating and tenor, its coupon rate, its position in the capital structure of the issuer, yield curves, credit curves, prepayment rates and other relevant factors. For certain fixed maturity instruments (for example, private placements) that are not traded in active markets or that are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments generally are based on available market evidence. In the absence of such evidence, Management’s best estimate is used.

Equity Securities Traded in Active Markets — Trading and Available for Sale

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Whenever available, the Company obtains quoted prices in active markets for identical assets at the balance sheet date to measure at fair value marketable equity securities in its trading and available for sale portfolios. Market price data generally is obtained from exchange or dealer markets.

F-11

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Hedge Funds, Private Equity Funds and Other Investment Partnerships — Other Invested Assets

The Company initially estimates the fair value of investments in certain hedge funds, private equity funds and other investment partnerships by reference to the transaction price. Subsequently, the Company generally obtains the fair value of these investments from net asset value information provided by the general partner or manager of the investments, the financial statements of which are generally audited annually. The Company considers observable market data and performs diligence procedures in validating the appropriateness of using the net asset value as a fair value measurement.

Separate Account Assets

Separate account assets are composed primarily of registered and unregistered open-end mutual funds that generally trade daily and are measured at fair value in the manner discussed above for equity securities traded in active markets.

Freestanding Derivatives

Derivative assets and liabilities can be exchange-traded or traded over-the-counter (OTC). The Company generally values exchange-traded derivatives using quoted prices in active markets for identical derivatives at the balance sheet date.

OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in the instrument, as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant Management judgment.

Certain OTC derivatives trade in less liquid markets with limited pricing information, and the determination of fair value for these derivatives is inherently more difficult. When the Company does not have corroborating market evidence to support significant model inputs and cannot verify the model to market transactions, the transaction price is initially used as the best estimate of fair value. Accordingly, when a pricing model is used to value such an instrument, the model is adjusted so the model value at inception equals the transaction price. Subsequent to initial recognition, the Company updates valuation inputs when corroborated by evidence such as similar market transactions, third party pricing services and/or broker or dealer quotations, or other empirical market data. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit considerations. Such adjustments are generally based on available market evidence. In the absence of such evidence, Management’s best estimate is used.

F-12

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Embedded Derivatives

The Company purchases and issues financial instruments and products that contain embedded derivative instruments. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes. The embedded derivative, which is reported with the host instrument in the Combined Balance Sheets, is carried at fair value with changes in fair value reported in Net realized capital gains and losses or Policyholder benefits and claims incurred, as appropriate.

Policyholder Contract Deposits

Policyholder contract deposits accounted for at fair value are measured using an earnings approach by taking into consideration the following factors:

• current policyholder account values and related surrender charges;

• the present value of estimated future cash inflows (policy fees) and outflows (benefits and maintenance expenses) associated with the product using risk neutral valuations, incorporating expectations about policyholder behavior, market returns and other factors; and

• a risk margin that market participants would require for a market return and the uncertainty inherent in the model inputs.

The change in fair value of these policyholder contract deposits, including any premiums or fees collected, is recorded as Policyholder benefits and claims incurred in the Condensed Combined Statements of Income. Policy fees and premiums collected are not recorded separately as revenue.

F-13

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the levels of the inputs used as of August 31, 2010 and November 30, 2009:

as of August 31, 2010							Counterparty			Cash
(in millions)	Level 1		Level 2		Level 3		Netting (a)			Collateral (b)			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	—	$	2,195	$	—	$	—		$	—		$	2,195
Obligations of states, municipalities and political subdivisions		—		2,503		1		—			—			2,504
Non-U.S. governments		155		23,235		697		—			—			24,087
Corporate debt		—		40,809		47		—			—			40,856
Mortgage-backed, asset-backed and collateralized:
RMBS		—		1,070		129		—			—			1,199
CMBS		—		4,040		2,028		—			—			6,068
CDO/ABS		—		73		253		—			—			326
Total mortgage-backed, asset-backed and collateralized		—		5,183		2,410		—			—			7,593
Total bonds available for sale		155		73,925		3,155		—			—			77,235
Bonds held for trading:
U.S. government and government sponsored entities		1		206		—		—			—			207
Obligations of states, municipalities and political subdivisions		373		2,339		—		—			—			2,712
Non-U.S. governments		—		1		—		—			—			1
Corporate debt		—		3,425		—		—			—			3,425
Mortgage-backed, asset-backed and collateralized:
RMBS		—		794		—		—			—			794
CMBS		—		134		76		—			—			210
CDO/ABS		—		10		62		—			—			72
Total mortgage-backed, asset-backed and collateralized		—		938		138		—			—			1,076
Total bonds held for trading		374		6,909		138		—			—			7,421
Equity securities available for sale:
Common stocks		119		2		—		—			—			121
Preferred stocks		—		45		—		—			—			45
Mutual funds		477		12		—		—			—			489
Total equity securities available for sale		596		59		—		—			—			655
Equity securities held for trading:
Common stocks		2,699		—		—		—			—			2,699
Mutual funds		2,568		105		6		—			—			2,679
Total equity securities held for trading		5,267		105		6		—			—			5,378
Other invested assets		116		409		165		(79	)		(108	)		503
Short-term investments		—		1,348		—		—			—			1,348
Separate account assets		120		115		1		—			—			236
Total assets	$	6,628	$	82,870	$	3,465	$	(79	)	$	(108	)	$	92,776
Liabilities:
Policyholder contract deposits	$	—	$	—	$	1,835	$	—		$	—		$	1,835
Other liabilities		—		70		12		(79	)		—			3
Total liabilities	$	—	$	70	$	1,847	$	(79	)	$	—		$	1,838

(a)	Represents netting of derivative exposures covered by a qualifying master netting agreement.
(b)	Represents offset for cash collateral posted (received).

F-14

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

as of November 30, 2009							Counterparty			Cash
(in millions)	Level 1		Level 2		Level 3		Netting (a)			Collateral (b)			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	—	$	1,342	$	—	$	—		$	—		$	1,342
Obligations of states, municipalities and political subdivisions		—		1,880		—		—			—			1,880
Non-U.S. governments		—		20,145		740		—			—			20,885
Corporate debt		—		40,454		33		—			—			40,487
Mortgage-backed, asset-backed and collateralized:
RMBS		—		1,034		34		—			—			1,068
CMBS		—		4,193		1,255		—			—			5,448
CDO/ABS		—		84		275		—			—			359
Total mortgage-backed, asset-backed and collateralized		—		5,311		1,564		—			—			6,875
Total bonds available for sale		—		69,132		2,337		—			—			71,469
Bonds held for trading:
U.S. government and government sponsored entities		—		144		16		—			—			160
Obligations of states, municipalities and political subdivisions		—		3,117		6		—			—			3,123
Non-U.S. governments		—		81		—		—			—			81
Corporate debt		—		3,745		2		—			—			3,747
Mortgage-backed, asset-backed and collateralized:
RMBS		—		884		—		—			—			884
CMBS		—		124		98		—			—			222
CDO/ABS		—		9		—		—			—			9
Total mortgage-backed, asset-backed and collateralized		—		1,017		98		—			—			1,115
Total bonds held for trading		—		8,104		122		—			—			8,226
Equity securities available for sale:
Common stocks		196		5		—		—			—			201
Preferred stocks		—		45		—		—			—			45
Mutual funds		245		19		—		—			—			264
Total equity securities available for sale		441		69		—		—			—			510
Equity securities held for trading:
Common stocks		3,087		—		—		—			—			3,087
Mutual funds		2,562		73		7		—			—			2,642
Total equity securities held for trading		5,649		73		7		—			—			5,729
Other invested assets		89		438		335		(64	)		(100	)		698
Short-term investments		178		2,511		—		—			—			2,689
Separate account assets		85		211		1		—			—			297
Total assets	$	6,442	$	80,538	$	2,802	$	(64	)	$	(100	)	$	89,618
Liabilities:
Policyholder contract deposits	$	—	$	—	$	1,792	$	—		$	—		$	1,792
Other liabilities		1		56		10		(64	)		8			11
Total liabilities	$	1	$	56	$	1,802	$	(64	)	$	8		$	1,803

(a)	Represents netting of derivative exposures covered by a qualifying master netting agreement.
(b)	Represents offset for cash collateral posted (received).

F-15

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Changes in Level 3 recurring fair value measurements

The following tables present the changes for the nine months ended August 31, 2010 and 2009 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) recorded in income during those periods related to the Level 3 assets and liabilities that remained as of August 31, 2010 and 2009:

																	Changes in
																	realized and
			Net realized						Purchases,								unrealized
			and unrealized			Accumulated			sales and								gains (losses) on
	Balance		gains (losses)			other			issuances, and						Balance		instruments
for the nine months ended August 31, 2010	beginning of		included in			comprehensive			settlements-			Transfers			end of		held at period
(in millions)	period		income (a)			income			net			(b)			period		end
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	—	$	—		$	—		$	4		$	(3	)	$	1	$	—
Non-U.S. governments		740		1			(59	)		57			(42	)		697		—
Corporate debt		33		3			(2	)		15			(2	)		47		—
Mortgage-backed, asset-backed and collateralized:
RMBS		34		(2	)		3			(2	)		96			129		—
CMBS		1,255		(143	)		387			79			450			2,028		—
CDO/ABS		275		1			46			(25	)		(44	)		253		—
Total mortgage-backed, asset-backed and collateralized:		1,564		(144	)		436			52			502			2,410		—
Total bonds available for sale		2,337		(140	)		375			128			455			3,155		—
Bonds held for trading
U.S. government and government sponsored entities:		16		—			—			(16	)		—			—		—
Obligations of states, municipalities and political subdivisions		6		(1	)		—			(5	)		—			—		—
Corporate debt		2		—			—			—			(2	)		—		—
Mortgage-backed, asset-backed and collateralized:
RMBS		—		1			—			—			(1	)		—		—
CMBS		98		19			—			(27	)		(14	)		76		10
CDO/ABS		—		4			—			16			42			62		—
Total mortgage-backed, asset-backed and collateralized		98		24			—			(11	)		27			138		10
Total bonds held for trading		122		23			—			(32	)		25			138		10
Equity securities available for sale:
Common stocks		—		—			3			—			3			—		—
Total equity securities available for sale		—		—			3			—			3			—		—
Equity securities held for trading:
Mutual funds		7		(5	)		—			(7	)		11			6		—
Total equity securities held for trading		7		(5	)		—			(7	)		11			6		—
Other invested assets		335		53			(2	)		(241	)		20			165		—
Separate account assets		1		—			—			—			—			1		—
Total assets	$	2,802	$	(69	)	$	376		$	(152	)	$	508		$	3,465	$	10
Liabilities:
Policyholder contract deposits	$	1,792	$	17		$	43		$	(17	)	$	—		$	1,835	$	57
Other liabilities		10		2			—			—			—			12		3
Total liabilities	$	1,802	$	19		$	43		$	(17	)	$	—		$	1,847	$	60

F-16

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

																	Changes in
																	realized and
			Net realized						Purchases,								unrealized
			and unrealized			Accumulated			sales and								gains (losses) on
	Balance		gains (losses)			other			issuances, and								instruments
for the nine months ended August 31, 2009	beginning of		included in			comprehensive			settlements-						Balance end		held at period
(in millions)	period		income (a)			income			net			Transfers (b)			of period		end
Assets:
Total bonds available for sale	$	1,105	$	172		$	(105	)	$	14		$	569		$	1,755	$	—
Bonds held for trading		17		(3	)		—			12			70			96		79
Equity securities held for trading		2		(1	)		—			(7	)		20			14		(2	)
Other invested assets		270		(35	)		5			3			8			251		—
Separate account assets		1		—			—			—			(1	)		—		—
Total assets	$	1,395	$	133		$	(100	)	$	22		$	666		$	2,116	$	77
Liabilities:
Policyholder contract deposits	$	1,554	$	(31	)	$	217		$	(11	)	$	17		$	1,746	$	(53	)
Other liabilities		21		(8	)		2			—			(3	)		12		(9	)
Total liabilities	$	1,575	$	(39	)	$	219		$	(11	)	$	14		$	1,758	$	(62	)

(a) Net realized and unrealized gains and losses related to Level 3 items shown above are reported in the Condensed Combined Statements of Income primarily as follows:

Major Category of Assets/Liabilities	Condensed Combined Statements of Income Line Items
Bonds available for sale	•   Net realized capital losses
Bonds held for trading	•   Net investment income
Other invested assets	•   Net realized capital losses
Policyholder contract deposits	•   Policyholder benefits and claims incurred
	•   Net realized capital losses
Other liabilities	•   Net realized capital losses

(b) Transfers are comprised of gross transfers into Level 3 assets of $753 million and $762 million and gross transfers out of Level 3 assets of $245 million and $96 million for the nine months ended August 31, 2010 and 2009, respectively. The Company’s policy is to record transfers of assets and liabilities into or out of Level 3 at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value. As a result, the Net realized and unrealized gains (losses) included in Income or Other comprehensive income and as shown in the table above exclude $54 million and $43 million of net gains related to assets and liabilities transferred into Level 3 during the nine months ended August 31, 2010 and 2009, respectively, and exclude $7 million and $8 million of net gains related to assets and liabilities transferred out of Level 3 during the nine months ended August 31, 2010 and 2009, respectively.

Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables above. As a result, the unrealized gains (losses) on instruments held as of August 31, 2010 and 2009, may include changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable inputs (e.g. changes in unobservable long-dated volatilities).

F-17

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The Company’s policy is to transfer assets and liabilities into Level 3 when a significant input cannot be corroborated with market observable data. This may include: circumstances in which market activity has dramatically decreased and transparency to underlying inputs cannot be observed, current prices are not available and substantial price variances in quotations among market participants exist.

In certain cases, the inputs used to measure the fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, factors specific to the asset or liability are considered.

During the nine months ended August 31, 2010, the Company transferred into Level 3 approximately $753 million of assets, consisting of certain ABS, CMBS, RMBS and non-US government bonds as well as private placement corporate debt. A majority of the transfers into Level 3 related to investments in CMBS and was due to a decrease in market transparency and downward credit migration in these securities.

Assets are transferred out of Level 3 when circumstances change such that significant inputs can be corroborated with market observable data. This may be due to a significant increase in market activity for the asset, a specific event, one or more significant input(s) becoming observable, or when a long-term interest rate significant to a valuation becomes short-term and thus observable. During the nine months ended August 31, 2010, approximately $245 million of assets were transferred out of Level 3. These transfers out of Level 3 were primarily related to investments in certain ABS and RMBS and investments in private placement corporate debt and non- US government bonds. Transfers out of Level 3 for ABS and RMBS investments were primarily due to increased usage of pricing from valuation service providers that were reflective of market activity, where previously an internally adjusted price had been used. Transfers out of Level 3 for private placement corporate debt were primarily the result of using observable pricing information or a third party pricing quote that appropriately reflects the fair value of those securities, without the need for adjustment based on the Company’s own assumptions regarding the characteristics of a specific security or the current liquidity in the market.

Transfers of Level 1 and Level 2 Assets and Liabilities

During the nine months ended August 31, 2010, investments with fair values of $1.1 billion and $216 million were transferred out of Level 1 and into Level 2 and out of Level 2 and into Level 1, respectively. These transfers in the aggregate represent less than two percent of total assets and nine percent of total equity at August 31, 2010.

F-18

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Investments in certain entities carried at fair value using net asset value per share

The following table includes information related to investments in certain other invested assets, including private equity funds, hedge funds and other alternative investments that calculate net asset value per share (or its equivalent). For these investments, which are measured at fair value on a recurring or non-recurring basis at August 31, 2010 and November 30, 2009, the net asset value per share is used as a practical expedient for fair value as of:

	August 31, 2010				November 30, 2009
	Fair Value Using		Unfunded		Fair Value Using Net		Unfunded
(in millions)	Net Asset Value		Commitments		Asset Value		Commitments
Investment Category
Private Equity Funds Venture Capital (a)	$	7	$	3	$	11	$	4
Total Private Equity Funds		7		3		11		4
Global Real Estate Funds (b)		7		12		8		14
Total	$	14	$	15	$	19	$	18

(a)	Includes investments in funds which invest in early-stage, high-potential, and growth companies in the interest of generating a return through an eventual realization event such as an initial public offering or sale of the company.
(b)	Includes investments in funds which invest in domestic and foreign commercial real estate.

Private equity fund investments included above are not redeemable during the lives of the funds, and have expected remaining lives that extend in some cases to 10 years. Seven percent of such funds have expected remaining lives of less than three years, and 93 percent have expected remaining lives between three and 10 years. Expected lives are based upon legal maturity, which can be extended at the general manager’s discretion, typically in one year increments.

Global real estate fund investments included above are not redeemable during the lives of the funds, and have expected remaining lives that extend from three to seven years.

Fair Value Measurements on a Non-Recurring Basis

The fair value of certain assets are measured on a non-recurring basis, generally quarterly, annually, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include cost and equity-method investments, collateral securing foreclosed loans and real estate and other fixed assets and goodwill. A variety of techniques are used to measure the fair value of these assets when appropriate, as described below:

• Cost and Equity Method Investments: When it is determined that the carrying value of these assets may not be recoverable, the assets are recorded at fair value with the loss recognized in earnings. In such cases, the fair values of these assets are measured using the techniques discussed in Valuation Methodologies above for Other invested assets.

• Collateral Securing Foreclosed Loans and Real Estate and Other Fixed Assets: When collateral is collected in connection with foreclosed loans, the estimate of fair value is generally based on the price that would be received in a current transaction to sell the asset by itself, by reference to observable transactions for similar assets.

F-19

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

• Goodwill: Goodwill is tested annually for impairment or more frequently whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. When it is determined that goodwill may be impaired, techniques are used including market-based earnings multiples of peer companies, discounted expected future cash flows, appraisals, or, in the case of reporting units being considered for sale, third-party indications of fair value of the reporting unit, if available, to determine the amount of any impairment.

• Long-Lived Assets: Long-lived assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount of a long-lived asset may not be recoverable. The fair values of long-lived assets are measured based on an in-use premise that considers the same factors used to estimate the fair value of its real estate and other fixed assets under an in-use premise.

Fair Value Option

The Company elected to apply the fair value option to certain single premium variable life products in Japan classified within policyholder contract deposits in the Condensed Combined Balance Sheets. For the nine months ended August 31, 2010 and 2009, the Company recorded a gain of $43 million and $31 million, respectively, in Policyholder benefit and claims incurred. The Company elected the fair value option for these liabilities to more closely align its accounting with the economics of its transactions at the time of election. The fair value option election allowed the Company to better match the inherent market risks associated with this business in an efficient and effective manner through the use of derivative instruments entered into with AIG. During the nine months ended August 31, 2010, the Company unwound all the affiliated derivatives described above, in conjunction with AIG’s restructuring and divestiture plans and currently has no specific plan to manage the inherent market risks of this business through the use of derivative instruments.

Fair Value Information about Financial Instruments Not Measured at Fair Value

Information regarding the estimation of fair value for financial instruments not carried at fair value (excluding insurance contracts and lease contracts) is discussed below:

• Mortgage and other loans receivable: Fair values of loans on real estate and collateral loans were estimated for disclosure purposes using discounted cash flow calculations based upon discount rates that Management believes market participants would use in determining the price they would pay for such assets. For certain loans, current incremental lending rates for similar type loans are used as the discount rate, as it is believed that this rate approximates the rates market participants would use.

• Policy loans: The fair values of policy loans were not estimated as the Company believes it would have to expend excessive costs for the benefits derived and such loans are fully collateralized.

• Cash, short-term investments, other assets and other liabilities: The carrying values of these assets and liabilities approximate fair values because of the relatively short period of time between origination and expected realization.

• Policyholder contract deposits associated with investment-type contracts: Fair values for Policyholder contract deposits associated with investment-type contracts not accounted for at fair value were estimated for disclosure purposes using discounted cash flow calculations based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Where no similar contracts are being offered, the discount rate is the appropriate tenor swap rates (if available) or current risk-free interest rates consistent with the currency in which the cash flows are denominated.

F-20

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

• Long-term debt: Fair values of these obligations were determined for disclosure purposes by reference to quoted market prices, where available and appropriate, or discounted cash flow calculations based upon current market-observable implicit-credit-spread rates for similar types of borrowings with maturities consistent with those remaining for the debt being valued.

The following table presents the carrying value and estimated fair value of financial instruments as of:

	August 31, 2010				November 30, 2009
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturities	$	84,656	$	84,656	$	79,695	$	79,695
Equity securities		6,033		6,033		6,239		6,239
Mortgage and other loans receivable		2,657		2,598		2,548		2,552
Other invested assets		1,225		1,225		1,501		1,501
Short-term investments		5,283		5,283		6,321		6,321
Cash		1,046		1,046		1,094		1,094
Other assets		128		128		105		105
Liabilities:
Policyholder contract deposits associated with investment-type contracts	$	48,103	$	49,239	$	50,330	$	50,092
Other liabilities		268		268		75		75
Long-term debt		46		46		1,112		1,158

F-21

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

4. Investments

(a) Securities Available for Sale

The following table presents the amortized cost or cost and fair value of available for sale securities:

									Other-than-
			Gross		Gross				Temporary
as of August 31, 2010	Amortized Cost		Unrealized		Unrealized				Impairments in
(in millions)	or Cost		Gains		Losses (a)		Fair Value		AOCI (b)
Bonds available for sale:
U.S. government and government sponsored entities	$	2,038	$	158	$	1	$	2,195	$	—
Obligations of states, municipalities, and political subdivisions		2,383		146		25		2,504		—
Non-U.S. governments		23,343		1,386		642		24,087		—
Corporate debt		38,606		2,848		598		40,856		5
Mortgage-backed, asset-backed and collateralized:
RMBS		1,257		61		119		1,199		—
CMBS		6,784		178		894		6,068		(48	)
CDO/ABS		362		8		44		326		2
Total mortgage-backed, asset-backed and collateralized:		8,403		247		1,057		7,593		(46	)
Total bonds available for sale		74,773		4,785		2,323		77,235		(41	)
Equity securities available for sale:
Common stocks		105		20		4		121		—
Preferred stocks		45		1		1		45		—
Mutual funds		463		38		12		489		—
Total equity securities available for sale		613		59		17		655		—
Total	$	75,386	$	4,844	$	2,340	$	77,890	$	(41	)

(a)	As of August 31, 2010, the fair value of bonds available for sale held that were below investment grade or not rated totaled $3.3 billion.
(b)	Represents the amount of non-credit related losses recognized in Accumulated other comprehensive loss, which, starting on March 1, 2009, were not included in earnings. Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

F-22

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The following table presents the amortized cost or cost and fair value of available for sale securities:

									Other-than-
			Gross		Gross				Temporary
as of November 30, 2009	Amortized Cost		Unrealized		Unrealized				Impairments in
(in millions)	or Cost		Gains		Losses (a)		Fair Value		AOCI (b)
Bonds available for sale:
U.S. government and government sponsored entities	$	1,272	$	70	$	—	$	1,342	$	—
Obligations of states, municipalities, and political subdivisions		1,833		69		22		1,880		—
Non-U.S. governments		20,500		682		296		20,886		—
Corporate debt		39,398		2,046		957		40,487		6
Mortgage-backed, asset-backed and collateralized:
RMBS		1,151		60		143		1,068		(19	)
CMBS		6,965		50		1,567		5,448		(26	)
CDO/ABS		433		9		84		358		6
Total mortgage-backed, asset-backed and collateralized:		8,549		119		1,794		6,874		(39	)
Total bonds available for sale		71,552		2,986		3,069		71,469		(33	)
Equity securities available for sale:
Common stocks		100		107		6		201		—
Preferred stocks		47		1		3		45		—
Mutual funds		253		25		14		264		—
Total equity securities available for sale		400		133		23		510		—
Total	$	71,952	$	3,119	$	3,092	$	71,979	$	(33	)

(a)	As of November 30, 2009, the fair value of bonds available for sale that were below investment grade or not rated totaled $2.6 billion.
(b)	Represents the amount of non-credit related losses recognized in Accumulated other comprehensive loss, which, starting on March 1, 2009, were not included in earnings. Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date.

F-23

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The following tables summarize the fair value and gross unrealized losses on available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position:

	12 Months or less				More than 12 Months				Total
as of August 31, 2010			Unrealized				Unrealized				Unrealized
(in millions)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Bonds available for sale:
U.S. government and government sponsored entities	$	35	$	1	$	—	$	—	$	35	$	1
Obligations of states, municipalities, and political subdivisions		244		7		124		18		368		25
Non-U.S. governments		2,772		342		1,234		300		4,006		642
Corporate debt		1,640		72		2,616		526		4,256		598
Mortgage-backed, asset-backed and collateralized:
RMBS		145		9		295		110		440		119
CMBS		127		7		2,915		887		3,042		894
CDO/ABS		—		—		207		44		207		44
Total mortgage-backed, asset-backed and collateralized:		272		16		3,417		1,041		3,689		1,057
Total bonds available for sale		4,963		438		7,391		1,885		12,354		2,323
Equity securities available for sale:
Common stocks		54		4		—		—		54		4
Preferred stocks		31		1		—		—		31		1
Mutual funds		155		12		—		—		155		12
Total equity securities available for sale		240		17		—		—		240		17
Total	$	5,203	$	455	$	7,391	$	1,885	$	12,594	$	2,340

F-24

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

	12 Months or less				More than 12 Months				Total
as of November 30, 2009			Unrealized				Unrealized				Unrealized
(in millions)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Bonds available for sale:
Obligations of states, municipalities, and political subdivisions	$	97	$	5	$	124	$	17	$	221	$	22
Non-U.S. governments		1,530		44		1,721		252		3,251		296
Corporate debt		1,801		89		5,681		868		7,482		957
Mortgage-backed, asset-backed and collateralized:
RMBS		97		16		298		127		395		143
CMBS		1,882		682		1,918		885		3,800		1,567
CDO/ABS		83		20		149		64		232		84
Total mortgage-backed, asset-backed and collateralized:		2,062		718		2,365		1,076		4,427		1,794
Total bonds available for sale		5,490		856		9,891		2,213		15,381		3,069
Equity securities available for sale:
Common stocks		36		6		—		—		36		6
Preferred stocks		33		3		—		—		33		3
Mutual funds		80		14		—		—		80		14
Total equity securities available for sale		149		23		—		—		149		23
Total	$	5,639	$	879	$	9,891	$	2,213	$	15,530	$	3,092

The Company reviews and evaluates the investment performance of its portfolio. As of August 31, 2010, the Company held 2,909 and 60 of individual fixed maturity and equity securities, respectively, which were in an unrealized loss position, of which 1,496 individual securities were in a continuous unrealized loss position for longer than twelve months. As of November 30, 2009, the Company held 3,177 and 85 individual fixed maturity and equity securities, respectively, which were in an unrealized loss position, of which 1,949 individual securities were in a continuous unrealized loss position for longer than twelve months.

The Company did not recognize in earnings the unrealized losses on these fixed maturity securities as of August 31, 2010 and November 30, 2009, because Management neither intends to sell the securities nor does it believe that it is more likely than not that it will be required to sell these securities before recovery of their amortized cost basis. Furthermore, Management expects to recover the entire amortized cost basis of these securities. In performing this evaluation, Management considered the recovery periods for securities in previous periods of broad market declines. For fixed maturity securities with significant declines, Management performed fundamental credit analysis on a security-by-security basis, which included consideration of credit enhancements, expected defaults on underlying collateral, review of relevant industry analyst reports and forecasts and other available market data.

F-25

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Contractual Maturities

The following tables present the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity:

					Fixed Maturity Securities in an
as of August 31, 2010	Total Fixed Maturity Securities				Unrealized Loss Position
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,842	$	4,929	$	427	$	406
Due after one year through five years		21,625		22,424		3,710		3,167
Due after five years through ten years		26,905		28,580		4,167		3,807
Due after ten years		12,998		13,709		1,627		1,285
Mortgage-backed, asset-backed and collateralized		8,403		7,593		4,746		3,689
Total	$	74,773	$	77,235	$	14,677	$	12,354

					Fixed Maturity Securities in an
as of November 30, 2009	Total Fixed Maturity Securities				Unrealized Loss Position
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,069	$	4,169	$	365	$	343
Due after one year through five years		22,866		23,345		3,998		3,405
Due after five years through ten years		25,128		25,924		4,546		4,099
Due after ten years		10,940		11,157		3,336		3,124
Mortgage-backed, asset-backed and collateralized		8,549		6,874		6,204		4,410
Total	$	71,552	$	71,469	$	18,449	$	15,381

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

F-26

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

(b) Net Investment Income

The following table presents the components of Net investment income:

	For the Nine Months Ended August 31,
(in millions)	2010			2009
Fixed maturities, including short-term investments (a)	$	2,428		$	2,273
Equity securities (a)		19			7
Interest on mortgage and other loans		98			88
Other invested assets (a)
Partnerships		(32	)		(10	)
Hedge funds		21			35
Real estate		61			57
Other investments		43			18
Total investment income before policyholder investment income		2,638			2,468
Policyholder investment income and trading account gains, net of fees (b)		259			1,538
Total investment income		2,897			4,006
Investment expenses		(87	)		(74	)
Net investment income	$	2,810		$	3,932

(a)	Amounts exclude net investment income from assets backing separate accounts that do not qualify for separate account reporting under GAAP.
(b)	Policyholder investment income represents investment income from assets backing separate accounts that do not qualify for separate account reporting under GAAP.

Net unrealized gains included in the Condensed Combined Statements of Income from investment securities classified as trading securities for the nine months ended August 31, 2010 and 2009 were $124 million and $2.6 billion, respectively.

F-27

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

(c) Net Realized Capital Gains (Losses) and Increase (Decrease) in Unrealized Gains (Losses)

The following table presents the components of Net realized capital gains (losses) and the increase (decrease) in unrealized gains (losses) of available for sale investments:

	For the Nine Months Ended August 31,
(in millions)	2010			2009
Net realized capital gains (losses):
Sales of fixed maturity securities	$	31		$	(19	)
Sales of equity securities		116			27
Sales of real estate and other assets		—			2
Other-than-temporary impairments:
Total other-than-temporary impairments on available for sale securities		(373	)		(464	)
Portion of other-than-temporary impairments on available for sale securities recognized in Accumulated other comprehensive income		(4	)		76
Net other-than temporary impairments on available for sale securities recognized in net income		(377	)		(388	)
Other-than-temporary impairments on all other investments		(4	)		(46	)
Provision for loan losses		2			(78	)
Foreign exchange transactions		212			(371	)
Derivatives		169			28
Other		(7	)		(33	)
Total net realized capital gains (losses)	$	142		$	(878	)
Increase (decrease) in unrealized gains (losses):
Fixed maturities	$	2,546		$	4,593
Equity securities		(65	)		82
Other investments		(152	)		(300	)
Increase in unrealized gains	$	2,329		$	4,375

F-28

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The following table presents the gross realized gains and gross realized losses from sales of available for sale securities:

			For the Nine Months Ended August 31,
	2010				2009
	Gross Realized		Gross Realized		Gross Realized		Gross Realized
(in millions)	Gains		Losses		Gains		Losses
Fixed maturities	$	78	$	29	$	22	$	29
Equity securities		117		1		28		1
Total	$	195	$	30	$	50	$	30

For the nine months ended August 31, 2010 and 2009, the aggregate fair value of available for sale securities sold at a loss was $428 million and $399 million, which resulted in a net realized capital loss of $29 million for each period, respectively. The average period of time that securities sold at a loss were trading continuously at a price below cost or amortized cost was approximately 8 months, for both the nine months ended August 31, 2010, and 2009.

Evaluating Investments for Other-Than-Temporary Impairments

On March 1, 2009, the Company adopted prospectively a new accounting standard addressing the evaluation of fixed maturity securities for other-than-temporary impairments. These requirements have significantly altered the Company’s policies and procedures for determining impairment charges recognized through earnings. The new standard requires a company to recognize the credit component (a credit impairment) of an other-than-temporary impairment of a fixed maturity security in earnings and the non-credit component in Accumulated other comprehensive income (loss) when the company does not intend to sell the security and it is more likely than not that the company will not be required to sell the security prior to recovery. The new standard also changes the threshold for determining when an other-than-temporary impairment has occurred on a fixed maturity security with respect to intent and ability to hold the security until recovery and requires additional disclosures. A credit impairment, which is recognized in earnings when it occurs, is the difference between the amortized cost of the fixed maturity security and the estimated present value of cash flows expected to be collected (recovery value), as determined by Management. The difference between fair value and amortized cost that is not related to a credit impairment is recognized as a separate component of Accumulated other comprehensive income (loss). Both credit impairments and impairments recognized as a result of intent to sell are referred to as “impairment charges”. The impairment model for equity securities was not affected by the new standard.

Fixed Maturity Securities

Impairment Policy — Effective March 1, 2009 and Thereafter

If the Company intends to sell a fixed maturity security, or it is more likely than not that the Company will be required to sell a fixed maturity security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an other-than-temporary impairment has occurred and the amortized cost is written down to current fair value with a corresponding charge to earnings.

For all other fixed maturity securities for which a credit impairment has occurred, the amortized cost is written down to the estimated recovery value using previous effective yields with a corresponding charge to earnings. Changes in fair value compared to recovery value, if any, are charged to unrealized appreciation (depreciation) of fixed maturity investments on which other-than-temporary credit impairments were taken (a component of Accumulated other comprehensive income (loss)).

F-29

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

When assessing the intent to sell a fixed maturity security, or if it is more likely than not that the Company will be required to sell a fixed maturity security before recovery of its amortized cost basis, Management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, sale of securities to meet cash flow needs and sales of securities to capitalize on favorable pricing.

The Company considers severe price declines and the duration of such price declines in its assessment of potential credit impairments. Modeled outputs are also modified for certain securities when it is determined that price declines are indicative of factors not comprehended by the cash flow models.

In periods subsequent to the recognition of an other-than-temporary impairment charge for available for sale fixed maturity securities that were not foreign exchange related, the Company generally prospectively accretes into earnings the difference between the new amortized cost and the expected undiscounted recovery value over the remaining expected holding period of the security.

F-30

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The following tables present a roll forward of the credit impairments recognized in earnings for available for sale fixed maturity securities (a):

for the nine months ended August 31, 2010

(in millions)
Balance at November 30, 2009	$	262
Increases due to:
Credit impairments on new securities subject to impairment losses		77
Additional credit impairments on previously impaired securities		60
Reductions due to:
Credit impaired securities fully disposed of for which there was no prior intent or requirement to sell		(95	)
Accretion on securities previously impaired due to credit (b)		4
Foreign exchange translation adjustments		(2	)
Change in accounting principle (See note 2 for discussion of Accounting for Embedded Credit Derivatives)		(41	)
Other		(5	)
Balance at August 31, 2010	$	260

for the six months ended August 31, 2009

(in millions)
Balance at March 1, 2009	$	—
Increases due to:
Credit losses remaining in accumulated deficit related to the adoption of new other- than-temporary impairment standard		202
Credit impairments on new securities subject to impairment losses		29
Additional credit impairments on previously impaired securities		46
Reductions due to:
Credit impaired securities fully disposed of for which there was no prior intent or requirement to sell		—
Accretion on securities previously impaired due to credit (b)		—
Foreign exchange translation adjustments		5
Balance at August 31, 2009	$	282

(a)	Includes structured, corporate, municipal and sovereign fixed maturity securities.
(b)	Represents accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities as well as the accretion due to the passage of time.

F-31

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

In assessing whether credit impairment has occurred for a structured fixed maturity security, the Company performs evaluations of expected future cash flows. Certain critical assumptions are made with respect to the performance of the securities.

When estimating future cash flows for a structured fixed maturity security (e.g. RMBS, CMBS, CDO, ABS), Management considers historical performance of the underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class:

• current delinquency rates;

• expected default rates and timing of such defaults;

• loss severity and timing of any such recovery;

• expected prepayment speeds; and

• ratings of securities underlying structured products.

For corporate, municipal and sovereign fixed maturity securities determined to be credit impaired, Management considers the fair value as the recovery value when available information does not indicate that another value is more relevant or reliable. When Management identifies information that supports a recovery value other than the fair value, the determination of a recovery value considers scenarios specific to the issuer and the security, and may be based upon estimates of outcomes of corporate restructurings, political and macro economic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment and the disposition of assets.

Impairment Policy — Prior to March 1, 2009

Fixed Maturity Securities

Prior to March 1, 2009, the Company assessed its ability to hold any fixed maturity available for sale security in an unrealized loss position to its recovery at each balance sheet date. The decision to sell any such fixed maturity security classified as available for sale reflected the judgment of Management that the security sold was unlikely to provide, on a relative value basis, as attractive a return in the future as alternative securities entailing comparable risks. With respect to distressed securities, the sale decision reflected Management’s judgment that the risk-adjusted ultimate recovery was less than the value achievable on sale. In that period, fixed maturity securities were evaluated for other-than-temporary impairments with respect to valuation as well as credit. After a fixed maturity security had been identified as other-than-temporarily impaired, the amount of such impairment was determined as the difference between fair value and amortized cost and the entire amount was recorded as a charge to earnings.

Equity Securities

The impairment model for equity securities and other cost and equity method investments was not affected by the adoption of the new accounting standard related to other-than-temporary impairments in March of 2009. The Company continues to evaluate its available for sale equity securities, equity method and cost method investments for impairment by considering such securities as candidates for other-than-temporary impairment if they meet any of the following criteria:

• The security has traded at a significant (25 percent or more) discount to cost for an extended period of time (nine consecutive months or longer);

F-32

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

• A discrete credit event has occurred resulting in (i) the issuer defaulting on a material outstanding obligation; (ii) the issuer seeking protection from creditors under the bankruptcy laws or any similar laws intended for court supervised reorganization of insolvent enterprises; or (iii) the issuer proposing a voluntary reorganization pursuant to which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value of their claims;

• The equity securities have been in an unrealized loss position for greater than twelve months, or

• Management has concluded that it may not realize a full recovery on its investment, regardless of the occurrence of one of the foregoing events.

The determination that an equity security is other-than-temporarily impaired requires the judgment of Management and consideration of the fundamental condition of the issuer, its near-term prospects and all the relevant facts and circumstances. The above criteria also consider circumstances of a rapid and severe market valuation decline in which Management could not reasonably assert that the impairment period would be temporary (severity losses).

(d) Other Invested Assets

The following table summarizes Other invested assets as of:

(in millions)	August 31, 2010		November 30, 2009
Alternative funds (a)	$	641	$	700
Investment real estate (b)		750		746
All other investments		584		800
Other invested assets	$	1,975	$	2,246

(a)	Includes hedge funds, private equity funds and other investment partnerships.
(b)	Net of accumulated depreciation of $156 million and $141 million as of August 31, 2010 and November 30, 2009 respectively.

5. Variable Interest Entities

The accounting standard related to the consolidation of variable interest entities (VIEs) provides guidance for determining when to consolidate certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity that is at risk to allow the entity to finance its activities without additional subordinated financial support.

The Company enters into various arrangements in the normal course of business and is involved with VIEs as a passive investor in debt securities (rated and unrated) and equity interests issued by VIEs and as a joint venture partner in an insurance operation.

The Company generally determines whether it is the primary beneficiary or a significant interest holder based on a qualitative assessment of the VIE. This includes a review of the VIE’s capital structure, contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued, and the Company’s and its related parties’ interests in the entity that either create or absorb variability. Both the design of the VIE and the related risks the entity was designed to expose the variable interest holders to are evaluated in the determination of consolidation. As of August 31, 2010 and November 30, 2009, there was no significant off-balance sheet exposure associated with VIEs.

F-33

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

For VIEs with attributes consistent with that of an investment company or a money market fund, the primary beneficiary is the party or group of related parties that absorbs a majority of the expected losses of the VIE, receives the majority of the expected residual returns of the VIE, or both.

For all other VIEs, the primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.

The Company defines a variable interest as significant relative to the materiality of its interest in the VIE. The Company calculates its maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where the Company has also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. Other interest holders in VIEs in which the Company is the primary beneficiary and owner generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to the Company.

Balance Sheet Classification

The Company’s interest in the assets and liabilities of consolidated and unconsolidated VIEs were classified on the Condensed Combined Balance Sheets as follows as of:

	August 31, 2010				November 30, 2009
	Consolidated		Unconsolidated		Consolidated		Unconsolidated
(in millions)	VIEs		VIEs (a)		VIEs		VIEs (b)
Assets:
Investments	$	7,124	$	1,994	$	1,983	$	2,123
Other asset accounts		127		—		106		—
Total	$	7,251	$	1,994	$	2,089	$	2,123
Liabilities:
Policyholder liabilities	$	797	$	—	$	712	$	—
Other liabilities(c)		250		—		166		—
Total	$	1,047	$	—	$	878	$	—

(a)	Total assets owned by unconsolidated VIEs as of August 31, 2010, consisted of $12.5 billion of Investments.
(b)	Total assets owned by unconsolidated VIEs as of November 30, 2009, consisted of $12.1 billion of Investments and $381 million of Other assets.
(c)	Other liabilities include noncontrolling interest of $146 million and $111 million as of August 31, 2010 and November 30, 2009, respectively.

F-34

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

6. Derivatives

The Company uses derivatives and other financial instruments as part of its financial risk management programs and as part of its investment operations. Derivatives are financial arrangements among two or more parties with returns linked to or “derived” from some underlying equity, debt, commodity or other asset, liability, or foreign exchange rate or other index, or the occurrence of a specified payment event. Derivative payments may be based on interest rates, exchange rates, prices of certain securities, commodities, or financial or commodity indices, or other variables. Derivatives, with the exception of bifurcated embedded derivatives, are reflected at fair value in the Condensed Combined Balance Sheets in “Other invested assets” and “Other liabilities.” None of the derivatives has been designated as a hedge for accounting purposes. Bifurcated embedded derivatives are recorded with the host contract on the Condensed Combined Balance Sheets.

The following tables present the notional amounts and fair values of derivative instruments:

	August 31, 2010										November 30, 2009
	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
	Notional					Notional					Notional					Notional
	Amount					Amount		Fair			Amount		Fair			Amount		Fair
(in millions)	(a)		Fair Value			(a)		Value			(a)		Value			(a)		Value
Interest rate contracts	$	575	$	121		$	343	$	69		$	703	$	94		$	1,336	$	53
Foreign exchange contracts		5,849		161			571		3			4,374		367			302		2
Equity contracts		150		1			71		—			209		3			65		1
Credit contracts (b)		10		—			101		44			10		—			63		3
Other contracts (b)		84		—			3,384		107			85		3			4,420		203
Subtotal		6,668		283			4,470		223			5,381		467			6,186		262
Counterparty netting (c)		—		(79	)		—		(79	)		—		(64	)		—		(64	)
Cash collateral (d)		—		(108	)		—		—			—		(100	)		—		8
Total	$	6,668	$	96		$	4,470	$	144		$	5,381	$	303		$	6,186	$	206

(a)	Notional amount represents a standard of measurement of the volume of derivatives business. Notional amount is not a quantification of market risk or credit risk and is not recorded on the Condensed Combined Balance Sheets. Notional amounts generally represent those amounts used to calculate contractual cash flows to be exchanged and are not paid or received, except for certain contracts such as currency swaps and certain credit contracts.
(b)	Credit contracts reflects bifurcated embedded credit derivatives that are related to synthetic securities and recorded in Bonds held for trading. Other contracts includes $95 million and $186 million as of August 31, 2010 and November 30, 2009, respectively, of bifurcated embedded derivatives related to Guaranteed Minimum Accumulation Value (GMAV) benefit recorded in Policyholder contract deposits and $9 million of bifurcated embedded derivatives related to a reinsurance agreement that is recorded in Other liabilities as of November 30, 2009.
(c)	Represents netting of derivative exposures covered by a qualifying master netting agreement.
(d)	Represents offset for cash collateral posted (received).

F-35

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The following table presents the effect of the Company’s derivative instruments in the Condensed Combined Statements of Income:

	Gains (losses) recognized in earnings*
	for the nine months ended August 31,
(in millions)	2010			2009
Interest rate contracts	$	90		$	52
Foreign exchange contracts		167			(48	)
Equity contracts		(21	)		(5	)
Credit contracts		—			4
Other contracts		95			2
Total	$	331		$	5

* For the nine months ended August 31, 2010 and 2009, the Company recognized gains (losses) of $169 million and $28 million in Net realized capital losses, respectively, and income of $162 million and $(23) million in Policyholder benefits and claims incurred, respectively.

7. Commitments, Contingencies, and Guarantees

In the normal course of business, various commitments and contingent liabilities are entered into or apply to the Company and certain of its subsidiaries. In addition, the Company guarantees various obligations of certain subsidiaries.

Although the Company cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including those referred to below, it is possible that such liability could have a material adverse effect on the Company’s financial condition or its results of operations or combined cash flows for an individual reporting period.

(a) Litigation and Investigations

Litigation Arising from Operations — The Company and its subsidiaries, in common with the insurance and financial services industries in general, is subject to litigation, including claims for punitive damages in the normal course of business. Litigation arising from claims settlement activities is generally considered in the establishment of the Company’s liability for Policyholder Funds. However, the potential for increasing jury awards and settlements makes it difficult to assess the ultimate outcome of such litigation.

Argentina Insurance Class Action Suits

ALICO Compania de Seguros, S.A, the Company’s Argentine subsidiary, along with several banks and credit companies providing certain insurance policies have been named as defendants in ten cases filed by various civil associations since 2007. The suits allege that the Argentine subsidiary’s credit life insurance policy fees were excessive and therefore violated the Argentine Consumer’s Protection Act. The plaintiffs in these cases generally seek reimbursement of a portion of the premiums charged for the last three years and in five instances, annulment of the existing policies. No specific amounts have been claimed. The cases are in various stages of litigation, although none has yet been decided by a court of law. No judgments have been awarded to any of the plaintiffs in these cases and the damages to be paid, if any, cannot be reliably estimated at this time.

F-36

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

United Kingdom Enhanced Fund Complaints

The Company’s United Kingdom branch suspended withdrawals from its Enhanced Fund linked to its Premier Access Bond product on September 15, 2008, and then announced closing of that fund as of December 14, 2008, resulting in a number of individual complaints to the United Kingdom Financial Ombudsman Service (“FOS”), an independent body set up by statute to informally review and settle complaints between consumers and businesses. The Company has provided information to the UK regulator, the Financial Services Authority (“FSA”) regarding the fund and the branch’s actions in closing it and to the FOS with regard to the investor complaints. No lawsuits have been filed to date against the United Kingdom branch relating to the closure of the Enhanced Fund.

Alico Life International Ltd’s Italian Internal Fund Suspensions

Certain policyholders of certain unit-linked funds offered by the Italian branch of Alico Life International Ltd. (“ALIL”), the Irish subsidiary of the Company, have either commenced or threatened litigation against ALIL as a result of the suspension of withdrawals from and diminution in value of those funds since late 2008, alleging damages for misrepresentation, mis-selling, improper or inadequate disclosures and other related claims. Most of the lawsuits are in early stages of litigation. In March 2010, ALIL learned that the public prosecutor in Milan had opened a formal investigation into the actions of employees of ALIL, as well as employees of ALIL’s major distributor, based on a policyholder’s complaint.

ALIL is cooperating with the Italian and Irish regulatory authorities, which have jurisdiction in connection with this matter, and is in discussions to address their concerns as well as those of the affected policyholders. As of August 31, 2010, the Company and ALIL have adequately accrued for estimated financial exposures related to this matter based on the current facts and circumstances. The ultimate resolution of this matter could have a material adverse effect on the Company’s combined and consolidated results of operations or cash flows for an individual reporting period.

(b) Commitments

In the normal course of business, the Company enters into commitments to invest in limited partnerships, private equities and mutual funds and to purchase and develop real estate. These commitments totaled $149 million as of August 31, 2010, $16 million of which were with affiliates. As of November 30, 2009, commitments totaled $51 million, of which $33 million were with affiliates. These commitments are due over the next four years.

(c) Contingencies

Liability for Future policy benefits

Although the Company regularly reviews the adequacy of the established liability for Future policy benefits, there can be no assurance that the ultimate liability for Future policy benefits will not develop adversely and materially exceed the current liability for Future policy benefits. Legal expenses incurred in connection with any contingencies are expensed as incurred.

Japan Policyholder Protection Commission

Japan has established a Policyholder Protection Commission as a contingency to protect policyholders against the insolvency of life insurance companies in Japan through assessments to companies licensed to provide life insurance. The recorded liability associated with the Japan Policyholder Protection Commission assessment was $22 million and $32 million as of August 31, 2010 and November 30, 2009, respectively.

F-37

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Potential IRS Withholding Claim

U.S. Internal Revenue Service Ruling No. 2004-75 (“IRS Ruling”) provides that in certain cases the income portion of a distribution received by a resident of a foreign country from life insurance and annuity contracts issued by a foreign branch of a U.S. life insurance company is U.S. source income to the foreign country investor or policyholder. A U.S. life insurance company is required to withhold 30 percent of the income portion distributed to the foreign resident unless it falls under a permissible exception. Certain insurance or investment products — those with a cash value, savings or investment elements — when sold by foreign branches of ALICO’s U.S. entity, are potentially encompassed by the IRS Ruling.

ALICO has not withheld taxes on payments by ALICO’s branches for insurance or investment products sold to customers that may be encompassed by the IRS Ruling, based on its position that ALICO will not be subject to the IRS Ruling due to the “80/20” Rule. Under the “80/20” Rule, U.S. companies with foreign source income in excess of 80 percent are not subject to U.S. tax withholding obligations for payments they make which are classified as “interest.”

On March 4, 2010, ALICO entered into a closing agreement with the Commissioner of the IRS with respect to the U.S. withholding tax issue arising from payments by foreign branches of a life insurance company incorporated under U.S. law. The closing agreement provides transitional relief under Section 7805(b) of the Code to ALICO, such that ALICO’s foreign branches will not be required to withhold U.S. income tax on the income portion of payments made pursuant to ALICO’s life insurance and annuity contracts (“Covered Payments”) under IRS Revenue Ruling 2004-75 for any tax periods beginning on January 1, 2005 and ending on December 31, 2013 (the “Deferral Period”). The closing agreement provides that ALICO will submit a plan to the IRS within 90 days after the close of its sale to MetLife (See Note 1, Sale of ALICO to MetLife, Inc.), indicating the steps ALICO will take (on a country by country basis) to ensure that no substantial amount of U.S. withholding tax will arise from Covered Payments made by ALICO’s foreign branches to foreign customers after the Deferral Period. In addition, the closing agreement requires that such plan be updated in quarterly filings with the IRS. The closing agreement is final and binding upon ALICO and the IRS; provided, however, that the agreement can be reopened in the event of malfeasance, fraud or a misrepresentation of a material fact, and is subject to change of law risk that occurs after the effective date of the closing agreement (with certain exceptions). In addition, the closing agreement provides that no legislative amendment to the 80/20 rule in Section 861(a) (1) (A) of the Code shall shorten the Deferral Period, regardless of when such amendment is enacted. ALICO expects that the plan it is required to deliver to the IRS may involve the transfer of businesses from certain of the foreign branches of ALICO to one or more existing or newly-formed foreign affiliates of ALICO; however, ALICO has not completed this plan. Due to both the timing of the creation of the plan and the uncertainty related to the plan and its execution, no reasonable estimation of the amount of expenses related to its creation and execution can be made at this time. Additionally, no range of amounts is estimable due to these uncertainties. As a result of the IRS ruling, the Company released its contingency reserve of $37 million in the first quarter of 2010.

There can be no assurance that ALICO will achieve the plan presented to the IRS within the required time frame of December 31, 2013 because of regulatory approvals and other requirements. Failure to achieve the plan timely could have a material adverse effect on the Company’s future revenues or expenses or both.

(d) Guarantees

The Company had guarantees outstanding of $48 million and $47 million supporting real estate deposit returns and future rental payments as of August 31, 2010 and November 30, 2009, respectively. The majority of these guarantees expire in time periods longer than five years.

Effective July 1, 2009, the Company transferred the insurance business and the assets and liabilities held by its Taiwan Branch to an affiliate, American International Assurance Company (Bermuda) Ltd., (“AIA (B)”). These businesses had been historically managed by AIA (B).

F-38

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

As part of this business transfer, the Company and AIA (B) are jointly and severally liable for all debts of the Taiwan Branch for a period of two years from the closing date, i.e. until July 1, 2011. Should AIA (B) fail to meet the debt and policy obligations related to this transferred business, the Company is legally bound to meet those obligations. The Company believes the probability of this occurring to be remote since the assets associated with the transferred business adequately fund the liability obligations as determined by local regulations.

8. Employee Compensation and Benefits Plans

Share-based Employee Compensation Plans

Employees of the Company participate in AIG employee awards. In December 2009, AIG introduced new compensation awards which were granted to the Company’s employees. For the nine months August 31, 2010, the Company recorded an expense and an obligation of $15 million related to these new awards.

Liability Awards

In December 2009, certain highly compensated employees were granted various share-based grants, including restricted stock units, linked to AIG’s stock, but which require cash settlement. Cash settled awards are recorded as a liability until the final payout is made or the award is replaced with a stock-settled award. At the end of each reporting period, any unsettled award or unvested Restricted Stock Unit (“RSU”) is re-measured based on the change in fair value of one share of AIG Common Stock and the liability and expense are adjusted accordingly.

Stock Salary

Stock salary is determined as a dollar amount through the date that salary is earned, accrues at the same time or times as the salary would otherwise be paid in cash and vests immediately upon grant. Certain executive officers of the Company received Stock salary awards in fiscal first quarter 2010, which are settled on either the first or third anniversary of the grant in accordance with the terms of an employee’s award. These stock salary grants, issued in December 2009, were awarded retroactively to January 1, 2009, in the form of immediately vested RSUs, and the number of units awarded was based on the value of AIG common stock on the grant date. The RSUs will be settled in cash based on the value of AIG common stock on the applicable settlement date.

Long-Term Performance Units (LTPUs)

In May, 2010, the stock salary program was replaced by LTPUs. Under LTPU, certain executive officers of the Company will receive cash payments to be determined by the value of certain AIG issued hybrid securities as well as AIG common stocks. The value of one LTPU was set at $1,000 on the grant date and will be remeasured until settlement.

Troubled Asset Relief Program (“TARP”) RSU’s and Other Long Term Incentive Plans

TARP RSUs were granted to certain employees of the Company on December 28, 2009 based on achievement of objective performance metrics and, when vested and transferable, these RSUs will be settled in 25 percent installments in proportion to AIG’s reduction of its TARP obligations. These TARP RSUs vest on the second anniversary of the grant and are subject to transferability restrictions for an additional year after vesting. As a result, TARP RSUs will be proportionally cash-settled three years from the date of grant for vested participants provided that AIG settles at least 25 percent of its TARP obligation.

Additionally, certain employees were awarded a fixed number of RSU’s in March 2010, for which the Company started to record an expense and an obligation during fiscal first quarter 2010. These RSU’s will be subsequently cash-settled in March 2013 based on the value of AIG Common Stock on the settlement date.

F-39

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

Employee Benefits

During the nine months ended August 31, 2010 and 2009, the Company contributed $14 million and $19 million to its non-U.S. ALICO sponsored defined benefit pension plans, respectively, and paid $21 million and $25 million in direct benefit payments to participants, respectively. The Company expects to contribute $4 million to its non-U.S. ALICO sponsored defined benefit pension plans and to pay $8 million in direct benefit payments to participants during the remainder of fiscal year 2010. These estimates are subject to change since contribution decisions are affected by various factors, including ALICO’s liquidity, plan asset dispositions, market performance, and management’s discretion.

9. Related Party Transactions

Investments

As of August 31, 2010, and November 30, 2009, the Company has investments in related parties of $167 million and $725 million, respectively, which is composed of the following:

(a) Bonds available for sale

The Company has securities issued by another subsidiary of AIG, Castle Trust, which securitizes third-party airplane leases. This investment was recorded at fair value of $121 million as of August 31, 2010, and $106 million as of November 30, 2009, resulting in a cumulative unrealized loss of $25 million and $76 million as of August 31, 2010 and 2009, respectively. Interest income of $6 million and $7 million relating to this investment was recognized for the nine month periods ended August 31, 2010 and 2009, respectively. The Company reported Accumulated other comprehensive income of $35 million and $13 million for the nine months ended August 31, 2010 and 2009, respectively.

(b) Bonds held for trading

In accordance with the definitive sale agreement of the Company to MetLife, ALICO transferred its interest in Maiden Lane II (ML II) to The Variable Annuity Life Insurance Company, an AIG subsidiary on September 7, 2010 for $22 million, its carrying value as of August 31, 2010.

(c) Common and preferred shares available for sale

At November 30, 2009, the Company owned 3,169,589 shares (2.3 percent) of the common stock of AIG. This investment was recorded at fair value of $90 million as of November 30, 2009. On March 24, 2010, the Company sold all of its AIG common shares to its parent, AIG, for $110 million or $34.70 per share, which was based on the volume-weighted average price over a ten-day business period between March 10, 2010 and March 23, 2010, as quoted by Bloomberg L.P. The Company recognized a net realized capital gain of $108 million on the sale for the nine months ended August 31, 2010. No dividends were paid on these shares during the nine months ended August 31, 2010 and 2009.

(d) Mortgage and other loans receivable

The Company held a loan receivable from AIG Funding Inc., which had an interest rate of 1.65 percent and was scheduled to mature on April 16, 2013. This receivable was settled in full in the fiscal quarter ended August 31, 2010 for $181 million. The balance of this loan was $174 million as of November 30, 2009.

F-40

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

The Company entered into a loan receivable agreement denominated in Polish zlotys with AIG Bank Polska S.A., a subsidiary of AIG. The principal amount outstanding on the loan as of November 30, 2009, was $23 million and was scheduled to mature in 2014. Annual interest rate on the loan was 7.85 percent until November 28, 2009, after which interest rate was reset and based on the one-year Warsaw Interbank Offered Rate (“WIBOR”) plus 1.15 percent until final settlement. In the fiscal quarter ended May 31, 2010, under an early payment provision, AIG Bank Polska S.A made a full settlement of the loan balance.

The Company entered into an agreement with an affiliate, AIG Kabushiki Kaisha on January 1, 2007, to loan its excess cash to AIG Kabushiki Kaisha at short-term rates tied to the one-week Tokyo Interbank Offered Rate (TIBOR) plus 0.25 percent. The principal amount was settled in full during the fiscal quarter ending February 28, 2010. The principal amount outstanding on the loan as of November 30, 2009 was $29 million.

The Company had a loan receivable of $6 million with AIG Global Real Estate as of November 30, 2009. This loan was an 18-month loan with an interest rate of 3.50 percent. The loan was settled in full during the fiscal quarter ending February 28, 2010.

The Company had no related party loans receivable as of August 31, 2010 and $232 million as of November 30, 2009, as listed above. Interest income earned on related party loans was $13 million and $3 million for the nine month periods ended August 31, 2010 and 2009, respectively.

F-41

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

(e) Other invested assets

(i) Derivative Transactions

As part of its risk management program, the Company routinely entered into interest rate and foreign currency swaps with AIGFP, an entity that is controlled by AIG. As part of the closing conditions associated with the definitive agreement to sell the Company to MetLife, ALICO has unwound and settled all remaining uncollateralized interest rate swaps and foreign exchange swaps with AIGFP in May 2010. The notional amounts and fair value of these related-party transactions, including the AIG foreign currency indemnification discussed below, are presented in the following table for the periods ended August 31, 2010 and November 30, 2009.

	August 31, 2010										November 30, 2009
	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
	Notional					Notional					Notional					Notional
	Amount		Fair			Amount		Fair			Amount		Fair			Amount		Fair
(in millions)	(a)		Value			(a)		Value			(a)		Value			(a)		Value
Interest rate contracts	$	468	$	109		$	310	$	63		$	560	$	83		$	1,284	$	49
Foreign exchange contracts		—		—			—		—			1,220		263			2		—
Subtotal		468		109			310		63			1,780		346			1,286		49
Counterparty netting (b)		—		(63	)		—		(63	)		—		(49	)		—		(49	)
Cash collateral (c)		—		(44	)		—		—			—		(34	)		—		2
Total	$	468	$	2		$	310	$	—		$	1,780	$	263		$	1,286	$	2

(a)	Notional amount represents a standard of measurement of the volume of derivatives business of the Company. Notional amount is not a quantification of market risk or credit risk and is not recorded on the Combined Balance Sheet. Notional amounts generally represent those amounts used to calculate contractual cash flows to be exchanged and are not paid or received, except for certain contracts such as currency swaps and certain credit contracts.
(b)	Represents netting of derivative exposures covered by a qualifying master netting agreement.
(c)	Represents offset for cash collateral posted (received).

The Company was party to an Indemnity Agreement with AIG, under which AIG indemnified the Company against foreign currency losses on approximately 105 billion Japanese yen resulting from unfavorable exchange rate movements against the U.S. dollar. This arrangement served as an economic hedge against a portfolio of U.S. dollar denominated fixed maturity investments held by ALICO’s Japan branch. However, it was not designated as a hedge for accounting purposes. The fair value of this arrangement, which was accounted for as a derivative instrument was settled for $292 million in August of 2010, and was an asset of $263 million as of November 30, 2009. The income recorded by the Company for this transaction is not taxable.

F-42

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

As a result of the related party derivative transactions, the Company recorded the following gains (losses) for the nine months ended August 31, 2010 and 2009:

	Gains recognized in earnings
	for the nine months ended August 31,
(in millions)	2010		2009
Interest rate contracts	$	86	$	50
Foreign exchange contracts		29		16
Total	$	115	$	66

(ii) Other invested assets also include investments in partially owned companies and investments in affiliated hedge funds and partnerships under the equity method of accounting.

Related Party Security Lending

The Company participated in a security lending program managed by an affiliate, AIG Global Security Lending. The lending program was terminated and all positions were settled in March 2010 and as of August 31, 2010, there were no assets or liabilities remaining in the program. The fair value of assets in the security lending program as of November 30, 2009, was $305 million and the fair value of assets received as collateral was $244 million, excluding $69 million in letters of credit received as collateral.

There were no fees paid or payable to affiliates in 2010 or 2009 for acting as an agent in securities lending transactions.

Related Party Reinsurance Agreements

In the ordinary course of business, the Company places reinsurance with other insurance companies in order to limit the potential for losses arising from large risks and to provide additional capacity for future growth as part of its risk management program. A number of these reinsurance agreements are with affiliates.

In addition to a related party reinsurance agreement, in 2004, ALICO entered into an agreement with RGA Reinsurance Company (RGA), a third-party reinsurer company, to reinsure certain Single Premium Deferred Annuity policies written in Japan. Independent of ALICO entering into this agreement, AIG entered into an agreement with RGA to provide investment performance guarantees with respect to the return on funds withheld by ALICO pursuant to the reinsurance treaty between ALICO and RGA. As of March 31, 2010, the agreement was terminated as part of the closing conditions associated with the definitive agreement to sell ALICO to MetLife (See Note 1, Sale of the Company to MetLife Inc.).

Long-term debt

The Company’s long-term debt consisted primarily of borrowings from affiliates. In accordance with the definitive agreement for the sale of the Company to MetLife, the Company settled all outstanding intercompany debt during August of 2010. The Company paid AIG Funding Inc. $310 million which represents the repayment of a $300 million demand note plus accrued interest of $10 million and $181 million, which represents repayment of 15 billion Japanese Yen promissory note. The Company also paid AIG $210 million for the settlement of a $528 million demand note collateralized and offset by a $325 million tax receivable due from AIG, plus accrued interest of $7 million. The Company’s balance of loans and notes payable was approximately $1.0 billion as of November 30, 2009. The Company recognized related party interest expense on borrowings of $29 million and $10 million for the nine months ended August 31, 2010 and 2009, respectively.

F-43

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

General Corporate Services and Costs

The Company receives a number of services from AIG. Amounts expensed by the Company to AIG for these services and costs were $15 million and $21 million for the nine months ended August 31, 2010 and 2009, respectively. Additional allocated services and costs were not and will not be reimbursed by the Company to AIG. These unreimbursed allocated costs were $57 million and $55 million for the nine months ended August 31, 2010 and 2009, respectively. The total cost of these reimbursed and unreimbursed general corporate services and costs totaled $72 million and $76 million for the nine months ended August 31, 2010 and 2009, respectively.

Related Party Services and Cost-Sharing Agreements

In addition to the general corporate services provided by the Parent, the Company has a number of various management, service contracts and cost-sharing agreements with other AIG subsidiaries. For the nine months ended August 31, 2010 and 2009, the Company recognized net costs of $82 million and $155 million, respectively, from affiliates for these services, which are included mainly in Policy acquisition and other expenses.

Payment of Outstanding Balances Due from Corporate Services and Related Party Services

The Company generally settles its payables to and receivables from related parties in cash, although in some instances agreements might provide for right of offset against other related obligations. The Company had a net receivable of $77 million and $60 million in Other assets as of August 31, 2010 and November 30, 2009 respectively, from transactions resulting from general corporate services and costs and related party services and cost-sharing agreements.

F-44

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

10. Income Taxes

The Company generates substantially all of its income from foreign branches and subsidiaries. Income generated by branch operations is subject to tax currently in both the foreign and U.S. jurisdictions. Income generated by subsidiary operations is taxed currently in the foreign jurisdiction and taxed in the U.S. either currently if it is considered U.S. “subpart F” income or in later years when the income is distributed to the U.S. The Company records a deferred tax liability for U.S. income tax on undistributed income of its foreign subsidiaries when it no longer plans to permanently reinvest the income with the subsidiary.

Actual income tax expense from operations differs from the statutory U.S. federal amount computed by applying the federal income tax rate due to the following:

	For the nine months ended August 31,
	2010						2009
(in millions)	Tax			Rate			Tax			Rate
U.S. Federal income tax expense at statutory rate	$	575			35.0	%	$	204			35.0	%
Adjustments:
Effect of foreign operations		20			1.2			(12	)		(2.1	)
Indemnity agreement		(10	)		(0.6	)		(5	)		(0.9	)
Withholding tax		(12	)		(0.7	)		—			—
IRS interest allocation		—			—			(28	)		(4.8	)
Other		8			0.5			7			1.2
Actual income tax expense	$	581			35.4	%	$	166			28.4	%

During the nine month period ended August 31, 2010, the Company revised its estimate of the tax effects related to the AIG restructuring and increased the tax basis in its net assets. As a result, the Company recorded an additional deferred tax asset of $175 million, offset by a $137 million increase in the valuation allowance. In addition, due to certain contractual obligations associated with AIG’s sale of the Company to MetLife, the Company also recorded an additional $90 million valuation allowance. All of these adjustments were recorded directly to Shareholder’s net investment. The net impact of the adjustments was a $52 million decrease to Shareholder’s net investment.

F-45

American Life Insurance Company and the Transferred Subsidiaries

Notes to Condensed Combined Financial Statements (unaudited) — (Continued)

11. Subsequent Events

The Company has evaluated transactions for consideration as subsequent events through October 30, 2010.

In accordance with the definitive sale agreement of the Company to MetLife, ALICO transferred its interest in ML II to The Variable Annuity Life Insurance Company, an AIG subsidiary on September 7, 2010 for $22 million, its carrying value on August 31, 2010.

On October 27, 2010, Alico sold its investments in two joint ventures in Peru for approximately $170 million cash payment. The following table summarizes assets and liabilities of the two joint ventures included in the Balance Sheet at August 31, 2010 and November 30, 2009.

	August 31,		November 30,
(in millions)	2010		2009
Total assets	$	1,132	$	975
Total Liabilities	$	857	$	767
Non-Controlling Interest		146		111

F-46

EX-99.2

Exhibit 99.2

MetLife, Inc.
Unaudited Pro Forma Condensed Combined Financial Statements

On November 1, 2010, MetLife, Inc. acquired all of the outstanding shares of capital stock of American Life Insurance Company and Delaware American Life Insurance Company (together, “ALICO”) for consideration transferred of $16,400 million, which included cash of $7,206 million and securities of MetLife, Inc. valued at $9,194 million, based on the opening price of MetLife, Inc.’s common stock on November 1, 2010, the closing date (the “Acquisition”).

The Acquisition was made pursuant to a stock purchase agreement, dated as of March 7, 2010, by and among MetLife, Inc., American International Group, Inc. (“AIG”) and ALICO Holdings LLC (“ALICO Holdings”) (the “Stock Purchase Agreement”). On October 28, 2010 and October 29, 2010, respectively, MetLife, Inc., AIG and ALICO Holdings entered into (i) a letter agreement relating to the MetLife, Inc. equity units forming part of the consideration (the “Equity Unit Amendment”) and (ii) a letter agreement relating to AIG’s guarantee obligations, pursuant to which modifications were made to the Stock Purchase Agreement (as so amended, the “Amended Stock Purchase Agreement”).

The unaudited pro forma condensed combined financial statements and accompanying notes present the impact of the Acquisition on MetLife, Inc.’s financial position and results of operations under the acquisition method of accounting which is more fully described in the notes to unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet as of September 30, 2010, combines the historical interim condensed consolidated balance sheet of MetLife, Inc. as of September 30, 2010 with the historical condensed combined balance sheet of ALICO as of August 31, 2010, giving effect to the Acquisition as if it had occurred on September 30, 2010. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 and the year ended December 31, 2009 combine the historical interim condensed consolidated statement of operations of MetLife, Inc. for the nine months ended September 30, 2010 with the historical condensed combined statement of income of ALICO for the nine months ended August 31, 2010, and the historical consolidated statement of operations of MetLife, Inc. for the year ended December 31, 2009 with the historical combined statement of income of ALICO for the year ended November 30, 2009, respectively, giving effect to the Acquisition as if it had been completed on January 1, 2009. The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are directly attributable to the Acquisition and factually supportable, and with respect to the statements of operations, are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes. In addition, the unaudited pro forma condensed combined financial statements were derived from and should be read in conjunction with, the:

1

• audited historical consolidated financial statements of MetLife, Inc. as of and for the year ended December 31, 2009 and the related notes included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009, as amended;

• audited historical combined financial statements of ALICO and the related notes as of and for the year ended November 30, 2009 which were filed as an exhibit to the Current Report on Form 8-K filed by MetLife, Inc. on August 2, 2010;

• unaudited historical interim condensed consolidated financial statements of MetLife, Inc. as of and for the nine months ended September 30, 2010 and the related notes included in MetLife Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010; and

• unaudited historical condensed combined financial statements of ALICO as of and for the nine months ended August 31, 2010 and the related notes, included as Exhibit 99.1 to the Current Report on Form 8-K to which these unaudited pro forma condensed combined financial statements are included as an exhibit.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Acquisition been effective during the periods presented or the results that may be obtained by the combined company in the future. The unaudited pro forma condensed combined financial statements as of and for the periods presented do not reflect future events that may occur after the Acquisition, including, but not limited to, expense efficiencies or revenue enhancements arising from the Acquisition. They also do not give effect to certain one-time charges that MetLife, Inc. expects to incur such as restructuring and integration costs. Future results may vary significantly from the results reflected in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles (“U.S. GAAP”), and reflect changes to acquired assets and assumed liabilities to record their preliminary estimated fair values, which are based on certain estimates and assumptions. It is likely that the actual adjustments reflected in the final acquisition accounting, that will consider additional available information, will differ from the pro forma adjustments and it is possible the differences may be material. MetLife, Inc.’s management believes that the pro forma adjustments give appropriate effect to the assumptions used and are properly applied in the unaudited pro forma condensed combined financial statements.

2

MetLife, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2010

	Historical					Pro Forma			Reclassification				Pro Forma
	MetLife			ALICO		Adjustments			Adjustments			Notes	Combined
	(In millions, except per share data)
	September 30, 2010			August 31, 2010
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	$	260,564		$	77,235	$	(1,004	)	$	(8,429	)	6(a)-(b), 7(a), 8(a)	$	328,366
Equity securities available-for-sale, at estimated fair value		2,865			655		(60	)		(326	)	7(b)-(c), 8(a)		3,134
Trading securities, at estimated fair value		3,987			12,799		(681	)		1,504		6(b), 7(c)-(d), 8(a)-(b)		17,609
Mortgage loans, net		59,938			1,103		(330	)		—		6(c)		60,711
Policy loans		10,230			1,554		156			—		6(d), 8(a)		11,940
Real estate and real estate joint ventures held-for-investment		6,981			—		135			618		6(e), 7(b), (e)-(f)		7,734
Real estate held-for-sale		9			—		—			—				9
Other limited partnership interests		5,948			—		—			—				5,948
Short-term investments		11,590			5,283		119			2,287		6(b), 7(a), (d), (g), 8(a)		19,279
Other invested assets		16,571			1,975		(20	)		(50	)	7(c), (e), (h), 8(a)		18,476
Total investments		378,683			100,604		(1,685	)		(4,396	)			473,206
Cash and cash equivalents		14,557			1,046		(6,943	)		4,749		6(b), (f), 7(a), (d), (g), 8(a)-(c)		13,409
Accrued investment income		3,469			1,084		(17	)		53		7(h), 8(a)		4,589
Premiums, reinsurance and other receivables		18,654			1,105		(6	)		—		8(a)		19,753
Deferred policy acquisition costs and value of business acquired		17,463			10,871		(3,743	)		—		6(g)-(h)		24,591
Current income tax recoverable		178			—		—			—				178
Goodwill		4,966			—		5,361			—		6(i)		10,327
Other assets		6,913			1,310		131			(148	)	6(j)-(o), 7(f), 8(a),(c)		8,206
Separate account assets		172,372			236		—			—				172,608
Total assets	$	617,255		$	116,256	$	(6,902	)	$	258			$	726,867
Liabilities and Stockholders’ Equity
Liabilities:
Future policy benefits	$	143,686		$	26,773	$	(682	)	$	—		8(a)	$	169,777
Policyholder account balances		145,360			64,582		(101	)		—		8(a)		209,841
Other policyholder funds		8,912			4,473		(1,400	)		—		6(p), 8(a)		11,985
Policyholder dividends payable		834			—		—			—				834
Policyholder dividend obligation		2,014			—		—			—				2,014
Payables for collateral under securities loaned and other transactions		31,891			—		—			—				31,891
Bank deposits		9,362			—		—			—				9,362
Short-term debt		2,057			—		—			—				2,057
Long-term debt		24,512			46		2,775			—		6(a), (q)		27,333
Collateral financing arrangements		5,297			—		—			—				5,297
Junior subordinated debt securities		3,191			—		—			—				3,191
Deferred/Current income tax payable		3,543			2,703		(3,256	)		—		6(r)		2,990
Other liabilities		17,455			1,988		5,139			258		6(r)-(s), (u)-(w), 7(h), 8(a)		24,840
Separate account liabilities		172,372			236		—			—				172,608
Total liabilities		570,486			100,801		2,475			258				674,020
Contingencies, Commitments and Guarantees
Redeemable noncontrolling interest in partially owned consolidated subsidiaries		—			95		—			—				95
Stockholders’ Equity:
Preferred stock, par value $0.01 per share		1			—		—			—				1
Series B contingent convertible preferred stock, par value $0.01 per share		—			—		1			—		6(x)		1
Common stock, par value $0.01 per share		9			—		1			—		6(y)		10
Additional paid-in capital		20,451			—		5,945			—		6(z)		26,396
Retained earnings		22,096			—		—			—				22,096
Treasury stock, at cost		(172	)		—		—			—				(172	)
Shareholder’s net investment		—			12,882		(12,882	)		—		6(aa)		—
Accumulated other comprehensive income		4,030			2,296		(2,296	)		—		6(bb)		4,030
Total stockholders’ equity		46,415			15,178		(9,231	)		—				52,362
Noncontrolling interests		354			182		(146	)		—		8(a)		390
Total equity		46,769			15,360		(9,377	)		—				52,752
Total liabilities and stockholders’ equity	$	617,255		$	116,256	$	(6,902	)	$	258			$	726,867

See accompanying notes to unaudited pro forma condensed combined financial statements.

3

MetLife, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2010

	Historical					Pro Forma			Reclassification				Pro Forma
	MetLife			ALICO		Adjustments			Adjustments			Notes	Combined
	(In millions, except per share data)
	September 30, 2010			August 31, 2010
Revenues
Premiums	$	20,078		$	7,620	$	(160	)	$	(902	)	7(i), 8(a)	$	26,636
Universal life and investment-type product policy fees		4,345			—		(115	)		902		6(p), 7(i)		5,132
Net investment income		12,822			2,810		(583	)		—		6(cc)		15,049
Other revenues		1,681			5		—			—				1,686
Net investment gains (losses)		954			142		(351	)		—		6(dd)-(ee), 8(a), (d)		745
Total revenues		39,880			10,577		(1,209	)		—				49,248
Expenses
Policyholder benefits and claims		21,952			5,913		(198	)		(1,507	)	6(s)-(t), 7(j), 8(a)		26,160
Interest credited to policyholder account balances		3,458			—		—			1,507		7(j)		4,965
Policyholder dividends		1,157			—		—			—				1,157
Other expenses		9,358			3,021		(842	)		—		6(ff)		11,537
Total expenses		35,925			8,934		(1,040	)		—				43,819
Income from continuing operations before provision for income tax		3,955			1,643		(169	)		—				5,429
Provision for income tax expense		1,259			581		(27	)		—		6(gg)		1,813
Income from continuing operations, net of income tax		2,696			1,062		(142	)		—				3,616
Less: Net income (loss) attributable to noncontrolling interests		(7	)		31		(22	)		—		8(a)		2
Income from continuing operations, net of income tax, attributable to shareholders		2,703			1,031		(120	)		—				3,614
Less: Preferred stock dividends		91			—		—			—				91
Income from continuing operations, net of income tax, attributable to common shareholders	$	2,612		$	1,031	$	(120	)	$	—			$	3,523
Earnings Per Share
Income per share from continuing operations, net of income tax, attributable to common shareholders
Basic	$	3.10											$	3.34
Diluted	$	3.08											$	3.32
Weighted average number of common shares outstanding
Basic		840												1,056
Diluted		847												1,063

See accompanying notes to unaudited pro forma condensed combined financial statements.

4

MetLife, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2009

	Historical						Pro Forma			Reclassification				Pro Forma
	MetLife			ALICO			Adjustments			Adjustments			Notes	Combined
	(In millions, except per share data)
	December 31, 2009			November 30, 2009
Revenues
Premiums	$	26,460		$	9,896		$	(165	)	$	(1,279	)	7(i), 8(a)	$	34,912
Universal life and investment-type product policy fees		5,203			—			(166	)		1,279		6(p), 7(i)		6,316
Net investment income		14,838			4,932			(959	)		—		6(cc)		18,811
Other revenues		2,329			5			—			—				2,334
Net investment gains (losses)		(7,772	)		(738	)		373			—		6(dd)-(ee), 8(a), (d)		(8,137	)
Total revenues		41,058			14,095			(917	)		—				54,236
Expenses
Policyholder benefits and claims		28,336			8,641			(249	)		(3,405	)	6(s)-(t), 7(j), 8(a)		33,323
Interest credited to policyholder account balances		4,849			—			—			3,405		7(j)		8,254
Policyholder dividends		1,650			—			—			—				1,650
Other expenses		10,556			4,268			(1,336	)		—		6(ff)		13,488
Total expenses		45,391			12,909			(1,585	)		—				56,715
Income (loss) from continuing operations before provision for income tax		(4,333	)		1,186			668			—				(2,479	)
Provision for income tax expense (benefit)		(2,015	)		379			320			—		6(gg)		(1,316	)
Income (loss) from continuing operations, net of income tax		(2,318	)		807			348			—				(1,163	)
Less: Income (loss) attributable to noncontrolling interests		(32	)		43			(13	)		—		8(a)		(2	)
Income (loss) from continuing operations, net of income tax, attributable to shareholders		(2,286	)		764			361			—				(1,161	)
Less: Preferred stock dividends		122			—			—			—				122
Income (loss) from continuing operations, net of income tax, attributable to common shareholders	$	(2,408	)	$	764		$	361		$	—			$	(1,283	)
Earnings Per Share
Loss per share from continuing operations, net of income tax, attributable to common shareholders
Basic	$	(2.94	)											$	(1.22	)
Diluted	$	(2.94	)											$	(1.22	)
Weighted average number of common shares outstanding
Basic		818													1,052
Diluted		818													1,052

See accompanying notes to unaudited pro forma condensed combined financial statements.

5

MetLife, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Description of Transaction

Under the terms of the Amended Stock Purchase Agreement, on November 1, 2010, MetLife, Inc. (i) paid $7,206 million to ALICO Holdings in cash, which included $406 million related to the settlement of intercompany balances and certain other closing adjustments, and (ii) issued to ALICO Holdings (a) 78,239,712 shares of MetLife, Inc.’s common stock, (b) 6,857,000 shares of Series B Contingent Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock (the “Series B Preferred Stock”) of MetLife, Inc., which will automatically convert into approximately 68,570,000 shares of MetLife, Inc.’s common stock upon a favorable vote of MetLife, Inc.’s common stockholders, and (c) 40,000,000 equity units of MetLife, Inc. (the “Equity Units”) with an aggregate stated amount at issuance of $3,000 million, initially consisting of (x) purchase contracts (the “Purchase Contracts”), obligating the holder to purchase, on specified future settlement dates, a variable number of shares of MetLife, Inc.’s common stock for a fixed price; and (y) an interest in each of three series of debt securities (the “Debt Securities”) issued by MetLife, Inc. Distributions on the Equity Units will be made quarterly, through contract payments on the Purchase Contracts and interest payments on the Debt Securities, initially at an aggregate annual rate of 5%.

Equity Unit Amendment

Pursuant to the original Stock Purchase Agreement, the Equity Units were to consist of (x) purchase contracts obligating the holder to purchase a variable number of shares of MetLife, Inc.’s common stock on specified future dates for a fixed price and (y) an interest in shares of MetLife, Inc.’s preferred stock. At a future date, shares of the preferred stock were to have been mandatorily exchanged for an interest in debt securities of MetLife, Inc., which would have been subject to remarketing and sold to investors.

The Equity Unit Amendment provides that the Equity Units consist of (x) Purchase Contracts obligating the holder to purchase a variable number of shares of MetLife, Inc.’s common stock on specified future dates for a fixed price and (y) an interest in the Debt Securities. Accordingly, there will not be any issuance and exchange of preferred stock, which no longer forms a part of the Equity Units, for an interest in debt securities of MetLife, Inc., as contemplated by the original Stock Purchase Agreement. The Debt Securities constituting part of the Equity Units will be subject to remarketing and sold to investors. Holders of the Equity Units who elect to include their Debt Securities in a remarketing can use the proceeds thereof to meet their obligations under the Purchase Contracts to purchase MetLife, Inc.’s common stock.

6

Cash Consideration

The $7,206 million cash portion of the purchase price was funded by MetLife, Inc. through the issuance of common stock and fixed and floating rate senior debt in August 2010, and with cash on hand.

In August 2010, MetLife, Inc. issued 86,250,000 shares of common stock at a public offering price of $42.00 per share for gross proceeds of $3,623 million. In connection with the offering of common stock, MetLife, Inc. incurred $94 million of issuance costs which has been recorded as a reduction of additional paid-in capital in MetLife, Inc.’s historical interim condensed consolidated balance sheet as of September 30, 2010. In addition, in August 2010, MetLife, Inc. issued senior notes in $3,000 million aggregate principal amount as follows:

• $250 million floating rate senior notes due August 6, 2013, with an interest rate equal to three-month LIBOR plus 1.25%;

• $1,000 million 2.375% fixed rate senior notes due February 6, 2014;

• $1,000 million 4.75% fixed rate senior notes due February 8, 2021; and

• $750 million 5.875% fixed rate senior notes due February 6, 2041.

In connection with the offering of the senior notes, MetLife, Inc. incurred $15 million of issuance costs which have been capitalized and included in other assets. These costs are being amortized over the respective terms of the senior notes. The shares of common stock and the fixed and floating rate senior notes issued during MetLife, Inc.’s 2010 third quarter are reflected in MetLife, Inc.’s historical interim condensed consolidated balance sheet as of September 30, 2010.

As a result of the offerings of common stock and senior notes, the amended commitment letter for a $5,000 million senior credit facility, which MetLife, Inc. signed on March 16, 2010, was terminated. During March 2010, MetLife, Inc. paid $28 million in fees related to this senior credit facility, all of which was expensed during the nine months ended September 30, 2010.

Common Stock, Series B Preferred Stock and Equity Units Issued to ALICO Holdings

Pursuant to the Amended Stock Purchase Agreement, on November 1, 2010, MetLife, Inc. issued 78,239,712 shares of its common stock to ALICO Holdings. The amount reflected in the unaudited pro forma condensed combined balance sheet of $3,200 million is based on the opening price of MetLife, Inc.’s common stock of $40.90 on the New York Stock Exchange on November 1, 2010.

Pursuant to the Amended Stock Purchase Agreement, MetLife, Inc. issued 6,857,000 shares of Series B Preferred Stock to ALICO Holdings. The Series B Preferred Stock will automatically convert into 68,570,000 shares of MetLife, Inc.’s common stock (subject to anti-dilution adjustments) upon a favorable vote of MetLife, Inc.’s common stockholders. If MetLife, Inc. fails to obtain this favorable vote of its common stockholders before the first anniversary of the closing of the Acquisition, then MetLife, Inc. must pay ALICO Holdings approximately

7

$300 million. The amount reflected in the unaudited pro forma condensed combined balance sheet of $2,805 million is based on the opening price of MetLife, Inc.’s common stock of $40.90 on the New York Stock Exchange on November 1, 2010. The Series B Preferred Stock will participate in dividends pari passu with MetLife Inc.’s common stock.

Pursuant to the Amended Stock Purchase Agreement, MetLife, Inc. issued to ALICO Holdings 40,000,000 Equity Units with an aggregate stated amount at issuance of $3,000 million and an estimated fair value of $3,189 million. The Equity Units include the Debt Securities and the Purchase Contracts that will settle in MetLife, Inc. common stock on specified future dates (an aggregate of $1,000 million on each settlement date). Distributions on the Equity Units will be made quarterly at an initial annual rate of 5%.

The aggregate amount of MetLife, Inc. common stock to be issued to ALICO Holdings in connection with the Acquisition is expected to be between 214.6 million to 231.5 million shares consisting of 78.2 million shares issued at closing, 68.6 million shares to be issued upon conversion of the Series B Preferred Stock (with the stockholder vote on such conversion to be held within one year after the closing) and between 67.8 million and 84.7 million shares of common stock, in total, issuable upon settlement of the Purchase Contracts forming part of the Equity Units. The ownership of these shares is subject to an investor rights agreement, previously filed as an exhibit to the Form 8-K filed by MetLife, Inc. on November 2, 2010, which grants to ALICO Holdings certain rights and sets forth certain agreements with respect to ALICO Holdings’ ownership, voting and transfer of the shares, including minimum holding periods and restrictions on the number of shares ALICO Holdings can sell at one time.

2. Basis of Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting and were derived from the historical financial statements of MetLife, Inc. and ALICO. The unaudited pro forma condensed combined financial statements include historical amounts as of and for the nine months ended September 30, 2010, for MetLife, Inc., and as of and for the nine months ended August 31, 2010, for ALICO, and for the year ended December 31, 2009, for MetLife, Inc., and for the year ended November 30, 2009, for ALICO. For ease of reference, all pro forma adjustments reference MetLife, Inc.’s period-end dates and no adjustments were made to ALICO’s reported information for its different period-end dates. Certain adjustments and reclassifications have been recorded in the unaudited pro forma condensed combined financial statements to conform to MetLife, Inc.’s accounting policies and are more fully described in Notes 6 and 7. The unaudited pro forma condensed combined financial statements give effect to the Acquisition as if it had occurred (i) on September 30, 2010 for purposes of the unaudited pro forma condensed combined balance sheet and (ii) on January 1, 2009 for purposes of the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 and for the year ended December 31, 2009.

The unaudited pro forma condensed combined financial statements were prepared in accordance with U.S. GAAP and presented in accordance with the requirements of Article 11 of Regulation S-X published by the U.S. Securities and Exchange Commission.

8

The acquisition method of accounting requires, among other things, that the consideration transferred be measured at fair value at the acquisition date and that assets acquired and certain liabilities assumed be recognized at their fair values as of the acquisition date. Accordingly, the assets acquired and liabilities assumed will be recorded as of the acquisition date at their respective fair values and added to those of MetLife, Inc.’s historical values. The financial statements and reported results of operations of MetLife, Inc. issued after completion of the Acquisition will reflect these values. Prior periods will not be retroactively restated to reflect the historical financial position or results of operations of ALICO.

In accordance with Article 11 of Regulation S-X, discontinued operations and the related earnings per share data have been excluded from the presentation of the unaudited pro forma condensed combined statements of operations. The pro forma adjustments reflecting the Acquisition under the acquisition method of accounting are based on certain estimates and assumptions. It is likely that the actual adjustments reflected in the final acquisition accounting, that may reflect additional available information, will differ from the pro forma adjustments and it is possible the differences may be material. MetLife, Inc.’s management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the transactions and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Acquisition been effective during the periods presented or the results that may be obtained by the combined company in the future.

3. Indemnification Related to Section 338 Elections

Pursuant to the Amended Stock Purchase Agreement, MetLife, Inc. and ALICO will be fully indemnified by ALICO Holdings, for all taxes, interest and penalties resulting from anticipated Section 338 elections to be made with respect to ALICO and its subsidiaries.

4. Acquisition-Related Costs

During the nine months ended September 30, 2010, MetLife, Inc. incurred acquisition-related transaction costs, consisting primarily of investment banking and legal fees, of $54 million. This amount is reflected in MetLife, Inc.’s unaudited historical interim condensed consolidated statement of operations for the nine months ended September 30, 2010 within other expenses. A pro forma adjustment has been made to eliminate these

9

costs and related tax benefit of $19 million from the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2010 due to their non-recurring nature.

5. Purchase Price Allocation

In accordance with U.S. GAAP, the fair value of MetLife, Inc.’s common stock and other securities issued as part of the consideration transferred was measured on the closing date of the Acquisition at the then current market price. The total purchase price for the Acquisition of $16,400 million is based on the estimated fair value of the total securities issued to ALICO Holdings using the opening price of MetLife, Inc. common stock of $40.90 per share on November 1, 2010. Of the $16,400 million, $225 million is allocated to the effective settlement of debt securities issued by MetLife, Inc. that are owned by ALICO, and reduces the purchase consideration. The remaining adjustments to the purchase consideration include: an increase of $69 million representing an estimated contractual adjustment owed under the Amended Stock Purchase Agreement, and $36 million reflecting an accounting adjustment associated with noncontrolling shareholders’ interest in certain legal entities acquired.

The purchase consideration for ALICO will be allocated to assets acquired (including identifiable assets arising from the Acquisition) and liabilities assumed based on their estimated fair values. The fair value adjustments in connection with the Acquisition are described in the notes below. The excess of the total purchase consideration of the Acquisition over the estimated fair value of the identifiable net assets acquired has been recorded as goodwill in the unaudited pro forma condensed combined balance sheet as of September 30, 2010.

For purposes of presentation in the unaudited pro forma condensed combined financial statements, the allocation of purchase price is as follows:

10

Purchase Price Allocation:

(in millions)

Cash	$	6,800
MetLife, Inc. common stock issued to ALICO Holdings		3,200
MetLife, Inc. Series B Preferred Stock issued to ALICO Holdings		2,805
MetLife, Inc. Equity Units issued to ALICO Holdings		3,189
Total cash paid and securities issued to ALICO Holdings		15,994
Contractual purchase price adjustments		406
Total purchase price		16,400
Effective settlement of pre-existing relationships		(225	)
Contingent consideration		69
Fair value of noncontrolling interests		36
Total purchase consideration for ALICO	$	16,280
Carrying value of net assets acquired at September 30, 2010	$	15,360
Estimated acquisition accounting adjustments:
Elimination of historical intangibles, including goodwill		(9,606	)
Establishment of VOBA, VODA and other intangibles, net		2,691
Investment fair value adjustments		(262	)
Liability for transforming ALICO branches to subsidiaries		(300	)
Deferred/current taxes		3,256
Other, net		(220	)
Establishment of goodwill		5,361
Total consideration transferred	$	16,280

6. Pro Forma Adjustments

Pro forma adjustments are based on certain estimates and assumptions made as of the date of the unaudited pro forma condensed combined financial statements. The fair value adjustments to assets acquired and liabilities assumed are preliminary in nature. The actual adjustments will depend on a number of factors, including changes in the estimated fair value of net assets and operating results of ALICO between August 31, 2010 and the closing date. The adjustments to be made as of the closing date may be different from the adjustments made to prepare the unaudited pro forma condensed combined financial statements and such differences may be material. The pro forma adjustments also include the effects of financing necessary to complete the Acquisition.

The following pro forma adjustments have been recorded in the unaudited pro forma condensed combined financial statements.

(a) Adjustment to decrease fixed maturity securities relating to commercial mortgage-backed securities to fair value by $227 million at September 30, 2010 and the associated increase in net investment income of $8 million and $6 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, related primarily to the net change in premium/discount of those securities. In addition, an adjustment to recognize the reduction of $516 million and $808 million in net investment income for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, was recorded to reflect the new cost basis and related amortization/accretion of the acquired fixed maturities available-for-sale portfolio.

11

Elimination of ALICO’s investment in MetLife, Inc.’s bonds of $225 million was recorded along with the related elimination of MetLife, Inc.’s long-term debt and related interest income and interest expense of $8 million and $11 million recorded in net investment income and in other expenses for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(b) Adjustment to reclassify trading securities of $641 million to fixed maturity securities available-for-sale, short term investments and cash of $392 million, $120 million and $129 million, respectively, in accordance with MetLife, Inc.’s policy and intention not to hold the securities principally for the purpose of selling in the near term and the associated reduction in net investment income (unrealized appreciation) of $29 million and $91 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(c) Adjustment to decrease mortgage loans by $330 million to fair value at September 30, 2010 and the associated increase in net investment income of $35 million and $45 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(d) Adjustment to increase policy loans by $157 million to fair value at September 30, 2010 and the associated reduction in net investment income of $27 million and $54 million for the nine months ended September 30, 2010 and the year ended December 31, 2010, respectively, related to the amortization of premium.

(e) Adjustment to increase investment real estate by $135 million to fair value and the associated increase in net investment income of $1 million for both the nine months ended September 30, 2010 and the year ended December 31, 2009.

(f) Adjustment represents payment of cash consideration of $7,206 million in accordance with the Amended Stock Purchase Agreement. See Note 1, Description of Transaction and Note 5, Purchase Price Allocation.

(g) Elimination of ALICO’s historical deferred policy acquisition costs (“DAC”) of $10,871 million and related amortization of $1,470 million and $2,276 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

Adjustment to increase other expenses by $232 million and $412 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, for the DAC amortization related to new business in the periods presented in conformity with MetLife, Inc.’s accounting policy.

(h) Establishment of value of business acquired (“VOBA”) arising from the Acquisition, which is estimated at $6,851 million, and the establishment of value of distribution agreements acquired (“VODA”) arising from the Acquisition which is estimated at $277 million. The adjustment for the related amortization of VOBA and VODA is estimated at $694 million and $17 million for the nine months ended September 30, 2010, respectively, and $977 million and $18 million for the year ended December 31, 2009, respectively.

12

VOBA represents the excess of policy liabilities over the estimated fair value of in-force contracts and includes the value of the right to receive future cash flows from the life insurance and annuity contracts 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 will vary from these projections perhaps materially.

VOBA is amortized in relation to estimated gross profits or premiums, depending on product type. If actual future gross profits or future premiums differ from expectations, the amortization of VOBA is adjusted to reflect actual experience. The following table provides an estimated amortization of the pro forma VOBA from 2010 to 2014:

	(In millions)
Three months ending December 31, 2010	$	221
2011		884
2012		692
2013		553
2014		475

VOBA and the related amortization amounts above exclude certain blocks of business where the estimated fair value of the in-force contract obligations exceeds the assumed in-force insurance policy liabilities as of September 30, 2010. A separate liability has been established for these blocks of business. See pro forma adjustment 6(w).

(i) Adjustment to reflect goodwill of $5,361 million arising from the transaction. See Note 5, Purchase Price Allocation.

(j) Elimination of ALICO’s deferred sales inducement assets of $105 million at September 30, 2010 and the related amortization of $23 million and $43 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(k) Adjustment related to the establishment of indemnification assets of $241 million for potential recoveries related to the deterioration of fixed maturity securities (including commercial mortgage-backed securities), mortgage loans and certain investment funds, in accordance with the indemnification provisions of the Amended Stock Purchase Agreement and related agreements and the associated increase in net investment income of $1 million and $2 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(l) Adjustment to increase company occupied real estate by $14 million to fair value at September 30, 2010 and the associated reduction in

13

other expenses of $1 million for both the nine months ended September 30, 2010 and for the year ended December 31, 2009.

(m) Elimination of ALICO’s historical goodwill of $29 million at September 30, 2010.

(n) Adjustment related to the recognition of trademark values acquired as an identifiable intangible asset arising from the Acquisition at an estimated fair value of $105 million at September 30, 2010. The associated adjustment recorded is other expenses for trademark amortization was estimated at $15 million and $21 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(o) Adjustment to reduce fixed assets and capitalized software by $106 million at September 30, 2010 primarily to conform to MetLife, Inc.’s capitalization policy and the associated reduction in depreciation expense of $11 million and $13 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(p) Elimination of ALICO’s historical unearned revenue liability of $1,399 million at September 30, 2010 and the associated revenue decreases of $115 million and $166 million for the nine months ended September 30, 2010 and for the year ended December 31, 2009, respectively.

(q) Adjustment for the issuance of the Debt Securities of $3,000 million which form part of the Equity Units issued to ALICO Holdings in connection with the Acquisition. Interest expense related to the Debt Securities as well as the $3,000 public offering of senior notes issued in August, 2010 in connection with the Acquisition, of $140 million and $189 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, is included in other expenses. Interest expense on the Debt Securities was based on an average annual contractual rate of 2%. Interest expense on the public offering of senior debt was calculated based on actual borrowing rates for the $3,000 million in aggregate principal amount of senior debt. See Note 1, Description of Transaction.

(r) Adjustment to decrease current and deferred income taxes by $3,256 million that includes (i) elimination of tax benefit of $19 million with respect to certain acquisition-related costs which are eliminated in the pro forma statement of operations for the nine months ended September 30, 2010, and (ii) deferred income tax effects of $3,275 million relating to the pro forma purchase adjustments and the adjustments of the tax basis of assets acquired and liabilities assumed as a result of anticipated Section 338 elections. The adjustments to deferred tax asset and liabilities of $3,275 million consist of the elimination of a portion of ALICO’s historical deferred tax liability of $2,537 million (which includes historical deferred tax liability of $47 million with respect to two Peru joint ventures which were sold by ALICO on October 27, 2010) and adjustment of $738 million to establish net resulting deferred tax asset of $534 million for ALICO. In addition, pro forma purchase adjustments resulted

14

in an increase in other liabilities due to an increase in unrecognized tax benefit of $7 million. The U.S. tax rate of 35% was applied to the pro forma pre-tax adjustments except for those adjustments related to certain foreign subsidiaries which were tax effected at the applicable local statutory tax rate. For purposes of this unaudited pro forma condensed combined balance sheet as of September 30, 2010, it has been assumed that earnings of foreign subsidiaries will not be permanently reinvested.

(s) Adjustment to reflect contingent consideration of $69 million for the estimated fair value of potential payments under provisions of the Amended Stock Purchase Agreement related to the adequacy of reserves for guarantees on certain U.K. unit-linked business. In addition, policyholder benefits and claims for the nine months ended September 30, 2010 and the year ended December 31, 2009, increased by $81 million and decreased by $180 million, respectively, to remove the effects of changes in embedded derivatives on these contracts since the guarantees will not impact MetLife Inc.’s future earnings based on the provisions of the Amended Stock Purchase Agreement.

(t) Adjustment to decrease policyholder benefits and claims incurred by $101 million for the nine months ended September 30, 2010 and increase policyholder benefits and claims incurred by $119 million for the year ended December 31, 2009 for the estimated effects of unlocking actuarial assumptions used in determining future net benefit premiums for certain traditional life insurance blocks of business and to reverse the mark to market effects of the fair value option used by ALICO for certain single premium variable life products in Japan in accordance with MetLife, Inc.’s policy decision not to use such an election.

(u) Adjustment to reflect the present value of the contract payments of $247 million associated with the Purchase Contracts that form part of the Equity Units issued to ALICO Holdings.

(v) Adjustment to recognize a liability of $300 million associated with the estimated cost for transforming ALICO branches to subsidiaries in order to comply with a Closing Agreement with the IRS signed on March 4, 2010.

(w) Adjustment to reflect an increase in insurance liabilities of $4,542 million for certain blocks of business where the estimated fair value of the in-force contract obligations exceeds the assumed in-force insurance policy liabilities as of September 30, 2010 and the associated reduction to other expenses of $373 million and $609 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively. See pro forma adjustment 6(h).

(x) Adjustment to reflect the par value of $1 million associated with the Series B Preferred Stock issued to ALICO Holdings in connection with the Acquisition.

(y) Adjustment to reflect the par value of $1 million associated with the common stock issued to ALICO Holdings in connection with the Acquisition.

(z) Issuance of 6,857,000 shares of Series B Preferred Stock to ALICO Holdings of $2,804 million and the issuance of 78,239,712 shares of common stock to ALICO Holdings of $3,199 million in connection with the Acquisition. In addition, additional paid-in capital includes a net charge of $58 million

15

associated with the Purchase Contracts that form part of the Equity Units issued to ALICO Holdings and the associated contract payments. See Note 1, Description of Transaction.

(aa) Elimination of ALICO’s historical shareholder’s net investment balance of $12,882 million at September 30, 2010.

(bb) Elimination of ALICO’s historical accumulated other comprehensive income balance of $2,296 million at September 30, 2010.

(cc) Adjustments to reflect the increase/(decrease) in net investment income related to pro forma adjustments for the nine months ended September 30, 2010 and the year ended December 31, 2009 as follows:

	Nine Months Ended			Year Ended			Note
	September 30, 2010			December 31, 2009			Reference
Adjustment to income associated with commercial mortgage-backed securities		8			6			6	(a)
Adjustment to amortization/accretion of fixed maturities available-for-sale portfolio		(516	)		(808	)		6	(a)
Elimination of interest income on investment in MetLife, Inc. debt securities		(8	)		(11	)		6	(a)
Adjustment to net investment income associated with reclass of investment securities		(29	)		(91	)		6	(b)
Adjustment to mortgage loan income		35			45			6	(c)
Adjustment to income associated with policy loans		(27	)		(54	)		6	(d)
Adjustment to depreciation expense on investment real estate		1			1			6	(e)
Recognition of income on indemnification asset		1			2			6	(k)
Elimination of net investment income associated with Peru joint ventures		(48	)		(49	)		8	(a)
		(583	)		(959	)

(dd)	Adjustment to realize a net investment loss of $25 million and a net investment gain of $5 million related to the release of unrealized gains/losses to realized gains/losses on foreign currency denominated fixed maturity securities for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.
(ee)	Adjustment to reverse realized gains of $106 million for the nine months ended September 30, 2010 and realized losses of $470 million for the year ended December 31, 2009, respectively, to conform to MetLife, Inc.’s policy related to foreign exchange.

16

(ff) Adjustments to reflect the (decrease)/increase in other expenses related to pro forma adjustments for the nine months ended September 30, 2010 and the year ended December 31, 2009 is as follows:

	Nine Months Ended			Year Ended			Note
	September 30, 2010			December 31, 2009			Reference
Adjustment to remove acquisition-related costs incurred in 2010		(54	)		—			4
Elimination of interest expense on MetLife, Inc. debt securities		(8	)		(11	)		6	(a)
Elimination of amortization on historical DAC		(1,470	)		(2,276	)		6	(g)
Adjustment to DAC amortization related to new business		232			412			6	(g)
Amortization of VOBA		694			977			6	(h)
Amortization of VODA		17			18			6	(h)
Elimination of expense associated with historical deferred sales inducements		(23	)		(43	)		6	(j)
Adjustment to depreciation expense on company occupied real estate		(1	)		(1	)		6	(l)
Adjustment for amortization on trademark assets		15			21			6	(n)
Adjustment to depreciation/amortization expense associated with fixed assets and software capitalization		(11	)		(13	)		6	(o)
Recognition of interest expense on debt securities issued in connection with Acquisition		140			189			6	(q)
Amortization of insurance liabilities		(373	)		(609	)		6	(w)
		(842	)		(1,336	)

(gg) The unaudited pro forma condensed combined statements of operations pre-tax adjustments were tax effected at the U.S. tax rate of 35%. For purposes of the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 and for the year ended December 31, 2009, it has been assumed that earnings of foreign subsidiaries will not be permanently reinvested. For the nine months ended September 30, 2010, the pro forma pre-tax adjustments resulted in a decrease to income tax expense of $27 million (net of the elimination of income tax benefit of $8 million related to the statement of operations items of the two joint ventures in Peru which were sold by ALICO on October 27, 2010). For the year ended December 31, 2009, the pro forma pre-tax adjustments resulted in an increase to income tax expense of $320 million (net of the elimination of income tax expense of $8 million related to the statement of operations items of the Peru joint ventures).

7. Reclassification Adjustments

The following reclassification adjustments have been made to conform ALICO’s accounting policies to those of MetLife, Inc. which have been recorded in the unaudited pro forma condensed combined financial statements.

(a) Adjustment to reclassify fixed maturity securities available-for-sale of $8,429 million to short term investments and cash and cash equivalents of $6,835 million and $1,594 million, respectively. The acquisition date for these securities results in resetting the remaining time to maturity at acquisition which is the primary determinant to classify holdings as cash equivalents and short-term investments.

(b) Adjustment to reclassify REITs of $342 million from equity securities to real estate and real estate joint ventures held-for-investment.

(c) Adjustment to reclassify mutual funds of $127 million from other invested assets to equity securities available-for-sale and trading securities of $16 million and $111 million, respectively.

(d) Adjustment to reclassify assets of $1,393 million from short-term investments of $1,015 million and cash and cash equivalents of $378 million to trading securities.

(e) Adjustment to reclassify real estate joint ventures of $128 million from other invested assets to real estate and real estate joint ventures held-for-investment.

17

(f) Adjustment to reclassify company occupied real estate of $148 million from other assets to real estate and real estate joint ventures held-for-investment.

(g) Adjustment to reclassify short-term investments of $3,533 million to cash and cash equivalents.

(h) Adjustment to reclassify accrued income receivable for derivatives of $61 million from other invested assets to accrued investment income and other liabilities of $53 million and $8 million, respectively.

Adjustment to reclassify liability to return cash collateral held by ALICO for derivatives of $187 million from other invested assets (contra asset) to other liabilities.

Adjustment to eliminate ALICO’s counterparty netting of derivatives exposures of $79 million based on master netting agreements.

(i) Adjustment to reclassify universal life and investment-type product policy fees of $902 million and $1,279 million from premiums and other considerations for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

(j) Adjustment to reclassify interest credited to policyholder account balances of $1,507 million and $3,405 million from policyholder benefits and claims for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.

18

8. Pre Closing Activities

The following transaction was completed prior to the acquisition date:

(a) On October 27, 2010, ALICO sold its investments in two joint ventures in Peru for $169 million. The proceeds associated with ALICO’s sale of its investments in the two joint ventures in Peru have been included in the unaudited pro forma condensed combined balance sheet as of September 30, 2010. The balance sheet items related to the Peru joint ventures at August 31, 2010 have been eliminated in the unaudited pro forma condensed combined balance sheet as of September 30, 2010 and are presented below.

	August 31, 2010
	(in millions)
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	$	944
Equity securities available-for-sale, at estimated fair value		60
Trading securities, at estimated fair value		18
Policy loans		1
Short-term investments		1
Other invested assets		20
Cash and cash equivalents		13
Accrued investment income		17
Premiums, reinsurance and other receivables		6
Other assets		33
Liabilities
Future policy benefits		682
Policyholder account balances		101
Other policyholder funds		1
Deferred/Current income tax payable		47
Other liabilities		26
Equity
Noncontrolling interests		146

     The statement of operations items related to the Peru joint ventures have been eliminated in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010 and the year ended December 31, 2009 and are presented below.

	Nine Months Ended		Year Ended
	August 31, 2010		November 30, 2009
	(in millions)
Revenues
Premiums	$	160	$	165
Net investment income		48		49
Net investment gains		5		3
Expenses
Policyholder benefits and claims		178		188
Net income attributable to noncontrolling interests		22		13

19

Prior to the closing of the Acquisition, AIG was required to complete certain transactions that affect ALICO. The following transactions were completed prior to the acquisition date:

(b) Adjustment of $22 million to reflect ALICO’s sale of an investment to an AIG subsidiary which occurred prior to the acquisition date as a condition of closing in accordance with the Amended Stock Purchase Agreement.

(c) Adjustment of $44 million to reflect the settlement of swap positions between ALICO and AIG Financial Products which occurred prior to the acquisition date as a condition of closing in accordance with the Amended Stock Purchase Agreement.

(d) The following gains and losses related to intercompany transactions that have settled prior to the closing of the Acquisition, as required by the Amended Stock Purchase Agreement, were adjusted:

(i)	a gain of $29 million and $99 million for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, associated with an intercompany settlement of a foreign currency derivative between the ALICO and AIG;
(ii)	a gain of $78 million for the nine months ended September 30, 2010, associated with the intercompany settlement of swap positions between the ALICO and AIG Financial Products;
(iii)	a gain of $108 million for the nine months ended September 30, 2010, associated with the sale of AIG common stock to AIG.

9. Pro Forma Earnings Per Share

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the estimated weighted average number of common shares outstanding, as adjusted for the following items:

(i) the public offering of 86,250,000 shares of MetLife, Inc. common stock issued on August 6, 2010, in connection with financing the cash portion of the transaction;

(ii) the issuance of 78,239,712 shares of MetLife, Inc. common stock to ALICO Holdings;

(iii) conversion of the Series B Preferred Stock into 68,570,000 shares of MetLife, Inc. common stock; and

(iv) the estimated common stock dilution associated with the Equity Units under the treasury stock method.

20

	Nine Months Ended		Year Ended
	September 30, 2010		December 31, 2009
Basic
Weighted average common shares outstanding, as reported (1)		822,683,211		818,462,150
Common shares issued in connection with the Acquisition (2)		164,489,712		164,489,712
Common shares upon conversion of Series B Preferred Stock (3)		68,570,000		68,570,000
Weighted average common shares outstanding, pro forma		1,055,742,923		1,051,521,862
Diluted
Weighted average common shares outstanding, as reported (1)		829,633,751		818,462,150
Common shares issued in connection with the Acquisition (2)		164,489,712		164,489,712
Common shares upon conversion of Series B Preferred Stock (3)		68,570,000		68,570,000
Estimated dilutive effect of the Equity Units (4)		—		—
Weighted average common shares outstanding, pro forma		1,062,693,463		1,051,521,862

(1)	Weighted average common shares, as reported for both basic and diluted, are adjusted to remove the incremental common shares issued on August 6, 2010, in connection with the Acquisition. These shares are included in total in “common shares issued in connection with the Acquisition.”
(2)	Includes shares issued on August 6, 2010 as well as shares of MetLife, Inc. common stock issued to ALICO Holdings on November 1, 2010.
(3)	For purposes of the earnings per share calculation, the Series B Preferred Stock is assumed converted into common shares for both basic and diluted weighted average shares. The if-converted method is not applied.
(4)	The Equity Units issued to ALICO Holdings had no impact on pro forma diluted shares under the treasury stock method. The Equity Units would only result in a dilutive impact when the market price of MetLife, Inc.’s common stock exceeds the “threshold appreciation price” of $44.275. When the stock price is at the threshold appreciation price or below, the assumed conversion would have an anti-dilutive effect on earnings per share.

The difference between basic shares and diluted shares for the nine months ended September 30, 2010 relates to the existing potential dilutive securities issued by MetLife, Inc. and is not affected by securities to be issued as part of the Acquisition. For the year ended December 31, 2009, there was no difference between the as reported basic shares and the as reported diluted shares as the existing potential dilutive securities issued by MetLife, Inc. were excluded from the calculation. MetLife, Inc. experienced a loss for the 2009 fiscal year and including these securities would have been anti-dilutive.

10. Forward Looking Statements

These unaudited pro forma condensed combined financial statements may be deemed to be forward looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward looking statements are identified by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Such statements may include, but are not limited to statements about the

21

benefits of the Acquisition, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. These forward looking statements are based largely on management’s expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward looking statements.

22