0001193125-12-160769.txt : 20120412 0001193125-12-160769.hdr.sgml : 20120412 20120412164345 ACCESSION NUMBER: 0001193125-12-160769 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20120412 DATE AS OF CHANGE: 20120412 EFFECTIVENESS DATE: 20120430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Metropolitan Life Separate Account UL CENTRAL INDEX KEY: 0000858997 IRS NUMBER: 135581829 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06025 FILM NUMBER: 12756804 BUSINESS ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Metropolitan Life Separate Account UL CENTRAL INDEX KEY: 0000858997 IRS NUMBER: 135581829 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-91226 FILM NUMBER: 12756805 BUSINESS ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL DATE OF NAME CHANGE: 19920703 0000858997 S000004219 Metropolitan Life Separate Account UL C000011874 Group Variable Universal Life Insurance 485BPOS 1 d258076d485bpos.txt GROUP VUL POST-EFFECTIVE AMENDMENT NO. 19 As filed with the Securities and Exchange Commission on April 12, 2012 Registration Nos. 033-91226 811-06025 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Post-Effective Amendment No. 19 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 58 [X] Metropolitan Life Separate Account UL (Exact Name of Registrant) Metropolitan Life Insurance Company (Name of Depositor) 200 Park Avenue New York, NY 10066 (Address of depositor's principal executive offices) ---------- Nicholas D. Latrenta, Esq. Executive Vice President and General Counsel Metropolitan Life Insurance Company 1095 Avenue of the Americas New York, NY 10036 (Name and address of agent for service) Copy to: Stephen E. Roth, Esquire Mary E. Payne, Esquire Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2415 It is proposed that this filing will become effective (check appropriate box) [_] immediately upon filing pursuant to paragraph (b) [X] on April 30, 2012 pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(1) [_] on (date) pursuant to paragraph (a)(1) of Rule 485 [_] this post-effective amendment designates a new effective date for a previously filed post-effective amendment Title of Securities Being Registered: Interests in Metropolitan Life Separate Account UL, which funds certain Variable Universal Life Insurance Policies. PROSPECTUS FOR GROUP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES ("GROUP POLICIES") ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY ("METLIFE") APRIL 30, 2012 This Prospectus provides you with important information about MetLife's Group Variable Universal Life Policies and its Certificates. However, we will also issue a Group Policy to the employer and Certificates to the employees which are separate documents from the prospectus. There may be differences between the description of the Group Policy and the Certificate contained in this prospectus and the Group Policy issued to the employer and the Certificate issued to the employee due to differences in state law. Please consult the Group Policy and the Certificate for the provisions that apply in your state. The Group Policies are designed to provide: .. Life insurance coverage for employees (and/or their spouses) of employers who purchase a Group Policy .. Flexible premium payments, including the option of paying premiums through payroll deduction .. A death benefit that varies because it includes the employee's cash value in addition to a fixed insurance amount .. Ownership rights of employees set forth in a certificate ("Certificate") issued in connection with the Group Policy You allocate net premiums to and may transfer cash value among a fixed interest account ("Fixed Account") and the Metropolitan Life Separate Account UL investment divisions which invest in the following Portfolios: FIDELITY(R) VARIABLE INSURANCE PRODUCTS (INITIAL CLASS) Freedom 2010 Portfolio Freedom 2020 Portfolio Freedom 2030 Portfolio Freedom 2040 Portfolio Freedom 2050 Portfolio MET INVESTORS SERIES TRUST (CLASS A) BlackRock Large Cap Core Portfolio Lord Abbett Bond Debenture Portfolio Morgan Stanley Mid Cap Growth Portfolio METROPOLITAN SERIES FUND (CLASS A) Baillie Gifford International Stock MFS(R) Value Portfolio Portfolio (formerly Artio MSCI EAFE(R) Index International Stock Portfolio) Portfolio (formerly Morgan Stanley Barclays Capital Aggregate Bond Index EAFE(R) Index Portfolio) Portfolio Oppenheimer Global Equity Portfolio BlackRock Bond Income Portfolio Russell 2000(R) Index Portfolio BlackRock Diversified Portfolio T. Rowe Price Small Cap Growth MetLife Stock Index Portfolio Portfolio
In some cases, the employer may limit which of the above Portfolios are available. The prospectuses for the Portfolios describe in greater detail an investment in the Portfolios listed above. YOU CAN OBTAIN PROSPECTUSES FOR THE PORTFOLIOS BY CALLING OUR ADMINISTRATIVE OFFICE AT (800) 685-0124. Since the Fixed Account is not registered under the federal securities laws, this Prospectus contains only limited information about the Fixed Account. The Group Policy and the Certificate give you more information on the operation of the Fixed Account. Neither the Securities and Exchange Commission ("SEC") nor any state securities authority has approved or disapproved these securities, nor have they determined if this Prospectus is accurate or complete. This prospectus does not constitute an offering in any jurisdiction where such offering may not lawfully be made. Any representation otherwise is a criminal offense. Interests in the Separate Account and the Fixed Account are not deposits or obligations of, or insured or guaranteed by, the U.S. Government, any bank or other depository institution including the Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board or any other agency or entity or person. We do not authorize any representations about this offering other than as contained in this Prospectus or its supplements or in our authorized supplemental sales material. We do not guarantee how any of the Portfolios will perform. TABLE OF CONTENTS
PAGE IN THIS SUBJECT PROSPECTUS ------- ---------- Cover Pages Contacting Us................................................ 3 Summary of Benefits and Risks................................ 3 Certificate Benefits...................................... 3 Risks of a Certificate.................................... 4 Fee Tables................................................... 5 Transaction Fees.......................................... 6 Periodic Charges Other Than Portfolio Operating Expenses.. 6 Periodic Charges Applicable to Any Optional Riders That May be Added to Your Certificate........................ 7 Portfolio Operating Expenses.............................. 9 MetLife...................................................... 10 The Fixed Account......................................... 11 Separate Account UL.......................................... 11 The Funds................................................. 12 Certain Payments We Receive with Regard to the Portfolios. 12 Selection of Portfolios................................... 13 Management of Portfolios.................................. 14 The Portfolio Share Classes that We Offer................. 15 Issuing a Group Policy and a Certificate..................... 16 Payment and Allocation of Premiums........................... 16 Paying Premiums........................................... 17 Maximum and Minimum Premium Payments...................... 17 Allocating Net Premiums................................... 17 Insurance Proceeds........................................... 18 Death Benefit............................................. 18 Alternate Death Benefit................................... 19 Specified Face Amount..................................... 19 Income Plans.............................................. 20 Cash Value, Transfers and Withdrawals........................ 20 Cash Value................................................ 20 Cash Value Transfers...................................... 21 Surrender and Withdrawal Privileges....................... 24 Benefit at Final Date..................................... 25 Paid-Up Certificate Provision................................ 25 Loan Privileges.............................................. 25 Optional Benefits Added By Rider............................. 26 Charges and Deductions....................................... 27 Important Information Applicable to All Certificate Charges and Deductions.................................. 27 Charges Deducted from Premiums............................ 28 Charges Included in the Monthly Deduction................. 28 Charges Against the Separate Account...................... 30 Variations in Charges..................................... 30 Portfolio Company Charges................................. 31 Other Charges............................................. 31 Certificate Termination and Reinstatement.................... 31 Federal Tax Matters.......................................... 32 Rights We Reserve............................................ 36 Other Certificate Provisions................................. 37 Sales of Certificates........................................ 41 Legal Proceedings............................................ 43 Restrictions on Financial Transactions....................... 44 Financial Statements......................................... 44
2 CONTACTING US [SIDEBAR: YOU CAN CONTACT US AT OUR ADMINISTRATIVE OFFICE.] You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Administrative Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Certificate loan; changing the specified face amount; taking a partial withdrawal; surrendering the Certificate; making transfer requests (including elections with respect to the systematic investment strategies) or changing your premium allocations. Our Administrative Office is our office at MetLife GVUL, Mail Code A2-10, 13045 Tesson Ferry Road, St. Louis, MO 63128. We may name additional or alternate Administrative Offices. If we do, we will notify you in writing. If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such premium payments or requests, we may return the premium payment to you, or there may be a delay in applying the premium payment or transaction to your Policy. SUMMARY OF BENEFITS AND RISKS This summary gives an overview of the Group Policy and Certificates and is qualified by the more detailed information in the balance of this Prospectus, the Group Policy and the Certificates. MetLife issues the Group Policy and Certificates. CERTIFICATE BENEFITS PREMIUM PAYMENT FLEXIBILITY. Generally, if elected by your employer, you may pay premiums through payroll deduction. If payroll deduction is not available, you may pay premiums to us on a monthly, quarterly or annual basis. You may, with certain restrictions, make premium payments in any amount and at any frequency. However, you may also be required to make an unscheduled premium payment so that the Certificate will remain in force. The Certificate will remain in force until its Final Date, as long as the cash surrender value is large enough to cover one monthly deduction, regardless of whether or not premium payments have been made. CASH VALUE. Your cash value in the Certificate reflects your premium payments, the charges we deduct, interest we credit if you have cash value in our fixed interest account, any investment experience you have in our Separate Account, as well as your loan and withdrawal activity. TRANSFERS AND SYSTEMATIC INVESTMENT STRATEGIES. You may transfer cash value among the funding options, subject to certain limits (see "Cash Value, Transfers and Withdrawals"). If elected by your employer, you may also choose among four systematic investment strategies: the Equity Generator/SM/, the Equalizer/SM/, the Allocator/SM/, and the Rebalancer/SM/. SPECIFIED FACE AMOUNT OF INSURANCE. Within certain limits, you may choose your specified face amount of insurance when the Certificate is issued. You may also increase the amount at certain times determined by your employer and subject to our underwriting requirements. In certain cases, we will automatically increase the specified face amount at each employee's salary increase on dates chosen by the employer. You may also decrease the specified face amount. DEATH BENEFIT. The death benefit is the specified face amount of the Certificate plus the Certificate cash value at the date of death of the covered person. 3 INCOME PLANS. The insurance proceeds can be paid under a variety of income plans that are available under the Certificate. SURRENDERS, PARTIAL WITHDRAWALS AND LOANS. Within certain limits, you may take partial withdrawals and loans from the Certificate. You may also surrender the Certificate for its cash surrender value. PAID-UP CERTIFICATE BENEFIT. You can choose to terminate the death benefit (and any riders in effect) and use all or part of the cash surrender value as a single premium for a "paid-up" benefit within the terms set forth in the Certificate. ("Paid-up" means no further premiums are required.) TAX ADVANTAGES. If you meet certain requirements, you will not pay income taxes on withdrawals or surrenders or at the Final Date of the Certificate, until your cumulative withdrawn amounts exceed the cumulative premiums you have paid. The death benefit may be subject to Federal and state estate taxes, but your beneficiary will generally not be subject to income tax on the death benefit. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. OPTIONAL RIDER BENEFITS. You may be eligible for certain benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) as part of the monthly deduction. RISKS OF A CERTIFICATE This Prospectus discusses the risks associated with purchasing the Certificate. Other prospectuses (which are attached at the end of this Prospectus) discuss the risks associated with investment in the Fund described therein. Those prospectuses are being provided to you in addition to this Prospectus because each of the Separate Account UL investment divisions that are available to you under a Certificate invests solely in a corresponding "Portfolio" of a Fund. INVESTMENT RISK. MetLife does not guarantee the investment performance of the variable investment options and you should consider your risk tolerance before selecting any of these options. You will be subject to the risk that investment performance will be unfavorable and that your cash value will decrease. In addition, we deduct certain Certificate fees and charges from your Certificate's cash value, which can significantly reduce your Certificate's cash value. During times of poor investment performance, this deduction may have an even greater impact on your Certificate's cash value. It is possible to lose your full investment and your Certificate could terminate without value, unless you pay additional premiums. If you allocate cash value to the Fixed Account, then we credit such cash value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than the guaranteed minimum annual effective rate stated in your Certificate. SURRENDER AND WITHDRAWAL RISKS. The Certificates are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and are not suitable as a short-term savings vehicle. You should purchase a Certificate only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Certificate if you intend to surrender all or part of the Certificate's cash value in the near future. 4 RISK OF CERTIFICATE TERMINATION. Your Certificate may terminate without value if you have paid an insufficient amount of premiums or if the investment experience of the investment divisions is poor. If your cash surrender value is not enough to pay the monthly deduction, your Policy will terminate without value unless you make a premium payment sufficient to cover two monthly deductions within the 61-day grace period. If your Certificate does terminate, your insurance coverage will terminate (although you will be given an opportunity to reinstate your coverage if you satisfy certain requirements). Lapse of a certificate on which there is an outstanding loan may have adverse tax consequences. CERTIFICATE CHARGE AND EXPENSE INCREASE. We have the right to increase certain Certificate charges. TAX LAW RISKS. We anticipate that the Certificate should generally be deemed a life insurance contract under Federal tax law. Assuming that a Certificate qualifies as a life insurance contract for Federal income tax purposes, you should not be deemed to be in receipt of any portion of your Certificate's cash value until there is an actual distribution from the Certificate. Moreover, insurance proceeds payable under the Certificate should be excludable from the gross income of the beneficiary. Although the beneficiary generally should not have to pay Federal income tax on the insurance proceeds, other taxes, such as estate taxes, may apply. If you pay more than a certain amount of premiums, you may cause your Certificate to become a "modified endowment contract." If it does, you will pay income taxes on loans and other amounts we pay out to you (except for payment of insurance proceeds), to the extent of any gains in your Certificate (which is generally the excess of cash value over the premiums paid). In this case, an additional 10% tax penalty may also apply. If the Certificate is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the contract and then as taxable income. However, during the first 15 Certificate years, in certain circumstances, a distribution may be subject to tax on a income-out-first basis if there is a gain in the Certificate (which is generally when your cash value exceeds the cumulative premiums you paid). Loans will generally not be treated as distributions prior to termination of your certificate, whether by lapse, surrender or exchange. Finally, neither distributions nor loans from a Certificate that is not a modified endowment contract are subject to the 10% penalty tax. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. FEE TABLES The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Certificate. The charges set forth in the first three tables can vary, pursuant to terms of the Group Policy under which the Certificate is issued. In certain cases, we have the right to increase our charges for new Certificates, as well as for Certificates already outstanding. The maximum charges in such cases are shown in the far right-hand columns of each of the first three tables below. In addition to the following tables, certain charges that we don't currently impose (but which we have the right 5 to impose on your Certificate in the future) are described under "Charges and Deductions--Other Charges," further back in this Prospectus. TRANSACTION FEES This table describes the fees and expenses that you will pay at the time that you buy the Certificate, surrender the Certificate, or transfer cash value among the variable investment options or the Fixed Account. The Current Amount Deducted represents an amount that would be deducted from a hypothetical group that is representative of the groups to whom the Group Policy is offered. The amount may not reflect the actual amount currently deducted for any current Policy owner, since the current amount deducted varies from group to group based on the anticipated experience of the group.
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT ----------------------------------------------------------------------------------- Charge for average On payment of An amount equal to No specific expected state and premium the estimate of taxes maximum local taxes we will actually pay attributable to for your group, premiums/1/ currently up to 2.55% of each premium payment. ----------------------------------------------------------------------------------- Charge for expected On payment of 0.35% of each Same as current federal taxes premium premium payment amount attributable to premiums/1/ ----------------------------------------------------------------------------------- Surrender, On surrender, None Up to $25 per withdrawal and loan withdrawal or loan surrender, transaction fees/2/ withdrawal or loan
-------- /1/ Rather than deducting this charge from each premium payment you make, we have the option of deducting an equivalent amount as part of the monthly deduction. In that case, the amount of the deduction will be based on the amount of premium payments received under all Certificates issued in connection with the Group Policy. We will waive the state premium tax charge for Internal Revenue Code Section 1035 exchanges from any other policy to a Certificate. We will also waive the state premium tax charge, as well as the charge for expected federal taxes attributable to premiums for 1035 exchanges, from another MetLife policy to a Certificate. /2/ Generally, we will not make any transaction charge for the surrender of a Certificate because of the termination of an employer's participation in the Group Policy. See your Certificate for more details. PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES These tables describe other fees and expenses that you will pay periodically during the time that you own the Certificate not including the fees and expenses of the Portfolios. The amounts shown for a 45 year old covered person assume that person is a member of a hypothetical group that has been derived from all groups to whom the Group Policy is offered. These amounts may not reflect the amounts for any actual Certificate owner, since the amounts vary from group to group based on the anticipated experience of the group. The actual charge at that age for your group may be higher or lower than the rate shown. 6 PERIODIC CHARGES APPLICABLE TO ALL CERTIFICATES
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT ------------------------------------------------------------------------------------------------------------- Cost of term insurance* On each monthly anniversary of the Certificate Highest and lowest charge Highest: $30.45 per Highest: $53.24 per among all possible covered $1,000 of net amount $1,000 of Net persons at risk Amount at Risk Lowest: $.02 per Lowest: $.06 per $1,000 of net amount $1,000 of Net at risk Amount at Risk Charge for a hypothetical $.10 per $1,000 of net $.43 per $1,000 of net 45 year old amount at risk amount at risk ------------------------------------------------------------------------------------------------------------- Mortality and expense risk Daily against the Effective annual rate Effective annual rate charge** cash value in the of .45% of the cash of .90% Separate Account value in the Separate Account ------------------------------------------------------------------------------------------------------------- Administration charge*** On each monthly $0 to $3 per $5 per Certificate anniversary of the Certificate Certificate ------------------------------------------------------------------------------------------------------------- Loan interest spread**** Annually (or on loan Annual rate of 0.25% Annual rate of 2% of termination, if of the loan amount the loan amount earlier)
PERIODIC CHARGES APPLICABLE TO ANY OPTIONAL RIDERS THAT MAY BE ADDED TO YOUR CERTIFICATE*****
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT OPTIONAL FEATURE DEDUCTED DEDUCTED WE CAN DEDUCT ---------------------------------------------------------------------------------------------- Disability waiver of monthly On each monthly Since your employer No separate deduction benefit anniversary of the decides for the whole maximum Certificate group whether to elect this benefit, the cost is included in the basic cost of insurance rates for the group. ---------------------------------------------------------------------------------------------- Accelerated benefits option On each monthly Since your employer No separate anniversary of the decides for the whole maximum Certificate group whether to elect this benefit, the cost is included in the basic cost of insurance rates for the group. ---------------------------------------------------------------------------------------------- Accidental death benefit On each monthly No maximum anniversary of the applies to this Certificate benefit Highest and Lowest charge among Highest: $.04 per all possible Certificates $1,000 of rider benefit amount Lowest: $.01 per $1,000 of rider benefit amount Charge for a hypothetical $.03 per $1,000 of 45 year old rider benefit amount ----------------------------------------------------------------------------------------------
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WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT OPTIONAL FEATURE DEDUCTED DEDUCTED WE CAN DEDUCT ------------------------------------------------------------------------------------------- Accidental Death or Dismemberment On each monthly No maximum Benefit anniversary of the applies to this Certificate benefit Highest and Lowest Charge Among Highest: $.05 per All Possible Certificates $1,000 of rider benefit amount Lowest: $.02 per $1,000 of rider benefit amount Charge for a hypothetical $.04 per $1,000 of 45 year old rider benefit amount ------------------------------------------------------------------------------------------- Dependent life benefits (spouse On each monthly No maximum coverage only) anniversary of the applies to this Certificate benefit Highest and lowest charge among Highest: $30.34 per all possible certificates $1,000 of rider benefit amount Lowest: $.03 per $1,000 of rider benefit amount Charge for a hypothetical $.10 per $1,000 of 45 year old rider benefit amount ------------------------------------------------------------------------------------------- Dependent life benefits (children On each monthly No maximum coverage only) anniversary of the applies to this Certificate benefit Highest and lowest charge among Highest: $.18 per all possible certificates $1,000 of rider benefit amount Lowest: $.07 per $1,000 of rider benefit amount Charge for a hypothetical 45 year $.13 per $1,000 of old rider benefit amount
* The cost of insurance charge varies based on anticipated variations in our costs or risks associated with the group or individuals in the group that the charge was intended to cover. The cost of insurance charge may not be representative of the charge that any particular Certificate owner would pay. See "Charges and Deductions--Cost of Insurance" for a more detailed discussion of factors affecting this charge. You can obtain more information about the cost of insurance or other charges that would apply by contacting your insurance sales representative. If you would like, we will provide you with an illustration of the impact of these and other charges under the Certificate based on various assumptions. ** We may determine differences in this charge for different employer groups based on differences in the levels of mortality and expense risks. See "Charges and Deductions--Certificate Charges--Charge Against the Separate Account" below for a fuller description of how this charge may vary. We are currently waiving the following amount of the Mortality and Expense Risk charge: 0.08% for the Investment Division investing in the BlackRock Large-Cap Core Portfolio. *** This charge for a Certificate may vary based on differences in the levels of administrative services performed by us and by the employer for the specific group under which the Certificate is issued. **** We charge interest on Certificate loans but credit you with interest on the amount of the cash value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. ***** The rider charges may vary based on individual characteristics, or anticipated variations in our costs or risks associated with the group or individuals in the group under which the Certificate is issued. The charge may not be representative of the charge that any particular Certificate owner would pay. You can obtain more information about this and other charges that would apply by contacting your insurance sales representative. 8 PORTFOLIO OPERATING EXPENSES Each of the Funds pays an investment management fee. Each of the Funds also incurs other direct expenses (see the applicable Fund Prospectus attached at the end of this Prospectus and the Statement of Additional Information referred to therein for each Fund). You bear indirectly your proportionate share of the fees and expenses of the Portfolios of each Fund that correspond to the Separate Account investment divisions you are using. The Funds offer various classes of shares, each of which has a different level of expenses. However, we offer only Class A shares of the Funds under the Certificates. The following tables describe the fees and expenses that the Portfolios will pay and that therefore a Certificate owner will indirectly pay periodically during the time that he or she owns a Certificate. The first table shows the minimum and maximum fees and expenses charged by the Portfolios for the fiscal year ended December 31, 2011. The second table shows each Portfolio's fees and expenses, as a percentage of average daily net assets, as of December 31, 2011, in some cases after contractual waivers and/or expense reimbursements. More detail concerning each Portfolio's fees and expenses is contained in the prospectuses for the Portfolios. Certain Portfolios may impose a redemption fee in the future. MINIMUM AND MAXIMUM TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM -------------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets, including management fees, distribution and/or service (12b-1) fees, and other expenses) 0.27% 0.95% --------------------------------------------------------------------------------------
PORTFOLIO FEES AND EXPENSES (as a percentage of average daily net assets)
CONTRACT- DISTRIB- UAL FEE UTION WAIVER AND/OR ACQUIRED TOTAL AND/OR NET TOTAL MANAGE- SERVICE FUND FEES ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER AND OPERATING REIM- OPERATING PORTFOLIO FEE FEES EXPENSES EXPENSES EXPENSES BURSEMENT EXPENSES --------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- INITIAL CLASS --------------------------------------------------------------------------------- Freedom 2010 Portfolio -- -- -- 0.56% 0.56% -- 0.56% --------------------------------------------------------------------------------- Freedom 2020 Portfolio -- -- -- 0.60% 0.60% -- 0.60% --------------------------------------------------------------------------------- Freedom 2030 Portfolio -- -- -- 0.65% 0.65% -- 0.65% --------------------------------------------------------------------------------- Freedom 2040 Portfolio -- -- -- 0.68% 0.68% -- 0.68% --------------------------------------------------------------------------------- Freedom 2050 Portfolio -- -- -- 0.70% 0.70% -- 0.70% --------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST -- CLASS A --------------------------------------------------------------------------------- BlackRock Large Cap Core Portfolio 0.59% -- 0.05% -- 0.64% 0.01% 0.63% --------------------------------------------------------------------------------- Lord Abbett Bond Debenture Portfolio 0.50% -- 0.04% -- 0.54% -- 0.54% ---------------------------------------------------------------------------------
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CONTRACT- DISTRIB- UAL FEE UTION WAIVER AND/OR ACQUIRED TOTAL AND/OR NET TOTAL MANAGE- SERVICE FUND FEES ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER AND OPERATING REIM- OPERATING PORTFOLIO FEE FEES EXPENSES EXPENSES EXPENSES BURSEMENT EXPENSES ---------------------------------------------------------------------------------- Morgan Stanley Mid Cap Growth Portfolio 0.65% -- 0.07% -- 0.72% 0.01% 0.71% ---------------------------------------------------------------------------------- METROPOLITAN SERIES FUND -- CLASS A ---------------------------------------------------------------------------------- Baillie Gifford International Stock Portfolio 0.83% -- 0.12% -- 0.95% 0.10% 0.85% ---------------------------------------------------------------------------------- Barclays Capital Aggregate Bond Index Portfolio 0.25% -- 0.03% -- 0.28% 0.01% 0.27% ---------------------------------------------------------------------------------- BlackRock Bond Income Portfolio 0.34% -- 0.03% -- 0.37% 0.01% 0.36% ---------------------------------------------------------------------------------- BlackRock Diversified Portfolio 0.46% -- 0.05% -- 0.51% -- 0.51% ---------------------------------------------------------------------------------- MetLife Stock Index Portfolio 0.25% -- 0.02% -- 0.27% 0.01% 0.26% ---------------------------------------------------------------------------------- MFS(R) Value Portfolio 0.70% -- 0.03% -- 0.73% 0.13% 0.60% ---------------------------------------------------------------------------------- MSCI EAFE(R) Index Portfolio 0.30% -- 0.11% 0.01% 0.42% 0.00% 0.42% ---------------------------------------------------------------------------------- Oppenheimer Global Equity Portfolio 0.52% -- 0.10% -- 0.62% -- 0.62% ---------------------------------------------------------------------------------- Russell 2000(R) Index Portfolio 0.25% -- 0.06% 0.01% 0.32% 0.00% 0.32% ---------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth Portfolio 0.49% -- 0.06% -- 0.55% -- 0.55% ----------------------------------------------------------------------------------
The Net Total Annual Operating Expenses shown in the table reflect contractual arrangements currently in effect under which the investment advisers of certain Portfolios have agreed to waive fees and/or pay expenses of the Portfolios until at least April 30, 2013. In the table, "0.00%" in the Contractual Fee Waiver and/or Expense Reimbursement column indicates that there is a contractual arrangement in effect for that Portfolio, but the expenses of the Portfolio are below the level that would trigger the waiver or reimbursement. The Net Total Annual Operating Expenses shown do not reflect voluntary waiver or expense reimbursement arrangements or arrangements that terminate prior to April 30, 2013. The Portfolios provided the information on their expenses, and we have not independently verified the information. METLIFE Metropolitan Life Insurance Company is a leading provider of insurance, annuities and employee benefit programs with operations throughout the United States. MetLife offers life insurance and annuities to individuals, as well as group insurance and retirement and savings products and many other services to corporations and other institutions. MetLife was formed under the laws of New York in 1868. The Company's home office is located at 200 Park Avenue, New York, New York 10166-0188. The Company is a wholly-owned subsidiary of MetLife, Inc. MetLife, Inc. is a leading global provider of 10 insurance, annuities and employee benefit programs, serving 90 million customers in over 50 countries. Through its subsidiaries and affiliates, MetLife, Inc. holds leading market positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. THE FIXED ACCOUNT The Fixed Account is part of our general assets that are not in any legally segregated separate accounts. The minimum guaranteed interest rate will vary based on the provisions stated in the Certificate but will never be lower than 3%. We may also credit excess interest on such amounts. Different excess interest rates may apply to different amounts based upon when such amounts were allocated to the Fixed Account. We credit the guaranteed and excess interest on each "Valuation Date" (as defined below in "Other Certificate Provisions--When Your Requests Become Effective"). We guarantee the credited interest, and it becomes part of the Certificate's cash value in the Fixed Account. We charge the portion of the monthly deduction that is deducted from the Fixed Account against the most recent premiums paid and interest credited thereto. We can delay transfers, withdrawals, surrender and payment of Certificate loans from the Fixed Account for up to 6 months. Since the Fixed Account is not registered under the federal securities laws, this Prospectus contains only limited information about the Fixed Account. The Group Policy and the Certificate give you more information on the operation of the Fixed Account. SEPARATE ACCOUNT UL THE SEPARATE ACCOUNT The Separate Account receives premium payments from the Group Policies and Certificates described in this Prospectus and other variable life insurance policies that we issue. The assets in the Separate Account legally belong to us, but they are held solely for the benefit of investors in the Separate Account and no one else, including our other policyholders and creditors. All the income, gains and losses (realized or unrealized) resulting from these assets are credited to or charged against the Group Policies and Certificates issued from the Separate Account without regard to our other business. We will keep an amount in the Separate Account that at least equals the value of our commitments to policy owners that are based on their investments in the Separate Account. We can also keep charges that we deduct and other excess amounts in the Separate Account or we can transfer the excess out of the Separate Account. We are obligated to pay the death benefit under the Certificates even if that amount exceeds the Certificate's Cash Value in the Separate Account. Any such amount that exceeds the Certificate's Cash Value in the Separate Account is paid from our general account. Death benefit amounts paid from the general account are subject to the financial strength and claims paying ability of the Company and our long term ability to make such payments. We issue other life insurance policies and annuity contracts where we pay all money we owe under those policies and contracts from our general account. MetLife is regulated as an insurance company under state law, which includes, generally, limits on the amount and type of investments in its general account. 11 However, there is no guarantee that we will be able to meet our claims paying obligations; there are risks to purchasing any insurance product. We are obligated to pay all amounts and other benefits to which you are entitled under the terms of your Certificate. THE INVESTMENT DIVISIONS [SIDEBAR: EACH SEPARATE ACCOUNT INVESTMENT DIVISION INVESTS IN A CORRESPONDING PORTFOLIO OF A FUND.] The Separate Account has subdivisions, called "investment divisions." Each investment division invests its assets exclusively in shares of a corresponding Portfolio of a Fund. We can add new investment divisions to or eliminate investment divisions from the Separate Account. You can designate how you would like your net premiums and cash value to be allocated among the available investment divisions and our Fixed Account. In some cases, your employer retains the right to allocate the portion of any net premiums it pays (rather than any premiums you pay). If so, the Certificate will state this. Amounts you allocate to each investment division receive the investment experience of the investment division, and you bear this investment risk. SUBSTITUTION OF INVESTMENTS If investment in the Portfolios or a particular Portfolio is no longer possible, or in our judgment becomes inappropriate for the purposes of the Policies, or for any other reason in our sole discretion, we may substitute another portfolio without your consent. The substituted portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investment of future premium payments, or both. However, we will not make such substitution without any necessary approval of the Securities and Exchange Commission. Furthermore, we may make available or close investment divisions to allocation of premium payments or cash value, or both, for some or all classes of Policies, at any time in our sole discretion. THE FUNDS [SIDEBAR: YOU SHOULD CAREFULLY REVIEW THE INVESTMENT OBJECTIVES, STRATEGIES, AND RISKS OF EACH PORTFOLIO WHICH ARE DESCRIBED IN THE PROSPECTUS FOR EACH FUND THAT IS ATTACHED AT THE END OF THIS PROSPECTUS.] Each of the Funds is a "series" type of mutual fund, which is registered as an open-end management investment company under the 1940 Act. Each Fund is divided into Portfolios, each of which represent a different class of stock in which a corresponding investment division of the Separate Account invests. Not all of the Portfolios of a Fund are available in connection with the Certificates. You should read the prospectus for each Portfolio. It contains information about the Portfolio, including the investment objectives, strategies, risks and investment advisers that are associated with each Portfolio. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS An investment adviser (other than our affiliate MetLife Advisers, LLC), or a sub-adviser of a Portfolio or its affiliates may make payments to us and/or certain of our affiliates. These payments may be used for a variety of purposes, including payment of expenses for certain administrative, marketing and support services with respect to the Policies, and, in the Company's role as an intermediary, with respect to the Portfolios. The Company and its affiliates may profit from these payments. These payments may be derived, in whole or in part, from the advisory fee deducted from Portfolio assets. Policy Owners, through their direct investment in the Portfolios, bear the costs of these advisory fees. (See the Portfolios' prospectuses for more information.) The 12 amount of the payments we receive is based on a percentage of assets of the Portfolio attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some advisers or sub-advisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50%. We, and certain of our affiliated insurance companies, have an ownership interest in our affiliated investment adviser, MetLife Advisers, LLC which is formed as a limited liability company. Our ownership interest in MetLife Advisers, LLC entitles us to profit distributions if the adviser makes a profit with respect to the advisory fees it receives from a Portfolio. We will benefit accordingly from assets allocated to the Portfolios to the extent they result in profits to the advisers. (See "Fee Tables--Annual Portfolio Operating Expenses" for information on the management fees paid by the Portfolios to the advisers and the Statement of Additional Information for the Funds for information on the management fees paid by the adviser to sub-advisers.) Additionally, an investment adviser or sub-adviser of a Portfolio or its affiliates may provide us with wholesaling services that assist in the distribution of the Policies and may pay us and/or certain affiliates amounts to participate in sales meetings. These amounts may be significant and may provide the adviser or sub-adviser (or their affiliate) with increased access to persons involved in the distribution of the Policies. SELECTION OF PORTFOLIOS We select the Portfolios offered through the Policy based on a number of criteria, including asset class coverage, the strength of the adviser's or sub-adviser's reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor we consider during the selection process is whether the Portfolio's adviser or sub-adviser is one of our affiliates or whether the Portfolio, its adviser, its sub-adviser(s), or an affiliate will make payments to us or our affiliates. In this regard, the profit distributions we receive from our affiliated investment advisers are a component of the total revenue that we consider in configuring the features and investment choices available in the variable insurance products that we and our affiliated insurance companies issue. Since we and our affiliated insurance companies may benefit more from the allocation of assets to portfolios advised by our affiliates than those that are not, we may be more inclined to offer portfolios advised by our affiliates in the variable insurance products we issue. We review the Portfolios periodically and may remove a Portfolio or limit its availability to new premium payments and/or transfers of cash value if we determine that the Portfolio no longer meets one or more of the selection criteria, and/or if the Portfolio has not attracted significant allocations from policy owners. In some cases, we have included Portfolios based on recommendations made by selling firms. These selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of Cash Value to such Portfolio. We do not provide investment advice and do not recommend or endorse any particular Portfolio. You bear the risk of any decline in the Cash Value of your Equity Options resulting from the performance of the Portfolios you have chosen. 13 MANAGEMENT OF PORTFOLIOS Each Fund has an investment adviser who is responsible for overall management of the Fund. These investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for some of the Portfolios. The adviser, any sub-adviser and the investment objective of each Portfolio are as follows:
-------------------------------------------------------------------------------------------- INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE ADVISER/SUBADVISER -------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- INITIAL CLASS -------------------------------------------------------------------------------------------- Freedom 2010 Portfolio Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. -------------------------------------------------------------------------------------------- Freedom 2020 Portfolio Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. -------------------------------------------------------------------------------------------- Freedom 2030 Portfolio Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. -------------------------------------------------------------------------------------------- Freedom 2040 Portfolio Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. -------------------------------------------------------------------------------------------- Freedom 2050 Portfolio Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. -------------------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST -- CLASS A -------------------------------------------------------------------------------------------- BlackRock Large Cap Core Seeks long-term capital MetLife Advisers, LLC Portfolio growth. Subadviser: BlackRock Advisors, LLC -------------------------------------------------------------------------------------------- Lord Abbett Bond Seeks high current income and MetLife Advisers, LLC Debenture Portfolio the opportunity for capital Subadviser: Lord, Abbett & appreciation to produce a high Co. LLC total return. -------------------------------------------------------------------------------------------- Morgan Stanley Mid Cap Seeks capital appreciation. MetLife Advisers, LLC Growth Portfolio Subadviser: Morgan Stanley Investment Management Inc. -------------------------------------------------------------------------------------------- METROPOLITAN SERIES FUND -- CLASS A -------------------------------------------------------------------------------------------- Baillie Gifford International Seeks long-term growth of MetLife Advisers, LLC Stock Portfolio capital. Subadviser: Baillie Gifford Overseas Limited -------------------------------------------------------------------------------------------- Barclays Capital Aggregate Seeks to track the performance MetLife Advisers, LLC Bond Index Portfolio of the Barclays U.S. Aggregate Subadviser: MetLife Bond Index. Investment Advisors Company, LLC -------------------------------------------------------------------------------------------- BlackRock Bond Income Seeks a competitive total MetLife Advisers, LLC Portfolio return primarily from Subadviser: BlackRock investing in fixed-income Advisors, LLC securities. -------------------------------------------------------------------------------------------- BlackRock Diversified Seeks high total return while MetLife Advisers, LLC Portfolio attempting to limit investment Subadviser: BlackRock risk and preserve capital. Advisors, LLC --------------------------------------------------------------------------------------------
14
------------------------------------------------------------------------------------------- INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE ADVISER/SUBADVISER ------------------------------------------------------------------------------------------- METROPOLITAN SERIES FUND -- CLASS A ------------------------------------------------------------------------------------------- MetLife Stock Index Seeks to track the MetLife Advisers, LLC Portfolio performance of the Standard & Subadviser: MetLife Poor's 500(R) Composite Stock Investment Advisors Price Index. Company, LLC ------------------------------------------------------------------------------------------- MFS(R) Value Portfolio Seeks capital appreciation. MetLife Advisers, LLC Subadviser: Massachusetts Financial Services Company ------------------------------------------------------------------------------------------- MSCI EAFE(R) Index Seeks to track the MetLife Advisers, LLC Portfolio performance of the MSCI Subadviser: MetLife EAFE(R) Index. Investment Advisors Company, LLC ------------------------------------------------------------------------------------------- Oppenheimer Global Equity Seeks capital appreciation. MetLife Advisers, LLC Portfolio Subadviser: OppenheimerFunds, Inc. ------------------------------------------------------------------------------------------- Russell 2000(R) Index Portfolio Seeks to track the MetLife Advisers, LLC performance of the Russell Subadviser: MetLife 2000(R) Index. Investment Advisors Company, LLC ------------------------------------------------------------------------------------------- T. Rowe Price Small Cap Seeks long-term capital MetLife Advisers, LLC Growth Portfolio growth. Subadviser: T. Rowe Price Associates, Inc. -------------------------------------------------------------------------------------------
Some of the Portfolios have names and investment objectives that are very similar to certain publicly available mutual funds that are managed by the same money managers. These Portfolios are not those publicly available mutual funds and will not have the same performance. Different performance will result from such factors as different implementation of investment policies, different cash flows into and out of the Portfolios, different fees and different sizes. THE PORTFOLIO SHARE CLASSES THAT WE OFFER The Funds offer various classes of shares, each of which has a different level of expenses. The prospectus for a Portfolio may provide information for share classes of the Portfolio that are not available through the Certificate. When you consult the prospectus for a Portfolio, you should be careful to refer only to the information regarding the class of shares that is available through the Certificate: .. For the Metropolitan Series Fund and the Met Investors Series Trust Portfolios, we offer Class A shares only. .. For the Fidelity Variable Products Portfolios, we offer Initial Class shares only. PURCHASE AND REDEMPTION OF PORTFOLIO SHARES BY OUR SEPARATE ACCOUNT As of the end of each Valuation Period (see "Valuation Period" description below in "Other Certificate Provisions--When Your Requests Become Effective"), we purchase and redeem Fund shares for the Separate Account at their net asset value without any sales or redemption charges. These purchases and redemptions reflect the amount of any of the following transactions that take effect at the end of the Valuation Period: .. The allocation of net premiums to the Separate Account. .. Dividends and distributions on Fund shares that are reinvested as of the dates paid (which reduces the value of each share of the Fund and increases the number of Fund shares outstanding, but has no effect on the cash value in the Separate Account). 15 .. Certificate loans and loan repayments allocated to the Separate Account. .. Transfers to and among investment divisions. .. Withdrawals and surrenders taken from the Separate Account. VOTING RIGHTS THAT YOU WILL HAVE [SIDEBAR: YOU CAN GIVE US VOTING INSTRUCTIONS ON SHARES OF EACH PORTFOLIO OF A FUND THAT ARE ATTRIBUTED TO YOUR CERTIFICATE.] The Funds have shareholder meetings from time to time to, for example, elect directors and approve some changes in investment management arrangements. We will vote the shares of each Portfolio that are attributed to your Certificate based on your instructions. Should we determine that the 1940 Act no longer requires us to do this, we may decide to vote Fund shares in our own right, without input from you or any other owners of variable life insurance policies or variable annuity contracts that participate in a Fund. ISSUING A GROUP POLICY AND A CERTIFICATE [SIDEBAR: WE WILL ISSUE A CERTIFICATE TO YOU AS OWNER. UNLESS YOUR EMPLOYER HAS RESERVED OTHERWISE, YOU WILL HAVE ALL THE RIGHTS UNDER THE CERTIFICATE, INCLUDING THE ABILITY TO NAME A NEW OWNER OR CONTINGENT OWNER.] We may issue a Group Policy to an employer or association ("employer") or to a trust through which an employer participates. Generally, the minimum number of people in a group that is required before we will issue a Group Policy directly to an employer is 200 lives. However, we reserve the right to issue a Group Policy or provide coverage to an employer that does not meet this minimum. Employees of employers and members of associations ("employees") may own Certificates issued under their employer's Group Policy. If you want to own a Certificate, then you must complete an enrollment form, which must be received by the Administrative Office. We reserve the right to reject an enrollment form for any reason permitted by law, and our acceptance of an enrollment form is subject to our underwriting rules. Generally, we will issue a Certificate only to an eligible employee, or a spouse of an eligible employee when permitted by the employer. The person upon whose life the Certificate is issued is called the covered person. The owner is generally the employee unless the enrollment form designates someone else as owner. For the purpose of computing the covered person's age under the Certificate, we start with the covered person's age on a day selected by your employer. Age can be measured from December 31st in a given year, or from any other date agreed to by your employer and us. The Date of Certificate is set forth in the Certificate and is the effective date for life insurance protection under the Certificate. We use the Date of Certificate to calculate the Certificate years (and Certificate months and monthly anniversaries). PAYMENT AND ALLOCATION OF PREMIUMS [SIDEBAR: YOU CAN MAKE PLANNED PERIODIC PREMIUM PAYMENTS AND UNSCHEDULED PREMIUM PAYMENTS.] The payment of a given premium will not necessarily guarantee that your Certificate will remain in force. Rather, this depends on the Certificate's cash surrender value. 16 PAYING PREMIUMS You can make premium payments, subject to certain limitations discussed below, through: .. PAYROLL DEDUCTION: Where provided by your employer, you may pay premiums through payroll deduction. Your employer may require that you pay a minimum monthly amount in order to use payroll deduction. Your employer may send payroll deductions to us as much as 30 days after the deduction is made. .. PLANNED PERIODIC PAYMENTS: If there is no payroll deduction available, you may elect to pay premiums monthly, quarterly or annually. .. UNSCHEDULED PREMIUM PAYMENT OPTION: You also can make other premium payments at any time. We do not accept premiums made in cash or by money order. If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such premium payments or requests, we may return the premium payment to you, or there may be a delay in applying the premium payment or transaction to your Certificate. MAXIMUM AND MINIMUM PREMIUM PAYMENTS .. The first premium may not be less than the planned premium. .. Unscheduled premium payments must be at least $100 each. We may change this minimum amount on 90 days notice to you. .. You may not pay premiums that exceed tax law premium limitations for life insurance policies. We will return any amounts that exceed these limits except that we will keep any amounts that are required to keep the Certificate from terminating. We will let you make premium payments that would turn the Certificate into a modified endowment contract, but we will promptly tell you of this status, and if possible, we will tell you how to reverse the status. ("See Tax Matters--Modified Endowment Contracts.") ALLOCATING NET PREMIUMS [SIDEBAR: NET PREMIUMS ARE YOUR PREMIUMS MINUS THE CHARGES DEDUCTED FROM YOUR PREMIUMS.] Generally, you indicate on your enrollment form the initial allocation of net premiums (your premiums minus the charges deducted from your premiums) among the Fixed Account and the investment divisions of the Separate Account. In some cases, your employer has the right to allocate the portion of any net premiums it pays (but not any premiums that you pay) until the covered person retires (if the covered person is employed by your employer) or the Certificate becomes portable. (See "Portable Certificate" under "Other Certificate Provisions--Effect of Termination of Employer Participation in the Group Policy.") If you fail to provide allocation instructions, we may allocate net premiums as described in the application. The Certificate includes a description of your right to allocate net premiums. The percentage of your net premium allocation into each of these investment options must be a minimum of 10% and in whole numbers. You can change your allocations at any time by giving us written notification at our Administrative Office or in any other manner that we permit. 17 INSURANCE PROCEEDS If the Certificate is in force, we will pay your beneficiary the insurance proceeds as of the end of the Valuation Period that includes the covered person's date of death. We will pay this amount after we receive documents that we request as due proof of the covered person's death. We will pay the proceeds in one sum, including either by check, by placing the amount in an account that earns interest and to which the accountholder has immediate and full access, or by any other method of payment that provides the beneficiary with immediate and full access to the proceeds, or under other settlement options that we may make available. None of these options vary with the investment performance of the Separate Account. More detailed information concerning settlement options is available on request from our Administrative Office. We will pay interest on the proceeds as required by the applicable state law. Unless otherwise requested and subject to state law, the Certificate's death proceeds will generally be paid to the beneficiary through a settlement option called the Total Control Account. The Total Control Account is an interest-bearing account through which the Beneficiary has immediate and full access to the proceeds, with unlimited draft writing privileges. We credit interest to the account at a rate that will not be less than a guaranteed minimum annual effective rate. You may also elect to have any Certificate surrender proceeds paid into a Total Control Account established for you. Assets backing the Total Control Accounts are maintained in our general account and are subject to the claims of our creditors. We will bear the investment experience of such assets; however, regardless of the investment experience of such assets, the interest credited to the Total Control Account will never fall below the applicable guaranteed minimum annual effective rate. Because we bear the investment experience of the assets backing the Total Control Accounts, we may receive a profit from these assets. The Total Control Account is not insured by the FDIC or any other governmental agency. The insurance proceeds equal: .. The death benefit provided on the date of death or the alternate death benefit; plus .. Any additional insurance proceeds provided by rider; minus .. Any unpaid Certificate loans and accrued interest thereon, and any due and unpaid charges accruing during a grace period. The amount of the death benefit that exceeds the Certificate's Cash Value is paid from our general account. Death benefit amounts paid from our general account are subject to the claims of our creditors. DEATH BENEFIT The death benefit varies and equals the specified face amount of insurance of the Certificate plus the cash value on the date of death. 18 ALTERNATE DEATH BENEFIT [SIDEBAR: THE CERTIFICATE PROVIDES A DEATH BENEFIT WHICH INCLUDES THE CASH VALUE OF THE CERTIFICATE.] In order to ensure that the Certificate qualifies as life insurance under the federal income tax laws, the beneficiary will receive an alternate death benefit if it is greater than the amount that the beneficiary would have received under the death benefit described above. The alternate death benefit is calculated by multiplying the Certificate's cash value by a prescribed percentage. The prescribed percentage is determined by the covered person's age at the time of the calculation and declines as the covered person grows older. The alternate death benefit is as follows:
AGE OF COVERED PERSON AT DEATH % OF CASH VALUE* ------------------------------------------------- 40 and less 250% 45 215% 50 185% 55 150% 60 130% 65 120% 70 115% 75 to 90 105% 95 100%
-------- * For the ages not listed, the percentage decreases by a ratable portion for each full year. During any period when your cash value is high enough that the alternate death benefit applies, your charges for insurance costs will be higher, since the effective amount of your coverage will be greater. In no event will the death benefit be less than the minimum insurance amount required under current Federal income tax rules applicable to the definition of life insurance as in effect on the date your Certificate is issued. SPECIFIED FACE AMOUNT [SIDEBAR: YOU CAN GENERALLY INCREASE OR DECREASE THE CERTIFICATE'S SPECIFIED FACE AMOUNT.] The specified face amount is the basic amount of life insurance specified in the Certificate. The Minimum Specified Face Amount is the smallest amount of specified face amount for which a Certificate may be issued, and is set forth in the Certificate. This amount will never be less than $10,000. Generally, you may change your specified face amount subject to certain limitations. Any change you request will be effective on the monthly anniversary on or next following our approval of your request. You are permitted to decrease the specified face amount to as low as the Minimum Specified Face Amount set forth in the Certificate. You may request an increase on dates determined by your employer and set forth in the Certificate. If you are a qualifying employee, we will make automatic increases in the specified face amount when your salary increases on a date or dates determined by your employer. However, you can notify us in writing at any time that you do not desire such automatic increases in the future. Any requirements as to the minimum amount of an increase are set forth in the Certificate. Any increase is subject to our underwriting rules which may include a requirement for evidence satisfactory to us of the covered person's insurability. 19 Before you change your specified face amount you should consider the following: .. The insurance portion of your death benefit will change. This will affect the insurance charges, cash value and death benefit levels; .. Reducing your specified face amount may result in our returning an amount to you which, if it occurs during the first 15 Certificate years, could then be taxed on an income first basis, even if the Certificate is not a modified endowment contract; .. The amount of additional premiums that the tax laws permit you to pay into the Certificate may increase or decrease. The additional amount you can pay without causing the Certificate to be a modified endowment contract for tax purposes may also increase or decrease (see "Tax Matters--Modified Endowment Contracts"); and .. The Certificate could become a modified endowment contract in certain circumstances. INCOME PLANS [SIDEBAR: GENERALLY YOU CAN RECEIVE THE CERTIFICATE'S INSURANCE PROCEEDS UNDER AN INCOME PLAN INSTEAD OF IN A LUMP SUM.] The insurance proceeds can generally be paid under a variety of income plans. We currently make the following income plans available: .. Interest Income .. Installment Income for a Stated Period .. Installment Income of a Stated Amount .. Single Life Income-Guaranteed Payment Period .. Joint and Survivor Life Income .. Single Life Income-Guaranteed Return Before you choose an income plan you should consider: .. The tax consequences associated with the Certificate proceeds, which can vary considerably, depending on whether a plan is chosen. You or your beneficiary should consult with a qualified tax advisor about tax consequences; and .. That the rates of return we credit under these plans are not based on the investment performance of any of the Portfolios. CASH VALUE, TRANSFERS AND WITHDRAWALS CASH VALUE [SIDEBAR: THE CERTIFICATE IS DESIGNED TO ACCUMULATE CASH VALUE.] The Certificate's CASH VALUE equals: .. The Fixed Account cash value, plus .. The Loan Account cash value, plus .. The Separate Account cash value. The Certificate's CASH SURRENDER VALUE equals your cash value minus: .. Any outstanding Certificate loans (plus any accrued and unpaid loan interest); .. Any accrued and unpaid monthly deduction; and .. Any surrender transaction fee. Unless the Group Policy is still in its first year, we will, on the Investment Start Date for the Certificate, allocate your cash value among the investment divisions as you requested your net premiums to be allocated in your enrollment form or a subsequent reallocation request. See "Investment Start Date" description below in "Other Certificate Provisions--When Your Requests Become Effective." If the Group Policy is still in its first year, we will make this allocation 20 days after the Investment Start Date. 20 Thereafter, at the end of each Valuation Period the cash value in an investment division will equal: .. The cash value in the investment division at the beginning of the Valuation Period; plus .. All net premiums, loan repayments and cash value transfers into the investment division during the Valuation Period; minus .. All partial cash withdrawals, loans and cash value transfers out of the investment division during the Valuation Period; minus .. The portion of any charges and deductions allocated to the cash value in the investment division during the Valuation Period; plus .. The net investment return for the Valuation Period on the amount of cash value in the investment division at the beginning of the Valuation Period. The net investment return currently equals the rate of increase or decrease in the net asset value per share of the underlying Fund portfolio over the Valuation Period, adjusted upward to take appropriate account of any dividends and other distributions paid by the portfolio during the period. CASH VALUE TRANSFERS The minimum amount you may transfer is $200 or, if less, the total amount in an investment option. You may make transfers at any time after the Investment Start Date. In some cases, your employer retains the right to transfer the portion of any net premiums it pays (but not any premiums you pay). The Certificate will set forth any such employer rights. In some cases, the maximum amount that you may transfer or withdraw from the Fixed Account in any Certificate year is the greater of .. $200 and .. 25% of the largest amount in the Fixed Account over the last four Certificate years (or since the Date of Certificate if the Certificate has been in effect for less than four years). Any such limit does not apply to .. a full surrender .. any loans taken .. any transfers under a systematic investment strategy It is important to note that due to the restrictions on transfers from the Fixed Account, it could take a number of years to fully transfer a current balance in the Fixed Account to the investment divisions of the Separate Account. You should keep this in mind when considering whether an allocation of cash value to the Fixed Account is consistent with your risk tolerance and time horizon. The Certificate includes a description of your cash value transfer rights. We do not charge for transfers. Currently, transfers are not taxable transactions. Frequent requests from Certificate Owners to transfer cash value may dilute the value of a Portfolio's shares if the frequent trading involves an attempt to take advantage of pricing inefficiencies created by a lag between a change in the value of the securities held by the Portfolio and the reflection of that change in the Portfolio's share price ("arbitrage trading"). Regardless of the existence of pricing inefficiencies, frequent transfers may also increase brokerage and administrative costs of the underlying Portfolios and may disrupt portfolio management strategy, requiring a Portfolio to maintain a high cash position and possibly resulting in lost investment opportunities and 21 forced liquidations ("disruptive trading"). Accordingly, arbitrage trading and disruptive trading activities (referred to collectively as "market timing") may adversely affect the long-term performance of the Portfolios, which may in turn adversely affect Certificate Owners and other persons who may have an interest in the Certificates (E.G., beneficiaries). We have policies and procedures that attempt to detect and deter frequent transfers in situations where we determine there is a potential for arbitrage trading. Currently, we believe that such situations may be presented in the international, small-cap, and high-yield Portfolios (I.E., Baillie Gifford International Stock Portfolio, MSCI EAFE(R) Index Portfolio, Oppenheimer Global Equity Portfolio, Russell 2000(R) Index Portfolio, T. Rowe Price Small Cap Growth Portfolio, and Lord Abbett Bond Debenture Portfolio) and we monitor transfer activity in those Portfolios (the "Monitored Portfolios"). We employ various means to monitor transfer activity, such as examining the frequency and size of transfers into and out of the Monitored Portfolios within given periods of time. For example, we currently monitor transfer activity to determine if, for each category of international, small-cap and high-yield Portfolios, in a 12-month period there were; (1) six or more transfers involving the given category; (2) cumulative gross transfers involving the given category that exceed the current cash value; and (3) two or more "round-trips" involving any Portfolio in the given category. A round-trip generally is defined as a transfer in followed by a transfer out within the next seven calendar days or a transfer out followed by a transfer in within the next seven calendar days, in either case subject to certain other criteria. We do not believe that other Portfolios present a significant opportunity to engage in arbitrage trading and therefore do not monitor transfer activity in those Portfolios. We may change the Monitored Portfolios at any time without notice in our sole discretion. In addition to monitoring transfer activity in certain Portfolios, we rely on the underlying Portfolios to bring any potential disruptive trading activity they identify to our attention for investigation on a case-by-case basis. We will also investigate any other harmful transfer activity that we identify from time to time. We may revise these policies and procedures in our sole discretion at any time without prior notice. Our policies and procedures may result in transfer restrictions being applied to deter market timing. Currently, when we detect transfer activity in the Monitored Portfolios that exceeds our current transfer limits, or other transfer activity that we believe may be harmful to other Certificate Owners or other persons who have an interest in the Certificates, we require all future transfer requests, to or from a Monitored Portfolio or other identified Portfolios, under that Certificate to be submitted in writing with an original signature. Transfers made under an automated investment strategy described in this prospectus are not treated as transfers when we evaluate trading patterns for market timing. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective, such as the decision to monitor only those Portfolios that we believe are susceptible to market timing or the determination of the transfer limits. Our ability to detect and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Certificate Owners to avoid such detection. Our ability to restrict such transfer activity may also be limited by provisions of the Certificates. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Certificate Owners and other persons with interests in the Certificates. We do not accommodate market 22 timing in any Portfolios and there are no arrangements in place to permit any Certificate Owner to engage in market timing; we apply our policies and procedures without exception, waiver, or special arrangement. The Portfolios may have adopted their own policies and procedures with respect to market timing transactions in their respective shares, and we reserve the right to enforce these policies and procedures. For example, Portfolios may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period. The prospectuses for the Portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Although we may not have the contractual authority or the operational capacity to apply the market timing policies and procedures of the Portfolios, we have entered into a written agreement, as required by SEC regulation, with each Portfolio or its principal underwriter that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual Certificate owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Certificate owners who violate the frequent trading policies established by the Portfolio. In addition, Certificate Owners and other persons with interests in the Certificates should be aware that the purchase and redemption orders received by the Portfolios generally are "omnibus" orders from intermediaries such as retirement plans or separate accounts funding variable insurance contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance policies and/or individual retirement plan participants. The omnibus nature of these orders may limit the Portfolios in their ability to apply their market timing policies and procedures. In addition, the other insurance companies and/or retirement plans may have different policies and procedures or may not have any such policies and procedures because of contractual limitations. For these reasons, we cannot guarantee that the Portfolios (and thus Certificate Owners) will not be harmed by transfer activity relating to the other insurance companies and/or retirement plans that may invest in the Portfolios. If a Portfolio believes that an omnibus order reflects one or more transfer requests from contract owners engaged in disruptive trading activity, the Portfolio may reject the entire omnibus order. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing and disruptive activities (even if an entire omnibus order is rejected due to the market timing or disruptive trading activity of a single Certificate Owner). You should read the Portfolio prospectuses for more details. SYSTEMATIC INVESTMENT STRATEGIES. For certain groups, you can choose one of four currently available strategies described below. Your employer can inform you whether these investment strategies are available. You can also change or cancel your choice at any time. EQUITY GENERATOR /SM/. Allows you to transfer an amount equal to the interest earned in the Fixed Account in any Certificate month equal to at least $20 to the MetLife Stock Index investment division. The transfer will be made at the beginning of the Certificate month following the Certificate month in which the interest was earned. 23 EQUALIZER /SM/. Allows you to periodically equalize amounts in your Fixed Account and the MetLife Stock Index investment division. We currently make equalization each quarter. We will terminate this strategy if you make a transfer out of either of the investment divisions or the Fixed Account. You may then reelect the Equalizer on your next Certificate anniversary. REBALANCER/SM/. Allows you to periodically redistribute amounts in the Fixed Account and investment divisions in the same proportion that the net premiums are then being allocated. We currently make the redistribution each quarter. ALLOCATOR/SM/. Allows you to systematically transfer money from the Fixed Account to any investment division(s). When you elect Allocator, you must have enough cash value in the Fixed Account to enable the election to be in effect for three months. The election can be to transfer each month: .. A specific amount, until the cash value in the Fixed Account is exhausted; .. A specific amount for a specific number of months; or .. Amounts in equal installments until the total amount you have requested has been transferred. These transfer privileges allow you to take advantage of investment fluctuations, but none assures a profit nor protects against a loss in declining markets. Because the Allocator involves continuous investment in securities regardless of the price levels of such securities, you should consider your financial ability to continue purchases through periods of fluctuating price levels. SURRENDER AND WITHDRAWAL PRIVILEGES [SIDEBAR: YOU CAN SURRENDER THE CERTIFICATE FOR ITS CASH SURRENDER VALUE.] We may ask you to return the Certificate before we honor your request to surrender the Certificate. The proceeds will be paid in a single sum. If the covered person dies after you surrender the Certificate but before the end of the Certificate month in which you surrendered the Certificate, we will pay your beneficiary an amount equal to the difference between the Certificate's death benefit and its cash value, computed as of the surrender date. You can make partial withdrawals if: .. the withdrawal is at least $200; and .. in some cases, the amount you request to withdraw from the Fixed Account is not more than the greater of (a) $200, and (b) 25% of the largest amount in the Fixed Account over the last four Certificate years (or since the Date of Certificate if the Certificate has been in effect for less than four years). The Certificate includes a description of your rights to make partial withdrawals. If you make a request for a partial withdrawal that is not permitted, we will tell you and you may then ask for a smaller withdrawal or surrender the Certificate. We will deduct your withdrawal from the Fixed Account and each of the investment divisions of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the Certificate in the Fixed Account and the investment divisions. As regards payment of amounts attributable to a check, we can wait for a reasonable time (15 days or less) to let the check clear. 24 Before surrendering the Certificate or requesting a partial withdrawal you should consider the following: .. Transaction fees of up to $25 (but not greater than 2% of the amount withdrawn) may apply, if the Certificate so states. .. Amounts received may be taxable as income and, if your Certificate is a modified endowment contract, subject to certain tax penalties. (See "Tax Matters--Modified Endowment Contracts.") .. If you also decrease your specified face amount at the time of the withdrawal, the Certificate could become a modified endowment contract. .. For partial withdrawals, your death benefit will decrease, generally by the amount of the withdrawal. In some cases you may be better off taking a Certificate loan, rather than a partial withdrawal. BENEFIT AT FINAL DATE The Final Date is the Certificate anniversary on which the covered person reaches age 95. Subject to certain conditions, we will allow you to extend that date where permitted by state law. If the covered person is living on the Final Date, we will pay the cash surrender value of the Certificate to the Certificate owner (generally the employee). The Certificate owner will receive the cash surrender value in a single sum. PAID-UP CERTIFICATE PROVISION Under this provision, you can choose to terminate the Certificate's usual death benefit (and any riders in effect) and use all or part of the cash surrender value as a single premium for a "paid-up" benefit under the Certificate. ("Paid-up" means no further premiums are required.) Thereafter, you may no longer allocate cash value to the Separate Account or the Fixed Account. You will receive in cash any remaining cash surrender value that is not used to elect a paid-up benefit. The paid-up benefit must not be: .. more than can be purchased using the Certificate's cash surrender value; .. more than the death benefit under the Certificate at the time you choose to use this provision; or .. less than $10,000. LOAN PRIVILEGES [SIDEBAR: YOU CAN BORROW FROM US AND USE THE CERTIFICATE AS SECURITY FOR THE LOAN.] The amount of each loan must be: .. At least $200; and .. No more than 75% of the cash surrender value (unless state law requires a different percentage to be applied, as set forth in your Certificate) when added to all other outstanding Certificate loans. For certain Group Policies, we may charge a transaction fee of up to $25 for each loan if the Certificate so states. As of your loan request's Date of Receipt, we will: .. Remove an amount equal to the loan, and an amount equal to the present value of the loan interest due, from your cash value in the Fixed Account and each investment division of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the 25 Certificate in the Fixed Account and the investment divisions. The present value of the loan interest due is the loan interest due at the next Certificate anniversary, discounted at an interest rate equal to the current Loan Account crediting rate. .. Transfer such cash value to the Loan Account, where it will be credited with interest at a rate equal to the loan rate charged less a percentage charge, based on expenses associated with Certificate loans, determined by us. This percentage charge will not exceed 2%, and the minimum rate we will credit to the Loan Account will be 3% per year (for Group Policies issued prior to March 1, 1999, the minimum rate is 4%). At least once a year, we will transfer any interest earned in your Loan Account to the Fixed Account and the investment divisions, according to the way that we then allocate your net premiums. .. Charge you interest, which will accrue daily at a rate of up to 8% per year (which is the maximum rate we will ever charge). We will determine the current interest rate applicable to you at the time you take a loan. Your interest payments are generally due at the beginning of each Certificate year. However, we reserve the right to make interest payments due in a different manner. If you do not pay the amount within 31 days after it is due, we will treat it as a new Certificate loan. Repaying your loans (plus accrued interest) is done by sending in payments at any time before the Final Date while the covered person is living. You should designate whether a payment is intended as a loan repayment or a premium payment, since we will treat any payment for which no designation is made as a premium payment. We will allocate your repayment to the Fixed Account and the investment divisions, in the same proportion that net premiums are then allocated. Before taking a Certificate loan you should consider the following: .. Interest payments on loans are generally not deductible for tax purposes. .. Under certain situations, Certificate loans could be considered taxable distributions. .. Amounts held in your Loan Account do not participate in the investment experience of the investment divisions or receive the interest rate credited to the Fixed Account either of which may be higher than the interest rate credited on the amount you borrow. .. If you surrender the Certificate or if we terminate the Certificate, or at the Final Date, any outstanding loan amounts (plus accrued interest) may be taxed as a distribution. (See "Federal Tax Matters--Loans" below.) .. A Certificate loan increases the chances of our terminating the Certificate due to insufficient cash surrender value. We will terminate your Certificate with no value if: (a) on a monthly anniversary your loans (plus accrued interest) exceed your cash value minus the monthly deduction; and (b) we tell you of the insufficiency and you do not make a sufficient payment within the greater of (i) 61 days of the monthly anniversary, or (ii) 30 days after the date notice of the start of the grace period is mailed to you. .. The Certificate's death proceeds will be reduced by any unpaid loan (plus any accrued and unpaid loan interest). OPTIONAL BENEFITS ADDED BY RIDER You may be eligible for certain benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) as part of the monthly deduction. Each 26 rider contains important information, including limits and conditions that apply to the benefits. Generally, we currently make the following benefits available by rider: Disability Waiver of Monthly Accidental Death or Deduction Benefit/1,2/ Dismemberment Benefit/1/ --------------------------------------------------------------- Accelerated Benefits Option/1,3/ Dependent Life Benefits/1/ --------------------------------------------------------------- Accidental Death Benefit/1/
-------- /1/ Provided to you only if elected by your employer. /2/ An increase in specified face amount may not be covered by this rider. If not, the portion of the monthly deduction associated with the increase will continue to be deducted from the cash value, which if insufficient, could result in the Certificate's termination. For this reason, it may be advantageous for the owner, at the time of total disability, to reduce the specified face amount to that covered by this rider. /3/ Payment under this rider may affect eligibility for benefits under state or federal law. Each rider contains important information, including limits and conditions that apply to the benefits. If you decide to purchase any of the riders, you should carefully review their provisions to be sure the benefit is something that you want. You should also consider: .. That the addition of certain riders can restrict your ability to exercise certain rights under the Certificate. .. That the amount of benefits provided under the rider is not based on investment performance of a separate account; but, if the Certificate terminates because of poor investment performance or any other reason, the rider generally will also terminate. .. The tax consequences. You should consult with your tax advisor before purchasing one of the riders. CHARGES AND DEDUCTIONS [SIDEBAR: CAREFULLY REVIEW THE "FEE TABLES" IN THIS PROSPECTUS WHICH SET FORTH THE CHARGES THAT YOU PAY UNDER THE CERTIFICATE.] IMPORTANT INFORMATION APPLICABLE TO ALL CERTIFICATE CHARGES AND DEDUCTIONS The charges discussed in the paragraphs that follow are all included in the Fee Tables on pages 5 to 10 of this Prospectus. You should refer to those Fee Tables for information about the rates of and amounts of such charges, as well as other information that is not covered below. The Certificate charges compensate us for the services and benefits we provide, the costs and expenses we incur, and the risks we assume. Services and benefits we provide: .. the death benefit, cash, and loan benefits under the Certificate .. investment options, including premium allocations .. administration of elective options .. the distribution of reports to certificate owners Costs and expenses we incur: .. costs associated with processing and underwriting applications, and with issuing and administering the Certificate (including any riders) .. overhead and other expenses for providing services and benefits .. sales and marketing expenses 27 .. other costs of doing business, such as collecting premiums, maintaining records, processing claims, effecting transactions, and paying federal, state, and local premium and other taxes and fees Risks we assume: .. that the cost of insurance charges we may deduct are insufficient to meet our actual claims because the insureds die sooner than we estimate .. that the charges of providing the services and benefits under the Certificates exceed the charges we deduct Our revenue from any particular charge may be more or less than any costs or expenses that charge is intended primarily to cover. We may use our revenues from one charge to pay other costs and expenses in connection with the Certificates including distribution expenses. We may also profit from all the charges combined, including the cost of insurance charge and the Mortality and Expense Risk charge and use such profits for any corporate purpose. The following sets forth additional information about some (but not all) of the Certificate charges. CHARGES DEDUCTED FROM PREMIUMS CHARGE FOR AVERAGE EXPECTED STATE TAXES ATTRIBUTABLE TO PREMIUMS: We make this charge to reimburse us for the state premium taxes that we must pay on premiums we receive. Although premium taxes vary from state to state, we will charge one rate for each employer group. We estimate the initial charge for each employer group based on anticipated taxes to be incurred on behalf of each group during its first year of coverage. Thereafter, we will base this charge on anticipated taxes taking into account actual state and local premium taxes we incur on behalf of each employer group in the prior year and known factors affecting the coming year's taxes. This charge may vary based on changes in the law or changes in the residence of the Certificate owners. We may deduct this charge, as well as the charge for expected federal taxes attributable to premiums, either as a percent of premium or as part of the monthly deduction. In the latter case, the amount we deduct would depend on the amount of premiums paid by the group as a whole rather than the amount paid by you. Currently, we are charging covered employer groups rates up to 2.55%, which reflect the average state premium taxes currently being charged for the group. There is no specific maximum rate we may charge. CHARGE FOR EXPECTED FEDERAL TAXES ATTRIBUTABLE TO PREMIUMS. Federal income tax law requires us to pay certain amounts of taxes that are related to the amount of premiums we receive. We deduct 0.35% of each premium payment to offset the cost to us of those additional taxes, which may be more or less than the amount we pay in respect of your premiums. CHARGES INCLUDED IN THE MONTHLY DEDUCTION The Certificate describes the charges that are applicable to you as part of the monthly deduction. The monthly deduction accrues on each monthly anniversary starting with the Date of Certificate. However, we may make the actual deduction up to 45 days after each such monthly anniversary. We allocate the monthly deduction among the Fixed Account and each of the 28 investment divisions of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the Certificate in the Fixed Account and the investment divisions. COST OF INSURANCE: This charge varies based on many factors. Each month, we determine the charge by multiplying your cost of insurance rate by the insurance amount. This is the amount we are at risk if the insured dies, and the Fee Table earlier in this Prospectus calls it our "Net Amount at Risk." The insurance amount (or Net Amount at Risk) is the death benefit at the beginning of the Certificate month, minus the cash value at the beginning of the Certificate month. The insurance amount will be affected by changes in the specified face amount of the Certificate. The insurance amount and therefore the cost of insurance will be greater if the specified face amount is increased. If the alternate death benefit is in effect, then the insurance amount will increase and thus your cost of insurance will be higher. The cost of insurance rate is based on: .. The age and rate class of the covered person .. Group mortality characteristics .. The particular characteristics that are agreed to by your employer and us, such as: 1. The rate class structure; 2. The degree of stability in the charges sought by your employer; and 3. Portability features. .. The amount of any surplus or reserves to be transferred to us from any previous insurer or from another of our policies (see "Other Certificate Provisions--Retrospective Experience Rating and Dividends"). The actual monthly cost of insurance rates will be based on our expectations as to future experience. The rates, however, will never exceed the guaranteed cost of insurance rates set forth in the Certificate. These guaranteed rates may be up to 150% of the rates that could be charged based on the 1980 Commissioners Standard Ordinary Mortality Table, Males, age last birthday ("1980 CSO Table"). The maximum guaranteed rates may be higher than the 1980 CSO Table because we use simplified underwriting and non-medical issue procedures whereby we may not require the covered person to submit to a medical or paramedical examination, and may provide coverage to groups that present substandard risk characteristics according to our underwriting criteria. Our current rates are lower than 100% of the 1980 CSO Table in most cases. We review our rates periodically and may adjust them based on our expectations of future experience. We will apply the same rates to everyone in a group who has had their Certificate for the same amount of time and who is the same age and rate class. We adjust the rates from time to time based on several factors, including: .. the number of Certificates in force for each group; .. the number of Certificates in the group surrendered or becoming portable during the period; and .. the actual experience of the group. As a general rule, the cost of insurance rate increases each year you own the Certificate, as the covered person's age increases. Our use of simplified underwriting and non-medical issue procedures may result in higher cost of insurance charges for some healthy individuals. 29 Rate class relates to the level of mortality risk we assume with respect to a covered person. We and your employer will agree to the number of classes and characteristics of each class. The classes may vary by smoker and nonsmokers, active and retired status, Owners of portable Certificates and other Owners, and/or any other non-discriminatory classes we and your employer agree to. The covered person's rate class will affect your cost of insurance. ADMINISTRATION CHARGE: We make this monthly charge primarily to compensate us for expenses we incur in the administration of the Certificates, including our underwriting and start-up expenses. The Certificate will describe your administration charge. The charge will never exceed $5 per Certificate. We will determine differences in the administration charge rates applicable to different Certificates under the Group Policies based on expected differences in the administrative costs under the Certificates or in the amount of revenues that we expect to derive from the charge. Such differences may result, for example, from: .. features that are agreed to by your employer and us; .. the extent to which certain administrative functions are to be performed by us or by your employer; and .. the expected average Certificate death benefit. CHARGE AGAINST THE SEPARATE ACCOUNT We make this daily Mortality and Expense Risk charge against the assets in the Separate Account primarily to compensate us for: .. mortality risks that covered persons may live for a shorter period than we expect; and .. expense risks that our issuing and administrative expenses may be higher than we expect. The maximum rate we may charge is equivalent to an effective annual rate of ..90% of the Cash Value in the Separate Account. We may determine differences in this charge for different employer groups based on differences in the levels of mortality and expense risks. These differences arise mainly from the fact that: .. the factors discussed above on which the cost of insurance and administration charges are based are more uncertain in some cases than others; and .. our ability to recover any unexpected costs from Certificate charges varies from case to case depending on the maximum rates for such charges we agree to with employers. We reserve the right, if permitted by law, to change the structure of this charge so that it is charged on a monthly basis as a percentage of cash value in the Separate Account or so that it is charged as a part of the monthly deduction. Our right to change the structure of this charge does not permit us to increase the maximum rate that is stated in the Policy. VARIATIONS IN CHARGES We will determine Certificate charge rates pursuant to our established actuarial procedures, and we will not discriminate unreasonably or unfairly against owners of Certificates under any Group Policy. 30 PORTFOLIO COMPANY CHARGES Each of the Portfolios pays an investment management fee to its investment manager. Each Portfolio also incurs other direct expenses. See the fuller description contained in the Fee Table section of this Prospectus (also see the Fund Prospectus and Statement of Additional Information referred to therein for each Fund). You bear indirectly your proportionate share of the fees and expenses of the Portfolios of each Fund that correspond to the Separate Account investment divisions you are using. OTHER CHARGES ADDITIONAL TAXES. In general, we don't expect to incur federal, state or local taxes upon the earnings or realized capital gains attributable to the assets in the Separate Account relating to the cash surrender value of the Policies. If we do incur such taxes, we reserve the right to charge cash value allocated to the Separate Account for these taxes. TRANSACTION FEE FOR SURRENDERS OR PARTIAL WITHDRAWALS. Your Certificate may provide that we may charge a transaction fee of up to $25 for each surrender or partial withdrawal. In no event, however, will the charge be greater than 2% of the amount withdrawn. LOAN INTEREST SPREAD: We charge interest on Certificate loans but credit you with interest on the amount of the Cash Value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. This charge is primarily to cover our expense in providing the loan. The spread is guaranteed to never exceed 2%. CERTIFICATE TERMINATION AND REINSTATEMENT TERMINATION: We will terminate the Certificate without any cash surrender value if: .. The cash surrender value on any monthly anniversary is less than the monthly deduction; and .. We do not receive a sufficient premium payment within the grace period to cover the monthly deduction. We will mail you notice if any grace period starts. The grace period is the greater of (a) 61 days measured from the monthly anniversary and (b) 30 days after the notice is mailed. REINSTATEMENT: The following applies unless the Group Policy has been terminated and you would not have been permitted to retain your Certificate on a portable or paid-up basis. Upon your request, we will reinstate the Certificate, subject to certain terms and conditions that the Certificate provides. We must receive your request within 3 years (or within a longer period if required by state law) after the end of the grace period and before the Final Date. You also must provide us with: .. A written request for reinstatement. .. Evidence of insurability that we find satisfactory. .. An additional premium amount that the Certificate prescribes for this purpose. Your Certificate can also terminate in some cases if your employer ends its participation in the Group Policy. This is discussed in detail under "Other Certificate Provisions--Effect of Termination of Employer Participation in the Group Policy" below. 31 FEDERAL TAX MATTERS [SIDEBAR: YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR TO FIND OUT HOW TAXES CAN AFFECT YOUR BENEFITS AND RIGHTS UNDER THE CERTIFICATE.] The following is a brief summary of some tax rules that may apply to the Certificate. Such discussion does not purport to be complete or to cover every situation. The summary does not address state, local or foreign tax issues related to the Certificate. You must consult with and rely on the advice of your own tax or ERISA counsel especially where the Certificate is being purchased in connection with an employee benefit plan, such as a death benefit or deferred compensation plan, or is being purchased for estate, tax planning or similar purposes. You should also consult with your own tax advisor to find out how taxes can affect your benefits and rights under the Certificate. Such consultation is especially important before you make unscheduled premium payments, change your specified face amount, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Certificate. Under current federal income tax law, the taxable portion of distributions from variable life contracts is taxed at ordinary income tax rates and does not qualify for the reduced tax rate applicable to long-term capital gains and dividends. IRS CIRCULAR 230 NOTICE: The tax information contained in this Prospectus is not intended to (and cannot) be used by anyone to avoid IRS penalties. It is intended to support the sale of the Policy. The Policyholder should seek tax advice based on its particular circumstances from an independent tax advisor. INSURANCE PROCEEDS .. Insurance proceeds are generally excludable from your beneficiary's gross income to the extent provided in Section 101 of the Internal Revenue Code ("Code"). Insurance proceeds may be taxable in some circumstances, such as where there is a transfer-for-value of a Certificate or where a business is the Owner of the Certificate covering the life of the employee, if certain notice and consent and other requirements are not satisfied. .. The proceeds may be subject to federal estate tax: (i) if paid to the covered person's estate or (ii) if paid to a different beneficiary if the covered person possessed incidents of ownership at or within three years before death. .. If you die before the covered person, the value of the Certificate (determined under IRS rules) is included in your estate and may be subject to federal estate tax. .. Whether or not any federal estate tax is due is based on a number of factors including the estate size. .. The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for a Certificate to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Certificate was issued. CASH VALUE (IF THE CERTIFICATE IS NOT A MODIFIED ENDOWMENT CONTRACT) .. You are generally not taxed on your cash value until you withdraw it or surrender the Certificate or receive a distribution such as when your Certificate terminates or on the Final Date. In these cases, you are generally permitted to take withdrawals and receive other distributions up to the amount of premiums paid without any tax consequences. However, withdrawals and other distributions will be subject to income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules may apply if there is a death benefit reduction in the first 15 Certificate years, when a distribution may be subject to tax on an income-out-first basis if there is a gain in the Certificate (which is generally when your cash value exceeds the cumulative premiums you paid). 32 There may be an indirect tax upon the income in the Certificate or the proceeds of a Certificate under the Federal corporate alternative minimum tax, if you are subject to that tax. LOANS .. Loan amounts you receive will generally not be subject to income tax, unless your Certificate is or becomes a modified endowment contract or terminates. .. Interest on loans is generally not deductible. .. If the Certificate terminates (upon surrender, cancellation, lapse, or the Final Date of replacement by your employer of your group coverage with other group coverage) while any Certificate loan is outstanding, the amount of the loan plus accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Certificate distribution. Thus, there will generally be federal income tax payable on the amount by which withdrawals and loans exceed the premiums paid to date. In the case of an outstanding loan at the time of an exchange, the cancelled loan will generally be taxed to the extent of any policy gain. Please be advised that amounts borrowed and withdrawn reduce the Certificate's cash value and any remaining cash value of the Certificate may be insufficient to pay the income tax on your gains. MODIFIED ENDOWMENT CONTRACTS These contracts are life insurance contracts where the premiums paid during the first 7 years after the Certificate is issued, or after a material change in the Certificate, exceed tax law limits referred to as the "7-pay test." Material changes in the Certificate include changes in the level of benefits and certain other changes to the Certificate after the issue date. Reductions in benefits during a 7-pay period also may cause the Certificate to become a modified endowment contract. Generally, a life insurance policy that is received in exchange for a modified endowment contract will also be considered a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts. Due to the flexibility of the Certificates as to premiums and benefits, the individual circumstances of each Certificate will determine whether it is classified as a MEC. If your Certificate is considered a modified endowment contract the following applies: .. The death benefit will still generally be income tax free to your beneficiary, as discussed above. .. Amounts withdrawn or distributed before the covered person's death, including (without limitation) loans, assignments and pledges, are treated as income first and subject to income tax (to the extent of any gain in the Certificate). All modified endowment contracts you purchase from us and our affiliates during the same calendar year are treated as a single contract for purposes of determining the amount of any such income. .. An additional 10% income tax generally applies to the taxable portion of the amounts received before age 59 1/2, except generally if you are disabled or if the distribution is part of a series of substantially equal periodic payments made over life expectancy. .. If a Certificate becomes a modified endowment contract, distributions that occur during the contract year will be taxed as distributions from a modified endowment contract. In addition, distributions from a Certificate within two 33 years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Certificate that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. DIVERSIFICATION In order for the Certificate to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Certificate. We believe that we satisfy and will continue to satisfy these diversification standards. Inadvertent failure to meet these standards may be able to be corrected. Failure to meet these standards would result in immediate taxation to Certificate owners of gains under their Certificates. In addition, if the Portfolio shares are sold directly to tax-qualified retirement plans that later lose their tax-qualified status or to non-qualified plans, there could be adverse consequences under the diversification rules. INVESTOR CONTROL In some circumstances, owners of variable contracts who retain excessive control over the investment of the separate account assets underlying their contracts may be treated as the owners of those assets and may be subject to tax on income produced by those assets. Although published guidance in this area does not address certain aspects of the Certificates, we believe that the owner of a Certificate should not be treated as an owner of any assets in our Separate Account. We reserve the right to modify the Certificates to bring them into conformity with applicable standards should such modification be necessary to prevent owners of the Certificates from being treated as the owners of any underlying Separate Account assets. ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES The transfer of the Policy or the designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. When the insured dies, the death proceeds will generally be includable in the Policy Owner's estate for purposes of the Federal estate tax if the Policy Owner was the insured, retained incidents of ownership at death, or made a gift transfer of the Certificate within 3 years of death. If the Policy Owner was not the insured, the fair market value of the Policy would be included in the Policy Owner's estate upon the Policy Owner's death. Moreover, under certain circumstances, the Internal Revenue Code may impose a "generation-skipping transfer tax" when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Policy Owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS. Qualified tax advisers should be consulted concerning the estate and gift tax consequences of Policy ownership and distributions under Federal, state and local law. The individual situation of each Policy Owner or beneficiary will determine the extent, if any, to which Federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of Federal, state and local estate, inheritance, generation-skipping transfer and other taxes. 34 Under previous law, the estate tax applicable exclusion gradually rose to $3.5 million per person in 2009 and the estate tax was repealed in 2010 with a modified carryover basis for heirs. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Act) has reinstated the estate and generation-skipping taxes through the end of 2012 with lower top rates and larger exemptions. The 2010 Act raises the applicable exclusion amount to $5,000,000. The top tax rate is set at 35%. A special irrevocable election was provided for estates of decedents who died in 2010. These estates may generally choose between the reinstated estate tax and the carryover basis rules which were in effect in 2010. It is not known if Congress will make the temporary changes of the 2010 Act permanent, enact permanent repeal of the estate and generation-skipping transfer tax or otherwise modify the estate tax or generation-skipping transfer tax rules for years after 2012. Absent Congressional action, the law governing estate, gift and generation-skipping transfer taxes will revert on January 1, 2013 to the law that was in place on June 7, 2001. The complexity of the tax law, along with uncertainty as to how it might be modified in coming years, underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios. WITHHOLDING To the extent that Certificate distributions are taxable, they are generally subject to withholding for the recipient's federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. LIFE INSURANCE PURCHASES BY RESIDENTS OF PUERTO RICO In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service recently announced that income received by residents of Puerto Rico under life insurance contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States Federal income tax. LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from life insurance Certificates at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to the purchase of a Certificate. CHANGES TO TAX RULES AND INTERPRETATIONS Changes in applicable tax rules and interpretations can adversely affect the tax treatment of your Certificate. These changes may take effect retroactively. We reserve the right to amend the Certificate in any way 35 necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include: .. Possible taxation of cash value transfers between investment funds. .. Possible taxation as if you were the owner of your allocable portion of the Separate Account's assets. .. Possible limits on the number of investment funds available or the frequency of transfers among them. .. Possible changes in the tax treatment of Certificate benefits and rights. OTHER ISSUES RELATING TO GROUP VARIABLE UNIVERSAL LIFE While "employee pay all" group variable universal life should generally be treated as separate from any Internal Revenue Code Section 79 Group Term Life Insurance Plan also in effect, in some circumstances group variable universal life could be viewed as being part of such a plan, possibly giving rise to adverse tax consequences. Finally, employer involvement and other factors determine whether group variable universal life is subject to the Employee Retirement Income Security Act ("ERISA"). TAX CREDITS AND DEDUCTIONS The Company may be entitled to certain tax benefits related to the assets of the Separate Account. These tax benefits, which may include foreign tax credits and corporate dividend received deductions, are not passed back to the Separate Account or to Policy owners since the Company is the owner of the assets from which the tax benefits are derived. THE COMPANY'S INCOME TAXES Under current Federal income tax law we are not taxed on the Separate Account's operations. Thus, currently we do not deduct a charge from the Separate Account for company Federal income taxes. (We do deduct a charge for Federal taxes from premiums.) We reserve the right to charge the Separate Account for any future Federal income taxes we may incur. Under current laws we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes. RIGHTS WE RESERVE We reserve the right to make certain changes if we believe the changes are in the best interest of our Certificate owners or would help carry out the purposes of the Certificate. We will make these changes in the manner permitted by applicable law and only after obtaining any necessary owner and regulatory approval. We will notify you of any changes that result in a material change in the underlying investments in the investment divisions, and you will have a chance to transfer out of the affected division (without charge). Some of the changes we may make include: .. Operating the Separate Account in any other form that is permitted by applicable law. .. Changes to obtain or continue exemptions from the 1940 Act. .. Transferring assets among investment divisions or to other separate accounts, or our general account or combining or removing investment divisions from the Separate Account. .. Substituting Fund shares in an investment division for shares of another portfolio of a Fund or another fund or investment permitted by law. 36 .. Changing the way we assess charges without exceeding the aggregate amount of the Certificate's guaranteed maximum charges. .. Making any necessary technical changes to the Certificate to conform it to the changes we have made. Some such changes might require us to obtain regulatory or Policy owner approval. Whether regulatory or Policy owner approval is required would depend on the nature of the change and, in many cases, the manner in which the change is implemented. You should not assume, therefore, that you necessarily will have an opportunity to approve or disapprove any such changes. Circumstances that could influence our determination to make any change might include changes in law or interpretations thereof; changes in financial or investment market conditions; changes in accepted methods of conducting operations in the relevant market; or a desire to achieve material operating economies or efficiencies. OTHER CERTIFICATE PROVISIONS [SIDEBAR: CAREFULLY REVIEW THE CERTIFICATE, WHICH CONTAINS A FULL DISCUSSION OF ALL ITS PROVISIONS.] FREE LOOK PERIOD You can return the Certificate or terminate an increase in the specified face amount during this period. The period ends on the later of: .. 10 days after you receive the Certificate or, in the case of an increase, the revised Certificate (unless state law requires a longer specified period); and .. 45 days after we receive the completed enrollment form or specified face amount increase request. If you return the Certificate, we will send you a complete refund of any premiums paid (or cash value plus any charges deducted if state law requires) within seven days. If you terminate an increase in the specified face amount, we will restore all Certificate values to what they would have been had there been no increase. We will also refund any premiums paid so that the Certificate will continue to qualify as life insurance under the federal income tax laws. SUICIDE Subject to applicable state law, if the covered person commits suicide within the first two Certificate years (or another period required by state law), your beneficiary will receive all premiums paid (without interest), less any outstanding loans (plus accrued interest) and withdrawals taken. Similarly, we will pay the beneficiary only the cost of any increase in specified face amount if the covered person commits suicide within two years of such increase. EFFECT OF TERMINATION OF EMPLOYER PARTICIPATION IN THE GROUP POLICY Your employer can terminate its participation in the Group Policy. In addition, we may also terminate your employer's participation in the Group Policy if either: 1. during any twelve month period, the total specified face amount for all Certificate Owners under the Group Policy or the number of Certificates falls by certain amounts or below the minimum levels we establish (these levels are set forth in the Certificate), or 2. your employer makes available to its employees another life insurance product. 37 Both your employer and MetLife must provide ninety days written notice to the other as well as to you before terminating participation in the Group Policy. Termination means that your employer will no longer send premiums to us through payroll deduction and that no new Certificates will be issued to employees in your employer's group. You will remain an Owner of your Certificate if: .. you are an Owner of a Certificate that has become portable (as discussed below) not later than the Certificate monthly anniversary prior to termination of your employer's participation; or .. you are an Owner who exercised the paid-up Certificate provision not later than the last Certificate monthly anniversary prior to notice being sent to you of the termination. For all other Owners, .. If your employer replaces your group coverage with another life insurance product that is designed to have cash value, .. we will terminate the Certificate and .. we will transfer your cash surrender value to the other life insurance product (or pay your cash surrender value to you if you are not covered by the new product). Any outstanding loan may be taxable. .. If the other life insurance product is not designed to have cash value, .. we will terminate your certificate and .. we will pay your cash surrender value to you. In such case, the Federal income tax consequences to you would be the same as if you surrendered your Certificate. If your employer does not replace your group coverage with another life insurance product, then, depending on the terms of the Certificate, .. you may have the option of choosing to become an Owner of a portable Certificate or a paid-up Certificate, and .. you may have the option of purchasing insurance based on the "conversion" rights set forth in the Certificate and of receiving the cash surrender value of the Certificate. If you choose the conversion rights, the insurance provided will be substantially less (and in some cases nominal) than the insurance provided under the Certificate. Instead of any of the above options, you may choose to apply the Certificate's cash surrender value to the purchase of an annuity product from MetLife upon termination of the Certificate. PORTABLE CERTIFICATE: A Certificate becomes "portable" when an event specified in the Certificate occurs. These events may include: .. termination of the payroll deduction plan with no successor carrier .. other termination of the covered person's employment .. the sale by your employer of the business unit with which the covered person is employed If you become the Owner of a portable Certificate, the current cost of insurance may change, but it will never be higher than the guaranteed cost of insurance. Also, we may no longer consider you a member of your employer's group for purposes of determining cost of insurance rates and charges. 38 ASSIGNMENT AND CHANGE IN OWNERSHIP You can assign the Certificate if you notify us in writing. The assignment or release of the assignment is effective when it is recorded at the Administrative Office. We are not responsible for determining the validity of the assignment or its release. Also, there could be serious adverse tax consequences to you or your beneficiary, so you should consult with your tax advisor before making any change of ownership or other assignment. REPORTS Generally, you will promptly receive statements confirming your significant transactions such as: .. Change in specified face amount; .. Transfers among investment divisions (including those through Systematic Investment Strategies, which may be confirmed quarterly); .. Partial withdrawals; .. Loan amounts you request; and .. Loan repayments and premium payments. If your premium payments are made through a payroll deduction plan, we will not send you any confirmation in addition to the one you receive from your bank or employer. We will also send you an annual statement generally within 30 days after a Certificate year. This statement will summarize the year's transactions and include information on: .. Deductions and charges; .. Status of the death benefit; .. Cash and cash surrender values; .. Amounts in the investment divisions and Fixed Account; .. Status of Certificate loans; .. Automatic loans to pay interest; and .. Information on your modified endowment contract status (if applicable) We will also send you a Fund's annual and semi-annual reports to shareholders. WHEN YOUR REQUESTS BECOME EFFECTIVE Generally, requests, premium payments and other instructions and notifications are effective on the Date of Receipt. In those cases, the effective time is at the end of the Valuation Period during which we receive them at our Administrative Office. (Some exceptions to this general rule are noted below and elsewhere in this Prospectus.) A Valuation Period is the period between two successive Valuation Dates. It begins at the close of regular trading on the New York Stock Exchange on a Valuation Date and ends at the close of regular trading on the New York Stock Exchange on the next succeeding Valuation Date. The close of regular trading is 4:00 p.m., Eastern Time on most days. A Valuation Date is each day on which the New York Stock Exchange is open for trading. Accordingly, if we receive your request, premium, or instructions after the close of regular trading on the New York Stock Exchange, or if the 39 New York Stock Exchange is not open that day, then we will treat it as received on the next day when the New York Stock Exchange is open. These rules apply regardless of the reason we did not receive your request, premium, or instructions by the close of regular trading on the New York Stock Exchange, even if due to our delay (such as a delay in answering your telephone call). If your employer's participation in the Group Policy is still in its first year, the effective time of premium allocation instructions and transfer requests you make in the Certificate enrollment form, or within 20 days of your Investment Start Date, is the end of the first Valuation Date after that 20 day period. During the 20 day period, all of your cash value is automatically allocated to our Fixed Account. Your Investment Start Date is the Date of Receipt of your first premium payment with respect to the Certificate, or, if later, the Date of Receipt of your enrollment form. If your employer's participation in the Group Policy is not still in its first year, the Investment Start Date is the effective time of the allocation instructions you made in the Certificate enrollment form. If your employer has determined to exchange your current insurance coverage for a MetLife Group Policy, there may be a delay between the effective date of the Certificate and the receipt of any cash value from the prior certificate for the 1035 exchange. At the sole discretion of MetLife, the premium attributable to the 1035 exchange may be credited interest from the Certificate effective date. In no case will transfers among the investment options for the premium attributable to the 1035 exchange be applied prior to the date of receipt. The effective date of your Systematic Investment Strategies will be that set forth in the strategy chosen. PAYMENT AND DEFERMENT We can delay transfers, withdrawals, surrender and payment of Certificate loans from the Fixed Account for up to 6 months. Generally, we will pay or transfer amounts from the Separate Account within seven days after the Date of Receipt of all necessary documentation required for such payment or transfer. We can defer this if: .. The New York Stock Exchange has an unscheduled closing. .. There is an emergency so that we could not reasonably determine the investment experience of the Certificate. .. The Securities and Exchange Commission determines that an emergency exists or by order permits us to do so for the protection of Certificate owners (provided that the delay is permitted under New York State insurance law and regulations). .. With respect to the insurance proceeds, if entitlement to a payment is being questioned or is uncertain. We currently pay interest on the amount of insurance proceeds at 3% per year (or higher if state law requires) from the date of death until the date we pay the benefit. We may withhold payment of surrender, partial withdrawals or loan proceeds if any portion of those proceeds would be derived from a Certificate Owner's 40 check or from a preauthorized checking arrangement that has not yet cleared (i.e. that could still be dishonored by your banking institution). We may use telephone, fax, Internet or other means of communications to verify that payment from the Certificate owner's check or preauthorized checking arrangement has been or will be collected. We will not delay payment longer than necessary for us to verify that payment has been or will be collected. Certificate owners may avoid the possibility of delay in the disbursement of proceeds coming from a check that has not yet cleared by providing us with a certified check. THIRD PARTY REQUESTS Generally, we accept requests for transactions or information only from you. Therefore, we reserve the right not to process transactions requested on your behalf by your agent with a power of attorney or any other authorization. This includes processing transactions by an agent you designate, through a power of attorney or other authorization, who has the ability to control the amount and timing of transfers for a number of other Certificate owners, and who simultaneously makes the same request or series of requests on behalf of other Certificate owners. EXCHANGE PRIVILEGE If you decide that you no longer want to take advantage of the investment divisions in the Separate Account, you may transfer all of your money into the Fixed Account. No transaction charge will be imposed on a transfer of your entire cash value (or the cash value attributable to a specified face amount increase) to the Fixed Account within the first 24 Certificate months (or within 24 Certificate months after a specified face amount increase you have requested, as applicable). In some states, in order to exercise your exchange privilege, you must transfer, without charge, the Certificate cash value (or the portion attributable to a specified face amount increase) to a flexible premium fixed benefit life insurance policy that we make available. SALES OF CERTIFICATES MetLife Investors Distribution Company ("MLIDC") is the principal underwriter and distributor of the Group Policies and Certificates. MLIDC's principal executive offices are located at 5 Park Plaza, Suite 1900, Irvine, CA 92614. MLIDC, which is our affiliate, is registered under the Securities Exchange Act of 1934 (the "34 Act") as a broker-dealer and is a member of the Financial Industry Regulatory Authority ("FINRA"). FINRA provides background information about broker-dealers and their registered representatives through FINRA BrokerCheck. You may contact the FINRA BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org. An investor brochure that includes information describing FINRA BrokerCheck is available through the Hotline or on-line. DISTRIBUTING THE GROUP POLICIES AND CERTIFICATES MLIDC enters into selling agreements with affiliated and unaffiliated broker-dealers who sell the Group Policies and Certificates through their registered representatives who are also licensed life insurance sales representatives. Our affiliated broker-dealers are MetLife Securities, Inc. ("MSI"). New England 41 Securities Corporation, Walnut Street Securities, Inc. and Tower Square Securities, Inc. MSI and our other affiliated broker-dealers are registered with the SEC as broker-dealers under the 34 Act and are also members of FINRA. We reimburse MLIDC for expenses MLIDC incurs in distributing the Group Policies and Certificates, (e.g. commissions payable to the broker-dealers who sell the Group Policies and Certificates, including our affiliated broker-dealers). COMMISSIONS AND OTHER COMPENSATION MetLife sales representatives are sales representatives registered through MSI. We do not pay commissions to MetLife representatives for the sale of the Group Policies and Certificates, although they may earn certain incentive award credits. We may pay commissions to other registered broker-dealers (also referred to as selling firms) who have entered into selling agreements with us. Commissions or fees which are payable to a broker-dealer or third party administrator, including maximum commissions, are set forth in our schedules of group insurance commission rates. These commissions consist of: .. Up to 15% of the cost of insurance, and may be based on the services provided by the broker-dealer or a third party administrator, and .. A per-Certificate payment, based on the total number of Certificates issued under a Group Policy. We may require all or part of the commission to be returned to us by the broker-dealer if you do not continue the Certificate for at least two years. COMPENSATION PAID TO SELLING FIRMS AND OTHER INTERMEDIARIES MetLife enters into arrangements concerning the sale, servicing and/or renewal of MetLife group insurance and certain other group-related products ("Products") with brokers, agents, consultants, third-party administrators, general agents, associations, and other parties that may participate in the sale, servicing and/or renewal of such Products (each an "Intermediary"). MetLife may pay your Intermediary compensation, which may include base compensation, supplemental compensation and/or a service fee. MetLife may pay compensation for the sale, servicing and/or renewal of Products, or remit compensation to an Intermediary on your behalf. Your Intermediary may also be owned by, controlled by or affiliated with another person or party, which may also be an Intermediary and who may also perform marketing and/or administration services in connection with your Products and be paid compensation by MetLife. Base compensation, which may vary from case to case and may change if you renew your Products with MetLife, may be payable to your Intermediary as a percentage of premium or a fixed dollar amount. In addition, supplemental compensation may be payable to your Intermediary. Under MetLife's current supplemental compensation plan, the amount payable as supplemental compensation may range from 0% to 7% of premium. The supplemental compensation percentage may be based on: (1) the number of Products sold through your Intermediary during a prior one-year period; (2) the amount of premium or fees with respect to Products sold through your Intermediary during a prior one-year period; (3) the persistency percentage of Products inforce through your Intermediary during a prior one-year period; and/or (4) a 42 fixed percentage of the premium for Products as set by MetLife. The supplemental compensation percentage will be set by MetLife prior to the beginning of each calendar year and it may not be changed until the following calendar year. As such, the supplemental compensation percentage may vary from year to year, but will not exceed 7% under the current supplemental compensation plan. The cost of supplemental compensation is not directly charged to the price of our Products except as an allocation of overhead expense, which is applied to all eligible group insurance products, whether or not supplemental compensation is paid in relation to a particular sale or renewal. As a result, your rates will not differ by whether or not your Intermediary receives supplemental compensation. If your Intermediary collects the premium from you in relation to your Products, your Intermediary may earn a return on such amounts. Additionally, MetLife may have a variety of other relationships with your Intermediary or its affiliates that involve the payment of compensation and benefits that may or may not be related to your relationship with MetLife (e.g., consulting or reinsurance arrangements). More information about the eligibility criteria, limitations, payment calculations and other terms and conditions under MetLife's base compensation and supplemental compensation plans can be found on MetLife's Web site at www.metlife.com/brokercompensation. Questions regarding Intermediary compensation can be directed to ask4met@metlifeservice.com, or if you would like to speak to someone about Intermediary compensation, please call (800) ASK 4MET. If you would like further information, ask your Intermediary or a MetLife representative for specific details concerning your Intermediary's compensation arrangement with MetLife. The commissions do not result in a charge against the Group Policies or Certificates in addition to the charges already described elsewhere in this Prospectus. The Statement of Additional Information contains additional information about the compensation paid for the sale of the Group Policies and Certificates. LEGAL PROCEEDINGS In the ordinary course of business, MetLife, similar to other life insurance companies, is involved in lawsuits (including class action lawsuits), arbitrations and other legal proceedings. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. In some legal proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MetLife does not believe any such action or proceeding will have a material adverse effect upon the Separate Account or upon the ability of MetLife Investors Distribution Company to perform its contract with the Separate Account or of MetLife to meet its obligations under the Group Policies or the Certificates. 43 RESTRICTIONS ON FINANCIAL TRANSACTIONS Federal laws designed to counter terrorism and prevent money laundering by criminals might, in certain circumstances, require us to reject a premium payment and/or block or "freeze" your account. If these laws apply in a particular situation, we would not be allowed to process any request for withdrawals, surrenders, loans or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about you or your Certificate to government regulators. FINANCIAL STATEMENTS The financial statements of the Company and the financial statements comprising each of the Individual Investment Divisions of the Separate Account are contained in the Statement of Additional Information referred to on the back cover of this Prospectus. The financial statements of the Company should be considered only as bearing upon our ability to meet our obligations under the Certificate. Additional information about the Group Policy, the Certificate and the Separate Account can be found in the Statement of Additional Information. You may obtain a copy of the Statement of Additional Information, without charge, by calling 1-800-664-4885, by e-mailing us at our website, or by logging on to our website at www.metlifegvul.com. You may also obtain, without charge, a personalized illustration of death benefits, cash surrender values and cash values by calling 1-800-664-4885. In order to help you understand how the Certificate's values would vary over time under different sets of assumptions, we will provide you with certain illustrations upon request. These will be based on the age and insurance risk characteristics of the person insured under the Certificate and such factors as the specified face amount, premium payment amounts and rates of return (within limits) that you request. You can request such illustrations at any time. We have filed an example of such an illustration as an exhibit to the registration statement referred to below. This Prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this Prospectus. Information about the Group Policy, Certificates and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the public reference room may be obtained by calling the SEC at 202-942-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site as www.sec.gov. Copies of this information may be obtained upon payment of a duplicating fee, by writing to the SEC's Public Reference Section at 100 F Street, NE, Washington, DC 20549. 811-06025 44 GROUP VARIABLE UNIVERSAL LIFE POLICIES METROPOLITAN LIFE SEPARATE ACCOUNT UL ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION APRIL 30, 2012 This Statement of Additional Information is not a prospectus. This Statement of Additional Information relates to the prospectus dated April 30, 2012 for Group Variable Universal Life and should be read in conjunction therewith. A copy of that prospectus may be obtained by writing to MetLife GVUL, Mail Code A2-10, 13045, Tesson Ferry Road, St. Louis, MO. 63128. YOU CAN OBTAIN PROSPECTUSES FOR THE PORTFOLIOS BY CALLING US AT (800) 685-0124. B-1 TABLE OF CONTENTS The Company and the Separate Account............................. B-3 Additional Information about the Operations of the Certificates.. B-3 Limits to MetLife's Right to Challenge the Certificate......... B-3 Misstatement of Age............................................ B-3 Additional Information About Voting.............................. B-3 Additional Information About Commissions......................... B-3 Independent Registered Public Accounting Firm.................... B-4 Financial Statements............................................. B-4 B-2 THE COMPANY AND THE SEPARATE ACCOUNT Metropolitan Life Insurance Company ("MetLife") is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. Our main office is located at 200 Park Avenue, New York, New York 10166. MetLife was formed under the laws of New York State in 1868. We established the Separate Account under New York law on December 13, 1988. The Separate Account receives premium payments from the Policies described in the Prospectus and other variable life insurance policies that we issue. We have registered the Separate Account as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). For more information about MetLife, please visit our website at www.metlife.com ADDITIONAL INFORMATION ABOUT THE OPERATIONS OF THE CERTIFICATES LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE CERTIFICATE We will not contest: .. The Certificate after two Certificate years from issue or reinstatement (excluding riders added later). .. An increase in a death benefit after it has been in effect for two years. MISSTATEMENT OF AGE We will adjust benefits to reflect the correct age of the covered person, if this information is not correct in the Certificate enrollment form. ADDITIONAL INFORMATION ON VOTING If you are eligible to give us voting instructions, we will send you informational material and a form to send back to us. We are entitled to disregard voting instructions in certain limited circumstances prescribed by the SEC. If we do so, we will give you our reasons in the next semi-annual report to Certificate owners. The number of shares for which you can give us voting instructions is determined as of the record date for the Fund shareholder meeting by dividing: .. The Certificate's cash value in the corresponding investment division; by .. The net asset value of one share of that Portfolio. We will count fractional votes. If we do not receive timely voting instructions from Certificate owners and other insurance and annuity owners that are entitled to give us voting instructions, we will vote those shares in the same proportion as the shares held in the same separate account for which we did receive voting instructions. The effect of this proportional voting is that a small number of Certificate owners may control the outcome of the vote. Also, we will vote Fund shares that are not attributable to insurance or annuity owners (including shares that we hold in our general account) or that are held in separate accounts that are not registered under the 1940 Act in the same proportion as the aggregate of the shares for which we received voting instructions from all insurance and annuity owners. ADDITIONAL INFORMATION ABOUT COMMISSIONS MetLife Investors Distribution Company ("MLIDC) is the principal underwriter and distributor of the Policies. MLIDC, which is our affiliate, is registered under the Securities Exchange Act of 1934 (the "34 Act") as a broker-dealer and is a member of the Financial Industry Regulatory Authority ("FINRA"). B-3 The Group Policies and Certificates are sold through licensed life insurance sales representatives who are associated with MetLife Securities, Inc. ("MSI"), our affiliate, or with our other affiliated broker-dealers, New England Securities Corporation, Walnut Street Securities, Inc. and Tower Square Securities, Inc. MSI and our other affiliated broker-dealers are registered with the SEC as broker-dealers under the 34 Act and are also members of FINRA. The Group Policies and Certificates may also be sold through licensed life insurance sales representatives associated with unaffiliated broker-dealers with which MLIDC enters into a selling agreement. While the Group Policy is no longer sold, Certificates are sold to new participants under existing Group Policies. MLIDC received sales compensation with respect to the Group Policies and Certificates in the following amounts.
AGGREGATE AMOUNT OF COMMISSIONS RETAINED BY AGGREGATE AMOUNT DISTRIBUTOR AFTER OF COMMISSIONS PAYMENTS TO FISCAL YEAR PAID TO DISTRIBUTOR* SELLING FIRMS ----------- -------------------- ----------------- 2011..... $281,435 $0 2010..... $363,089 $0 2009..... $243,920 $0
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements and financial highlights comprising each of the Investment Divisions of Metropolitan Life Separate Account UL included in this Statement of Additional Information, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements and financial highlights have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of Metropolitan Life Insurance Company and subsidiaries (the "Company"), included in this Statement of Additional Information, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion on the consolidated financial statements and includes an explanatory paragraph referring to changes in the Company's method of accounting for the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is Two World Financial Center, New York, New York 10281-1414. FINANCIAL STATEMENTS The financial statements comprising each of the Investment Divisions of Metropolitan Life Separate Account UL and MetLife are attached to this Statement of Additional Information. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Certificate. B-4 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Policy Owners of Metropolitan Life Separate Account UL and Board of Directors of Metropolitan Life Insurance Company We have audited the accompanying statements of assets and liabilities of Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company (the "Company") comprising each of the individual Investment Divisions listed in Note 2.A. as of December 31, 2011, the related statements of operations and changes in net assets for the respective stated periods in the three years then ended, and the financial highlights in Note 8 for the respective stated periods in the five years then ended. These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2011, by correspondence with the custodian or mutual fund companies. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Investment Divisions constituting the Separate Account of the Company as of December 31, 2011, the results of their operations and changes in their net assets for the respective stated periods in the three years then ended, and the financial highlights for the respective stated periods in the five years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida March 29, 2012 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2011 ALLIANCEBERNSTEIN GLOBAL ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN AMERICAN THEMATIC GROWTH INTERMEDIATE BOND INTERNATIONAL VALUE CENTURY VP VISTA INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 4,293,725 $ 47,397 $ 143 $ 8,658 Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 4,293,725 47,397 143 8,658 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 30 111 2 4 ------------------- ------------------- ------------------- ------------------- Total Liabilities 30 111 2 4 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 4,293,695 $ 47,286 $ 141 $ 8,654 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 1 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS BOND CAPITALIZATION GROWTH GROWTH-INCOME INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 4,735,498 $ 52,474,884 $ 118,199,497 $ 71,255,359 Due from Metropolitan Life Insurance Company -- 105 13 1,458 ------------------- ------------------- ------------------- ------------------- Total Assets 4,735,498 52,474,989 118,199,510 71,256,817 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 39 -- -- -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 39 -- -- -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 4,735,459 $ 52,474,989 $ 118,199,510 $ 71,256,817 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 2 AMERICAN FUNDS U.S. AMERICAN FUNDS GOVERNMENT/AAA- DREYFUS VIF FIDELITY VIP ASSET FIDELITY VIP FIDELITY VIP INTERNATIONAL RATED SECURITIES INTERNATIONAL VALUE MANAGER: GROWTH CONTRAFUND EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 524,711 $ 45,545 $ 184,091 $ 1,430,520 $ 2,151,831 $ 18,605 -- -- -- -- -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 524,711 45,545 184,091 1,430,520 2,151,831 18,605 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 6 30 4 182 16 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 6 30 4 182 16 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 524,711 $ 45,539 $ 184,061 $ 1,430,516 $ 2,151,649 $ 18,589 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 3 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 FIDELITY VIP FIDELITY VIP FIDELITY VIP FIDELITY VIP FREEDOM 2010 FREEDOM 2020 FREEDOM 2030 FREEDOM 2050 INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 34,148 $ 699,723 $ 56,980 $ 15,438 Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 34,148 699,723 56,980 15,438 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 4 9 10 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 4 9 10 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 34,144 $ 699,714 $ 56,970 $ 15,438 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 4 FIDELITY VIP FTVIPT FTVIPT FIDELITY VIP INVESTMENT MUTUAL GLOBAL FTVIPT TEMPLETON TEMPLETON GLOBAL HIGH INCOME GRADE BOND FIDELITY VIP MID CAP DISCOVERY SECURITIES FOREIGN SECURITIES BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- -------------------- -------------------- ------------------- ------------------- $ 43,227 $ 1,747,859 $ 613,963 $ 783,963 $ 3,022,199 $ 289,348 -- -- -- -- -- -- ------------------- ------------------- -------------------- -------------------- ------------------- ------------------- 43,227 1,747,859 613,963 783,963 3,022,199 289,348 ------------------- ------------------- -------------------- -------------------- ------------------- ------------------- 4 7 5 128 414 3 ------------------- ------------------- -------------------- -------------------- ------------------- ------------------- 4 7 5 128 414 3 ------------------- ------------------- -------------------- -------------------- ------------------- ------------------- $ 43,223 $ 1,747,852 $ 613,958 $ 783,835 $ 3,021,785 $ 289,345 =================== =================== ==================== ==================== =================== ===================
The accompanying notes are an integral part of these financial statements. 5 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 GOLDMAN SACHS INVESCO V.I. GOLDMAN SACHS STRUCTURED INVESCO V.I. GOVERNMENT MID-CAP VALUE SMALL CAP EQUITY GLOBAL REAL ESTATE SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 268,281 $ 50,289 $ 1,491,271 $ 21,492 Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 268,281 50,289 1,491,271 21,492 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 33 30 627 1 ------------------- ------------------- ------------------- ------------------- Total Liabilities 33 30 627 1 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 268,248 $ 50,259 $ 1,490,644 $ 21,491 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 6 INVESCO V.I. INVESCO V.I. VAN KAMPEN JANUS ASPEN INTERNATIONAL GROWTH COMSTOCK BALANCED JANUS ASPEN FORTY JANUS ASPEN JANUS JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION -------------------- ------------------- ------------------- ------------------- ------------------- -------------------- $ 23,414 $ 190,057 $ 1,339,815 $ 702,889 $ 858,101 $ 344,177 -- 5 -- 247 -- -- -------------------- ------------------- ------------------- ------------------- ------------------- -------------------- 23,414 190,062 1,339,815 703,136 858,101 344,177 -------------------- ------------------- ------------------- ------------------- ------------------- -------------------- 7 -- 27 -- 7 42 -------------------- ------------------- ------------------- ------------------- ------------------- -------------------- 7 -- 27 -- 7 42 -------------------- ------------------- ------------------- ------------------- ------------------- -------------------- $ 23,407 $ 190,062 $ 1,339,788 $ 703,136 $ 858,094 $ 344,135 ==================== =================== =================== =================== =================== ====================
The accompanying notes are an integral part of these financial statements. 7 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MFS VIT MFS VIT MFS VIT MFS VIT GLOBAL EQUITY HIGH INCOME NEW DISCOVERY VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 5,454 $ 135,792 $ 122,401 $ 44,305 Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 5,454 135,792 122,401 44,305 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 40 481 6 6 ------------------- ------------------- ------------------- ------------------- Total Liabilities 40 481 6 6 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 5,414 $ 135,311 $ 122,395 $ 44,299 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 8 MIST MIST MIST AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS MIST BLACKROCK MIST CLARION MIST DREMAN BALANCED ALLOCATION GROWTH ALLOCATION MODERATE ALLOCATION LARGE CAP CORE GLOBAL REAL ESTATE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 515,999 $ 781,249 $ 401,609 $ 291,613,210 $ 19,560,392 $ 35,944 -- -- -- 2,529 -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 515,999 781,249 401,609 291,615,739 19,560,392 35,944 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 4 4 3 -- 5 6 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 4 4 3 -- 5 6 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 515,995 $ 781,245 $ 401,606 $ 291,615,739 $ 19,560,387 $ 35,938 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 9 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MIST HARRIS OAKMARK MIST INVESCO MIST LAZARD INTERNATIONAL SMALL CAP GROWTH MIST JANUS FORTY MID CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 27,216,807 $ 4,412,943 $ 12,484,254 $ 5,277,741 Due from Metropolitan Life Insurance Company -- 24 23 -- ------------------- ------------------- ------------------- ------------------- Total Assets 27,216,807 4,412,967 12,484,277 5,277,741 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 65 -- -- 63 ------------------- ------------------- ------------------- ------------------- Total Liabilities 65 -- -- 63 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 27,216,742 $ 4,412,967 $ 12,484,277 $ 5,277,678 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 10 MIST LEGG MIST MET/FRANKLIN MASON CLEARBRIDGE MIST LORD ABBETT MIST LORD ABBETT MIST MET/FRANKLIN MIST MET/FRANKLIN TEMPLETON FOUNDING AGGRESSIVE GROWTH BOND DEBENTURE MID CAP VALUE INCOME MUTUAL SHARES STRATEGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 12,365,968 $ 25,730,610 $ 120,865 $ 237,486 $ 79,916 $ 275,815 -- 383 -- -- -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 12,365,968 25,730,993 120,865 237,486 79,916 275,815 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 174 -- 7 3 3 3 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 174 -- 7 3 3 3 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 12,365,794 $ 25,730,993 $ 120,858 $ 237,483 $ 79,913 $ 275,812 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 11 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MIST MET/TEMPLETON MIST METLIFE MIST MFS EMERGING MIST MFS RESEARCH GROWTH AGGRESSIVE STRATEGY MARKETS EQUITY INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 53,529 $ 12,471,146 $ 22,950 $ 12,176,273 Due from Metropolitan Life Insurance Company -- 1,515 -- 626 ------------------- ------------------- ------------------- ------------------- Total Assets 53,529 12,472,661 22,950 12,176,899 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 3 -- -- -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 3 -- -- -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 53,526 $ 12,472,661 $ 22,950 $ 12,176,899 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 12 MIST MIST MORGAN STANLEY MIST OPPENHEIMER PIMCO INFLATION MIST PIMCO MIST RCM MID CAP GROWTH CAPITAL APPRECIATION PROTECTED BOND TOTAL RETURN MIST PIONEER FUND TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- $ 178,347,753 $ 1,734,844 $ 10,519,522 $ 47,130,249 $ 175,808 $ 13,216,492 2,664 -- -- 1,630 546 43 ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- 178,350,417 1,734,844 10,519,522 47,131,879 176,354 13,216,535 ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- -- 9 21 -- -- -- ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- -- 9 21 -- -- -- ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- $ 178,350,417 $ 1,734,835 $ 10,519,501 $ 47,131,879 $ 176,354 $ 13,216,535 =================== ==================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 13 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MIST SSGA GROWTH MIST SSGA MIST T. ROWE PRICE MIST T. ROWE PRICE AND INCOME ETF GROWTH ETF LARGE CAP VALUE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 4,611,150 $ 3,309,512 $ 1,081,559 $ 25,204,642 Due from Metropolitan Life Insurance Company -- 6 -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 4,611,150 3,309,518 1,081,559 25,204,642 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 23 -- 5 15 ------------------- ------------------- ------------------- ------------------- Total Liabilities 23 -- 5 15 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 4,611,127 $ 3,309,518 $ 1,081,554 $ 25,204,627 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 14 MIST THIRD AVENUE MSF ARTIO MSF BARCLAYS CAPITAL MSF BLACKROCK MSF BLACKROCK MSF BLACKROCK SMALL CAP VALUE INTERNATIONAL STOCK AGGREGATE BOND INDEX AGGRESSIVE GROWTH BOND INCOME DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- -------------------- ------------------- ------------------- ------------------- $ 806,062 $ 35,919,208 $ 108,763,369 $ 184,990,648 $ 84,064,739 $ 255,554,738 -- 353 218 147 466 -- ------------------- ------------------- -------------------- ------------------- ------------------- ------------------- 806,062 35,919,561 108,763,587 184,990,795 84,065,205 255,554,738 ------------------- ------------------- -------------------- ------------------- ------------------- ------------------- 11 -- -- -- -- 546 ------------------- ------------------- -------------------- ------------------- ------------------- ------------------- 11 -- -- -- -- 546 ------------------- ------------------- -------------------- ------------------- ------------------- ------------------- $ 806,051 $ 35,919,561 $ 108,763,587 $ 184,990,795 $ 84,065,205 $ 255,554,192 =================== =================== ==================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 15 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MSF BLACKROCK MSF BLACKROCK LEGACY LARGE CAP MSF BLACKROCK MSF DAVIS LARGE CAP VALUE GROWTH MONEY MARKET VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 13,313,106 $ 7,367,845 $ 20,793,802 $ 53,650,820 Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 13,313,106 7,367,845 20,793,802 53,650,820 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 54 35 10,594 28 ------------------- ------------------- ------------------- ------------------- Total Liabilities 54 35 10,594 28 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 13,313,052 $ 7,367,810 $ 20,783,208 $ 53,650,792 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 16 MSF METLIFE MSF FI MSF JENNISON MSF LOOMIS SAYLES MSF LOOMIS SAYLES MSF MET/ARTISAN CONSERVATIVE VALUE LEADERS GROWTH SMALL CAP CORE SMALL CAP GROWTH MID CAP VALUE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 6,065,876 $ 14,166,471 $ 17,444,054 $ 8,179,811 $ 47,189,069 $ 4,371,282 -- 15 -- -- -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 6,065,876 14,166,486 17,444,054 8,179,811 47,189,069 4,371,282 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 47 -- 70 32 80 27 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 47 -- 70 32 80 27 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 6,065,829 $ 14,166,486 $ 17,443,984 $ 8,179,779 $ 47,188,989 $ 4,371,255 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 17 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MSF METLIFE MSF METLIFE CONSERVATIVE TO MSF METLIFE MSF METLIFE MODERATE TO MODERATE ALLOCATION MID CAP STOCK INDEX MODERATE ALLOCATION AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- --------------------- ASSETS: Investments at fair value $ 6,564,572 $ 62,847,551 $ 39,588,334 $ 66,170,231 Due from Metropolitan Life Insurance Company -- 64 -- 16 ------------------- ------------------- ------------------- --------------------- Total Assets 6,564,572 62,847,615 39,588,334 66,170,247 ------------------- ------------------- ------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 10 -- 25 -- ------------------- ------------------- ------------------- --------------------- Total Liabilities 10 -- 25 -- ------------------- ------------------- ------------------- --------------------- NET ASSETS $ 6,564,562 $ 62,847,615 $ 39,588,309 $ 66,170,247 =================== =================== =================== =====================
The accompanying notes are an integral part of these financial statements. 18 MSF MSF MSF METLIFE MSF MFS MSF MORGAN STANLEY NEUBERGER BERMAN NEUBERGER BERMAN STOCK INDEX TOTAL RETURN MSF MFS VALUE EAFE INDEX GENESIS MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 668,623,116 $ 7,362,347 $ 52,361,935 $ 59,759,357 $ 79,278,540 $ 69,819,693 3,051 -- 1,434 193 526 1 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 668,626,167 7,362,347 52,363,369 59,759,550 79,279,066 69,819,694 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 9 -- -- -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 9 -- -- -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 668,626,167 $ 7,362,338 $ 52,363,369 $ 59,759,550 $ 79,279,066 $ 69,819,694 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 19 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2011 MSF OPPENHEIMER MSF RUSSELL 2000 MSF T. ROWE PRICE MSF T. ROWE PRICE GLOBAL EQUITY INDEX LARGE CAP GROWTH SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 37,497,157 $ 51,171,752 $ 42,316,422 $ 86,825,938 Due from Metropolitan Life Insurance Company 62 32 914 -- ------------------- ------------------- ------------------- ------------------- Total Assets 37,497,219 51,171,784 42,317,336 86,825,938 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company -- -- -- 167 ------------------- ------------------- ------------------- ------------------- Total Liabilities -- -- -- 167 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 37,497,219 $ 51,171,784 $ 42,317,336 $ 86,825,771 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 20 MSF WESTERN MSF VAN ECK ASSET MANAGEMENT MSF WESTERN GLOBAL NATURAL STRATEGIC BOND ASSET MANAGEMENT PIMCO VIT PIMCO VIT PIONEER VCT RESOURCES OPPORTUNITIES U.S. GOVERNMENT ALL ASSET LOW DURATION EMERGING MARKETS INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 13,179 $ 23,536,045 $ 16,435,856 $ 96,184 $ 945,780 $ 402,026 -- 843 -- -- 228 -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 13,179 23,536,888 16,435,856 96,184 946,008 402,026 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- -- 58 46 -- 728 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- -- 58 46 -- 728 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 13,179 $ 23,536,888 $ 16,435,798 $ 96,138 $ 946,008 $ 401,298 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 21 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2011 PIONEER VCT UIF EMERGING MID CAP VALUE ROYCE MICRO-CAP ROYCE SMALL-CAP MARKETS DEBT INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 134,791 $ 310,458 $ 754,750 $ 420,989 Due from Metropolitan Life Insurance Company -- 5 -- 9 ------------------- ------------------- ------------------- ------------------- Total Assets 134,791 310,463 754,750 420,998 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 11 -- 8 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 11 -- 8 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 134,780 $ 310,463 $ 754,742 $ 420,998 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 22 UIF EMERGING WELLS FARGO VT MARKETS EQUITY TOTAL RETURN BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- $ 539,545 $ 134,979 -- 235 ------------------- ------------------- 539,545 135,214 ------------------- ------------------- 157 -- ------------------- ------------------- 157 -- ------------------- ------------------- $ 539,388 $ 135,214 =================== ===================
The accompanying notes are an integral part of these financial statements. 23 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH INVESTMENT DIVISION ----------------------------------- 2011 2010 2009 --------------- -------- ----------- INVESTMENT INCOME: Dividends $ 18,192 $ 1,486 $ -- --------------- -------- ----------- EXPENSES: Mortality and expense risk charges 162,987 310 370 --------------- -------- ----------- Total expenses 162,987 310 370 --------------- -------- ----------- Net investment income (loss) (144,795) 1,176 (370) --------------- -------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (40,514) 8,379 (2,773) --------------- -------- ----------- Net realized gains (losses) (40,514) 8,379 (2,773) --------------- -------- ----------- Change in unrealized gains (losses) on investments (1,444,286) 1,480 45,397 --------------- -------- ----------- Net realized and changes in unrealized gains (losses) on investments (1,484,800) 9,859 42,624 --------------- -------- ----------- Net increase (decrease) in net assets resulting from operations $ (1,629,595) $ 11,035 $ 42,254 =============== ======== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 24 ALLIANCEBERNSTEIN INTERMEDIATE BOND ALLIANCEBERNSTEIN INTERNATIONAL VALUE INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------- ------------------------------------- 2011 2010 2009 (a) 2011 2010 (b) ---------- -------------- -------------- ----------------- ------------------- $ 2,097 $ 2,177 $ 763 $ 7 $ 31 ---------- -------------- -------------- ----------------- ------------------- 183 139 71 56 2 ---------- -------------- -------------- ----------------- ------------------- 183 139 71 56 2 ---------- -------------- -------------- ----------------- ------------------- 1,914 2,038 692 (49) 29 ---------- -------------- -------------- ----------------- ------------------- 170 -- -- -- -- 14 2,172 716 175 1 ---------- -------------- -------------- ----------------- ------------------- 184 2,172 716 175 1 ---------- -------------- -------------- ----------------- ------------------- 563 (1,393) 2,187 (129) 88 ---------- -------------- -------------- ----------------- ------------------- 747 779 2,903 46 89 ---------- -------------- -------------- ----------------- ------------------- $ 2,661 $ 2,817 $ 3,595 $ (3) $ 118 ========== ============== ============== ================= ===================
The accompanying notes are an integral part of these financial statements. 25 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN CENTURY VP VISTA INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 ----------- ---------- ----------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- ----------- ---------- ----------- EXPENSES: Mortality and expense risk charges 305 519 472 ----------- ---------- ----------- Total expenses 305 519 472 ----------- ---------- ----------- Net investment income (loss) (305) (519) (472) ----------- ---------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 5,995 12,351 (47,927) ----------- ---------- ----------- Net realized gains (losses) 5,995 12,351 (47,927) ----------- ---------- ----------- Change in unrealized gains (losses) on investments (8,184) (1,947) 67,433 ----------- ---------- ----------- Net realized and changes in unrealized gains (losses) on investments (2,189) 10,404 19,506 ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations $ (2,494) $ 9,885 $ 19,034 =========== ========== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 26 AMERICAN FUNDS BOND AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- --------------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- $ 140,691 $ 126,810 $ 116,930 $ 817,781 $ 1,031,490 $ 125,985 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 35,142 32,377 28,070 493,303 493,443 372,082 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 35,142 32,377 28,070 493,303 493,443 372,082 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 105,549 94,433 88,860 324,478 538,047 (246,097) --------- ---------------------- ------------ ---------------- ---------------------- ----------------- -- -- -- -- -- -- 10,695 (8,911) (91,981) (68,423) (386,466) (2,366,209) --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 10,695 (8,911) (91,981) (68,423) (386,466) (2,366,209) --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 121,054 122,161 381,938 (13,188,181) 11,810,164 23,159,810 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- 131,749 113,250 289,957 (13,256,604) 11,423,698 20,793,601 --------- ---------------------- ------------ ---------------- ---------------------- ----------------- $ 237,298 $ 207,683 $ 378,817 $ (12,932,126) $ 11,961,745 $ 20,547,504 ========= ====================== ============ ================ ====================== =================
The accompanying notes are an integral part of these financial statements. 27 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN FUNDS GROWTH INVESTMENT DIVISION -------------------------------------------------------- 2011 2010 2009 --------------- ------------------------ --------------- INVESTMENT INCOME: Dividends $ 771,098 $ 832,401 $ 607,594 --------------- ------------------------ --------------- EXPENSES: Mortality and expense risk charges 1,028,922 953,940 768,579 --------------- ------------------------ --------------- Total expenses 1,028,922 953,940 768,579 --------------- ------------------------ --------------- Net investment income (loss) (257,824) (121,539) (160,985) --------------- ------------------------ --------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 658,869 (328,082) (1,821,468) --------------- ------------------------ --------------- Net realized gains (losses) 658,869 (328,082) (1,821,468) --------------- ------------------------ --------------- Change in unrealized gains (losses) on investments (6,628,058) 19,817,938 31,985,158 --------------- ------------------------ --------------- Net realized and changes in unrealized gains (losses) on investments (5,969,189) 19,489,856 30,163,690 --------------- ------------------------ --------------- Net increase (decrease) in net assets resulting from operations $ (6,227,013) $ 19,368,317 $ 30,002,705 =============== ======================== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 28 AMERICAN FUNDS GROWTH-INCOME AMERICAN FUNDS INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------- --------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- $ 1,148,376 $ 1,018,183 $ 922,229 $ 10,736 $ 13,328 $ 1,021 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- 594,603 564,494 475,319 9,756 9,546 222 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- 594,603 564,494 475,319 9,756 9,546 222 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- 553,773 453,689 446,910 980 3,782 799 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- -- -- -- -- -- 255 (58,726) (336,443) (956,152) (605) (608) 1,282 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- (58,726) (336,443) (956,152) (605) (608) 1,537 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- (2,428,568) 6,948,053 15,943,649 (108,507) 46,566 19,842 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- (2,487,294) 6,611,610 14,987,497 (109,112) 45,958 21,379 --------------- ---------------------- ----------------- ------------ ---------------------- --------------- $ (1,933,521) $ 7,065,299 $ 15,434,407 $(108,132) $ 49,740 $ 22,178 =============== ====================== ================= ============ ====================== ===============
The accompanying notes are an integral part of these financial statements. 29 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN FUNDS U.S. GOVERNMENT/AAA-RATED SECURITIES INVESTMENT DIVISION --------------------------------------------------- 2011 2010 2009 ------- ------------------- ----------------------- INVESTMENT INCOME: Dividends $ 773 $ 683 $ 2,005 ------- ------------------- ----------------------- EXPENSES: Mortality and expense risk charges 601 596 265 ------- ------------------- ----------------------- Total expenses 601 596 265 ------- ------------------- ----------------------- Net investment income (loss) 172 87 1,740 ------- ------------------- ----------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 1,111 193 505 Realized gains (losses) on sale of investments 509 450 619 ------- ------------------- ----------------------- Net realized gains (losses) 1,620 643 1,124 ------- ------------------- ----------------------- Change in unrealized gains (losses) on investments 885 1,804 (1,799) ------- ------------------- ----------------------- Net realized and changes in unrealized gains (losses) on investments 2,505 2,447 (675) ------- ------------------- ----------------------- Net increase (decrease) in net assets resulting from operations $ 2,677 $ 2,534 $ 1,065 ======= =================== =======================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 30 DREYFUS VIF INTERNATIONAL VALUE FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- ------------------------------------------------ 2011 2010 2009 2011 2010 2009 ------------ ---------------------- --------------- ------------- ------------------- -------------- $ 4,085 $ 3,367 $ 10,533 $ 23,605 $ 19,264 $ 22,283 ------------ ---------------------- --------------- ------------- ------------------- -------------- 798 876 1,264 11,005 11,265 6,417 ------------ ---------------------- --------------- ------------- ------------------- -------------- 798 876 1,264 11,005 11,265 6,417 ------------ ---------------------- --------------- ------------- ------------------- -------------- 3,287 2,491 9,269 12,600 7,999 15,866 ------------ ---------------------- --------------- ------------- ------------------- -------------- -- -- -- 3,056 5,857 3,095 (960) (14,086) (185,176) 71,204 31,417 (19,280) ------------ ---------------------- --------------- ------------- ------------------- -------------- (960) (14,086) (185,176) 74,260 37,274 (16,185) ------------ ---------------------- --------------- ------------- ------------------- -------------- (45,726) 19,382 238,024 (205,700) 201,872 427,179 ------------ ---------------------- --------------- ------------- ------------------- -------------- (46,686) 5,296 52,848 (131,440) 239,146 410,994 ------------ ---------------------- --------------- ------------- ------------------- -------------- $ (43,399) $ 7,787 $ 62,117 $ (118,840) $ 247,145 $ 426,860 ============ ====================== =============== ============= =================== ==============
The accompanying notes are an integral part of these financial statements. 31 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP CONTRAFUND INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ------------ ------------ ------------ INVESTMENT INCOME: Dividends $ 20,916 $ 27,427 $ 43,475 ------------ ------------ ------------ EXPENSES: Mortality and expense risk charges 10,858 17,497 12,639 ------------ ------------ ------------ Total expenses 10,858 17,497 12,639 ------------ ------------ ------------ Net investment income (loss) 10,058 9,930 30,836 ------------ ------------ ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 1,114 957 Realized gains (losses) on sale of investments 12,745 (218,742) (199,492) ------------ ------------ ------------ Net realized gains (losses) 12,745 (217,628) (198,535) ------------ ------------ ------------ Change in unrealized gains (losses) on investments (98,141) 648,547 1,136,586 ------------ ------------ ------------ Net realized and changes in unrealized gains (losses) on investments (85,396) 430,919 938,051 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (75,338) $ 440,849 $ 968,887 ============ ============ ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 32 FIDELITY VIP EQUITY-INCOME FIDELITY VIP FREEDOM 2010 INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- ----------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------------- ----------- -------------- ----------- -------------- $ 637 $ 3,327 $ 4,739 $ 726 $ 654 $ 529 -------------- -------------- ----------- -------------- ----------- -------------- 749 838 1,051 150 109 72 -------------- -------------- ----------- -------------- ----------- -------------- 749 838 1,051 150 109 72 -------------- -------------- ----------- -------------- ----------- -------------- (112) 2,489 3,688 576 545 457 -------------- -------------- ----------- -------------- ----------- -------------- -- -- -- 176 470 190 2,625 (5,418) (392,905) 1,305 67 (1,846) -------------- -------------- ----------- -------------- ----------- -------------- 2,625 (5,418) (392,905) 1,481 537 (1,656) -------------- -------------- ----------- -------------- ----------- -------------- (8,921) 31,745 405,695 (2,344) 2,036 3,793 -------------- -------------- ----------- -------------- ----------- -------------- (6,296) 26,327 12,790 (863) 2,573 2,137 -------------- -------------- ----------- -------------- ----------- -------------- $ (6,408) $ 28,816 $ 16,478 $ (287) $ 3,118 $ 2,594 ============== ============== =========== ============== =========== ==============
The accompanying notes are an integral part of these financial statements. 33 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 ----------- --------- ------------ INVESTMENT INCOME: Dividends $ 15,422 $ 15,231 $ 19,275 ----------- --------- ------------ EXPENSES: Mortality and expense risk charges 2,741 2,551 2,094 ----------- --------- ------------ Total expenses 2,741 2,551 2,094 ----------- --------- ------------ Net investment income (loss) 12,681 12,680 17,181 ----------- --------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 2,671 5,440 10,109 Realized gains (losses) on sale of investments 10,134 2,838 (11,027) ----------- --------- ------------ Net realized gains (losses) 12,805 8,278 (918) ----------- --------- ------------ Change in unrealized gains (losses) on investments (33,543) 70,032 149,817 ----------- --------- ------------ Net realized and changes in unrealized gains (losses) on investments (20,738) 78,310 148,899 ----------- --------- ------------ Net increase (decrease) in net assets resulting from operations $ (8,057) $ 90,990 $ 166,080 =========== ========= ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 34 FIDELITY VIP FIDELITY VIP FREEDOM 2030 FREEDOM 2050 INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------- 2011 2010 2009 2011 (c) ---------- --------- ---------- ------------------- $ 1,232 $ 2,018 $ 624 $ 288 ---------- --------- ---------- ------------------- 300 364 112 60 ---------- --------- ---------- ------------------- 300 364 112 60 ---------- --------- ---------- ------------------- 932 1,654 512 228 ---------- --------- ---------- ------------------- 172 680 329 1,383 11,751 710 38 (5,037) ---------- --------- ---------- ------------------- 11,923 1,390 367 (3,654) ---------- --------- ---------- ------------------- (12,843) 11,839 6,395 1,450 ---------- --------- ---------- ------------------- (920) 13,229 6,762 (2,204) ---------- --------- ---------- ------------------- $ 12 $ 14,883 $ 7,274 $ (1,976) ========== ========= ========== ===================
The accompanying notes are an integral part of these financial statements. 35 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP HIGH INCOME INVESTMENT DIVISION ------------------------------------- 2011 2010 2009 (d) -------------- ---------- ----------- INVESTMENT INCOME: Dividends $ 2,953 $ 340 $ 2,882 -------------- ---------- ----------- EXPENSES: Mortality and expense risk charges 27 30 33 -------------- ---------- ----------- Total expenses 27 30 33 -------------- ---------- ----------- Net investment income (loss) 2,926 310 2,849 -------------- ---------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 13 (227) 11 -------------- ---------- ----------- Net realized gains (losses) 13 (227) 11 -------------- ---------- ----------- Change in unrealized gains (losses) on investments (1,768) 801 (647) -------------- ---------- ----------- Net realized and changes in unrealized gains (losses) on investments (1,755) 574 (636) -------------- ---------- ----------- Net increase (decrease) in net assets resulting from operations $ 1,171 $ 884 $ 2,213 ============== ========== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 36 FIDELITY VIP INVESTMENT GRADE BOND FIDELITY VIP MID CAP INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ----------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------------- -------------- ------------ ------------- -------------- $ 54,637 $ 18,206 $ 10,680 $ 150 $ 502 $ 119 -------------- -------------- -------------- ------------ ------------- -------------- 6,449 4,314 369 5,725 5,209 142 -------------- -------------- -------------- ------------ ------------- -------------- 6,449 4,314 369 5,725 5,209 142 -------------- -------------- -------------- ------------ ------------- -------------- 48,188 13,892 10,311 (5,575) (4,707) (23) -------------- -------------- -------------- ------------ ------------- -------------- 24,253 5,814 654 1,181 1,027 129 (3,064) 17,651 3,233 10,846 2,077 613 -------------- -------------- -------------- ------------ ------------- -------------- 21,189 23,465 3,887 12,027 3,104 742 -------------- -------------- -------------- ------------ ------------- -------------- 1,742 (13,312) (1,678) (60,535) 83,723 13,131 -------------- -------------- -------------- ------------ ------------- -------------- 22,931 10,153 2,209 (48,508) 86,827 13,873 -------------- -------------- -------------- ------------ ------------- -------------- $ 71,119 $ 24,045 $ 12,520 $ (54,083) $ 82,120 $ 13,850 ============== ============== ============== ============ ============= ==============
The accompanying notes are an integral part of these financial statements. 37 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES INVESTMENT DIVISION ----------------------------------------- 2011 2010 2009 ------------ ------------- -------------- INVESTMENT INCOME: Dividends $ 22,691 $ 10,103 $ 7,899 ------------ ------------- -------------- EXPENSES: Mortality and expense risk charges 3,892 2,866 4,787 ------------ ------------- -------------- Total expenses 3,892 2,866 4,787 ------------ ------------- -------------- Net investment income (loss) 18,799 7,237 3,112 ------------ ------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 22,139 -- 18,638 Realized gains (losses) on sale of investments (20,210) (4,189) (456,806) ------------ ------------- -------------- Net realized gains (losses) 1,929 (4,189) (438,168) ------------ ------------- -------------- Change in unrealized gains (losses) on investments (59,670) 81,592 609,659 ------------ ------------- -------------- Net realized and changes in unrealized gains (losses) on investments (57,741) 77,403 171,491 ------------ ------------- -------------- Net increase (decrease) in net assets resulting from operations $ (38,942) $ 84,640 $ 174,603 ============ ============= ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 38 FTVIPT TEMPLETON FOREIGN SECURITIES FTVIPT TEMPLETON GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- --------------------------------------- 2011 2010 2009 2011 2010 2009 (e) ------------- --------------------- ---------------- ------------ -------------- ----------- $ 89,150 $ 164,170 $ 239,754 $ 10,824 $ 60 $ -- ------------- --------------------- ---------------- ------------ -------------- ----------- 111,353 239,041 28,000 1,067 89 4 ------------- --------------------- ---------------- ------------ -------------- ----------- 111,353 239,041 28,000 1,067 89 4 ------------- --------------------- ---------------- ------------ -------------- ----------- (22,203) (74,871) 211,754 9,757 (29) (4) ------------- --------------------- ---------------- ------------ -------------- ----------- -- -- 268,234 1,216 10 -- 253,750 (50,450) (421,623) (12,515) 4,591 5 ------------- --------------------- ---------------- ------------ -------------- ----------- 253,750 (50,450) (153,389) (11,299) 4,601 5 ------------- --------------------- ---------------- ------------ -------------- ----------- (552,735) 614,425 2,059,948 (11,949) (171) 239 ------------- --------------------- ---------------- ------------ -------------- ----------- (298,985) 563,975 1,906,559 (23,248) 4,430 244 ------------- --------------------- ---------------- ------------ -------------- ----------- $ (321,188) $ 489,104 $ 2,118,313 $ (13,491) $ 4,401 $ 240 ============= ===================== ================ ============ ============== ===========
The accompanying notes are an integral part of these financial statements. 39 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 GOLDMAN SACHS MID-CAP VALUE INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ------------ ------------ ----------- INVESTMENT INCOME: Dividends $ 2,221 $ 2,264 $ 5,173 ------------ ------------ ------------ EXPENSES: Mortality and expense risk charges 1,289 1,356 2,426 ------------ ------------ ----------- Total expenses 1,289 1,356 2,426 ------------ ------------ ----------- Net investment income (loss) 932 908 2,747 ------------ ------------ ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (27,627) (13,608) (540,331) ------------ ------------ ----------- Net realized gains (losses) (27,627) (13,608) (540,331) ------------ ------------ ----------- Change in unrealized gains (losses) on investments 1,030 84,633 633,578 ------------ ------------ ----------- Net realized and changes in unrealized gains (losses) on investments (26,597) 71,025 93,247 ------------ ------------ ----------- Net increase (decrease) in net assets resulting from operations $ (25,665) $ 71,933 $ 95,994 ============ ============ ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 40 INVESCO V.I. GOVERNMENT GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESCO V.I. GLOBAL REAL ESTATE SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ----------------------------------------------- ------------------- 2011 2010 2009 2011 2010 2009 2011 (f) -------------------------------------------- ----------------------------------------------- ------------------- $ 424 $ 254 $ 724 $ 72,431 $ 71,976 $ -- $ -- -------------------------------------------- ----------------------------------------------- ------------------- 173 154 173 49,508 39,431 5,813 120 -------------------------------------------- ----------------------------------------------- ------------------- 173 154 173 49,508 39,431 5,813 120 -------------------------------------------- ----------------------------------------------- ------------------- 251 100 551 22,923 32,545 (5,813) (120) -------------------------------------------- ----------------------------------------------- ------------------- -- -- -- -- -- -- -- 175 (7,335) (17,708) (158,339) (130,047) (698,156) 1,389 -------------------------------------------- ----------------------------------------------- ------------------- 175 (7,335) (17,708) (158,339) (130,047) (698,156) 1,389 -------------------------------------------- ----------------------------------------------- ------------------- (255) 18,632 28,044 (44,519) 289,353 1,038,943 1,336 -------------------------------------------- ----------------------------------------------- ------------------- (80) 11,297 10,336 (202,858) 159,306 340,787 2,725 -------------------------------------------- ----------------------------------------------- ------------------- $ 171 $ 11,397 $ 10,887 $ (179,935) $ 191,851 $ 334,974 $ 2,605 ============ =================== =========== ============= ================== ============== ===================
The accompanying notes are an integral part of these financial statements. 41 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 INVESCO V.I. INTERNATIONAL GROWTH INVESTMENT DIVISION ------------------------------------ 2011 2010 2009 (d) ------------ ---------- ------------ INVESTMENT INCOME: Dividends $ 3,660 $ 4,364 $ 242 ------------ ---------- ------------ EXPENSES: Mortality and expense risk charges 1,400 783 29 ------------ ---------- ------------ Total expenses 1,400 783 29 ------------ ---------- ------------ Net investment income (loss) 2,260 3,581 213 ------------ ---------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 3,888 1,465 34 ------------ ---------- ------------ Net realized gains (losses) 3,888 1,465 34 ------------ ---------- ------------ Change in unrealized gains (losses) on investments (28,330) 26,537 2,258 ------------ ---------- ------------ Net realized and changes in unrealized gains (losses) on investments (24,442) 28,002 2,292 ------------ ---------- ------------ Net increase (decrease) in net assets resulting from operations $ (22,182) $ 31,583 $ 2,505 ============ ========== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 42 INVESCO V.I. VAN KAMPEN COMSTOCK JANUS ASPEN BALANCED INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- ---------------------------- 2011 2010 (g) 2011 2010 2009 -------------- ----------------- --------- -------- --------- $ 489 $ -- $ 44,376 $ 54,166 $ 14,836 -------------- ----------------- --------- -------- --------- 423 -- 25,576 23,474 1,929 -------------- ----------------- --------- -------- --------- 423 -- 25,576 23,474 1,929 -------------- ----------------- --------- -------- --------- 66 -- 18,800 30,692 12,907 -------------- ----------------- --------- -------- --------- -- -- 108,835 -- 18,519 (127) 53 29,077 26,581 655 -------------- ----------------- --------- -------- --------- (127) 53 137,912 26,581 19,174 -------------- ----------------- --------- -------- --------- (6,181) 45 (161,867) 90,252 93,262 -------------- ----------------- --------- -------- --------- (6,308) 98 (23,955) 116,833 112,436 -------------- ----------------- --------- -------- --------- $ (6,242) $ 98 $ (5,155) $147,525 $ 125,343 ============== ================= ========= ======== =========
The accompanying notes are an integral part of these financial statements. 43 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 JANUS ASPEN FORTY INVESTMENT DIVISION ------------------------------------- 2011 2010 2009 ------------ ----------- ------------ INVESTMENT INCOME: Dividends $ 2,325 $ 2,433 $ 81 ------------ ----------- ------------ EXPENSES: Mortality and expense risk charges 15,960 16,448 2,129 ------------ ----------- ------------ Total expenses 15,960 16,448 2,129 ------------ ----------- ------------ Net investment income (loss) (13,635) (14,015) (2,048) ------------ ----------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 43,353 14,051 (78,622) ------------ ----------- ------------ Net realized gains (losses) 43,353 14,051 (78,622) ------------ ----------- ------------ Change in unrealized gains (losses) on investments (117,114) 47,707 310,554 ------------ ----------- ------------ Net realized and changes in unrealized gains (losses) on investments (73,761) 61,758 231,932 ------------ ----------- ------------ Net increase (decrease) in net assets resulting from operations $ (87,396) $ 47,743 $ 229,884 ============ =========== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 44 JANUS ASPEN JANUS JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- ------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ------------ -------------- ------------- -------- -------- $ 5,397 $ 73,809 $ 28,575 $ 1,291 $ 1,609 $ 413 ------------- ------------ -------------- ------------- -------- -------- 36,978 226,951 22,889 29,472 817 355 ------------- ------------ -------------- ------------- -------- -------- 36,978 226,951 22,889 29,472 817 355 ------------- ------------ -------------- ------------- -------- -------- (31,581) (153,142) 5,686 (28,181) 792 58 ------------- ------------ -------------- ------------- -------- -------- -- -- -- 3,396 -- 3,372 1,561,413 52,158 (31,201) (93,767) 4,218 23,192 ------------- ------------ -------------- ------------- -------- -------- 1,561,413 52,158 (31,201) (90,371) 4,218 26,564 ------------- ------------ -------------- ------------- -------- -------- (1,416,036) 848,330 1,662,317 (214,175) 62,994 37,885 ------------- ------------ -------------- ------------- -------- -------- 145,377 900,488 1,631,116 (304,546) 67,212 64,449 ------------- ------------ -------------- ------------- -------- -------- $ 113,796 $ 747,346 $ 1,636,802 $ (332,727) $ 68,004 $ 64,507 ============= ============ ============== ============= ======== ========
The accompanying notes are an integral part of these financial statements. 45 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MFS VIT GLOBAL EQUITY INVESTMENT DIVISION ------------------------------- 2011 2010 2009 ----------- ------- ----------- INVESTMENT INCOME: Dividends $ 575 $ 1,232 $ 1,242 ----------- ------- ----------- EXPENSES: Mortality and expense risk charges 361 598 238 ----------- ------- ----------- Total expenses 361 598 238 ----------- ------- ----------- Net investment income (loss) 214 634 1,004 ----------- ------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 12,787 183 (11,944) ----------- ------- ----------- Net realized gains (losses) 12,787 183 (11,944) ----------- ------- ----------- Change in unrealized gains (losses) on investments (16,173) 19,523 27,307 ----------- ------- ----------- Net realized and changes in unrealized gains (losses) on investments (3,386) 19,706 15,313 ----------- ------- ----------- Net increase (decrease) in net assets resulting from operations $ (3,172) 20,340 $ 16,317 =========== ======= ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 46 MFS VIT HIGH INCOME MFS VIT NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- ----------------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------- -------- ------------ ----------- ---------- $ 12,069 $ 8,657 $ 933 $ -- $ -- $ -- -------------- -------- -------- ------------ ----------- ---------- 491 457 273 555 340 27 -------------- -------- -------- ------------ ----------- ---------- 491 457 273 555 340 27 -------------- -------- -------- ------------ ----------- ---------- 11,578 8,200 660 (555) (340) (27) -------------- -------- -------- ------------ ----------- ---------- -- -- -- 17,326 -- -- 361 680 326 772 544 1,560 -------------- -------- -------- ------------ ----------- ---------- 361 680 326 18,098 544 1,560 -------------- -------- -------- ------------ ----------- ---------- (7,343) 7,331 21,466 (32,906) 28,843 3,314 -------------- -------- -------- ------------ ----------- ---------- (6,982) 8,011 21,792 (14,808) 29,387 4,874 -------------- -------- -------- ------------ ----------- ---------- $ 4,596 $ 16,211 $ 22,452 $ (15,363) $ 29,047 $ 4,847 ============== ======== ======== ============ =========== ==========
The accompanying notes are an integral part of these financial statements. 47 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MFS VIT VALUE INVESTMENT DIVISION ------------------------------------- 2011 2010 2009 ----------- ---------- -------------- INVESTMENT INCOME: Dividends $ 999 $ 969 $ 803 ----------- ---------- -------------- EXPENSES: Mortality and expense risk charges 285 293 257 ----------- ---------- -------------- Total expenses 285 293 257 ----------- ---------- -------------- Net investment income (loss) 714 676 546 ----------- ---------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 318 -- -- Realized gains (losses) on sale of investments (10,004) (552) (1,224) ----------- ---------- -------------- Net realized gains (losses) (9,686) (552) (1,224) ----------- ---------- -------------- Change in unrealized gains (losses) on investments 6,173 7,585 14,082 ----------- ---------- -------------- Net realized and changes in unrealized gains (losses) on investments (3,513) 7,033 12,858 ----------- ---------- -------------- Net increase (decrease) in net assets resulting from operations $ (2,799) $ 7,709 $ 13,404 =========== ========== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 48 MIST AMERICAN FUNDS BALANCED ALLOCATION MIST AMERICAN FUNDS GROWTH ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- ------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ------------ --------------- ------------ ----------- ----------- $ 6,635 $ 3,146 $ -- $ 10,815 $ 2,434 $ -- ------------ ------------ --------------- ------------ ----------- ----------- -- -- -- -- -- -- ------------ ------------ --------------- ------------ ----------- ----------- -- -- -- -- -- -- ------------ ------------ --------------- ------------ ----------- ----------- 6,635 3,146 -- 10,815 2,434 -- ------------ ------------ --------------- ------------ ----------- ----------- 248 117 -- -- -- -- 6,046 1,705 (28) 9,254 5,990 1,298 ------------ ------------ --------------- ------------ ----------- ----------- 6,294 1,822 (28) 9,254 5,990 1,298 ------------ ------------ --------------- ------------ ----------- ----------- (23,258) 26,193 14,667 (58,738) 79,550 20,909 ------------ ------------ --------------- ------------ ----------- ----------- (16,964) 28,015 14,639 (49,484) 85,540 22,207 ------------ ------------ --------------- ------------ ----------- ----------- $ (10,329) $ 31,161 $ 14,639 $ (38,669) $ 87,974 $ 22,207 ============ ============ =============== ============ =========== ===========
The accompanying notes are an integral part of these financial statements. 49 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST AMERICAN FUNDS MODERATE ALLOCATION INVESTMENT DIVISION --------------------------------------- 2011 2010 2009 -------------- ------------ ----------- INVESTMENT INCOME: Dividends $ 5,453 $ 2,501 $ -- -------------- ------------ ----------- EXPENSES: Mortality and expense risk charges -- -- -- -------------- ------------ ----------- Total expenses -- -- -- -------------- ------------ ----------- Net investment income (loss) 5,453 2,501 -- -------------- ------------ ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 1,467 -- -- Realized gains (losses) on sale of investments 1,917 646 370 -------------- ------------ ----------- Net realized gains (losses) 3,384 646 370 -------------- ------------ ----------- Change in unrealized gains (losses) on investments (7,233) 16,902 11,101 -------------- ------------ ----------- Net realized and changes in unrealized gains (losses) on investments (3,849) 17,548 11,471 -------------- ------------ ----------- Net increase (decrease) in net assets resulting from operations $ 1,604 $ 20,049 $ 11,471 ============== ============ ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 50 MIST BLACKROCK LARGE CAP CORE MIST CLARION GLOBAL REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- --------------- --------------- --------------- -------------- -------------- $ 3,462,386 $ 3,848,840 $ 4,180,146 $ 847,944 $ 1,558,222 $ 496,210 -------------- --------------- --------------- --------------- -------------- -------------- 2,301,027 2,233,231 2,047,270 179,211 166,255 119,529 -------------- --------------- --------------- --------------- -------------- -------------- 2,301,027 2,233,231 2,047,270 179,211 166,255 119,529 -------------- --------------- --------------- --------------- -------------- -------------- 1,161,359 1,615,609 2,132,876 668,733 1,391,967 376,681 -------------- --------------- --------------- --------------- -------------- -------------- -- -- -- -- -- -- (4,542,808) (7,248,214) (10,716,690) (421,589) (571,095) (1,092,248) -------------- --------------- --------------- --------------- -------------- -------------- (4,542,808) (7,248,214) (10,716,690) (421,589) (571,095) (1,092,248) -------------- --------------- --------------- --------------- -------------- -------------- 3,050,880 38,497,976 54,384,062 (1,500,208) 1,969,823 5,493,585 -------------- --------------- --------------- --------------- -------------- -------------- (1,491,928) 31,249,762 43,667,372 (1,921,797) 1,398,728 4,401,337 -------------- --------------- --------------- --------------- -------------- -------------- $(330,569) $32,865,371 $45,800,248 $(1,253,064) $ 2,790,695 $ 4,778,018 ============== =============== =============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 51 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST DREMAN SMALL CAP VALUE INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 ----------- ---------- ----------- INVESTMENT INCOME: Dividends $ 472 $ 172 $ 1 ----------- ---------- ----------- EXPENSES: Mortality and expense risk charges 255 220 428 ----------- ---------- ----------- Total expenses 255 220 428 ----------- ---------- ----------- Net investment income (loss) 217 (48) (427) ----------- ---------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 1,124 403 58,177 ----------- ---------- ----------- Net realized gains (losses) 1,124 403 58,177 ----------- ---------- ----------- Change in unrealized gains (losses) on investments (4,058) 3,392 2,844 ----------- ---------- ----------- Net realized and changes in unrealized gains (losses) on investments (2,934) 3,795 61,021 ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations $ (2,717) $ 3,747 $ 60,594 =========== ========== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 52 MIST HARRIS OAKMARK INTERNATIONAL MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- -------------- -------------- ------------ ------------ ------------ $ 8,423 $ 576,287 $ 1,589,352 $ -- $ -- $ -- --------------- -------------- -------------- ------------ ------------ ------------ 243,105 232,976 170,663 36,533 30,507 22,254 --------------- -------------- -------------- ------------ ------------ ------------ 243,105 232,976 170,663 36,533 30,507 22,254 --------------- -------------- -------------- ------------ ------------ ------------ (234,682) 343,311 1,418,689 (36,533) (30,507) (22,254) --------------- -------------- -------------- ------------ ------------ ------------ -- -- -- -- -- -- (114,036) (312,283) (1,294,657) 169,309 (15,371) (84,509) --------------- -------------- -------------- ------------ ------------ ------------ (114,036) (312,283) (1,294,657) 169,309 (15,371) (84,509) --------------- -------------- -------------- ------------ ------------ ------------ (4,256,535) 4,235,035 8,897,628 (192,641) 887,599 919,328 --------------- -------------- -------------- ------------ ------------ ------------ (4,370,571) 3,922,752 7,602,971 (23,332) 872,228 834,819 --------------- -------------- -------------- ------------ ------------ ------------ $ (4,605,253) $ 4,266,063 $ 9,021,660 $ (59,865) $ 841,721 $ 812,565 =============== ============== ============== ============ ============ ============
The accompanying notes are an integral part of these financial statements. 53 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST JANUS FORTY INVESTMENT DIVISION --------------------------------------------- 2011 2010 2009 --------------- -------------- -------------- INVESTMENT INCOME: Dividends $ 249,768 $ 219,796 $ -- --------------- -------------- -------------- EXPENSES: Mortality and expense risk charges 100,112 99,823 75,162 --------------- -------------- -------------- Total expenses 100,112 99,823 75,162 --------------- -------------- -------------- Net investment income (loss) 149,656 119,973 (75,162) --------------- -------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 2,199 (41,591) (540,105) --------------- -------------- -------------- Net realized gains (losses) 2,199 (41,591) (540,105) --------------- -------------- -------------- Change in unrealized gains (losses) on investments (1,278,619) 1,120,682 3,887,171 --------------- -------------- -------------- Net realized and changes in unrealized gains (losses) on investments (1,276,420) 1,079,091 3,347,066 --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ (1,126,764) $ 1,199,064 $ 3,271,904 =============== ============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 54 MIST LAZARD MID CAP MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- -------------- -------------- ------------- ---------------- -------------- $ 51,406 $ 51,856 $ 51,729 $ 8,681 $ 4,315 $ 6,856 ------------- -------------- -------------- ------------- ---------------- -------------- 44,360 40,421 32,462 88,982 57,953 47,276 ------------- -------------- -------------- ------------- ---------------- -------------- 44,360 40,421 32,462 88,982 57,953 47,276 ------------- -------------- -------------- ------------- ---------------- -------------- 7,046 11,435 19,267 (80,301) (53,638) (40,420) ------------- -------------- -------------- ------------- ---------------- -------------- -- -- -- -- -- -- (15,584) (93,933) (283,748) 93,448 (57,251) (166,346) ------------- -------------- -------------- ------------- ---------------- -------------- (15,584) (93,933) (283,748) 93,448 (57,251) (166,346) ------------- -------------- -------------- ------------- ---------------- -------------- (320,660) 1,108,654 1,519,608 (217,464) 1,583,027 1,815,976 ------------- -------------- -------------- ------------- ---------------- -------------- (336,244) 1,014,721 1,235,860 (124,016) 1,525,776 1,649,630 ------------- -------------- -------------- ------------- ---------------- -------------- $ (329,198) $ 1,026,156 $ 1,255,127 $ (204,317) $ 1,472,138 $ 1,609,210 ============= ============== ============== ============= ================ ==============
The accompanying notes are an integral part of these financial statements. 55 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION ----------------------------------------- 2011 2010 2009 -------------- ----------- -------------- INVESTMENT INCOME: Dividends $ 1,568,618 $ 1,718,530 $ 1,572,315 -------------- ----------- -------------- EXPENSES: Mortality and expense risk charges 212,395 316,284 180,909 -------------- ----------- -------------- Total expenses 212,395 316,284 180,909 -------------- ----------- -------------- Net investment income (loss) 1,356,223 1,402,246 1,391,406 -------------- ----------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 583,376 240,525 (126,749) -------------- ----------- -------------- Net realized gains (losses) 583,376 240,525 (126,749) -------------- ----------- -------------- Change in unrealized gains (losses) on investments (863,576) 1,315,427 5,411,601 -------------- ----------- -------------- Net realized and changes in unrealized gains (losses) on investments (280,200) 1,555,952 5,284,852 -------------- ----------- -------------- Net increase (decrease) in net assets resulting from operations $ 1,076,023 $ 2,958,198 $ 6,676,258 ============== =========== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 56 MIST LORD ABBETT MID CAP VALUE MIST MET/FRANKLIN INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- --------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------- ----------- ---------- -------- ------- $ 603 $ 568 $ 1,893 $ 8,323 $ 3,216 $ -- -------------- -------- ----------- ---------- -------- ------- 437 369 335 -- -- -- -------------- -------- ----------- ---------- -------- ------- 437 369 335 -- -- -- -------------- -------- ----------- ---------- -------- ------- 166 199 1,558 8,323 3,216 -- -------------- -------- ----------- ---------- -------- ------- -- -- -- 5,005 433 -- 818 3,236 (38,897) 700 390 54 -------------- -------- ----------- ---------- -------- ------- 818 3,236 (38,897) 5,705 823 54 -------------- -------- ----------- ---------- -------- ------- (5,510) 19,769 57,059 (8,507) 10,272 9,507 -------------- -------- ----------- ---------- -------- ------- (4,692) 23,005 18,162 (2,802) 11,095 9,561 -------------- -------- ----------- ---------- -------- ------- $ (4,526) $ 23,204 $ 19,720 $ 5,521 $ 14,311 $ 9,561 ============== ======== =========== ========== ======== =======
The accompanying notes are an integral part of these financial statements. 57 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST MET/FRANKLIN MUTUAL SHARES INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 --------- --------- ------------- INVESTMENT INCOME: Dividends $ 1,982 $ -- $ -- --------- --------- ------------- EXPENSES: Mortality and expense risk charges -- -- -- --------- --------- ------------- Total expenses -- -- -- --------- --------- ------------- Net investment income (loss) 1,982 -- -- --------- --------- ------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 3,716 577 -- Realized gains (losses) on sale of investments 386 106 (91) --------- --------- ------------- Net realized gains (losses) 4,102 683 (91) --------- --------- ------------- Change in unrealized gains (losses) on investments (6,478) 4,077 4,710 --------- --------- ------------- Net realized and changes in unrealized gains (losses) on investments (2,376) 4,760 4,619 --------- --------- ------------- Net increase (decrease) in net assets resulting from operations $ (394) $ 4,760 $ 4,619 ========= ========= =============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 58 MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY MIST MET/TEMPLETON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------- 2011 2010 2009 2011 2010 2009 ----------- -------------- ------------------ ----------- --------- ---------- $ 5,031 $ -- $ -- $ 792 $ 305 $ 2 ----------- -------------- ------------------ ----------- --------- ---------- -- -- -- -- -- -- ----------- -------------- ------------------ ----------- --------- ---------- -- -- -- -- -- -- ----------- -------------- ------------------ ----------- --------- ---------- 5,031 -- -- 792 305 2 ----------- -------------- ------------------ ----------- --------- ---------- 255 1 -- -- -- -- 2,035 1,545 565 371 125 (60) ----------- -------------- ------------------ ----------- --------- ---------- 2,290 1,546 565 371 125 (60) ----------- -------------- ------------------ ----------- --------- ---------- (10,599) 23,230 14,572 (5,463) 3,904 3,117 ----------- -------------- ------------------ ----------- --------- ---------- (8,309) 24,776 15,137 (5,092) 4,029 3,057 ----------- -------------- ------------------ ----------- --------- ---------- $ (3,278) $ 24,776 $ 15,137 $ (4,300) $ 4,334 $ 3,059 =========== ============== ================== =========== ========= ==========
The accompanying notes are an integral part of these financial statements. 59 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST MFS MIST METLIFE EMERGING AGGRESSIVE STRATEGY MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ---------------------- 2011 (f) 2011 (f) ---------------------- ---------------------- INVESTMENT INCOME: Dividends $ -- $ -- ---------------------- ---------------------- EXPENSES: Mortality and expense risk charges 77,007 788 ---------------------- ---------------------- Total expenses 77,007 788 ---------------------- ---------------------- Net investment income (loss) (77,007) (788) ---------------------- ---------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- Realized gains (losses) on sale of investments (117,896) (70) ---------------------- ---------------------- Net realized gains (losses) (117,896) (70) ---------------------- ---------------------- Change in unrealized gains (losses) on investments (1,834,063) (3,209) ---------------------- ---------------------- Net realized and changes in unrealized gains (losses) on investments (1,951,959) (3,279) ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations $ (2,028,966) $ (4,067) ====================== ======================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 60 MIST MFS RESEARCH INTERNATIONAL MIST MORGAN STANLEY MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- -------------- -------------- ---------------- --------------- ----------- $ 285,362 $ 240,942 $ 369,327 $ 1,490,199 $ 28 $ -- --------------- -------------- -------------- ---------------- --------------- ----------- 108,556 106,709 89,063 1,473,993 957,621 870 --------------- -------------- -------------- ---------------- --------------- ----------- 108,556 106,709 89,063 1,473,993 957,621 870 --------------- -------------- -------------- ---------------- --------------- ----------- 176,806 134,233 280,264 16,206 (957,593) (870) --------------- -------------- -------------- ---------------- --------------- ----------- -- -- -- 5,251,936 -- -- (233,782) (545,005) (1,024,253) 2,604,216 336,382 1,780 --------------- -------------- -------------- ---------------- --------------- ----------- (233,782) (545,005) (1,024,253) 7,856,152 336,382 1,780 --------------- -------------- -------------- ---------------- --------------- ----------- (1,480,693) 1,743,808 3,897,065 (21,552,444) 31,775,159 75,648 --------------- -------------- -------------- ---------------- --------------- ----------- (1,714,475) 1,198,803 2,872,812 (13,696,292) 32,111,541 77,428 --------------- -------------- -------------- ---------------- --------------- ----------- $ (1,537,669) $ 1,333,036 $ 3,153,076 $ (13,680,086) $ 31,153,948 $ 76,558 =============== ============== ============== ================ =============== ===========
The accompanying notes are an integral part of these financial statements. 61 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST OPPENHEIMER CAPITAL APPRECIATION INVESTMENT DIVISION ------------------------------------- 2011 2010 2009 ------------ ----------- ------------ INVESTMENT INCOME: Dividends $ 6,135 $ 10,876 $ -- ------------ ----------- ------------ EXPENSES: Mortality and expense risk charges 14,133 13,539 10,277 ------------ ----------- ------------ Total expenses 14,133 13,539 10,277 ------------ ----------- ------------ Net investment income (loss) (7,998) (2,663) (10,277) ------------ ----------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (25,379) (39,996) (109,001) ------------ ----------- ------------ Net realized gains (losses) (25,379) (39,996) (109,001) ------------ ----------- ------------ Change in unrealized gains (losses) on investments 5,975 190,578 558,202 ------------ ----------- ------------ Net realized and changes in unrealized gains (losses) on investments (19,404) 150,582 449,201 ------------ ----------- ------------ Net increase (decrease) in net assets resulting from operations $ (27,402) $ 147,919 $ 438,924 ============ =========== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 62 MIST PIMCO INFLATION PROTECTED BOND MIST PIMCO TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ -------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- --------- -------------- -------------- ----------- ----------- $ 165,169 $ 210,729 $ 247,574 $ 1,344,247 $ 1,634,551 $ 2,762,595 ----------- --------- -------------- -------------- ----------- ----------- 69,974 64,055 52,710 368,735 360,915 310,295 ----------- --------- -------------- -------------- ----------- ----------- 69,974 64,055 52,710 368,735 360,915 310,295 ----------- --------- -------------- -------------- ----------- ----------- 95,195 146,674 194,864 975,512 1,273,636 2,452,300 ----------- --------- -------------- -------------- ----------- ----------- 424,271 220,376 -- 1,446,133 236,060 1,566,277 100,776 60,903 (46,474) 187,988 238,435 10,564 ----------- --------- -------------- -------------- ----------- ----------- 525,047 281,279 (46,474) 1,634,121 474,495 1,576,841 ----------- --------- -------------- -------------- ----------- ----------- 331,187 130,473 877,182 (1,410,547) 1,426,113 1,911,046 ----------- --------- -------------- -------------- ----------- ----------- 856,234 411,752 830,708 223,574 1,900,608 3,487,887 ----------- --------- -------------- -------------- ----------- ----------- $ 951,429 $ 558,426 $ 1,025,572 $ 1,199,086 $ 3,174,244 $ 5,940,187 =========== ========= ============== ============== =========== ===========
The accompanying notes are an integral part of these financial statements. 63 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST PIONEER FUND INVESTMENT DIVISION -------------------------------- 2011 2010 2009 (e) ----------- -------- ----------- INVESTMENT INCOME: Dividends $ 2,289 $ 1,987 $ -- ----------- -------- ----------- EXPENSES: Mortality and expense risk charges 770 982 580 ----------- -------- ----------- Total expenses 770 982 580 ----------- -------- ----------- Net investment income (loss) 1,519 1,005 (580) ----------- -------- ----------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 21,102 6,067 1,986 ----------- -------- ----------- Net realized gains (losses) 21,102 6,067 1,986 ----------- -------- ----------- Change in unrealized gains (losses) on investments (30,602) 25,716 48,304 ----------- -------- ----------- Net realized and changes in unrealized gains (losses) on investments (9,500) 31,783 50,290 ----------- -------- ----------- Net increase (decrease) in net assets resulting from operations $ (7,981) $ 32,788 $ 49,710 =========== ======== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 64 MIST RCM TECHNOLOGY MIST SSGA GROWTH AND INCOME ETF INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------- 2011 2010 2009 2011 2010 2009 --------------- -------------- -------------- ----------- --------- --------- $ -- $ -- $ -- $ 74,234 $ 35,130 $ 13,156 --------------- -------------- -------------- ----------- --------- --------- 125,028 111,175 82,504 32,826 22,837 6,883 --------------- -------------- -------------- ----------- --------- --------- 125,028 111,175 82,504 32,826 22,837 6,883 --------------- -------------- -------------- ----------- --------- --------- (125,028) (111,175) (82,504) 41,408 12,293 6,273 --------------- -------------- -------------- ----------- --------- --------- -- -- -- 74,142 115 -- 512,571 (54,192) (600,648) 49,491 16,043 3,801 --------------- -------------- -------------- ----------- --------- --------- 512,571 (54,192) (600,648) 123,633 16,158 3,801 --------------- -------------- -------------- ----------- --------- --------- (1,944,446) 3,551,862 5,182,655 (151,325) 322,318 204,020 --------------- -------------- -------------- ----------- --------- --------- (1,431,875) 3,497,670 4,582,007 (27,692) 338,476 207,821 --------------- -------------- -------------- ----------- --------- --------- $ (1,556,903) $ 3,386,495 $ 4,499,503 $ 13,716 $ 350,769 $ 214,094 =============== ============== ============== =========== ========= =========
The accompanying notes are an integral part of these financial statements. 65 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST SSGA GROWTH ETF INVESTMENT DIVISION ----------------------------------- 2011 2010 2009 ------------ --------- ------------ INVESTMENT INCOME: Dividends $ 57,479 $ 34,185 $ 15,419 ------------ --------- ------------ EXPENSES: Mortality and expense risk charges 26,324 17,903 8,413 ------------ --------- ------------ Total expenses 26,324 17,903 8,413 ------------ --------- ------------ Net investment income (loss) 31,155 16,282 7,006 ------------ --------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 63,035 12,378 (20,730) ------------ --------- ------------ Net realized gains (losses) 63,035 12,378 (20,730) ------------ --------- ------------ Change in unrealized gains (losses) on investments (183,850) 271,601 309,775 ------------ --------- ------------ Net realized and changes in unrealized gains (losses) on investments (120,815) 283,979 289,045 ------------ --------- ------------ Net increase (decrease) in net assets resulting from operations $ (89,660) $ 300,261 $ 296,051 ============ ========= ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 66 MIST T. ROWE PRICE LARGE CAP VALUE MIST T. ROWE PRICE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------- ---------------------------------------- 2011 2010 2009 2011 2010 2009 ---------- ----------- ----------- ------------- ------------ ------------- $ 9,481 $ 65,246 $ 104,472 $ -- $ -- $ -- ---------- ----------- ----------- ------------- ------------ ------------- 24,068 134,790 18,231 314,304 150,122 115,483 ---------- ----------- ----------- ------------- ------------ ------------- 24,068 134,790 18,231 314,304 150,122 115,483 ---------- ----------- ----------- ------------- ------------ ------------- (14,587) (69,544) 86,241 (314,304) (150,122) (115,483) ---------- ----------- ----------- ------------- ------------ ------------- -- -- -- 560,152 -- -- (435,260) (79,021) (261,167) 312,619 131,367 (381,122) ---------- ----------- ----------- ------------- ------------ ------------- (435,260) (79,021) (261,167) 872,771 131,367 (381,122) ---------- ----------- ----------- ------------- ------------ ------------- 577,510 921,874 894,542 (1,837,318) 4,580,355 5,596,487 ---------- ----------- ----------- ------------- ------------ ------------- 142,250 842,853 633,375 (964,547) 4,711,722 5,215,365 ---------- ----------- ----------- ------------- ------------ ------------- $ 127,663 $ 773,309 $ 719,616 $(1,278,851) $ 4,561,600 $ 5,099,882 ========== =========== =========== ============= ============ =============
The accompanying notes are an integral part of these financial statements. 67 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST THIRD AVENUE SMALL CAP VALUE INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 ------------- --------- ---------- INVESTMENT INCOME: Dividends $ 9,414 $ 12,822 $ 3,058 ------------- --------- ---------- EXPENSES: Mortality and expense risk charges 10,152 11,741 2,219 ------------- --------- ---------- Total expenses 10,152 11,741 2,219 ------------- --------- ---------- Net investment income (loss) (738) 1,081 839 ------------- --------- ---------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 2,838 Realized gains (losses) on sale of investments 86,881 42,370 (17,013) ------------- --------- ---------- Net realized gains (losses) 86,881 42,370 (14,175) ------------- --------- ---------- Change in unrealized gains (losses) on investments (240,493) 198,929 152,916 ------------- --------- ---------- Net realized and changes in unrealized gains (losses) on investments (153,612) 241,299 138,741 ------------- --------- ---------- Net increase (decrease) in net assets resulting from operations $ (154,350) $ 242,380 $ 139,580 ============= ========= ==========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 68 MSF ARTIO INTERNATIONAL STOCK MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ----------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- -------------- -------------- ----------- ------------- --------------- $ 753,948 $ 672,423 $ 284,863 $ 3,919,750 $ 4,039,520 $ 5,910,030 --------------- -------------- -------------- ----------- ------------- --------------- 342,874 360,189 333,983 911,279 904,600 732,517 --------------- -------------- -------------- ----------- ------------- --------------- 342,874 360,189 333,983 911,279 904,600 732,517 --------------- -------------- -------------- ----------- ------------- --------------- 411,074 312,234 (49,120) 3,008,471 3,134,920 5,177,513 --------------- -------------- -------------- ----------- ------------- --------------- -- -- -- -- -- -- (808,593) (1,030,425) (2,053,375) 843,640 613,564 195,723 --------------- -------------- -------------- ----------- ------------- --------------- (808,593) (1,030,425) (2,053,375) 843,640 613,564 195,723 --------------- -------------- -------------- ----------- ------------- --------------- (8,900,342) 3,370,719 10,298,349 3,276,276 1,607,603 (1,139,158) --------------- -------------- -------------- ----------- ------------- --------------- (9,708,935) 2,340,294 8,244,974 4,119,916 2,221,167 (943,435) --------------- -------------- -------------- ----------- ------------- --------------- $ (9,297,861) $ 2,652,528 $ 8,195,854 $ 7,128,387 $ 5,356,087 $ 4,234,078 =============== ============== ============== =========== ============= ===============
The accompanying notes are an integral part of these financial statements. 69 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF BLACKROCK AGGRESSIVE GROWTH INVESTMENT DIVISION ----------------------------------------------- 2011 2010 2009 --------------- --------------- --------------- INVESTMENT INCOME: Dividends $ 597,164 $ 125,813 $ 309,682 --------------- --------------- --------------- EXPENSES: Mortality and expense risk charges 1,828,016 1,617,041 1,367,142 --------------- --------------- --------------- Total expenses 1,828,016 1,617,041 1,367,142 --------------- --------------- --------------- Net investment income (loss) (1,230,852) (1,491,228) (1,057,460) --------------- --------------- --------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 2,544,325 451,106 (3,328,441) --------------- --------------- --------------- Net realized gains (losses) 2,544,325 451,106 (3,328,441) --------------- --------------- --------------- Change in unrealized gains (losses) on investments (8,863,059) 26,312,677 66,805,065 --------------- --------------- --------------- Net realized and changes in unrealized gains (losses) on investments (6,318,734) 26,763,783 63,476,624 --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (7,549,586) $ 25,272,555 $ 62,419,164 =============== =============== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 70 MSF BLACKROCK BOND INCOME MSF BLACKROCK DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- ------------------------------------------ 2011 2010 2009 2011 2010 2009 ----------- ----------- -------------- -------------- ------------- ------------- $ 3,304,583 $ 3,345,493 $ 5,731,533 $ 6,407,012 $ 4,856,230 $ 12,214,068 ----------- ----------- -------------- -------------- ------------- ------------- 652,314 675,543 651,039 2,319,083 2,202,890 2,044,120 ----------- ----------- -------------- -------------- ------------- ------------- 652,314 675,543 651,039 2,319,083 2,202,890 2,044,120 ----------- ----------- -------------- -------------- ------------- ------------- 2,652,269 2,669,950 5,080,494 4,087,929 2,653,340 10,169,948 ----------- ----------- -------------- -------------- ------------- ------------- -- -- -- -- -- -- 132,024 24,746 (553,787) (191,522) (1,951,136) (4,609,576) ----------- ----------- -------------- -------------- ------------- ------------- 132,024 24,746 (553,787) (191,522) (1,951,136) (4,609,576) ----------- ----------- -------------- -------------- ------------- ------------- 1,930,533 3,372,816 2,142,811 3,658,514 20,635,275 31,028,944 ----------- ----------- -------------- -------------- ------------- ------------- 2,062,557 3,397,562 1,589,024 3,466,992 18,684,139 26,419,368 ----------- ----------- -------------- -------------- ------------- ------------- $ 4,714,826 $ 6,067,512 $ 6,669,518 $ 7,554,921 $ 21,337,479 $ 36,589,316 =========== =========== ============== ============== ============= =============
The accompanying notes are an integral part of these financial statements. 71 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF BLACKROCK LARGE CAP VALUE INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 ------------ -------------- -------------- INVESTMENT INCOME: Dividends $ 149,056 $ 122,314 $ 155,310 ------------ -------------- -------------- EXPENSES: Mortality and expense risk charges 105,410 95,279 81,859 ------------ -------------- -------------- Total expenses 105,410 95,279 81,859 ------------ -------------- -------------- Net investment income (loss) 43,646 27,035 73,451 ------------ -------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (80,782) (263,466) (513,587) ------------ -------------- -------------- Net realized gains (losses) (80,782) (263,466) (513,587) ------------ -------------- -------------- Change in unrealized gains (losses) on investments 254,349 1,265,453 1,615,283 ------------ -------------- -------------- Net realized and changes in unrealized gains (losses) on investments 173,567 1,001,987 1,101,696 ------------ -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 217,213 $ 1,029,022 $ 1,175,147 ============ ============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 72 MSF BLACKROCK LEGACY LARGE CAP GROWTH MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- --------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- -------------- -------------- ------------ ------------- ------------ $ 14,560 $ 14,175 $ 29,634 $ -- $ 3,600 $ 269,650 ------------- -------------- -------------- ------------ ------------- ------------ 61,180 52,945 35,213 161,149 304,506 280,999 ------------- -------------- -------------- ------------ ------------- ------------ 61,180 52,945 35,213 161,149 304,506 280,999 ------------- -------------- -------------- ------------ ------------- ------------ (46,620) (38,770) (5,579) (161,149) (300,906) (11,349) ------------- -------------- -------------- ------------ ------------- ------------ -- -- -- -- -- -- 137,813 75,641 (146,284) -- -- -- ------------- -------------- -------------- ------------ ------------- ------------ 137,813 75,641 (146,284) -- -- -- ------------- -------------- -------------- ------------ ------------- ------------ (879,158) 1,107,022 1,684,656 -- -- -- ------------- -------------- -------------- ------------ ------------- ------------ (741,345) 1,182,663 1,538,372 -- -- -- ------------- -------------- -------------- ------------ ------------- ------------ $ (787,965) $ 1,143,893 $ 1,532,793 $(161,149) $ (300,906) $ (11,349) ============= ============== ============== ============ ============= ============
The accompanying notes are an integral part of these financial statements. 73 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF DAVIS VENTURE VALUE INVESTMENT DIVISION ------------------------------------------- 2011 2010 2009 --------------- ----------- --------------- INVESTMENT INCOME: Dividends $ 648,127 $ 534,093 $ 679,120 --------------- ----------- --------------- EXPENSES: Mortality and expense risk charges 437,275 444,758 366,383 --------------- ----------- --------------- Total expenses 437,275 444,758 366,383 --------------- ----------- --------------- Net investment income (loss) 210,852 89,335 312,737 --------------- ----------- --------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 492,146 191,969 (723,952) --------------- ----------- --------------- Net realized gains (losses) 492,146 191,969 (723,952) --------------- ----------- --------------- Change in unrealized gains (losses) on investments (3,392,027) 5,562,556 12,907,686 --------------- ----------- --------------- Net realized and changes in unrealized gains (losses) on investments (2,899,881) 5,754,525 12,183,734 --------------- ----------- --------------- Net increase (decrease) in net assets resulting from operations $ (2,689,029) $ 5,843,860 $ 12,496,471 =============== =========== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 74 MSF FI VALUE LEADERS MSF JENNISON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------- ----------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ------------ ------------ ----------- -------------- -------------- $ 70,725 $ 90,469 $ 128,519 $ 42,021 $ 82,750 $ 21,249 ------------- ------------ ------------ ----------- -------------- -------------- 51,616 48,155 38,405 109,004 116,354 96,459 ------------- ------------ ------------ ----------- -------------- -------------- 51,616 48,155 38,405 109,004 116,354 96,459 ----------- ------------ ------------ ----------- -------------- -------------- 19,109 42,314 90,114 (66,983) (33,604) (75,210) ----------- ------------ ------------ ----------- -------------- -------------- -- -- -- -- -- -- (99,840) (145,291) (259,906) 251,119 17,747 (140,559) ------------- ------------ ------------ ----------- -------------- -------------- (99,840) (145,291) (259,906) 251,119 17,747 (140,559) ------------- ------------ ------------ ----------- -------------- -------------- (347,209) 885,079 1,128,894 (215,551) 1,535,759 4,015,386 ------------- ------------ ------------ ----------- -------------- -------------- (447,049) 739,788 868,988 35,568 1,553,506 3,874,827 ------------- ------------ ------------ ----------- -------------- -------------- $ (427,940) $ 782,102 $ 959,102 $(31,415) $ 1,519,902 $ 3,799,617 ============= ============ ============ =========== ============== ==============
The accompanying notes are an integral part of these financial statements. 75 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF LOOMIS SAYLES SMALL CAP CORE INVESTMENT DIVISION ----------------------------------------- 2011 2010 2009 ----------- -------------- -------------- INVESTMENT INCOME: Dividends $ 20,207 $ 14,765 $ 34,048 ----------- -------------- -------------- EXPENSES: Mortality and expense risk charges 137,144 127,370 100,553 ----------- -------------- -------------- Total expenses 137,144 127,370 100,553 ----------- -------------- -------------- Net investment income (loss) (116,937) (112,605) (66,505) ----------- -------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 258,722 (55,224) (439,969) ----------- -------------- -------------- Net realized gains (losses) 258,722 (55,224) (439,969) ----------- -------------- -------------- Change in unrealized gains (losses) on investments (166,265) 4,065,140 3,809,050 ----------- -------------- -------------- Net realized and changes in unrealized gains (losses) on investments 92,457 4,009,916 3,369,081 ----------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ (24,480) $ 3,897,311 $ 3,302,576 =========== ============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 76 MSF LOOMIS SAYLES SMALL CAP GROWTH MSF MET/ARTISAN MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------------- -------------- -------------- -------------- --------------- $ -- $ -- $ -- $ 455,060 $ 314,548 $ 390,395 -------------- -------------- -------------- -------------- -------------- --------------- 65,916 51,755 39,304 394,641 362,293 295,816 -------------- -------------- -------------- -------------- -------------- --------------- 65,916 51,755 39,304 394,641 362,293 295,816 -------------- -------------- -------------- -------------- -------------- --------------- (65,916) (51,755) (39,304) 60,419 (47,745) 94,579 -------------- -------------- -------------- -------------- -------------- --------------- -- -- -- -- -- -- 104,198 (47,680) (219,528) (412,007) (887,093) (2,074,439) -------------- -------------- -------------- -------------- -------------- --------------- 104,198 (47,680) (219,528) (412,007) (887,093) (2,074,439) -------------- -------------- -------------- -------------- -------------- --------------- 121,090 1,843,398 1,519,136 3,096,938 6,661,231 14,134,862 -------------- -------------- -------------- -------------- -------------- --------------- 225,288 1,795,718 1,299,608 2,684,931 5,774,138 12,060,423 -------------- -------------- -------------- -------------- -------------- --------------- $ 159,372 $ 1,743,963 $ 1,260,304 $ 2,745,350 $ 5,726,393 $ 12,155,002 ============== ============== ============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 77 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF METLIFE CONSERVATIVE ALLOCATION INVESTMENT DIVISION ----------------------------------- 2011 2010 2009 ------------ --------- ------------ INVESTMENT INCOME: Dividends $ 98,787 $ 102,209 $ 56,682 ------------ --------- ------------ EXPENSES: Mortality and expense risk charges 30,203 21,942 14,419 ------------ --------- ------------ Total expenses 30,203 21,942 14,419 ------------ --------- ------------ Net investment income (loss) 68,584 80,267 42,263 ------------ --------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 10,668 Realized gains (losses) on sale of investments 77,218 46,459 (4,941) ------------ --------- ------------ Net realized gains (losses) 77,218 46,459 5,727 ------------ --------- ------------ Change in unrealized gains (losses) on investments (37,275) 119,161 276,504 ------------ --------- ------------ Net realized and changes in unrealized gains (losses) on investments 39,943 165,620 282,231 ------------ --------- ------------ Net increase (decrease) in net assets resulting from operations $ 108,527 $ 245,887 $ 324,494 ============ ========= ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 78 MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MSF METLIFE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------- ----------------- --------------- -------------- ----------------- $ 156,398 $ 193,442 $ 133,159 $ 593,088 $ 562,548 $ 810,735 ------------ ---------------- ----------------- --------------- -------------- ----------------- 53,513 46,556 35,274 500,504 473,626 374,527 ------------ ---------------- ----------------- --------------- -------------- ----------------- 53,513 46,556 35,274 500,504 473,626 374,527 ------------ ---------------- ----------------- --------------- -------------- ----------------- 102,885 146,886 97,885 92,584 88,922 436,208 ------------ ---------------- ----------------- --------------- -------------- ----------------- -- -- 27,807 2,722,599 70,909 1,783,617 135,436 32,319 (95,953) 678,616 177,461 (1,475,288) ------------ ---------------- ----------------- --------------- -------------- ----------------- 135,436 32,319 (68,146) 3,401,215 248,370 308,329 ------------ ---------------- ----------------- --------------- -------------- ----------------- (210,123) 421,073 828,280 (4,954,472) 12,893,844 13,600,526 ------------ ---------------- ----------------- --------------- -------------- ----------------- (74,687) 453,392 760,134 (1,553,257) 13,142,214 13,908,855 ------------ ---------------- ----------------- --------------- -------------- ----------------- $ 28,198 $ 600,278 $ 858,019 $ (1,460,673) $ 13,231,136 $ 14,345,063 ============ ================ ================= =============== ============== =================
The accompanying notes are an integral part of these financial statements. 79 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION --------------------------------------- 2011 2010 2009 ------------- ----------- ------------- INVESTMENT INCOME: Dividends $ 669,982 $ 877,469 $ 699,782 ------------- ----------- ------------- EXPENSES: Mortality and expense risk charges 304,573 264,549 193,170 ------------- ----------- ------------- Total expenses 304,573 264,549 193,170 ------------- ----------- ------------- Net investment income (loss) 365,409 612,920 506,612 ------------- ----------- ------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 337,203 Realized gains (losses) on sale of investments 234,474 17,779 (340,090) ------------- ----------- ------------- Net realized gains (losses) 234,474 17,779 (2,887) ------------- ----------- ------------- Change in unrealized gains (losses) on investments (1,362,402) 3,378,733 5,007,760 ------------- ----------- ------------- Net realized and changes in unrealized gains (losses) on investments (1,127,928) 3,396,512 5,004,873 ------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $ (762,519) $ 4,009,432 $ 5,511,485 ============= =========== =============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 80 MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION MSF METLIFE STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------ 2011 2010 2009 2011 2010 2009 --------------- ----------------- --------------- --------------- --------------- ---------------- $ 1,073,341 $ 1,283,219 $ 1,144,971 $ 11,182,368 $ 10,671,016 $ 13,698,992 --------------- ----------------- --------------- --------------- --------------- ---------------- 567,221 486,295 365,479 4,861,432 4,862,670 4,016,527 --------------- ----------------- --------------- --------------- --------------- ---------------- 567,221 486,295 365,479 4,861,432 4,862,670 4,016,527 --------------- ----------------- --------------- --------------- --------------- ---------------- 506,120 796,924 779,492 6,320,936 5,808,346 9,682,465 --------------- ----------------- --------------- --------------- --------------- ---------------- -- -- 560,846 4,115,111 -- 10,241,628 112,005 (102,509) (694,062) (324,668) (5,405,568) (11,218,400) --------------- ----------------- --------------- --------------- --------------- ---------------- 112,005 (102,509) (133,216) 3,790,443 (5,405,568) (976,772) --------------- ----------------- --------------- --------------- --------------- ---------------- (3,772,324) 7,116,457 10,602,923 (2,093,968) 82,259,608 112,925,652 --------------- ----------------- --------------- --------------- --------------- ---------------- (3,660,319) 7,013,948 10,469,707 1,696,475 76,854,040 111,948,880 --------------- ----------------- --------------- --------------- --------------- ---------------- $ (3,154,199) $ 7,810,872 $ 11,249,199 $ 8,017,411 $ 82,662,386 $ 121,631,345 =============== ================= =============== =============== =============== ================
The accompanying notes are an integral part of these financial statements. 81 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF MFS TOTAL RETURN INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ------------ ------------ ------------ INVESTMENT INCOME: Dividends $ 208,852 $ 217,114 $ 230,711 ------------ ------------ ------------ EXPENSES: Mortality and expense risk charges 112,685 86,631 51,498 ------------ ------------ ------------ Total expenses 112,685 86,631 51,498 ------------ ------------ ------------ Net investment income (loss) 96,167 130,483 179,213 ------------ ------------ ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (29,847) (99,947) (173,243) ------------ ------------ ------------ Net realized gains (losses) (29,847) (99,947) (173,243) ------------ ------------ ------------ Change in unrealized gains (losses) on investments (11,189) 568,242 937,515 ------------ ------------ ------------ Net realized and changes in unrealized gains (losses) on investments (41,036) 468,295 764,272 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 55,131 $ 598,778 $ 943,485 ============ ============ ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 82 MSF MFS VALUE MSF MORGAN STANLEY EAFE INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ---------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ -------------- -------------- --------------- -------------- --------------- $ 836,589 $ 713,180 $ -- $ 1,549,893 $ 1,568,147 $ 2,127,820 ------------ -------------- -------------- --------------- -------------- --------------- 469,226 457,584 360,654 552,900 524,541 418,461 ------------ -------------- -------------- --------------- -------------- --------------- 469,226 457,584 360,654 552,900 524,541 418,461 ------------ -------------- -------------- --------------- -------------- --------------- 367,363 255,596 (360,654) 996,993 1,043,606 1,709,359 ------------ -------------- -------------- --------------- -------------- --------------- -- -- -- -- -- 345,458 (44,982) (425,864) (877,734) 137,025 (236,046) (800,654) ------------ -------------- -------------- --------------- -------------- --------------- (44,982) (425,864) (877,734) 137,025 (236,046) (455,196) ------------ -------------- -------------- --------------- -------------- --------------- (346,891) 5,358,513 9,493,542 (9,604,700) 3,674,685 11,844,795 ------------ -------------- -------------- --------------- -------------- --------------- (391,873) 4,932,649 8,615,808 (9,467,675) 3,438,639 11,389,599 ------------ -------------- -------------- --------------- -------------- --------------- $ (24,510) $ 5,188,245 $ 8,255,154 $ (8,470,682) $ 4,482,245 $ 13,098,958 ============ ============== ============== =============== ============== ===============
The accompanying notes are an integral part of these financial statements. 83 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF NEUBERGER BERMAN GENESIS INVESTMENT DIVISION ------------------------------------------- 2011 2010 2009 -------------- ------------- -------------- INVESTMENT INCOME: Dividends $ 596,562 $ 353,007 $ 663,127 -------------- ------------- -------------- EXPENSES: Mortality and expense risk charges 663,840 628,387 512,489 -------------- ------------- -------------- Total expenses 663,840 628,387 512,489 -------------- ------------- -------------- Net investment income (loss) (67,278) (275,380) 150,638 -------------- ------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments (976,828) (2,085,738) (2,703,187) -------------- ------------- -------------- Net realized gains (losses) (976,828) (2,085,738) (2,703,187) -------------- ------------- -------------- Change in unrealized gains (losses) on investments 4,961,322 15,927,942 10,045,644 -------------- ------------- -------------- Net realized and changes in unrealized gains (losses) on investments 3,984,494 13,842,204 7,342,457 -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $ 3,917,216 $ 13,566,824 $ 7,493,095 ============== ============= ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 84 MSF NEUBERGER BERMAN MID CAP VALUE MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ----------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- --------------- --------------- --------------- ----------- ------------- $ 587,608 $ 569,862 $ 813,259 $ 845,569 $ 612,821 $ 852,361 --------------- --------------- --------------- --------------- ----------- ------------- 575,836 570,197 440,022 304,815 297,201 258,416 --------------- --------------- --------------- --------------- ----------- ------------- 575,836 570,197 440,022 304,815 297,201 258,416 --------------- --------------- --------------- --------------- ----------- ------------- 11,772 (335) 373,237 540,754 315,620 593,945 --------------- --------------- --------------- --------------- ----------- ------------- -- -- 16,184 -- -- -- 682,184 12,235 (1,401,599) 892,248 362,727 (362,452) --------------- --------------- --------------- --------------- ----------- ------------- 682,184 12,235 (1,385,415) 892,248 362,727 (362,452) --------------- --------------- --------------- --------------- ----------- ------------- (5,912,606) 15,949,723 21,838,137 (5,213,727) 5,192,068 11,124,292 --------------- --------------- --------------- --------------- ----------- ------------- (5,230,422) 15,961,958 20,452,722 (4,321,479) 5,554,795 10,761,840 --------------- --------------- --------------- --------------- ----------- ------------- $ (5,218,650) $ 15,961,623 $ 20,825,959 $ (3,780,725) $ 5,870,415 $ 11,355,785 =============== =============== =============== =============== =========== =============
The accompanying notes are an integral part of these financial statements. 85 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF RUSSELL 2000 INDEX INVESTMENT DIVISION ---------------------------------------------- 2011 2010 2009 --------------- --------------- -------------- INVESTMENT INCOME: Dividends $ 561,526 $ 547,888 $ 812,284 --------------- --------------- -------------- EXPENSES: Mortality and expense risk charges 389,979 378,183 318,144 --------------- --------------- -------------- Total expenses 389,979 378,183 318,144 --------------- --------------- -------------- Net investment income (loss) 171,547 169,705 494,140 --------------- --------------- -------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 1,106,089 Realized gains (losses) on sale of investments 734,988 (66,857) (1,035,970) --------------- --------------- -------------- Net realized gains (losses) 734,988 (66,857) 70,119 --------------- --------------- -------------- Change in unrealized gains (losses) on investments (3,300,203) 11,828,973 9,093,620 --------------- --------------- -------------- Net realized and changes in unrealized gains (losses) on investments (2,565,215) 11,762,116 9,163,739 --------------- --------------- -------------- Net increase (decrease) in net assets resulting from operations $ (2,393,668) $ 11,931,821 $ 9,657,879 =============== =============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 86 MSF T. ROWE PRICE LARGE CAP GROWTH MSF T. ROWE PRICE SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ---------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- -------------- --------------- -------------- --------------- --------------- $ 38,643 $ 113,187 $ 224,945 $ -- $ -- $ 200,547 ------------- -------------- --------------- -------------- --------------- --------------- 354,938 373,672 295,919 968,014 769,902 477,748 ------------- -------------- --------------- -------------- --------------- --------------- 354,938 373,672 295,919 968,014 769,902 477,748 ------------- -------------- --------------- -------------- --------------- --------------- (316,295) (260,485) (70,974) (968,014) (769,902) (277,201) ------------- -------------- --------------- -------------- --------------- --------------- -- -- -- -- -- 1,576,442 908,859 253,453 (485,740) 2,332,511 562,971 (1,108,337) ------------- -------------- --------------- -------------- --------------- --------------- 908,859 253,453 (485,740) 2,332,511 562,971 468,105 ------------- -------------- --------------- -------------- --------------- --------------- (1,383,140) 6,370,252 13,392,122 (846,789) 22,601,563 19,138,611 ------------- -------------- --------------- -------------- --------------- --------------- (474,281) 6,623,705 12,906,382 1,485,722 23,164,534 19,606,716 ------------- -------------- --------------- -------------- --------------- --------------- $ (790,576) $ 6,363,220 $ 12,835,408 $ 517,708 $ 22,394,632 $ 19,329,515 ============= ============== =============== ============== =============== ===============
The accompanying notes are an integral part of these financial statements. 87 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF VAN ECK GLOBAL NATURAL MSF WESTERN ASSET MANAGEMENT RESOURCES STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------- -------------------------------------- 2011 (f) 2011 2010 2009 ------------------- ----------- ------------- ------------ INVESTMENT INCOME: Dividends $ -- $ 1,209,466 $ 1,333,421 $ 1,175,403 ------------------- ----------- ------------- ------------ EXPENSES: Mortality and expense risk charges 609 192,580 182,131 148,016 ------------------- ----------- ------------- ------------ Total expenses 609 192,580 182,131 148,016 ------------------- ----------- ------------- ------------ Net investment income (loss) (609) 1,016,886 1,151,290 1,027,387 ------------------- ----------- ------------- ------------ NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- 518,778 Realized gains (losses) on sale of investments (45) 144,847 71,403 (136,510) ------------------- ----------- ------------- ------------ Net realized gains (losses) (45) 144,847 71,403 382,268 ------------------- ----------- ------------- ------------ Change in unrealized gains (losses) on investments (2,198) 64,600 1,196,007 3,433,572 ------------------- ----------- ------------- ------------ Net realized and changes in unrealized gains (losses) on investments (2,243) 209,447 1,267,410 3,815,840 ------------------- ----------- ------------- ------------ Net increase (decrease) in net assets resulting from operations $ (2,852) $ 1,226,333 $ 2,418,700 $ 4,843,227 =================== =========== ============= ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 88 PIMCO VIT ALL ASSET MSF WESTERN ASSET MANAGEMENT U.S. GOVERNMENT INVESTMENT PIMCO VIT LOW DURATION INVESTMENT DIVISION DIVISION INVESTMENT DIVISION -------------------------------------------- ------------ -------------------------------------- 2011 2010 2009 2011 (f) 2011 2010 2009 (e) ------------ ---------------- -------------- ------------ ----------- ----------- -------------- $ 248,608 $ 448,826 $ 714,343 $ 2,796 $ 13,732 $ 12,187 $ 11,216 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 131,962 134,214 131,035 22 2,905 2,779 1,731 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 131,962 134,214 131,035 22 2,905 2,779 1,731 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 116,646 314,612 583,308 2,774 10,827 9,408 9,485 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 570,575 47,316 -- -- -- 2,469 32,906 (5,603) 1,727 (89,029) -- 618 260 180 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 564,972 49,043 (89,029) -- 618 2,729 33,086 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 82,587 435,726 44,105 (1,176) (6,243) 23,685 1,601 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- 647,559 484,769 (44,924) (1,176) (5,625) 26,414 34,687 ------------ ---------------- -------------- ------------ ----------- ----------- -------------- $ 764,205 $ 799,381 $ 538,384 $ 1,598 $ 5,202 $ 35,822 $ 44,172 ============ ================ ============== ============ =========== =========== ==============
The accompanying notes are an integral part of these financial statements. 89 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 PIONEER VCT EMERGING MARKETS INVESTMENT DIVISION ------------------------------------ 2011 2010 2009 ------------- ------------ --------- INVESTMENT INCOME: Dividends $ -- $ 3,039 $ 5,200 ------------- ------------ --------- EXPENSES: Mortality and expense risk charges 12,310 13,622 1,999 ------------- ------------ --------- Total expenses 12,310 13,622 1,999 ------------- ------------ --------- Net investment income (loss) (12,310) (10,583) 3,201 ------------- ------------ --------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 121,447 75,682 8,989 ------------- ------------ --------- Net realized gains (losses) 121,447 75,682 8,989 ------------- ------------ --------- Change in unrealized gains (losses) on investments (327,299) 68,690 311,181 ------------- ------------ --------- Net realized and changes in unrealized gains (losses) on investments (205,852) 144,372 320,170 ------------- ------------ --------- Net increase (decrease) in net assets resulting from operations $ (218,162) $ 133,789 $ 323,371 ============= ============ =========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 90 PIONEER VCT MID CAP VALUE ROYCE MICRO-CAP INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------ 2011 2010 2009 (d) 2011 2010 (b) ----------- -------- ---------- ------------ ----------- $ 1,190 $ 801 $ -- $ 8,331 $ 5,659 ----------- -------- ---------- ------------ ----------- 550 297 34 1,375 619 ----------- -------- ---------- ------------ ----------- 550 297 34 1,375 619 ----------- -------- ---------- ------------ ----------- 640 504 (34) 6,956 5,040 ----------- -------- ---------- ------------ ----------- -- -- -- -- -- 580 313 32 1,545 197 ----------- -------- ---------- ------------ ----------- 580 313 32 1,545 197 ----------- -------- ---------- ------------ ----------- (11,556) 14,039 2,439 (52,132) 61,964 ----------- -------- ---------- ------------ ----------- (10,976) 14,352 2,471 (50,587) 62,161 ----------- -------- ---------- ------------ ----------- $(10,336) $ 14,856 $ 2,437 $ (43,631) $ 67,201 =========== ======== ========== ============ ===========
The accompanying notes are an integral part of these financial statements. 91 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 ROYCE SMALL-CAP INVESTMENT DIVISION ----------------------------------- 2011 2010 2009 (h) ------------ ----------- ---------- INVESTMENT INCOME: Dividends $ 3,804 $ 425 $ -- ------------ ----------- ---------- EXPENSES: Mortality and expense risk charges 6,407 1,285 57 ------------ ----------- ---------- Total expenses 6,407 1,285 57 ------------ ----------- ---------- Net investment income (loss) (2,603) (860) (57) ------------ ----------- ---------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 18,080 2,111 16 ------------ ----------- ---------- Net realized gains (losses) 18,080 2,111 16 ------------ ----------- ---------- Change in unrealized gains (losses) on investments (64,398) 63,066 2,984 ------------ ----------- ---------- Net realized and changes in unrealized gains (losses) on investments (46,318) 65,177 3,000 ------------ ----------- ---------- Net increase (decrease) in net assets resulting from operations $ (48,921) $ 64,317 $ 2,943 ============ =========== ==========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 92 UIF EMERGING MARKETS DEBT UIF EMERGING MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------- --------------------------------------- 2011 2010 2009 (h) 2011 2010 2009 (h) ---------- ------ -------- ---------- ------------- -------------- $ 7,775 $ 318 $ 74 $ 1,515 $ 758 $ -- ---------- ------ -------- ---------- ------------- -------------- 1,372 31 6 2,182 520 17 ---------- ------ -------- ---------- ------------- -------------- 1,372 31 6 2,182 520 17 ---------- ------ -------- ---------- ------------- -------------- 6,403 287 68 (667) 238 (17) ---------- ------ -------- ---------- ------------- -------------- 2,422 -- -- -- -- -- 392 87 32 4,478 899 480 ---------- ------ -------- ---------- ------------- -------------- 2,814 87 32 4,478 899 480 ---------- ------ -------- ---------- ------------- -------------- 79 318 95 (99,779) 38,992 1,146 ---------- ------ -------- ---------- ------------- -------------- 2,893 405 127 (95,301) 39,891 1,626 ---------- ------ -------- ---------- ------------- -------------- $ 9,296 $ 692 $ 195 $ (95,968) $ 40,129 $ 1,609 ========== ====== ======== ========== ============= ==============
The accompanying notes are an integral part of these financial statements. 93 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION -------------------------------- 2011 2010 2009 ----------- ----------- -------- INVESTMENT INCOME: Dividends $ 18,903 $ 29,774 $ 18,789 ----------- ----------- -------- EXPENSES: Mortality and expense risk charges 6,364 6,709 1,892 ----------- ----------- -------- Total expenses 6,364 6,709 1,892 ----------- ----------- -------- Net investment income (loss) 12,539 23,065 16,897 ----------- ----------- -------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 30,313 23,602 2,046 Realized gains (losses) on sale of investments 15,483 10,857 3,173 ----------- ----------- -------- Net realized gains (losses) 45,796 34,459 5,219 ----------- ----------- -------- Change in unrealized gains (losses) on investments (7,169) (12,496) 23,526 ----------- ----------- -------- Net realized and changes in unrealized gains (losses) on investments 38,627 21,963 28,745 ----------- ----------- -------- Net increase (decrease) in net assets resulting from operations $ 51,166 $ 45,028 $ 45,642 =========== =========== ========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 94 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 -------------- -------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (144,795) $ 1,176 $ (370) Net realized gains (losses) (40,514) 8,379 (2,773) Change in unrealized gains (losses) on investments (1,444,286) 1,480 45,397 -------------- -------------- ------------ Net increase (decrease) in net assets resulting from operations (1,629,595) 11,035 42,254 -------------- -------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 6,425 1,269 21,200 Net transfers (including fixed account) 5,890,970 (20,468) 29,509 Policy charges (66,201) (1,852) (2,499) Transfers for policy benefits and terminations (27,392) -- (10,407) -------------- -------------- ------------ Net increase (decrease) in net assets resulting from policy transactions 5,803,802 (21,051) 37,803 -------------- -------------- ------------ Net increase (decrease) in net assets 4,174,207 (10,016) 80,057 NET ASSETS: Beginning of year 119,488 129,504 49,447 -------------- -------------- ------------ End of year $ 4,293,695 $ 119,488 $ 129,504 ============== ============== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 96 ALLIANCEBERNSTEIN INTERMEDIATE BOND ALLIANCEBERNSTEIN INTERNATIONAL VALUE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- --------------------------------------- 2011 2010 2009 (a) 2011 2010 (b) -------------- -------------- -------------- ----------------- --------------------- $ 1,914 $ 2,038 $ 692 $ (49) $ 29 184 2,172 716 175 1 563 (1,393) 2,187 (129) 88 -------------- -------------- -------------- ----------------- --------------------- 2,661 2,817 3,595 (3) 118 -------------- -------------- -------------- ----------------- --------------------- 2,678 3,570 13,019 268 -- -- 9,880 23,126 (1,225) 1,252 (1,310) (1,055) (590) (135) (13) (8) (255) (10,842) (121) -- -------------- -------------- -------------- ----------------- --------------------- 1,360 12,140 24,713 (1,213) 1,239 -------------- -------------- -------------- ----------------- --------------------- 4,021 14,957 28,308 (1,216) 1,357 43,265 28,308 -- 1,357 -- -------------- -------------- -------------- ----------------- --------------------- $ 47,286 $ 43,265 $ 28,308 $ 141 $ 1,357 ============== ============== ============== ================= =====================
The accompanying notes are an integral part of these financial statements. 97 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN CENTURY VP VISTA INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ------------- ----------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (305) $ (519) $ (472) Net realized gains (losses) 5,995 12,351 (47,927) Change in unrealized gains (losses) on investments (8,184) (1,947) 67,433 ------------- ----------- ------------ Net increase (decrease) in net assets resulting from operations (2,494) 9,885 19,034 ------------- ----------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 11,044 13,202 110,074 Net transfers (including fixed account) (72,025) (83,499) (53,969) Policy charges (2,026) (2,550) (4,572) Transfers for policy benefits and terminations -- (9,338) (3,305) ------------- ----------- ------------ Net increase (decrease) in net assets resulting from policy transactions (63,007) (82,185) 48,228 ------------- ----------- ------------ Net increase (decrease) in net assets (65,501) (72,300) 67,262 NET ASSETS: Beginning of year 74,155 146,455 79,193 ------------- ----------- ------------ End of year $ 8,654 $ 74,155 $ 146,455 ============= =========== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 98 AMERICAN FUNDS BOND AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 -------------- ---------------------- -------------- --------------- ---------------------- --------------- $ 105,549 $ 94,433 $ 88,860 $ 324,478 $ 538,047 $ (246,097) 10,695 (8,911) (91,981) (68,423) (386,466) (2,366,209) 121,054 122,161 381,938 (13,188,181) 11,810,164 23,159,810 -------------- ---------------------- -------------- --------------- ---------------------- --------------- 237,298 207,683 378,817 (12,932,126) 11,961,745 20,547,504 -------------- ---------------------- -------------- --------------- ---------------------- --------------- 678,665 724,857 777,097 7,605,640 8,529,505 9,330,898 53,187 320,665 (59,617) (1,805,503) (976,366) (1,354,960) (333,117) (330,299) (371,335) (3,739,239) (4,049,658) (3,968,778) (265,605) (318,517) (107,448) (4,059,136) (4,114,157) (2,381,130) -------------- ---------------------- -------------- --------------- ---------------------- --------------- 133,130 396,706 238,697 (1,998,238) (610,676) 1,626,030 -------------- ---------------------- -------------- --------------- ---------------------- --------------- 370,428 604,389 617,514 (14,930,364) 11,351,069 22,173,534 4,365,031 3,760,642 3,143,128 67,405,353 56,054,284 33,880,750 -------------- ---------------------- -------------- --------------- ---------------------- --------------- $ 4,735,459 $ 4,365,031 $ 3,760,642 $ 52,474,989 $ 67,405,353 $ 56,054,284 ============== ====================== ============== =============== ====================== ===============
The accompanying notes are an integral part of these financial statements. 99 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN FUNDS GROWTH INVESTMENT DIVISION ---------------------------------------------------------- 2011 2010 2009 ---------------- ------------------------ ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $(257,824) $ (121,539) $ (160,985) Net realized gains (losses) 658,869 (328,082) (1,821,468) Change in unrealized gains (losses) on investments (6,628,058) 19,817,938 31,985,158 ---------------- ------------------------ ---------------- Net increase (decrease) in net assets resulting from operations (6,227,013) 19,368,317 30,002,705 ---------------- ------------------------ ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 15,130,932 16,677,167 18,769,815 Net transfers (including fixed account) (1,178,160) (1,005,842) (2,195,305) Policy charges (8,119,220) (8,182,015) (8,384,980) Transfers for policy benefits and terminations (8,844,884) (8,617,264) (5,510,035) ---------------- ------------------------ ---------------- Net increase (decrease) in net assets resulting from policy transactions (3,011,332) (1,127,954) 2,679,495 ---------------- ------------------------ ---------------- Net increase (decrease) in net assets (9,238,345) 18,240,363 32,682,200 NET ASSETS: Beginning of year 127,437,855 109,197,492 76,515,292 ---------------- ------------------------ ---------------- End of year $ 118,199,510 $ 127,437,855 $ 109,197,492 ================ ======================== ================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 100 AMERICAN FUNDS GROWTH-INCOME AMERICAN FUNDS INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ---------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- --------------- --------------- ------------ ------------ -------------- $ 553,773 $ 453,689 $ 446,910 $ 980 $ 3,782 $ 799 (58,726) (336,443) (956,152) (605) (608) 1,537 (2,428,568) 6,948,053 15,943,649 (108,507) 46,566 19,842 --------------- --------------- --------------- ------------ ------------ -------------- (1,933,521) 7,065,299 15,434,407 (108,132) 49,740 22,178 --------------- --------------- --------------- ------------ ------------ -------------- 9,556,841 10,334,758 11,825,982 4,120 196,875 22,210 (457,407) (240,405) (1,377,002) (89,752) 113,293 416,930 (5,030,683) (5,117,228) (5,387,634) (8,379) (7,689) (1,457) (4,739,607) (4,718,644) (3,569,007) (82,771) (7,938) (38,651) --------------- --------------- --------------- ------------ ------------ -------------- (670,856) 258,481 1,492,339 (176,782) 294,541 399,032 --------------- --------------- --------------- ------------ ------------ -------------- (2,604,377) 7,323,780 16,926,746 (284,914) 344,281 421,210 73,861,194 66,537,414 49,610,668 809,625 465,344 44,134 --------------- --------------- --------------- ------------ ------------ -------------- $ 71,256,817 $ 73,861,194 $ 66,537,414 $ 524,711 $ 809,625 $ 465,344 =============== =============== =============== ============ ============ ==============
The accompanying notes are an integral part of these financial statements. 101 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 AMERICAN FUNDS U.S. GOVERNMENT/AAA-RATED SECURITIES INVESTMENT DIVISION ------------------------------------------------------ 2011 2010 2009 -------------- ---------------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 172 $ 87 $ 1,740 Net realized gains (losses) 1,620 643 1,124 Change in unrealized gains (losses) on investments 885 1,804 (1,799) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from operations 2,677 2,534 1,065 -------------- ---------------------- ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 18,071 7,825 43,406 Net transfers (including fixed account) (2,592) (50,106) 40,706 Policy charges (8,463) (10,089) (8,355) Transfers for policy benefits and terminations (1,984) (2,565) (21,474) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from policy transactions 5,032 (54,935) 54,283 -------------- ---------------------- ---------------- Net increase (decrease) in net assets 7,709 (52,401) 55,348 NET ASSETS: Beginning of year 37,830 90,231 34,883 -------------- ---------------------- ---------------- End of year $ 45,539 $ 37,830 $ 90,231 ============== ====================== ================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 102 DREYFUS VIF INTERNATIONAL VALUE FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ------------ ------------ -------------- -------------- -------------- $ 3,287 $ 2,491 $ 9,269 $ 12,600 $ 7,999 $ 15,866 (960) (14,086) (185,176) 74,260 37,274 (16,185) (45,726) 19,382 238,024 (205,700) 201,872 427,179 ------------ ------------ ------------ -------------- -------------- -------------- (43,399) 7,787 62,117 (118,840) 247,145 426,860 ------------ ------------ ------------ -------------- -------------- -------------- 1,458 955 28,115 182,388 168,558 240,196 (1,532) (65,938) (85,562) (79,369) (53,668) 256,106 (3,164) (3,082) (8,707) (67,026) (58,088) (64,669) (766) -- (45,781) (392,245) (120,774) (44,925) ------------ ------------ ------------ -------------- -------------- -------------- (4,004) (68,065) (111,935) (356,252) (63,972) 386,708 ------------ ------------ ------------ -------------- -------------- -------------- (47,403) (60,278) (49,818) (475,092) 183,173 813,568 231,464 291,742 341,560 1,905,608 1,722,435 908,867 ------------ ------------ ------------ -------------- -------------- -------------- $ 184,061 $ 231,464 $ 291,742 $ 1,430,516 $ 1,905,608 $ 1,722,435 ============ ============ ============ ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 103 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP CONTRAFUND INVESTMENT DIVISION -------------------------------------------- 2011 2010 2009 -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 10,058 $ 9,930 $ 30,836 Net realized gains (losses) 12,745 (217,628) (198,535) Change in unrealized gains (losses) on investments (98,141) 648,547 1,136,586 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (75,338) 440,849 968,887 -------------- -------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 206,289 166,923 431,847 Net transfers (including fixed account) (243,464) (1,821,221) 898,388 Policy charges (93,976) (86,557) (99,153) Transfers for policy benefits and terminations (319,235) (10,806) (139,114) -------------- -------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (450,386) (1,751,661) 1,091,968 -------------- -------------- -------------- Net increase (decrease) in net assets (525,724) (1,310,812) 2,060,855 NET ASSETS: Beginning of year 2,677,373 3,988,185 1,927,330 -------------- -------------- -------------- End of year $ 2,151,649 $ 2,677,373 $ 3,988,185 ============== ============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 104 FIDELITY VIP EQUITY-INCOME FIDELITY VIP FREEDOM 2010 INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------- ----------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ------------ ------------ ----------- ----------- ----------- $(112) $ 2,489 $ 3,688 $ 576 $ 545 $ 457 2,625 (5,418) (392,905) 1,481 537 (1,656) (8,921) 31,745 405,695 (2,344) 2,036 3,793 ----------- ------------ ------------ ----------- ----------- ----------- (6,408) 28,816 16,478 (287) 3,118 2,594 ----------- ------------ ------------ ----------- ----------- ----------- 26,285 37,251 60,293 2,823 2,793 1,353 (55,376) (103,500) (169,930) 884 12,520 (12,215) (4,119) (5,643) (10,922) -- -- -- (144,483) -- (227,954) (1,136) (1,119) (753) ----------- ------------ ------------ ----------- ----------- ----------- (177,693) (71,892) (348,513) 2,571 14,194 (11,615) ----------- ------------ ------------ ----------- ----------- ----------- (184,101) (43,076) (332,035) 2,284 17,312 (9,021) 202,690 245,766 577,801 31,860 14,548 23,569 ----------- ------------ ------------ ----------- ----------- ----------- $ 18,589 $ 202,690 $ 245,766 $ 34,144 $ 31,860 $ 14,548 =========== ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 105 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ------------ ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 12,681 $ 12,680 $ 17,181 Net realized gains (losses) 12,805 8,278 (918) Change in unrealized gains (losses) on investments (33,543) 70,032 149,817 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations (8,057) 90,990 166,080 ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 12,681 10,953 2,536 Net transfers (including fixed account) 33,211 1,108 449,027 Policy charges (7,830) (7,298) (5,925) Transfers for policy benefits and terminations (68,993) (5,562) (928) ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions (30,931) (799) 444,710 ------------ ------------ ------------ Net increase (decrease) in net assets (38,988) 90,191 610,790 NET ASSETS: Beginning of year 738,702 648,511 37,721 ------------ ------------ ------------ End of year $ 699,714 $ 738,702 $ 648,511 ============ ============ ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 106 FIDELITY VIP FIDELITY VIP FREEDOM 2030 FREEDOM 2050 INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ -------------------- 2011 2010 2009 2011 (c) ----------- ------------ ----------- ------------------- $ 932 $ 1,654 $ 512 $ 228 11,923 1,390 367 (3,654) (12,843) 11,839 6,395 1,450 ----------- ------------ ----------- ------------------- 12 14,883 7,274 (1,976) ----------- ------------ ----------- ------------------- 2,634 3,169 1,286 -- (51,129) 62,506 2,573 17,414 (369) (1,042) (28) -- (2,369) (3,063) (754) -- ----------- ------------ ----------- ------------------- (51,233) 61,570 3,077 17,414 ----------- ------------ ----------- ------------------- (51,221) 76,453 10,351 15,438 108,191 31,738 21,387 -- ----------- ------------ ----------- ------------------- $ 56,970 $ 108,191 $ 31,738 $ 15,438 =========== ============ =========== ===================
The accompanying notes are an integral part of these financial statements. 107 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FIDELITY VIP HIGH INCOME INVESTMENT DIVISION ---------------------------------- 2011 2010 2009 (d) ----------- ---------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 2,926 $ 310 $ 2,849 Net realized gains (losses) 13 (227) 11 Change in unrealized gains (losses) on investments (1,768) 801 (647) ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations 1,171 884 2,213 ----------- ---------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 3,335 -- 16,782 Net transfers (including fixed account) 34,562 (36,834) 22,156 Policy charges (330) (252) (236) Transfers for policy benefits and terminations (80) (148) -- ----------- ---------- ----------- Net increase (decrease) in net assets resulting from policy transactions 37,487 (37,234) 38,702 ----------- ---------- ----------- Net increase (decrease) in net assets 38,658 (36,350) 40,915 NET ASSETS: Beginning of year 4,565 40,915 -- ----------- ---------- ----------- End of year $ 43,223 $ 4,565 $ 40,915 =========== ========== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 108 FIDELITY VIP INVESTMENT GRADE BOND FIDELITY VIP MID CAP INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ---------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- -------------- -------------- ------------ -------------- ------------ $ 48,188 $ 13,892 $ 10,311 $ (5,575) $ (4,707) $ (23) 21,189 23,465 3,887 12,027 3,104 742 1,742 (13,312) (1,678) (60,535) 83,723 13,131 -------------- -------------- -------------- ------------ -------------- ------------ 71,119 24,045 12,520 (54,083) 82,120 13,850 -------------- -------------- -------------- ------------ -------------- ------------ 1,122 829 4,336 5,952 95,232 3,949 1,150,764 281,430 183,821 253,173 77,140 192,734 (10,497) (4,910) (4,482) (5,498) (3,824) (835) -- -- (5,946) (47,617) (4,506) (25,654) -------------- -------------- -------------- ------------ -------------- ------------ 1,141,389 277,349 177,729 206,010 164,042 170,194 -------------- -------------- -------------- ------------ -------------- ------------ 1,212,508 301,394 190,249 151,927 246,162 184,044 535,344 233,950 43,701 462,031 215,869 31,825 -------------- -------------- -------------- ------------ -------------- ------------ $ 1,747,852 $ 535,344 $ 233,950 $ 613,958 $ 462,031 $ 215,869 ============== ============== ============== ============ ============== ============
The accompanying notes are an integral part of these financial statements. 109 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES INVESTMENT DIVISION ------------------------------------------- 2011 2010 2009 ------------ --------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 18,799 $ 7,237 $ 3,112 Net realized gains (losses) 1,929 (4,189) (438,168) Change in unrealized gains (losses) on investments (59,670) 81,592 609,659 ------------ --------------- -------------- Net increase (decrease) in net assets resulting from operations (38,942) 84,640 174,603 ------------ --------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 53,641 97,464 291,315 Net transfers (including fixed account) 113,146 (79,267) (1,354,085) Policy charges (20,333) (17,879) (31,930) Transfers for policy benefits and terminations (291,009) (141) (32,906) ------------ --------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (144,555) 177 (1,127,606) ------------ --------------- -------------- Net increase (decrease) in net assets (183,497) 84,817 (953,003) NET ASSETS: Beginning of year 967,332 882,515 1,835,518 ------------ --------------- -------------- End of year $ 783,835 $ 967,332 $ 882,515 ============ =============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 110 FTVIPT TEMPLETON FOREIGN SECURITIES FTVIPT TEMPLETON GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- --------------------------------------- 2011 2010 2009 2011 2010 2009 (e) -------------- -------------- -------------- ------------ ------------- ------------ $(22,203) $ (74,871) $ 211,754 $ 9,757 $ (29) $ (4) 253,750 (50,450) (153,389) (11,299) 4,601 5 (552,735) 614,425 2,059,948 (11,949) (171) 239 -------------- -------------- -------------- ------------ ------------- ------------ (321,188) 489,104 2,118,313 (13,491) 4,401 240 -------------- -------------- -------------- ------------ ------------- ------------ 379,032 834,212 807,327 38,191 9,303 -- (5,636,582) 220,184 (284,673) 482,861 (9,428) 3,614 (132,125) (165,900) (372,860) (6,561) (736) (140) (512,046) (68,047) (189,134) (215,383) (3,516) (10) -------------- -------------- -------------- ------------ ------------- ------------ (5,901,721) 820,449 (39,340) 299,108 (4,377) 3,464 -------------- -------------- -------------- ------------ ------------- ------------ (6,222,909) 1,309,553 2,078,973 285,617 24 3,704 9,244,694 7,935,141 5,856,168 3,728 3,704 -- -------------- -------------- -------------- ------------ ------------- ------------ $ 3,021,785 $ 9,244,694 $ 7,935,141 $ 289,345 $ 3,728 $ 3,704 ============== ============== ============== ============ ============= ============
The accompanying notes are an integral part of these financial statements. 111 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 GOLDMAN SACHS MID-CAP VALUE INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 ------------ ------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 932 $ 908 $ 2,747 Net realized gains (losses) (27,627) (13,608) (540,331) Change in unrealized gains (losses) on investments 1,030 84,633 633,578 ------------ ------------- --------------- Net increase (decrease) in net assets resulting from operations (25,665) 71,933 95,994 ------------ ------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners -- -- -- Net transfers (including fixed account) -- (23,223) (667,539) Policy charges (7,841) (7,848) (13,708) Transfers for policy benefits and terminations (65,335) (2,114) (214) ------------ ------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (73,176) (33,185) (681,461) ------------ ------------- --------------- Net increase (decrease) in net assets (98,841) 38,748 (585,467) NET ASSETS: Beginning of year 367,089 328,341 913,808 ------------ ------------- --------------- End of year $ 268,248 $ 367,089 $ 328,341 ============ ============= ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 112 INVESCO V.I. GOVERNMENT GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESCO V.I. GLOBAL REAL ESTATE SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ------------------------------------------------ ------------------- 2011 2010 2009 2011 2010 2009 2011 (f) --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- $ 251 $ 100 $ 551 $ 22,923 $ 32,545 $ (5,813) $ (120) 175 (7,335) (17,708) (158,339) (130,047) (698,156) 1,389 (255) 18,632 28,044 (44,519) 289,353 1,038,943 1,336 --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- 171 11,397 10,887 (179,935) 191,851 334,974 2,605 --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- 468 4,077 12,573 18,821 3,708 143,426 -- -- (33,283) 4,125 131,727 (63,773) (367,827) 19,885 (1,631) (1,447) (1,545) (16,626) (14,537) (55,212) (999) (1) -- (4,928) (60,454) (26,660) (3,924) -- --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- (1,164) (30,653) 10,225 73,468 (101,262) (283,537) 18,886 --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- (993) (19,256) 21,112 (106,467) 90,589 51,437 21,491 51,252 70,508 49,396 1,597,111 1,506,522 1,455,085 -- --------------- -------------- ----------- -------------- ---------------- ---------------- ------------------- $ 50,259 $ 51,252 $ 70,508 $ 1,490,644 $ 1,597,111 $ 1,506,522 $ 21,491 =============== ============== =========== ============== ================ ================ ===================
The accompanying notes are an integral part of these financial statements. 113 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 INVESCO V.I. INTERNATIONAL GROWTH INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 (d) ----------- --------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 2,260 $ 3,581 $ 213 Net realized gains (losses) 3,888 1,465 34 Change in unrealized gains (losses) on investments (28,330) 26,537 2,258 ----------- --------------- -------------- Net increase (decrease) in net assets resulting from operations (22,182) 31,583 2,505 ----------- --------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 3,175 43,890 -- Net transfers (including fixed account) (26,489) 184,805 16,392 Policy charges (5,587) (4,422) (495) Transfers for policy benefits and terminations (197,921) (1,805) (42) ----------- --------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (226,822) 222,468 15,855 ----------- --------------- -------------- Net increase (decrease) in net assets (249,004) 254,051 18,360 NET ASSETS: Beginning of year 272,411 18,360 -- ----------- --------------- -------------- End of year $ 23,407 $ 272,411 $ 18,360 =========== =============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 114 INVESCO V.I. VAN KAMPEN COMSTOCK JANUS ASPEN BALANCED INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- -------------------------------------------- 2011 2010 (g) 2011 2010 2009 ------------ ------------------- -------------- -------------- -------------- $ 66 $ -- $ 18,800 $ 30,692 $ 12,907 (127) 53 137,912 26,581 19,174 (6,181) 45 (161,867) 90,252 93,262 ------------ ------------------- -------------- -------------- -------------- (6,242) 98 (5,155) 147,525 125,343 ------------ ------------------- -------------- -------------- -------------- 18,211 -- 105,004 500,783 116,443 148,276 31,986 (679,101) 426,734 1,020,529 (2,267) -- (31,952) (30,577) (15,717) -- -- (575,867) (8,070) (2,543) ------------ ------------------- -------------- -------------- -------------- 164,220 31,986 (1,181,916) 888,870 1,118,712 ------------ ------------------- -------------- -------------- -------------- 157,978 32,084 (1,187,071) 1,036,395 1,244,055 32,084 -- 2,526,859 1,490,464 246,409 ------------ ------------------- -------------- -------------- -------------- $ 190,062 $ 32,084 $ 1,339,788 $ 2,526,859 $ 1,490,464 ============ =================== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 115 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 JANUS ASPEN FORTY INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 ------------ ---------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $(13,635) $ (14,015) $ (2,048) Net realized gains (losses) 43,353 14,051 (78,622) Change in unrealized gains (losses) on investments (117,114) 47,707 310,554 ------------ ---------------- ------------ Net increase (decrease) in net assets resulting from operations (87,396) 47,743 229,884 ------------ ---------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 58,591 190,160 165,769 Net transfers (including fixed account) (237,596) 46,953 209,535 Policy charges (14,197) (16,395) (23,392) Transfers for policy benefits and terminations (229,034) (6,634) (106,150) ------------ ---------------- ------------ Net increase (decrease) in net assets resulting from policy transactions (422,236) 214,084 245,762 ------------ ---------------- ------------ Net increase (decrease) in net assets (509,632) 261,827 475,646 NET ASSETS: Beginning of year 1,212,768 950,941 475,295 ------------ ---------------- ------------ End of year $ 703,136 $ 1,212,768 $ 950,941 ============ ================ ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 116 JANUS ASPEN JANUS JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- --------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ------------------ -------------- ------------ -------------- ----------- $ (31,581) $(153,142) $ 5,686 $ (28,181) $ 792 $ 58 1,561,413 52,158 (31,201) (90,371) 4,218 26,564 (1,416,036) 848,330 1,662,317 (214,175) 62,994 37,885 ------------- ------------------ -------------- ------------ -------------- ----------- 113,796 747,346 1,636,802 (332,727) 68,004 64,507 ------------- ------------------ -------------- ------------ -------------- ----------- 6,403 635,005 658,401 17,337 61,601 9,283 (6,850,158) (58,773) 8,858 362,799 175,192 11,467 (52,198) (122,027) (310,790) (27,743) (7,034) (3,624) (191,751) -- (1,693) (51,382) (4,005) (25,524) ------------- ------------------ -------------- ------------ -------------- ----------- (7,087,704) 454,205 354,776 301,011 225,754 (8,398) ------------- ------------------ -------------- ------------ -------------- ----------- (6,973,908) 1,201,551 1,991,578 (31,716) 293,758 56,109 7,832,002 6,630,451 4,638,873 375,851 82,093 25,984 ------------- ------------------ -------------- ------------ -------------- ----------- $ 858,094 $ 7,832,002 $ 6,630,451 $ 344,135 $ 375,851 $ 82,093 ============= ================== ============== ============ ============== ===========
The accompanying notes are an integral part of these financial statements. 117 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MFS VIT GLOBAL EQUITY INVESTMENT DIVISION -------------------------------------- 2011 2010 2009 ----------- -------------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 214 $ 634 $ 1,004 Net realized gains (losses) 12,787 183 (11,994) Change in unrealized gains (losses) on investments (16,173) 19,523 27,307 ----------- -------------- ----------- Net increase (decrease) in net assets resulting from operations (3,172) 20,340 16,317 ----------- -------------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 10,718 28,453 20,456 Net transfers (including fixed account) (180,476) 103,015 (9,035) Policy charges (1,193) (2,360) (1,544) Transfers for policy benefits and terminations (47,257) (1,538) (5,469) ----------- -------------- ----------- Net increase (decrease) in net assets resulting from policy transactions (218,208) 127,570 4,408 ----------- -------------- ----------- Net increase (decrease) in net assets (221,380) 147,910 20,725 NET ASSETS: Beginning of year 226,794 78,884 58,159 ----------- -------------- ----------- End of year $ 5,414 $ 226,794 $ 78,884 =========== ============== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 118 MFS VIT HIGH INCOME MFS VIT NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- ------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ --------------- ------------ ------------ --------------- -------------- $ 11,578 $ 8,200 $ 660 $ (555) $ (340) $ (27) 361 680 326 18,098 544 1,560 (7,343) 7,331 21,466 (32,906) 28,843 3,314 ------------ --------------- ------------ ------------ --------------- -------------- 4,596 16,211 22,452 (15,363) 29,047 4,847 ------------ --------------- ------------ ------------ --------------- -------------- -- -- 3,777 6,694 8,926 564 -- (706) 90,405 5 94,362 (83) (1,372) (1,293) (684) (3,864) (2,441) (178) (22) -- (1,164) -- -- (2,063) ------------ --------------- ------------ ------------ --------------- -------------- (1,394) (1,999) 92,334 2,835 100,847 (1,760) ------------ --------------- ------------ ------------ --------------- -------------- 3,202 14,212 114,786 (12,528) 129,894 3,087 132,109 117,897 3,111 134,923 5,029 1,942 ------------ --------------- ------------ ------------ --------------- -------------- $ 135,311 $ 132,109 $ 117,897 $ 122,395 $ 134,923 $ 5,029 ============ =============== ============ ============ =============== ==============
The accompanying notes are an integral part of these financial statements. 119 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MFS VIT VALUE INVESTMENT DIVISION ------------------------------------------ 2011 2010 2009 ----------- --------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 714 $ 676 $ 546 Net realized gains (losses) (9,686) (552) (1,224) Change in unrealized gains (losses) on investments 6,173 7,585 14,082 ----------- --------------- -------------- Net increase (decrease) in net assets resulting from operations (2,799) 7,709 13,404 ----------- --------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners -- -- -- Net transfers (including fixed account) -- -- -- Policy charges (2,437) (2,613) (2,736) Transfers for policy benefits and terminations (29,560) (2) (1) ----------- --------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (31,997) (2,615) (2,737) ----------- --------------- -------------- Net increase (decrease) in net assets (34,796) 5,094 10,667 NET ASSETS: Beginning of year 79,095 74,001 63,334 ----------- --------------- -------------- End of year $ 44,299 $ 79,095 $ 74,001 =========== =============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 120 MIST AMERICAN FUNDS BALANCED ALLOCATION MIST AMERICAN FUNDS GROWTH ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------- -------------- ------------ --------------- -------------- $ 6,635 $ 3,146 $ -- $ 10,815 $ 2,434 $ -- 6,294 1,822 (28) 9,254 5,990 1,298 (23,258) 26,193 14,667 (58,738) 79,550 20,909 ------------ ---------------- -------------- ------------ --------------- -------------- (10,329) 31,161 14,639 (38,669) 87,974 22,207 ------------ ---------------- -------------- ------------ --------------- -------------- 100,111 105,391 30,361 267,061 355,048 87,422 36,239 89,836 167,911 31,086 223,657 36,431 (32,003) (11,710) (9,727) (124,905) (93,195) (24,118) (5,429) -- (563) (59,628) (2,170) (2,703) ------------ ---------------- -------------- ------------ --------------- -------------- 98,918 183,517 187,982 113,614 483,340 97,032 ------------ ---------------- -------------- ------------ --------------- -------------- 88,589 214,678 202,621 74,945 571,314 119,239 427,406 212,728 10,107 706,300 134,986 15,747 ------------ ---------------- -------------- ------------ --------------- -------------- $ 515,995 $ 427,406 $ 212,728 $ 781,245 $ 706,300 $ 134,986 ============ ================ ============== ============ =============== ==============
The accompanying notes are an integral part of these financial statements. 121 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST AMERICAN FUNDS MODERATE ALLOCATION INVESTMENT DIVISION ------------------------------------------- 2011 2010 2009 ------------ --------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 5,453 $ 2,501 $ -- Net realized gains (losses) 3,384 646 370 Change in unrealized gains (losses) on investments (7,233) 16,902 11,101 ------------ --------------- -------------- Net increase (decrease) in net assets resulting from operations 1,604 20,049 11,471 ------------ --------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 153,402 103,657 36,169 Net transfers (including fixed account) 57,534 70,020 57,483 Policy charges (55,936) (37,265) (13,816) Transfers for policy benefits and terminations (5,092) (2,260) (21) ------------ --------------- -------------- Net increase (decrease) in net assets resulting from policy transactions 149,908 134,152 79,815 ------------ --------------- -------------- Net increase (decrease) in net assets 151,512 154,201 91,286 NET ASSETS: Beginning of year 250,094 95,893 4,607 ------------ --------------- -------------- End of year $ 401,606 $ 250,094 $ 95,893 ============ =============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 122 MIST BLACKROCK LARGE CAP CORE MIST CLARION GLOBAL REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ --------------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------------- ------------------ ------------------ --------------- ----------------- ----------------- $ 1,161,359 $ 1,615,609 $ 2,132,876 $ 668,733 $ 1,391,967 $ 376,681 (4,542,808) (7,248,214) (10,716,690) (421,589) (571,095) (1,092,248) 3,050,880 38,497,976 54,384,062 (1,500,208) 1,969,823 5,493,585 ---------------- ------------------ ------------------ --------------- ----------------- ----------------- (330,569) 32,865,371 45,800,248 (1,253,064) 2,790,695 4,778,018 ---------------- ------------------ ------------------ --------------- ----------------- ----------------- 32,085,988 34,809,861 38,206,877 2,829,699 3,115,895 3,655,037 (2,768,320) (2,767,361) (5,847,879) (266,335) (6,843) (802,883) (25,373,589) (25,759,862) (26,968,042) (1,318,752) (1,331,035) (1,374,865) (21,487,307) (21,236,249) (18,412,707) (1,591,725) (1,474,613) (714,297) ---------------- ------------------ ------------------ --------------- ----------------- ----------------- (17,543,228) (14,953,611) (13,021,751) (347,113) 303,404 762,992 ---------------- ------------------ ------------------ --------------- ----------------- ----------------- (17,873,797) 17,911,760 32,778,497 (1,600,177) 3,094,099 5,541,010 309,489,536 291,577,776 258,799,279 21,160,564 18,066,465 12,525,455 ---------------- ------------------ ------------------ --------------- ----------------- ----------------- $ 291,615,739 $ 309,489,536 $ 291,577,776 $ 19,560,387 $ 21,160,564 $ 18,066,465 ================ ================== ================== =============== ================= =================
The accompanying notes are an integral part of these financial statements. 123 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST DREMAN SMALL CAP VALUE INVESTMENT DIVISION ------------------------------------------------ 2011 2010 2009 -------------- ----------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 217 $ (48) $ (427) Net realized gains (losses) 1,124 403 58,177 Change in unrealized gains (losses) on investments (4,058) 3,392 2,844 -------------- ----------------- --------------- Net increase (decrease) in net assets resulting from operations (2,717) 3,747 60,594 -------------- ----------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 8,977 2,082 412 Net transfers (including fixed account) 6,064 6,849 240,274 Policy charges (3,875) (2,325) (5,500) Transfers for policy benefits and terminations -- -- (278,764) -------------- ----------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 11,166 6,606 (43,578) -------------- ----------------- --------------- Net increase (decrease) in net assets 8,449 10,353 17,016 NET ASSETS: Beginning of year 27,489 17,136 120 -------------- ----------------- --------------- End of year $ 35,938 $ 27,489 $ 17,136 ============== ================= ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 124 MIST HARRIS OAKMARK INTERNATIONAL MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- -------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ------------------ ----------------- -------------- ------------------ ---------------- $(234,682) $ 343,311 $ 1,418,689 $(36,533) $ (30,507) $ (22,254) (114,036) (312,283) (1,294,657) 169,309 (15,371) (84,509) (4,256,535) 4,235,035 8,897,628 (192,641) 887,599 919,328 --------------- ------------------ ----------------- -------------- ------------------ ---------------- (4,605,253) 4,266,063 9,021,660 (59,865) 841,721 812,565 --------------- ------------------ ----------------- -------------- ------------------ ---------------- 3,837,373 4,074,673 4,204,850 453,004 471,774 525,764 133,438 669,473 154,538 42,346 164,724 214,625 (1,743,944) (1,796,257) (1,715,379) (231,126) (216,436) (223,502) (1,949,570) (2,128,605) (1,050,988) (261,290) (184,521) (124,073) --------------- ------------------ ----------------- -------------- ------------------ ---------------- 277,297 819,284 1,593,021 (2,934) 235,541 392,814 --------------- ------------------ ----------------- -------------- ------------------ ---------------- (4,327,956) 5,085,347 10,614,681 (56,931) 1,077,262 1,205,379 31,544,698 26,459,351 15,844,670 4,469,898 3,392,636 2,187,257 --------------- ------------------ ----------------- -------------- ------------------ ---------------- $ 27,216,742 $ 31,544,698 $ 26,459,351 $ 4,412,967 $ 4,469,898 $ 3,392,636 =============== ================== ================= ============== ================== ================
The accompanying notes are an integral part of these financial statements. 125 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST JANUS FORTY INVESTMENT DIVISION -------------------------------------------------- 2011 2010 2009 --------------- ------------------ --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 149,656 $ 119,973 $ (75,162) Net realized gains (losses) 2,199 (41,591) (540,105) Change in unrealized gains (losses) on investments (1,278,619) 1,120,682 3,887,171 --------------- ------------------ --------------- Net increase (decrease) in net assets resulting from operations (1,126,764) 1,199,064 3,271,904 --------------- ------------------ --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,050,382 2,241,409 2,031,808 Net transfers (including fixed account) (1,014,538) 410,883 1,027,089 Policy charges (884,372) (908,738) (846,828) Transfers for policy benefits and terminations (795,086) (788,374) (298,955) --------------- ------------------ --------------- Net increase (decrease) in net assets resulting from policy transactions (643,614) 955,180 1,913,114 --------------- ------------------ --------------- Net increase (decrease) in net assets (1,770,378) 2,154,244 5,185,018 NET ASSETS: Beginning of year 14,254,655 12,100,411 6,915,393 --------------- ------------------ --------------- End of year $ 12,484,277 $ 14,254,655 $ 12,100,411 =============== ================== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 126 MIST LAZARD MID CAP MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ----------------- -------------- --------------- ----------------- -------------- $ 7,046 $ 11,435 $ 19,267 $ (80,301) $ (53,638) $ (40,420) (15,584) (93,933) (283,748) 93,448 (57,251) (166,346) (320,660) 1,108,654 1,519,608 (217,464) 1,583,027 1,815,976 -------------- ----------------- -------------- --------------- ----------------- -------------- (329,198) 1,026,156 1,255,127 (204,317) 1,472,138 1,609,210 -------------- ----------------- -------------- --------------- ----------------- -------------- 665,125 700,574 796,272 1,318,130 897,883 1,020,767 304,589 24,219 (267,754) 5,034,717 (116,646) (178,569) (345,623) (347,953) (346,321) (725,056) (490,095) (500,322) (602,339) (387,630) (290,206) (890,256) (464,163) (374,454) -------------- ----------------- -------------- --------------- ----------------- -------------- 21,752 (10,790) (108,009) 4,737,535 (173,021) (32,578) -------------- ----------------- -------------- --------------- ----------------- -------------- (307,446) 1,015,366 1,147,118 4,533,218 1,299,117 1,576,632 5,585,124 4,569,758 3,422,640 7,832,576 6,533,459 4,956,827 -------------- ----------------- -------------- --------------- ----------------- -------------- $ 5,277,678 $ 5,585,124 $ 4,569,758 $ 12,365,794 $ 7,832,576 $ 6,533,459 ============== ================= ============== =============== ================= ==============
The accompanying notes are an integral part of these financial statements. 127 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION ---------------------------------------------------- 2011 2010 2009 --------------- ------------------ ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,356,223 $ 1,402,246 $ 1,391,406 Net realized gains (losses) 583,376 240,525 (126,749) Change in unrealized gains (losses) on investments (863,576) 1,315,427 5,411,601 --------------- ------------------ ----------------- Net increase (decrease) in net assets resulting from operations 1,076,023 2,958,198 6,676,258 --------------- ------------------ ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,158,065 2,523,009 2,703,439 Net transfers (including fixed account) (2,168,860) (548,415) 2,036,045 Policy charges (1,487,874) (1,509,898) (1,703,902) Transfers for policy benefits and terminations (1,520,091) (1,782,906) (1,226,776) --------------- ------------------ ----------------- Net increase (decrease) in net assets resulting from policy transactions (3,018,760) (1,318,210) 1,808,806 --------------- ------------------ ----------------- Net increase (decrease) in net assets (1,942,737) 1,639,988 8,485,064 NET ASSETS: Beginning of year 27,673,730 26,033,742 17,548,678 --------------- ------------------ ----------------- End of year $ 25,730,993 $ 27,673,730 $ 26,033,742 =============== ================== =================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 128 MIST LORD ABBETT MID CAP VALUE MIST MET/FRANKLIN INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ----------------- -------------- ------------ ----------------- -------------- $ 166 $ 199 $ 1,558 $ 8,323 $ 3,216 $ -- 818 3,236 (38,897) 5,705 823 54 (5,510) 19,769 57,059 (8,507) 10,272 9,507 -------------- ----------------- -------------- ------------ ----------------- -------------- (4,526) 23,204 19,720 5,521 14,311 9,561 -------------- ----------------- -------------- ------------ ----------------- -------------- 5,506 6,334 75,266 44,198 28,894 13,515 11,792 (18,047) (77,923) 67,493 66,675 19,688 (3,104) (3,822) (4,803) (23,591) (12,613) (6,238) -- -- (590) (7,430) (1,480) (482) -------------- ----------------- -------------- ------------ ----------------- -------------- 14,194 (15,535) (8,050) 80,670 81,476 26,483 -------------- ----------------- -------------- ------------ ----------------- -------------- 9,668 7,669 11,670 86,191 95,787 36,044 111,190 103,521 91,851 151,292 55,505 19,461 -------------- ----------------- -------------- ------------ ----------------- -------------- $ 120,858 $ 111,190 $ 103,521 $ 237,483 $ 151,292 $ 55,505 ============== ================= ============== ============ ================= ==============
The accompanying notes are an integral part of these financial statements. 129 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST MET/FRANKLIN MUTUAL SHARES INVESTMENT DIVISION -------------------------------------------- 2011 2010 2009 -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,982 $ -- $ -- Net realized gains (losses) 4,102 683 (91) Change in unrealized gains (losses) on investments (6,478) 4,077 4,710 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (394) 4,760 4,619 -------------- -------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 18,290 13,024 8,704 Net transfers (including fixed account) 18,465 22,360 6,499 Policy charges (9,290) (6,571) (3,313) Transfers for policy benefits and terminations (4,200) (811) (293) -------------- -------------- -------------- Net increase (decrease) in net assets resulting from policy transactions 23,265 28,002 11,597 -------------- -------------- -------------- Net increase (decrease) in net assets 22,871 32,762 16,216 NET ASSETS: Beginning of year 57,042 24,280 8,064 -------------- -------------- -------------- End of year $ 79,913 $ 57,042 $ 24,280 ============== ============== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 130 MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY MIST MET/TEMPLETON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------------------------ 2011 2010 2009 2011 2010 2009 ------------ ------------------ ------------- -------------- ---------------- ---------------- $ 5,031 $ -- $ -- $ 792 $ 305 $ 2 2,290 1,546 565 371 125 (60) (10,599) 23,230 14,572 (5,463) 3,904 3,117 ------------ ------------------ ------------- -------------- ---------------- ---------------- (3,278) 24,776 15,137 (4,300) 4,334 3,059 ------------ ------------------ ------------- -------------- ---------------- ---------------- 25,042 25,504 18,400 18,937 18,420 14,327 2,199 21,917 159,413 2,912 12,049 2,568 (8,412) (6,972) (7,871) (6,419) (5,335) (3,419) (19) -- (705) (6,096) (173) (526) ------------ ------------------ ------------- -------------- ---------------- ---------------- 18,810 40,449 169,237 9,334 24,961 12,950 ------------ ------------------ ------------- -------------- ---------------- ---------------- 15,532 65,225 184,374 5,034 29,295 16,009 260,280 195,055 10,681 48,492 19,197 3,188 ------------ ------------------ ------------- -------------- ---------------- ---------------- $ 275,812 $ 260,280 $ 195,055 $ 53,526 $ 48,492 $ 19,197 ============ ================== ============= ============== ================ ================
The accompanying notes are an integral part of these financial statements. 131 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST MFS MIST METLIFE EMERGING AGGRESSIVE STRATEGY MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ---------------------- 2011 (f) 2011 (f) ---------------------- ---------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $(77,007) $ (788) Net realized gains (losses) (117,896) (70) Change in unrealized gains (losses) on investments (1,834,063) (3,209) ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations (2,028,966) (4,067) ---------------------- ---------------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,640,701 3,938 Net transfers (including fixed account) 14,330,838 23,265 Policy charges (611,481) (123) Transfers for policy benefits and terminations (858,431) (63) ---------------------- ---------------------- Net increase (decrease) in net assets resulting from policy transactions 14,501,627 27,017 ---------------------- ---------------------- Net increase (decrease) in net assets 12,472,661 22,950 NET ASSETS: Beginning of year -- -- ---------------------- ---------------------- End of year $ 12,472,661 $ 22,950 ====================== ======================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 132 MIST MFS RESEARCH INTERNATIONAL MIST MORGAN STANLEY MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- $ 176,806 $ 134,233 $ 280,264 $ 16,206 $ (957,593) $ (870) (233,782) (545,005) (1,024,253) 7,856,152 336,382 1,780 (1,480,693) 1,743,808 3,897,065 (21,552,444) 31,775,159 75,648 --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- (1,537,669) 1,333,036 3,153,076 (13,680,086) 31,153,948 76,558 --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- 1,640,050 1,870,809 2,210,375 22,486,193 16,409,129 13,014 51,977 (766,625) (550,815) (4,111,245) 174,856,480 208,259 (767,791) (802,613) (902,498) (14,405,421) (9,530,730) (2,906) (1,130,486) (892,543) (545,950) (15,693,955) (9,440,323) (5,098) --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- (206,250) (590,972) 211,112 (11,724,428) 172,294,556 213,269 --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- (1,743,919) 742,064 3,364,188 (25,404,514) 203,448,504 289,827 13,920,818 13,178,754 9,814,566 203,754,931 306,427 16,600 --------------- ---------------------- ----------------- ---------------- ---------------------- -------------- $ 12,176,899 $ 13,920,818 $ 13,178,754 $ 178,350,417 $ 203,754,931 $ 306,427 =============== ====================== ================= ================ ====================== ==============
The accompanying notes are an integral part of these financial statements. 133 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST OPPENHEIMER CAPITAL APPRECIATION INVESTMENT DIVISION ----------------------------------------------------- 2011 2010 2009 -------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (7,998) $ (2,663) $ (10,277) Net realized gains (losses) (25,379) (39,996) (109,001) Change in unrealized gains (losses) on investments 5,975 190,578 558,202 -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations (27,402) 147,919 438,924 -------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 291,580 304,670 338,372 Net transfers (including fixed account) (65,330) (75,809) 205,296 Policy charges (118,108) (119,410) (126,102) Transfers for policy benefits and terminations (125,516) (109,397) (66,149) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (17,374) 54 351,417 -------------- ---------------------- --------------- Net increase (decrease) in net assets (44,776) 147,973 790,341 NET ASSETS: Beginning of year 1,779,611 1,631,638 841,297 -------------- ---------------------- --------------- End of year $ 1,734,835 $ 1,779,611 $ 1,631,638 ============== ====================== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 134 MIST PIMCO INFLATION PROTECTED BOND MIST PIMCO TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- --------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ----------------- ---------------- --------------- ------------------- --------------- $ 95,195 $ 146,674 $ 194,864 $ 975,512 $ 1,273,636 $ 2,452,300 525,047 281,279 (46,474) 1,634,121 474,495 1,576,841 331,187 130,473 877,182 (1,410,547) 1,426,113 1,911,046 --------------- ----------------- ---------------- --------------- ------------------- --------------- 951,429 558,426 1,025,572 1,199,086 3,174,244 5,940,187 --------------- ----------------- ---------------- --------------- ------------------- --------------- 1,244,015 1,208,996 1,284,337 5,110,970 5,334,220 5,672,803 671,186 587,680 842,827 1,024,517 3,101,158 2,447,477 (631,840) (577,592) (561,645) (3,110,778) (3,135,341) (3,246,181) (527,827) (699,416) (379,813) (3,694,178) (3,692,336) (3,035,028) --------------- ----------------- ---------------- --------------- ------------------- --------------- 755,534 519,668 1,185,706 (669,469) 1,607,701 1,839,071 --------------- ----------------- ---------------- --------------- ------------------- --------------- 1,706,963 1,078,094 2,211,278 529,617 4,781,945 7,779,258 8,812,538 7,734,444 5,523,166 46,602,262 41,820,317 34,041,059 --------------- ----------------- ---------------- --------------- ------------------- --------------- $ 10,519,501 $ 8,812,538 $ 7,734,444 $ 47,131,879 $ 46,602,262 $ 41,820,317 =============== ================= ================ =============== =================== ===============
The accompanying notes are an integral part of these financial statements. 135 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST PIONEER FUND INVESTMENT DIVISION ----------------------------------------- 2011 2010 2009 (e) ------------ --------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,519 $ 1,005 $ (580) Net realized gains (losses) 21,102 6,067 1,986 Change in unrealized gains (losses) on investments (30,602) 25,716 48,304 ------------ --------------- ------------ Net increase (decrease) in net assets resulting from operations (7,981) 32,788 49,710 ------------ --------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 5,551 4,871 9,778 Net transfers (including fixed account) (1,284) (26,206) 197,145 Policy charges (3,877) (4,729) (2,535) Transfers for policy benefits and terminations (61,915) -- (14,962) ------------ --------------- ------------ Net increase (decrease) in net assets resulting from policy transactions (61,525) (26,064) 189,426 ------------ --------------- ------------ Net increase (decrease) in net assets (69,506) 6,724 239,136 NET ASSETS: Beginning of year 245,860 239,136 -- ------------ --------------- ------------ End of year $ 176,354 $ 245,860 $ 239,136 ============ =============== ============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 136 MIST RCM TECHNOLOGY MIST SSGA GROWTH AND INCOME ETF INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ---------------- --------------- -------------- ----------------- ---------------- $(125,028) $ (111,175) $ (82,504) $ 41,408 $ 12,293 $ 6,273 512,571 (54,192) (600,648) 123,633 16,158 3,801 (1,944,446) 3,551,862 5,182,655 (151,325) 322,318 204,020 -------------- ---------------- --------------- -------------- ----------------- ---------------- (1,556,903) 3,386,495 4,499,503 13,716 350,769 214,094 -------------- ---------------- --------------- -------------- ----------------- ---------------- 1,591,820 1,602,041 1,674,647 610,076 471,109 200,034 (740,109) 7,146 1,430,181 653,921 1,821,735 921,708 (964,790) (958,684) (886,510) (249,515) (188,226) (67,668) (1,227,369) (1,144,160) (618,269) (235,978) (217,589) (23,508) -------------- ---------------- --------------- -------------- ----------------- ---------------- (1,340,448) (493,657) 1,600,049 778,504 1,887,029 1,030,566 -------------- ---------------- --------------- -------------- ----------------- ---------------- (2,897,351) 2,892,838 6,099,552 792,220 2,237,798 1,244,660 16,113,886 13,221,048 7,121,496 3,818,907 1,581,109 336,449 -------------- ---------------- --------------- -------------- ----------------- ---------------- $ 13,216,535 $ 16,113,886 $ 13,221,048 $ 4,611,127 $ 3,818,907 $ 1,581,109 ============== ================ =============== ============== ================= ================
The accompanying notes are an integral part of these financial statements. 137 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST SSGA GROWTH ETF INVESTMENT DIVISION ------------------------------------------------ 2011 2010 2009 -------------- ------------------ -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 31,155 $ 16,282 $ 7,006 Net realized gains (losses) 63,035 12,378 (20,730) Change in unrealized gains (losses) on investments (183,850) 271,601 309,775 -------------- ------------------ -------------- Net increase (decrease) in net assets resulting from operations (89,660) 300,261 296,051 -------------- ------------------ -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 473,918 426,740 229,022 Net transfers (including fixed account) 671,574 479,704 921,197 Policy charges (187,333) (144,844) (75,749) Transfers for policy benefits and terminations (238,362) (171,487) (38,845) -------------- ------------------ -------------- Net increase (decrease) in net assets resulting from policy transactions 719,797 590,113 1,035,625 -------------- ------------------ -------------- Net increase (decrease) in net assets 630,137 890,374 1,331,676 NET ASSETS: Beginning of year 2,679,381 1,789,007 457,331 -------------- ------------------ -------------- End of year $ 3,309,518 $ 2,679,381 $ 1,789,007 ============== ================== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 138 MIST T. ROWE PRICE LARGE CAP VALUE MIST T. ROWE PRICE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ----------------- ---------------- --------------- ------------------- ----------------- $ (14,587) $ (69,544) $ 86,241 $ (314,304) $ (150,122) $ (115,483) (435,260) (79,021) (261,167) 872,771 131,367 (381,122) 577,510 921,874 894,542 (1,837,318) 4,580,355 5,596,487 -------------- ----------------- ---------------- --------------- ------------------- ----------------- 127,663 773,309 719,616 (1,278,581) 4,561,600 5,099,882 -------------- ----------------- ---------------- --------------- ------------------- ----------------- 4,938 427,886 455,197 2,194,867 2,269,288 2,540,664 (4,150,820) (66,707) (56,090) 5,978,566 264,028 (25,606) (22,272) (66,379) (175,840) (1,281,123) (1,184,611) (1,208,476) (1,102,016) (7,059) (15,683) (1,643,740) (1,448,078) (796,500) -------------- ----------------- ---------------- --------------- ------------------- ----------------- (5,270,170) 287,741 207,584 5,248,570 (99,373) 510,082 -------------- ----------------- ---------------- --------------- ------------------- ----------------- (5,142,507) 1,061,050 927,200 3,969,719 4,462,227 5,609,964 6,224,061 5,163,011 4,235,811 21,234,908 16,772,681 11,162,717 -------------- ----------------- ---------------- --------------- ------------------- ----------------- $ 1,081,554 $ 6,224,061 $ 5,163,011 $ 25,204,627 $ 21,234,908 $ 16,772,681 ============== ================= ================ =============== =================== =================
The accompanying notes are an integral part of these financial statements. 139 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MIST THIRD AVENUE SMALL CAP VALUE INVESTMENT DIVISION -------------------------------------------- 2011 2010 2009 ------------ ---------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (738) $ 1,081 $ 839 Net realized gains (losses) 86,881 42,370 (14,175) Change in unrealized gains (losses) on investments (240,493) 198,929 152,916 ------------ ---------------- -------------- Net increase (decrease) in net assets resulting from operations (154,350) 242,380 139,580 ------------ ---------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 28,968 152,265 57,631 Net transfers (including fixed account) (400,494) 298,003 486,247 Policy charges (18,468) (17,684) (12,877) Transfers for policy benefits and terminations (225,194) (369) (13,418) ------------ ---------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (615,188) 432,215 517,583 ------------ ---------------- -------------- Net increase (decrease) in net assets (769,538) 674,595 657,163 NET ASSETS: Beginning of year 1,575,589 900,994 243,831 ------------ ---------------- -------------- End of year $ 806,051 $ 1,575,589 $ 900,994 ============ ================ ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 140 MSF ARTIO INTERNATIONAL STOCK MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ------------------- ----------------- ---------------- ------------------- ---------------- $ 411,074 $ 312,234 $ (49,120) $ 3,008,471 $ 3,134,920 $ 5,177,513 (808,593) (1,030,425) (2,053,375) 843,640 613,564 195,723 (8,900,342) 3,370,719 10,298,349 3,276,276 1,607,603 (1,139,158) --------------- ------------------- ----------------- ---------------- ------------------- ---------------- (9,297,861) 2,652,528 8,195,854 7,128,387 5,356,087 4,234,078 --------------- ------------------- ----------------- ---------------- ------------------- ---------------- 4,892,915 5,258,777 5,947,335 12,546,475 13,651,933 15,575,764 100,755 (592,663) (1,694,751) (5,035,008) 4,296,224 5,185,787 (3,012,276) (3,227,781) (3,532,211) (7,661,064) (7,836,195) (8,703,722) (2,530,848) (3,487,847) (2,746,693) (12,699,958) (7,334,933) (6,465,006) --------------- ------------------- ----------------- ---------------- ------------------- ---------------- (549,454) (2,049,514) (2,026,320) (12,849,555) 2,777,029 5,592,823 --------------- ------------------- ----------------- ---------------- ------------------- ---------------- (9,847,315) 603,014 6,169,534 (5,721,168) 8,133,116 9,826,901 45,766,876 45,163,862 38,994,328 114,484,755 106,351,639 96,524,738 --------------- ------------------- ----------------- ---------------- ------------------- ---------------- $ 35,919,561 $ 45,766,876 $ 45,163,862 $ 108,763,587 $ 114,484,755 $ 106,351,639 =============== =================== ================= ================ =================== ================
The accompanying notes are an integral part of these financial statements. 141 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF BLACKROCK AGGRESSIVE GROWTH INVESTMENT DIVISION ------------------------------------------------------- 2011 2010 2009 ---------------- ------------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (1,230,852) $ (1,491,228) $ (1,057,460) Net realized gains (losses) 2,544,325 451,106 (3,328,441) Change in unrealized gains (losses) on investments (8,863,059) 26,312,677 66,805,065 ---------------- ------------------- ------------------ Net increase (decrease) in net assets resulting from operations (7,549,586) 25,272,555 62,419,164 ---------------- ------------------- ------------------ POLICY TRANSACTIONS: Premium payments received from policy owners 17,102,384 18,632,365 20,361,017 Net transfers (including fixed account) 3,214,026 (3,158,688) (3,469,034) Policy charges (13,648,373) (13,928,346) (14,222,944) Transfers for policy benefits and terminations (14,269,181) (14,208,996) (11,832,605) ---------------- ------------------- ------------------ Net increase (decrease) in net assets resulting from policy transactions (7,601,144) (12,663,665) (9,163,566) ---------------- ------------------- ------------------ Net increase (decrease) in net assets (15,150,730) 12,608,890 53,255,598 NET ASSETS: Beginning of year 200,141,525 187,532,635 134,277,037 ---------------- ------------------- ------------------ End of year $ 184,990,795 $ 200,141,525 $ 187,532,635 ================ =================== ==================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 142 MSF BLACKROCK BOND INCOME MSF BLACKROCK DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 --------------- ------------------ ----------------- ---------------- -------------------- ---------------- $ 2,652,269 $ 2,669,950 $ 5,080,494 $ 4,087,929 $ 2,653,340 $ 10,169,948 132,024 24,746 (553,787) (191,522) (1,951,136) (4,609,576) 1,930,533 3,372,816 2,142,811 3,658,514 20,635,275 31,028,944 --------------- ------------------ ----------------- ---------------- -------------------- ---------------- 4,714,826 6,067,512 6,669,518 7,554,921 21,337,479 36,589,316 --------------- ------------------ ----------------- ---------------- -------------------- ---------------- 7,828,777 8,520,413 9,587,028 27,879,758 29,469,771 32,386,040 (1,265,327) 406,620 (2,591,044) (878,239) (2,059,076) (4,711,176) (6,239,953) (6,604,181) (7,385,796) (23,064,453) (23,701,241) (25,234,205) (5,835,954) (5,946,761) (5,845,823) (19,040,111) (19,336,433) (17,354,140) --------------- ------------------ ----------------- ---------------- -------------------- ---------------- (5,512,457) (3,623,909) (6,235,635) (15,103,045) (15,626,979) (14,913,481) --------------- ------------------ ----------------- ---------------- -------------------- ---------------- (797,631) 2,443,603 433,883 (7,548,124) 5,710,500 21,675,835 84,862,836 82,419,233 81,985,350 263,102,316 257,391,816 235,715,981 --------------- ------------------ ----------------- ---------------- -------------------- ---------------- $ 84,065,205 $ 84,862,836 $ 82,419,233 $ 255,554,192 $ 263,102,316 $ 257,391,816 =============== ================== ================= ================ ==================== ================
The accompanying notes are an integral part of these financial statements. 143 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF BLACKROCK LARGE CAP VALUE INVESTMENT DIVISION ---------------------------------------------------- 2011 2010 2009 --------------- ------------------ ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 43,646 $ 27,035 $ 73,451 Net realized gains (losses) (80,782) (263,466) (513,587) Change in unrealized gains (losses) on investments 254,349 1,265,453 1,615,283 --------------- ------------------ ---------------- Net increase (decrease) in net assets resulting from operations 217,213 1,029,022 1,175,147 --------------- ------------------ ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,997,147 2,157,901 2,432,547 Net transfers (including fixed account) 22,211 (183,197) 29,524 Policy charges (867,088) (871,019) (969,741) Transfers for policy benefits and terminations (955,568) (957,459) (514,960) --------------- ------------------ ---------------- Net increase (decrease) in net assets resulting from policy transactions 196,702 146,226 977,370 --------------- ------------------ ---------------- Net increase (decrease) in net assets 413,915 1,175,248 2,152,517 NET ASSETS: Beginning of year 12,899,137 11,723,889 9,571,372 --------------- ------------------ ---------------- End of year $ 13,313,052 $ 12,899,137 $ 11,723,889 =============== ================== ================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 144 MSF BLACKROCK LEGACY LARGE CAP GROWTH MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 -------------- ----------------- ---------------- --------------- ------------------- ------------------ $ (46,620) $ (38,770) $ (5,579) $ (161,149) $ (300,906) $ (11,349) 137,813 75,641 (146,284) -- -- -- (879,158) 1,107,022 1,684,656 -- -- -- -------------- ----------------- ---------------- --------------- ------------------- ------------------ (787,965) 1,143,893 1,532,793 (161,149) (300,906) (11,349) -------------- ----------------- ---------------- --------------- ------------------- ------------------ 1,133,989 1,127,304 1,097,152 6,905,158 14,816,043 8,264,492 1,403,176 39,075 217,819 (10,656,392) (13,160,154) (31,859,828) (514,429) (499,832) (460,694) (1,109,422) (1,340,285) (1,914,002) (1,189,484) (438,412) (223,463) (4,013,323) (5,424,880) (2,515,809) -------------- ----------------- ---------------- --------------- ------------------- ------------------ 833,252 228,135 630,814 (8,873,979) (5,109,276) (28,025,147) -------------- ----------------- ---------------- --------------- ------------------- ------------------ 45,287 1,372,028 2,163,607 (9,035,128) (5,410,182) (28,036,496) 7,322,523 5,950,495 3,786,888 29,818,336 35,228,518 63,265,014 -------------- ----------------- ---------------- --------------- ------------------- ------------------ $ 7,367,810 $ 7,322,523 $ 5,950,495 $ 20,783,208 $ 29,818,336 $ 35,228,518 ============== ================= ================ =============== =================== ==================
The accompanying notes are an integral part of these financial statements. 145 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF DAVIS VENTURE VALUE INVESTMENT DIVISION ------------------------------------------------- 2011 2010 2009 --------------- ----------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 210,852 $ 89,335 $ 312,737 Net realized gains (losses) 492,146 191,969 (723,952) Change in unrealized gains (losses) on investments (3,392,027) 5,562,556 12,907,686 --------------- ----------------- --------------- Net increase (decrease) in net assets resulting from operations (2,689,029) 5,843,860 12,496,471 --------------- ----------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 7,273,891 8,027,444 9,217,297 Net transfers (including fixed account) 33,336 (908,212) (601,386) Policy charges (3,741,905) (3,883,974) (4,013,443) Transfers for policy benefits and terminations (5,136,119) (3,941,742) (2,327,459) --------------- ----------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (1,570,797) (706,484) 2,275,009 --------------- ----------------- --------------- Net increase (decrease) in net assets (4,259,826) 5,137,376 14,771,480 NET ASSETS: Beginning of year 57,910,618 52,773,242 38,001,762 --------------- ----------------- --------------- End of year $ 53,650,792 $ 57,910,618 $ 52,773,242 =============== ================= ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 146 MSF FI VALUE LEADERS MSF JENNISON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- -------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ----------------- -------------- --------------- ------------------ --------------- $ 19,109 $ 42,314 $ 90,114 $ (66,983) $ (33,604) $ (75,210) (99,840) (145,291) (259,906) 251,119 17,747 (140,559) (347,209) 885,079 1,128,894 (215,551) 1,535,759 4,015,386 -------------- ----------------- -------------- --------------- ------------------ --------------- (427,940) 782,102 959,102 (31,415) 1,519,902 3,799,617 -------------- ----------------- -------------- --------------- ------------------ --------------- 906,978 997,133 1,137,076 1,444,160 1,601,194 1,719,206 107,098 41,388 (112,167) (43,841) 598,866 (143,027) (436,787) (451,311) (473,372) (938,887) (946,786) (963,364) (572,452) (361,541) (254,916) (1,671,932) (838,122) (752,854) -------------- ----------------- -------------- --------------- ------------------ --------------- 4,837 225,669 296,621 (1,210,500) 415,152 (140,039) -------------- ----------------- -------------- --------------- ------------------ --------------- (423,103) 1,007,771 1,255,723 (1,241,915) 1,935,054 3,659,578 6,488,932 5,481,161 4,225,438 15,408,401 13,473,347 9,813,769 -------------- ----------------- -------------- --------------- ------------------ --------------- $ 6,065,829 $ 6,488,932 $ 5,481,161 $ 14,166,486 $ 15,408,401 $ 13,473,347 ============== ================= ============== =============== ================== ===============
The accompanying notes are an integral part of these financial statements. 147 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF LOOMIS SAYLES SMALL CAP CORE INVESTMENT DIVISION ---------------------------------------------------- 2011 2010 2009 --------------- ------------------ ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (116,937) $ (112,605) $ (66,505) Net realized gains (losses) 258,722 (55,224) (439,969) Change in unrealized gains (losses) on investments (166,265) 4,065,140 3,809,050 --------------- ------------------ ----------------- Net increase (decrease) in net assets resulting from operations (24,480) 3,897,311 3,302,576 --------------- ------------------ ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,937,235 2,076,395 2,435,828 Net transfers (including fixed account) (342,656) (491,792) (114,204) Policy charges (1,066,229) (1,025,327) (1,044,037) Transfers for policy benefits and terminations (1,342,670) (999,217) (789,008) --------------- ------------------ ----------------- Net increase (decrease) in net assets resulting from policy transactions (814,320) (439,941) 488,579 --------------- ------------------ ----------------- Net increase (decrease) in net assets (838,800) 3,457,370 3,791,155 NET ASSETS: Beginning of year 18,282,784 14,825,414 11,034,259 --------------- ------------------ ----------------- End of year $ 17,443,984 $ 18,282,784 $ 14,825,414 =============== ================== =================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 148 MSF LOOMIS SAYLES SMALL CAP GROWTH MSF MET/ARTISAN MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ------------------ ---------------- --------------- ------------------- ----------------- $(65,916) $ (51,755) $ (39,304) $ 60,419 $ (47,745) $ 94,579 104,198 (47,680) (219,528) (412,007) (887,093) (2,074,439) 121,090 1,843,398 1,519,136 3,096,938 6,661,231 14,134,862 -------------- ------------------ ---------------- --------------- ------------------- ----------------- 159,372 1,743,963 1,260,304 2,745,350 5,726,393 12,155,002 -------------- ------------------ ---------------- --------------- ------------------- ----------------- 919,698 919,140 988,520 5,738,107 6,389,633 7,222,155 627,796 81,273 (173,065) (545,207) (144,561) (2,763,216) (484,566) (421,055) (408,126) (3,144,705) (3,135,232) (3,172,696) (472,962) (486,248) (281,193) (4,205,697) (3,307,007) (2,344,946) -------------- ------------------ ---------------- --------------- ------------------- ----------------- 589,966 93,110 126,136 (2,157,502) (197,167) (1,058,703) -------------- ------------------ ---------------- --------------- ------------------- ----------------- 749,338 1,837,073 1,386,440 587,848 5,529,226 11,096,299 7,430,441 5,593,368 4,206,928 46,601,141 41,071,915 29,975,616 -------------- ------------------ ---------------- --------------- ------------------- ----------------- $ 8,179,779 $ 7,430,441 $ 5,593,368 $ 47,188,989 $ 46,601,141 $ 41,071,915 ============== ================== ================ =============== =================== =================
The accompanying notes are an integral part of these financial statements. 149 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF METLIFE CONSERVATIVE ALLOCATION INVESTMENT DIVISION -------------------------------------------------- 2011 2010 2009 -------------- ------------------ ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 68,584 $ 80,267 $ 42,263 Net realized gains (losses) 77,218 46,459 5,727 Change in unrealized gains (losses) on investments (37,275) 119,161 276,504 -------------- ------------------ ---------------- Net increase (decrease) in net assets resulting from operations 108,527 245,887 324,494 -------------- ------------------ ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 485,812 467,696 374,777 Net transfers (including fixed account) 943,856 1,892,409 493,401 Policy charges (360,205) (296,178) (222,010) Transfers for policy benefits and terminations (843,231) (461,555) (132,555) -------------- ------------------ ---------------- Net increase (decrease) in net assets resulting from policy transactions 226,232 1,602,372 513,613 -------------- ------------------ ---------------- Net increase (decrease) in net assets 334,759 1,848,259 838,107 NET ASSETS: Beginning of year 4,036,496 2,188,237 1,350,130 -------------- ------------------ ---------------- End of year $ 4,371,255 $ 4,036,496 $ 2,188,237 ============== ================== ================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 150 MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MSF METLIFE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 -------------- ------------------ -------------- --------------- ------------------- ----------------- $ 102,885 $ 146,886 $ 97,885 $ 92,584 $ 88,922 $ 436,208 135,436 32,319 (68,146) 3,401,215 248,370 308,329 (210,123) 421,073 828,280 (4,954,472) 12,893,844 13,600,526 -------------- ------------------ -------------- --------------- ------------------- ----------------- 28,198 600,278 858,019 (1,460,673) 13,231,136 14,345,063 -------------- ------------------ -------------- --------------- ------------------- ----------------- 968,450 1,013,491 1,081,983 6,663,417 7,250,885 8,322,995 (142,377) 1,079,782 990,434 550,217 173,240 (1,733,152) (614,893) (573,007) (588,201) (3,942,548) (3,916,122) (3,929,463) (600,517) (457,386) (298,169) (4,758,860) (4,634,928) (4,046,727) -------------- ------------------ -------------- --------------- ------------------- ----------------- (389,337) 1,062,880 1,186,047 (1,487,774) (1,126,925) (1,386,347) -------------- ------------------ -------------- --------------- ------------------- ----------------- (361,139) 1,663,158 2,044,066 (2,948,447) 12,104,211 12,958,716 6,925,701 5,262,543 3,218,477 65,796,062 53,691,851 40,733,135 -------------- ------------------ -------------- --------------- ------------------- ----------------- $ 6,564,562 $ 6,925,701 $ 5,262,543 $ 62,847,615 $ 65,796,062 $ 53,691,851 ============== ================== ============== =============== =================== =================
The accompanying notes are an integral part of these financial statements. 151 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION ----------------------------------------------------- 2011 2010 2009 --------------- ------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 365,409 $ 612,920 $ 506,612 Net realized gains (losses) 234,474 17,779 (2,887) Change in unrealized gains (losses) on investments (1,362,402) 3,378,733 5,007,760 --------------- ------------------- ----------------- Net increase (decrease) in net assets resulting from operations (762,519) 4,009,432 5,511,485 --------------- ------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 5,784,576 5,949,225 6,448,156 Net transfers (including fixed account) 3,395,270 3,305,318 2,562,902 Policy charges (2,904,925) (2,798,394) (2,812,947) Transfers for policy benefits and terminations (3,138,424) (2,041,425) (1,454,530) --------------- ------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions 3,136,497 4,414,724 4,743,581 --------------- ------------------- ----------------- Net increase (decrease) in net assets 2,373,978 8,424,156 10,255,066 NET ASSETS: Beginning of year 37,214,331 28,790,175 18,535,109 --------------- ------------------- ----------------- End of year $ 39,588,309 $ 37,214,331 $ 28,790,175 =============== =================== =================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 152 MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION MSF METLIFE STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 --------------- -------------------- --------------- ---------------- -------------------- ---------------- $ 506,120 $ 796,924 $ 779,492 $ 6,320,936 $ 5,808,346 $ 9,682,465 112,005 (102,509) (133,216) 3,790,443 (5,405,568) (976,772) (3,772,324) 7,116,457 10,602,923 (2,093,968) 82,259,608 112,925,652 --------------- -------------------- --------------- ---------------- -------------------- ---------------- (3,154,199) 7,810,872 11,249,199 8,017,411 82,662,386 121,631,345 --------------- -------------------- --------------- ---------------- -------------------- ---------------- 12,078,791 13,837,630 16,058,041 80,842,256 86,739,358 95,757,402 1,724,329 655,595 (778,406) (3,601,844) (12,182,904) (18,281,346) (4,865,736) (5,100,587) (5,739,610) (41,264,087) (41,866,793) (43,260,398) (4,677,007) (4,588,662) (2,211,947) (47,119,534) (41,307,628) (30,750,386) --------------- -------------------- --------------- ---------------- -------------------- ---------------- 4,260,377 4,803,976 7,328,078 (11,143,209) (8,617,967) 3,465,272 --------------- -------------------- --------------- ---------------- -------------------- ---------------- 1,106,178 12,614,848 18,577,277 (3,125,798) 74,044,419 125,096,617 65,064,069 52,449,221 33,871,944 671,751,965 597,707,546 472,610,929 --------------- -------------------- --------------- ---------------- -------------------- ---------------- $ 66,170,247 $ 65,064,069 $ 52,449,221 $ 668,626,167 $ 671,751,965 $ 597,707,546 =============== ==================== =============== ================ ==================== ================
The accompanying notes are an integral part of these financial statements. 153 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF MFS TOTAL RETURN INVESTMENT DIVISION ------------------------------------------------ 2011 2010 2009 -------------- ------------------ -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 96,167 $ 130,483 $ 179,213 Net realized gains (losses) (29,847) (99,947) (173,243) Change in unrealized gains (losses) on investments (11,189) 568,242 937,515 -------------- ------------------ -------------- Net increase (decrease) in net assets resulting from operations 55,131 598,778 943,485 -------------- ------------------ -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,027,479 952,924 1,270,198 Net transfers (including fixed account) (126,958) (93,026) 999,337 Policy charges (500,485) (506,572) (577,409) Transfers for policy benefits and terminations (801,101) (377,989) (362,991) -------------- ------------------ -------------- Net increase (decrease) in net assets resulting from policy transactions (401,065) (24,663) 1,329,135 -------------- ------------------ -------------- Net increase (decrease) in net assets (345,934) 574,115 2,272,620 NET ASSETS: Beginning of year 7,708,272 7,134,157 4,861,537 -------------- ------------------ -------------- End of year $ 7,362,338 $ 7,708,272 $ 7,134,157 ============== ================== ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 154 MSF MFS VALUE MSF MORGAN STANLEY EAFE INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ------------------ --------------- --------------- ------------------- ----------------- $ 367,363 $ 255,596 $ (360,654) $ 996,993 $ 1,043,606 $ 1,709,359 (44,982) (425,864) (877,734) 137,025 (236,046) (455,196) (346,891) 5,358,513 9,493,542 (9,604,700) 3,674,685 11,844,795 --------------- ------------------ --------------- --------------- ------------------- ----------------- (24,510) 5,188,245 8,255,154 (8,470,682) 4,482,245 13,098,958 --------------- ------------------ --------------- --------------- ------------------- ----------------- 6,217,602 6,966,530 7,793,992 7,277,374 7,898,110 9,558,645 423,365 37,691 (1,188,905) 3,903,398 2,327,295 (1,404,247) (3,452,473) (3,542,869) (3,789,583) (3,801,271) (3,885,302) (4,356,028) (4,853,465) (3,962,238) (2,718,079) (4,517,098) (4,368,376) (2,974,891) --------------- ------------------ --------------- --------------- ------------------- ----------------- (1,664,971) (500,886) 97,425 2,862,403 1,971,727 823,479 --------------- ------------------ --------------- --------------- ------------------- ----------------- (1,689,481) 4,687,359 8,352,579 (5,608,279) 6,453,972 13,922,437 54,052,850 49,365,491 41,012,912 65,367,829 58,913,857 44,991,420 --------------- ------------------ --------------- --------------- ------------------- ----------------- $ 52,363,369 $ 54,052,850 $ 49,365,491 $ 59,759,550 $ 65,367,829 $ 58,913,857 =============== ================== =============== =============== =================== =================
The accompanying notes are an integral part of these financial statements. 155 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF NEUBERGER BERMAN GENESIS INVESTMENT DIVISION ----------------------------------------------------- 2011 2010 2009 --------------- ------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (67,278) $ (275,380) $ 150,638 Net realized gains (losses) (976,828) (2,085,738) (2,703,187) Change in unrealized gains (losses) on investments 4,961,322 15,927,942 10,045,644 --------------- ------------------- ----------------- Net increase (decrease) in net assets resulting from operations 3,917,216 13,566,824 7,493,095 --------------- ------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 8,942,665 9,951,447 11,539,415 Net transfers (including fixed account) (1,072,904) (1,640,139) (1,847,368) Policy charges (5,313,072) (5,140,082) (5,408,103) Transfers for policy benefits and terminations (5,912,935) (5,453,013) (4,050,199) --------------- ------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions (3,356,246) (2,281,787) 233,745 --------------- ------------------- ----------------- Net increase (decrease) in net assets 560,970 11,285,037 7,726,840 NET ASSETS: Beginning of year 78,718,096 67,433,059 59,706,219 --------------- ------------------- ----------------- End of year $ 79,279,066 $ 78,718,096 $ 67,433,059 =============== =================== =================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 156 MSF NEUBERGER BERMAN MID CAP VALUE MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ------------------ ----------------- --------------- ------------------- ----------------- $ 11,772 $ (335) $ 373,237 $ 540,754 $ 315,620 $ 593,945 682,184 12,235 (1,385,415) 892,248 362,727 (362,452) (5,912,606) 15,949,723 21,838,137 (5,213,727) 5,192,068 11,124,292 --------------- ------------------ ----------------- --------------- ------------------- ----------------- (5,218,650) 15,961,623 20,825,959 (3,780,725) 5,870,415 11,355,785 --------------- ------------------ ----------------- --------------- ------------------- ----------------- 8,114,422 8,746,908 9,917,985 3,587,418 3,921,178 4,170,777 (368,606) (311,273) (2,538,823) (166,778) 130,181 (1,832,917) (4,863,238) (4,935,922) (4,785,680) (2,342,147) (2,449,571) (2,484,658) (5,832,043) (5,431,326) (3,527,386) (3,507,119) (2,648,050) (1,971,254) --------------- ------------------ ----------------- --------------- ------------------- ----------------- (2,949,465) (1,931,613) (933,904) (2,428,626) (1,046,262) (2,118,052) --------------- ------------------ ----------------- --------------- ------------------- ----------------- (8,168,115) 14,030,010 19,892,055 (6,209,351) 4,824,153 9,237,733 77,987,809 63,957,799 44,065,744 43,706,570 38,882,417 29,644,684 --------------- ------------------ ----------------- --------------- ------------------- ----------------- $ 69,819,694 $ 77,987,809 $ 63,957,799 $ 37,497,219 $ 43,706,570 $ 38,882,417 =============== ================== ================= =============== =================== =================
The accompanying notes are an integral part of these financial statements. 157 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF RUSSELL 2000 INDEX INVESTMENT DIVISION --------------------------------------------------- 2011 2010 2009 --------------- ------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 171,547 $ 169,705 $ 494,140 Net realized gains (losses) 734,988 (66,857) 70,119 Change in unrealized gains (losses) on investments (3,300,203) 11,828,973 9,093,620 --------------- ------------------- --------------- Net increase (decrease) in net assets resulting from operations (2,393,668) 11,931,821 9,657,879 --------------- ------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 5,547,834 6,030,913 6,872,994 Net transfers (including fixed account) 238,532 (1,459,730) (966,184) Policy charges (3,170,368) (3,188,654) (3,197,900) Transfers for policy benefits and terminations (5,646,773) (3,961,411) (2,569,871) --------------- ------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (3,030,775) (2,578,882) 139,039 --------------- ------------------- --------------- Net increase (decrease) in net assets (5,424,443) 9,352,939 9,796,918 NET ASSETS: Beginning of year 56,596,227 47,243,288 37,446,370 --------------- ------------------- --------------- End of year $ 51,171,784 $ 56,596,227 $ 47,243,288 =============== =================== ===============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 158 MSF T. ROWE PRICE LARGE CAP GROWTH MSF T. ROWE PRICE SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- --------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------------- ------------------ ---------------- --------------- ----------------- ----------------- $ (316,295) $ (260,485) $ (70,974) $ (968,014) $ (769,902) $ (277,201) 908,859 253,453 (485,740) 2,332,511 562,971 468,105 (1,383,140) 6,370,252 13,392,122 (846,789) 22,601,563 19,138,611 --------------- ------------------ ---------------- --------------- ----------------- ----------------- (790,576) 6,363,220 12,835,408 517,708 22,394,632 19,329,515 --------------- ------------------ ---------------- --------------- ----------------- ----------------- 4,270,409 4,102,715 5,247,409 6,244,277 6,679,778 7,344,778 162,723 (1,629,305) (479,252) 3,733,237 (365,817) (1,819,482) (2,791,074) (2,739,632) (3,146,728) (4,773,192) (4,469,032) (4,555,731) (4,309,233) (2,842,508) (2,638,815) (6,901,125) (5,044,716) (3,780,276) --------------- ------------------ ---------------- --------------- ----------------- ----------------- (2,667,175) (3,108,730) (1,017,386) (1,696,803) (3,199,787) (2,810,711) --------------- ------------------ ---------------- --------------- ----------------- ----------------- (3,457,751) 3,254,490 11,818,022 (1,179,095) 19,194,845 16,518,804 45,775,087 42,520,597 30,702,575 88,004,866 68,810,021 52,291,217 --------------- ------------------ ---------------- --------------- ----------------- ----------------- $ 42,317,336 $ 45,775,087 $ 42,520,597 $ 86,825,771 $ 88,004,866 $ 68,810,021 =============== ================== ================ =============== ================= =================
The accompanying notes are an integral part of these financial statements. 159 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 MSF VAN ECK GLOBAL NATURAL MSF WESTERN ASSET MANAGEMENT RESOURCES STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------------------------------------------ 2011 (f) 2011 2010 2009 ------------------- ------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (609) $ 1,016,886 $ 1,151,290 $ 1,027,387 Net realized gains (losses) (45) 144,847 71,403 382,268 Change in unrealized gains (losses) on investments (2,198) 64,600 1,196,007 3,433,572 ------------------- ------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations (2,852) 1,226,333 2,418,700 4,843,227 ------------------- ------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 3,321 2,593,403 2,832,832 3,046,053 Net transfers (including fixed account) 12,824 (646,114) 1,156,919 35,565 Policy charges (101) (1,546,833) (1,584,202) (1,611,112) Transfers for policy benefits and terminations (13) (1,876,403) (1,617,829) (1,198,113) ------------------- ------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions 16,031 (1,475,947) 787,720 272,393 ------------------- ------------- ---------------------- ----------------- Net increase (decrease) in net assets 13,179 (249,614) 3,206,420 5,115,620 NET ASSETS: Beginning of year -- 23,786,502 20,580,082 15,464,462 ------------------- ------------- ---------------------- ----------------- End of year $ 13,179 $ 23,536,888 $ 23,786,502 $ 20,580,082 =================== ============= ====================== =================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 160 PIMCO VIT ALL ASSET MSF WESTERN ASSET MANAGEMENT U.S. GOVERNMENT INVESTMENT PIMCO VIT LOW DURATION INVESTMENT DIVISION DIVISION INVESTMENT DIVISION --------------------------------------------------- -------------- ------------------------------------------ 2011 2010 2009 2011 (f) 2011 2010 2009 (e) --------------- ------------------- --------------- -------------- ------------ -------------- -------------- $ 116,646 $ 314,612 $ 583,308 $ 2,774 $ 10,827 $ 9,408 $ 9,485 564,972 49,043 (89,029) -- 618 2,729 33,086 82,587 435,726 44,105 (1,176) (6,243) 23,685 1,601 --------------- ------------------- --------------- -------------- ------------ -------------- -------------- 764,205 799,381 538,384 1,598 5,202 35,822 44,172 --------------- ------------------- --------------- -------------- ------------ -------------- -------------- 2,130,621 2,331,803 2,652,804 8,337 43,028 -- -- (428,475) (168,918) 3,368,164 86,523 153,678 32 696,037 (1,254,276) (1,312,750) (1,485,448) (320) (18,431) (8,069) (3,966) (1,409,928) (1,375,135) (4,351,515) -- -- -- (1,497) --------------- ------------------- --------------- -------------- ------------ -------------- -------------- (962,058) (525,000) 184,005 94,540 178,275 (8,037) 690,574 --------------- ------------------- --------------- -------------- ------------ -------------- -------------- (197,853) 274,381 722,389 96,138 183,477 27,785 734,746 16,633,651 16,359,270 15,636,881 -- 762,531 734,746 -- --------------- ------------------- --------------- -------------- ------------ -------------- -------------- $ 16,435,798 $ 16,633,651 $ 16,359,270 $ 96,138 $ 946,008 $ 762,531 $ 734,746 =============== =================== =============== ============== ============ ============== ==============
The accompanying notes are an integral part of these financial statements. 161 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 PIONEER VCT EMERGING MARKETS INVESTMENT DIVISION -------------------------------------------- 2011 2010 2009 ------------ ---------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $(12,310) $ (10,583) $ 3,201 Net realized gains (losses) 121,447 75,682 8,989 Change in unrealized gains (losses) on investments (327,299) 68,690 311,181 ------------ ---------------- -------------- Net increase (decrease) in net assets resulting from operations (218,162) 133,789 323,371 ------------ ---------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 104,589 102,565 70,484 Net transfers (including fixed account) 193,458 72,459 258,993 Policy charges (13,621) (14,156) (19,519) Transfers for policy benefits and terminations (649,132) (82,614) (15,065) ------------ ---------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (364,706) 78,254 294,893 ------------ ---------------- -------------- Net increase (decrease) in net assets (582,868) 212,043 618,264 NET ASSETS: Beginning of year 984,166 772,123 153,859 ------------ ---------------- -------------- End of year $ 401,298 $ 984,166 $ 772,123 ============ ================ ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 162 PIONEER VCT MID CAP VALUE ROYCE MICRO-CAP INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------- ------------------------- 2011 2010 2009 (d) 2011 2010 (b) ------------ --------------- ----------- ------------ ------------ $ 640 $ 504 $ (34) $ 6,956 $ 5,040 580 313 32 1,545 197 (11,556) 14,039 2,439 (52,132) 61,964 ------------ --------------- ----------- ------------ ------------ (10,336) 14,856 2,437 (43,631) 67,201 ------------ --------------- ----------- ------------ ------------ -- 7,217 -- 4,792 53,592 51,112 59,471 19,671 7,703 236,555 (5,471) (3,451) (582) (7,099) (4,223) (3) (18) (123) (11) (4,416) ------------ --------------- ----------- ------------ ------------ 45,638 63,219 18,966 5,385 281,508 ------------ --------------- ----------- ------------ ------------ 35,302 78,075 21,403 (38,246) 348,709 99,478 21,403 -- 348,709 -- ------------ --------------- ----------- ------------ ------------ $ 134,780 $ 99,478 $ 21,403 $ 310,463 $ 348,709 ============ =============== =========== ============ ============
The accompanying notes are an integral part of these financial statements. 163 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 ROYCE SMALL-CAP INVESTMENT DIVISION ----------------------------------------- 2011 2010 2009 (h) ------------ ---------------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $(2,603) $ (860) $ (57) Net realized gains (losses) 18,080 2,111 16 Change in unrealized gains (losses) on investments (64,398) 63,066 2,984 ------------ ---------------- ----------- Net increase (decrease) in net assets resulting from operations (48,921) 64,317 2,943 ------------ ---------------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 4,584 22,886 13,726 Net transfers (including fixed account) 740,973 257,401 42,530 Policy charges (13,407) (6,872) (728) Transfers for policy benefits and terminations (321,629) (3,061) -- ------------ ---------------- ----------- Net increase (decrease) in net assets resulting from policy transactions (410,521) 270,354 55,528 ------------ ---------------- ----------- Net increase (decrease) in net assets 361,600 334,671 58,471 NET ASSETS: Beginning of year 393,142 58,471 -- ------------ ---------------- ----------- End of year $ 754,742 $ 393,142 $ 58,471 ============ ================ ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 164 UIF EMERGING MARKETS DEBT UIF EMERGING MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------- -------------------------------------------- 2011 2010 2009 (h) 2011 2010 2009 (h) ------------ ------------- ---------- ------------ ---------------- -------------- $ 6,403 $ 287 $ 68 $ (667) $ 238 $ (17) 2,814 87 32 4,478 899 480 79 318 95 (99,779) 38,992 1,146 ------------ ------------- ---------- ------------ ---------------- -------------- 9,296 692 195 (95,968) 40,129 1,609 ------------ ------------- ---------- ------------ ---------------- -------------- 2,057 2,057 803 2,923 2,451 803 408,567 -- 6,688 444,567 157,781 6,231 (2,897) (1,064) (131) (9,803) (6,947) (1,164) (3,368) (89) (1,808) -- (1,388) (1,836) ------------ ------------- ---------- ------------ ---------------- -------------- 404,359 904 5,552 437,687 151,897 4,034 ------------ ------------- ---------- ------------ ---------------- -------------- 413,655 1,596 5,747 341,719 192,026 5,643 7,343 5,747 -- 197,669 5,643 -- ------------ ------------- ---------- ------------ ---------------- -------------- $ 420,998 $ 7,343 $ 5,747 $ 539,388 $ 197,669 $ 5,643 ============ ============= ========== ============ ================ ==============
The accompanying notes are an integral part of these financial statements. 165 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION ---------------------------------------------- 2011 2010 2009 ------------- ----------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 12,539 $ 23,065 $ 16,897 Net realized gains (losses) 45,796 34,459 5,219 Change in unrealized gains (losses) on investments (7,169) (12,496) 23,526 ------------- ----------------- -------------- Net increase (decrease) in net assets resulting from operations 51,166 45,028 45,642 ------------- ----------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 66,775 158,432 124,039 Net transfers (including fixed account) (413,486) 386,034 234,843 Policy charges (13,372) (15,907) (14,024) Transfers for policy benefits and terminations (637,284) (26,909) (39,437) ------------- ----------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (997,367) 501,650 305,421 ------------- ----------------- -------------- Net increase (decrease) in net assets (946,201) 546,678 351,063 NET ASSETS: Beginning of year 1,081,415 534,737 183,674 ------------- ----------------- -------------- End of year $ 135,214 $ 1,081,415 $ 534,737 ============= ================= ==============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 166 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS 1. ORGANIZATION Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company (the "Company"), was established by the Company's Board of Directors on December 13, 1988 to support operations of the Company with respect to certain variable life insurance policies (the "Policies"). The Company is a direct wholly-owned subsidiary of MetLife, Inc., a Delaware corporation. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and exists in accordance with the regulations of the New York State Department of Financial Services. The Separate Account is divided into Investment Divisions, each of which is treated as an individual accounting entity for financial reporting purposes. Each Investment Division invests in shares of the corresponding portfolio, series, or fund (with the same name) of registered investment management companies (the "Trusts"), which are presented below: AIM Variable Insurance Funds (Invesco Variable Insurance Funds) ("Invesco V.I.") AllianceBernstein Variable Products Series Fund, Inc. ("AllianceBernstein") American Century Variable Portfolios, Inc. ("American Century VP") American Funds Insurance Series ("American Funds") Dreyfus Variable Investment Fund ("Dreyfus VIF") Fidelity Variable Insurance Products ("Fidelity VIP") Franklin Templeton Variable Insurance Products Trust ("FTVIPT") Goldman Sachs Variable Insurance Trust ("Goldman Sachs") Janus Aspen Series ("Janus Aspen") Legg Mason Partners Variable Equity Trust ("LMPVET") Met Investors Series Trust ("MIST")* Metropolitan Series Fund, Inc. ("MSF")* MFS Variable Insurance Trust ("MFS VIT") Oppenheimer Variable Account Funds ("Oppenheimer VA") PIMCO Variable Insurance Trust ("PIMCO VIT") Pioneer Variable Contracts Trust ("Pioneer VCT") Putnam Variable Trust ("Putnam VT") Royce Capital Fund ("Royce") The Universal Institutional Funds, Inc. ("UIF") Wells Fargo Variable Trust ("Wells Fargo VT") * See Note 5 for a discussion of additional information on related party transactions. 2. LIST OF INVESTMENT DIVISIONS A. Premium payments, less any applicable charges, applied to the Separate Account are invested in one or more Investment Divisions in accordance with the selection made by the policy owner. The following Investment Divisions had net assets as of December 31, 2011: AllianceBernstein Global Thematic Growth Investment Division AllianceBernstein Intermediate Bond Investment Division AllianceBernstein International Value Investment Division American Century VP Vista Investment Division American Funds Bond Investment Division American Funds Global Small Capitalization Investment Division American Funds Growth Investment Division American Funds Growth-Income Investment Division American Funds International Investment Division American Funds U.S. Government/AAA-Rated Securities Investment Division Dreyfus VIF International Value Investment Division Fidelity VIP Asset Manager: Growth Investment Division Fidelity VIP Contrafund Investment Division Fidelity VIP Equity-Income Investment Division Fidelity VIP Freedom 2010 Investment Division Fidelity VIP Freedom 2020 Investment Division Fidelity VIP Freedom 2030 Investment Division Fidelity VIP Freedom 2050 Investment Division Fidelity VIP High Income Investment Division Fidelity VIP Investment Grade Bond Investment Division Fidelity VIP Mid Cap Investment Division FTVIPT Mutual Global Discovery Securities Investment Division 167 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. LIST OF INVESTMENT DIVISIONS -- (CONTINUED) FTVIPT Templeton Foreign Securities Investment Division FTVIPT Templeton Global Bond Securities Investment Division Goldman Sachs Mid-Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division Invesco V.I. Global Real Estate Investment Division Invesco V.I. Government Securities Investment Division (a) Invesco V.I. International Growth Investment Division Invesco V.I. Van Kampen Comstock Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division Janus Aspen Janus Investment Division Janus Aspen Overseas Investment Division MFS VIT Global Equity Investment Division MFS VIT High Income Investment Division MFS VIT New Discovery Investment Division MFS VIT Value Investment Division MIST American Funds Balanced Allocation Investment Division MIST American Funds Growth Allocation Investment Division MIST American Funds Moderate Allocation Investment Division MIST BlackRock Large Cap Core Investment Division MIST Clarion Global Real Estate Investment Division* MIST Dreman Small Cap Value Investment Division MIST Harris Oakmark International Investment Division MIST Invesco Small Cap Growth Investment Division* MIST Janus Forty Investment Division MIST Lazard Mid Cap Investment Division* MIST Legg Mason ClearBridge Aggressive Growth Investment Division MIST Lord Abbett Bond Debenture Investment Division MIST Lord Abbett Mid Cap Value Investment Division MIST Met/Franklin Income Investment Division MIST Met/Franklin Mutual Shares Investment Division MIST Met/Franklin Templeton Founding Strategy Investment Division MIST Met/Templeton Growth Investment Division MIST MetLife Aggressive Strategy Investment Division* (a) MIST MFS Emerging Markets Equity Investment Division (a) MIST MFS Research International Investment Division* MIST Morgan Stanley Mid Cap Growth Investment Division MIST Oppenheimer Capital Appreciation Investment Division MIST PIMCO Inflation Protected Bond Investment Division MIST PIMCO Total Return Investment Division MIST Pioneer Fund Investment Division MIST RCM Technology Investment Division MIST SSgA Growth and Income ETF Investment Division MIST SSgA Growth ETF Investment Division MIST T. Rowe Price Large Cap Value Investment Division MIST T. Rowe Price Mid Cap Growth Investment Division* MIST Third Avenue Small Cap Value Investment Division MSF Artio International Stock Investment Division MSF Barclays Capital Aggregate Bond Index Investment Division MSF BlackRock Aggressive Growth Investment Division MSF BlackRock Bond Income Investment Division MSF BlackRock Diversified Investment Division MSF BlackRock Large Cap Value Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Money Market Investment Division MSF Davis Venture Value Investment Division MSF FI Value Leaders Investment Division MSF Jennison Growth Investment Division MSF Loomis Sayles Small Cap Core Investment Division MSF Loomis Sayles Small Cap Growth Investment Division MSF Met/Artisan Mid Cap Value Investment Division* MSF MetLife Conservative Allocation Investment Division* MSF MetLife Conservative to Moderate Allocation Investment Division* MSF MetLife Mid Cap Stock Index Investment Division MSF MetLife Moderate Allocation Investment Division* MSF MetLife Moderate to Aggressive Allocation Investment Division* 168 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. LIST OF INVESTMENT DIVISIONS -- (CONCLUDED) MSF MetLife Stock Index Investment Division MSF MFS Total Return Investment Division* MSF MFS Value Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Neuberger Berman Genesis Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF Oppenheimer Global Equity Investment Division MSF Russell 2000 Index Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF T. Rowe Price Small Cap Growth Investment Division MSF Van Eck Global Natural Resources Investment Division (a) MSF Western Asset Management Strategic Bond Opportunities Investment Division MSF Western Asset Management U.S. Government Investment Division PIMCO VIT All Asset Investment Division (a) PIMCO VIT Low Duration Investment Division Pioneer VCT Emerging Markets Investment Division Pioneer VCT Mid Cap Value Investment Division Royce Micro-Cap Investment Division Royce Small-Cap Investment Division UIF Emerging Markets Debt Investment Division UIF Emerging Markets Equity Investment Division Wells Fargo VT Total Return Bond Investment Division * This Investment Division invests in two or more share classes within the underlying portfolio, series, or fund of the Trusts. (a) This Investment Division began operations during the year ended December 31, 2011. B. The following Investment Divisions had no net assets as of December 31, 2011: American Funds High-Income Bond Investment Division Fidelity VIP Freedom 2015 Investment Division Fidelity VIP Freedom 2025 Investment Division Fidelity VIP Freedom 2040 Investment Division Janus Aspen Enterprise Investment Division LMPVET Investment Counsel Variable Social Awareness Investment Division Oppenheimer VA Main Street Small- & Mid-Cap Investment Division PIMCO VIT Long-Term U.S. Government Investment Division Putnam VT International Value Investment Division 3. PORTFOLIO CHANGES The following Investment Divisions ceased operations during the year ended December 31, 2011: Delaware VIP Small Cap Value Investment Division Invesco V.I. Van Kampen Government Investment Division MIST Legg Mason Value Equity Investment Division MSF MetLife Aggressive Allocation Investment Division The operations of the Investment Divisions were affected by the following changes that occurred during the year ended December 31, 2011: NAME CHANGES:
FORMER NAME NEW NAME (MIST) Lord Abbett Growth and Income Portfolio (MIST) T. Rowe Price Large Cap Value Portfolio Oppenheimer Main Street Small Cap Fund/VA Oppenheimer Main Street Small- & Mid-Cap Fund/VA
169 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 3. PORTFOLIO CHANGES -- (CONTINUED) MERGERS:
FORMER PORTFOLIO NEW PORTFOLIO Invesco V.I. Van Kampen Government Fund Invesco V.I. Government Securities Fund (MIST) Legg Mason Value Equity Portfolio (MIST) Legg Mason ClearBridge Aggressive Growth Portfolio (MSF) MetLIfe Aggressive Allocation Portfolio (MIST) MetLife Aggressive Strategy Portfolio
SUBSTITUTION:
FORMER PORTFOLIO NEW PORTFOLIO Delaware VIP Small Cap Value Series (MIST) Third Avenue Small Cap Value Portfolio
4. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable for variable life separate accounts registered as unit investment trusts. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the average cost of the investment sold. Income from dividends and realized gain distributions are recorded on the ex-distribution date. SECURITY VALUATION The Investment Divisions' investment in shares of the portfolio, series or fund of the Trusts is valued at fair value based on the closing net asset value ("NAV") or price per share as determined by the Trusts as of the end of the year. All changes in fair value are recorded as changes in unrealized gains (losses) on investments in the statements of operations of the applicable Investment Divisions. The Separate Account defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Separate Account prioritizes the inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not available. The Separate Account has categorized its assets based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset's classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are as follows: Level 1 Unadjusted quoted prices in active markets for identical assets that the Separate Account has the ability to access. Level 2 Observable inputs other than quoted prices in Level 1 that are observable either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market or prices for similar instruments. Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets, representing the Separate Account's own assumptions about the assumptions a market participant would use in valuing the asset, and based on the best information available. 170 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Each Investment Division invests in shares of open-end mutual funds which calculate a daily NAV based on the fair value of the underlying securities in their portfolios. As a result, and as required by law, shares of open-end mutual funds are purchased and redeemed at their quoted daily NAV as reported by the Trusts at the close of each business day. On that basis, the inputs used to value all shares held by the Separate Account, which are measured at fair value on a recurring basis, are classified as Level 2. There were no transfers between Level 1 and Level 2, and no activity in Level 3 during the year. FEDERAL INCOME TAXES The operations of the Separate Account form a part of the total operations of the Company and are not taxed separately. The Company is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the Policies. Accordingly, no charge is currently being made to the Separate Account for federal income taxes. The Company will periodically review the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the Policies. PREMIUM PAYMENTS The Company deducts a sales charge and a state premium tax charge from premiums before amounts are allocated to the Separate Account. The Company also deducts a federal income tax charge before amounts are allocated to the Separate Account. This federal income tax charge is imposed to recover a portion of the federal income tax adjustment attributable to policy acquisition expenses. Net premiums are reported as payments received from policy owners on the statements of changes in net assets of the applicable Investment Divisions and are credited as accumulation units. NET TRANSFERS Funds transferred by the policy owner into or out of the Investment Divisions within the Separate Account or into or out of the fixed account (an investment option in the Company's general account) are recorded on a net basis as net transfers in the statements of changes in net assets of the applicable Investment Divisions. USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 2010, the Separate Account adopted new guidance that requires new disclosures about significant transfers in and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about the level of disaggregation and inputs and valuation techniques. The adoption of this guidance did not have an impact on the Separate Account's financial statements. Effective December 31, 2009, the Separate Account adopted new guidance on: (i) measuring the fair value of investments in certain entities that calculate a NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements about the nature and risks of investments measured at fair value on a recurring or non-recurring basis. As a result, the Separate Account classified all of its investments, which utilize a NAV to measure fair value, as Level 2 in the fair value hierarchy. Effective April 1, 2009, the Separate Account adopted prospectively new guidance, which establishes general standards for accounting and disclosures of events that occur subsequent to the statements of assets and liabilities date but before financial statements are issued, as revised in February 2010. The Separate Account has provided the required disclosures, if any, in its financial statements. 171 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED) FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In May 2011, the Financial Accounting Standards Board ("FASB") issued new guidance regarding fair value measurements (Accounting Standards Update ("ASU") 2011-04, FAIR VALUE MEASUREMENT (TOPIC 820): AMENDMENTS TO ACHIEVE COMMON FAIR VALUE MEASUREMENT AND DISCLOSURE REQUIREMENTS IN U.S. GAAP AND IFRSS), effective for the first interim or annual period beginning after December 15, 2011. The guidance should be applied prospectively. The amendments in this ASU are intended to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards ("IFRS"). Some of the amendments clarify the FASB's intent on the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The Separate Account does not expect the adoption of this new guidance to have a material impact on its financial statements. 5. EXPENSES AND RELATED PARTY TRANSACTIONS The following annual Separate Account charge paid to the Company, is an asset-based charge and assessed through a daily reduction in unit values, which is recorded as an expense in the accompanying statements of operations of the applicable Investment Divisions: MORTALITY AND EXPENSE RISK -- The mortality risk assumed by the Company is the risk that those insured may die sooner than anticipated and therefore, the Company will pay an aggregate amount of death benefits greater than anticipated. The expense risk assumed is the risk that expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges assessed against the Policies. The table below represents the range of effective annual rates for the respective charge for the year ended December 31, 2011: Mortality and Expense Risk 0.00% - 0.90%
The above referenced charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge or associated with a particular policy. For some Policies, a mortality and expense risk charge ranging from 0.30% to 0.90% is assessed through the redemption of units on a monthly basis and recorded as mortality and expense risk charges in the statements of operations of the applicable Investment Divisions. The charges outlined in the following section are paid to the Company and are recorded as policy charges in the accompanying statements of changes in net assets of the applicable Investment Divisions. Other policy charges that are assessed through the redemption of units generally include: Cost of Insurance ("COI") charges, administrative charges, a policy fee, and charges for benefits provided by rider, if any. The COI charge is the primary charge under the policy for the death benefit provided by the Company which may vary by policy based on underwriting criteria. Administrative charges range from $3 to $35 and are assessed monthly. For some Policies, a surrender charge is imposed if the policy is partially or fully surrendered within the specified surrender charge period that ranges from $3.75 to $38.25 for every $1,000 of the policy face amount. Surrender charges for other Policies are equal to the lesser of the maximum surrender charge premium or the premiums actually paid in the first two policy years. For these policies, in the first policy year, the maximum surrender charge premium is 75% of the smoker federal guideline premium for the policy, assuming a level death benefit for the policy and any riders; and in the second and later policy years, it is 100% of the smoker federal guideline premium for the policy, assuming a level death benefit for the policy and any riders. The surrender charge cannot exceed 100% of the cumulative premiums paid in the first two policy years. If the policy is surrendered in the first two policy years, the Company will deduct 100% of the surrender charge, determined as described above. After the second policy year, the percentage the Company deducts declines until it reaches 0% at the end of the 15th policy year. 172 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. EXPENSES AND RELATED PARTY TRANSACTIONS -- (CONTINUED) Most policies offer optional benefits that can be added to the policy by rider. The charge for riders that provide life insurance benefits can range from $0.01 to $30.34 per $1,000 of coverage and the charge for riders providing benefits in the event of disability can range from $0.00 to $61.44 per $100 of the benefit provided. Certain investments in the various portfolios of the MIST and MSF Trusts hold shares that are managed by MetLife Advisers, LLC, which acts in the capacity of investment advisor and is an affiliate of the Company. On May 1, 2009, Met Investors Advisory, LLC, an affiliate of the Company and previous manager of the MIST Trust, merged into MetLife Advisers, LLC. 173 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS FOR THE YEAR ENDED AS OF DECEMBER 31, 2011 DECEMBER 31, 2011 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ---------- ------------ ------------- -------------- AllianceBernstein Global Thematic Growth Investment Division 296,119 5,722,542 5,924,276 265,271 AllianceBernstein Intermediate Bond Investment Division 3,819 46,555 4,944 1,493 AllianceBernstein International Value Investment Division 12 183 1,511 2,772 American Century VP Vista Investment Division 575 9,279 16,251 74,661 American Funds Bond Investment Division 435,647 4,686,761 969,816 731,112 American Funds Global Small Capitalization Investment Division 3,079,512 62,409,491 3,778,860 5,452,768 American Funds Growth Investment Division 2,287,142 116,580,904 5,600,915 8,870,119 American Funds Growth-Income Investment Division 2,154,683 73,971,889 3,518,169 3,636,760 American Funds International Investment Division 34,611 580,778 16,165 191,972 American Funds U.S. Government/AAA-Rated Securities Investment Division 3,533 43,793 24,616 18,298 Dreyfus VIF International Value Investment Division 20,568 262,362 5,544 6,265 Fidelity VIP Asset Manager: Growth Investment Division 107,882 1,331,954 201,611 542,259 Fidelity VIP Contrafund Investment Division 93,762 2,177,801 386,193 826,551 Fidelity VIP Equity-Income Investment Division 998 18,281 65,604 243,406 Fidelity VIP Freedom 2010 Investment Division 3,312 33,619 16,905 13,581 Fidelity VIP Freedom 2020 Investment Division 68,532 524,552 64,043 79,620 Fidelity VIP Freedom 2030 Investment Division 5,873 54,640 33,098 83,225 Fidelity VIP Freedom 2050 Investment Division (a) 1,157 13,988 44,388 25,362 Fidelity VIP High Income Investment Division 8,019 44,841 40,651 236 Fidelity VIP Investment Grade Bond Investment Division 135,914 1,762,691 1,807,611 593,778 Fidelity VIP Mid Cap Investment Division 21,482 588,358 287,684 86,070 FTVIPT Mutual Global Discovery Securities Investment Division 40,641 804,523 279,594 383,211 FTVIPT Templeton Foreign Securities Investment Division 236,478 3,362,268 539,313 6,463,366 FTVIPT Templeton Global Bond Securities Investment Division 15,548 301,229 626,974 316,892 Goldman Sachs Mid-Cap Value Investment Division 20,495 310,207 58,548 130,799 Goldman Sachs Structured Small Cap Equity Investment Division 4,411 46,124 893 1,806 Invesco V.I. Global Real Estate Investment Division 122,840 1,838,520 1,144,072 1,047,754 Invesco V.I. Government Securities Investment Division (b) 1,735 20,156 105,415 86,648 Invesco V.I. International Growth Investment Division 888 22,949 11,463 236,029 Invesco V.I. Van Kampen Comstock Investment Division 16,849 196,193 166,971 2,690 Janus Aspen Balanced Investment Division 48,299 1,337,704 476,479 1,530,768 Janus Aspen Forty Investment Division 21,488 666,136 60,009 495,862 Janus Aspen Janus Investment Division 37,570 734,386 11,493 7,130,795 Janus Aspen Overseas Investment Division 9,198 475,978 5,940,358 5,664,163 MFS VIT Global Equity Investment Division 430 5,384 14,292 232,286 MFS VIT High Income Investment Division 16,459 115,867 12,069 1,866 MFS VIT New Discovery Investment Division 8,908 125,314 24,020 4,419 MFS VIT Value Investment Division 3,533 44,675 36,464 67,428 MIST American Funds Balanced Allocation Investment Division 54,201 500,178 225,636 119,833 MIST American Funds Growth Allocation Investment Division 88,778 739,576 237,080 112,650 MIST American Funds Moderate Allocation Investment Division 40,689 380,969 184,789 27,959 MIST BlackRock Large Cap Core Investment Division 33,712,507 360,691,469 6,851,461 23,235,479 MIST Clarion Global Real Estate Investment Division 2,099,114 25,357,383 2,264,531 1,937,838 MIST Dreman Small Cap Value Investment Division 2,735 33,760 16,769 5,385 MIST Harris Oakmark International Investment Division 2,296,776 32,074,482 2,500,638 2,457,952 MIST Invesco Small Cap Growth Investment Division 314,943 4,044,669 950,748 984,337 MIST Janus Forty Investment Division 196,139 13,090,670 1,510,556 2,004,491 MIST Lazard Mid Cap Investment Division 491,504 5,837,241 1,280,594 1,251,786
(a) Commenced on May 4, 2009 and began transactions in 2011. (b) For the period May 2, 2011 to December 31, 2011. 174 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS -- (CONTINUED) FOR THE YEAR ENDED AS OF DECEMBER 31, 2011 DECEMBER 31, 2011 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ---------- ------------ ------------- -------------- MIST Legg Mason ClearBridge Aggressive Growth Investment Division 1,583,348 11,900,844 5,893,574 1,236,188 MIST Lord Abbett Bond Debenture Investment Division 2,010,202 23,705,523 4,202,645 5,865,230 MIST Lord Abbett Mid Cap Value Investment Division 7,962 97,587 17,623 3,264 MIST Met/Franklin Income Investment Division 23,305 228,675 104,557 10,557 MIST Met/Franklin Mutual Shares Investment Division 9,793 80,192 34,651 5,687 MIST Met/Franklin Templeton Founding Strategy Investment Division 28,790 248,758 36,620 12,523 MIST Met/Templeton Growth Investment Division 6,209 52,293 19,150 9,023 MIST MetLife Aggressive Strategy Investment Division (b) 1,381,243 14,305,212 15,450,469 1,027,360 MIST MFS Emerging Markets Equity Investment Division (b) 2,452 26,160 26,770 540 MIST MFS Research International Investment Division 1,349,426 15,039,387 2,576,414 2,605,812 MIST Morgan Stanley Mid Cap Growth Investment Division 16,544,317 168,067,211 9,829,634 16,285,234 MIST Oppenheimer Capital Appreciation Investment Division 284,866 1,806,309 403,309 428,646 MIST PIMCO Inflation Protected Bond Investment Division 883,250 9,810,259 3,303,438 2,028,482 MIST PIMCO Total Return Investment Division 3,882,227 45,377,062 7,403,802 5,653,299 MIST Pioneer Fund Investment Division 13,169 132,390 7,780 67,759 MIST RCM Technology Investment Division 2,990,153 12,776,901 2,111,961 3,577,458 MIST SSgA Growth and Income ETF Investment Division 411,341 4,330,488 1,498,489 604,376 MIST SSgA Growth ETF Investment Division 308,722 3,120,509 1,923,928 1,172,938 MIST T. Rowe Price Large Cap Value Investment Division 51,503 1,269,288 25,689 5,307,279 MIST T. Rowe Price Mid Cap Growth Investment Division 2,661,246 22,825,590 8,275,848 2,781,426 MIST Third Avenue Small Cap Value Investment Division 59,664 831,943 595,096 1,211,039 MSF Artio International Stock Investment Division 4,564,064 51,718,192 3,235,087 3,373,752 MSF Barclays Capital Aggregate Bond Index Investment Division 9,392,344 101,657,627 11,501,288 21,342,034 MSF BlackRock Aggressive Growth Investment Division 7,098,644 164,559,851 8,269,136 17,101,074 MSF BlackRock Bond Income Investment Division 758,023 81,119,184 5,805,876 8,666,314 MSF BlackRock Diversified Investment Division 16,022,240 257,117,632 10,350,108 21,365,154 MSF BlackRock Large Cap Value Investment Division 1,285,048 14,463,819 1,424,125 1,183,780 MSF BlackRock Legacy Large Cap Growth Investment Division 295,304 6,820,352 2,393,555 1,606,886 MSF BlackRock Money Market Investment Division 207,938 20,793,802 11,412,230 20,447,498 MSF Davis Venture Value Investment Division 1,808,251 49,447,185 4,062,485 5,416,410 MSF FI Value Leaders Investment Division 46,079 7,447,441 923,988 900,032 MSF Jennison Growth Investment Division 1,166,924 12,586,990 1,020,376 2,289,730 MSF Loomis Sayles Small Cap Core Investment Division 77,854 15,721,460 1,401,272 2,332,479 MSF Loomis Sayles Small Cap Growth Investment Division 817,163 7,507,090 1,535,720 1,011,621 MSF Met/Artisan Mid Cap Value Investment Division 263,619 53,786,669 2,136,634 4,226,880 MSF MetLife Conservative Allocation Investment Division 377,019 4,163,131 1,806,198 1,511,348 MSF MetLife Conservative to Moderate Allocation Investment Division 583,520 6,211,103 1,953,282 2,239,776 MSF MetLife Mid Cap Stock Index Investment Division 4,845,608 58,660,606 7,118,449 5,790,251 MSF MetLife Moderate Allocation Investment Division 3,655,601 37,889,222 6,621,830 3,119,932 MSF MetLife Moderate to Aggressive Allocation Investment Division 6,368,644 66,556,710 8,856,018 4,089,610 MSF MetLife Stock Index Investment Division 22,588,617 678,268,203 42,140,081 42,862,666 MSF MFS Total Return Investment Division 56,913 7,555,188 1,189,902 1,494,750 MSF MFS Value Investment Division 4,281,432 54,455,261 3,888,301 5,180,543 MSF Morgan Stanley EAFE Index Investment Division 5,847,293 64,630,081 9,375,469 5,508,673 MSF Neuberger Berman Genesis Investment Division 6,579,130 94,640,448 2,070,471 5,494,730 MSF Neuberger Berman Mid Cap Value Investment Division 3,749,714 65,181,444 3,309,588 6,247,250 MSF Oppenheimer Global Equity Investment Division 2,695,695 34,380,468 4,561,354 6,449,346
(a) Commenced on May 4, 2009 and began transactions in 2011. (b) For the period May 2, 2011 to December 31, 2011. 175 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS -- (CONCLUDED) FOR THE YEAR ENDED AS OF DECEMBER 31, 2011 DECEMBER 31, 2011 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) --------- ------------- ------------- -------------- MSF Russell 2000 Index Investment Division 4,042,001 47,361,388 4,574,342 7,433,659 MSF T. Rowe Price Large Cap Growth Investment Division 2,845,757 34,332,406 2,728,837 5,712,444 MSF T. Rowe Price Small Cap Growth Investment Division 5,205,391 65,703,613 6,480,374 9,130,453 MSF Van Eck Global Natural Resources Investment Division (b) 975 15,377 15,766 344 MSF Western Asset Management Strategic Bond Opportunities Investment Division 1,809,072 21,952,432 2,218,805 2,678,776 MSF Western Asset Management U.S. Government Investment Division 1,346,097 16,268,088 1,868,479 2,143,284 PIMCO VIT All Asset Investment Division (b) 9,222 97,359 97,359 -- PIMCO VIT Low Duration Investment Division 91,115 926,737 210,299 21,217 Pioneer VCT Emerging Markets Investment Division 16,956 389,995 461,977 837,851 Pioneer VCT Mid Cap Value Investment Division 8,504 129,868 52,297 6,022 Royce Micro-Cap Investment Division 29,823 300,626 22,196 9,860 Royce Small-Cap Investment Division 74,950 753,098 1,012,962 605,050 UIF Emerging Markets Debt Investment Division 50,660 420,498 432,895 19,721 UIF Emerging Markets Equity Investment Division 43,060 599,186 657,354 220,179 Wells Fargo VT Total Return Bond Investment Division 12,806 132,348 134,983 1,089,695
(a) Commenced on May 4, 2009 and began transations in 2011. (b) For the period May 2, 2011 to December 31, 2011. 176 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH ALLIANCEBERNSTEIN INTERMEDIATE BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------------ 2011 2010 2009 2011 2010 2009 (a) ---------- ---------------------- --------- -------- ---------------------- ---------- Units beginning of year 19,486 25,043 14,644 3,146 2,242 -- Units issued and transferred from other funding options 943,623 5,471 14,289 191 3,226 3,299 Units redeemed and transferred to other funding options (48,897) (11,028) (3,890) (105) (2,322) (1,057) ---------- ---------------------- --------- -------- ---------------------- ---------- Units end of year 914,212 19,486 25,043 3,232 3,146 2,242 ========== ====================== ========= ======== ====================== ==========
AMERICAN FUNDS BOND AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ------------ ---------------------- ------------- Units beginning of year 361,073 335,183 317,147 2,114,920 2,152,577 2,098,117 Units issued and transferred from other funding options 111,528 767,492 631,349 395,698 2,898,451 2,393,707 Units redeemed and transferred to other funding options (104,902) (741,602) (613,313) (473,030) (2,936,108) (2,339,247) ----------- ---------------------- ----------- ------------ ---------------------- ------------- Units end of year 367,699 361,073 335,183 2,037,588 2,114,920 2,152,577 =========== ====================== =========== ============ ====================== =============
AMERICAN FUNDS INTERNATIONAL AMERICAN FUNDS U.S. GOVERNMENT/AAA-RATED SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 --------- ---------------------- --------- -------- ---------------------- ---------------------- Units beginning of year 27,930 17,214 2,335 1,810 4,564 1,808 Units issued and transferred from other funding options 306 13,635 16,414 1,074 398 4,273 Units redeemed and transferred to other funding options (7,197) (2,919) (1,535) (859) (3,152) (1,517) --------- ---------------------- --------- -------- ---------------------- ---------------------- Units end of year 21,039 27,930 17,214 2,025 1,810 4,564 ========= ====================== ========= ======== ====================== ======================
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 178 ALLIANCEBERNSTEIN INTERNATIONAL VALUE AMERICAN CENTURY VP VISTA INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------- ----------------------------------- 2011 2010 (b) 2011 2010 2009 ------- ----------------------------- --------- -------------- ---------- 73 -- 5,360 13,115 8,686 6 73 753 2,722 17,746 (70) -- (5,434) (10,477) (13,317) ------- ----------------------------- --------- -------------- ---------- 9 73 679 5,360 13,115 ======= ============================= ========= ============== ==========
AMERICAN FUNDS GROWTH AMERICAN FUNDS GROWTH-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ --------------- ------------- ------------ ---------------- ------------- 1,411,108 1,419,237 1,382,286 1,483,095 1,491,242 1,461,879 236,308 1,491,854 1,183,014 249,184 1,511,750 1,196,222 (294,359) (1,499,983) (1,146,063) (278,334) (1,519,897) (1,166,859) ------------ --------------- ------------- ------------ ---------------- ------------- 1,353,057 1,411,108 1,419,237 1,453,945 1,483,095 1,491,242 ============ =============== ============= ============ ================ =============
DREYFUS VIF INTERNATIONAL VALUE FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- ------------------------------------ 2011 2010 2009 2011 2010 2009 --------- ------------ ---------- ---------- -------------- ---------- 16,502 21,676 33,156 172,460 181,097 126,890 99 505 2,909 17,093 24,042 70,300 (448) (5,679) (14,389) (51,437) (32,679) (16,093) --------- ------------ ---------- ---------- -------------- ---------- 16,153 16,502 21,676 138,116 172,460 181,097 ========= ============ ========== ========== ============== ==========
179 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: FIDELITY VIP CONTRAFUND FIDELITY VIP EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2011 2010 2009 2011 2010 2009 ---------- -------------- ---------- ---------- ------------- ---------- Units beginning of year 190,755 332,757 218,160 17,040 23,778 72,691 Units issued and transferred from other funding options 22,512 43,442 153,261 2,435 4,102 10,561 Units redeemed and transferred to other funding options (55,817) (185,444) (38,664) (17,926) (10,840) (59,474) ---------- -------------- ---------- ---------- ------------- ---------- Units end of year 157,450 190,755 332,757 1,549 17,040 23,778 ========== ============== ========== ========== ============= ==========
FIDELITY VIP FIDELITY VIP FREEDOM 2030 FREEDOM 2050 INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ----------------------- 2011 2010 2009 2011 (c) --------- ---------- ------ ------------------------ Units beginning of year 9,011 3,665 3,324 -- Units issued and transferred from other funding options 2,929 9,042 372 1,494 Units redeemed and transferred to other funding options (5,912) (3,696) (31) (2) --------- ---------- ------ ------------------------ Units end of year 6,028 9,011 3,665 1,492 ========= ========== ====== ========================
FIDELITY VIP MID CAP FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 --------- ------------ --------- ---------- ---------------------- ----------- Units beginning of year 16,733 10,051 2,071 53,444 54,588 140,006 Units issued and transferred from other funding options 12,194 7,750 9,260 9,519 32,229 28,222 Units redeemed and transferred to other funding options (3,985) (1,068) (1,280) (18,337) (33,373) (113,640) --------- ------------ --------- ---------- ---------------------- ----------- Units end of year 24,942 16,733 10,051 44,626 53,444 54,588 ========= ============ ========= ========== ====================== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 180 FIDELITY VIP FREEDOM 2010 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------- 2011 2010 2009 2011 2010 2009 ------------ ------------- --------- --------- --------- --------- 3,002 1,541 3,089 56,297 56,341 4,617 246 1,471 21 121 829 52,551 (10) (10) (1,569) (2,904) (873) (827) ------------ ------------- --------- --------- --------- --------- 3,238 3,002 1,541 53,514 56,297 56,341 ============ ============= ========= ========= ========= =========
FIDELITY VIP HIGH INCOME FIDELITY VIP INVESTMENT GRADE BOND INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- ---------------------------------- 2011 2010 2009 (d) 2011 2010 2009 ------------ --------- --------- ---------- ---------- ------------ 294 3,001 -- 38,436 18,087 3,908 2,406 -- 3,022 120,433 87,556 31,638 (23) (2,707) (21) (41,816) (67,207) (17,459) ------------ --------- --------- ---------- ---------- ------------ 2,677 294 3,001 117,053 38,436 18,087 ============ ========= ========= ========== ========== ============
FTVIPT TEMPLETON FOREIGN SECURITIES FTVIPT TEMPLETON GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------- -------------------------------------- 2011 2010 2009 2011 2010 2011 (e) ----------- --------------- ----------- ---------- ------------- ------------- 558,309 520,792 527,866 179 204 -- 26,853 75,062 104,859 25,202 11,325 213 (381,387) (37,545) (111,933) (11,377) (11,350) (9) ----------- --------------- ----------- ---------- ------------- ------------- 203,775 558,309 520,792 14,004 179 204 =========== =============== =========== ========== ============= ==============
181 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: GOLDMAN SACHS MID-CAP VALUE GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 --------- ---------------------- ---------- -------- ---------------------- ------------ Units beginning of year 24,643 27,552 102,102 4,258 7,623 6,818 Units issued and transferred from other funding options -- 1 -- 38 436 2,806 Units redeemed and transferred to other funding options (5,409) (2,910) (74,550) (148) (3,801) (2,001) --------- ---------------------- ---------- -------- ---------------------- ------------ Units end of year 19,234 24,643 27,552 4,148 4,258 7,623 ========= ====================== ========== ======== ====================== ============
INVESCO V.I. INTERNATIONAL GROWTH INVESCO V.I. VAN KAMPEN COMSTOCK INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ----------------------------------- 2011 2010 2009 (d) 2011 2010 (g) ---------- ---------------------- ---------- --------- ------------------------- Units beginning of year 14,201 1,080 -- 2,966 -- Units issued and transferred from other funding options 320 20,685 1,114 15,242 2,966 Units redeemed and transferred to other funding options (13,213) (7,564) (34) (257) -- ---------- ---------------------- ---------- --------- ------------------------- Units end of year 1,308 14,201 1,080 17,951 2,966 ========== ====================== ========== ========= =========================
JANUS ASPEN JANUS JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ---------- ----------- ---------------------- --------- Units beginning of year 741,523 718,894 685,791 11,481 3,135 1,777 Units issued and transferred from other funding options 640 65,451 77,949 181,594 9,125 5,289 Units redeemed and transferred to other funding options (656,372) (42,822) (44,846) (177,539) (779) (3,931) ----------- ---------------------- ---------- ----------- ---------------------- --------- Units end of year 85,791 741,523 718,894 15,536 11,481 3,135 =========== ====================== ========== =========== ====================== =========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 182 INVESCO V.I. GOVERNMENT INVESCO V.I. GLOBAL REAL ESTATE SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ---------------------- 2011 2010 2009 2011 (f) ---------- ----------------------- ---------- ---------------------- 54,093 59,960 76,172 -- 34,742 6,829 18,609 8,213 (34,833) (12,696) (34,821) (6,643) ---------- ----------------------- ---------- ---------------------- 54,002 54,093 59,960 1,570 ========== ======================= ========== ======================
JANUS ASPEN BALANCED JANUS ASPEN FORTY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------- ---------------------- --------- ---------- ---------------------- ---------- 155,834 99,381 20,633 73,218 61,130 45,182 8,172 79,900 81,253 4,044 22,591 39,687 (82,484) (23,447) (2,505) (31,646) (10,503) (23,739) ---------- ---------------------- --------- ---------- ---------------------- ---------- 81,522 155,834 99,381 45,616 73,218 61,130 ========== ====================== ========= ========== ====================== ==========
MFS VIT GLOBAL EQUITY MFS VIT HIGH INCOME INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------- ---------------------- --------- ------------- ---------------- ------------- 14,222 5,543 5,386 9,020 9,209 354 851 11,271 2,627 1 106 9,330 (14,717) (2,592) (2,470) (125) (295) (475) ---------- ---------------------- --------- ------------- ---------------- ------------- 356 14,222 5,543 8,896 9,020 9,209 ========== ====================== ========= ============= ================ =============
183 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MFS VIT NEW DISCOVERY MFS VIT VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ----------- ----------- --------- ------------ ------------ Units beginning of year 7,814 396 249 5,577 5,803 6,081 Units issued and transferred from other funding options 359 7,766 864 -- -- -- Units redeemed and transferred to other funding options (254) (348) (717) (2,439) (226) (278) ------------ ----------- ----------- --------- ------------ ------------ Units end of year 7,919 7,814 396 3,138 5,577 5,803 ============ =========== =========== ========= ============ ============
MIST AMERICAN FUNDS MODERATE ALLOCATION MIST BLACKROCK LARGE CAP CORE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ -------------------------------------------------- 2011 2010 2009 2011 2010 2009 --------- ---------------------- --------- ------------- ---------------------- ------------- Units beginning of year 23,584 9,961 593 13,468,383 14,107,746 14,670,780 Units issued and transferred from other funding options 16,729 29,424 11,392 1,797,760 9,046,176 6,882,314 Units redeemed and transferred to other funding options (2,607) (15,801) (2,024) (2,503,416) (9,685,539) (7,445,348) --------- ---------------------- --------- ------------- ---------------------- ------------- Units end of year 37,706 23,584 9,961 12,762,727 13,468,383 14,107,746 ========= ====================== ========= ============= ====================== =============
MIST HARRIS OAKMARK INTERNATIONAL MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ---------- ---------------------- ----------- Units beginning of year 1,473,309 1,439,875 1,337,674 280,254 268,049 230,618 Units issued and transferred from other funding options 324,563 1,994,881 1,598,848 85,976 345,354 285,386 Units redeemed and transferred to other funding options (314,680) (1,961,447) (1,496,647) (86,976) (333,149) (247,955) ------------ ---------------------- ------------- ---------- ---------------------- ----------- Units end of year 1,483,192 1,473,309 1,439,875 279,254 280,254 268,049 ============ ====================== ============= ========== ====================== ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 184 MIST AMERICAN FUNDS BALANCED ALLOCATION MIST AMERICAN FUNDS GROWTH ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------- ---------------------- ---------- ---------- ---------------------- --------- 41,296 23,102 1,427 71,574 15,564 2,439 21,131 70,685 44,911 22,942 90,305 17,809 (11,661) (52,491) (23,236) (11,699) (34,295) (4,684) ---------- ---------------------- ---------- ---------- ---------------------- --------- 50,766 41,296 23,102 82,817 71,574 15,564 ========== ====================== ========== ========== ====================== =========
MIST CLARION GLOBAL REAL ESTATE MIST DREMAN SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------- ------------- ------------ --------------- ------- 1,342,988 1,332,507 1,247,223 1,705 1,271 11 277,732 1,901,957 1,551,482 1,121 1,222 22,145 (308,897) (1,891,476) (1,466,198) (346) (788) (20,885) ------------ ---------------- ------------- ------------ --------------- ------- 1,311,823 1,342,988 1,332,507 2,480 1,705 1,271 ============ ================ ============= ============ =============== =======
MIST JANUS FORTY MIST LAZARD MID CAP INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------- ------------- ----------- -------------- ----------- 1,185,626 1,122,196 943,170 360,447 362,314 371,732 250,215 2,258,407 1,816,405 109,194 450,103 378,306 (342,207) (2,194,977) (1,637,379) (111,235) (451,970) (387,724) ------------ ---------------- ------------- ----------- -------------- ----------- 1,093,634 1,185,626 1,122,196 358,406 360,447 362,314 ============ ================ ============= =========== ============== ===========
185 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ------------------------------------------------ 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------ ------------ ---------------------- ------------ Units beginning of year 888,257 918,435 929,444 1,222,207 1,300,112 1,205,110 Units issued and transferred from other funding options 760,794 862,843 681,902 200,137 833,058 736,059 Units redeemed and transferred to other funding options (295,500) (893,021) (692,911) (337,033) (910,963) (641,057) ------------ ---------------------- ------------ ------------ ---------------------- ------------ Units end of year 1,353,551 888,257 918,435 1,085,311 1,222,207 1,300,112 ============ ====================== ============ ============ ====================== ============
MIST MET/FRANKLIN MUTUAL SHARES MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ------------------------------------------------ 2011 2010 2009 2011 2010 2009 -------- ------------------ -------- --------- ---------------------- --------------- Units beginning of year 6,134 2,904 1,208 25,753 21,298 1,503 Units issued and transferred from other funding options 3,078 6,436 2,223 3,131 55,695 44,058 Units redeemed and transferred to other funding options (595) (3,206) (527) (1,191) (51,240) (24,263) -------- ------------------ -------- --------- ---------------------- --------------- Units end of year 8,617 6,134 2,904 27,693 25,753 21,298 ======== ================== ======== ========= ====================== ===============
MIST MFS RESEARCH INTERNATIONAL MIST MORGAN STANLEY MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------------------ 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ------------- ------------------ --------- Units beginning of year 838,110 885,756 870,603 13,121,650 23,317 1,987 Units issued and transferred from other funding options 223,953 1,201,606 996,145 1,773,282 24,103,485 23,232 Units redeemed and transferred to other funding options (241,725) (1,249,252) (980,992) (2,538,198) (11,005,152) (1,902) ----------- ---------------------- ----------- ------------- ------------------ --------- Units end of year 820,338 838,110 885,756 12,356,734 13,121,650 23,317 =========== ====================== =========== ============= ================== =========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 186 MIST LORD ABBETT MID CAP VALUE MIST MET/FRANKLIN INCOME INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------------------ 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ---------- --------- ---------------------- --------- 7,974 9,319 10,463 13,040 5,364 2,408 1,279 620 12,325 7,842 13,379 4,293 (253) (1,965) (13,469) (889) (5,703) (1,337) ------------ ---------------------- ---------- --------- ---------------------- --------- 9,000 7,974 9,319 19,993 13,040 5,364 ============ ====================== ========== ========= ====================== =========
MIST METLIFE MIST MFS AGGRESSIVE EMERGING MIST MET/TEMPLETON GROWTH STRATEGY MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------- ------------------- ------------------- 2011 2010 2009 2011 (f) 2011 (f) ------- ----------- -------- ------------------- ------------------- 5,088 2,173 480 -- -- 1,929 5,903 2,325 1,234,168 2,117 (1,003) (2,988) (632) (184,382) (47) ------- ----------- -------- ------------------- ------------------- 6,014 5,088 2,173 1,049,786 2,070 ======= =========== ======== =================== ===================
MIST OPPENHEIMER CAPITAL APPRECIATION MIST PIMCO INFLATION PROTECTED BOND INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------- ------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------- ----------------- ----------- ----------- ----------------- ------------- 155,354 155,544 114,986 653,613 618,801 523,888 52,806 284,133 234,271 288,475 1,507,168 1,226,809 (54,766) (284,323) (193,713) (241,931) (1,472,356) (1,131,896) ---------- ----------------- ----------- ----------- ----------------- ------------- 153,394 155,354 155,544 700,157 653,613 618,801 ========== ================= =========== =========== ================= =============
187 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MIST PIMCO TOTAL RETURN MIST PIONEER FUND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ----------------------------------- 2011 2010 2009 2011 2010 2009 (e) ------------ ---------------- ------------- --------- -------------- ---------- Units beginning of year 2,450,427 2,378,221 2,287,745 17,938 20,277 -- Units issued and transferred from other funding options 620,126 2,765,705 2,051,940 399 399 22,226 Units redeemed and transferred to other funding options (643,462) (2,693,499) (1,961,464) (4,857) (2,738) (1,949) ------------ ---------------- ------------- --------- -------------- ---------- Units end of year 2,427,091 2,450,427 2,378,221 13,480 17,938 20,277 ============ ================ ============= ========= ============== ==========
MIST SSGA GROWTH ETF MIST T. ROWE PRICE LARGE CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ----------- ---------------------- ---------- Units beginning of year 237,751 181,473 59,898 601,441 585,353 569,914 Units issued and transferred from other funding options 190,117 355,523 247,780 1,323 46,143 58,321 Units redeemed and transferred to other funding options (128,753) (299,245) (126,205) (494,160) (30,055) (42,882) ----------- ---------------------- ----------- ----------- ---------------------- ---------- Units end of year 299,115 237,751 181,473 108,604 601,441 585,353 =========== ====================== =========== =========== ====================== ==========
MSF ARTIO INTERNATIONAL STOCK MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------ 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ------------- -------------------- ------------- Units beginning of year 2,985,340 3,130,833 3,272,041 6,069,208 5,979,612 5,705,639 Units issued and transferred from other funding options 537,715 2,254,216 1,779,165 1,036,792 5,950,976 4,481,852 Units redeemed and transferred to other funding options (575,628) (2,399,709) (1,920,373) (1,738,111) (5,861,380) (4,207,879) ------------ ---------------------- ------------- ------------- -------------------- ------------- Units end of year 2,947,427 2,985,340 3,130,833 5,367,889 6,069,208 5,979,612 ============ ====================== ============= ============= ==================== =============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 188 MIST RCM TECHNOLOGY MIST SSGA GROWTH AND INCOME ETF INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- -------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ---------- ---------------------- ---------- 2,007,835 2,111,049 1,806,845 320,284 149,333 39,742 541,643 3,754,204 2,949,637 139,491 435,343 206,989 (721,355) (3,857,418) (2,645,433) (78,250) (264,392) (97,398) ------------ ---------------------- ------------- ---------- ---------------------- ---------- 1,828,123 2,007,835 2,111,049 381,525 320,284 149,333 ============ ====================== ============= ========== ====================== ==========
MIST T. ROWE PRICE MID CAP GROWTH MIST THIRD AVENUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ---------- ---------------------- --------- 1,725,748 1,754,850 1,702,757 96,930 66,457 22,742 685,902 2,400,707 1,928,793 30,935 54,144 49,002 (453,815) (2,429,809) (1,876,700) (73,382) (23,671) (5,287) ------------ ---------------------- ------------- ---------- ---------------------- --------- 1,957,835 1,725,748 1,754,850 54,483 96,930 66,457 ============ ====================== ============= ========== ====================== =========
MSF BLACKROCK AGGRESSIVE GROWTH MSF BLACKROCK BOND INCOME INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ---------------------- ------------- ------------ ---------------------- ------------- 9,010,506 9,655,662 10,226,808 3,695,898 3,849,026 4,137,787 1,226,282 5,730,219 4,486,979 476,235 2,545,294 1,958,068 (1,623,521) (6,375,375) (5,058,125) (723,318) (2,698,422) (2,246,829) ------------- ---------------------- ------------- ------------ ---------------------- ------------- 8,613,267 9,010,506 9,655,662 3,448,815 3,695,898 3,849,026 ============= ====================== ============= ============ ====================== =============
189 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MSF BLACKROCK DIVERSIFIED MSF BLACKROCK LARGE CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ---------------------- ------------- ------------ ---------------------- ------------- Units beginning of year 10,826,228 11,480,151 12,136,197 1,026,360 1,018,697 924,995 Units issued and transferred from other funding options 1,401,995 7,504,390 5,841,981 229,911 1,430,731 1,160,670 Units redeemed and transferred to other funding options (2,004,555) (8,158,313) (6,498,027) (219,607) (1,423,068) (1,066,968) ------------- ---------------------- ------------- ------------ ---------------------- ------------- Units end of year 10,223,668 10,826,228 11,480,151 1,036,664 1,026,360 1,018,697 ============= ====================== ============= ============ ====================== =============
MSF DAVIS VENTURE VALUE MSF FI VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ---------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ----------- ---------------------- ----------- Units beginning of year 1,632,869 1,661,533 1,580,625 493,819 478,934 451,406 Units issued and transferred from other funding options 320,460 1,634,097 1,319,611 119,587 576,474 447,507 Units redeemed and transferred to other funding options (383,606) (1,662,761) (1,238,703) (123,858) (561,589) (419,979) ------------ ---------------------- ------------- ----------- ---------------------- ----------- Units end of year 1,569,723 1,632,869 1,661,533 489,548 493,819 478,934 ============ ====================== ============= =========== ====================== ===========
MSF LOOMIS SAYLES SMALL CAP GROWTH MSF MET/ARTISAN MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- --------------------------------------------- 2011 2010 2009 2011 2010 2009 ---------------- ----------------- ----------- ---------------- ---------------- ----------- Units beginning of year 597,616 592,149 579,322 222,836 191,339 196,801 Units issued and transferred from other funding options 204,191 595,787 456,755 55,960 303,121 142,199 Units redeemed and transferred to other funding options (162,053) (590,320) (443,928) (91,313) (271,624) (147,661) ---------------- ----------------- ----------- ---------------- ---------------- ----------- Units end of year 639,754 597,616 592,149 187,483 222,836 191,339 ================ ================= =========== ================ ================ ===========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 190 MSF BLACKROCK LEGACY LARGE CAP GROWTH MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- -------------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ------------- ---------------------- ------------- 494,998 480,438 413,693 1,663,896 1,962,757 3,533,477 231,277 793,080 696,623 607,896 1,839,931 1,181,172 (192,473) (778,520) (629,878) (1,108,460) (2,138,792) (2,751,892) ----------- ---------------------- ----------- ------------- ---------------------- ------------- 533,802 494,998 480,438 1,163,332 1,663,896 1,962,757 =========== ====================== =========== ============= ====================== =============
MSF JENNISON GROWTH MSF LOOMIS SAYLES SMALL CAP CORE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ -------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------ ---------- ---------------------- ---------- 1,234,658 1,148,604 1,170,101 115,539 116,312 116,157 212,585 1,009,921 646,258 19,557 70,304 70,176 (380,769) (923,867) (667,755) (39,147) (71,077) (70,021) ------------ ---------------------- ------------ ---------- ---------------------- ---------- 1,066,474 1,234,658 1,148,604 95,949 115,539 116,312 ============ ====================== ============ ========== ====================== ==========
MSF METLIFE CONSERVATIVE ALLOCATION MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ---------------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ----------- ---------------------- --------------- 281,025 179,332 133,696 523,187 443,689 336,506 187,246 672,097 463,545 194,728 852,775 631,508 (174,309) (570,404) (417,909) (226,796) (773,277) (524,325) ----------- ---------------------- ----------- ----------- ---------------------- --------------- 293,962 281,025 179,332 491,119 523,187 443,689 =========== ====================== =========== =========== ====================== ===============
191 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MSF METLIFE MID CAP STOCK INDEX MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ------------ ---------------------- ------------- Units beginning of year 3,223,737 3,313,158 3,450,115 2,825,563 2,488,914 2,031,439 Units issued and transferred from other funding options 578,839 3,107,108 2,443,661 818,677 4,421,202 3,488,092 Units redeemed and transferred to other funding options (661,737) (3,196,529) (2,580,618) (593,430) (4,084,553) (3,030,617) ------------ ---------------------- ------------- ------------ ---------------------- ------------- Units end of year 3,140,839 3,223,737 3,313,158 3,050,810 2,825,563 2,488,914 ============ ====================== ============= ============ ====================== =============
MSF MFS TOTAL RETURN MSF MFS VALUE INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ----------------------------------------------- 2011 2010 2009 2011 2010 2009 ----------- ---------------------- ----------- ------------ ---------------------- ------------- Units beginning of year 568,106 580,613 469,855 3,975,344 4,056,273 4,061,727 Units issued and transferred from other funding options 110,243 701,621 595,895 685,905 3,454,529 2,678,033 Units redeemed and transferred to other funding options (149,872) (714,128) (485,137) (832,421) (3,535,458) (2,683,487) ----------- ---------------------- ----------- ------------ ---------------------- ------------- Units end of year 528,477 568,106 580,613 3,828,828 3,975,344 4,056,273 =========== ====================== =========== ============ ====================== =============
MSF NEUBERGER BERMAN MID CAP VALUE MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ------------ ---------------------- ------------- Units beginning of year 3,179,105 3,292,949 3,355,424 2,044,692 2,111,250 2,250,790 Units issued and transferred from other funding options 498,738 3,046,306 2,427,646 348,871 1,375,412 1,043,645 Units redeemed and transferred to other funding options (637,055) (3,160,150) (2,490,121) (475,051) (1,441,970) (1,183,185) ------------ ---------------------- ------------- ------------ ---------------------- ------------- Units end of year 3,040,788 3,179,105 3,292,949 1,918,512 2,044,692 2,111,250 ============ ====================== ============= ============ ====================== =============
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 192 MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION MSF METLIFE STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ----------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------- ---------------------- ------------- ------------- ---------------------- -------------- 5,118,269 4,732,679 3,956,910 36,664,506 36,924,505 36,120,853 1,298,976 8,011,177 6,445,005 5,857,273 25,845,802 21,105,595 (1,017,009) (7,625,587) (5,669,236) (6,220,079) (26,105,801) (20,301,943) ------------- ---------------------- ------------- ------------- ---------------------- -------------- 5,400,236 5,118,269 4,732,679 36,301,700 36,664,506 36,924,505 ============= ====================== ============= ============= ====================== ==============
MSF MORGAN STANLEY EAFE INDEX MSF NEUBERGER BERMAN GENESIS INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ------------ ---------------------- ------------- 4,717,340 4,618,467 4,548,869 4,111,864 4,279,459 4,285,033 1,183,779 5,171,804 3,949,991 590,730 3,571,339 2,810,773 (990,468) (5,072,931) (3,880,393) (786,998) (3,738,934) (2,816,347) ------------ ---------------------- ------------- ------------ ---------------------- ------------- 4,910,651 4,717,340 4,618,467 3,915,596 4,111,864 4,279,459 ============ ====================== ============= ============ ====================== =============
MSF RUSSELL 2000 INDEX MSF T. ROWE PRICE LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------- ------------ ---------------------- ------------- 2,808,600 2,972,133 2,979,566 3,148,378 3,409,767 3,522,287 516,402 2,633,026 2,105,103 503,272 2,659,923 2,114,300 (671,877) (2,796,559) (2,112,536) (696,890) (2,921,312) (2,226,820) ------------ ---------------------- ------------- ------------ ---------------------- ------------- 2,653,125 2,808,600 2,972,133 2,954,760 3,148,378 3,409,767 ============ ====================== ============= ============ ====================== =============
193 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: MSF VAN ECK GLOBAL NATURAL MSF T. ROWE PRICE SMALL CAP GROWTH RESOURCES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ---------------------- 2011 2010 2009 2011 (f) ------------ ---------------------- ------------- ---------------------- Units beginning of year 4,055,742 4,272,691 4,498,247 -- Units issued and transferred from other funding options 645,717 2,453,679 1,930,920 83 Units redeemed and transferred to other funding options (762,735) (2,670,628) (2,156,476) (2) ------------ ---------------------- ------------- ---------------------- Units end of year 3,938,724 4,055,742 4,272,691 81 ============ ====================== ============= ======================
PIMCO VIT ALL ASSET INVESTMENT PIMCO VIT LOW DURATION DIVISION INVESTMENT DIVISION ------------- ------------------------------------------- 2011 (f) 2011 2010 2009 (e) ------------- --------- ---------------------- ---------- Units beginning of year -- 65,497 66,450 -- Units issued and transferred from other funding options 8,680 16,680 -- 66,978 Units redeemed and transferred to other funding options (31) (1,813) (953) (528) ------------- --------- ---------------------- ---------- Units end of year 8,649 80,364 65,497 66,450 ============= ========= ====================== ==========
ROYCE MICRO-CAP ROYCE SMALL-CAP INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- -------------------------------------------- 2011 2010 (b) 2011 2010 2009 (h) --------- ------------ ---------- ---------------------- ---------- Units beginning of year 19,226 -- 26,235 4,703 -- Units issued and transferred from other funding options 1,095 19,549 66,609 35,416 4,771 Units redeemed and transferred to other funding options (848) (323) (40,769) (13,884) (68) --------- ------------ ---------- ---------------------- ---------- Units end of year 19,473 19,226 52,075 26,235 4,703 ========= ============ ========== ====================== ==========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 194 MSF WESTERN ASSET MANAGEMENT MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ------------------------------------------------- 2011 2010 2009 2011 2010 2009 ------------ ---------------------- ------------ ------------ ---------------------- ------------- 1,145,809 1,115,618 1,106,833 1,021,769 1,063,071 1,059,598 190,447 1,232,736 931,022 193,206 1,297,550 1,058,237 (267,433) (1,202,545) (922,237) (257,910) (1,338,852) (1,054,764) ------------ ---------------------- ------------ ------------ ---------------------- ------------- 1,068,823 1,145,809 1,115,618 957,065 1,021,769 1,063,071 ============ ====================== ============ ============ ====================== =============
C> PIONEER VCT EMERGING MARKETS PIONEER VCT MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------------------------ 2011 2010 2009 2011 2010 2009 (d) ---------- ---------------------- --------- ------------------ ---------------- ------------------ 41,431 37,577 13,031 2,302 586 -- 15,775 11,637 26,780 1,144 1,815 604 (35,090) (7,783) (2,234) (140) (99) (18) ---------- ---------------------- --------- ------------------ ---------------- ------------------ 22,116 41,431 37,577 3,306 2,302 586 ========== ====================== ========= ================= ================ ==================
UIF EMERGING MARKETS DEBT UIF EMERGING MARKETS EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ---------------------------------------------------- 2011 2010 2009 (h) 2011 2010 2009 (h) --------- ---------------------- ---------- ------------------ ---------------------- ---------- 259 223 -- 13,018 442 -- 14,310 79 302 46,847 13,146 714 (686) (43) (79) (16,430) (570) (272) --------- ---------------------- ---------- ------------------ ---------------------- ---------- 13,883 259 223 43,435 13,018 442 ========= ====================== ========== ================== ====================== ==========
195 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009: WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION ---------------------------------------------- 2011 2010 2009 ---------- ------------------------ ---------- Units beginning of year 75,281 39,845 15,329 Units issued and transferred from other funding options 4,877 56,222 36,270 Units redeemed and transferred to other funding options (71,469) (20,786) (11,754) ---------- ------------------------ ---------- Units end of year 8,689 75,281 39,845 ========== ======================== ==========
(a) Commenced on May 1, 2005 and began transactions in 2009. (b) Commenced on November 10, 2008 and began transactions in 2010. (c) Commenced on May 4, 2009 and began transactions in 2011. (d) Commenced on April 28, 2008 and began transactions in 2009. (e) For the period May 4, 2009 to December 31, 2009. (f) For the period May 2, 2011 to December 31, 2011. (g) For the period May 3, 2010 to December 31, 2010. (h) Commenced on November 10, 2008 and began transactions in 2009. 196 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS The Company sells a number of variable life products, which have unique combinations of features and fees, some of which directly affect the unit values of the Investment Divisions. Differences in the fee structures result in a variety of unit values, expense ratios, and total returns. The following is a summary of unit values and units outstanding for the Policies, net investment income ratios, and expense ratios, excluding expenses for the underlying portfolio, series, or fund for the respective stated periods in the five years ended December 31, 2011: AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- -------------- ----------- ------------- ----------- ------------------- AllianceBernstein Global 2011 914,212 4.70 4,293,695 0.43 0.00 (23.40) Thematic Growth Investment 2010 19,486 6.13 119,488 1.84 0.00 18.58 Division 2009 25,043 5.17 129,504 -- 0.00 53.14 2008 14,644 3.38 49,447 -- 0.00 (47.48) 2007 8,261 6.43 53,097 -- 0.00 19.96 AllianceBernstein 2011 3,232 14.63 47,286 4.56 0.00 6.38 Intermediate Bond Investment 2010 3,146 13.75 43,265 5.90 0.00 8.93 Division (Commenced 5/1/2005 2009 2,242 12.62 28,308 4.18 0.00 18.20 and began transactions in 2009) AllianceBernstein International 2011 9 15.08 141 1.92 0.00 (19.25) Value Investment Division 2010 73 18.68 1,357 2.40 0.00 13.41 (Commenced 11/10/2008 and began transactions in 2010) American Century VP Vista 2011 679 12.74 8,654 -- 0.00 (7.90) Investment Division 2010 5,360 13.83 74,155 -- 0.00 23.88 2009 13,115 11.17 146,455 -- 0.00 22.47 2008 8,686 9.12 79,193 -- 0.00 (48.63) 2007 1,642 17.75 29,133 -- 0.00 39.76 American Funds Bond 2011 367,699 11.99 - 21.23 4,735,459 3.08 0.00 - 0.90 5.15 - 6.10 Investment Division 2010 361,073 11.41 - 20.00 4,365,031 3.15 0.00 - 0.90 5.49 - 6.44 2009 335,183 10.81 - 18.79 3,760,642 3.37 0.90 11.60 - 12.61 2008 317,147 9.69 - 16.69 3,143,128 5.80 0.90 (10.12) - (9.37) 2007 291,647 10.78 - 10.95 3,182,415 10.03 0.90 6.52 - 7.56 American Funds Global Small 2011 2,037,588 23.74 - 30.03 52,474,989 1.33 0.00 - 0.90 (19.87) - (19.14) Capitalization Investment 2010 2,114,920 29.62 - 37.13 67,405,353 1.74 0.00 - 0.90 21.32 - 22.41 Division 2009 2,152,577 24.42 - 30.34 56,054,284 0.29 0.90 59.85 - 61.30 2008 2,098,117 15.27 - 18.81 33,880,750 -- 0.90 (53.94) - (48.89) 2007 1,945,062 33.16 - 35.20 67,615,279 3.01 0.90 20.32 - 21.42 American Funds Growth 2011 1,353,057 20.02 - 219.03 118,199,510 0.61 0.00 - 0.90 (5.13) - (4.27) Investment Division 2010 1,411,108 20.92 - 228.81 127,437,855 0.73 0.00 - 0.90 17.62 - 18.68 2009 1,419,237 17.62 - 192.80 109,197,492 0.67 0.90 38.16 - 39.41 2008 1,382,286 12.64 - 138.29 76,515,292 0.86 0.90 (44.47) - 27.72 2007 1,218,654 94.52 - 100.35 121,273,017 0.82 0.90 11.33 - 12.35 American Funds Growth-Income 2011 1,453,945 44.65 - 149.67 71,256,817 1.57 0.00 - 0.90 (2.71) - (1.83) Investment Division 2010 1,483,095 45.89 - 152.46 73,861,194 1.51 0.00 - 0.90 10.43 - 11.43 2009 1,491,242 41.56 - 136.83 66,537,414 1.65 0.90 30.07 - 31.24 2008 1,461,879 31.95 - 104.26 49,610,668 1.79 0.90 (38.41) - (35.35) 2007 1,381,044 51.88 - 55.07 75,370,228 1.59 0.90 4.11 - 5.04
197 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 -------------------------------- --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ------- ------------- ---------- ------------- ----------- ------------------- American Funds International 2011 21,039 24.94 524,711 1.50 0.00 (13.96) Investment Division 2010 27,930 28.99 809,625 2.23 0.00 7.23 (Commenced 4/28/2008) 2009 17,214 27.03 465,344 1.51 0.00 43.07 2008 2,335 18.89 44,134 2.51 0.00 (39.19) American Funds U.S. Government/ 2011 2,025 22.49 45,539 1.73 0.00 7.57 AAA-Rated Securities 2010 1,810 20.90 37,830 1.49 0.00 5.75 Investment Division 2009 4,564 19.77 90,231 3.32 0.00 2.50 (Commenced 4/28/2008) 2008 1,808 19.29 34,883 2.26 0.00 6.61 Dreyfus VIF International 2011 16,153 11.40 184,061 1.88 0.00 (18.76) Value Investment Division 2010 16,502 14.03 231,464 1.53 0.00 4.22 2009 21,676 13.45 291,742 3.77 0.00 30.67 2008 33,156 10.30 341,560 2.14 0.00 (37.50) 2007 42,550 16.48 701,093 1.66 0.00 3.97 Fidelity VIP Asset Manager: 2011 138,116 10.36 1,430,516 1.33 0.00 (6.27) Growth Investment Division 2010 172,460 11.05 1,905,608 1.12 0.00 16.18 2009 181,097 9.51 1,722,435 1.60 0.00 32.79 2008 126,890 7.16 908,867 1.87 0.00 (35.88) 2007 112,746 11.17 1,259,390 4.07 0.00 18.83 Fidelity VIP Contrafund 2011 157,450 13.67 2,151,649 0.83 0.00 (2.64) Investment Division 2010 190,755 14.04 2,677,373 0.96 0.00 17.11 2009 332,757 11.99 3,988,185 1.48 0.00 35.66 2008 218,160 8.83 1,927,330 0.90 0.00 (42.60) 2007 188,529 15.39 2,902,318 0.91 0.00 11.44 Fidelity VIP Equity-Income 2011 1,549 12.00 18,589 0.35 0.00 0.86 Investment Division 2010 17,040 11.90 202,690 1.60 0.00 15.09 2009 23,778 10.33 245,766 1.95 0.00 30.03 2008 72,691 7.95 577,801 1.89 0.00 (42.69) 2007 87,700 13.87 1,216,664 3.23 0.00 (0.93) Fidelity VIP Freedom 2010 2011 3,238 10.55 34,144 2.18 0.00 (0.63) Investment Division 2010 3,002 10.61 31,860 2.67 0.00 12.45 (Commenced 4/28/2008) 2009 1,541 9.44 - 12.05 14,548 3.32 0.45 23.72 - 24.27 2008 3,089 7.63 - 9.69 23,569 6.53 0.45 (23.71) - (23.48) Fidelity VIP Freedom 2020 2011 53,514 10.01 - 13.53 699,714 2.10 0.00 (1.47) - (1.03) Investment Division 2010 56,297 10.16 - 13.67 738,702 2.26 0.00 13.98 - 14.49 (Commenced 4/28/2008) 2009 56,341 8.91 - 11.94 648,511 4.16 0.45 28.40 - 28.97 2008 4,617 6.94 - 9.26 37,721 4.51 0.45 (30.60) - (30.39) Fidelity VIP Freedom 2030 2011 6,028 9.45 - 13.00 56,970 1.97 0.00 (3.03) - (2.59) Investment Division 2010 9,011 9.75 - 13.35 108,191 2.42 0.00 15.56 - 16.08 (Commenced 4/28/2008) 2009 3,665 8.43 - 11.50 31,738 2.47 0.45 31.07 - 31.66 2008 3,324 6.43 - 8.74 21,387 6.89 0.45 (35.65) - (35.46) Fidelity VIP Freedom 2050 2011 1,492 10.34 15,438 1.77 0.00 (5.36) Investment Division (Commenced 5/4/2009 and began transactions in 2011)
198 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------ ---------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ------- ----------- ---------- ------------- ----------- -------------- Fidelity VIP High Income 2011 2,677 16.14 43,223 37.24 0.00 4.03 Investment Division 2010 294 15.52 4,565 4.94 0.00 13.82 (Commenced 4/28/2008 and 2009 3,001 13.63 40,915 26.74 0.00 43.96 began transactions in 2009) Fidelity VIP Investment 2011 117,053 14.93 1,747,852 4.67 0.00 7.21 Grade Bond Investment Division 2010 38,436 13.93 535,344 4.23 0.00 7.68 2009 18,087 12.93 233,950 10.75 0.00 15.67 2008 3,908 11.18 43,701 1.19 0.00 (3.35) 2007 73,675 11.57 852,372 0.68 0.00 4.23 Fidelity VIP Mid Cap 2011 24,942 24.62 613,958 0.03 0.00 (10.85) Investment Division 2010 16,733 27.61 462,031 0.15 0.00 28.57 (Commenced 4/28/2008) 2009 10,051 21.48 215,869 0.29 0.00 39.75 2008 2,071 15.37 31,825 0.15 0.00 (46.25) FTVIPT Mutual Global 2011 44,626 17.56 783,835 2.31 0.00 (2.96) Discovery Securities Investment 2010 53,444 18.10 967,332 1.39 0.00 11.96 Division 2009 54,588 16.17 882,515 0.75 0.00 23.31 2008 140,006 13.11 1,835,518 2.51 0.00 (28.44) 2007 93,103 18.32 1,706,062 1.59 0.00 11.84 FTVIPT Templeton Foreign 2011 203,775 14.83 3,021,785 1.67 0.00 (10.44) Securities Investment Division 2010 558,309 16.56 9,244,694 2.02 0.00 8.67 2009 520,792 15.24 7,935,141 3.61 0.00 37.34 2008 527,866 11.09 5,856,168 2.58 0.00 (40.23) 2007 504,436 18.56 9,363,624 2.07 0.00 15.78 FTVIPT Templeton Global 2011 14,004 20.66 289,345 3.79 0.00 (0.61) Bond Securities Investment 2010 179 20.79 3,728 0.20 0.00 14.71 Division (Commenced 5/4/2009) 2009 204 18.12 3,704 -- 0.00 95.55 Goldman Sachs Mid-Cap Value 2011 19,234 13.95 268,248 0.67 0.00 (6.37) Investment Division 2010 24,643 14.90 367,089 0.70 0.00 25.00 2009 27,552 11.92 328,341 1.09 0.00 33.15 2008 102,102 8.95 913,808 1.06 0.00 (37.33) 2007 84,789 14.28 1,210,921 1.16 0.00 (0.70) Goldman Sachs Structured 2011 4,148 12.12 50,259 0.82 0.00 0.67 Small Cap Equity Investment 2010 4,258 12.04 51,252 0.57 0.00 30.12 Division 2009 7,623 9.25 70,508 1.46 0.00 27.67 2008 6,818 7.24 49,396 0.66 0.00 (33.96) 2007 12,264 10.97 134,527 0.51 0.00 (17.46) Invesco V.I. Global Real 2011 54,002 27.60 1,490,644 4.08 0.00 (6.51) Estate Investment Division 2010 54,093 29.53 1,597,111 5.17 0.00 17.51 2009 59,960 25.13 1,506,522 -- 0.00 31.53 2008 76,172 19.10 1,455,085 5.47 0.00 (44.65) 2007 74,508 34.51 2,571,266 5.97 0.00 (12.34) Invesco V.I. Government 2011 1,570 13.69 21,491 -- 0.00 7.73 Securities Investment Division (Commenced 5/2/2011)
199 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------ ---------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ------- ----------- ---------- ------------- ----------- -------------- Invesco V.I. International 2011 1,308 17.89 23,407 1.52 0.00 (6.74) Growth Investment Division 2010 14,201 19.18 272,411 2.40 0.00 12.86 (Commenced 4/28/2008 and 2009 1,080 17.00 18,360 1.38 0.00 35.24 began transactions in 2009) Invesco V.I. Van Kampen 2011 17,951 10.59 190,062 0.44 0.00 (2.11) Comstock Investment Division 2010 2,966 10.82 32,084 -- 0.00 19.94 (Commenced 5/3/2010) Janus Aspen Balanced 2011 81,522 16.43 1,339,788 2.04 0.00 1.36 Investment Division 2010 155,834 16.22 2,526,859 2.71 0.00 8.12 2009 99,381 15.00 1,490,464 2.93 0.00 25.58 2008 20,633 11.94 246,409 3.65 0.00 (16.08) 2007 5,625 14.23 80,035 3.00 0.00 10.31 Janus Aspen Forty 2011 45,616 15.41 703,136 0.24 0.00 (6.94) Investment Division 2010 73,218 16.56 1,212,768 0.24 0.00 6.48 2009 61,130 15.56 950,941 0.01 0.00 46.01 2008 45,182 10.65 475,295 0.01 0.00 (44.31) 2007 27,126 19.13 518,927 0.25 0.00 36.64 Janus Aspen Janus 2011 85,791 10.00 858,094 0.24 0.00 (5.30) Investment Division 2010 741,523 10.56 7,832,002 1.09 0.00 14.52 2009 718,894 9.22 6,630,451 0.54 0.00 36.35 2008 685,791 6.76 4,638,873 0.74 0.00 (39.71) 2007 643,417 11.22 7,219,885 0.74 0.00 15.08 Janus Aspen Overseas 2011 15,536 22.15 344,135 0.10 0.00 (32.34) Investment Division 2010 11,481 32.74 375,851 0.73 0.00 25.02 (Commenced 4/28/2008) 2009 3,135 26.19 82,093 0.46 0.00 79.07 2008 1,777 14.62 25,984 -- 0.00 (52.68) MFS VIT Global Equity 2011 356 15.23 5,414 0.67 0.00 (4.53) Investment Division 2010 14,222 15.95 226,794 0.78 0.00 12.05 2009 5,543 14.23 78,884 2.04 0.00 31.80 2008 5,386 10.80 58,159 0.76 0.00 (33.95) 2007 3,948 16.35 64,569 1.71 0.00 8.93 MFS VIT High Income 2011 8,896 15.21 135,311 8.93 0.00 3.86 Investment Division 2010 9,020 14.65 132,109 7.00 0.00 14.40 2009 9,209 12.80 117,897 1.48 0.00 45.22 2008 354 8.82 3,111 10.38 0.00 (28.67) 2007 1,776 12.36 21,944 9.79 0.00 1.56 MFS VIT New Discovery 2011 7,919 15.46 122,395 -- 0.00 (10.49) Investment Division 2010 7,814 17.27 134,923 -- 0.00 35.94 (Commenced 5/3/2004 and 2009 396 12.70 5,029 -- 0.00 62.92 began transactions in 2007) 2008 249 7.80 1,942 -- 0.00 (39.52) 2007 253 12.89 3,269 -- 0.00 2.25
200 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------- ----------- ------------------- MFS VIT Value Investment 2011 3,138 14.12 44,299 1.45 0.00 (0.47) Division 2010 5,577 14.18 79,095 1.32 0.00 11.22 (Commenced 5/3/2004 and 2009 5,803 12.75 74,001 1.24 0.00 22.45 began transactions in 2007) 2008 6,081 10.41 63,334 6.73 0.00 (32.72) 2007 2,966 15.48 45,933 -- 0.00 7.56 MIST American Funds Balanced 2011 50,766 10.16 515,995 1.44 0.00 (1.80) Allocation Investment Division 2010 41,296 10.35 427,406 1.26 0.00 12.40 (Commenced 4/28/2008) 2009 23,102 9.21 212,728 -- 0.00 30.06 2008 1,427 7.08 10,107 5.25 0.00 (29.27) MIST American Funds Growth 2011 82,817 9.43 781,245 1.38 0.00 (4.41) Allocation Investment Division 2010 71,574 9.87 706,300 0.62 0.00 13.78 (Commenced 4/28/2008) 2009 15,564 8.67 134,986 -- 0.00 34.36 2008 2,439 6.45 15,747 8.38 0.00 (35.51) MIST American Funds Moderate 2011 37,706 10.65 401,606 1.66 0.00 0.44 Allocation Investment Division 2010 23,584 10.60 250,094 1.38 0.00 10.15 (Commenced 4/28/2008) 2009 9,961 9.63 95,893 -- 0.00 23.90 2008 593 7.77 4,607 6.80 0.00 (22.46) MIST BlackRock Large Cap 2011 12,762,727 8.43 - 36.66 291,615,739 1.12 0.00 - 0.90 (0.36) - 0.54 Core Investment Division 2010 13,468,383 8.42 - 36.79 309,489,536 1.34 0.00 - 0.90 11.73 - 12.73 (Commenced 4/30/2007) 2009 14,107,746 7.50 - 32.93 291,577,776 1.61 0.45 - 0.90 18.37 - 19.43 2008 14,670,780 6.31 - 27.82 258,799,279 0.70 0.45 - 0.90 (37.68) - (31.87) 2007 15,352,126 10.08 - 44.64 436,975,682 -- 0.45 - 0.90 0.80 - 6.77 MIST Clarion Global Real 2011 1,311,823 14.06 - 15.06 19,560,387 4.03 0.00 - 0.90 (6.12) - (5.28) Estate Investment Division 2010 1,342,988 14.98 - 15.90 21,160,564 8.28 0.00 - 0.90 15.24 - 16.28 2009 1,332,507 13.00 - 13.68 18,066,465 3.50 0.90 33.91 - 35.12 2008 1,247,223 9.71 - 10.12 12,525,455 2.00 0.90 (44.73) - (41.56) 2007 1,071,638 16.76 - 17.32 18,432,903 1.09 0.90 (15.57) - (14.81) MIST Dreman Small Cap Value 2011 2,480 14.49 35,938 1.63 0.00 (10.12) Investment Division 2010 1,705 16.12 27,489 0.82 0.00 19.53 (Commenced 4/28/2008) 2009 1,271 13.49 17,136 -- 0.00 29.09 2008 11 10.45 120 -- 0.00 (25.08) MIST Harris Oakmark 2011 1,483,192 9.53 - 18.68 27,216,742 0.03 0.00 - 0.90 (14.75) - (13.98) International Investment Division 2010 1,473,309 20.09 - 21.72 31,544,698 2.05 0.00 - 0.90 15.63 - 16.67 2009 1,439,875 17.38 - 18.61 26,459,351 7.87 0.90 54.07 - 55.46 2008 1,337,674 11.28 - 11.97 15,844,670 1.96 0.90 (41.26) - (37.26) 2007 1,335,770 19.20 - 20.20 26,700,786 0.89 0.90 (1.74) - (0.83) MIST Invesco Small Cap 2011 279,254 14.80 - 18.28 4,412,967 -- 0.00 - 0.90 (1.73) - (0.85) Growth Investment Division 2010 280,254 15.06 - 18.44 4,469,898 -- 0.00 - 0.90 25.34 - 26.47 2009 268,049 12.01 - 14.58 3,392,636 -- 0.90 33.01 - 34.21 2008 230,618 9.03 - 10.86 2,187,257 -- 0.90 (38.73) - (34.43) 2007 208,985 14.84 - 15.62 3,233,322 -- 0.90 10.42 - 11.41
201 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- -------------- ---------- ------------- ----------- ------------------- MIST Janus Forty Investment 2011 1,093,634 10.07 - 329.01 12,484,277 1.80 0.00 - 0.90 (8.16) - (7.32) Division (Commenced 4/30/2007) 2010 1,185,626 10.96 - 355.01 14,254,655 1.71 0.00 - 0.90 8.70 - 9.68 2009 1,122,196 10.08 - 323.68 12,100,411 -- 0.90 41.93 - 43.21 2008 943,170 7.10 - 226.02 6,915,393 4.58 0.90 (44.68) - (41.84) 2007 281,380 12.33 - 12.40 3,487,948 -- 0.90 23.30 - 24.00 MIST Lazard Mid Cap 2011 358,406 12.90 - 17.20 5,277,678 0.92 0.00 - 0.90 (5.98) - (5.13) Investment Division 2010 360,447 13.62 - 18.13 5,585,124 1.05 0.00 - 0.90 22.15 - 23.25 2009 362,314 11.09 - 14.71 4,569,758 1.34 0.90 35.92 - 37.14 2008 371,732 8.11 - 10.73 3,422,640 1.17 0.90 (38.70) - (36.07) 2007 340,316 13.14 - 15.10 5,084,696 0.63 0.90 (3.37) - (2.45) MIST Legg Mason ClearBridge 2011 1,353,551 7.98 - 9.38 12,365,794 0.08 0.00 - 0.90 (8.33) - 3.56 Aggressive Growth Investment 2010 888,257 7.56 - 9.05 7,832,576 0.06 0.00 - 0.90 22.94 - 24.05 Division 2009 918,435 6.11 - 7.30 6,533,459 0.12 0.90 32.26 - 33.45 2008 929,444 4.59 - 5.47 4,956,827 0.01 0.90 (39.49) - (36.35) 2007 893,124 7.54 - 8.82 7,804,601 0.22 0.90 1.71 - 2.56 MIST Lord Abbett Bond 2011 1,085,311 20.52 - 30.90 25,730,993 5.96 0.00 - 0.90 3.89 - 4.83 Debenture Investment Division 2010 1,222,207 19.75 - 29.48 27,673,730 6.47 0.00 - 0.90 12.16 - 13.18 2009 1,300,112 17.61 - 26.05 26,033,742 7.18 0.45 - 0.90 35.89 - 37.12 2008 1,205,110 12.96 - 19.00 17,548,678 4.38 0.45 - 0.90 (19.13) - (18.40) 2007 1,249,287 16.02 - 19.29 22,262,379 5.32 0.45 - 0.90 5.88 - 14.15 MIST Lord Abbett Mid Cap 2011 9,000 13.43 120,858 0.53 0.00 (3.69) Value Investment Division 2010 7,974 13.94 111,190 0.58 0.00 25.53 2009 9,319 11.11 103,521 2.10 0.00 26.53 2008 10,463 8.78 91,851 0.25 0.00 (38.78) 2007 4,638 14.34 66,500 0.94 0.00 0.63 MIST Met/Franklin Income 2011 19,993 11.88 237,483 4.33 0.00 2.39 Investment Division 2010 13,040 11.60 151,292 3.26 0.00 12.13 (Commenced 4/28/2008) 2009 5,364 10.35 55,505 -- 0.00 28.05 2008 2,408 8.08 19,461 4.29 0.00 (19.19) MIST Met/Franklin Mutual 2011 8,617 9.27 79,913 2.90 0.00 (0.27) Shares Investment Division 2010 6,134 9.30 57,042 -- 0.00 11.23 (Commenced 4/28/2008) 2009 2,904 8.36 24,280 -- 0.00 25.15 2008 1,208 6.68 8,064 3.53 0.00 (33.20) MIST Met/Franklin Templeton 2011 27,693 9.96 275,812 1.86 0.00 (1.45) Founding Strategy Investment 2010 25,753 10.11 260,280 -- 0.00 10.36 Division (Commenced 4/28/2008) 2009 21,298 9.16 195,055 -- 0.00 28.84 2008 1,503 7.11 10,681 7.79 0.00 (28.92) MIST Met/Templeton Growth 2011 6,014 8.90 53,526 1.44 0.00 (6.61) Investment Division 2010 5,088 9.53 48,492 0.98 0.00 7.88 (Commenced 4/28/2008) 2009 2,173 8.83 19,197 0.02 0.00 33.08 2008 480 6.64 3,188 1.08 0.00 (33.62) MIST MetLife Aggressive Strategy 2011 1,049,786 10.97 - 114.35 12,472,661 -- 0.00 - 0.90 (13.94) - (10.95) Investment Division (Commenced 5/2/2011)
202 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------- ----------- ------------------- MIST MFS Emerging Markets Equity 2011 2,070 11.09 22,950 -- 0.00 (22.19) Investment Division (Commenced 5/2/2011) MIST MFS Research International 2011 820,338 13.07 - 15.26 12,176,899 2.07 0.00 - 0.90 (11.23) - (10.44) Investment Division 2010 838,110 14.64 - 17.04 13,920,818 1.89 0.00 - 0.90 10.65 - 11.65 2009 885,756 13.14 - 15.26 13,178,754 3.35 0.90 30.75 - 31.93 2008 870,603 9.99 - 11.57 9,814,566 2.06 0.90 (42.78) - (41.00) 2007 695,827 17.33 - 20.03 13,629,924 1.44 0.90 12.59 - 13.61 MIST Morgan Stanley Mid Cap 2011 12,356,734 6.22 - 17.47 178,350,417 0.73 0.00 - 0.90 (7.50) - (6.67) Growth Investment Division 2010 13,121,650 6.67 - 18.71 203,754,931 -- 0.00 - 0.90 17.91 - 32.19 (Commenced 5/3/2004 and 2009 23,317 13.14 - 14.13 306,427 -- 0.00 57.27 - 57.83 began transactions in 2007) 2008 1,987 8.35 - 8.96 16,600 1.36 0.00 (46.77) - (43.85) 2007 2,000 15.69 31,371 -- 0.00 23.52 MIST Oppenheimer Capital 2011 153,394 9.79 - 11.52 1,734,835 0.34 0.00 - 0.90 (1.86) - (0.97) Appreciation Investment Division 2010 155,354 9.89 - 11.63 1,779,611 0.66 0.00 - 0.90 8.70 - 9.68 2009 155,544 9.02 - 10.61 1,631,638 -- 0.90 42.73 - 44.02 2008 114,986 6.26 - 7.37 841,297 3.67 0.90 (46.29) - (43.37) 2007 70,634 13.27 - 13.59 955,427 0.11 0.90 13.42 - 14.49 MIST PIMCO Inflation 2011 700,157 11.56 - 17.42 10,519,501 1.74 0.00 - 0.90 10.23 - 11.49 Protected Bond Investment 2010 653,613 12.97 - 15.63 8,812,538 2.54 0.00 - 0.90 7.04 - 8.00 Division 2009 618,801 12.12 - 14.47 7,734,444 3.75 0.90 17.31 - 18.37 2008 523,888 10.33 - 12.23 5,523,166 3.28 0.90 (9.73) - (6.61) 2007 80,592 11.16 - 11.33 911,539 1.27 0.90 10.06 - 11.08 MIST PIMCO Total Return 2011 2,427,091 10.79 - 19.95 47,131,879 2.84 0.00 - 0.90 2.50 - 3.42 Investment Division 2010 2,450,427 17.69 - 19.29 46,602,262 3.66 0.00 - 0.90 7.44 - 8.41 2009 2,378,221 16.46 - 17.80 41,820,317 7.36 0.90 17.33 - 18.39 2008 2,287,745 14.03 - 15.03 34,041,059 3.92 0.90 (1.28) - 0.61 2007 2,175,489 14.07 - 14.94 32,210,481 3.46 0.90 6.91 - 7.87 MIST Pioneer Fund 2011 13,480 13.08 176,354 1.21 0.00 (4.55) Investment Division 2010 17,938 13.71 245,860 0.90 0.00 17.93 (Commenced 5/4/2009) 2009 20,277 11.79 239,136 -- 0.00 17.93 MIST RCM Technology 2011 1,828,123 6.67 - 7.34 13,216,535 -- 0.00 - 0.90 (10.60) - (9.79) Investment Division 2010 2,007,835 7.46 - 8.14 16,113,886 -- 0.00 - 0.90 27.12 - 28.27 2009 2,111,049 5.87 - 6.34 13,221,048 -- 0.90 57.74 - 59.17 2008 1,806,845 3.72 - 3.99 7,121,496 13.07 0.90 (44.79) - (37.82) 2007 1,867,295 6.74 - 7.15 13,231,277 -- 0.90 30.62 - 31.68 MIST SSgA Growth and Income 2011 381,525 11.55 - 12.90 4,611,127 1.79 0.00 - 0.90 0.37 - 1.28 ETF Investment Division 2010 320,284 11.51 - 12.74 3,818,907 1.29 0.00 - 0.90 11.60 - 12.61 2009 149,333 10.31 - 11.31 1,581,109 1.61 0.90 23.84 - 24.96 2008 39,742 8.33 - 9.05 336,449 1.95 0.90 (25.54) - (23.99) 2007 30,551 11.18 - 11.35 345,473 -- 0.90 4.78 - 5.78
203 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------- ----------- ------------------- MIST SSgA Growth ETF 2011 299,115 10.59 - 12.05 3,309,518 1.76 0.00 - 0.90 (2.75) - (1.86) Investment Division 2010 237,751 10.89 - 12.28 2,679,381 1.57 0.00 - 0.90 13.35 - 14.37 2009 181,473 9.61 - 10.74 1,789,007 1.53 0.90 28.34 - 29.51 2008 59,898 7.48 - 8.29 457,331 1.65 0.90 (33.42) - (30.82) 2007 56,164 11.24 - 11.41 639,459 -- 0.90 4.95 - 5.94 MIST T. Rowe Price Large 2011 108,604 9.96 1,081,554 0.51 0.00 (3.77) Cap Value Investment Division 2010 601,441 10.35 6,224,061 1.22 0.00 17.33 2009 585,353 8.82 5,163,011 2.45 0.00 18.67 2008 569,914 7.43 - 48.32 4,235,811 1.80 0.00 (36.20) - (32.76) 2007 539,972 11.65 6,289,386 1.00 0.00 4.02 MIST T. Rowe Price Mid Cap 2011 1,957,835 11.07 - 18.03 25,204,627 -- 0.00 - 0.90 (2.28) - (1.39) Growth Investment Division 2010 1,725,748 11.33 - 18.33 21,234,908 -- 0.00 - 0.90 26.93 - 28.07 2009 1,754,850 8.93 - 14.35 16,772,681 -- 0.90 44.54 - 45.85 2008 1,702,757 6.18 - 9.87 11,162,717 0.07 0.90 (40.16) - (37.28) 2007 1,587,296 10.32 - 16.38 17,384,199 0.21 0.90 16.74 - 17.85 MIST Third Avenue Small Cap 2011 54,483 14.79 806,051 0.92 0.00 (8.98) Value Investment Division 2010 96,930 16.25 1,575,589 1.05 0.00 19.90 2009 66,457 13.56 900,994 0.62 0.00 26.45 2008 22,742 10.72 243,831 0.70 0.00 (29.73) 2007 24,943 15.28 381,064 0.85 0.00 (2.98) MSF Artio International 2011 2,947,427 10.02 - 15.01 35,919,561 1.77 0.00 - 0.90 (20.59) - (19.87) Stock Investment Division 2010 2,985,340 12.56 - 18.74 45,766,876 1.57 0.00 - 0.90 6.25 - 7.21 2009 3,130,833 11.77 - 17.48 45,163,862 0.71 0.45 - 0.90 21.07 - 22.17 2008 3,272,041 9.71 - 14.31 38,994,328 3.13 0.45 - 0.90 (44.63) - (40.37) 2007 3,371,026 17.46 - 23.95 72,704,709 1.05 0.45 - 0.90 9.36 - 11.35 MSF Barclays Capital Aggregate 2011 5,367,889 17.85 - 20.54 108,763,587 3.52 0.00 - 0.90 6.55 - 7.51 Bond Index Investment 2010 6,069,208 16.75 - 19.11 114,484,755 3.72 0.00 - 0.90 5.10 - 6.05 Division 2009 5,979,612 15.94 - 18.02 106,351,639 5.95 0.45 - 0.90 4.22 - 5.17 2008 5,705,639 15.30 - 17.13 96,524,738 4.55 0.45 - 0.90 4.32 - 5.99 2007 6,582,200 14.56 - 16.17 104,928,263 4.49 0.45 - 0.90 5.89 - 11.27 MSF BlackRock Aggressive 2011 8,613,267 16.80 - 63.39 184,990,795 0.30 0.00 - 0.90 (3.87) - (3.00) Growth Investment Division 2010 9,010,506 17.39 - 65.35 200,141,525 0.07 0.00 - 0.90 14.27 - 15.30 2009 9,655,662 15.15 - 56.68 187,532,635 0.20 0.45 - 0.90 48.10 - 49.44 2008 10,226,808 10.19 - 37.93 134,277,037 -- 0.45 - 0.90 (46.22) - (44.59) 2007 10,673,487 18.84 - 26.64 260,061,815 -- 0.45 - 0.90 19.53 - 20.60 MSF BlackRock Bond Income 2011 3,448,815 18.67 - 88.42 84,065,205 3.92 0.00 - 0.90 5.61 - 6.56 Investment Division 2010 3,695,898 17.52 - 82.97 84,862,836 3.95 0.00 - 0.90 7.37 - 8.34 2009 3,849,026 16.17 - 76.59 82,419,233 7.04 0.45 - 0.90 8.49 - 9.47 2008 4,137,787 14.77 - 69.96 81,985,350 5.16 0.45 - 0.90 (4.31) - (3.43) 2007 4,467,585 15.30 - 31.06 92,436,358 3.24 0.45 - 0.90 5.36 - 12.31 MSF BlackRock Diversified 2011 10,223,668 15.50 - 62.70 255,554,192 2.43 0.00 - 0.90 2.87 - 3.81 Investment Division 2010 10,826,228 14.93 - 60.41 263,102,316 1.90 0.00 - 0.90 8.67 - 9.65 2009 11,480,151 13.61 - 55.09 257,391,816 5.15 0.45 - 0.90 16.25 - 17.30 2008 12,136,197 11.61 - 46.97 235,715,981 2.81 0.45 - 0.90 (25.47) - (20.65) 2007 12,715,624 15.43 - 38.69 334,245,436 2.54 0.45 - 0.90 4.96 - 8.02
204 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- --------------- ---------- ------------- ----------- ------------------- MSF BlackRock Large Cap 2011 1,036,664 11.95 - 13.03 13,313,052 1.11 0.00 - 0.90 1.43 - 2.35 Value Investment Division 2010 1,026,360 11.78 - 12.73 12,899,137 1.05 0.00 - 0.90 8.24 - 9.22 2009 1,018,697 10.88 - 11.66 11,723,889 1.58 0.90 10.22 - 11.21 2008 924,995 9.87 - 10.48 9,571,372 0.82 0.90 (35.46) - (30.94) 2007 770,111 15.30 - 16.10 12,275,048 0.98 0.90 2.41 - 3.40 MSF BlackRock Legacy Large 2011 533,802 9.33 - 37.56 7,367,810 0.19 0.00 - 0.90 (9.76) - (8.94) Cap Growth Investment Division 2010 494,998 10.25 - 41.25 7,322,523 0.23 0.00 - 0.90 18.75 - 19.82 2009 480,438 8.55 - 34.42 5,950,495 0.62 0.90 35.56 - 36.79 2008 413,693 6.25 - 25.16 3,786,888 0.43 0.90 (37.07) - (34.56) 2007 265,094 9.85 - 14.78 3,824,550 0.19 0.90 17.60 - 18.77 MSF BlackRock Money Market 2011 1,163,332 17.51 - 17.98 20,783,208 -- 0.00 - 0.90 (0.89) - 0.00 Investment Division 2010 1,663,896 17.66 - 17.98 29,818,336 0.01 0.00 - 0.90 (0.89) - 0.01 2009 1,962,757 17.82 - 17.98 35,228,518 0.45 0.90 (0.48) - 0.42 2008 3,533,477 17.90 - 17.91 63,265,014 2.81 0.90 1.92 - 2.84 2007 3,638,086 17.41 - 17.57 63,398,057 4.94 0.90 4.15 - 5.07 MSF Davis Venture Value 2011 1,569,723 12.50 - 41.31 53,650,792 1.15 0.00 - 0.90 (4.89) - (4.03) Investment Division 2010 1,632,869 13.03 - 43.04 57,910,618 1.00 0.00 - 0.90 11.00 - 12.00 2009 1,661,533 11.63 - 38.43 52,773,242 1.57 0.90 30.80 - 31.99 2008 1,580,625 8.81 - 29.12 38,001,762 1.34 0.90 (39.89) - (37.59) 2007 1,479,707 14.53 - 42.17 58,550,244 0.77 0.90 3.65 - 4.56 MSF FI Value Leaders 2011 489,548 9.83 - 32.38 6,065,829 1.10 0.00 - 0.90 (6.99) - (6.15) Investment Division 2010 493,819 10.47 - 34.50 6,488,932 1.56 0.00 - 0.90 13.54 - 14.56 2009 478,934 9.14 - 30.11 5,481,161 2.80 0.90 20.75 - 21.85 2008 451,406 7.50 - 24.71 4,225,438 1.93 0.90 (39.49) - (34.25) 2007 440,904 12.29 - 15.50 6,742,764 0.91 0.90 3.22 - 4.24 MSF Jennison Growth 2011 1,066,474 6.47 - 14.29 14,166,486 0.28 0.00 - 0.90 (0.39) - 0.51 Investment Division 2010 1,234,658 6.44 - 14.22 15,408,401 0.59 0.00 - 0.90 10.63 - 11.66 2009 1,148,604 5.77 - 12.74 13,473,347 0.19 0.90 38.73 - 39.99 2008 1,170,101 4.12 - 9.10 9,813,769 2.43 0.90 (37.00) - (26.98) 2007 1,203,057 6.48 - 13.98 15,741,716 0.42 0.90 10.62 - 11.66 MSF Loomis Sayles Small Cap 2011 95,949 16.14 - 357.46 17,443,984 0.11 0.00 - 0.90 (0.31) - 0.59 Core Investment Division 2010 115,539 16.04 - 355.36 18,282,784 0.09 0.00 - 0.90 26.38 - 27.53 2009 116,312 12.58 - 278.66 14,825,414 0.28 0.90 29.08 - 30.25 2008 116,157 9.66 - 213.94 11,034,259 -- 0.90 (36.47) - (30.05) 2007 98,083 15.07 - 333.74 15,771,472 0.08 0.90 10.90 - 11.90 MSF Loomis Sayles Small Cap 2011 639,754 11.74 - 12.92 8,179,779 -- 0.00 - 0.90 2.06 - 2.98 Growth Investment Division 2010 597,616 11.50 - 12.54 7,430,441 -- 0.00 - 0.90 30.53 - 31.71 2009 592,149 8.22 - 9.52 5,593,368 -- 0.90 28.77 - 38.63 2008 579,322 5.93 - 7.33 4,206,928 -- 0.90 (41.67) - (36.32) 2007 569,953 11.73 - 12.46 7,040,049 -- 0.90 3.53 - 4.53 MSF Met/Artisan Mid Cap 2011 187,483 18.74 - 267.60 47,188,989 0.95 0.00 - 0.90 5.80 - 6.76 Value Investment Division 2010 222,836 17.60 - 250.67 46,601,141 0.74 0.00 - 0.90 7.99 - 15.04 2009 191,339 35.18 - 217.89 41,071,915 1.13 0.90 40.30 - 41.56 2008 196,801 24.85 - 153.92 29,975,616 0.37 0.90 (46.49) - (42.81) 2007 191,591 268.52 - 285.05 54,129,720 0.56 0.90 (7.67) - (6.84)
205 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- -------------- ---------- ------------- ----------- ------------------- MSF MetLife Conservative 2011 293,962 13.17 - 137.56 4,371,255 2.46 0.00 - 0.90 2.55 - 3.48 Allocation Investment Division 2010 281,025 12.84 - 133.23 4,036,496 3.52 0.00 - 0.90 9.35 - 10.34 2009 179,332 11.74 - 121.06 2,188,237 3.20 0.90 19.65 - 20.73 2008 133,696 9.82 - 10.14 1,350,130 1.41 0.90 (14.87) - (13.89) 2007 66,558 11.53 - 11.81 784,035 -- 0.90 4.82 - 5.73 MSF MetLife Conservative to 2011 491,119 12.75 - 133.03 6,564,562 2.28 0.00 - 0.90 0.37 - 1.28 Moderate Allocation Investment 2010 523,187 12.70 - 131.65 6,925,701 3.39 0.00 - 0.90 10.78 - 11.78 Division 2009 443,689 11.47 - 118.05 5,262,543 3.27 0.90 22.89 - 24.00 2008 336,506 9.33 - 9.64 3,218,477 1.34 0.90 (22.11) - (20.23) 2007 244,254 11.98 - 12.27 2,977,400 -- 0.90 4.08 - 5.05 MSF MetLife Mid Cap Stock 2011 3,140,839 18.32 - 20.31 62,847,615 0.90 0.00 - 0.90 (2.77) - (1.89) Index Investment Division 2010 3,223,737 18.84 - 20.70 65,796,062 0.99 0.00 - 0.90 25.15 - 26.28 2009 3,313,158 14.93 - 16.39 53,691,851 1.81 0.90 35.77 - 36.99 2008 3,450,115 10.90 - 11.97 40,733,135 1.41 0.90 (36.75) - (35.42) 2007 3,466,871 17.07 - 18.75 63,959,203 0.75 0.90 6.83 - 7.82 MSF MetLife Moderate 2011 3,050,810 12.22 - 127.62 39,588,309 1.72 0.00 - 0.90 (2.02) - (1.14) Allocation Investment Division 2010 2,825,563 12.48 - 129.39 37,214,331 2.69 0.00 - 0.90 12.45 - 13.47 2009 2,488,914 11.09 - 114.33 28,790,175 3.09 0.90 25.71 - 26.84 2008 2,031,439 8.82 - 90.36 18,535,109 1.08 0.90 (29.06) - (26.51) 2007 1,452,241 12.44 - 12.74 18,395,945 0.19 0.90 3.58 - 4.51 MSF MetLife Moderate to 2011 5,400,236 11.62 - 12.34 66,170,247 1.59 0.00 - 0.90 (4.42) - (3.55) Aggressive Allocation Investment 2010 5,118,269 12.16 - 126.24 65,064,069 2.27 0.00 - 0.90 13.86 - 14.89 Division 2009 4,732,679 10.68 - 110.06 52,449,221 2.75 0.90 28.27 - 29.43 2008 3,956,910 8.33 - 8.61 33,871,944 0.84 0.90 (35.55) - (32.36) 2007 2,499,351 12.92 - 13.23 32,935,899 0.19 0.90 3.19 - 4.09 MSF MetLife Stock Index 2011 36,301,700 12.50 - 56.01 668,626,167 1.66 0.00 - 0.90 0.93 - 1.84 Investment Division 2010 36,664,506 12.28 - 55.00 671,751,965 1.75 0.00 - 0.90 13.79 - 14.82 2009 36,924,505 10.69 - 47.90 597,707,546 2.70 0.45 - 0.90 25.11 - 26.26 2008 36,120,853 8.47 - 37.94 472,610,929 1.94 0.45 - 0.90 (37.67) - (34.22) 2007 34,637,993 13.47 - 39.67 748,068,488 1.03 0.45 - 0.90 4.28 - 10.73 MSF MFS Total Return 2011 528,477 12.95 - 67.87 7,362,338 2.71 0.00 - 0.90 1.50 - 2.42 Investment Division 2010 568,106 12.76 - 66.27 7,708,272 3.01 0.00 - 0.90 9.09 - 10.08 2009 580,613 11.70 - 60.20 7,134,157 4.19 0.90 17.54 - 18.60 2008 469,855 9.95 - 50.76 4,861,537 3.50 0.90 (22.84) - (20.13) 2007 418,473 12.90 - 13.33 5,549,510 1.97 0.90 3.45 - 4.39 MSF MFS Value Investment 2011 3,828,828 12.53 - 18.20 52,363,369 1.56 0.00 - 0.90 (0.05) - 0.85 Division 2010 3,975,344 12.48 - 18.04 54,052,850 1.43 0.00 - 0.90 10.43 - 11.42 2009 4,056,273 11.25 - 16.19 49,365,491 -- 0.45 - 0.90 19.74 - 20.82 2008 4,061,727 9.35 - 13.40 41,012,912 1.91 0.45 - 0.90 (34.05) - (17.37) 2007 4,115,566 14.14 - 17.54 61,926,665 0.78 0.45 - 0.90 (4.67) - (3.48) MSF Morgan Stanley EAFE 2011 4,910,651 9.74 - 13.81 59,759,550 2.43 0.00 - 0.90 (13.28) - (12.50) Index Investment Division 2010 4,717,340 11.23 - 15.78 65,367,829 2.68 0.00 - 0.90 7.22 - 8.19 2009 4,618,467 10.47 - 14.59 58,913,857 4.28 0.45 - 0.90 27.52 - 28.67 2008 4,548,869 8.21 - 11.34 44,991,420 2.87 0.45 - 0.90 (42.58) - (40.15) 2007 4,186,312 14.30 - 19.58 71,635,930 1.94 0.45 - 0.90 9.83 - 13.98
206 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- --------------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- ------------- ----------- ------------- ----------- ------------------- MSF Neuberger Berman 2011 3,915,596 18.49 - 20.50 79,279,066 0.74 0.00 - 0.90 4.85 - 5.80 Genesis Investment Division 2010 4,111,864 17.63 - 19.37 78,718,096 0.51 0.00 - 0.90 20.49 - 21.58 2009 4,279,459 14.59 - 15.93 67,433,059 1.12 0.90 12.14 - 13.15 2008 4,285,033 12.90 - 14.08 59,706,219 0.54 0.90 (38.96) - (35.81) 2007 4,450,536 20.94 - 22.86 100,708,365 0.30 0.90 (4.30) - (3.41) MSF Neuberger Berman Mid Cap 2011 3,040,788 18.92 - 28.59 69,819,694 0.78 0.00 - 0.90 (7.25) - (6.42) Value Investment Division 2010 3,179,105 20.40 - 30.55 77,987,809 0.83 0.00 - 0.90 25.18 - 26.31 2009 3,292,949 16.29 - 24.19 63,957,799 1.58 0.90 46.77 - 48.10 2008 3,355,424 11.10 - 16.33 44,065,744 0.85 0.90 (47.81) - (46.55) 2007 3,292,329 21.27 - 30.68 82,005,373 0.55 0.90 2.51 - 3.45 MSF Oppenheimer Global 2011 1,918,512 18.89 - 21.58 37,497,219 1.98 0.00 - 0.90 (9.05) - (8.24) Equity Investment Division 2010 2,044,692 20.77 - 23.52 43,706,570 1.54 0.00 - 0.90 15.19 - 16.23 2009 2,111,250 18.03 - 20.23 38,882,417 2.57 0.45 - 0.90 39.06 - 40.31 2008 2,250,790 12.94 - 14.42 29,644,684 2.15 0.45 - 0.90 (40.90) - (37.34) 2007 2,347,437 21.71 - 24.18 52,072,709 1.10 0.45 - 0.90 5.53 - 10.86 MSF Russell 2000 Index 2011 2,653,125 14.59 - 21.28 51,171,784 1.05 0.00 - 0.90 (4.96) - (4.10) Investment Division 2010 2,808,600 15.35 - 22.19 56,596,227 1.10 0.00 - 0.90 25.78 - 26.92 2009 2,972,133 12.21 - 17.49 47,243,288 2.05 0.45 - 0.90 24.88 - 26.01 2008 2,979,566 9.77 - 13.88 37,446,370 1.26 0.45 - 0.90 (34.09) - (30.11) 2007 2,975,863 14.83 - 20.87 56,244,600 0.91 0.45 - 0.90 (2.43) - 2.72 MSF T. Rowe Price Large Cap 2011 2,954,760 10.73 - 16.99 42,317,336 0.09 0.00 - 0.90 (1.99) - (1.11) Growth Investment Division 2010 3,148,378 10.95 - 17.18 45,775,087 0.27 0.00 - 0.90 16.00 - 17.05 2009 3,409,767 9.44 - 14.68 42,520,597 0.63 0.90 42.15 - 43.44 2008 3,522,287 6.64 - 10.23 30,702,575 0.59 0.90 (41.89) - (38.27) 2007 3,529,093 11.53 - 17.60 52,811,241 0.45 0.90 8.47 - 9.40 MSF T. Rowe Price Small Cap 2011 3,938,724 20.15 - 23.40 86,825,771 -- 0.00 - 0.90 0.86 - 1.77 Growth Investment Division 2010 4,055,742 19.98 - 22.99 88,004,866 -- 0.00 - 0.90 33.69 - 34.90 2009 4,272,691 14.95 - 17.11 68,810,021 0.35 0.45 - 0.90 37.72 - 38.97 2008 4,498,247 10.85 - 12.37 52,291,217 -- 0.45 - 0.90 (36.76) - (33.41) 2007 4,692,085 17.16 - 19.47 85,746,187 -- 0.45 - 0.90 8.88 - 9.89 MSF Van Eck Global Natural 2011 81 162.89 13,179 -- 0.00 (22.34) Resources Investment Division (Commenced 5/2/2011) MSF Western Asset Management 2011 1,068,823 20.28 - 35.25 23,536,888 5.05 0.00 - 0.90 5.19 - 6.14 Strategic Bond Opportunities 2010 1,145,809 19.28 - 33.21 23,786,502 6.04 0.00 - 0.90 11.72 - 12.73 Investment Division 2009 1,115,618 17.25 - 29.46 20,580,082 6.60 0.90 31.04 - 32.22 2008 1,106,833 13.17 - 22.28 15,464,462 4.07 0.90 (15.76) - (14.42) 2007 1,117,386 15.63 - 16.60 18,372,006 2.67 0.90 3.10 - 4.08 MSF Western Asset Management 2011 957,065 15.77 - 23.91 16,435,798 1.49 0.00 - 0.90 4.56 - 5.51 U.S. Government 2010 1,021,769 15.08 - 22.66 16,633,651 2.70 0.00 - 0.90 4.86 - 5.81 Investment Division 2009 1,063,071 14.38 - 21.41 16,359,270 4.49 0.90 3.40 - 4.33 2008 1,059,598 13.91 - 20.52 15,636,881 4.27 0.90 (1.23) - (0.36) 2007 1,066,735 14.08 - 14.95 15,797,381 2.66 0.90 3.38 - 4.33 PIMCO VIT All Asset Investment 2011 8,649 11.12 96,138 3.04 0.00 (3.47) Division (Commenced 5/2/2011)
207 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONCLUDED) 8. FINANCIAL HIGHLIGHTS -- (CONCLUDED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------- ---------------------------------------- EXPENSE(2) TOTAL(3) UNIT VALUE INVESTMENT(1) RATIO RETURN LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ------ ----------- ---------- ------------- ----------- -------------- PIMCO VIT Low Duration 2011 80,364 11.77 946,008 1.68 0.00 1.11 Investment Division 2010 65,497 11.64 762,531 1.62 0.00 5.29 (Commenced 5/4/2009) 2009 66,450 11.06 734,746 1.55 0.00 10.57 Pioneer VCT Emerging 2011 22,116 18.14 401,298 -- 0.00 (23.62) Markets Investment Division 2010 41,431 23.75 984,166 0.33 0.00 15.61 (Commenced 4/28/2008) 2009 37,577 20.55 772,123 0.96 0.00 74.02 2008 13,031 11.81 153,859 -- 0.00 (55.11) Pioneer VCT Mid Cap Value 2011 3,306 40.77 134,780 0.87 0.00 (5.64) Investment Division 2010 2,302 43.21 99,478 1.08 0.00 18.22 (Commenced 4/28/2008 and 2009 586 36.55 21,403 -- 0.00 25.58 began transactions in 2009) Royce Micro-Cap Investment 2011 19,473 15.94 310,463 2.46 0.00 (12.10) Division (Commenced 11/10/2008 2010 19,226 18.14 348,709 3.02 0.00 29.96 and began transactions in 2010) Royce Small-Cap Investment 2011 52,075 14.49 754,742 0.36 0.00 (3.28) Division (Commenced 11/10/2008 2010 26,235 14.99 393,142 0.14 0.00 20.52 and began transactions in 2009) 2009 4,703 12.43 58,471 -- 0.00 35.20 UIF Emerging Markets Debt 2011 13,883 30.33 420,998 3.50 0.00 7.03 Investment Division 2010 259 28.33 7,343 4.24 0.00 9.74 (Commenced 11/10/2008 and 2009 223 25.82 5,747 2.19 0.00 30.21 began transactions in 2009) UIF Emerging Markets Equity 2011 43,435 12.42 539,388 0.35 0.00 (18.22) Investment Division 2010 13,018 15.18 197,669 0.57 0.00 19.02 (Commenced 11/10/2008 and 2009 442 12.76 5,643 -- 0.00 69.84 began transactions in 2009) Wells Fargo VT Total Return 2011 8,689 15.56 135,214 2.74 0.00 8.33 Bond Investment Division 2010 75,281 14.37 1,081,415 3.35 0.00 7.04 2009 39,845 13.42 534,737 4.42 0.00 12.00 2008 15,329 11.98 183,674 4.82 0.00 2.41 2007 9,697 11.70 113,479 4.64 0.00 6.17
(1) These amounts represent the dividends, excluding distributions of capital gains, received by the Investment Division from the underlying portfolio, series, or fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that are assessed against policy owner accounts either through reductions in the unit values or the redemption of units. The investment income ratio is calculated for each period indicated or from the effective date through the end of the reporting period. The recognition of investment income by the Investment Division is affected by the timing of the declaration of dividends by the underlying portfolio, series, or fund in which the Investment Division invests. The investment income ratio is calculated as a weighted average ratio since the Investment Division may invest in two or more share classes, if any, within the underlying portfolio, series or fund of the Trusts which may have unique investment income ratios. (2) These amounts represent the annualized policy expenses of each of the applicable Investment Divisions, consisting primarily of mortality and expense risk charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to policy owner accounts through the redemption of units and expenses of the underlying portfolio, series, or fund have been excluded. (3) These amounts represent the total return for the period indicated, including changes in the value of the underlying portfolio, series, or fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. The total return is presented as a range of minimum to maximum returns, based on minimum and maximum returns within each product grouping of the applicable Investment Division. 208 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholder of Metropolitan Life Insurance Company: We have audited the accompanying consolidated balance sheets of Metropolitan Life Insurance Company and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company changed its method of accounting for the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP New York, New York March 30, 2012 F-1 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2011 AND 2010 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
2011 -------- ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $154,376 and $153,708, respectively)...................................................................................................... $168,178 Equity securities available-for-sale, at estimated fair value (cost: $1,379 and $1,898, respectively)............... 1,278 Trading and other securities, at estimated fair value (includes $473 and $463, respectively, of actively traded securities; and $117 and $201, respectively, relating to variable interest entities)............................... 697 Mortgage loans (net of valuation allowances of $393 and $522, respectively)......................................... 43,880 Policy loans........................................................................................................ 8,314 Real estate and real estate joint ventures (includes $15 and $10, respectively, relating to variable interest entities).......................................................................................................... 5,891 Other limited partnership interests (includes $152 and $187, respectively, relating to variable interest entities).. 4,334 Short-term investments, principally at estimated fair value......................................................... 6,140 Other invested assets, principally at estimated fair value (includes $98 and $102, respectively, relating to variable interest entities)........................................................................................ 12,505 -------- Total investments................................................................................................ 251,217 Cash and cash equivalents, principally at estimated fair value (includes $70 and $55, respectively, relating to variable interest entities)........................................................................................... 2,089 Accrued investment income (includes $1 and $3, respectively, relating to variable interest entities)................... 2,219 Premiums, reinsurance and other receivables (includes $10 and $1, respectively, relating to variable interest entities)............................................................................................................. 27,981 Deferred policy acquisition costs and value of business acquired....................................................... 7,779 Other assets (includes $4 and $6, respectively, relating to variable interest entities)................................ 4,233 Separate account assets................................................................................................ 106,678 -------- Total assets..................................................................................................... $402,196 ======== LIABILITIES AND EQUITY LIABILITIES Future policy benefits................................................................................................. $109,333 Policyholder account balances.......................................................................................... 88,856 Other policy-related balances.......................................................................................... 5,876 Policyholder dividends payable......................................................................................... 659 Policyholder dividend obligation....................................................................................... 2,919 Payables for collateral under securities loaned and other transactions................................................. 20,280 Short-term debt........................................................................................................ 101 Long-term debt (includes $116 and $236, respectively, at estimated fair value, relating to variable interest entities)............................................................................................................. 2,248 Current income tax payable............................................................................................. 123 Deferred income tax liability.......................................................................................... 2,827 Other liabilities (includes $42 and $61, respectively, relating to variable interest entities)......................... 36,614 Separate account liabilities........................................................................................... 106,678 -------- Total liabilities................................................................................................ 376,514 -------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 13) EQUITY Metropolitan Life Insurance Company stockholder's equity: Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding at December 31, 2011 and 2010............................................................................. 5 Additional paid-in capital............................................................................................. 14,506 Retained earnings...................................................................................................... 8,077 Accumulated other comprehensive income (loss).......................................................................... 2,912 -------- Total Metropolitan Life Insurance Company stockholder's equity................................................... 25,500 Noncontrolling interests............................................................................................... 182 -------- Total equity..................................................................................................... 25,682 -------- Total liabilities and equity..................................................................................... $402,196 ========
2010 -------- ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $154,376 and $153,708, respectively)...................................................................................................... $159,535 Equity securities available-for-sale, at estimated fair value (cost: $1,379 and $1,898, respectively)............... 1,821 Trading and other securities, at estimated fair value (includes $473 and $463, respectively, of actively traded securities; and $117 and $201, respectively, relating to variable interest entities)............................... 735 Mortgage loans (net of valuation allowances of $393 and $522, respectively)......................................... 41,667 Policy loans........................................................................................................ 8,270 Real estate and real estate joint ventures (includes $15 and $10, respectively, relating to variable interest entities).......................................................................................................... 5,755 Other limited partnership interests (includes $152 and $187, respectively, relating to variable interest entities).. 4,517 Short-term investments, principally at estimated fair value......................................................... 2,369 Other invested assets, principally at estimated fair value (includes $98 and $102, respectively, relating to variable interest entities)........................................................................................ 7,822 -------- Total investments................................................................................................ 232,491 Cash and cash equivalents, principally at estimated fair value (includes $70 and $55, respectively, relating to variable interest entities)........................................................................................... 3,485 Accrued investment income (includes $1 and $3, respectively, relating to variable interest entities)................... 2,183 Premiums, reinsurance and other receivables (includes $10 and $1, respectively, relating to variable interest entities)............................................................................................................. 26,802 Deferred policy acquisition costs and value of business acquired....................................................... 8,191 Other assets (includes $4 and $6, respectively, relating to variable interest entities)................................ 4,426 Separate account assets................................................................................................ 97,829 -------- Total assets..................................................................................................... $375,407 ======== LIABILITIES AND EQUITY LIABILITIES Future policy benefits................................................................................................. $102,950 Policyholder account balances.......................................................................................... 88,922 Other policy-related balances.......................................................................................... 5,649 Policyholder dividends payable......................................................................................... 722 Policyholder dividend obligation....................................................................................... 876 Payables for collateral under securities loaned and other transactions................................................. 17,014 Short-term debt........................................................................................................ 102 Long-term debt (includes $116 and $236, respectively, at estimated fair value, relating to variable interest entities)............................................................................................................. 3,610 Current income tax payable............................................................................................. 155 Deferred income tax liability.......................................................................................... 950 Other liabilities (includes $42 and $61, respectively, relating to variable interest entities)......................... 35,113 Separate account liabilities........................................................................................... 97,829 -------- Total liabilities................................................................................................ 353,892 -------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 13) EQUITY Metropolitan Life Insurance Company stockholder's equity: Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding at December 31, 2011 and 2010............................................................................. 5 Additional paid-in capital............................................................................................. 14,445 Retained earnings...................................................................................................... 6,001 Accumulated other comprehensive income (loss).......................................................................... 916 -------- Total Metropolitan Life Insurance Company stockholder's equity................................................... 21,367 Noncontrolling interests............................................................................................... 148 -------- Total equity..................................................................................................... 21,515 -------- Total liabilities and equity..................................................................................... $375,407 ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-2 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 (IN MILLIONS)
2011 2010 2009 ------- ------- -------- REVENUES Premiums...................................................................... $18,288 $18,519 $ 18,629 Universal life and investment-type product policy fees........................ 2,202 2,075 2,067 Net investment income......................................................... 11,627 11,593 10,175 Other revenues................................................................ 1,808 1,725 1,739 Net investment gains (losses): Other-than-temporary impairments on fixed maturity securities................ (244) (510) (1,521) Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss).......................................... 17 150 623 Other net investment gains (losses).......................................... 359 190 (769) ------- ------- -------- Total net investment gains (losses)........................................ 132 (170) (1,667) Net derivative gains (losses)................................................ 1,578 (266) (4,428) ------- ------- -------- Total revenues........................................................... 35,635 33,476 26,515 ------- ------- -------- EXPENSES Policyholder benefits and claims.............................................. 20,681 20,707 20,662 Interest credited to policyholder account balances............................ 2,372 2,523 2,669 Policyholder dividends........................................................ 1,355 1,443 1,612 Other expenses................................................................ 6,414 6,259 6,009 ------- ------- -------- Total expenses........................................................... 30,822 30,932 30,952 ------- ------- -------- Income (loss) from continuing operations before provision for income tax...... 4,813 2,544 (4,437) Provision for income tax expense (benefit).................................... 1,481 778 (1,896) ------- ------- -------- Income (loss) from continuing operations, net of income tax................... 3,332 1,766 (2,541) Income (loss) from discontinued operations, net of income tax................. 57 26 19 ------- ------- -------- Net income (loss)............................................................ 3,389 1,792 (2,522) Less: Net income (loss) attributable to noncontrolling interests.............. (8) (3) (5) ------- ------- -------- Net income (loss) attributable to Metropolitan Life Insurance Company......... $ 3,397 $ 1,795 $(2,517) ======= ======= ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-3 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEAR ENDED DECEMBER 31, 2011 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ------------------------------------------------- NET FOREIGN DEFINED ADDITIONAL UNREALIZED OTHER-THAN- CURRENCY BENEFIT COMMON PAID-IN RETAINED INVESTMENT TEMPORARY TRANSLATION PLANS STOCK CAPITAL EARNINGS GAINS (LOSSES) IMPAIRMENTS ADJUSTMENTS ADJUSTMENT ------ ---------- -------- -------------- ----------- ----------- ---------- Balance at December 31, 2010....................... $5 $14,445 $ 6,001 $2,564 $(254) $35 $(1,429) Capital contributions from MetLife, Inc. (Note 15)............................................... 50 Excess tax benefits related to stock-based compensation...................................... 11 Dividends on common stock.......................... (1,321) Change in equity of noncontrolling interests....... Comprehensive income (loss): Net income (loss)............................... 3,397 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax............... 782 Unrealized investment gains (losses), net of related offsets and income tax............ 1,695 (63) Foreign currency translation adjustments, net of income tax............................ 4 Defined benefit plans adjustment, net of income tax................................... (422) Other comprehensive income (loss)............ Comprehensive income (loss)..................... ------ ---------- -------- -------------- ----------- ----------- ---------- Balance at December 31, 2011....................... $5 $14,506 $ 8,077 $5,041 $(317) $39 $(1,851) ====== ========== ======== ============== =========== =========== ==========
TOTAL METROPOLITAN LIFE INSURANCE COMPANY NONCONTROLLING TOTAL STOCKHOLDER'S EQUITY INTERESTS EQUITY -------------------- -------------- -------- Balance at December 31, 2010....................... $ 21,367 $148 $ 21,515 Capital contributions from MetLife, Inc. (Note 15)............................................... 50 50 Excess tax benefits related to stock-based compensation...................................... 11 11 Dividends on common stock.......................... (1,321) (1,321) Change in equity of noncontrolling interests....... 42 42 Comprehensive income (loss): Net income (loss)............................... 3,397 (8) 3,389 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax............... 782 782 Unrealized investment gains (losses), net of related offsets and income tax............ 1,632 1,632 Foreign currency translation adjustments, net of income tax............................ 4 4 Defined benefit plans adjustment, net of income tax................................... (422) (422) -------------------- -------------- -------- Other comprehensive income (loss)............ 1,996 -- 1,996 -------------------- -------------- -------- Comprehensive income (loss)..................... 5,393 (8) 5,385 -------------------- -------------- -------- Balance at December 31, 2011....................... $ 25,500 $182 $ 25,682 ==================== ============== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-4 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 (IN MILLIONS)
ADDITIONAL COMMON PAID-IN RETAINED STOCK CAPITAL EARNINGS ------ ---------- -------- Balance at December 31, 2009......................... $5 $14,438 $4,817 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... 30 ------ ---------- -------- Balance at January 1, 2010........................... 5 14,438 4,847 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... (10) Capital contributions from MetLife, Inc. (Note 15)................................................. 3 Excess tax benefits related to stock-based compensation........................................ 4 Dividends on common stock............................ (631) Change in equity of noncontrolling interests......... Comprehensive income (loss): Net income (loss)................................. 1,795 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax................. Unrealized investment gains (losses), net of related offsets and income tax.............. Foreign currency translation adjustments, net of income tax.............................. Defined benefit plans adjustment, net of income tax..................................... Other comprehensive income (loss).............. Comprehensive income (loss)....................... ------ ---------- -------- Balance at December 31, 2010......................... $5 $14,445 $6,001 ====== ========== ========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ------------------------------------------------- NET FOREIGN DEFINED TOTAL UNREALIZED OTHER-THAN- CURRENCY BENEFIT METROPOLITAN LIFE INVESTMENT TEMPORARY TRANSLATION PLANS INSURANCE COMPANY GAINS (LOSSES) IMPAIRMENTS ADJUSTMENTS ADJUSTMENT STOCKHOLDER'S EQUITY -------------- ----------- ----------- ---------- -------------------- Balance at December 31, 2009......................... $(265) $(341) $ 51 $(1,527) $17,178 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... 30 -------------- ----------- ----------- ---------- -------------------- Balance at January 1, 2010........................... (265) (341) 51 (1,527) 17,208 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... 10 -- Capital contributions from MetLife, Inc. (Note 15)................................................. 3 Excess tax benefits related to stock-based compensation........................................ 4 Dividends on common stock............................ (631) Change in equity of noncontrolling interests......... Comprehensive income (loss): Net income (loss)................................. 1,795 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax................. 118 118 Unrealized investment gains (losses), net of related offsets and income tax.............. 2,701 87 2,788 Foreign currency translation adjustments, net of income tax.............................. (16) (16) Defined benefit plans adjustment, net of income tax..................................... 98 98 -------------------- Other comprehensive income (loss).............. 2,988 -------------------- Comprehensive income (loss)....................... 4,783 -------------- ----------- ----------- ---------- -------------------- Balance at December 31, 2010......................... $2,564 $(254) $ 35 $(1,429) $21,367 ============== =========== =========== ========== ====================
NONCONTROLLING TOTAL INTERESTS EQUITY -------------- ------- Balance at December 31, 2009......................... $ 291 $17,469 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... 30 -------------- ------- Balance at January 1, 2010........................... 291 17,499 Cumulative effect of change in accounting principle, net of income tax (Note 1).......................... -- Capital contributions from MetLife, Inc. (Note 15)................................................. 3 Excess tax benefits related to stock-based compensation........................................ 4 Dividends on common stock............................ (631) Change in equity of noncontrolling interests......... (146) (146) Comprehensive income (loss): Net income (loss)................................. (3) 1,792 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax................. 118 Unrealized investment gains (losses), net of related offsets and income tax.............. 6 2,794 Foreign currency translation adjustments, net of income tax.............................. (16) Defined benefit plans adjustment, net of income tax..................................... 98 -------------- ------- Other comprehensive income (loss).............. 6 2,994 -------------- ------- Comprehensive income (loss)....................... 3 4,786 -------------- ------- Balance at December 31, 2010......................... $ 148 $21,515 ============== =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-5 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 (IN MILLIONS)
ADDITIONAL COMMON PAID-IN RETAINED STOCK CAPITAL EARNINGS ------ ---------- -------- Balance at December 31, 2008..................................................... $5 $14,437 $ 7,298 Cumulative effect of change in accounting principle, net of income tax (Note 1).............................................................................. 36 Capital contributions from MetLife, Inc. (Note 15)............................... 3 Excess tax liabilities related to stock-based compensation....................... (2) Change in equity of noncontrolling interests..................................... Comprehensive income (loss): Net income (loss)............................................................. (2,517) Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax........................................................................ Unrealized investment gains (losses), net of related offsets and income tax........................................................................ Foreign currency translation adjustments, net of income tax................. Defined benefit plans adjustment, net of income tax......................... Other comprehensive income (loss).......................................... Comprehensive income (loss)................................................... ------ ---------- -------- Balance at December 31, 2009..................................................... $5 $14,438 $ 4,817 ====== ========== ========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ------------------------------------------------- NET FOREIGN DEFINED UNREALIZED OTHER-THAN- CURRENCY BENEFIT INVESTMENT TEMPORARY TRANSLATION PLANS GAINS (LOSSES) IMPAIRMENTS ADJUSTMENTS ADJUSTMENT -------------- ----------- ----------- ---------- Balance at December 31, 2008..................................................... $(7,701) $ -- $ 143 $(1,437) Cumulative effect of change in accounting principle, net of income tax (Note 1).............................................................................. (36) Capital contributions from MetLife, Inc. (Note 15)............................... Excess tax liabilities related to stock-based compensation....................... Change in equity of noncontrolling interests..................................... Comprehensive income (loss): Net income (loss)............................................................. Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax........................................................................ (162) Unrealized investment gains (losses), net of related offsets and income tax........................................................................ 7,598 (305) Foreign currency translation adjustments, net of income tax................. (92) Defined benefit plans adjustment, net of income tax......................... (90) Other comprehensive income (loss).......................................... Comprehensive income (loss)................................................... -------------- ----------- ----------- ---------- Balance at December 31, 2009..................................................... $ (265) $(341) $ 51 $(1,527) ============== =========== =========== ==========
TOTAL METROPOLITAN LIFE INSURANCE COMPANY NONCONTROLLING TOTAL STOCKHOLDER'S EQUITY INTERESTS EQUITY -------------------- -------------- -------- Balance at December 31, 2008..................................................... $ 12,745 $ 83 $ 12,828 Cumulative effect of change in accounting principle, net of income tax (Note 1).............................................................................. -- -- Capital contributions from MetLife, Inc. (Note 15)............................... 3 3 Excess tax liabilities related to stock-based compensation....................... (2) (2) Change in equity of noncontrolling interests..................................... 218 218 Comprehensive income (loss): Net income (loss)............................................................. (2,517) (5) (2,522) Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax........................................................................ (162) (162) Unrealized investment gains (losses), net of related offsets and income tax........................................................................ 7,293 (5) 7,288 Foreign currency translation adjustments, net of income tax................. (92) (92) Defined benefit plans adjustment, net of income tax......................... (90) (90) -------------------- -------------- -------- Other comprehensive income (loss).......................................... 6,949 (5) 6,944 -------------------- -------------- -------- Comprehensive income (loss)................................................... 4,432 (10) 4,422 -------------------- -------------- -------- Balance at December 31, 2009..................................................... $ 17,178 $ 291 $ 17,469 ==================== ============== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-6 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 (IN MILLIONS)
2011 2010 2009 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)............................................................ $ 3,389 $ 1,792 $ (2,522) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expenses...................................... 407 394 381 Amortization of premiums and accretion of discounts associated with investments, net.......................................................... (683) (709) (715) (Gains) losses on investments and derivatives and from sales of businesses, net....................................................................... (1,735) 380 6,081 (Income) loss from equity method investments, net of dividends or distributions............................................................. 269 116 845 Interest credited to policyholder account balances.......................... 2,372 2,523 2,669 Universal life and investment-type product policy fees...................... (2,202) (2,075) (2,067) Change in trading and other securities...................................... 20 (14) (165) Change in accrued investment income......................................... 14 (117) 14 Change in premiums, reinsurance and other receivables....................... (208) (377) (507) Change in deferred policy acquisition costs, net............................ 94 147 (441) Change in income tax recoverable (payable).................................. 547 735 (2,340) Change in other assets...................................................... 767 283 (10) Change in insurance-related liabilities and policy-related balances......... 2,587 2,469 2,582 Change in other liabilities................................................. 726 684 3,330 Other, net.................................................................. (125) (120) (44) --------- --------- --------- Net cash provided by operating activities.................................... 6,239 6,111 7,091 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities................................................... 53,325 49,828 41,437 Equity securities........................................................... 816 520 1,030 Mortgage loans.............................................................. 8,152 4,853 4,589 Real estate and real estate joint ventures.................................. 1,058 241 30 Other limited partnership interests......................................... 754 383 751 Purchases of: Fixed maturity securities................................................... (54,038) (57,961) (51,066) Equity securities........................................................... (278) (157) (544) Mortgage loans.............................................................. (10,443) (5,820) (3,231) Real estate and real estate joint ventures.................................. (980) (539) (318) Other limited partnership interests......................................... (658) (614) (585) Cash received in connection with freestanding derivatives.................... 1,011 712 1,801 Cash paid in connection with freestanding derivatives........................ (695) (920) (1,748) Issuances of loans to affiliates............................................. (525) -- -- Net change in policy loans................................................... (44) (171) (218) Net change in short-term investments......................................... (3,816) 841 4,268 Net change in other invested assets.......................................... (570) 142 (740) Net change in property, equipment and leasehold improvements................. (104) (138) (109) Other, net................................................................... 7 (7) 1 --------- --------- --------- Net cash used in investing activities........................................ $ (7,028) $ (8,807) $ (4,652) --------- --------- ---------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-7 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 (IN MILLIONS)
2011 2010 2009 --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Policyholder account balances: Deposits......................................................................... $ 55,586 $ 44,481 $ 51,313 Withdrawals...................................................................... (57,078) (43,381) (57,182) Net change in payables for collateral under securities loaned and other transactions. 3,266 2,352 (3,987) Net change in short-term debt........................................................ (1) (217) (95) Long-term debt issued................................................................ 110 188 1,205 Long-term debt repaid................................................................ (1,411) (324) (737) Dividends on common stock............................................................ (1,151) (232) -- Capital contribution................................................................. 47 -- -- Other, net........................................................................... 25 (33) 112 --------- --------- --------- Net cash (used in) provided by financing activities.................................. (607) 2,834 (9,371) --------- --------- --------- Change in cash and cash equivalents.................................................. (1,396) 138 (6,932) Cash and cash equivalents, beginning of year......................................... 3,485 3,347 10,279 --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR............................................... $ 2,089 $ 3,485 $ 3,347 ========= ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Net cash paid during the year for: Interest......................................................................... $ 196 $ 217 $ 166 ========= ========= ========= Income tax....................................................................... $ 701 $ 183 $ 285 ========= ========= ========= Non-cash transactions during the year: Purchase money mortgage loans on sales of real estate joint ventures................. $ -- $ 2 $ 93 ========= ========= ========= Capital contributions from MetLife, Inc.............................................. $ 3 $ 3 $ 3 ========= ========= ========= Dividends to MetLife, Inc............................................................ $ 170 $ 399 $ -- ========= ========= ========= Real estate and real estate joint ventures acquired in satisfaction of debt.......... $ 151 $ 58 $ 209 ========= ========= ========= Long-term debt issued to MetLife, Inc. in exchange for fixed maturity securities..... $ -- $ -- $ 300 ========= ========= =========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-8 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS Metropolitan Life Insurance Company and its subsidiaries (collectively, "MLIC" or the "Company") is a leading provider of insurance, annuities and employee benefit programs throughout the United States. The Company offers life insurance and annuities to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Metropolitan Life Insurance Company and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See "-- Adoption of New Accounting Pronouncements." Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 10. Intercompany accounts and transactions have been eliminated. Certain amounts in the prior years' consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2011 presentation as discussed throughout the Notes to the Consolidated Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements. A description of critical estimates is incorporated within the discussion of the related accounting policies which follows. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's business and operations. Actual results could differ from these estimates. Investments The accounting policies for the Company's principal investments are as follows: Fixed Maturity and Equity Securities. The Company's fixed maturity and equity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income (loss), net of policyholder-related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales of securities are determined on a specific identification basis. F-9 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Interest income on fixed maturity securities is recorded when earned using an effective yield method giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. Interest, dividends and prepayment fees are recorded in net investment income. Included within fixed maturity securities are structured securities including mortgage-backed and asset-backed securities ("ABS"). Amortization of the premium or discount considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single class and multi-class mortgage-backed and ABS are estimated by management using inputs obtained from third-party specialists, including broker-dealers, and based on management's knowledge of the current market. For credit-sensitive mortgage-backed and ABS and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other mortgage-backed and ABS, the effective yield is recalculated on a retrospective basis. The Company periodically evaluates fixed maturity and equity securities for impairment. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in estimated fair value. The Company's review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of severity and/or age of the gross unrealized loss, as summarized in Note 3 "-- Aging of Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale." Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below cost or amortized cost; (ii) the potential for impairments of securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vi) with respect to fixed maturity securities, whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to structured securities, changes in forecasted cash flows after considering the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security; and (viii) other subjective factors, including concentrations and information obtained from regulators and rating agencies. For fixed maturity securities in an unrealized loss position, an other-than-temporary impairment ("OTTI") is recognized in earnings when it is anticipated that the amortized cost will not be recovered. In such situations, the OTTI recognized in earnings is the entire difference between the fixed maturity security's amortized cost and its estimated fair value only when either: (i) the Company has the intent to sell the fixed maturity security; or (ii) it is more likely than not that the Company will be required to sell the fixed maturity security before recovery of the decline in estimated fair value below amortized cost. If neither of these two conditions exist, the difference between the amortized cost of the fixed maturity security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings ("credit loss"). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than credit factors ("noncredit F-10 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) loss") is recorded in other comprehensive income (loss). Adjustments are not made for subsequent recoveries in value. With respect to equity securities, the Company considers in its OTTI analysis its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its estimated fair value to an amount equal to or greater than cost. If a sale decision is made for an equity security and it is not expected to recover to an amount at least equal to cost prior to the expected time of the sale, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings. When an OTTI loss has occurred, the OTTI loss is the entire difference between the equity security's cost and its estimated fair value with a corresponding charge to earnings. Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the securities have an interest rate step-up feature which, when combined with other qualitative factors, indicates that the securities have more debt-like characteristics; while those with more equity-like characteristics are classified as equity securities within non-redeemable preferred stock. Many of such securities, commonly referred to as "perpetual hybrid securities," have been issued by non-U.S. financial institutions that are accorded the highest two capital treatment categories by their respective regulatory bodies (i.e. core capital, or "Tier 1 capital" and perpetual deferrable securities, or "Upper Tier 2 capital"). With respect to perpetual hybrid securities, the Company considers in its OTTI analysis whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of the securities that are in a severe and extended unrealized loss position. The Company also considers whether any perpetual hybrid securities, with an unrealized loss, regardless of credit rating, have deferred any dividend payments. When an OTTI loss has occurred, the OTTI loss is the entire difference between the perpetual hybrid security's cost and its estimated fair value with a corresponding charge to earnings. The Company's methodology and significant inputs used to determine the amount of the credit loss on fixed maturity securities are as follows: (i)The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment. (ii)When determining the collectability and the period over which value is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management's best estimates of likely scenario-based outcomes after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies. (iii)Additional considerations are made when assessing the unique features that apply to certain structured securities such as residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS") and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security. F-11 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (iv)When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, management considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, management considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process as described in (ii) above. The cost or amortized cost of fixed maturity and equity securities is adjusted for OTTI in the period in which the determination is made. The Company does not change the revised cost basis for subsequent recoveries in value. In periods subsequent to the recognition of OTTI on a fixed maturity security, the Company accounts for the impaired security as if it had been purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis is accreted into net investment income over the remaining term of the fixed maturity security in a prospective manner based on the amount and timing of estimated future cash flows. Trading and Other Securities. Trading and other securities are stated at estimated fair value. Trading and other securities include investments that are actively purchased and sold ("Actively Traded Securities"). These Actively Traded Securities are principally fixed maturity securities. Short sale agreement liabilities related to Actively Traded Securities, included in other liabilities, are also stated at estimated fair value. Trading and other securities also includes securities for which the fair value option ("FVO") has been elected ("FVO Securities"). FVO Securities include certain fixed maturity and equity securities held-for-investment by the general account to support asset and liability matching strategies for certain insurance products. FVO Securities also include securities held by consolidated securitization entities ("CSEs") with changes in estimated fair value subsequent to consolidation included in net investment gains (losses). Interest and dividends related to all trading and other securities are included in net investment income. Securities Lending. Securities lending transactions, whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, are treated as financing arrangements and the associated liability is recorded at the amount of cash received. At the inception of a loan, the Company obtains collateral, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned and maintains it at a level greater than or equal to 100% for the duration of the loan. The Company monitors the estimated fair value of the securities loaned on a daily basis with additional collateral obtained as necessary. Income and expenses associated with securities lending transactions are reported as investment income and investment expense, respectively, within net investment income. Mortgage Loans. For the purposes of determining valuation allowances the Company disaggregates its mortgage loan investments into three portfolio segments: commercial, agricultural, and residential. The accounting and valuation allowance policies that are applicable to all portfolio segments are presented below, followed by the policies applicable to both commercial and agricultural loans, which are very similar, as well as policies applicable to residential loans. Commercial, Agricultural and Residential Mortgage Loans -- Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and F-12 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) discounts and prepayment fees are reported in net investment income. Interest ceases to accrue when collection of interest is not considered probable and/or when interest or principal payments are past due as follows: commercial -- 60 days; and agricultural and residential -- 90 days, unless, in the case of a residential loan, it is both well-secured and in the process of collection. When a loan is placed on non-accrual status, uncollected past due interest is charged-off against net investment income. Generally, the accrual of interest income resumes after all delinquent amounts are paid and management believes all future principal and interest payments will be collected. Cash receipts on non-accruing loans are recorded in accordance with the loan agreement as a reduction of principal and/or interest income. Charge-offs occur upon the realization of a credit loss, typically through foreclosure or after a decision is made to sell a loan, or for residential loans when, after considering the individual consumer's financial status, management believes that uncollectability is other-than-temporary. Gain or loss upon charge-off is recorded, net of previously established valuation allowances, in net investment gains (losses). Cash recoveries on principal amounts previously charged-off are generally recorded as an increase to the valuation allowance, unless the valuation allowance adequately provides for expected credit losses; then the recovery is recorded in net investment gains (losses). Gains and losses from sales of loans and increases or decreases to valuation allowances are recorded in net investment gains (losses). Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Specific valuation allowances are established using the same methodology for all three portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan's original effective interest rate, (ii) the estimated fair value of the loan's underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan's observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for all loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company's experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available. For commercial and agricultural mortgage loans, the Company typically uses 10 years or more of historical experience in establishing non-specific valuation allowances. For commercial mortgage loans, 20 years of historical experience is used which captures multiple economic cycles. For evaluations of commercial mortgage loans, in addition to historical experience, management considers factors that include the impact of a rapid change to the economy, which may not be reflected in the loan portfolio, and recent loss and recovery trend experience as compared to historical loss and recovery experience. For agricultural mortgage loans, ten years of historical experience is used which captures a full economic cycle. For evaluations of agricultural loans, in addition to historical experience, management considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. For commercial and agricultural mortgage loans, on a quarterly basis, management incorporates the impact of these current market events and conditions on historical experience in determining the non-specific valuation allowance established for each portfolio segment level. For evaluations of residential mortgage loans, the key inputs of expected frequency F-13 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) and expected loss reflect current market conditions, with expected frequency adjusted, when appropriate, for differences from market conditions and the Company's experience. Commercial and Agricultural Mortgage Loans -- All commercial loans are reviewed on an ongoing basis which may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, loan-to-value ratios, debt service coverage ratios, and tenant creditworthiness. All agricultural loans are monitored on an ongoing basis. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, potentially delinquent, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. The monitoring process for agricultural loans is generally similar, with a focus on higher risk loans, including reviews on a geographic and property-type basis. Higher risk commercial and agricultural loans are reviewed individually on an ongoing basis for potential credit loss and specific valuation allowances are established using the methodology described above for all loan portfolio segments. Quarterly, the remaining loans are reviewed on a pool basis by aggregating groups of loans that have similar risk characteristics for potential credit loss, and non-specific valuation allowances are established as described above using inputs that are unique to each segment of the loan portfolio. For commercial loans, the Company's primary credit quality indicator is the debt service coverage ratio, which compares a property's net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. The Company also reviews the loan-to-value ratio of its commercial loan portfolio. Loan-to-value ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. A loan-to-value ratio greater than 100% indicates that the loan's unpaid principal balance is greater than the collateral value. A loan-to-value ratio of less than 100% indicates an excess of collateral value over the loan's unpaid principal balance. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The debt service coverage ratio and loan-to-value ratio, as well as the values utilized in calculating these ratios, are updated annually, on a rolling basis, with a portion of the loan portfolio updated each quarter. For agricultural loans, the Company's primary credit quality indicator is the loan-to-value ratio. The values utilized in calculating this ratio are developed in connection with the ongoing review of the agricultural loan portfolio and are routinely updated. Residential Mortgage Loans -- The Company's residential loan portfolio is comprised primarily of closed end, amortizing residential loans and home equity lines of credit and it does not hold any optional adjustable rate mortgages, sub-prime, or low teaser rate loans. In contrast to the commercial and agricultural loan portfolios, residential loans are smaller-balance homogeneous loans that are collectively evaluated for impairment. Non-specific valuation allowances are established using the evaluation framework described above for pools of loans with similar risk characteristics from inputs that are unique to the residential segment of the loan portfolio. Loan specific valuation allowances are only established on residential loans when they have been restructured and are established using the methodology described above for all loan portfolio segments. For residential loans, the Company's primary credit quality indicator is whether the loan is performing or non-performing. The Company generally defines non-performing residential loans as those that are 90 or more days past due and/or in non-accrual status. The determination of F-14 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) performing or non-performing status is assessed monthly. Generally, non-performing residential loans have a higher risk of experiencing a credit loss. Mortgage Loans Modified in a Troubled Debt Restructuring. For a small portion of the portfolio, classified as troubled debt restructurings, concessions are granted related to the borrowers' financial difficulties. Generally, the types of concessions include: reduction of the contractual interest rate, extension of the maturity date at an interest rate lower than current market interest rates and/or a reduction of accrued interest. The amount, timing and extent of the concession granted is considered in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. Through the continuous portfolio monitoring process, a specific valuation allowance may have been recorded prior to the quarter when the mortgage loan is modified in a troubled debt restructuring. Accordingly, the carrying value (after specific valuation allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment. Policy Loans. Policy loans are stated at unpaid principal balances. Interest income on such loans is recorded as earned in net investment income using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. Valuation allowances are not established for policy loans, as these loans are fully collateralized by the cash surrender value of the underlying insurance policies. Any unpaid principal or interest on the loan is deducted from the cash surrender value or the death benefit prior to settlement of the policy. Real Estate. Real estate held-for-investment, including related improvements, is stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset (typically 20 to 55 years). Rental income is recognized on a straight-line basis over the term of the respective leases. The Company classifies a property as held-for-sale if it commits to a plan to sell a property within one year and actively markets the property in its current condition for a price that is reasonable in comparison to its estimated fair value. The Company classifies the results of operations and the gain or loss on sale of a property that either has been disposed of or classified as held-for-sale as discontinued operations, if the ongoing operations of the property will be eliminated from the ongoing operations of the Company and if the Company will not have any significant continuing involvement in the operations of the property after the sale. Real estate held-for-sale is stated at the lower of depreciated cost or estimated fair value less expected disposition costs. Real estate is not depreciated while it is classified as held-for-sale. The Company periodically reviews its properties held-for-investment for impairment and tests properties for recoverability whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable and the carrying value of the property exceeds its estimated fair value. Properties whose carrying values are greater than their undiscounted cash flows are written down to their estimated fair value, with the impairment loss included in net investment gains (losses). Impairment losses are based upon the estimated fair value of real estate, which is generally computed using the present value of expected future cash flows discounted at a rate commensurate with the underlying risks. Real estate acquired upon foreclosure is recorded at the lower of estimated fair value or the carrying value of the mortgage loan at the date of foreclosure. Real Estate Joint Ventures and Other Limited Partnership Interests. The Company uses the equity method of accounting for investments in real estate joint ventures and other limited partnership interests consisting of leveraged buy-out funds, hedge funds and other private equity funds in which it has more than a minor ownership interest or more than a minor influence over the joint venture's or partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The equity method is also used for such investments in which the Company has more than a minor F-15 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) influence or more than a 20% interest. Generally, the Company records its share of earnings using a three-month lag methodology for instances where the timely financial information is not available and the contractual agreements provide for the delivery of the investees' financial information after the end of the Company's reporting period. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture's or the partnership's operations. Based on the nature and structure of these investments, they do not meet the characteristics of an equity security. The Company reports the distributions from real estate joint ventures and other limited partnership interests accounted for under the cost method and equity in earnings from real estate joint ventures and other limited partnership interests accounted for under the equity method in net investment income. In addition to the investees performing regular evaluations for the impairment of underlying investments, the Company routinely evaluates its investments in real estate joint ventures and other limited partnerships for impairments. The Company considers its cost method investments for OTTI when the carrying value of real estate joint ventures and other limited partnership interests exceeds the net asset value ("NAV"). The Company takes into consideration the severity and duration of this excess when deciding if the cost method investment is other-than-temporarily impaired. For equity method investees, the Company considers financial and other information provided by the investee, other known information and inherent risks in the underlying investments, as well as future capital commitments, in determining whether an impairment has occurred. When an OTTI is deemed to have occurred, the Company records a realized capital loss within net investment gains (losses) to record the investment at its estimated fair value. Short-term Investments. Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates estimated fair value. Short-term investments also include investments in affiliated money market pools. Other Invested Assets. Other invested assets consist principally of freestanding derivatives with positive estimated fair values, loans to affiliates, leveraged leases, tax credit partnerships, investments in insurance enterprise joint ventures, and funds withheld. Freestanding derivatives with positive estimated fair values are described in "-- Derivative Financial Instruments" below. Leveraged leases are recorded net of non-recourse debt. The Company recognizes income on the leveraged leases by applying the leveraged lease's estimated rate of return to the net investment in the lease. The Company regularly reviews residual values and impairs them to expected values. Loans to affiliates are stated at unpaid principal balance, adjusted for amortization of any unamortized premium or discount. Tax credit partnerships are established for the purpose of investing in low-income housing and other social causes, where the primary return on investment is in the form of income tax credits and are accounted for under the equity method or under the effective yield method. The Company reports the equity in earnings of joint venture investments and tax credit partnerships in net investment income. Joint venture investments represent the Company's investments in entities that engage in insurance underwriting activities and are accounted for under the equity method. F-16 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Funds withheld represent a receivable for amounts contractually withheld by ceding companies in accordance with reinsurance agreements. The Company recognizes interest on funds withheld at rates defined by the terms of the agreement which may be contractually specified or directly related to the underlying investments and records it in net investment income. Investments Risks and Uncertainties. The Company's investments are exposed to four primary sources of risk: credit, interest rate, liquidity risk, and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the determination of estimated fair values, the diminished ability to sell certain investments in times of strained market conditions, the recognition of impairments, the recognition of income on certain investments and the potential consolidation of VIEs. The use of different methodologies, assumptions and inputs relating to these financial statement risks may have a material effect on the amounts presented within the consolidated financial statements. When available, the estimated fair value of the Company's fixed maturity and equity securities are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company's securities holdings and valuation of these securities does not involve management judgment. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies as described in "-- Fair Value" below and in Note 5. Such estimated fair values are based on available market information and management's judgment about financial instruments. The observable and unobservable inputs used in the standard market valuation methodologies are described in Note 5. Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company's ability to sell securities, or the price ultimately realized for these securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities. The determination of the amount of valuation allowances and impairments, as applicable, is described previously by investment type. The determination of such valuation allowances and impairments is highly subjective and is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. The recognition of income on certain investments (e.g. structured securities, including mortgage-backed and ABS, certain structured investment transactions, trading and other securities) is dependent upon prepayments and defaults, which could result in changes in amounts to be earned. The Company has invested in certain structured transactions that are VIEs. These structured transactions include asset-backed securitizations, hybrid securities, real estate joint ventures, other limited partnership interests, and limited liability companies. The Company consolidates those VIEs for which it is deemed to be the primary beneficiary. The accounting guidance for the determination of when an entity is a VIE and when to consolidate a VIE is complex and requires significant management judgment. The determination of the VIE's primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party's relationship with or involvement in the entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity. The Company generally uses a qualitative approach to determine whether it is the primary beneficiary. F-17 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) For most VIEs, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered the primary beneficiary. However, for VIEs that are investment companies or apply measurement principles consistent with those utilized by investment companies, the primary beneficiary is based on a risks and rewards model and is defined as the entity that will absorb a majority of a VIE's expected losses, receive a majority of a VIE's expected residual returns if no single entity absorbs a majority of expected losses, or both. The Company reassesses its involvement with VIEs on a quarterly basis. The use of different methodologies, assumptions and inputs in the determination of the primary beneficiary could have a material effect on the amounts presented within the consolidated financial statements. Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter ("OTC") market. The Company uses a variety of derivatives, including swaps, forwards, futures and option contracts, to manage various risks relating to its ongoing business operations. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance agreements that have embedded derivatives. Freestanding derivatives are carried in the Company's consolidated balance sheets either as assets within other invested assets or as liabilities within other liabilities at estimated fair value as determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for OTC derivatives. The determination of estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. Accruals on derivatives are generally recorded in accrued investment income or within other liabilities in the consolidated balance sheets. However, accruals that are not expected to settle within one year are included with the derivative carrying value in other invested assets or other liabilities. The Company does not offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivative gains (losses) except for those in net investment income for economic hedges of equity method investments in joint ventures, or for all derivatives held in relation to the trading portfolios. The fluctuations in estimated fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (i) a hedge of the estimated fair value of a recognized asset or liability ("fair value hedge"); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid F-18 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) related to a recognized asset or liability ("cash flow hedge"); or (iii) a hedge of a net investment in a foreign operation. In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments of hedge effectiveness and measurements of ineffectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income. The accounting for derivatives is complex and interpretations of the primary accounting guidance continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under such accounting guidance. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Under a fair value hedge, changes in the estimated fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the estimated fair value of the hedged item related to the designated risk being hedged, are reported within net derivative gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. Under a cash flow hedge, changes in the estimated fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholder's equity and the deferred gains or losses on the derivative are reclassified into the consolidated statement of operations when the Company's earnings are affected by the variability in cash flows of the hedged item. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net derivative gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. In a hedge of a net investment in a foreign operation, changes in the estimated fair value of the hedging derivative that are measured as effective are reported within other comprehensive income (loss) consistent with the translation adjustment for the hedged net investment in the foreign operation. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net derivative gains (losses). The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the consolidated statements of operations when the Company's earnings are affected by the variability in cash flows of the hedged item. F-19 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable are recognized immediately in net derivative gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value in the consolidated balance sheets, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). The Company issues certain products and purchases certain investments that contain embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. If the instrument would not be accounted for in its entirety at estimated fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried in the consolidated balance sheets at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. Fair Value As described below, certain assets and liabilities are measured at estimated fair value in the Company's consolidated balance sheets. In addition, the notes to these consolidated financial statements include further disclosures of estimated fair values. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition. Subsequent to initial recognition, fair values are based on unadjusted quoted prices for identical assets or liabilities in active markets that are readily and regularly obtainable. When such quoted prices are not available, fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical assets or liabilities, or other observable inputs. If these inputs are not available, or observable inputs are not determinative, unobservable inputs and/or adjustments to observable inputs requiring management judgment are used to determine the fair value of assets and liabilities. The Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows: Level 1Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. F-20 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Level 2Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability. Cash and Cash Equivalents The Company considers all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, which approximates estimated fair value. Property, Equipment, Leasehold Improvements and Computer Software Property, equipment and leasehold improvements, which are included in other assets, are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, as appropriate. The estimated life for company occupied real estate property is generally 40 years. Estimated lives generally range from five to 10 years for leasehold improvements and three to seven years for all other property and equipment. The cost basis of the property, equipment and leasehold improvements was $1.7 billion and $1.6 billion at December 31, 2011 and 2010, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $999 million and $898 million at December 31, 2011 and 2010, respectively. Related depreciation and amortization expense was $118 million, $111 million and $111 million for the years ended December 31, 2011, 2010 and 2009, respectively. Computer software, which is included in other assets, is stated at cost, less accumulated amortization. Purchased software costs, as well as certain internal and external costs incurred to develop internal-use computer software during the application development stage, are capitalized. Such costs are amortized generally over a four-year period using the straight-line method. The cost basis of computer software was $1.6 billion and $1.5 billion at December 31, 2011 and 2010, respectively. Accumulated amortization of capitalized software was $1.2 billion and $1.1 billion at December 31, 2011 and 2010, respectively. Related amortization expense was $145 million, $132 million and $125 million for the years ended December 31, 2011, 2010 and 2009, respectively. Deferred Policy Acquisition Costs and Value of Business Acquired The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that vary with and relate to the production of new business are deferred as deferred policy acquisition costs ("DAC"). Such costs consist principally of commissions, certain agency expenses and policy issuance expenses. Value of business acquired (" VOBA") is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The estimated fair value of the acquired liabilities is based on 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, F-21 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) nonperformance risk adjustment and other factors. Actual experience on the purchased business may vary from these projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated in the consolidated financial statements for reporting purposes. The Company amortizes DAC and VOBA on life insurance or investment-type contracts in proportion to gross premiums, gross margins or gross profits, depending on the type of contract as described below. The Company amortizes DAC and VOBA related to non-participating and non-dividend-paying traditional contracts (term insurance, non-participating whole life insurance, traditional group life insurance, and non-medical health insurance) over the appropriate premium paying period in proportion to the present value of actual historic and expected future gross premiums. The present value of expected premiums is based upon the premium requirement of each policy and assumptions for mortality, morbidity, persistency and investment returns at policy issuance, or policy acquisition (as it relates to VOBA), that include provisions for adverse deviation that are consistent with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes. The Company amortizes DAC and VOBA related to participating, dividend-paying traditional contracts over the estimated lives of the contracts in proportion to actual and expected future gross margins. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The future gross margins are dependent principally on investment returns, policyholder dividend scales, mortality, persistency, expenses to administer the business, creditworthiness of reinsurance counterparties and certain economic variables, such as inflation. For participating contracts within the closed block (dividend paying traditional contracts) future gross margins are also dependent upon changes in the policyholder dividend obligation. Of these factors, the Company anticipates that investment returns, expenses, persistency and other factor changes, as well as policyholder dividend scales are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross margins with the actual gross margins for that period. When the actual gross margins change from previously estimated gross margins, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross margins exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross margins are below the previously estimated gross margins. Each reporting period, the Company also updates the actual amount of business in-force, which impacts expected future gross margins. When expected future gross margins are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the expected future gross margins are above the previously estimated expected future gross margins. Each period, the Company also reviews the estimated gross margins for each block of business to determine the recoverability of DAC and VOBA balances. The Company amortizes DAC and VOBA related to fixed and variable universal life contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties, the effect of any hedges used and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns, expenses and persistency are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is F-22 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits. When expected future gross profits are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits. Each period, the Company also reviews the estimated gross profits for each block of business to determine the recoverability of DAC and VOBA balances. Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period which can result in significant fluctuations in amortization of DAC and VOBA. Returns that are higher than the Company's long-term expectation produce higher account balances, which increases the Company's future fee expectations and decreases future benefit payment expectations on minimum death and living benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower than the Company's long-term expectation. The Company's practice to determine the impact of gross profits resulting from returns on separate accounts assumes that long-term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these events and only changes the assumption when its long-term expectation changes. The Company also periodically reviews other long-term assumptions underlying the projections of estimated gross margins and profits. These include investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency and expenses to administer business. Management annually updates assumptions used in the calculation of estimated gross margins and profits which may have significantly changed. If the update of assumptions causes expected future gross margins and profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes expected future gross margins and profits to decrease. Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If such modification, referred to as an internal replacement, substantially changes the contract, the associated DAC or VOBA is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. Sales Inducements The Company generally has two different types of sales inducements which are included in other assets: (i) the policyholder receives a bonus whereby the policyholder's initial account balance is increased by an amount equal to a specified percentage of the customer's deposit; and (ii) the policyholder receives a higher interest rate using a dollar cost averaging method than would have been received based on the normal general account interest rate credited. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The amortization of sales inducements is included in policyholder benefits and claims. Each year, or more frequently if circumstances indicate a potentially significant recoverability issue exists, the Company reviews the deferred sales inducements to determine the recoverability of these balances. F-23 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Value of Distribution Agreements and Customer Relationships Acquired Value of distribution agreements acquired ("VODA") is reported in other assets and represents the present value of expected future profits associated with the expected future business derived from the distribution agreements acquired as part of a business combination. Value of customer relationships acquired ("VOCRA") is also reported in other assets and represents the present value of the expected future profits associated with the expected future business acquired through existing customers of the acquired company or business. The VODA and VOCRA associated with past acquisitions are amortized over useful lives ranging from 10 to 30 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a potentially significant recoverability issue exists, the Company reviews VODA and VOCRA to determine the recoverability of these balances. Goodwill Goodwill, which is included in other assets, is the excess of cost over the estimated fair value of net assets acquired which represents the future economic benefits arising from such net assets acquired that could not be individually identified. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test. The Company performs its annual goodwill impairment testing during the third quarter of each year based upon data as of the close of the second quarter. Goodwill associated with a business acquisition is not tested for impairment during the year the business is acquired unless there is a significant identified impairment event. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment, at the "reporting unit" level. A reporting unit is the operating segment or a business one level below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that level. For purposes of goodwill impairment testing, if the carrying value of a reporting unit exceeds its estimated fair value, there might be an indication of impairment. In such instances, the implied fair value of the goodwill is determined in the same manner as the amount of goodwill that would be determined in a business acquisition. The excess of the carrying value of goodwill over the implied fair value of goodwill would be recognized as an impairment and recorded as a charge against net income. In performing the Company's goodwill impairment tests, the estimated fair values of the reporting units are first determined using a market multiple approach. When further corroboration is required, the Company uses a discounted cash flow approach. For reporting units which are particularly sensitive to market assumptions, such as the retirement products and individual life reporting units, the Company may use additional valuation methodologies to estimate the reporting units' fair values. The key inputs, judgments and assumptions necessary in determining estimated fair value of the reporting units include projected operating earnings, current book value, the level of economic capital required to support the mix of business, long-term growth rates, comparative market multiples, the account value of in-force business, projections of new and renewal business, as well as margins on such business, the level of interest rates, credit spreads, equity market levels and the discount rate that the Company believes is appropriate for the respective reporting unit. The Company applies significant judgment when determining the estimated fair value of the Company's reporting units. The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently uncertain and represent only management's reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the F-24 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) estimates are based will, in all likelihood, differ in some respects from actual future results. Declines in the estimated fair value of the Company's reporting units could result in goodwill impairments in future periods which could adversely affect the Company's results of operations or financial position. On an ongoing basis, the Company evaluates potential triggering events that may affect the estimated fair value of the Company's reporting units to assess whether any goodwill impairment exists. Deteriorating or adverse market conditions for certain reporting units may have an impact on the estimated fair value of these reporting units and could result in future impairments of goodwill. See Note 7 for discussion of goodwill impairment testing during 2011. Liability for Future Policy Benefits and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance, traditional annuities and non-medical health insurance. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of future expected benefits to be paid reduced by the present value of future expected premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, disability incidence, disability terminations, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. Utilizing these assumptions, liabilities are established on a block of business basis. For long duration insurance contracts, assumptions such as mortality, morbidity and interest rates are "locked in" upon the issuance of new business. However, significant adverse changes in experience on such contracts may require us to establish premium deficiency reserves. Such reserves are determined based on assumptions at the time the premium deficiency reserve is established and do not include a provision for adverse deviation. Premium deficiency reserves may also be established for short duration contracts to provide for expected future losses. These reserves on short duration contracts are based on actuarial estimates of the amount of loss inherent in that period, including losses incurred for which claims have not been reported. The provisions for unreported claims are calculated using studies that measure the historical length of time between the incurred date of a claim and its eventual reporting to the company. Anticipated investment income is considered in the calculation of premium deficiency losses for short duration contracts. Future policy benefit liabilities for participating life insurance policies are equal to the aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non-forfeiture interest rate, ranging from 3% to 7%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the liability for terminal dividends. Participating business represented approximately 6% of the Company's life insurance in-force at both December 31, 2011 and 2010. Participating policies represented approximately 32%, 32% and 33% of gross life insurance premiums for the years ended December 31, 2011, 2010 and 2009, respectively. Future policy benefit liabilities for non-participating life insurance policies are equal to the aggregate of the present value of expected future benefit payments and related expenses less the present value of expected future net premiums. Assumptions as to mortality and persistency are based upon the Company's experience when the basis of the liability is established. Interest rate assumptions for the aggregate future policy benefit liabilities range from 2% to 10%. F-25 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Future policy benefit liabilities for individual and group traditional fixed annuities after annuitization are equal to the present value of expected future payments. Interest rate assumptions used in establishing such liabilities range from 2% to 11%. Future policy benefit liabilities for non-medical health insurance are calculated using the net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. Interest rate assumptions used in establishing such liabilities range from 4% to 7%. Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. Interest rate assumptions used in establishing such liabilities range from 2% to 9%. Liabilities for unpaid claims and claim expenses are included in future policyholder benefits and represent the amount estimated for claims that have been reported but not settled and claims incurred but not reported. Other policy-related balances include claims that have been reported but not settled and claims incurred but not reported on life and non-medical health insurance. Liabilities for unpaid claims are estimated based upon the Company's historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. Liabilities for universal and variable life secondary guarantees and paid-up guarantees are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating the secondary and paid-up guarantee liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are consistent with historical Standard & Poor's Ratings Services ("S&P") experience of the appropriate underlying equity index, such as the S&P 500 Index. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. Future policy benefit liabilities are established for certain variable annuity products with guaranteed minimum benefits as described below under "-- Variable Annuity Guaranteed Minimum Benefits." The Company regularly reviews its estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies and guarantees, and in the establishment of the related liabilities, result in changes in the additional liability balances with related charges or credits to benefit expenses in the period in which the changes occur. Policyholder account balances ("PABs") relate to investment-type contracts, universal life-type policies and certain guaranteed minimum benefits. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase and non-variable group annuity contracts. PABs for these contracts are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest, ranging from 1% to 13%, less expenses, mortality charges and withdrawals; and (iii) fair value adjustments relating to business combinations. Variable Annuity Guaranteed Minimum Benefits The Company issues certain variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit (i.e., the benefit base) less withdrawals. In some cases the benefit base may be increased by additional deposits, bonus amounts, accruals or optional market value resets. These guarantees are accounted for as insurance liabilities or as embedded derivatives depending on how and when the benefit is paid. Specifically, a guarantee is accounted for as an embedded derivative if a guarantee F-26 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) is paid without requiring (i) the occurrence of specific insurable event, or (ii) the policyholder to annuitize. Alternatively, a guarantee is accounted for as an insurance liability if the guarantee is paid only upon either (i) the occurrence of a specific insurable event, or (ii) annuitization. In certain cases, a guarantee may have elements of both an insurance liability and an embedded derivative and in such cases the guarantee is accounted for under a split of the two models. These guarantees include: . Guaranteed minimum death benefit ("GMDB") that guarantees the contractholder a return of their purchase payment upon death even if the account value is reduced to zero. An enhanced death benefit may be available for an additional fee. . Guaranteed minimum income benefit ("GMIB") that provides the contractholder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments, even if the account value is reduced to zero, that can be annuitized to receive a monthly income stream that is not less than a specified amount. Certain of these contracts also provide for a guaranteed lump sum return of purchase premium in lieu of the annuitization benefit. . Guaranteed minimum withdrawal benefits ("GMWB") that guarantee the contractholder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contractholder's cumulative withdrawals in a contract year do not exceed a certain limit. Certain of these contracts include guaranteed withdrawals that are life contingent. . Guaranteed minimum accumulation benefits ("GMAB") that provide the contractholder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments even if the account value is reduced to zero. Guarantees accounted for as insurance liabilities in future policy benefits include GMDB, the portion of GMIB that require annuitization, and the life-contingent portion of certain GMWB. These liabilities are established as follows: GMDB liabilities are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used in estimating the GMDB liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the appropriate underlying equity index, such as the S&P 500 Index. The benefit assumptions used in calculating the liabilities are based on the average benefits payable over a range of scenarios. GMIB liabilities are determined by estimating the expected value of the income benefits in excess of the projected account balance at any future date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for estimating the GMIB liabilities are consistent with those used for estimating the GMDB liabilities. In addition, the calculation of guaranteed annuitization benefit liabilities incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. Certain GMIB have settlement features that result in a portion of that guarantee being accounted for as an embedded derivative and are recorded in PABs as described below. The liability for the life contingent portion of GMWB is determined based on the expected value of the life contingent payments and expected assessments using assumptions consistent with those used for estimating the GMDB liabilities. F-27 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Guarantees accounted for as embedded derivatives in PABs include the non life-contingent portion of GMWB, GMAB and the portion of certain GMIB that do not require annuitization. These guarantees are recorded at estimated fair value separately from the host variable annuity with changes in estimated fair value reported in net derivative gains (losses). At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent "excess" fees and are reported in universal life and investment-type product policy fees. The estimated fair values of these embedded derivatives are then determined based on the present value of projected future benefits minus the present value of projected future fees. The projections of future benefits and future fees require capital market and actuarial assumptions including expectations concerning policyholder behavior. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free rates. The valuation of these embedded derivatives also includes an adjustment for the Company's nonperformance risk and risk margins related to non-capital market inputs. The nonperformance adjustment, which is captured as a spread over the risk free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates, changes in nonperformance risk, variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. The Company ceded the risk associated with certain of the GMIB and GMWB described in the preceding paragraphs. With respect to GMIB, a portion of the directly written GMIB guarantees are accounted for as insurance (i.e., not as embedded derivatives) but where the reinsurance agreements contain embedded derivatives. These embedded derivatives are included in premiums, reinsurance, and other receivables in the consolidated balance sheet with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. Other Policy-Related Balances Other policy-related balances include policy and contract claims, unearned revenue liabilities, premiums received in advance, policyholder dividends due and unpaid and policyholder dividends left on deposit. The liability for policy and contract claims generally relates to incurred but not reported death, disability, long-term care ("LTC") and dental claims, as well as claims which have been reported but not yet settled. The liability for these claims is based on the Company's estimated ultimate cost of settling all claims. The Company derives estimates for the development of incurred but not reported claims principally from actuarial analyses of historical patterns of claims and claims development for each line of business. The methods used to determine F-28 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) these estimates are continually reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. The unearned revenue liability relates to universal life-type and investment-type products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the product's estimated gross profits and margins, similar to DAC. Such amortization is recorded in universal life and investment-type product policy fees. The Company accounts for the prepayment of premiums on its individual life, group life and health contracts as premium received in advance and applies the cash received to premiums when due. Also included in other policy-related balances are policyholder dividends due and unpaid on participating policies and policyholder dividends left on deposit. Such liabilities are presented at amounts contractually due to policyholders. Recognition of Insurance Revenue and Related Benefits Premiums related to traditional life and annuity policies with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided against such revenues to recognize profits over the estimated lives of the policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into operations in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Premiums related to non-medical health and disability contracts are recognized on a pro rata basis over the applicable contract term. Deposits related to universal life-type and investment-type products are credited to PABs. Revenues from such contracts consist of amounts assessed against PABs for mortality, policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related PABs. Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance. The portion of fees allocated to embedded derivatives described previously is recognized within net derivative gains (losses) as part of the estimated fair value of embedded derivatives. Other Revenues Other revenues include, in addition to items described elsewhere herein, advisory fees, broker-dealer commissions and fees and administrative service fees. Such fees and commissions are recognized in the period in which services are performed. Other revenues also include changes in account value relating to corporate-owned life insurance ("COLI"). Under certain COLI contracts, if the Company reports certain unlikely adverse results in its consolidated financial statements, withdrawals would not be immediately available and would be subject to market value adjustment, which could result in a reduction of the account value. F-29 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Policyholder Dividends Policyholder dividends are approved annually by Metropolitan Life Insurance Company and its insurance subsidiaries' boards of directors. The aggregate amount of policyholder dividends is related to actual interest, mortality, morbidity and expense experience for the year, as well as management's judgment as to the appropriate level of statutory surplus to be retained by Metropolitan Life Insurance Company and its insurance subsidiaries. Income Taxes Metropolitan Life Insurance Company and its includable subsidiaries join with MetLife, Inc. and its includable subsidiaries in filing a consolidated U.S. life and non-life federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Metropolitan Life Insurance Company and its includable subsidiaries participate in a tax sharing agreement with MetLife, Inc. The Company's accounting for income taxes represents management's best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Factors in management's determination include the performance of the business and its ability to generate capital gains. Significant judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When making such determination, consideration is given to, among other things, the following: (i)future taxable income exclusive of reversing temporary differences and carryforwards; (ii)future reversals of existing taxable temporary differences; (iii)taxable income in prior carryback years; and (iv)tax planning strategies. The Company may be required to change its provision for income taxes in certain circumstances. Examples of such circumstances include when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur. The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 % likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. F-30 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax. Reinsurance The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by third parties. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as amounts paid (received) related to new business, are recorded as ceded (assumed) premiums and ceded (assumed) future policy benefit liabilities are established. For prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid (received) are recorded as ceded (assumed) premiums and ceded (assumed) unearned premiums and are reflected as a component of premiums, reinsurance and other receivables (future policy benefits). Such amounts are amortized through earned premiums over the remaining contract period in proportion to the amount of protection provided. For retroactive reinsurance of short-duration contracts that meet the criteria of reinsurance accounting, amounts paid (received) in excess of (which do not exceed) the related insurance liabilities ceded (assumed) are recognized immediately as a loss. Any gains on such retroactive agreements are deferred and recorded in other liabilities. The gains are amortized primarily using the recovery method. The assumptions used to account for both long and short-duration reinsurance agreements are consistent with those used for the underlying contracts. Ceded policyholder and contract related liabilities, other than those currently due, are reported gross on the balance sheet. Amounts currently recoverable under reinsurance agreements are included in premiums, reinsurance and other receivables and amounts currently payable are included in other liabilities. Such assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance balances recoverable could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance. The funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements. The Company withholds the funds rather than transferring the underlying investments and, as a result, records funds withheld liability within other liabilities. The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement which may be contractually specified or directly related to the investment portfolio. F-31 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Premiums, fees and policyholder benefits and claims include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Cessions under reinsurance agreements do not discharge the Company's obligations as the primary insurer. Employee Benefit Plans The Company sponsors and administers various qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering eligible employees and sales representatives who meet specified eligibility requirements of the sponsor and its participating affiliates. A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired participants. Participants that were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for the Company, may become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement medical benefits. Participants hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits. The projected pension benefit obligation ("PBO") is defined as the actuarially calculated present value of vested and non-vested pension benefits accrued based on future salary levels. The accumulated pension benefit obligation ("ABO") is the actuarial present value of vested and non-vested pension benefits accrued based on current salary levels. Obligations, both PBO and ABO, of the defined benefit pension plans are determined using a variety of actuarial assumptions, from which actual results may vary, as described below. The expected postretirement plan benefit obligations represent the actuarial present value of all other postretirement benefits expected to be paid after retirement to employees and their dependents and is used in measuring the periodic postretirement benefit expense. The accumulated postretirement plan benefit obligations ("APBO") represent the actuarial present value of future other postretirement benefits attributed to employee F-32 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) services rendered through a particular date and is the valuation basis upon which liabilities are established. The APBO is determined using a variety of actuarial assumptions, from which actual results may vary, as described below. The Company recognizes the funded status of the PBO for pension plans and the APBO for other postretirement plans for each of its plans in the consolidated balance sheets. The actuarial gains or losses, prior service costs and credits and the remaining net transition asset or obligation that had not yet been included in net periodic benefit costs are charged, net of income tax, to accumulated other comprehensive income (loss). Net periodic benefit cost is determined using management estimates and actuarial assumptions to derive service cost, interest cost, and expected return on plan assets for a particular year. Net periodic benefit cost also includes the applicable amortization of any prior service cost (credit) arising from the increase (decrease) in prior years' benefit costs due to plan amendments or initiation of new plans. These costs are amortized into net periodic benefit cost over the expected service years of employees whose benefits are affected by such plan amendments. Actual experience related to plan assets and/or the benefit obligations may differ from that originally assumed when determining net periodic benefit cost for a particular period, resulting in gains or losses. To the extent such aggregate gains or losses exceed 10 percent of the greater of the benefit obligations or the market-related asset value of the plans, they are amortized into net periodic benefit cost over the expected service years of employees expected to receive benefits under the plans. The obligations and expenses associated with these plans require an extensive use of assumptions such as the discount rate, expected rate of return on plan assets, rate of future compensation increases, healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of retirements, withdrawal rates and mortality. Management, in consultation with its external consulting actuarial firms, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data and expected benefit payout streams. The assumptions used may differ materially from actual results due to, among other factors, changing market and economic conditions and changes in participant demographics. These differences may have a significant effect on the Company's consolidated financial statements and liquidity. The Company also sponsors defined contribution savings and investment plans ("SIP") for substantially all employees under which a portion of participant contributions is matched. Applicable matching contributions are made each payroll period. Accordingly, the Company recognizes compensation cost for current matching contributions. As all contributions are transferred currently as earned to the SIP trust, no liability for matching contributions is recognized in the consolidated balance sheets. Stock-Based Compensation Stock-based compensation recognized in the Company's consolidated results of operations is allocated from MetLife, Inc. The accounting policies described below represent those that MetLife, Inc. applies in determining such allocated expenses. As more fully described in Note 15, MetLife, Inc. grants certain employees and directors stock-based compensation awards under various plans that are subject to specific vesting conditions. The cost of all stock-based transactions is measured at fair value at grant date and recognized over the period during which a grantee is required to provide goods or services in exchange for the award. Although the terms of MetLife, Inc.'s stock-based plans do not accelerate vesting upon retirement, or the attainment of retirement eligibility, the requisite service period subsequent to attaining such eligibility is considered nonsubstantive. Accordingly, MetLife, Inc. recognizes compensation expense related to stock-based awards over the shorter of the requisite service period or the period to attainment of retirement eligibility. An estimation of future forfeitures of stock- F-33 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) based awards is incorporated into the determination of compensation expense when recognizing expense over the requisite service period. Foreign Currency Assets, liabilities and operations of foreign affiliates and subsidiaries, if any, are recorded based on the functional currency of each entity. The determination of the functional currency is made based on the appropriate economic and management indicators. The local currencies of foreign operations are the functional currencies. Assets and liabilities of foreign affiliates and subsidiaries, if any, are translated from the functional currency to U.S. dollars at the exchange rates in effect at each year-end and income and expense accounts are translated at the average rates of exchange prevailing during the year. The resulting translation adjustments are charged or credited directly to other comprehensive income or loss, net of applicable taxes. Gains and losses from foreign currency transactions, including the effect of re-measurement of monetary assets and liabilities to the appropriate functional currency, are reported as part of net investment gains (losses) in the period in which they occur. Discontinued Operations The results of operations of a component of the Company that either has been disposed of or is classified as held-for-sale are reported in discontinued operations if the operations and cash flows of the component have been or will be eliminated from the ongoing operations of the Company as a result of the disposal transaction and the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. Litigation Contingencies The Company is a party to a number of legal actions and is involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company's financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Except as otherwise disclosed in Note 13, legal costs are recognized in other expenses as incurred. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in the Company's consolidated financial statements. It is possible that an adverse outcome in certain of the Company's litigation and regulatory investigations, or the use of different assumptions in the determination of amounts recorded, could have a material effect upon the Company's consolidated net income or cash flows in particular quarterly or annual periods. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. Assets within the Company's separate accounts primarily include: mutual funds, fixed maturity and equity securities, mortgage loans, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. The Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from the Company's general account liabilities; (iii) investments are directed by the contractholder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contractholder. The Company reports separate account assets meeting such criteria at their F-34 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) fair value which is based on the estimated fair values of the underlying assets comprising the portfolios of an individual separate account. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within the same line in the consolidated statements of operations. Separate accounts credited with a contractual investment return are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses and the accounting for these investments is consistent with the methodologies described herein for similar financial instruments held within the general account. The Company's revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. Such fees are included in universal life and investment-type product policy fees in the consolidated statements of operations. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Financial Instruments Effective July 1, 2011, the Company adopted new guidance regarding accounting for troubled debt restructurings. This guidance clarifies whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for the purpose of determining when a restructuring constitutes a troubled debt restructuring. Additionally, the guidance prohibits creditors from using the borrower's effective rate test to evaluate whether a concession has been granted to the borrower. The adoption did not have a material impact on the Company's consolidated financial statements. See also expanded disclosures in Note 3. Effective January 1, 2011, the Company adopted new guidance regarding accounting for investment funds determined to be VIEs. Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer's evaluation of its economic interest in a VIE, unless the separate account contractholder is a related party. The adoption did not have a material impact on the Company's consolidated financial statements. Effective December 31, 2010, the Company adopted guidance regarding disclosures about the credit quality of financing receivables and valuation allowances for credit losses, including credit quality indicators. Such disclosures must be disaggregated by portfolio segment or class based on how a company develops its valuation allowances for credit losses and how it manages its credit exposure. The Company has provided all material required disclosures in its consolidated financial statements. Effective July 1, 2010, the Company adopted guidance regarding accounting for embedded credit derivatives within structured securities. This guidance clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, embedded credit derivatives resulting only from subordination of one financial instrument to another continue to qualify for the scope exception. Embedded credit derivative features other than subordination must be analyzed to determine whether they require bifurcation and separate accounting. As a result of the adoption of this guidance, the Company elected FVO for certain structured securities that were previously accounted for as fixed maturity securities. Upon adoption, the Company reclassified $50 million of securities from fixed maturity securities to trading and other securities. These securities had cumulative unrealized losses of $10 million, net of income tax, which was recognized as a cumulative effect adjustment to decrease retained earnings with a corresponding increase to accumulated other comprehensive income (loss) as of July 1, 2010. F-35 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Effective January 1, 2010, the Company adopted guidance related to financial instrument transfers and consolidation of VIEs. The financial instrument transfer guidance eliminates the concept of a qualified special purpose entity ("QSPE"), eliminates the guaranteed mortgage securitization exception, changes the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. The new consolidation guidance changes the definition of the primary beneficiary, as well as the method of determining whether an entity is a primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered to be the primary beneficiary of the VIE. The guidance requires a quarterly reassessment, as well as enhanced disclosures, including the effects of a company's involvement with VIEs on its financial statements. As a result of the adoption of this guidance, the Company consolidated certain former QSPEs that were previously accounted for as equity security collateralized debt obligations. The Company also elected FVO for all of the consolidated assets and liabilities of these entities. Upon consolidation, the Company recorded $278 million of securities classified as trading and other securities and $232 million of long-term debt based on estimated fair values at January 1, 2010 and de-recognized less than $1 million in equity securities. The consolidation also resulted in an increase in retained earnings of $30 million, net of income tax, at January 1, 2010. For the year ended December 31, 2010, the Company recorded $15 million of net investment income on the consolidated assets, $15 million of interest expense in other expenses on the related long-term debt and ($30) million in net investment gains (losses) to remeasure the assets and liabilities at their estimated fair values. In addition, the Company also deconsolidated certain partnerships for which the Company does not have the power to direct activities and for which the Company has concluded it is no longer the primary beneficiary. These deconsolidations did not result in a cumulative effect adjustment to retained earnings and did not have a material impact on the Company's consolidated financial statements. Also effective January 1, 2010, the Company adopted guidance that indefinitely defers the above changes relating to the Company's interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain real estate joint ventures and other limited partnership interests held by the Company. Effective April 1, 2009, the Company adopted OTTI guidance. This guidance amends the previously used methodology for determining whether an OTTI exists for fixed maturity securities, changes the presentation of OTTI for fixed maturity securities and requires additional disclosures for OTTI on fixed maturity and equity securities in interim and annual financial statements. The Company's net cumulative effect adjustment of adopting the OTTI guidance was an increase of $36 million to retained earnings with a corresponding increase to accumulated other comprehensive loss to reclassify the noncredit loss portion of previously recognized OTTI losses on fixed maturity securities held at April 1, 2009. This cumulative effect adjustment was comprised of an increase in the amortized cost basis of fixed maturity securities of $59 million, net of policyholder related amounts of $4 million and net of deferred income taxes of $19 million, resulting in the net cumulative effect adjustment of $36 million. The increase in the amortized cost basis of fixed maturity securities of $59 million by sector was as follows: $25 million -- ABS, $25 million -- RMBS and $9 million -- U.S. corporate securities. As a result of the adoption of the OTTI guidance, the Company's pre-tax earnings for the year ended December 31, 2009 increased by $566 million, offset by an increase in other comprehensive loss representing OTTI relating to noncredit losses recognized during the year ended December 31, 2009. F-36 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Effective January 1, 2009, the Company adopted guidance on disclosures about derivative instruments and hedging. This guidance requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments and disclosures about credit risk-related contingent features in derivative agreements. The Company has provided all of the material disclosures in its consolidated financial statements. Effective January 1, 2009, the Company adopted prospectively an update on accounting for transfers of financial assets and repurchase financing transactions. This update provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. The adoption did not have a material impact on the Company's consolidated financial statements. Business Combinations and Noncontrolling Interests Effective January 1, 2011, the Company adopted new guidance that addresses when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure. Under the new guidance, if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The guidance also expands the supplemental pro forma disclosures to include additional narratives. The adoption did not have an impact on the Company's consolidated financial statements. Effective January 1, 2009, the Company adopted revised guidance on business combinations and accounting for noncontrolling interests in the consolidated financial statements. Under this guidance: . All business combinations (whether full, partial or "step" acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions. . Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date. . The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date. . Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if the acquisition-date fair value can be reasonably determined. If the fair value is not estimable, an asset or liability is recorded if existence or incurrence at the acquisition date is probable and its amount is reasonably estimable. . Changes in deferred income tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. . Noncontrolling interests (formerly known as "minority interests") are valued at fair value at the acquisition date and are presented as equity rather than liabilities. . Net income (loss) includes amounts attributable to noncontrolling interests. . When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized. . Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions. . When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized. F-37 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The adoption of this guidance on a prospective basis did not have an impact on the Company's consolidated financial statements. Effective January 1, 2009, the Company adopted prospectively guidance on determination of the useful life of intangible assets. This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. This change is intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected future cash flows used to measure the fair value of the asset. The Company determines useful lives and provides all of the material disclosures prospectively on intangible assets acquired on or after January 1, 2009 in accordance with this guidance. Fair Value Effective January 1, 2010, the Company adopted guidance that requires disclosures about significant transfers into and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about level of disaggregation and inputs and valuation techniques. The adoption of this guidance did not have an impact on the Company's consolidated financial statements. The following pronouncements relating to fair value had no material impact on the Company's consolidated financial statements: . Effective January 1, 2009, the Company implemented fair value measurements guidance for certain nonfinancial assets and liabilities that are recorded at fair value on a non-recurring basis. This guidance applies to such items as: (i) nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination; (ii) reporting units measured at estimated fair value in the first step of a goodwill impairment test; and (iii) indefinite-lived intangible assets measured at estimated fair value for impairment assessment. . Effective January 1, 2009, the Company adopted prospectively guidance on issuer's accounting for liabilities measured at fair value with a third-party credit enhancement. This guidance states that an issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. In addition, it requires disclosures about the existence of any third-party credit enhancement related to liabilities that are measured at fair value. . Effective April 1, 2009, the Company adopted guidance on: (i) estimating the fair value of an asset or liability if there was a significant decrease in the volume and level of trading activity for these assets or liabilities; and (ii) identifying transactions that are not orderly. The Company has provided all of the material disclosures in its consolidated financial statements. . Effective December 31, 2009, the Company adopted guidance on: (i) measuring the fair value of investments in certain entities that calculate NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements, for both interim and annual periods, about the nature and risks of investments measured at fair value on a recurring or non-recurring basis. . Effective December 31, 2009, the Company adopted guidance on measuring liabilities at fair value. This guidance provides clarification for measuring fair value in circumstances in which a quoted price in an active market for the identical liability is not available. In such circumstances a company is required to measure fair value using either a valuation technique that uses: (i) the quoted price of the identical liability when traded as an asset; or (ii) quoted prices for similar liabilities or similar liabilities F-38 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) when traded as assets; or (iii) another valuation technique that is consistent with the principles of fair value measurement such as an income approach (e.g., present value technique) or a market approach (e.g., "entry" value technique). Defined Benefit and Other Postretirement Plans Effective December 31, 2011, the Company adopted guidance regarding enhanced disclosures for employers' participation in multiemployer pension plans. The revised disclosures require additional qualitative and quantitative information about the employer's involvement in significant multiemployer pension and other postretirement plans. The adoption of this guidance did not have an impact on the Company's consolidated financial statements. Effective December 31, 2009, the Company adopted guidance to enhance the transparency surrounding the types of assets and associated risks in an employer's defined benefit pension or other postretirement benefit plans. This guidance requires an employer to disclose information about the valuation of plan assets similar to that required under other fair value disclosure guidance. The Company provided all of the material disclosures in its consolidated financial statements. Other Pronouncements Effective January 1, 2011, the Company adopted new guidance regarding goodwill impairment testing. This guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity would be required to perform Step 2 of the test if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The adoption did not have an impact on the Company's consolidated financial statements. Effective April 1, 2009, the Company adopted prospectively guidance which establishes general standards for accounting and disclosures of events that occur subsequent to the balance sheet date but before financial statements are issued or available to be issued. The Company has provided all of the material disclosures in its consolidated financial statements. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In December 2011, the Financial Accounting Standards Board ("FASB") issued new guidance regarding comprehensive income (Accounting Standards Update ("ASU") 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05). The amendments in ASU 2011-12 are effective for fiscal years and interim periods within those years beginning after December 15, 2011. Consistent with the effective date of the amendments in ASU 2011-05 discussed below, ASU 2011-12 defers the effective date pertaining to reclassification adjustments out of accumulated other comprehensive income in ASU 2011-05. The amendments are being made to allow the FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. F-39 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In December 2011, the FASB issued new guidance regarding balance sheet offsetting disclosures (ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities), effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The guidance should be applied retrospectively for all comparative periods presented. The amendments in ASU 2011-11 require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effects of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The objective of ASU 2011-11 is to facilitate comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards ("IFRS"). The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2011, the FASB issued new guidance regarding derecognition of in substance real estate (ASU 2011-10 Property, Plant and Equipment (Topic 360): Derecognition of in Substance Real Estate -- a Scope Clarification (a consensus of the FASB Emerging Issues Task Force), effective for fiscal years, and interim periods within those fiscal years, beginning on or after June 15, 2012. The amendments should be applied prospectively to deconsolidation events occurring after the effective date. Under the amendments in ASU 2011-10, when a parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of a default on the subsidiary's nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In September 2011, the FASB issued new guidance on goodwill impairment testing (ASU 2011-08, Intangibles -- Goodwill and Other (Topic 350): Testing Goodwill for Impairment), effective for calendar years beginning after December 15, 2011. Early adoption is permitted. The objective of this standard is to simplify how an entity tests goodwill for impairment. The amendments in this standard will allow an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it needs to perform the quantitative two-step goodwill impairment test. Only if an entity determines, based on qualitative assessment, that it is more likely than not that a reporting unit's fair value is less than its carrying value will it be required to calculate the fair value of the reporting unit. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements. In July 2011, the FASB issued new guidance on other expenses (ASU 2011-06, Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers), effective for calendar years beginning after December 31, 2013. The objective of this standard is to address how health insurers should recognize and classify in their income statements fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. The amendments in this standard specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using the straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In June 2011, the FASB issued new guidance regarding comprehensive income (ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income), effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The guidance should be applied F-40 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) retrospectively and early adoption is permitted. The new guidance provides companies with the option to present the total of comprehensive income, components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The objective of the standard is to increase the prominence of items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The standard eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder's equity. The amendments in ASU 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified in net income. The Company intends to adopt the two-statement approach in the first quarter of 2012. In May 2011, the FASB issued new guidance regarding fair value measurements (ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs), effective for the first interim or annual period beginning after December 15, 2011. The guidance should be applied prospectively. The amendments in this ASU are intended to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRS. Some of the amendments clarify the FASB's intent on the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements. In April 2011, the FASB issued new guidance regarding effective control in repurchase agreements (ASU 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements), effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. The amendments in this ASU remove from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements. In October 2010, the FASB issued new guidance regarding accounting for deferred acquisition costs (ASU 2010-26, Financial Services -- Insurance (Topic 944): Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts) ("ASU 2010-26"), effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. ASU 2010-26 specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized as DAC; all other acquisition-related costs must be expensed as incurred. As a result, sales manager compensation and administrative costs currently capitalized by the Company will no longer be deferred. The Company will adopt ASU 2010-26 in the first quarter of 2012 and will apply it retrospectively to all prior periods presented in its consolidated financial statements for all insurance contracts. The Company estimates that DAC will be reduced by approximately $1.4 billion to $1.6 billion and total equity will be reduced by approximately $900 million to $1.0 billion, net of income tax, as of the date of adoption. Additionally, the Company estimates that net income (loss) will be reduced by approximately $41 million to $46 million in 2011, $20 million to $22 million in 2010, and $39 million to $44 million in 2009, as of the date of adoption. F-41 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2. ACQUISITIONS AND DISPOSITIONS 2009 DISPOSITION THROUGH ASSUMPTION REINSURANCE On October 30, 2009, the Company completed the disposal, through assumption reinsurance, of substantially all of the insurance business of MetLife Canada, a wholly-owned indirect subsidiary, to a third-party. Pursuant to the assumption reinsurance agreement, the consideration paid by the Company was $259 million, comprised of cash of $14 million and fixed maturity securities, mortgage loans and other assets totaling $245 million. At the date of the assumption reinsurance agreement, the carrying value of insurance liabilities transferred was $267 million, resulting in a gain of $5 million, net of income tax. The gain was recognized in net investment gains (losses). 3. INVESTMENTS FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized gains and losses, estimated fair value of fixed maturity and equity securities and the percentage that each sector represents by the respective total holdings for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of OTTI losses:
DECEMBER 31, 2011 -------------------------------------------------- GROSS UNREALIZED COST OR ------------------------ ESTIMATED AMORTIZED TEMPORARY OTTI FAIR % OF COST GAINS LOSSES LOSSES VALUE TOTAL --------- ------- --------- ------ --------- ----- (IN MILLIONS) FIXED MATURITY SECURITIES: U.S. corporate securities.................. $ 56,298 $ 6,113 $ 715 $ -- $ 61,696 36.7% Foreign corporate securities............... 27,298 2,400 551 1 29,146 17.3 U.S. Treasury and agency securities........ 21,572 4,272 -- -- 25,844 15.4 RMBS....................................... 25,445 1,564 766 524 25,719 15.3 CMBS....................................... 8,750 473 114 4 9,105 5.4 ABS (1).................................... 6,589 156 166 (7) 6,586 3.9 State and political subdivision securities. 5,387 842 47 -- 6,182 3.7 Foreign government securities.............. 3,037 915 52 -- 3,900 2.3 --------- ------- --------- ------ --------- ----- Total fixed maturity securities........ $154,376 $16,735 $2,411 $522 $168,178 100.0% ========= ======= ========= ====== ========= ===== EQUITY SECURITIES: Common stock............................... $ 830 $ 32 $ 6 $ -- $ 856 67.0% Non-redeemable preferred stock............. 549 11 138 -- 422 33.0 --------- ------- --------- ------ --------- ----- Total equity securities................ $ 1,379 $ 43 $ 144 $ -- $ 1,278 100.0% ========= ======= ========= ====== ========= =====
F-42 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2010 ------------------------------------------------- GROSS UNREALIZED COST OR ----------------------- ESTIMATED AMORTIZED TEMPORARY OTTI FAIR % OF COST GAINS LOSSES LOSSES VALUE TOTAL --------- ------ --------- ------ --------- ----- (IN MILLIONS) FIXED MATURITY SECURITIES: U.S. corporate securities.................. $ 50,764 $3,322 $ 959 $ -- $ 53,127 33.3% Foreign corporate securities............... 28,841 2,218 492 -- 30,567 19.2 U.S. Treasury and agency securities........ 20,154 1,190 367 -- 20,977 13.1 RMBS....................................... 30,540 1,257 747 371 30,679 19.2 CMBS....................................... 9,401 484 174 10 9,701 6.1 ABS........................................ 6,522 146 187 38 6,443 4.0 State and political subdivision securities. 4,693 86 195 -- 4,584 2.9 Foreign government securities.............. 2,793 682 18 -- 3,457 2.2 --------- ------ --------- ------ --------- ----- Total fixed maturity securities........ $153,708 $9,385 $3,139 $419 $159,535 100.0% ========= ====== ========= ====== ========= ===== EQUITY SECURITIES: Common stock............................... $ 937 $ 42 $ 7 $ -- $ 972 53.4% Non-redeemable preferred stock............. 961 52 164 -- 849 46.6 --------- ------ --------- ------ --------- ----- Total equity securities................ $ 1,898 $ 94 $ 171 $ -- $ 1,821 100.0% ========= ====== ========= ====== ========= =====
---------- (1)OTTI losses as presented above represent the noncredit portion of OTTI losses that is included in accumulated other comprehensive income (loss). OTTI losses include both the initial recognition of noncredit losses, and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities that were previously noncredit loss impaired. The noncredit loss component of OTTI losses for ABS was in an unrealized gain (loss) position of $7 million at December 31, 2011 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also "-- Net Unrealized Investment Gains (Losses)." Within fixed maturity securities, a reclassification from the ABS sector to the RMBS sector has been made to the prior year amounts to conform to the current year presentation for securities backed by sub-prime residential mortgage loans to be consistent with market convention relating to the risks inherent in such securities and the Company's management of its investments within these asset sectors. The Company held non-income producing fixed maturity securities with an estimated fair value of $7 million and $55 million with unrealized gains (losses) of ($3) million and ($13) million at December 31, 2011 and 2010, respectively. The Company held foreign currency derivatives with notional amounts of $8.5 billion and $8.3 billion to hedge the exchange rate risk associated with foreign denominated fixed maturity securities at December 31, 2011 and 2010, respectively. Concentrations of Credit Risk (Fixed Maturity Securities) -- Summary. The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings. F-43 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company's equity, other than the government securities summarized in the table below. Concentrations of Credit Risk (Government and Agency Securities). The following section contains a summary of the concentrations of credit risk related to government and agency fixed maturity and fixed-income securities holdings, which were greater than 10% of the Company's equity at:
DECEMBER 31, ------------------ 2011 2010 ------- ------- CARRYING VALUE (1) ------------------ (IN MILLIONS) U.S. Treasury and agency fixed maturity securities............ $25,844 $20,977 U.S. Treasury and agency fixed-income securities included in: Short-term investments..................................... $ 5,133 $ 1,378 Cash equivalents........................................... $ 910 $ 2,497
---------- (1)Represents estimated fair value for fixed maturity securities, and for short-term investments and cash equivalents, estimated fair value or amortized cost, which approximates estimated fair value. Concentrations of Credit Risk (Equity Securities). The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company's equity or 1% of total investments at December 31, 2011 and 2010. Maturities of Fixed Maturity Securities. The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows at:
DECEMBER 31, --------------------------------------- 2011 2010 ------------------- ------------------- ESTIMATED ESTIMATED AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE --------- --------- --------- --------- (IN MILLIONS) Due in one year or less................ $ 8,089 $ 8,159 $ 3,974 $ 4,052 Due after one year through five years.. 26,375 27,486 25,910 27,017 Due after five years through ten years. 34,660 38,517 31,060 33,543 Due after ten years.................... 44,468 52,606 46,301 48,100 --------- --------- --------- --------- Subtotal.............................. 113,592 126,768 107,245 112,712 RMBS, CMBS and ABS..................... 40,784 41,410 46,463 46,823 --------- --------- --------- --------- Total fixed maturity securities..... $154,376 $168,178 $153,708 $159,535 ========= ========= ========= =========
Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity. F-44 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EVALUATING AVAILABLE-FOR-SALE SECURITIES FOR OTHER-THAN-TEMPORARY IMPAIRMENT As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired. NET UNREALIZED INVESTMENT GAINS (LOSSES) The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), were as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 -------- -------- ------ (IN MILLIONS) Fixed maturity securities.................................................. $ 14,266 $ 6,189 $(216) Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss).............................................. (522) (419) (574) -------- -------- ------ Total fixed maturity securities........................................... 13,744 5,770 (790) Equity securities.......................................................... (98) (66) (75) Derivatives................................................................ 1,293 90 (156) Short-term investments..................................................... (10) (13) (23) Other...................................................................... 45 48 52 -------- -------- ------ Subtotal................................................................ 14,974 5,829 (992) -------- -------- ------ Amounts allocated from:.................................................... Insurance liability loss recognition...................................... (3,495) (426) -- DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)....................................... 33 27 49 DAC and VOBA.............................................................. (1,323) (999) 6 Policyholder dividend obligation.......................................... (2,919) (876) -- -------- -------- ------ Subtotal................................................................ (7,704) (2,274) 55 Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss).............. 172 138 184 Deferred income tax benefit (expense)...................................... (2,717) (1,382) 142 -------- -------- ------ Net unrealized investment gains (losses)................................... 4,725 2,311 (611) Net unrealized investment gains (losses) attributable to noncontrolling interests................................................................ (1) (1) 5 -------- -------- ------ Net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company........................................................ $ 4,724 $ 2,310 $(606) ======== ======== ======
F-45 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The changes in fixed maturity securities with noncredit OTTI losses included in accumulated other comprehensive income (loss) were as follows:
DECEMBER 31, ------------- 2011 2010 ------ ------ (IN MILLIONS) Balance, beginning of period...................... $(419) $(574) Noncredit OTTI losses recognized (1).............. (17) (150) Securities sold with previous noncredit OTTI loss. 85 87 Subsequent changes in estimated fair value........ (171) 218 ------ ------ Balance, end of period............................ $(522) $(419) ====== ======
---------- (1)Noncredit OTTI losses recognized, net of DAC, were ($16) million and ($148) million for the years ended December 31, 2011 and 2010, respectively. The changes in net unrealized investment gains (losses) were as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2011 2010 2009 -------- -------- -------- (IN MILLIONS) Balance, beginning of period.................................................... $ 2,310 $ (606) $(7,701) Cumulative effect of change in accounting principles, net of income tax......... -- 10 (36) Fixed maturity securities on which noncredit OTTI losses have been recognized.................................................................... (103) 155 (515) Unrealized investment gains (losses) during the year............................ 9,248 6,650 13,344 Unrealized investment gains (losses) relating to: Insurance liability gain (loss) recognition.................................... (3,069) (426) 1 DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)............................................ 6 (22) 45 DAC and VOBA................................................................... (324) (1,005) (1,994) Policyholder dividend obligation............................................... (2,043) (876) -- Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss).................. 34 (46) 165 Deferred income tax benefit (expense).......................................... (1,335) (1,518) (3,920) -------- -------- -------- Net unrealized investment gains (losses)........................................ 4,724 2,316 (611) Net unrealized investment gains (losses) attributable to noncontrolling interests..................................................................... -- (6) 5 -------- -------- -------- Balance, end of period.......................................................... $ 4,724 $ 2,310 $ (606) ======== ======== ======== Change in net unrealized investment gains (losses).............................. $ 2,414 $ 2,922 $ 7,090 Change in net unrealized investment gains (losses) attributable to noncontrolling interests...................................................... -- (6) 5 -------- -------- -------- Change in net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company........................................................ $ 2,414 $ 2,916 $ 7,095 ======== ======== ========
F-46 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONTINUOUS GROSS UNREALIZED LOSSES AND OTTI LOSSES FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE BY SECTOR The following tables present the estimated fair value and gross unrealized losses of fixed maturity and equity securities in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being "less than 12 months" or "equal to or greater than 12 months" in a continuous unrealized loss position based on the point in time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.
DECEMBER 31, 2011 -------------------------------------------------------------- EQUAL TO OR GREATER LESS THAN 12 MONTHS THAN 12 MONTHS TOTAL -------------------- -------------------- -------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: U.S. corporate securities................... $ 5,669 $ 204 $3,170 $ 511 $ 8,839 $ 715 Foreign corporate securities................ 4,560 334 1,258 218 5,818 552 U.S. Treasury and agency securities......... 2,189 -- -- -- 2,189 -- RMBS........................................ 2,647 407 3,241 883 5,888 1,290 CMBS........................................ 709 66 365 52 1,074 118 ABS......................................... 2,557 45 608 114 3,165 159 State and political subdivision securities.. 31 -- 169 47 200 47 Foreign government securities............... 499 44 88 8 587 52 --------- ---------- --------- ---------- --------- ---------- Total fixed maturity securities............ $18,861 $1,100 $8,899 $1,833 $27,760 $2,933 ========= ========== ========= ========== ========= ========== EQUITY SECURITIES: Common stock................................ $ 4 $ 6 $ -- $ -- $ 4 $ 6 Non-redeemable preferred stock.............. 126 14 238 124 364 138 --------- ---------- --------- ---------- --------- ---------- Total equity securities.................... $ 130 $ 20 $ 238 $ 124 $ 368 $ 144 ========= ========== ========= ========== ========= ========== Total number of securities in an unrealized loss position............................. 1,412 819 ========= =========
F-47 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2010 -------------------------------------------------------------- EQUAL TO OR GREATER LESS THAN 12 MONTHS THAN 12 MONTHS TOTAL -------------------- -------------------- -------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: U.S. corporate securities................... $ 5,997 $197 $ 5,234 $ 762 $11,231 $ 959 Foreign corporate securities................ 3,692 125 2,662 367 6,354 492 U.S. Treasury and agency securities......... 8,553 367 -- -- 8,553 367 RMBS........................................ 3,983 122 5,128 996 9,111 1,118 CMBS........................................ 236 2 965 182 1,201 184 ABS......................................... 981 16 1,219 209 2,200 225 State and political subdivision securities.. 2,412 117 234 78 2,646 195 Foreign government securities............... 231 7 94 11 325 18 --------- ---------- --------- ---------- --------- ---------- Total fixed maturity securities............ $26,085 $953 $15,536 $2,605 $41,621 $3,558 --------- ---------- --------- ---------- --------- ---------- EQUITY SECURITIES: Common stock................................ $ 29 $ 7 $ -- $ -- $ 29 $ 7 Non-redeemable preferred stock.............. 52 3 558 161 610 164 --------- ---------- --------- ---------- --------- ---------- Total equity securities.................... $ 81 $ 10 $ 558 $ 161 $ 639 $ 171 ========= ========== ========= ========== ========= ========== Total number of securities in an unrealized loss position............................. 1,405 1,151 ========= =========
F-48 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AGING OF GROSS UNREALIZED LOSSES AND OTTI LOSSES FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized losses, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized losses as a percentage of cost or amortized cost and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:
DECEMBER 31, 2011 ------------------------------------------------------------------ COST OR AMORTIZED COST GROSS UNREALIZED LOSSES NUMBER OF SECURITIES ---------------------- --------------------- -------------------- LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: Less than six months........................ $15,723 $3,112 $ 509 $ 881 945 180 Six months or greater but less than nine months.................................... 2,523 393 178 123 221 28 Nine months or greater but less than twelve months.................................... 445 196 21 60 52 8 Twelve months or greater.................... 6,859 1,442 597 564 498 128 --------- ------ --------- ------ Total...................................... $25,550 $5,143 $1,305 $1,628 ========= ====== ========= ====== Percentage of amortized cost................ 5% 32% ========= ====== EQUITY SECURITIES: Less than six months........................ $ 127 $ 133 $ 10 $ 41 13 18 Six months or greater but less than nine months.................................... -- -- -- -- 1 1 Nine months or greater but less than twelve months.................................... -- -- -- -- -- -- Twelve months or greater.................... 46 206 4 89 3 11 --------- ------ --------- ------ Total...................................... $ 173 $ 339 $ 14 $ 130 ========= ====== ========= ====== Percentage of cost.......................... 8% 38% ========= ======
F-49 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2010 ------------------------------------------------------------------ COST OR AMORTIZED COST GROSS UNREALIZED LOSSES NUMBER OF SECURITIES ---------------------- --------------------- -------------------- LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: Less than six months............................ $25,867 $ 811 $ 843 $ 216 1,287 65 Six months or greater but less than nine months. 696 275 19 75 51 24 Nine months or greater but less than twelve months........................................ 271 35 22 8 29 6 Twelve months or greater........................ 13,525 3,699 1,158 1,217 823 226 --------- ------ --------- ------ Total.......................................... $40,359 $4,820 $2,042 $1,516 ========= ====== ========= ====== Percentage of amortized cost.................... 5% 31% ========= ====== EQUITY SECURITIES: Less than six months............................ $ 52 $ 59 $ 2 $ 13 23 11 Six months or greater but less than nine months. 29 28 5 6 3 2 Nine months or greater but less than twelve months........................................ -- 40 -- 14 2 2 Twelve months or greater........................ 309 293 32 99 22 13 --------- ------ --------- ------ Total.......................................... $ 390 $ 420 $ 39 $ 132 ========= ====== ========= ====== Percentage of cost.............................. 10% 31% ========= ======
Equity securities with gross unrealized losses of 20% or more for twelve months or greater decreased from $99 million at December 31, 2010 to $89 million at December 31, 2011. As shown in the section "-- Evaluating Temporarily Impaired Available-for-Sale Securities" below, all of the equity securities with gross unrealized losses of 20% or more for twelve months or greater at December 31, 2011 were financial services industry investment grade non-redeemable preferred stock, of which 74% were rated A or better. F-50 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONCENTRATION OF GROSS UNREALIZED LOSSES AND OTTI LOSSES FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The gross unrealized losses related to fixed maturity and equity securities, including the portion of OTTI losses on fixed maturity securities recognized in accumulated other comprehensive income (loss) were $3.1 billion and $3.7 billion at December 31, 2011 and 2010, respectively. The concentration, calculated as a percentage of gross unrealized losses (including OTTI losses), by sector and industry was as follows at:
DECEMBER 31, ---------- 2011 2010 ---- ---- SECTOR: RMBS....................................... 42% 30% U.S. corporate securities.................. 23 26 Foreign corporate securities............... 18 13 ABS........................................ 5 6 CMBS....................................... 4 5 Foreign government securities.............. 2 -- State and political subdivision securities. 1 5 U.S. Treasury and agency securities........ -- 10 Other...................................... 5 5 ---- ---- Total..................................... 100% 100% ==== ==== INDUSTRY: Mortgage-backed............................ 46% 35% Finance.................................... 23 21 Consumer................................... 7 4 Asset-backed............................... 5 6 Utility.................................... 5 6 Communications............................. 4 2 Industrial................................. 3 2 Foreign government securities.............. 2 -- State and political subdivision securities. 1 5 U.S. Treasury and agency securities........ -- 10 Other...................................... 4 9 ---- ---- Total..................................... 100% 100% ==== ====
F-51 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EVALUATING TEMPORARILY IMPAIRED AVAILABLE-FOR-SALE SECURITIES The following table presents fixed maturity and equity securities, each with gross unrealized losses of greater than $10 million, the number of securities, total gross unrealized losses and percentage of total gross unrealized losses at:
DECEMBER 31, ------------------------------------------------------ 2011 2010 -------------------------- -------------------------- FIXED MATURITY EQUITY FIXED MATURITY EQUITY SECURITIES SECURITIES SECURITIES SECURITIES -------------- ---------- -------------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Number of securities........................ 54 5 67 5 Total gross unrealized losses............... $938 $69 $1,179 $75 Percentage of total gross unrealized losses. 32% 48% 33% 44%
Fixed maturity and equity securities, each with gross unrealized losses greater than $10 million, decreased $247 million during the year ended December 31, 2011. The decline in, or improvement in, gross unrealized losses for the year ended December 31, 2011, was primarily attributable to a decrease in interest rates, partially offset by widening credit spreads. These securities were included in the Company's OTTI review process. As of December 31, 2011, $747 million of unrealized losses were from fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater. Of the $747 million, $314 million, or 42%, are related to unrealized losses on investment grade securities. Unrealized losses on investment grade securities are principally related to widening credit spreads or rising interest rates since purchase. Of the $747 million, $433 million, or 58%, are related to unrealized losses on below investment grade securities. Unrealized losses on below investment grade securities are principally related to non-agency RMBS (primarily alternative residential mortgage loans and sub-prime residential mortgage loans), U.S and foreign corporate securities (primarily utility, industrial and financial services industry securities) and ABS (primarily collateralized debt obligations) and were the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over the financial services industry sector, unemployment levels and valuations of residential real estate supporting non-agency RMBS. As explained further in Note 1, management evaluates these U.S. and foreign corporate securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuer; and evaluates non-agency RMBS and ABS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security. See "-- Aging of Gross Unrealized Losses and OTTI Losses for Fixed Maturity and Equity Securities Available-for-Sale" for a discussion of equity securities with an unrealized loss position of 20% or more of cost for 12 months or greater. In the Company's impairment review process, the duration and severity of an unrealized loss position for equity securities are given greater weight and consideration than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company's evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration are given by the Company to a decline in market value and the likelihood such market value decline will recover. F-52 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents certain information about the Company's equity securities available-for-sale with gross unrealized losses of 20% or more at December 31, 2011:
NON-REDEEMABLE PREFERRED STOCK ---------------------------------------------------------------------------------- ALL TYPES OF INVESTMENT GRADE ALL EQUITY NON-REDEEMABLE ----------------------------------------------------------- SECURITIES PREFERRED STOCK ALL INDUSTRIES FINANCIAL SERVICES INDUSTRY ---------- --------------------- -------------------------- ------------------------------- GROSS GROSS % OF ALL GROSS % OF ALL GROSS % A UNREALIZED UNREALIZED EQUITY UNREALIZED NON-REDEEMABLE UNREALIZED % OF ALL RATED OR LOSSES LOSSES SECURITIES LOSSES PREFERRED STOCK LOSSES INDUSTRIES BETTER ---------- ---------- ---------- ---------- --------------- ---------- ---------- -------- (IN MILLIONS) Less than six months............. $ 41 $ 35 85% $ 19 54% $ 19 100% 5% Six months or greater but less than twelve months.............. -- -- --% -- --% -- --% --% Twelve months or greater......... 89 89 100% 89 100% 89 100% 74% ---------- ---------- ---------- ---------- All equity securities with gross unrealized losses of 20% or more............................ $130 $124 95% $108 87% $108 100% 62% ========== ========== ========== ==========
In connection with the equity securities impairment review process, the Company evaluated its holdings in non-redeemable preferred stock, particularly those in the financial services industry. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred stock with a severe or an extended unrealized loss. The Company also considered whether any issuers of non-redeemable preferred stock with an unrealized loss held by the Company, regardless of credit rating, have deferred any dividend payments. No such dividend payments had been deferred. With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of less than 20% in an extended unrealized loss position (i.e., 12 months or greater). Based on the Company's current evaluation of available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company's current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily-impaired. Future OTTIs will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, changes in collateral valuation, changes in interest rates and changes in credit spreads. If economic fundamentals or any of the above factors deteriorate, additional OTTIs may be incurred in upcoming quarters. F-53 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) TRADING AND OTHER SECURITIES The table below presents certain information about the Company's trading and other securities.
DECEMBER 31, ------------ 2011 2010 ------ ----- (IN MILLIONS) Actively Traded Securities..................................... $ 473 $ 463 FVO general account securities................................. 107 71 FVO securities held by CSEs.................................... 117 201 ------ ----- Total trading and other securities -- at estimated fair value. $ 697 $ 735 ====== ===== Actively Traded Securities -- at estimated fair value.......... $ 473 $ 463 Short sale agreement liabilities -- at estimated fair value.... (127) (46) ------ ----- Net long/short position -- at estimated fair value............ $ 346 $ 417 ====== ===== Investments pledged to secure short sale agreement liabilities. $ 558 $ 465 ====== =====
See "-- Variable Interest Entities" for discussion of CSEs included in the table above. See "-- Net Investment Income" and "-- Net Investment Gains (Losses)" for the net investment income recognized on trading and other securities and the related changes in estimated fair value subsequent to purchase included in net investment income and net investment gains (losses) for securities still held as of the end of the respective years, as applicable. F-54 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET INVESTMENT GAINS (LOSSES) The components of net investment gains (losses) were as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2011 2010 2009 ------ ------ -------- (IN MILLIONS) Total gains (losses) on fixed maturity securities: Total OTTI losses recognized.................................................. $(244) $(510) $(1,521) Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)................................................. 17 $ 150 $ 623 ------ ------ -------- Net OTTI losses on fixed maturity securities recognized in earnings........... (227) (360) (898) Fixed maturity securities -- net gains (losses) on sales and disposals........ 107 129 (7) ------ ------ -------- Total gains (losses) on fixed maturity securities............................ (120) (231) (905) ------ ------ -------- Other net investment gains (losses): Equity securities............................................................ 3 70 (255) Trading and other securities -- FVO general account securities -- changes in estimated fair value....................................................... (2) -- -- Mortgage loans............................................................... 133 59 (373) Real estate and real estate joint ventures................................... 133 (33) (100) Other limited partnership interests.......................................... 11 (5) (284) Other investment portfolio gains (losses).................................... (4) 36 (38) ------ ------ -------- Subtotal -- investment portfolio gains (losses)............................ 154 (104) (1,955) ------ ------ -------- FVO CSEs -- changes in estimated fair value: Securities................................................................... -- (78) -- Long-term debt -- related to securities...................................... (8) 48 -- Other gains (losses).......................................................... (14) (36) 288 ------ ------ -------- Subtotal FVO CSEs and other gains (losses)................................. (22) (66) 288 ------ ------ -------- Total net investment gains (losses).................................... $ 132 $(170) $(1,667) ====== ====== ========
See "-- Variable Interest Entities" for discussion of CSEs included in the table above. See "-- Related Party Investment Transactions" for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates. Gains (losses) from foreign currency transactions included within net investment gains (losses) were $21 million, $18 million and $317 million for the years ended December 31, 2011, 2010 and 2009, respectively. F-55 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown in the table below. Investment gains and losses on sales of securities are determined on a specific identification basis.
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, ----------------------- ------------------------ ------------------------ 2011 2010 2009 2011 2010 2009 2011 2010 2009 ------- ------- ------- ----- ----- ------ ------- ------- -------- FIXED MATURITY SECURITIES EQUITY SECURITIES TOTAL ----------------------- ------------------------ ------------------------ (IN MILLIONS) Proceeds............................. $34,015 $30,817 $24,900 $ 771 $ 429 $ 658 $34,786 $31,246 $ 25,558 ======= ======= ======= ===== ===== ====== ======= ======= ======== Gross investment gains............... $ 445 $ 544 $ 685 $ 86 $ 88 $ 118 $ 531 $ 632 $ 803 ------- ------- ------- ----- ----- ------ ------- ------- -------- Gross investment losses.............. (338) (415) (692) (42) (11) (90) (380) (426) (782) ------- ------- ------- ----- ----- ------ ------- ------- -------- Total OTTI losses recognized in earnings: Credit-related............ (183) (334) (632) -- -- -- (183) (334) (632) Other (1).......................... (44) (26) (266) (41) (7) (283) (85) (33) (549) ------- ------- ------- ----- ----- ------ ------- ------- -------- Total OTTI losses recognized in earnings......................... (227) (360) (898) (41) (7) (283) (268) (367) (1,181) ------- ------- ------- ----- ----- ------ ------- ------- -------- Net investment gains (losses).... $ (120) $ (231) $ (905) $ 3 $ 70 $(255) $ (117) $ (161) $(1,160) ======= ======= ======= ===== ===== ====== ======= ======= ========
---------- (1)Other OTTI losses recognized in earnings include impairments on equity securities, impairments on perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value. Fixed maturity security OTTI losses recognized in earnings related to the following sectors and industries within the U.S. and foreign corporate securities sector:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ---- ---- ---- (IN MILLIONS) Sector: U.S. and foreign corporate securities -- by industry: Consumer............................................. $ 40 $ 20 $127 Finance.............................................. 37 117 284 Communications....................................... 26 10 130 Industrial........................................... 8 -- 9 Utility.............................................. -- 1 81 Other industries..................................... -- -- 27 ---- ---- ---- Total U.S. and foreign corporate securities........ 111 148 658 RMBS................................................. 78 87 167 ABS.................................................. 28 66 55 CMBS................................................. 9 59 18 Foreign government securities........................ 1 -- -- ---- ---- ---- Total.............................................. $227 $360 $898 ==== ==== ====
F-56 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Equity security OTTI losses recognized in earnings related to the following sectors and industries:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ---- ---- ---- (IN MILLIONS) Sector: Non-redeemable preferred stock........................ $33 $ 3 $228 Common stock.......................................... 8 4 55 ---- ---- ---- Total........................................... $41 $ 7 $283 ==== ==== ==== Industry: Financial services industry:.......................... Perpetual hybrid securities......................... $33 $ 3 $228 Common and remaining non-redeemable preferred stock. -- -- 25 ---- ---- ---- Total financial services industry................. 33 3 253 Other industries....................................... 8 4 30 ---- ---- ---- Total........................................... $41 $ 7 $283 ==== ==== ====
CREDIT LOSS ROLLFORWARD -- ROLLFORWARD OF THE CUMULATIVE CREDIT LOSS COMPONENT OF OTTI LOSS RECOGNIZED IN EARNINGS ON FIXED MATURITY SECURITIES STILL HELD FOR WHICH A PORTION OF THE OTTI LOSS WAS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss):
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 ----- ------ (IN MILLIONS) Balance, at January 1,................................................................... $ 330 $ 303 Additions: Initial impairments -- credit loss OTTI recognized on securities not previously impaired.............................................................................. 33 91 Additional impairments -- credit loss OTTI recognized on securities previously impaired.............................................................................. 68 91 Reductions: Sales (maturities, pay downs or prepayments) during the period of securities previously impaired as credit loss OTTI.......................................................... (82) (149) Securities impaired to net present value of expected future cash flows.................. (24) (1) Increases in cash flows -- accretion of previous credit loss OTTI....................... (9) (5) ----- ------ Balance, at December 31,................................................................. $ 316 $ 330 ===== ======
F-57 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET INVESTMENT INCOME The components of net investment income were as follows:
YEARS ENDED DECEMBER 31, ----------------------- 2011 2010 2009 ------- ------- ------- (IN MILLIONS) Investment income: Fixed maturity securities.................................................. $ 8,225 $ 8,147 $ 7,799 Equity securities.......................................................... 73 89 126 Trading and other securities -- Actively Traded Securities and FVO general account securities (1)................................................... 29 72 116 Mortgage loans............................................................. 2,401 2,258 2,236 Policy loans............................................................... 479 515 504 Real estate and real estate joint ventures................................. 509 348 (185) Other limited partnership interests........................................ 435 684 147 Cash, cash equivalents and short-term investments.......................... 12 15 27 International joint ventures............................................... 5 14 7 Other...................................................................... 112 111 104 ------- ------- ------- Subtotal................................................................ 12,280 12,253 10,881 Less: Investment expenses................................................. 662 675 706 ------- ------- ------- Subtotal, net........................................................... 11,618 11,578 10,175 ------- ------- ------- FVO CSEs: Securities................................................................ 9 15 -- ------- ------- ------- Net investment income................................................. $11,627 $11,593 $10,175 ======= ======= =======
---------- (1)Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective years included in net investment income were $2 million, $30 million and $31 million for the years ended December 31, 2011, 2010, and 2009, respectively. See "-- Variable Interest Entities" for discussion of CSEs included in the table above. See "-- Related Party Investment Transactions" for discussion of affiliated net investment income and investment expenses included in the table above. F-58 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SECURITIES LENDING As described more fully in Note 1, the Company participates in a securities lending program whereby blocks of securities are loaned to third parties. These transactions are treated as financing arrangements and the associated cash collateral received is recorded as a liability. The Company is obligated to return the cash collateral received to its counterparties. Elements of the securities lending program are presented below at:
DECEMBER 31, --------------- 2011 2010 ------- ------- (IN MILLIONS) Securities on loan: (1) Amortized cost.................................... $13,595 $15,274 Estimated fair value.............................. $15,726 $15,682 Cash collateral on deposit from counterparties (2). $15,870 $15,981 Security collateral on deposit from counterparties. $ 188 $ -- Reinvestment portfolio -- estimated fair value..... $15,803 $15,789
---------- (1)Included within fixed maturity securities and short-term investments. (2)Included within payables for collateral under securities loaned and other transactions. Security collateral on deposit from counterparties in connection with the securities lending transactions may not be sold or repledged, unless the counterparty is in default, and is not reflected in the consolidated financial statements. INVESTED ASSETS ON DEPOSIT AND PLEDGED AS COLLATERAL Invested assets on deposit and pledged as collateral are presented in the table below at estimated fair value for cash and cash equivalents, short-term investments, fixed maturity securities, equity securities, and trading and other securities and at carrying value for mortgage loans.
DECEMBER 31, --------------- 2011 2010 ------- ------- (IN MILLIONS) Invested assets on deposit (1).............................. $ 976 $ 1,491 Invested assets pledged as collateral (2)................... 17,280 17,738 ------- ------- Total invested assets on deposit and pledged as collateral. $18,256 $19,229 ======= =======
---------- (1)The Company has invested assets on deposit with regulatory agencies consisting primarily of cash and cash equivalents, short-term investments, fixed maturity securities and equity securities. (2)The Company has pledged fixed maturity securities, mortgage loans and cash and cash equivalents in connection with various agreements and transactions, including funding agreements (see Note 8), derivative transactions (see Note 4), and short sale agreements (see "-- Trading and Other Securities"). F-59 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) MORTGAGE LOANS Mortgage loans are summarized as follows at:
DECEMBER 31, ------------------------------ 2011 2010 -------------- -------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- (IN MILLIONS) (IN MILLIONS) Mortgage loans: Commercial...................... $32,774 74.7% $31,080 74.6% Agricultural.................... 11,498 26.2 11,108 26.7 Residential..................... 1 -- 1 -- -------- ----- -------- ----- Subtotal...................... 44,273 100.9 42,189 101.3 Valuation allowances............ (393) (0.9) (522) (1.3) -------- ----- -------- ----- Total mortgage loans, net... $43,880 100.0% $41,667 100.0% ======== ===== ======== =====
Certain of the Company's real estate joint ventures have mortgage loans with the Company. The carrying values of such mortgage loans were $286 million and $283 million at December 31, 2011 and 2010, respectively. The following tables present the recorded investment in mortgage loans, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, at:
COMMERCIAL AGRICULTURAL RESIDENTIAL TOTAL ---------- ------------ ----------- ------- (IN MILLIONS) DECEMBER 31, 2011: Mortgage loans: Evaluated individually for credit losses......... $ 73 $ 159 $-- $ 232 Evaluated collectively for credit losses......... 32,701 11,339 1 44,041 ---------- ------------ ----------- ------- Total mortgage loans........................... 32,774 11,498 1 44,273 ---------- ------------ ----------- ------- Valuation allowances: Specific credit losses........................... 44 45 -- 89 Non-specifically identified credit losses........ 274 30 -- 304 ---------- ------------ ----------- ------- Total valuation allowances..................... 318 75 -- 393 ---------- ------------ ----------- ------- Mortgage loans, net of valuation allowance... $32,456 $11,423 $ 1 $43,880 ---------- ------------ ----------- ------- DECEMBER 31, 2010: Mortgage loans: Evaluated individually for credit losses......... $ 96 $ 147 $-- $ 243 Evaluated collectively for credit losses......... 30,984 10,961 1 41,946 ---------- ------------ ----------- ------- Total mortgage loans........................... 31,080 11,108 1 42,189 ---------- ------------ ----------- ------- Valuation allowances: Specific credit losses........................... 13 52 -- 65 Non-specifically identified credit losses........ 428 29 -- 457 ---------- ------------ ----------- ------- Total valuation allowances..................... 441 81 -- 522 ---------- ------------ ----------- ------- Mortgage loans, net of valuation allowance... $30,639 $11,027 $ 1 $41,667 ========== ============ =========== =======
F-60 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables present the changes in the valuation allowance, by portfolio segment:
MORTGAGE LOAN VALUATION ALLOWANCES ------------------------------------------ COMMERCIAL AGRICULTURAL RESIDENTIAL TOTAL ---------- ------------ ----------- ------ (IN MILLIONS) Balance at January 1, 2009..... $ 184 $ 58 $ 2 $ 244 Provision (release)............ 325 69 -- 394 Charge-offs, net of recoveries. (17) (25) (2) (44) ---------- ------------ ----------- ------ Balance at December 31, 2009... 492 102 -- 594 Provision (release)............ (39) 12 -- (27) Charge-offs, net of recoveries. (12) (33) -- (45) ---------- ------------ ----------- ------ Balance at December 31, 2010... 441 81 -- 522 Provision (release)............ (111) (2) -- (113) Charge-offs, net of recoveries. (12) (4) -- (16) ---------- ------------ ----------- ------ Balance at December 31, 2011... $ 318 $ 75 $ -- $ 393 ========== ============ =========== ======
Commercial Mortgage Loans -- by Credit Quality Indicators with Estimated Fair Value. See Note 1 for a discussion of all credit quality indicators presented herein. Presented below for the commercial mortgage loans is the recorded investment, prior to valuation allowances, by the indicated loan-to-value ratio categories and debt service coverage ratio categories and estimated fair value of such mortgage loans by the indicated loan-to-value ratio categories at:
COMMERCIAL ---------------------------------------------------------------- RECORDED INVESTMENT ------------------------------------------- DEBT SERVICE COVERAGE RATIOS ----------------------------- % OF ESTIMATED % OF > 1.20X 1.00X - 1.20X < 1.00X TOTAL TOTAL FAIR VALUE TOTAL ------- ------------- ------- ------- ----- ------------- ----- (IN MILLIONS) (IN MILLIONS) DECEMBER 31, 2011: Loan-to-value ratios: Less than 65%......... $20,510 $ 389 $ 332 $21,231 64.8% $22,547 66.1% 65% to 75%............ 6,919 237 268 7,424 22.6 7,734 22.6 76% to 80%............ 950 98 200 1,248 3.8 1,251 3.7 Greater than 80%...... 1,880 674 317 2,871 8.8 2,588 7.6 ------- ------------- ------- ------- ----- ------------- ----- Total................ $30,259 $1,398 $1,117 $32,774 100.0% $34,120 100.0% ======= ============= ======= ======= ===== ============= ===== DECEMBER 31, 2010: Loan-to-value ratios: Less than 65%......... $13,864 $ 100 $ 425 $14,389 46.3% $15,203 47.5% 65% to 75%............ 7,658 611 343 8,612 27.7 8,955 28.0 76% to 80%............ 2,534 166 128 2,828 9.1 2,883 9.0 Greater than 80%...... 3,002 1,625 624 5,251 16.9 4,978 15.5 ------- ------------- ------- ------- ----- ------------- ----- Total................ $27,058 $2,502 $1,520 $31,080 100.0% $32,019 100.0% ======= ============= ======= ======= ===== ============= =====
F-61 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Agricultural Mortgage Loans -- by Credit Quality Indicator. The recorded investment in agricultural mortgage loans, prior to valuation allowances, by credit quality indicator, is as shown below. The estimated fair value of agricultural mortgage loans was $11.9 billion and $11.3 billion at December 31, 2011 and 2010, respectively.
AGRICULTURAL -------------------------------------------------------------- DECEMBER 31, -------------------------------------------------------------- 2011 2010 ------------------------------ ------------------------------ RECORDED INVESTMENT % OF TOTAL RECORDED INVESTMENT % OF TOTAL ------------------- ---------- ------------------- ---------- (IN MILLIONS) (IN MILLIONS) Loan-to-value ratios: Less than 65%......... $10,378 90.2% $ 9,896 89.1% 65% to 75%............ 732 6.4 829 7.5 76% to 80%............ 12 0.1 48 0.4 Greater than 80%...... 376 3.3 335 3.0 ------------------- ---------- ------------------- ---------- Total................ $11,498 100.0% $11,108 100.0% =================== ========== =================== ==========
Residential Mortgage Loans -- by Credit Quality Indicator. All residential mortgage loans were performing at both December 31, 2011 and 2010. The estimated fair value of residential mortgage loans was $1 million at both December 31, 2011 and 2010. Past Due and Interest Accrual Status of Mortgage Loans. The Company has a high quality, well performing, mortgage loan portfolio, with approximately 99% of all mortgage loans classified as performing at both December 31, 2011 and 2010. The Company defines delinquent mortgage loans consistent with industry practice, when interest and principal payments are past due as follows: commercial mortgage loans -- 60 days or more; and agricultural mortgage loans -- 90 days or more. The recorded investment in mortgage loans, prior to valuation allowances, past due according to these aging categories, greater than 90 days past due and still accruing interest and in nonaccrual status, by portfolio segment, were as follows at:
GREATER THAN 90 DAYS PAST DUE STILL PAST DUE ACCRUING INTEREST NONACCRUAL STATUS ----------------------------------- ----------------------------------- ----------------------------------- DECEMBER 31, 2011 DECEMBER 31, 2010 DECEMBER 31, 2011 DECEMBER 31, 2010 DECEMBER 31, 2011 DECEMBER 31, 2010 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- (IN MILLIONS) Commercial... $ 63 $ 51 $-- $-- $ 63 $ 6 Agricultural. 139 145 27 9 150 166 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Total...... $202 $196 $27 $ 9 $213 $172 ================= ================= ================= ================= ================= =================
F-62 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Impaired Mortgage Loans. The unpaid principal balance, recorded investment, valuation allowances and carrying value, net of valuation allowances, for impaired mortgage loans, including those modified in a troubled debt restructuring, by portfolio segment, were as follows at:
IMPAIRED MORTGAGE LOANS -------------------------------------------------------------------------------- LOANS WITHOUT LOANS WITH A VALUATION ALLOWANCE A VALUATION ALLOWANCE ALL IMPAIRED LOANS ---------------------------------------- -------------------- ------------------ UNPAID UNPAID UNPAID PRINCIPAL RECORDED VALUATION CARRYING PRINCIPAL RECORDED PRINCIPAL CARRYING BALANCE INVESTMENT ALLOWANCES VALUE BALANCE INVESTMENT BALANCE VALUE --------- ---------- ---------- -------- --------- ---------- --------- -------- (IN MILLIONS) DECEMBER 31, 2011: Commercial......... $ 73 $ 73 $44 $ 29 $225 $209 $298 $238 Agricultural....... 160 159 45 114 62 60 222 174 --------- ---------- ---------- -------- --------- ---------- --------- -------- Total............ $233 $232 $89 $143 $287 $269 $520 $412 ========= ========== ========== ======== ========= ========== ========= ======== DECEMBER 31, 2010: Commercial......... $ 96 $ 96 $13 $ 83 $ 94 $ 82 $190 $165 Agricultural....... 146 146 52 94 107 104 253 198 --------- ---------- ---------- -------- --------- ---------- --------- -------- Total............ $242 $242 $65 $177 $201 $186 $443 $363 ========= ========== ========== ======== ========= ========== ========= ========
Unpaid principal balance is generally prior to any charge-offs. The average investment in impaired mortgage loans, including those modified in a troubled debt restructuring, and the related interest income, by portfolio segment, for the years ended December 31, 2011 and 2010, and for all mortgage loans for the year ended December 31, 2009, was:
IMPAIRED MORTGAGE LOANS --------------------------------------------- AVERAGE INVESTMENT INTEREST INCOME RECOGNIZED ------------------ -------------------------- CASH BASIS ACCRUAL BASIS ---------- ------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2011: Commercial............................ $257 $4 $ 1 Agricultural.......................... 239 3 -- ------------------ ---------- ------------- Total................................ $496 $7 $ 1 ================== ========== ============= FOR THE YEAR ENDED DECEMBER 31, 2010: Commercial............................ $126 $3 $ 1 Agricultural.......................... 259 6 2 ------------------ ---------- ------------- Total................................ $385 $9 $ 3 ================== ========== ============= FOR THE YEAR ENDED DECEMBER 31, 2009.. $288 $5 $ 1 ================== ========== =============
F-63 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Mortgage Loans Modified in a Troubled Debt Restructuring. See Note 1 for a discussion of loan modifications that are classified as troubled debt restructuring and the types of concessions typically granted. At December 31, 2011, the number of mortgage loans and carrying value after specific valuation allowance of mortgage loans modified during the period in a troubled debt restructuring were as follows:
MORTGAGE LOANS MODIFIED IN A TROUBLED DEBT RESTRUCTURING ------------------------------------------ DECEMBER 31, 2011 ------------------------------------------ NUMBER OF MORTGAGE CARRYING VALUE AFTER SPECIFIC LOANS VALUATION ALLOWANCE --------- ----------------------------- PRE- POST- MODIFICATION MODIFICATION ------------ ------------ (IN MILLIONS) Commercial... 4 $125 $ 87 Agricultural. 9 40 40 --------- ------------ ------------ Total....... 13 $165 $127 ========= ============ ============
During the previous 12 months, the Company had three agricultural mortgage loans, with a carrying value after specific valuation allowance of $11 million, modified in a troubled debt restructuring with a subsequent payment default at December 31, 2011. During the previous 12 months, there were no commercial mortgage loans modified in a troubled debt restructuring with a subsequent payment default at December 31, 2011. Payment default is determined in the same manner as delinquency status -- when interest and principal payments are past due as follows: commercial mortgage loans -- 60 days or more; and agricultural mortgage loans -- 90 days or more. REAL ESTATE AND REAL ESTATE JOINT VENTURES Real estate investments by type consisted of the following:
DECEMBER 31, ---------------------------------------- 2011 2010 ------------------- ------------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL ------------- ----- ------------- ----- (IN MILLIONS) (IN MILLIONS) Traditional......................................... $3,634 61.7% $3,211 55.8% Real estate joint ventures and funds................ 2,060 35.0 2,279 39.6 ------------- ----- ------------- ----- Real estate and real estate joint ventures....... 5,694 96.7 5,490 95.4 Foreclosed (commercial and agricultural)............ 196 3.3 85 1.5 ------------- ----- ------------- ----- Real estate held-for-investment.................. 5,890 100.0 5,575 96.9 Real estate held-for-sale........................... 1 -- 180 3.1 ------------- ----- ------------- ----- Total real estate and real estate joint ventures. $5,891 100.0% $5,755 100.0% ============= ===== ============= =====
The Company classifies within traditional real estate its investment in income-producing real estate, which is comprised primarily of wholly-owned real estate and, to a much lesser extent, joint ventures with interests in single property income-producing real estate. The Company classifies within real estate joint ventures and funds, its investments in joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the operation of income-producing properties, as well as its investments in real estate private equity funds. From time to time, the Company transfers investments from these joint ventures to F-64 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) traditional real estate, if the Company retains an interest in the joint venture after a completed property commences operations and the Company intends to retain an interest in the property. Properties acquired through foreclosure were $156 million, $48 million and $121 million for the years ended December 31, 2011, 2010 and 2009, respectively, and include commercial and agricultural properties. After the Company acquires properties through foreclosure, it evaluates whether the properties are appropriate for retention in its traditional real estate portfolio. Foreclosed real estate held at December 31, 2011 and 2010 includes those properties the Company has not selected for retention in its traditional real estate portfolio and which do not meet the criteria to be classified as held-for-sale. The wholly-owned real estate within traditional real estate is net of accumulated depreciation of $1.1 billion and $1.3 billion at December 31, 2011 and 2010, respectively. Related depreciation expense on traditional wholly-owned real estate was $125 million, $134 million and $120 million for the years ended December 31, 2011, 2010 and 2009, respectively. These amounts include depreciation expense related to discontinued operations of $7 million, $16 million and $17 million for the years ended December 31, 2011, 2010 and 2009, respectively. There were no impairments recognized on real estate held-for-investment for the year ended December 31, 2011. Impairments recognized on real estate held-for-investment were $27 million and $96 million for the years ended December 31, 2010 and 2009, respectively. Impairments recognized on real estate held-for-sale were $1 million for the year ended December 31, 2010. There were no impairments recognized on real estate held-for-sale for the years ended December 31, 2011 and 2009. The Company's carrying value of real estate held-for-sale has been reduced by impairments recorded prior to 2009 of $1 million at both December 31, 2011 and 2010. The carrying value of non-income producing real estate was $110 million and $94 million at December 31, 2011 and 2010, respectively. OTHER LIMITED PARTNERSHIP INTERESTS The carrying value of other limited partnership interests (which primarily represent ownership interests in pooled investment funds that principally make private equity investments in companies in the United States and overseas) was $4.3 billion and $4.5 billion at December 31, 2011 and 2010, respectively. Included within other limited partnership interests were $667 million and $604 million at December 31, 2011 and 2010, respectively, of investments in hedge funds. Impairments of other limited partnership interests, principally other limited partnership interests accounted for under the cost method, were $3 million, $2 million and $288 million for the years ended December 31, 2011, 2010 and 2009, respectively. COLLECTIVELY SIGNIFICANT EQUITY METHOD INVESTMENTS The Company holds investments in real estate joint ventures, real estate funds and other limited partnership interests consisting of leveraged buy-out funds, hedge funds, private equity funds, joint ventures, tax credit partnerships and other funds. The portion of these investments accounted for under the equity method had a carrying value of $6.8 billion as of December 31, 2011. The Company's maximum exposure to loss related to these equity method investments is limited to the carrying value of these investments plus unfunded commitments of $2.2 billion as of December 31, 2011. Except for certain real estate joint ventures, the Company's investments in real estate funds and other limited partnership interests are generally of a passive nature in that the Company does not participate in the management of the entities. As further described in Note 1, the Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income. As of December 31, 2011, aggregate net investment income from these equity method real estate joint ventures, real estate funds and other F-65 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) limited partnership interests exceeded 10% of the Company's consolidated pre-tax income (loss) from continuing operations. The Company is providing the following aggregated summarized financial data for such equity method investments. This aggregated summarized financial data does not represent the Company's proportionate share of the assets, liabilities, or earnings of such entities. As of, and for the year ended December 31, 2011, the aggregated summarized financial data presented below reflects the latest available financial information. Aggregate total assets of these entities totaled $229.7 billion and $185.6 billion as of December 31, 2011 and 2010, respectively. Aggregate total liabilities of these entities totaled $22.2 billion and $30.6 billion as of December 31, 2011 and 2010, respectively. Aggregate net income (loss) of these entities totaled $8.4 billion, $16.5 billion and $22.0 billion for the years ended December 31, 2011, 2010 and 2009, respectively. Aggregate net income (loss) from real estate joint ventures, real estate funds and other limited partnership interests is primarily comprised of investment income, including recurring investment income and realized and unrealized investment gains (losses). OTHER INVESTED ASSETS The following table presents the carrying value of the Company's other invested assets by type at:
DECEMBER 31, ---------------------------------------- 2011 2010 ------------------- ------------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL ------------- ----- ------------- ----- (IN MILLIONS) (IN MILLIONS) Freestanding derivatives with positive estimated fair values. $ 6,936 55.5% $3,311 42.3% Leveraged leases, net of non-recourse debt................... 1,832 14.7 1,799 23.0 Loans to affiliates.......................................... 1,600 12.8 1,415 18.1 Tax credit partnerships...................................... 1,409 11.3 835 10.7 Joint venture investments.................................... 59 0.5 51 0.7 Funds withheld............................................... 25 0.2 31 0.4 Other........................................................ 644 5.0 380 4.8 ------------- ----- ------------- ----- Total....................................................... $12,505 100.0% $7,822 100.0% ============= ===== ============= =====
See Note 4 for information regarding the freestanding derivatives with positive estimated fair values. See "-- Leveraged Leases" for the composition of leveraged leases. Loans to affiliates, some of which are regulated, are used by the affiliates to assist in meeting their capital requirements. See "-- Related Party Investment Transactions" for information regarding certain loans to affiliates. Tax credit partnerships are established for the purpose of investing in low-income housing and other social causes, where the primary return on investment is in the form of income tax credits, and are accounted for under the equity method or under the effective yield method. Joint venture investments are accounted for under the equity method and represent the Company's investment in an insurance underwriting joint venture in China. Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. F-66 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Leveraged Leases Investment in leveraged leases, included in other invested assets, consisted of the following:
DECEMBER 31, ----------------- 2011 2010 -------- -------- (IN MILLIONS) Rental receivables, net..................................... $ 1,761 $ 1,783 Estimated residual values................................... 1,110 1,136 -------- -------- Subtotal.................................................. 2,871 2,919 Unearned income............................................. (1,039) (1,120) -------- -------- Investment in leveraged leases........................... $ 1,832 $ 1,799 ======== ========
Rental receivables are generally due in periodic installments. The payment periods range from one to 15 years, but in certain circumstances are as long as 34 years. For rental receivables, the primary credit quality indicator is whether the rental receivable is performing or non-performing, which is assessed monthly. The Company generally defines non-performing rental receivables as those that are 90 days or more past due. As of December 31, 2011 and 2010, all rental receivables were performing. The deferred income tax liability related to leveraged leases was $1.3 billion and $1.2 billion at December 31, 2011 and 2010, respectively. The components of income from investment in leveraged leases, excluding realized gains (losses) were as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ----- ----- ----- (IN MILLIONS) Net income from investment in leveraged leases............................. $ 101 $ 102 $ 92 Less: Income tax expense on leveraged leases............................... (35) (36) (32) ----- ----- ----- Net investment income after income tax from investment in leveraged leases. $ 66 $ 66 $ 60 ===== ===== =====
CASH EQUIVALENTS The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $1.2 billion and $3.1 billion at December 31, 2011 and 2010, respectively. PURCHASED CREDIT IMPAIRED INVESTMENTS Investments acquired with evidence of credit quality deterioration since origination and for which it is probable at the acquisition date that the Company will be unable to collect all contractually required payments are classified as purchased credit impaired investments. For each investment, the excess of the cash flows expected to be collected as of the acquisition date over its acquisition date fair value is referred to as the accretable yield and is recognized as net investment income on an effective yield basis. If subsequently, based on current information and events, it is probable that there is a significant increase in cash flows previously expected to be collected or if actual cash flows are significantly greater than cash flows previously expected to be collected, the accretable yield is adjusted prospectively. The excess of the contractually required payments F-67 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (including interest) as of the acquisition date over the cash flows expected to be collected as of the acquisition date is referred to as the nonaccretable difference, and this amount is not expected to be realized as net investment income. Decreases in cash flows expected to be collected can result in OTTI. The table below presents the purchased credit impaired fixed maturity securities held at:
DECEMBER 31, ------------- 2011 2010 ------ ------ (IN MILLIONS) Outstanding principal and interest balance (1). $3,708 $1,163 Carrying value (2)............................. $2,675 $ 913
---------- (1)Represents the contractually required payments which is the sum of contractual principal, whether or not currently due, and accrued interest. (2)Estimated fair value plus accrued interest. The following table presents information about purchased credit impaired fixed maturity securities acquired during the periods, as of their respective acquisition dates:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 ------ ------ (IN MILLIONS) Contractually required payments (including interest). $4,260 $1,605 Cash flows expected to be collected (1).............. $3,603 $1,540 Fair value of investments acquired................... $2,140 $ 939
---------- (1)Represents undiscounted principal and interest cash flow expectations at the date of acquisition. The following table presents activity for the accretable yield on purchased credit impaired fixed maturity securities for:
DECEMBER 31, ------------- 2011 2010 ------ ------ (IN MILLIONS) Accretable yield, January 1,........................ $ 436 $ -- Investments purchased............................... 1,463 601 Accretion recognized in earnings.................... (97) (62) Reclassification (to) from nonaccretable difference. 176 (103) ------ ------ Accretable yield, December 31,...................... $1,978 $ 436 ====== ======
F-68 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) VARIABLE INTEREST ENTITIES The Company holds investments in certain entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at December 31, 2011 and 2010. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company's obligation to the VIEs is limited to the amount of its committed investment.
DECEMBER 31, ------------------------------------- 2011 2010 ------------------ ------------------ TOTAL TOTAL TOTAL TOTAL ASSETS LIABILITIES ASSETS LIABILITIES ------ ----------- ------ ----------- (IN MILLIONS) Other limited partnership interests. $203 $ 1 $194 $ 53 CSEs (1)............................ 146 138 243 226 Other invested assets............... 102 1 108 1 Real estate joint ventures.......... 16 18 20 17 ------ ----------- ------ ----------- Total............................ $467 $158 $565 $297 ====== =========== ====== ===========
---------- (1)The Company consolidates former QSPEs that are structured as collateralized debt obligations. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company's exposure was limited to that of its remaining investment in the former QSPEs of less than $1 million at estimated fair value at both December 31, 2011 and 2010, respectively. The long-term debt presented below bears interest primarily at variable rates, payable on a bi-annual basis and is expected to be repaid over the next three years. Interest expense related to these obligations, included in other expenses, was $9 million and $15 million for the years ended December 31, 2011 and 2010, respectively. The assets and liabilities of these CSEs, at estimated fair value, were as follows at:
DECEMBER 31, ------------ 2011 2010 ---- ---- (IN MILLIONS) ASSETS: Trading and other securities................ $117 $201 Cash and cash equivalents................... 21 39 Accrued investment income................... 1 3 Premiums, reinsurance and other receivables. 7 -- ---- ---- Total assets.............................. $146 $243 ==== ==== LIABILITIES: Long-term debt.............................. $116 $184 Other liabilities........................... 22 42 ---- ---- Total liabilities......................... $138 $226 ==== ====
F-69 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the carrying amount and maximum exposure to loss relating to VIEs for which the Company holds significant variable interests but is not the primary beneficiary and which have not been consolidated at:
DECEMBER 31, ----------------------------------------- 2011 2010 -------------------- -------------------- MAXIMUM MAXIMUM CARRYING EXPOSURE CARRYING EXPOSURE AMOUNT TO LOSS (1) AMOUNT TO LOSS (1) -------- ----------- -------- ----------- (IN MILLIONS) Fixed maturity securities available-for-sale: RMBS (2)................................... $25,719 $25,719 $30,679 $30,679 CMBS (2)................................... 9,105 9,105 9,701 9,701 ABS (2).................................... 6,586 6,586 6,443 6,443 U.S. corporate securities.................. 1,593 1,593 1,283 1,283 Foreign corporate securities............... 786 786 1,058 1,058 Other limited partnership interests........... 2,537 3,259 2,583 3,281 Other invested assets......................... 745 1,140 514 694 Real estate joint ventures.................... 32 49 24 69 -------- ----------- -------- ----------- Total.................................... $47,103 $48,237 $52,285 $53,208 ======== =========== ======== ===========
---------- (1)The maximum exposure to loss relating to the fixed maturity securities is equal to the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. For certain of its investments in other invested assets, the Company's return is in the form of income tax credits which are guaranteed by a creditworthy third party. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $264 million and $225 million at December 31, 2011 and 2010, respectively. (2)For these variable interests, the Company's involvement is limited to that of a passive investor. As described in Note 13, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during the years ended December 31, 2011, 2010 and 2009. RELATED PARTY INVESTMENT TRANSACTIONS In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Invested assets transferred to and from affiliates were as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2011 2010 2009 ------ ------ -------- (IN MILLIONS) Estimated fair value of invested assets transferred to affiliates....................... $ 170 $ 444 $ -- Amortized cost of invested assets transferred to affiliates...................................... $ 164 $ 431 $ -- Net investment gains (losses) recognized on transfers....................................... $ 6 $ 13 $ -- Estimated fair value of invested assets transferred from affiliates..................... $ 132 $ 582 $ 1,019
F-70 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has loans outstanding to Exeter Reassurance Company Ltd. ("Exeter"), an affiliate. During 2011, the Company issued loans to Exeter totaling $525 million bringing the total loans outstanding to $1.6 billion and $1.0 billion at December 31, 2011 and 2010, respectively, which are included in other invested assets. The loans issued in 2011 of $150 million and $375 million are due on July 15, 2021 and December 16, 2021, respectively, and bear interest, payable semi-annually, at 5.64% and 5.86%, respectively. The loans issued in 2009 are due as follows: $500 million due on June 30, 2014, $250 million due on September 30, 2012 and $250 million due on September 30, 2016, respectively, and these amounts bear interest, payable semi-annually, at 6.44%, 5.33% and 7.44%, respectively. Both the principal and interest payments have been guaranteed by MetLife, Inc. Net investment income from this investment was $74 million, $64 million and $28 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Company provides investment administrative services to certain affiliates. Investment administrative service charges to these affiliates, which reduced investment expenses, were $164 million, $107 million and $87 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Company also had additional affiliated net investment income of $3 million, $16 million and $16 million for the years ended December 31, 2011, 2010 and 2009, respectively. 4. DERIVATIVE FINANCIAL INSTRUMENTS ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS See Note 1 for a description of the Company's accounting policies for derivative financial instruments. See Note 5 for information about the fair value hierarchy for derivatives. F-71 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PRIMARY RISKS MANAGED BY DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to various risks relating to its ongoing business operations, including interest rate risk, foreign currency risk, credit risk and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of derivative instruments. The following table presents the gross notional amount, estimated fair value and primary underlying risk exposure of the Company's derivative financial instruments, excluding embedded derivatives, held at:
DECEMBER 31, ------------------------------------------------------- 2011 2010 --------------------------- --------------------------- ESTIMATED FAIR ESTIMATED FAIR VALUE (1) VALUE (1) PRIMARY UNDERLYING NOTIONAL ------------------ NOTIONAL ------------------ RISK EXPOSURE INSTRUMENT TYPE AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES ------------------ ------------------------- -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate Interest rate swaps...... $ 36,069 $4,609 $ 952 $ 25,614 $1,477 $ 870 Interest rate floors..... 13,290 789 14 13,290 460 4 Interest rate caps....... 38,532 83 -- 27,253 145 -- Interest rate futures.... 2,675 6 2 1,246 7 -- Interest rate options.... 4,624 326 -- 5,680 107 23 Interest rate forwards... 845 81 14 445 -- 36 Synthetic GICs........... 4,454 -- -- 4,397 -- -- Foreign currency Foreign currency swaps... 13,149 867 649 13,558 1,024 901 Foreign currency forwards 2,014 81 -- 2,050 17 16 Credit Credit default swaps..... 7,765 90 81 6,792 72 79 Credit forwards.......... 20 4 -- 90 2 3 Equity market Equity futures........... -- -- -- 7 -- -- Equity options........... 135 -- -- 176 -- -- -------- ------ ----------- -------- ------ ----------- Total.................. $123,572 $6,936 $1,712 $100,598 $3,311 $1,932 ======== ====== =========== ======== ====== ===========
---------- (1)The estimated fair value of all derivatives in an asset position is reported within other invested assets in the consolidated balance sheets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets. F-72 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the gross notional amount of derivative financial instruments by maturity at December 31, 2011:
REMAINING LIFE --------------------------------------------------------- AFTER FIVE AFTER ONE YEAR YEARS ONE YEAR OR THROUGH FIVE THROUGH TEN AFTER TEN LESS YEARS YEARS YEARS TOTAL ----------- -------------- ----------- --------- -------- (IN MILLIONS) Interest rate swaps....... $ 4,799 $18,744 $ 4,622 $ 7,904 $ 36,069 Interest rate floors...... -- 8,890 1,400 3,000 13,290 Interest rate caps........ 3,250 31,271 4,011 -- 38,532 Interest rate futures..... 2,675 -- -- -- 2,675 Interest rate options..... 65 4,159 400 -- 4,624 Interest rate forwards.... 580 265 -- -- 845 Synthetic GICs............ 4,454 -- -- -- 4,454 Foreign currency swaps.... 727 5,946 4,738 1,738 13,149 Foreign currency forwards. 1,919 16 20 59 2,014 Credit default swaps...... 161 6,970 634 -- 7,765 Credit forwards........... 20 -- -- -- 20 Equity futures............ -- -- -- -- -- Equity options............ 135 -- -- -- 135 ----------- -------------- ----------- --------- -------- Total.................. $18,785 $76,261 $15,825 $12,701 $123,572 =========== ============== =========== ========= ========
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. The Company utilizes interest rate swaps in fair value, cash flow and non-qualifying hedging relationships. The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. In a basis swap, both legs of the swap are floating with each based on a different index. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counterparty at each due date. Basis swaps are included in interest rate swaps in the preceding table. The Company utilizes basis swaps in non-qualifying hedging relationships. Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in interest rate swaps in the preceding table. The Company utilizes inflation swaps in non-qualifying hedging relationships. Implied volatility swaps are used by the Company primarily as economic hedges of interest rate risk associated with the Company's investments in mortgage-backed securities. In an implied volatility swap, the Company exchanges fixed payments for floating payments that are linked to certain market volatility measures. If implied volatility rises, the floating payments that the Company receives will increase, and if implied volatility falls, the floating payments that the Company receives will decrease. Implied volatility swaps are included in interest rate swaps in the preceding table. The Company utilizes implied volatility swaps in non-qualifying hedging relationships. F-73 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury, agency, or other fixed maturity security. Structured interest rate swaps are included in interest rate swaps in the preceding table. Structured interest rate swaps are not designated as hedging instruments. The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches), as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in non-qualifying hedging relationships. In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring and to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance. The Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships. Swaptions are used by the Company to hedge interest rate risk associated with the Company's long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. Swaptions are included in interest rate options in the preceding table. The Company utilizes swaptions in non-qualifying hedging relationships. The Company writes covered call options on its portfolio of U.S. Treasury securities as an income generation strategy. In a covered call transaction, the Company receives a premium at the inception of the contract in exchange for giving the derivative counterparty the right to purchase the referenced security from the Company at a predetermined price. The call option is "covered" because the Company owns the referenced security over the term of the option. Covered call options are included in interest rate options in the preceding table. The Company utilizes covered call options in non-qualifying hedging relationships. The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and non-qualifying hedging relationships. A synthetic GIC is a contract that simulates the performance of a traditional guaranteed interest contract through the use of financial instruments. Under a synthetic GIC, the policyholder owns the underlying assets. The Company guarantees a rate return on those assets for a premium. Synthetic GICs are not designated as hedging instruments. Foreign currency derivatives, including foreign currency swaps and foreign currency forwards, are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency forwards and swaps to hedge the foreign currency risk associated with certain of its net investments in foreign operations. F-74 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow, net investment in foreign operations and non-qualifying hedging relationships. In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. The Company utilizes foreign currency forwards in net investment in foreign operations and non-qualifying hedging relationships. Swap spreadlocks are used by the Company to hedge invested assets on an economic basis against the risk of changes in credit spreads. Swap spreadlocks are forward transactions between two parties whose underlying reference index is a forward starting interest rate swap where the Company agrees to pay a coupon based on a predetermined reference swap spread in exchange for receiving a coupon based on a floating rate. The Company has the option to cash settle with the counterparty in lieu of maintaining the swap after the effective date. The Company utilizes swap spreadlocks in non-qualifying hedging relationships. Certain credit default swaps are used by the Company to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to hedge credit risk. If a credit event, as defined by the contract, occurs, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. The Company utilizes credit default swaps in non-qualifying hedging relationships. Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments such as U.S. Treasury securities, agency securities or other fixed maturity securities. The Company also enters into certain credit default swaps held in relation to trading portfolios for the purpose of generating profits on short-term differences in price. These credit default swaps are not designated as hedging instruments. The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships. In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships. Equity index options are used by the Company to hedge certain invested assets against adverse changes in equity indices. In an equity index option transaction, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through F-75 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the purchase and sale of options. Equity index options are included in equity options in the preceding table. The Company utilizes equity index options in non-qualifying hedging relationships. Total rate of return swaps ("TRRs") are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the London Inter-Bank Offered Rate ("LIBOR"), calculated by reference to an agreed notional principal amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. The Company uses TRRs to hedge its equity market guarantees in certain of its insurance products. TRRs can be used as hedges or to synthetically create investments. The Company utilizes TRRs in non-qualifying hedging relationships. HEDGING The following table presents the gross notional amount and estimated fair value of derivatives designated as hedging instruments by type of hedge designation at:
DECEMBER 31, ----------------------------------------------------------- 2011 2010 ----------------------------- ----------------------------- ESTIMATED FAIR VALUE ESTIMATED FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES --------------------------------------------- -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Fair value hedges: Foreign currency swaps................ $ 2,622 $ 312 $ 79 $ 3,737 $ 572 $126 Interest rate swaps................... 4,259 1,849 86 4,795 811 154 -------- ------ ----------- -------- ------ ----------- Subtotal.......................... 6,881 2,161 165 8,532 1,383 280 -------- ------ ----------- -------- ------ ----------- Cash flow hedges: Foreign currency swaps................ 5,135 314 160 4,487 193 212 Interest rate swaps................... 2,875 852 -- 2,602 95 71 Interest rate forwards................ 345 81 -- 445 -- 36 Credit forwards....................... 20 4 -- 90 2 3 -------- ------ ----------- -------- ------ ----------- Subtotal.......................... 8,375 1,251 160 7,624 290 322 -------- ------ ----------- -------- ------ ----------- Total qualifying hedges............ $15,256 $3,412 $325 $16,156 $1,673 $602 ======== ====== =========== ======== ====== ===========
F-76 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the gross notional amount and estimated fair value of derivatives that were not designated or do not qualify as hedging instruments by derivative type at:
DECEMBER 31, ----------------------------------------------------------- 2011 2010 ----------------------------- ----------------------------- ESTIMATED FAIR VALUE ESTIMATED FAIR VALUE DERIVATIVES NOT DESIGNATED OR NOT NOTIONAL -------------------- NOTIONAL -------------------- QUALIFYING AS HEDGING INSTRUMENTS AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES ------------------------------------------ -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate swaps........................ $ 28,935 $1,908 $ 866 $18,217 $ 571 $ 645 Interest rate floors....................... 13,290 789 14 13,290 460 4 Interest rate caps......................... 38,532 83 -- 27,253 145 -- Interest rate futures...................... 2,675 6 2 1,246 7 -- Interest rate options...................... 4,624 326 -- 5,680 107 23 Interest rate forwards..................... 500 -- 14 -- -- -- Synthetic GICs............................. 4,454 -- -- 4,397 -- -- Foreign currency swaps..................... 5,392 241 410 5,334 259 563 Foreign currency forwards.................. 2,014 81 -- 2,050 17 16 Credit default swaps....................... 7,765 90 81 6,792 72 79 Equity futures............................. -- -- -- 7 -- -- Equity options............................. 135 -- -- 176 -- -- -------- ------ ----------- -------- ------ ----------- Total non-designated or non-qualifying derivatives........................... $108,316 $3,524 $1,387 $84,442 $1,638 $1,330 ======== ====== =========== ======== ====== ===========
NET DERIVATIVE GAINS (LOSSES) The components of net derivative gains (losses) were as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2011 2010 2009 ------ ------ -------- (IN MILLIONS) Derivatives and hedging gains (losses) (1). $2,040 $ 353 $(2,842) Embedded derivatives....................... (462) (619) (1,586) ------ ------ -------- Total net derivative gains (losses)..... $1,578 $(266) $(4,428) ====== ====== ========
---------- (1)Includes foreign currency transaction gains (losses) on hedged items in cash flow and non-qualifying hedging relationships, which are not presented elsewhere in this note. F-77 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents earned income on derivatives for the:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ----- ----- ----- (IN MILLIONS) Qualifying hedges: Net investment income.............................. $ 96 $ 82 $ 51 Interest credited to policyholder account balances. 173 196 180 Non-qualifying hedges: Net investment income.............................. (8) (4) (3) Net derivative gains (losses)...................... 179 53 (51) ----- ----- ----- Total.......................................... $440 $327 $ 177 ===== ===== =====
FAIR VALUE HEDGES The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate investments to floating rate investments; (ii) interest rate swaps to convert fixed rate liabilities to floating rate liabilities; and (iii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities. F-78 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net derivative gains (losses). The following table represents the amount of such net derivative gains (losses):
NET DERIVATIVE NET DERIVATIVE INEFFECTIVENESS GAINS (LOSSES) GAINS (LOSSES) RECOGNIZED IN DERIVATIVES IN FAIR VALUE HEDGED ITEMS IN FAIR VALUE RECOGNIZED RECOGNIZED FOR NET DERIVATIVE HEDGING RELATIONSHIPS HEDGING RELATIONSHIPS FOR DERIVATIVES HEDGED ITEMS GAINS (LOSSES) ------------------------- ----------------------------------- --------------- -------------- --------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2011: Interest rate swaps: Fixed maturity securities.......... $ (18) $ 18 $ -- PABs (1)........................... 1,019 (994) 25 Foreign currency swaps: Foreign-denominated fixed maturity securities....................... 1 3 4 Foreign-denominated PABs (2)....... 28 (55) (27) --------------- -------------- --------------- Total................................................... $1,030 $(1,028) $ 2 =============== ======== ===== FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps: Fixed maturity securities.......... $ (13) $ 15 $ 2 PABs (1)........................... 153 (150) 3 Foreign currency swaps: Foreign-denominated fixed maturity securities....................... 13 (13) -- Foreign-denominated PABs (2)....... 47 (34) 13 --------------- -------------- --------------- Total................................................... $ 200 $ (182) $ 18 =============== ======== ===== FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps: Fixed maturity securities.......... $ 42 $ (35) $ 7 PABs (1)........................... (956) 947 (9) Foreign currency swaps: Foreign-denominated fixed maturity securities....................... (13) 10 (3) Foreign-denominated PABs (2)....... 351 (332) 19 --------------- -------------- --------------- Total................................................... $(576) $ 590 $ 14 =============== ======== =====
---------- (1)Fixed rate liabilities. (2)Fixed rate or floating rate liabilities. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. CASH FLOW HEDGES The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate investments to fixed rate investments; (ii) interest rate swaps to convert floating rate liabilities to fixed rate liabilities; (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities; (iv) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments; and (v) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments. In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date, within two months of that date, or were no longer probable of occurring. The net amounts reclassified into net derivative gains (losses) for the years ended December 31, 2011, F-79 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2010 and 2009 related to such discontinued cash flow hedges were gains (losses) of $3 million, $9 million and ($7) million, respectively. At December 31, 2011 and 2010, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed nine years and seven years, respectively. The following table presents the components of accumulated other comprehensive income (loss), before income tax, related to cash flow hedges:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ----- ------ (IN MILLIONS) Accumulated other comprehensive income (loss), balance at January 1,.................. $ 90 $(92) $ 137 Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges................................................................. 1,231 134 (327) Amounts reclassified to net derivative gains (losses)................................. (30) 46 93 Amounts reclassified to net investment income......................................... 2 3 7 Amounts reclassified to other expenses................................................ -- (1) -- Amortization of transition adjustment................................................. -- -- (2) ------ ----- ------ Accumulated other comprehensive income (loss), balance at December 31,................ $1,293 $ 90 $ (92) ====== ===== ======
At December 31, 2011, $26 million of deferred net gains (losses) on derivatives in accumulated other comprehensive income (loss) was expected to be reclassified to earnings within the next 12 months. F-80 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the effects of derivatives in cash flow hedging relationships on the consolidated statements of operations and the consolidated statements of equity:
AMOUNT OF GAINS AMOUNT AND LOCATION (LOSSES) DEFERRED OF GAINS (LOSSES) AMOUNT AND LOCATION IN ACCUMULATED OTHER RECLASSIFIED FROM OF GAINS (LOSSES) DERIVATIVES IN CASH FLOW COMPREHENSIVE INCOME ACCUMULATED OTHER COMPREHENSIVE RECOGNIZED IN INCOME (LOSS) HEDGING RELATIONSHIPS (LOSS) ON DERIVATIVES INCOME (LOSS) INTO INCOME (LOSS) ON DERIVATIVES -------------------------------------- --------------------- -------------------------------------- --------------------------- (INEFFECTIVE PORTION AND AMOUNT EXCLUDED FROM (EFFECTIVE PORTION) (EFFECTIVE PORTION) EFFECTIVENESS TESTING) - --------------------- -------------------------------------- --------------------------- NET DERIVATIVE NET INVESTMENT OTHER NET DERIVATIVE GAINS (LOSSES) INCOME EXPENSES GAINS (LOSSES) -------------- -------------- -------- --------------------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2011: Interest rate swaps................... $ 919 $ -- $ 1 $-- $ 1 Foreign currency swaps................ 166 7 (5) -- 1 Interest rate forwards................ 128 22 2 -- 2 Credit forwards....................... 18 1 -- -- -- --------------------- -------------- -------------- -------- --------------------------- Total.............................. $1,231 $ 30 $(2) $-- $ 4 ===================== ============== ============== ======== =========================== FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps................... $ 90 $ -- $ -- $ 1 $ 3 Foreign currency swaps................ 74 (56) (6) -- -- Interest rate forwards................ (35) 10 3 -- (1) Credit forwards....................... 5 -- -- -- -- --------------------- -------------- -------------- -------- --------------------------- Total.............................. $ 134 $ (46) $(3) $ 1 $ 2 ===================== ============== ============== ======== =========================== FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps................... $ (47) $ -- $ -- $-- $(2) Foreign currency swaps................ (409) (159) (5) -- (1) Interest rate forwards................ 130 66 -- -- -- Credit forwards....................... (1) -- -- -- -- --------------------- -------------- -------------- -------- --------------------------- Total.............................. $(327) $ (93) $(5) $-- $(3) ===================== ============== ============== ======== ===========================
All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS The Company uses foreign exchange contracts, which may include foreign currency swaps, forwards and options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on these contracts based upon the change in forward rates. In addition, the Company may also use non-derivative financial instruments to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on non-derivative financial instruments based upon the change in spot rates. When net investments in foreign operations are sold or substantially liquidated, the amounts in accumulated other comprehensive income (loss) are reclassified to the consolidated statements of operations, while a pro rata portion will be reclassified upon partial sale of the net investments in foreign operations. F-81 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the effects of derivatives and non-derivative financial instruments in net investment hedging relationships in the consolidated statements of operations and the consolidated statements of equity:
AMOUNT AND LOCATION OF GAINS (LOSSES) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME (LOSS) AMOUNT OF GAINS (LOSSES) (EFFECTIVE PORTION) DEFERRED IN ACCUMULATED ----------------------------- OTHER COMPREHENSIVE INCOME (LOSS) NET INVESTMENT (EFFECTIVE PORTION) GAINS (LOSSES) --------------------------------- ----------------------------- YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, DERIVATIVES AND NON-DERIVATIVE HEDGING INSTRUMENTS IN NET --------------------------------- ----------------------------- INVESTMENT HEDGING RELATIONSHIPS (1), (2) 2011 2010 2009 2011 2010 2009 --------------------------------------------------------- ---- ---- ----- ---- ---- ------ (IN MILLIONS) Foreign currency forwards...................... $-- $-- $ -- $-- $-- $ (59) Foreign currency swaps......................... -- -- (18) -- -- (63) Non-derivative hedging instruments............. -- -- (37) -- -- (11) ---- ---- ----- ---- ---- ------ Total....................................... $-- $-- $(55) $-- $-- $(133) ==== ==== ===== ==== ==== ======
---------- (1)During the years ended December 31, 2011 and 2010, there were no sales or substantial liquidations of net investments in foreign operations that would have required the reclassification of gains or losses from accumulated other comprehensive income (loss) into earnings. During the year ended December 31, 2009, the Company substantially liquidated, through assumption reinsurance, the portion of its Canadian operations that was being hedged in a net investment hedging relationship. As a result, the Company reclassified losses of $133 million from accumulated other comprehensive income (loss) into earnings. See Note 2. (2)There was no ineffectiveness recognized for the Company's hedges of net investments in foreign operations. All components of each derivative and non-derivative hedging instrument's gain or loss were included in the assessment of hedge effectiveness. At December 31, 2011 and 2010, there was no cumulative foreign currency translation gain (loss) recorded in accumulated other comprehensive income (loss) related to hedges of net investments in foreign operations. NON-QUALIFYING DERIVATIVES AND DERIVATIVES FOR PURPOSES OTHER THAN HEDGING The Company enters into the following derivatives that do not qualify for hedge accounting or for purposes other than hedging: (i) interest rate swaps, implied volatility swaps, caps and floors and interest rate futures to economically hedge its exposure to interest rates; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; (iv) equity futures to economically hedge liabilities; (v) swap spreadlocks to economically hedge invested assets against the risk of changes in credit spreads; (vi) interest rate forwards to buy and sell securities to economically hedge its exposure to interest rates; (vii) credit default swaps, TRRs and structured interest rate swaps to synthetically create investments; (viii) basis swaps to better match the cash flows of assets and related liabilities; (ix) credit default swaps held in relation to trading portfolios; (x) swaptions to hedge interest rate risk; (xi) inflation swaps to reduce risk generated from inflation-indexed liabilities; (xii) covered call options for income generation; (xiii) synthetic GICs; and (xiv) equity options to economically hedge certain invested assets against adverse changes in equity indices. F-82 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments:
NET NET DERIVATIVE INVESTMENT GAINS (LOSSES) INCOME (1) -------------- ---------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2011: Interest rate swaps................... $ 1,073 $ -- Interest rate floors.................. 319 -- Interest rate caps.................... (185) -- Interest rate futures................. 240 -- Foreign currency swaps................ 72 -- Foreign currency forwards............. 31 -- Equity options........................ -- (14) Interest rate options................. 246 -- Interest rate forwards................ (14) -- Swap spreadlocks...................... -- -- Credit default swaps.................. 13 5 Total rate of return swaps............ -- -- -------------- ---------- Total................................ $ 1,795 $ (9) ============== ========== FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps................... $ 74 $ -- Interest rate floors.................. 95 -- Interest rate caps.................... (165) -- Interest rate futures................. 108 -- Foreign currency swaps................ 118 -- Foreign currency forwards............. (12) -- Equity options........................ (2) (17) Interest rate options................. 30 -- Interest rate forwards................ 7 -- Swap spreadlocks...................... -- -- Credit default swaps.................. 28 (2) Total rate of return swaps............ 15 -- -------------- ---------- Total................................ $ 296 $(19) ============== ========== FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps................... $ (880) $ -- Interest rate floors.................. (514) -- Interest rate caps.................... 27 -- Interest rate futures................. (155) -- Foreign currency swaps................ (584) -- Foreign currency forwards............. (151) -- Equity options........................ 2 (2) Interest rate options................. (379) -- Interest rate forwards................ (7) -- Swap spreadlocks...................... (38) -- Credit default swaps.................. (195) (11) Total rate of return swaps............ 63 -- -------------- ---------- Total................................ $(2,811) $(13) ============== ==========
---------- (1)Changes in estimated fair value related to economic hedges of equity method investments in joint ventures, and changes in estimated fair value related to derivatives held in relation to trading portfolios. F-83 \METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CREDIT DERIVATIVES In connection with synthetically created investment transactions and credit default swaps held in relation to the trading portfolio, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the non-qualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company's maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $5.4 billion and $4.2 billion at December 31, 2011 and 2010, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current fair value of the credit default swaps. At December 31, 2011, the Company would have paid $29 million to terminate all of these contracts, and at December 31, 2010, the Company would have received $49 million to terminate all of these contracts. The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
DECEMBER 31, ----------------------------------------------------------------------------- 2011 2010 -------------------------------------- -------------------------------------- MAXIMUM MAXIMUM ESTIMATED AMOUNT ESTIMATED AMOUNT FAIR VALUE OF FUTURE WEIGHTED FAIR VALUE OF FUTURE WEIGHTED OF CREDIT PAYMENTS UNDER AVERAGE OF CREDIT PAYMENTS UNDER AVERAGE RATING AGENCY DESIGNATION OF REFERENCED DEFAULT CREDIT DEFAULT YEARS TO DEFAULT CREDIT DEFAULT YEARS TO CREDIT OBLIGATIONS (1) SWAPS SWAPS (2) MATURITY (3) SWAPS SWAPS (2) MATURITY (3) --------------------------------------------- ---------- -------------- ------------ ---------- -------------- ------------ (IN MILLIONS) (IN MILLIONS) Aaa/Aa/A Single name credit default swaps (corporate). $ 3 $ 488 3.1 $ 4 $ 423 3.9 Credit default swaps referencing indices..... (1) 2,150 3.0 34 2,247 3.7 ---------- -------------- ---------- -------------- Subtotal................................... 2 2,638 3.0 38 2,670 3.7 ---------- -------------- ---------- -------------- Baa Single name credit default swaps (corporate). (10) 750 3.6 5 730 4.4 Credit default swaps referencing indices..... (19) 1,959 4.9 6 728 5.0 ---------- -------------- ---------- -------------- Subtotal................................... (29) 2,709 4.5 11 1,458 4.7 ---------- -------------- ---------- -------------- Ba Single name credit default swaps (corporate). -- 25 3.5 -- 25 4.4 Credit default swaps referencing indices..... -- -- -- -- -- -- ---------- -------------- ---------- -------------- Subtotal................................... -- 25 3.5 -- 25 4.4 ---------- -------------- ---------- -------------- B Single name credit default swaps (corporate). -- -- -- -- -- -- Credit default swaps referencing indices..... (2) 25 4.8 -- -- -- ---------- -------------- ---------- -------------- Subtotal................................... (2) 25 4.8 -- -- -- ---------- -------------- ---------- -------------- Total..................................... $(29) $5,397 3.8 $49 $4,153 4.1 ========== ============== ========== ==============
---------- (1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody's Investors Service, S&P and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used. F-84 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (2)Assumes the value of the referenced credit obligations is zero. (3)The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts. The Company has also entered into credit default swaps to purchase credit protection on certain of the referenced credit obligations in the table above. As a result, the maximum amounts of potential future recoveries available to offset the $5.4 billion and $4.2 billion from the table above were $80 million and $120 million at December 31, 2011 and 2010, respectively. CREDIT RISK ON FREESTANDING DERIVATIVES The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company's derivative contracts is limited to the 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 pursuant to credit support annexes. The Company manages its credit risk related to OTC derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange-traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments. See Note 5 for a description of the impact of credit risk on the valuation of derivative instruments. The Company enters into various collateral arrangements which require both the pledging and accepting of collateral in connection with its OTC derivative instruments. At December 31, 2011 and 2010, the Company was obligated to return cash collateral under its control of $4.4 billion and $1.0 billion, respectively. This cash collateral is included in cash and cash equivalents or in short-term investments and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. At December 31, 2011 and 2010, the Company had received collateral consisting of various securities with a fair market value of $768 million and $501 million, respectively, which were held in separate custodial accounts. Subject to certain constraints, the Company is permitted by contract to sell or repledge this collateral, but at December 31, 2011, none of the collateral had been sold or repledged. The Company's collateral arrangements for its OTC derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the fair value of that counterparty's derivatives reaches a pre-determined threshold. Certain of these arrangements also include credit-contingent provisions that provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, certain of the Company's netting agreements for derivative instruments contain provisions that require the Company to maintain a specific investment grade credit rating from at least one of the major credit rating agencies. If the Company's credit ratings were to fall below that specific investment grade credit rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments that are in a net liability position after considering the effect of netting agreements. The following table presents the estimated fair value of the Company's OTC derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The table also presents the incremental collateral that the Company would be required to provide if there was a one notch downgrade in the Company's credit rating at the F-85 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) reporting date or if the Company's credit rating sustained a downgrade to a level that triggered full overnight collateralization or termination of the derivative position at the reporting date. Derivatives that are not subject to collateral agreements are not included in the scope of this table.
ESTIMATED FAIR VALUE OF FAIR VALUE OF INCREMENTAL COLLATERAL COLLATERAL PROVIDED: PROVIDED UPON: - ----------------------- ------------------------------------ DOWNGRADE IN THE ONE NOTCH COMPANY'S CREDIT RATING DOWNGRADE TO A LEVEL THAT TRIGGERS ESTIMATED IN THE FULL OVERNIGHT FAIR VALUE (1) OF COMPANY'S COLLATERALIZATION OR DERIVATIVES IN NET FIXED MATURITY CREDIT TERMINATION LIABILITY POSITION SECURITIES (2) CASH (3) RATING OF THE DERIVATIVE POSITION - ------------------ -------------- -------- --------- -------------------------- (IN MILLIONS) DECEMBER 31, 2011: Derivatives subject to credit- contingent provisions........ $151 $ 94 $-- $25 $ 64 Derivatives not subject to credit-contingent provisions. -- -- -- -- -- ------------------ -------------- -------- --------- -------------------------- Total......................... $151 $ 94 $-- $25 $ 64 ================== ============== ======== ========= ========================== DECEMBER 31, 2010: Derivatives subject to credit- contingent provisions........ $243 $120 $-- $35 $110 Derivatives not subject to credit-contingent provisions. 1 -- 1 -- -- ------------------ -------------- -------- --------- -------------------------- Total......................... $244 $120 $ 1 $35 $110 ================== ============== ======== ========= ==========================
---------- (1)After taking into consideration the existence of netting agreements. (2)Included in fixed maturity securities in the consolidated balance sheets. Subject to certain constraints, the counterparties are permitted by contract to sell or repledge this collateral. (3)Included in premiums, reinsurance and other receivables in the consolidated balance sheets. Without considering the effect of netting agreements, the estimated fair value of the Company's OTC derivatives with credit-contingent provisions that were in a gross liability position at December 31, 2011 was $216 million. At December 31, 2011, the Company provided collateral of $94 million in connection with these derivatives. In the unlikely event that both: (i) the Company's credit rating was downgraded to a level that triggers full overnight collateralization or termination of all derivative positions; and (ii) the Company's netting agreements were deemed to be legally unenforceable, then the additional collateral that the Company would be required to provide to its counterparties in connection with its derivatives in a gross liability position at December 31, 2011 would be $122 million. This amount does not consider gross derivative assets of $65 million for which the Company has the contractual right of offset. The Company also has exchange-traded futures, which require the pledging of collateral. At both December 31, 2011 and 2010, the Company did not pledge any securities collateral for exchange-traded futures. At December 31, 2011 and 2010, the Company provided cash collateral for exchange-traded futures of $37 million and $21 million, respectively, which is included in premiums, reinsurance and other receivables. F-86 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EMBEDDED DERIVATIVES The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; affiliated ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; funds withheld on ceded reinsurance and affiliated funds withheld on ceded reinsurance; funding agreements with equity or bond indexed crediting rates; and options embedded in debt or equity securities. The following table presents the estimated fair value of the Company's embedded derivatives at:
DECEMBER 31, ------------ 2011 2010 ------ ----- (IN MILLIONS) Net embedded derivatives within asset host contracts: Ceded guaranteed minimum benefits.......................... $1,163 $ 295 Options embedded in debt or equity securities.............. (15) (24) ------ ----- Net embedded derivatives within asset host contracts..... $1,148 $ 271 ====== ===== Net embedded derivatives within liability host contracts: Direct guaranteed minimum benefits......................... $ 307 $(77) Funds withheld on ceded reinsurance........................ 1,646 754 Other...................................................... 17 11 ------ ----- Net embedded derivatives within liability host contracts. $1,970 $ 688 ====== =====
The following table presents changes in estimated fair value related to embedded derivatives:
YEARS ENDED DECEMBER 31, ---------------------- 2011 2010 2009 ------ ------ -------- (IN MILLIONS) Net derivative gains (losses) (1), (2). $(462) $(619) $(1,586)
---------- (1)The valuation of direct guaranteed minimum benefits includes an adjustment for nonperformance risk. The amounts included in net derivative gains (losses), in connection with this adjustment, were $88 million, ($43) million and ($380) million for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, the valuation of ceded guaranteed minimum benefits includes an adjustment for nonperformance risk. The amounts included in net derivative gains (losses), in connection with this adjustment, were ($219) million, $82 million and $624 million for the years ended December 31, 2011, 2010 and 2009, respectively. (2)See Note 9 for discussion of affiliated net derivative gains (losses) included in the table above. 5. FAIR VALUE Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. F-87 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ASSETS AND LIABILITIES MEASURED AT FAIR VALUE RECURRING FAIR VALUE MEASUREMENTS The assets and liabilities measured at estimated fair value on a recurring basis, including those items for which the Company has elected the FVO, were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:
DECEMBER 31, 2011 ----------------------------------------------------------- FAIR VALUE MEASUREMENTS AT REPORTING DATE USING ------------------------------------------------- QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT TOTAL IDENTICAL ASSETS SIGNIFICANT OTHER UNOBSERVABLE ESTIMATED AND LIABILITIES OBSERVABLE INPUTS INPUTS FAIR (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE ------------------ ----------------- ------------ --------- (IN MILLIONS) ASSETS: Fixed maturity securities: U.S. corporate securities.................................. $ -- $ 56,777 $ 4,919 $ 61,696 Foreign corporate securities............................... -- 26,888 2,258 29,146 U.S. Treasury and agency securities........................ 11,450 14,369 25 25,844 RMBS....................................................... -- 25,028 691 25,719 CMBS....................................................... -- 8,886 219 9,105 ABS........................................................ -- 5,440 1,146 6,586 State and political subdivision securities................. -- 6,182 -- 6,182 Foreign government securities.............................. -- 3,609 291 3,900 ------------------ ----------------- ------------ --------- Total fixed maturity securities........................... 11,450 147,179 9,549 168,178 ------------------ ----------------- ------------ --------- Equity securities: Common stock............................................... 79 673 104 856 Non-redeemable preferred stock............................. -- 129 293 422 ------------------ ----------------- ------------ --------- Total equity securities................................... 79 802 397 1,278 ------------------ ----------------- ------------ --------- Trading and other securities: Actively Traded Securities................................. -- 473 -- 473 FVO general account securities............................. -- 93 14 107 FVO securities held by CSEs................................ -- 117 -- 117 ------------------ ----------------- ------------ --------- Total trading and other securities........................ -- 683 14 697 ------------------ ----------------- ------------ --------- Short-term investments (1)................................... 1,641 4,364 134 6,139 Derivative assets: (2) Interest rate contracts.................................... 6 5,807 81 5,894 Foreign currency contracts................................. -- 892 56 948 Credit contracts........................................... -- 71 23 94 Equity market contracts.................................... -- -- -- -- ------------------ ----------------- ------------ --------- Total derivative assets................................... 6 6,770 160 6,936 ------------------ ----------------- ------------ --------- Net embedded derivatives within asset host contracts (3)..... -- -- 1,163 1,163 Separate account assets (4).................................. 22,445 83,151 1,082 106,678 ------------------ ----------------- ------------ --------- Total assets............................................. $35,621 $242,949 $12,499 $291,069 ================== ================= ============ ========= LIABILITIES: Derivative liabilities: (2) Interest rate contracts.................................... $ 2 $ 966 $ 14 $ 982 Foreign currency contracts................................. -- 649 -- 649 Credit contracts........................................... -- 59 22 81 Equity market contracts.................................... -- -- -- -- ------------------ ----------------- ------------ --------- Total derivative liabilities.............................. 2 1,674 36 1,712 ------------------ ----------------- ------------ --------- Net embedded derivatives within liability host contracts (3). -- 17 1,953 1,970 Long-term debt of CSEs....................................... -- -- 116 116 Trading liabilities (5)...................................... 124 3 -- 127 ------------------ ----------------- ------------ --------- Total liabilities........................................ $ 126 $ 1,694 $ 2,105 $ 3,925 ================== ================= ============ =========
F-88 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2010 ----------------------------------------------------------- FAIR VALUE MEASUREMENTS AT REPORTING DATE USING ------------------------------------------------- QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT TOTAL IDENTICAL ASSETS SIGNIFICANT OTHER UNOBSERVABLE ESTIMATED AND LIABILITIES OBSERVABLE INPUTS INPUTS FAIR (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE ------------------ ----------------- ------------ --------- (IN MILLIONS) ASSETS: Fixed maturity securities: U.S. corporate securities.................................. $ -- $ 48,064 $ 5,063 $ 53,127 Foreign corporate securities............................... -- 27,771 2,796 30,567 U.S. Treasury and agency securities........................ 7,728 13,205 44 20,977 RMBS....................................................... 274 28,420 1,985 30,679 CMBS....................................................... -- 9,540 161 9,701 ABS........................................................ -- 4,929 1,514 6,443 State and political subdivision securities................. -- 4,583 1 4,584 Foreign government securities.............................. -- 3,286 171 3,457 ------------------ ----------------- ------------ --------- Total fixed maturity securities........................... 8,002 139,798 11,735 159,535 ------------------ ----------------- ------------ --------- Equity securities: Common stock............................................... 176 717 79 972 Non-redeemable preferred stock............................. -- 216 633 849 ------------------ ----------------- ------------ --------- Total equity securities................................... 176 933 712 1,821 ------------------ ----------------- ------------ --------- Trading and other securities: Actively Traded Securities................................. -- 453 10 463 FVO general account securities............................. -- 21 50 71 FVO securities held by CSEs................................ -- 201 -- 201 ------------------ ----------------- ------------ --------- Total trading and other securities........................ -- 675 60 735 ------------------ ----------------- ------------ --------- Short-term investments (1)................................... 1,001 845 379 2,225 Derivative assets: (2) Interest rate contracts.................................... 7 2,175 14 2,196 Foreign currency contracts................................. -- 995 46 1,041 Credit contracts........................................... -- 35 39 74 Equity market contracts.................................... -- -- -- -- ------------------ ----------------- ------------ --------- Total derivative assets................................... 7 3,205 99 3,311 ------------------ ----------------- ------------ --------- Net embedded derivatives within asset host contracts (3)..... -- -- 295 295 Separate account assets (4).................................. 19,550 76,770 1,509 97,829 ------------------ ----------------- ------------ --------- Total assets............................................. $28,736 $222,226 $14,789 $265,751 ================== ================= ============ ========= LIABILITIES: Derivative liabilities: (2) Interest rate contracts.................................... $ -- $ 896 $ 37 $ 933 Foreign currency contracts................................. -- 917 -- 917 Credit contracts........................................... -- 76 6 82 Equity market contracts.................................... -- -- -- -- ------------------ ----------------- ------------ --------- Total derivative liabilities.............................. -- 1,889 43 1,932 ------------------ ----------------- ------------ --------- Net embedded derivatives within liability host contracts (3). -- 11 677 688 Long-term debt of CSEs....................................... -- -- 184 184 Trading liabilities (5)...................................... 46 -- -- 46 ------------------ ----------------- ------------ --------- Total liabilities........................................ $ 46 $ 1,900 $ 904 $ 2,850 ================== ================= ============ =========
---------- (1)Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value (e.g., time deposits, etc.), and therefore are excluded from the tables presented above. (2)Derivative assets are presented within other invested assets in the consolidated balance sheets and derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented F-89 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables which follow. (3)Net embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented in the consolidated balance sheets within PABs and other liabilities. At December 31, 2011, fixed maturity securities and equity securities also included embedded derivatives of less than $1 million and ($15) million, respectively. At December 31, 2010, fixed maturity securities and equity securities included embedded derivatives of $1 million and ($25) million, respectively. (4)Separate account assets are measured at estimated fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. (5)Trading liabilities are presented within other liabilities in the consolidated balance sheets. See Note 3 for discussion of CSEs included in the tables above and for certain prior year amounts which have been reclassified to conform with the 2011 presentation. The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments When available, the estimated fair value of the Company's fixed maturity securities, equity securities, trading and other securities and short-term investments are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company's securities holdings and valuation of these securities does not involve management's judgment. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, giving priority to observable inputs. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or other similar techniques. The inputs in applying these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity and management's assumptions regarding estimated duration, liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management's judgments about financial instruments. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Such observable inputs include benchmarking prices for similar assets in active markets, quoted prices in markets that are not active and observable yields and spreads in the market. When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs can be based in large part on management's judgment or estimation and cannot be supported by reference to market activity. Even though these inputs are unobservable, management believes they are consistent with what other F-90 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) market participants would use when pricing such securities and are considered appropriate given the circumstances. The estimated fair value of FVO securities held by CSEs is determined on a basis consistent with the methodologies described herein for fixed maturity securities and equity securities. The Company consolidates certain securitization entities that hold securities that have been accounted for under the FVO and classified within trading and other securities. The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company's securities holdings. Derivatives The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for OTC derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. The significant inputs to the pricing models for most OTC derivatives are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, certain OTC derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: independent broker quotes, references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its derivative positions using the standard swap curve which includes a spread to the risk free rate. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with the standard swap curve. As the Company and its significant derivative counterparties consistently execute trades at such pricing levels, additional credit risk adjustments are not currently required in the valuation process. The Company's ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. The evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Most inputs for OTC derivatives are mid market inputs but, in certain cases, bid level inputs are used when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company's derivatives and could materially affect net income. F-91 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Embedded Derivatives Within Asset and Liability Host Contracts Embedded derivatives principally include certain direct variable annuity guarantees, certain affiliated ceded reinsurance agreements related to such variable annuity guarantees and certain funding agreements with equity or bond indexed crediting rates and those related to ceded funds withheld on reinsurance. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs are embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within PABs in the consolidated balance sheets. The fair value of these guarantees is estimated using the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free rates. The valuation of these guarantee liabilities includes adjustments for nonperformance risk and for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. The Company ceded the risk associated with certain of the GMIBs, GMABs and GMWBs previously described. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also ceded directly written GMIBs that are accounted for as insurance (i.e., not as embedded derivatives) but where the reinsurance agreement contains an embedded derivative. These embedded derivatives are included within premiums, reinsurance and other receivables in the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on these ceded risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as previously described in "-- Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments." The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities in the consolidated balance sheets with F-92 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income. The estimated fair value of the embedded equity and bond indexed derivatives contained in certain funding agreements is determined using market standard swap valuation models and observable market inputs, including an adjustment for nonperformance risk. The estimated fair value of these embedded derivatives are included, along with their funding agreements host, within PABs with changes in estimated fair value recorded in net derivative gains (losses). Changes in equity and bond indices, interest rates and the Company's credit standing may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income. Separate Account Assets Separate account assets are carried at estimated fair value and reported as a summarized total on the consolidated balance sheets. The estimated fair value of separate account assets is based on the estimated fair value of the underlying assets. Assets within the Company's separate accounts include: mutual funds, fixed maturity securities, equity securities, mortgage loans, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. See "-- Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities" below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments. Long-term Debt of CSEs The Company has elected the FVO for the long-term debt of CSEs. See "-- Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities" below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments. Trading Liabilities Trading liabilities are recorded at estimated fair value with subsequent changes in estimated fair value recognized in net investment income. The estimated fair value of trading liabilities is determined on a basis consistent with the methodologies described in "-- Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments." VALUATION TECHNIQUES AND INPUTS BY LEVEL WITHIN THE THREE-LEVEL FAIR VALUE HIERARCHY BY MAJOR CLASSES OF ASSETS AND LIABILITIES A description of the significant valuation techniques and inputs to the determination of estimated fair value for the more significant asset and liability classes measured at fair value on a recurring basis is as follows: The Company determines the estimated fair value of its investments using primarily the market approach and the income approach. The use of quoted prices for identical assets and matrix pricing or other similar techniques are examples of market approaches, while the use of discounted cash flow methodologies is an example of the income approach. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs in selecting whether the market or income approach is used. While certain investments have been classified as Level 1 from the use of unadjusted quoted prices for identical investments supported by high volumes of trading activity and narrow bid/ask spreads, most investments have been classified as Level 2 because the significant inputs used to measure the fair value on a F-93 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) recurring basis of the same or similar investment are market observable or can be corroborated using market observable information for the full term of the investment. Level 3 investments include those where estimated fair values are based on significant unobservable inputs that are supported by little or no market activity and may reflect management's own assumptions about what factors market participants would use in pricing these investments. LEVEL 1 MEASUREMENTS: Fixed Maturity Securities, Equity Securities and Short-term Investments These securities are comprised of U.S. Treasury and agency securities, RMBS principally to-be-announced securities, exchange traded common stock and short-term money market securities, including U.S. Treasury bills. Valuation of these securities is based on unadjusted quoted prices in active markets that are readily and regularly available. Derivative Assets and Derivative Liabilities These assets and liabilities are comprised of exchange-traded derivatives. Valuation of these assets and liabilities is based on unadjusted quoted prices in active markets that are readily and regularly available. Separate Account Assets These assets are comprised of (i) securities that are similar in nature to the fixed maturity securities, equity securities and short-term investments referred to above; and (ii) certain exchange-traded derivatives, including financial futures and owned options. Valuation of these assets is based on unadjusted quoted prices in active markets that are readily and regularly available. LEVEL 2 MEASUREMENTS: Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments This level includes fixed maturity securities and equity securities priced principally by independent pricing services using observable inputs. Trading and other securities and short-term investments within this level are of a similar nature and class to the Level 2 securities described below. U.S. corporate and foreign corporate securities. These securities are principally valued using the market and income approaches. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques that use standard market observable inputs such as benchmark yields, spreads off benchmark yields, new issuances, issuer rating, duration, and trades of identical or comparable securities. Investment grade privately placed securities are valued using discounted cash flow methodologies using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. This level also includes certain below investment grade privately placed fixed maturity securities priced by independent pricing services that use observable inputs. Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, F-94 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans. U.S. Treasury and agency securities. These securities are principally valued using the market approach. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques using standard market observable inputs such as benchmark U.S. Treasury yield curve, the spread off the U.S. Treasury curve for the identical security and comparable securities that are actively traded. Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market observable inputs including benchmark U.S. Treasury or other yields, issuer ratings, broker-dealer quotes, issuer spreads and reported trades of similar securities, including those within the same sub-sector or with a similar maturity or credit rating. Common and non-redeemable preferred stock. These securities are principally valued using the market approach where market quotes are available but are not considered actively traded. Valuation is based principally on observable inputs including quoted prices in markets that are not considered active. Derivative Assets and Derivative Liabilities This level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. These derivatives are principally valued using an income approach. Interest rate contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves and repurchase rates. Option-based -- Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves and interest rate volatility. Foreign currency contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates and cross currency basis curves. Credit contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves and recovery rates. Equity market contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels and dividend yield curves. F-95 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Option-based -- Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves and equity volatility. Embedded Derivatives Contained in Certain Funding Agreements These derivatives are principally valued using an income approach. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the spot equity and bond index level. Separate Account Assets These assets are comprised of investments that are similar in nature to the fixed maturity securities, equity securities, short-term investments and derivative assets referred to above. Also included are certain mutual funds and hedge funds without readily determinable fair values given prices are not published publicly. Valuation of the mutual funds and hedge funds is based upon quoted prices or reported NAV provided by the fund managers. LEVEL 3 MEASUREMENTS: In general, investments classified within Level 3 use many of the same valuation techniques and inputs as described in Level 2 Measurements. However, if key inputs are unobservable, or if the investments are less liquid and there is very limited trading activity, the investments are generally classified as Level 3. The use of independent non-binding broker quotations to value investments generally indicates there is a lack of liquidity or a lack of transparency in the process to develop the valuation estimates generally causing these investments to be classified in Level 3. Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments This level includes fixed maturity securities and equity securities priced principally by independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived principally from or corroborated by observable market data. Trading and other securities and short-term investments within this level are of a similar nature and class to the Level 3 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below. U.S. corporate and foreign corporate securities. These securities, including financial services industry hybrid securities classified within fixed maturity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques that utilize unobservable inputs or cannot be derived principally from, or corroborated by, observable market data, including illiquidity premiums and spread adjustments to reflect industry trends or specific credit-related issues. Valuations may be based on independent non-binding broker quotations. Generally, below investment grade privately placed or distressed securities included in this level are valued using discounted cash flow methodologies which rely upon significant, unobservable inputs and inputs that cannot be derived principally from, or corroborated by, observable market data. Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data, or are based on independent non-binding broker quotations. Below investment grade securities and RMBS supported by sub-prime mortgage loans included in this level are valued based on inputs including F-96 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, and certain of these securities are valued based on independent non-binding broker quotations. Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques, however these securities are less liquid and certain of the inputs are based on very limited trading activity. Common and non-redeemable preferred stock. These securities, including privately held securities and financial services industry hybrid securities classified within equity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques using inputs such as comparable credit rating and issuance structure. Equity securities valuations determined with discounted cash flow methodologies use inputs such as earnings multiples based on comparable public companies, and industry-specific non-earnings based multiples. Certain of these securities are valued based on independent non-binding broker quotations. Derivative Assets and Derivative Liabilities These derivatives are principally valued using an income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. These valuation methodologies generally use the same inputs as described in the corresponding sections above for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Interest rate contracts. Non-option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve and LIBOR basis curves. Option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves and interest rate volatility. Foreign currency contracts. Non-option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves and cross currency basis curves. Certain of these derivatives are valued based on independent non-binding broker quotations. Credit contracts. Non-option-based -- Significant unobservable inputs may include credit spreads, repurchase rates, and the extrapolation beyond observable limits of the swap yield curve and credit curves. Certain of these derivatives are valued based on independent non-binding broker quotations. Equity market contracts. Non-option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves. F-97 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves and equity volatility. Direct Guaranteed Minimum Benefits These embedded derivatives are principally valued using an income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curve, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of capital for purposes of calculating the risk margin. Reinsurance Ceded on Certain Guaranteed Minimum Benefits These embedded derivatives are principally valued using an income approach. The valuation techniques and significant market standard unobservable inputs used in their valuation are similar to those previously described under "Direct Guaranteed Minimum Benefits" and also include counterparty credit spreads. Embedded Derivatives Within Funds Withheld Related to Certain Ceded Reinsurance These embedded derivatives are principally valued using an income approach. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the fair value of assets within the reference portfolio. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the fair value of certain assets within the reference portfolio which are not observable in the market and cannot be derived principally from, or corroborated by, observable market data. Separate Account Assets These assets are comprised of investments that are similar in nature to the fixed maturity securities, equity securities and derivative assets referred to above. Separate account assets within this level also include mortgage loans and other limited partnership interests. The estimated fair value of mortgage loans is determined by discounting expected future cash flows, using current interest rates for similar loans with similar credit risk. Other limited partnership interests are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables which may impact the exit value of the particular partnership interest. Long-term Debt of CSEs The estimated fair value of the long-term debt of the Company's CSEs are priced principally through independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived from or corroborated by observable market data. F-98 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) TRANSFERS BETWEEN LEVELS 1 AND 2: During the years ended December 31, 2011 and 2010, transfers between Levels 1 and 2 were not significant. TRANSFERS INTO OR OUT OF LEVEL 3: Overall, transfers into and/or out of Level 3 are attributable to a change in the observability of inputs. Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Transfers into and/or out of any level are assumed to occur at the beginning of the period. Significant transfers into and/or out of Level 3 assets and liabilities for the years ended December 31, 2011 and 2010 are summarized below. Transfers into Level 3 were due primarily to a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade), which have resulted in decreased transparency of valuations and an increased use of broker quotations and unobservable inputs to determine estimated fair value. During the year ended December 31, 2011, transfers into Level 3 for fixed maturity securities of $299 million and for separate account assets of $18 million, were principally comprised of certain U.S. and foreign corporate securities. During the year ended December 31, 2010, transfers into Level 3 for fixed maturity securities of $1.3 billion and for separate account assets of $46 million, were principally comprised of certain U.S. and foreign corporate securities. Transfers out of Level 3 resulted primarily from increased transparency of both new issuances that subsequent to issuance and establishment of trading activity, became priced by independent pricing services and existing issuances that, over time, the Company was able to obtain pricing from, or corroborate pricing received from independent pricing services with observable inputs or increases in market activity and upgraded credit ratings. During the year ended December 31, 2011, transfers out of Level 3 for fixed maturity securities of $3.1 billion and for separate account assets of $252 million, were principally comprised of certain RMBS, U.S. and foreign corporate securities, and ABS. During the year ended December 31, 2010, transfers out of Level 3 for fixed maturity securities of $1.1 billion and for separate account assets of $231 million, were principally comprised of certain U.S. and foreign corporate securities, RMBS, ABS and foreign government securities. F-99 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3), including realized and unrealized gains (losses) of all assets and (liabilities) and realized and unrealized gains (losses) of all assets and (liabilities) still held at the end of the respective time periods:
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ----------------------------------------------------------------------------- FIXED MATURITY SECURITIES: ----------------------------------------------------------------------------- U.S. STATE AND U.S. FOREIGN TREASURY POLITICAL FOREIGN CORPORATE CORPORATE AND AGENCY SUBDIVISION GOVERNMENT SECURITIES SECURITIES SECURITIES RMBS CMBS ABS SECURITIES SECURITIES ---------- ---------- ---------- -------- ----- ------ ----------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2011: Balance, January 1,........................... $5,063 $ 2,796 $ 44 $ 1,985 $ 161 $1,514 $ 1 $ 171 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... 4 7 -- 10 -- 2 -- 6 Net investment gains (losses).............. (15) 16 -- (10) (1) (12) -- -- Net derivative gains (losses).............. -- -- -- -- -- -- -- -- Other comprehensive income (loss)............ 258 (24) 2 (52) 28 42 -- 17 Purchases (3)................................. 789 915 -- 78 106 670 -- 118 Sales (3)..................................... (653) (1,129) (1) (127) (86) (370) -- (21) Issuances (3)................................. -- -- -- -- -- -- -- -- Settlements (3)............................... -- -- -- -- -- -- -- -- Transfers into Level 3 (4).................... 122 155 -- -- 11 11 -- -- Transfers out of Level 3 (4).................. (649) (478) (20) (1,193) -- (711) (1) -- ---------- ---------- ---------- -------- ----- ------ ----------- ---------- Balance, December 31,......................... $4,919 $ 2,258 $ 25 $ 691 $ 219 $1,146 $ -- $ 291 ========== ========== ========== ======== ===== ====== =========== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2011 included in earnings: Net investment income...................... $ 4 $ 5 $ -- $ 11 $ -- $ 2 $ -- $ 5 Net investment gains (losses).............. $ (27) $ (22) $ -- $ (10) $ -- $ (9) $ -- $ -- Net derivative gains (losses).............. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
F-100 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------------------------------------------------------------------- EQUITY SECURITIES: TRADING AND OTHER SECURITIES: --------------------- -------------------------- NON- FVO REDEEMABLE ACTIVELY GENERAL SEPARATE COMMON PREFERRED TRADED ACCOUNT SHORT-TERM ACCOUNT STOCK STOCK SECURITIES SECURITIES INVESTMENTS ASSETS (5) ------ ---------- ---------- ---------- ----------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2011: Balance, January 1,.......................... $ 79 $ 633 $ 10 $ 50 $ 379 $1,509 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... -- -- -- (6) 1 -- Net investment gains (losses).............. 11 (45) -- -- (1) 101 Net derivative gains (losses).............. -- -- -- -- -- -- Other comprehensive income (loss)........... 11 1 -- -- -- -- Purchases (3)................................ 22 2 -- -- 134 188 Sales (3).................................... (20) (298) (8) (30) (379) (482) Issuances (3)................................ -- -- -- -- -- -- Settlements (3).............................. -- -- -- -- -- -- Transfers into Level 3 (4)................... 1 -- -- -- -- 18 Transfers out of Level 3 (4)................. -- -- (2) -- -- (252) ------ ---------- ---------- ---------- ----------- ---------- Balance, December 31,........................ $ 104 $ 293 $ -- $ 14 $ 134 $1,082 ====== ========== ========== ========== =========== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2011 included in earnings: Net investment income...................... $ -- $ -- $ -- $ (6) $ 1 $ -- Net investment gains (losses).............. $ (6) $ (16) $ -- $ -- $ (1) $ -- Net derivative gains (losses).............. $ -- $ -- $ -- $ -- $ -- $ --
F-101 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) -------------------------------------------------------------------- NET DERIVATIVES: (6) --------------------------------------- INTEREST FOREIGN EQUITY NET RATE CURRENCY CREDIT MARKET EMBEDDED LONG-TERM CONTRACTS CONTRACTS CONTRACTS CONTRACTS DERIVATIVES (7) DEBT OF CSES --------- --------- --------- --------- --------------- ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2011: Balance, January 1,.......................... $(23) $46 $ 33 $-- $(382) $(184) Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... -- -- -- -- -- -- Net investment gains (losses).............. -- -- -- -- -- (8) Net derivative gains (losses).............. (7) 10 (33) -- (458) -- Other comprehensive income (loss)........... 130 -- 14 -- -- -- Purchases (3)................................ -- -- -- -- -- -- Sales (3).................................... -- -- -- -- -- -- Issuances (3)................................ -- -- (2) -- -- -- Settlements (3).............................. (33) -- (11) -- 50 76 Transfers into Level 3 (4)................... -- -- -- -- -- -- Transfers out of Level 3 (4)................. -- -- -- -- -- -- --------- --------- --------- --------- --------------- ------------ Balance, December 31,........................ $ 67 $56 $ 1 $-- $(790) $(116) ========= ========= ========= ========= =============== ============ Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2011 included in earnings: Net investment income...................... $ -- $-- $ -- $-- $ -- $ -- Net investment gains (losses).............. $ -- $-- $ -- $-- $ -- $ (8) Net derivative gains (losses).............. $(13) $10 $(32) $-- $(454) $ --
F-102 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) --------------------------------------------------------------------------- FIXED MATURITY SECURITIES: --------------------------------------------------------------------------- U.S. STATE AND U.S. FOREIGN TREASURY POLITICAL FOREIGN CORPORATE CORPORATE AND AGENCY SUBDIVISION GOVERNMENT SECURITIES SECURITIES SECURITIES RMBS CMBS ABS SECURITIES SECURITIES ---------- ---------- ---------- ------ ----- ------ ----------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: Balance, January 1,.......................... $4,674 $3,456 $-- $2,290 $ 87 $ 958 $ 20 $ 249 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... 17 (1) -- 63 2 5 -- 5 Net investment gains (losses).............. (10) (32) -- (47) (2) (33) -- (1) Net derivative gains (losses).............. -- -- -- -- -- -- -- -- Other comprehensive income (loss)........... 184 179 -- 234 50 113 -- 16 Purchases, sales, issuances and settlements (3)......................................... (400) (709) 22 (420) (21) 581 2 15 Transfers into Level 3 (4)................... 751 351 22 57 45 29 -- -- Transfers out of Level 3 (4)................. (153) (448) -- (192) -- (139) (21) (113) ---------- ---------- ---------- ------ ----- ------ ----------- ---------- Balance, December 31,........................ $5,063 $2,796 $44 $1,985 $ 161 $1,514 $ 1 $ 171 ========== ========== ========== ====== ===== ====== =========== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2010 included in earnings: Net investment income...................... $ 8 $ (2) $-- $ 62 $ 1 $ 5 $ -- $ 5 Net investment gains (losses).............. $ (32) $ (43) $-- $ (26) $ (2) $ (23) $ -- $ -- Net derivative gains (losses).............. $ -- $ -- $-- $ -- $ -- $ -- $ -- $ --
F-103 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------------------------------------------------------------------- EQUITY SECURITIES: TRADING AND OTHER SECURITIES: --------------------- -------------------------- NON- FVO REDEEMABLE ACTIVELY GENERAL SEPARATE COMMON PREFERRED TRADED ACCOUNT SHORT-TERM ACCOUNT STOCK STOCK SECURITIES SECURITIES INVESTMENTS ASSETS (5) ------ ---------- ---------- ---------- ----------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: Balance, January 1,.......................... $ 64 $ 793 $ 32 $ 51 $ 8 $1,583 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... -- -- -- 10 1 -- Net investment gains (losses).............. (1) 30 -- -- -- 142 Net derivative gains (losses).............. -- -- -- -- -- -- Other comprehensive income (loss)........... -- 2 -- -- -- -- Purchases, sales, issuances and settlements (3)......................................... 16 (192) (22) (30) 370 (31) Transfers into Level 3 (4)................... 1 -- -- 37 -- 46 Transfers out of Level 3 (4)................. (1) -- -- (18) -- (231) ------ ---------- ---------- ---------- ----------- ---------- Balance, December 31,........................ $ 79 $ 633 $ 10 $ 50 $379 $1,509 ====== ========== ========== ========== =========== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2010 included in earnings: Net investment income...................... $ -- $ -- $ -- $ 13 $ 1 $ -- Net investment gains (losses).............. $(2) $ (3) $ -- $ -- $ -- $ -- Net derivative gains (losses).............. $ -- $ -- $ -- $ -- $ -- $ --
F-104 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------------------------------------------------------------------ NET DERIVATIVES: (6) --------------------------------------- INTEREST FOREIGN EQUITY NET RATE CURRENCY CREDIT MARKET EMBEDDED LONG-TERM CONTRACTS CONTRACTS CONTRACTS CONTRACTS DERIVATIVES (7) DEBT OF CSES (8) --------- --------- --------- --------- --------------- ---------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: Balance, January 1,.......................... $ -- $ 53 $ 37 $ 2 $ 166 $ -- Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... -- -- -- -- -- -- Net investment gains (losses).............. -- -- -- -- -- 48 Net derivative gains (losses).............. 23 28 2 (2) (588) -- Other comprehensive income (loss)........... (36) -- 1 -- -- -- Purchases, sales, issuances and settlements (3)......................................... (10) (35) (7) -- 40 (232) Transfers into Level 3 (4)................... -- -- -- -- -- -- Transfers out of Level 3 (4)................. -- -- -- -- -- -- --------- --------- --------- --------- --------------- ---------------- Balance, December 31,........................ $(23) $ 46 $ 33 $ -- $(382) $(184) ========= ========= ========= ========= =============== ================ Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2010 included in earnings: Net investment income...................... $ -- $ -- $ -- $ -- $ -- $ -- Net investment gains (losses).............. $ -- $ -- $ -- $ -- $ -- $ 48 Net derivative gains (losses).............. $ 23 $ 21 $ 3 $(2) $(584) $ --
F-105 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) -------------------------------------------------------------------------- FIXED MATURITY SECURITIES: -------------------------------------------------------------------------- U.S. STATE AND U.S. FOREIGN TREASURY POLITICAL FOREIGN CORPORATE CORPORATE AND AGENCY SUBDIVISION GOVERNMENT SECURITIES SECURITIES SECURITIES RMBS CMBS ABS SECURITIES SECURITIES ---------- ---------- ---------- ------ ----- ----- ----------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: Balance, January 1,.......................... $ 5,089 $3,367 $ 48 $1,077 $ 138 $ 783 $ 76 $ 202 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income...................... 12 (8) -- 36 -- 2 -- 3 Net investment gains (losses).............. (288) (202) -- (22) 6 (44) -- (1) Net derivative gains (losses).............. -- -- -- -- -- -- -- -- Other comprehensive income (loss)........... 572 1,156 -- 148 4 213 1 18 Purchases, sales, issuances and settlements (3)......................................... (1,002) (614) (27) 1,104 (38) (31) (15) 66 Transfers into and/or out of Level 3 (4)..... 291 (243) (21) (53) (23) 35 (42) (39) ---------- ---------- ---------- ------ ----- ----- ----------- ---------- Balance, December 31,........................ $ 4,674 $3,456 $ -- $2,290 $ 87 $ 958 $ 20 $ 249 ========== ========== ========== ====== ===== ===== =========== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2009 included in earnings: Net investment income...................... $ 11 $ (7) $ -- $ 36 $ -- $ 2 $ -- $ 3 Net investment gains (losses).............. $ (281) $(106) $ -- $ (41) $ (5) $(50) $ -- $ -- Net derivative gains (losses).............. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
F-106 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ----------------------------------------------------------------------------------- EQUITY SECURITIES: ----------------- NON- TRADING REDEEMABLE AND NET SEPARATE COMMON PREFERRED SHORT-TERM OTHER NET EMBEDDED ACCOUNT STOCK STOCK INVESTMENTS SECURITIES DERIVATIVES (6) DERIVATIVES (7) ASSETS (5) ------ ---------- ----------- ---------- --------------- --------------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: Balance, January 1,..................... $ 59 $ 918 $ 75 $ 116 $(19) $ 1,702 $1,486 Total realized/unrealized gains (losses) included in: Earnings: (1), (2) Net investment income................. -- -- -- 16 -- -- -- Net investment gains (losses)......... (2) (251) (9) -- -- -- (221) Net derivative gains (losses)......... -- -- -- -- 35 (1,570) -- Other comprehensive income (loss)...... (2) 355 -- -- (1) -- -- Purchases, sales, issuances, and settlements (3)........................ 9 (190) (53) (49) 79 34 452 Transfers into and/or out of Level 3 (4) -- (39) (5) -- (2) -- (134) ------ ---------- ----------- ---------- --------------- --------------- ---------- Balance, December 31,................... $ 64 $ 793 $ 8 $ 83 $ 92 $ 166 $1,583 ====== ========== =========== ========== =============== =============== ========== Changes in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2009 included in earnings: Net investment income................. $ -- $ -- $ -- $ 15 $ -- $ -- $ -- Net investment gains (losses)......... $(1) $(128) $ -- $ -- $ -- $ -- $ -- Net derivative gains (losses)......... $ -- $ -- $ -- $ -- $ 96 $(1,568) $ --
---------- (1)Amortization of premium/discount is included within net investment income. Impairments charged to earnings on securities are included within net investment gains (losses). Lapses associated with embedded derivatives are included within net derivative gains (losses). (2)Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. (3)The amount reported within purchases, sales, issuances and settlements is the purchase or issuance price and the sales or settlement proceeds based upon the actual date purchased or issued and sold or settled, respectively. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For the year ended December 31, 2011, fees attributed to net embedded derivatives are included within settlements. For the years ended December 31, 2010 and 2009, fees attributed to net embedded derivatives are included within purchases, sales, issuances and settlements. (4)Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and/or out of Level 3 in the same period are excluded from the rollforward. (5)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income. For the purpose of this disclosure, these changes are presented within net investment gains (losses). (6)Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. (7)Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (8)The long-term debt of the CSEs at January 1, 2010 is reported within the purchases, sales, issuances and settlements caption of the rollforward. F-107 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Assets and Liabilities Held by CSEs The Company has elected the FVO for the following assets and liabilities held by CSEs: securities and long-term debt. Information on the estimated fair value of the securities classified as trading and other securities is presented in Note 3. The following table presents the long-term debt carried under the FVO related to securities classified as trading and other securities at:
DECEMBER 31, ------------- 2011 2010 ----- ----- (IN MILLIONS) Contractual principal balance..................................... $ 138 $ 214 Excess of contractual principal balance over estimated fair value. (22) (30) ----- ----- Carrying value at estimated fair value........................... $ 116 $ 184 ===== =====
Interest income on securities classified as trading and other securities held by CSEs is recorded in net investment income. Interest expense on long-term debt of CSEs is recorded in other expenses. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales of long-term debt are recognized in net investment gains (losses). See Note 3. NON-RECURRING FAIR VALUE MEASUREMENTS Certain assets are measured at estimated fair value on a non-recurring basis and are not included in the tables presented above. The amounts below relate to certain investments measured at estimated fair value during the period and still held at the reporting dates.
YEARS ENDED DECEMBER 31, --------------------------------------------------------------------------------------------- 2011 2010 2009 ---------------------------------- ---------------------------------- ----------------------- CARRYING ESTIMATED NET CARRYING ESTIMATED NET CARRYING ESTIMATED VALUE FAIR INVESTMENT VALUE FAIR INVESTMENT VALUE FAIR PRIOR TO VALUE AFTER GAINS PRIOR TO VALUE AFTER GAINS PRIOR TO VALUE AFTER MEASUREMENT MEASUREMENT (LOSSES) MEASUREMENT MEASUREMENT (LOSSES) MEASUREMENT MEASUREMENT ----------- ----------- ---------- ----------- ----------- ---------- ----------- ----------- (IN MILLIONS) Mortgage loans, net (1)........ $168 $143 $(25) $176 $160 $(16) $248 $168 Other limited partnership interests (2)................. $ 11 $ 8 $ (3) $ 3 $ 1 $ (2) $805 $517 Real estate joint ventures (3). $ -- $ -- $ -- $ 8 $ 3 $ (5) $ 80 $ 43
----------- ----------- NET INVESTMENT GAINS (LOSSES) ---------- Mortgage loans, net (1)........ $ (80) Other limited partnership interests (2)................. $(288) Real estate joint ventures (3). $ (37)
---------- (1)Mortgage loans -- The impaired mortgage loans presented above were written down to their estimated fair values at the date the impairments were recognized and are reported as losses above. Subsequent improvements in estimated fair value on previously impaired loans recorded through a reduction in the previously established valuation allowance are reported as gains above. Estimated fair values for impaired mortgage loans are based on observable market prices or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, on the estimated fair value of the underlying collateral, or the present value of the expected future cash flows. Impairments to estimated fair value and decreases in previous impairments from subsequent improvements in estimated fair value represent non-recurring fair value measurements that have been categorized as Level 3 due to the lack of price transparency inherent in the limited markets for such mortgage loans. (2)Other limited partnership interests -- The impaired investments presented above were accounted for using the cost method. Impairments on these cost method investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair F-108 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several private equity and debt funds that typically invest primarily in a diversified pool of investments using certain investment strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; and below investment grade debt and mezzanine debt funds. The estimated fair values of these investments have been determined using the NAV of the Company's ownership interest in the partners' capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. Unfunded commitments for these investments were $1 million and $11 million at December 31, 2011 and 2010, respectively. (3)Real estate joint ventures -- The impaired investments presented above were accounted for using the cost method. Impairments on these cost method investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several real estate funds that typically invest primarily in commercial real estate. The estimated fair values of these investments have been determined using the NAV of the Company's ownership interest in the partners' capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. There were no unfunded commitments for these investments at December 31, 2011. Unfunded commitments for these investments were $3 million at December 31, 2010. F-109 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS Amounts related to the Company's financial instruments that were not measured at fair value on a recurring basis, were as follows:
DECEMBER 31, ------------------------------------------------------- 2011 2010 --------------------------- --------------------------- ESTIMATED ESTIMATED NOTIONAL CARRYING FAIR NOTIONAL CARRYING FAIR AMOUNT VALUE VALUE AMOUNT VALUE VALUE -------- -------- --------- -------- -------- --------- (IN MILLIONS) ASSETS: Mortgage loans, net................................. $43,880 $46,013 $41,667 $43,278 Policy loans........................................ $ 8,314 $10,279 $ 8,270 $ 9,509 Real estate joint ventures (1)...................... $ 59 $ 73 $ 50 $ 58 Other limited partnership interests (1)............. $ 1,207 $ 1,517 $ 1,423 $ 1,491 Short-term investments (2).......................... $ 1 $ 1 $ 144 $ 144 Other invested assets (1)........................... $ 1,996 $ 2,032 $ 1,494 $ 1,506 Cash and cash equivalents........................... $ 2,089 $ 2,089 $ 3,485 $ 3,485 Accrued investment income........................... $ 2,219 $ 2,219 $ 2,183 $ 2,183 Premiums, reinsurance and other receivables (1)..... $18,127 $19,276 $18,268 $18,999 LIABILITIES: PABs (1)............................................ $65,606 $68,360 $66,249 $68,861 Payables for collateral under securities loaned and other transactions................................ $20,280 $20,280 $17,014 $17,014 Short-term debt..................................... $ 101 $ 101 $ 102 $ 102 Long-term debt (1), (3)............................. $ 2,106 $ 2,408 $ 3,399 $ 3,473 Other liabilities (1)............................... $23,963 $24,637 $24,553 $25,034 Separate account liabilities (1).................... $45,467 $45,467 $37,791 $37,791 COMMITMENTS: (4) Mortgage loan commitments........................... $2,332 $ -- $ 3 $2,516 $ -- $ (13) Commitments to fund bank credit facilities, bridge loans and private corporate bond investments...... $ 986 $ -- $ 38 $1,997 $ -- $ 16
---------- (1)Carrying values presented herein differ from those presented in the consolidated balance sheets because certain items within the respective financial statement caption are not considered financial instruments. Financial statement captions excluded from the table above are not considered financial instruments. (2)Short-term investments as presented in the table above differ from the amounts presented in the consolidated balance sheets because this table does not include short-term investments that meet the definition of a security, which are measured at estimated fair value on a recurring basis. (3)Long-term debt as presented in the table above does not include long-term debt of CSEs, which is accounted for under the FVO. (4)Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. F-110 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: The assets and liabilities measured at estimated fair value on a recurring basis include: fixed maturity securities, equity securities, trading and other securities, certain short-term investments, derivative assets and liabilities, net embedded derivatives within asset and liability host contracts, separate account assets, long-term debt of CSEs and trading liabilities. These assets and liabilities are described in the section "-- Recurring Fair Value Measurements" and, therefore, are excluded from the table above. The estimated fair value for these financial instruments approximates carrying value. Mortgage Loans The Company originates mortgage loans principally for investment purposes. These loans are principally carried at amortized cost. The estimated fair value of mortgage loans is primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk. Policy Loans For policy loans with fixed interest rates, estimated fair values are determined using a discounted cash flow model applied to groups of similar policy loans determined by the nature of the underlying insurance liabilities. Cash flow estimates are developed by applying a weighted-average interest rate to the outstanding principal balance of the respective group of policy loans and an estimated average maturity determined through experience studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. The estimated fair value for policy loans with variable interest rates approximates carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates. Real Estate Joint Ventures and Other Limited Partnership Interests Real estate joint ventures and other limited partnership interests included in the preceding table consist of those investments accounted for using the cost method. The remaining carrying value recognized in the consolidated balance sheets represents investments in real estate carried at cost less accumulated depreciation, or real estate joint ventures and other limited partnership interests accounted for using the equity method, which do not meet the definition of financial instruments for which fair value is required to be disclosed. The estimated fair values for real estate joint ventures and other limited partnership interests accounted for under the cost method are generally based on the Company's share of the NAV as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments. Short-term Investments Certain short-term investments do not qualify as securities and are recognized at amortized cost in the consolidated balance sheets. For these instruments, the Company believes that there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying value. In light F-111 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) of recent market conditions, short-term investments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality and the Company has determined additional adjustment is not required. Other Invested Assets Other invested assets within the preceding table are principally comprised of loans to affiliates and funds withheld. The estimated fair value of loans to affiliates is determined by discounting the expected future cash flows using market interest rates currently available for instruments with similar terms and remaining maturities. For funds withheld, the Company evaluates the specific facts and circumstances of each instrument to determine the appropriate estimated fair values. The estimated fair value for funds withheld was not materially different from the recognized carrying value. Cash and Cash Equivalents Due to the short-term maturities of cash and cash equivalents, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value generally approximates carrying value. In light of recent market conditions, cash and cash equivalent instruments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality, or sufficient solvency in the case of depository institutions, and the Company has determined additional adjustment is not required. Accrued Investment Income Due to the short term until settlement of accrued investment income, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying value. In light of recent market conditions, the Company has monitored the credit quality of the issuers and has determined additional adjustment is not required. Premiums, Reinsurance and Other Receivables Premiums, reinsurance and other receivables in the preceding table are principally comprised of certain amounts recoverable under reinsurance agreements, amounts on deposit with financial institutions to facilitate daily settlements related to certain derivative positions and amounts receivable for securities sold but not yet settled. Premiums receivable and those amounts recoverable under reinsurance agreements determined to transfer significant risk are not financial instruments subject to disclosure and thus have been excluded from the amounts presented in the preceding table. Amounts recoverable under ceded reinsurance agreements, which the Company has determined do not transfer significant risk such that they are accounted for using the deposit method of accounting, have been included in the preceding table. The estimated fair value is determined as the present value of expected future cash flows, which were discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty. The amounts on deposit for derivative settlements essentially represent the equivalent of demand deposit balances and amounts due for securities sold are generally received over short periods such that the estimated fair value approximates carrying value. In light of recent market conditions, the Company has monitored the solvency position of the financial institutions and has determined additional adjustments are not required. F-112 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PABs PABs in the table above include investment contracts. Embedded derivatives on investment contracts and certain variable annuity guarantees accounted for as embedded derivatives are included in this caption in the consolidated financial statements but excluded from this caption in the table above as they are separately presented in "-- Recurring Fair Value Measurements." The remaining difference between the amounts reflected as PABs in the preceding table and those recognized in the consolidated balance sheets represents those amounts due under contracts that satisfy the definition of insurance contracts and are not considered financial instruments. The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts. The fair values for these investment contracts are estimated by discounting best estimate future cash flows using current market risk-free interest rates and adding a spread to reflect the nonperformance risk in the liability. Payables for Collateral Under Securities Loaned and Other Transactions The estimated fair value for payables for collateral under securities loaned and other transactions approximates carrying value. The related agreements to loan securities are short-term in nature such that the Company believes there is limited risk of a material change in market interest rates. Additionally, because borrowers are cross-collateralized by the borrowed securities, the Company believes no additional consideration for changes in nonperformance risk are necessary. Short-term and Long-term Debt The estimated fair value for short-term debt approximates carrying value due to the short-term nature of these obligations. The estimated fair value of long-term debt is generally determined by discounting expected future cash flows using market rates currently available for debt with similar remaining maturities and reflecting the credit risk of the Company, including inputs when available, from actively traded debt of the Company or other companies with similar types of borrowing arrangements. Risk-adjusted discount rates applied to the expected future cash flows can vary significantly based upon the specific terms of each individual arrangement, including, but not limited to: subordinated rights, contractual interest rates in relation to current market rates, the structuring of the arrangement, and the nature and observability of the applicable valuation inputs. Use of different risk-adjusted discount rates could result in different estimated fair values. The carrying value of long-term debt presented in the table above differs from the amounts presented in the consolidated balance sheets as it does not include capital leases which are not required to be disclosed at estimated fair value. Other Liabilities Other liabilities included in the table above reflect those other liabilities that satisfy the definition of financial instruments subject to disclosure. These items consist primarily of interest and dividends payable, amounts due for securities purchased but not yet settled, funds withheld amounts payable which are contractually withheld by the Company in accordance with the terms of the reinsurance agreements and amounts payable under certain ceded and assumed reinsurance agreements are recorded using the deposit method of accounting. The Company evaluates the specific terms, facts and circumstances of each instrument to determine the appropriate estimated fair values, which are not materially different from the carrying values, with the exception of certain deposit type reinsurance payables. For these reinsurance payables, the estimated fair value is F-113 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) determined as the present value of expected future cash flows, which are discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty. Separate Account Liabilities Separate account liabilities included in the preceding table represent those balances due to policyholders under contracts that are classified as investment contracts. The remaining amounts presented in the consolidated balance sheets represent those contracts classified as insurance contracts, which do not satisfy the definition of financial instruments. Separate account liabilities classified as investment contracts primarily represent variable annuities with no significant mortality risk to the Company such that the death benefit is equal to the account balance, funding agreements related to group life contracts and certain contracts that provide for benefit funding. Separate account liabilities are recognized in the consolidated balance sheets at an equivalent value of the related separate account assets. Separate account assets, which equal net deposits, net investment income and realized and unrealized investment gains and losses, are fully offset by corresponding amounts credited to the contractholders' liability which is reflected in separate account liabilities. Since separate account liabilities are fully funded by cash flows from the separate account assets which are recognized at estimated fair value as described in the section "-- Recurring Fair Value Measurements," the Company believes the value of those assets approximates the estimated fair value of the related separate account liabilities. Mortgage Loan Commitments and Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments The estimated fair values for mortgage loan commitments that will be held for investment and commitments to fund bank credit facilities, bridge loans and private corporate bonds that will be held for investment reflected in the above table represents the difference between the discounted expected future cash flows using interest rates that incorporate current credit risk for similar instruments on the reporting date and the principal amounts of the commitments. F-114 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 6. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Information regarding DAC and VOBA was as follows:
DAC VOBA TOTAL -------- ----- -------- (IN MILLIONS) Balance at January 1, 2009............ $ 10,662 $ 209 $ 10,871 Capitalizations...................... 857 -- 857 -------- ----- -------- Subtotal........................... 11,519 209 11,728 -------- ----- -------- Amortization related to: Net investment gains (losses)...... 254 1 255 Other expenses..................... (648) (22) (670) -------- ----- -------- Total amortization............... (394) (21) (415) -------- ----- -------- Unrealized investment gains (losses). (1,897) (52) (1,949) -------- ----- -------- Balance at December 31, 2009.......... 9,228 136 9,364 Capitalizations...................... 804 -- 804 -------- ----- -------- Subtotal........................... 10,032 136 10,168 -------- ----- -------- Amortization related to: Net investment gains (losses)...... (127) -- (127) Other expenses..................... (809) (14) (823) -------- ----- -------- Total amortization............... (936) (14) (950) -------- ----- -------- Unrealized investment gains (losses). (1,020) (7) (1,027) -------- ----- -------- Balance at December 31, 2010.......... 8,076 115 8,191 Capitalizations...................... 893 -- 893 -------- ----- -------- Subtotal........................... 8,969 115 9,084 -------- ----- -------- Amortization related to: Net investment gains (losses)...... (82) -- (82) Other expenses..................... (895) (10) (905) -------- ----- -------- Total amortization............... (977) (10) (987) -------- ----- -------- Unrealized investment gains (losses). (310) (8) (318) -------- ----- -------- Balance at December 31, 2011.......... $ 7,682 $ 97 $ 7,779 ======== ===== ========
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $11 million in 2012, $11 million in 2013, $9 million in 2014, $8 million in 2015 and $4 million in 2016. Amortization of DAC and VOBA is attributed to both investment gains and losses and to other expenses for the amount of gross margins or profits originating from transactions other than investment gains and losses. Unrealized investment gains and losses represent the amount of DAC and VOBA that would have been amortized if such gains and losses had been recognized. F-115 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding DAC and VOBA by segment was as follows:
DAC VOBA TOTAL ------------- --------- ------------- DECEMBER 31, ------------------------------------- 2011 2010 2011 2010 2011 2010 ------ ------ ---- ---- ------ ------ (IN MILLIONS) Insurance Products........ $5,993 $6,143 $80 $ 97 $6,073 $6,240 Retirement Products....... 1,599 1,866 14 17 1,613 1,883 Corporate Benefit Funding. 89 66 2 -- 91 66 Corporate & Other......... 1 1 1 1 2 2 ------ ------ ---- ---- ------ ------ Total.................... $7,682 $8,076 $97 $115 $7,779 $8,191 ====== ====== ==== ==== ====== ======
7. GOODWILL Goodwill, which is included in other assets, is the excess of cost over the estimated fair value of net assets acquired. Information regarding allocated goodwill by segment and reporting unit was as follows:
DECEMBER 31, ------------ 2011 2010 ---- ---- (IN MILLIONS) Insurance Products: Group life................. $ 3 $ 3 Individual life............ 27 27 Non-medical health......... 65 65 ---- ---- Total Insurance Products. 95 95 Retirement Products......... 10 10 Corporate Benefit Funding... 2 2 Corporate & Other........... 4 4 ---- ---- Total.................. $111 $111 ==== ====
The Company performed its annual goodwill impairment tests during the third quarter of 2011 based upon data at June 30, 2011 and concluded that the fair values of all reporting units were in excess of their carrying values and, therefore, goodwill was not impaired. Such tests are described in more detail in Note 1. Management continues to evaluate current market conditions that may affect the estimated fair value of these reporting units to assess whether any goodwill impairment exists. Deteriorating or adverse market conditions for certain reporting units may have a significant impact on the estimated fair value of these reporting units and could result in future impairments of goodwill. F-116 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. INSURANCE INSURANCE LIABILITIES Insurance liabilities, including affiliated insurance liabilities on reinsurance assumed and ceded, were as follows:
FUTURE POLICY POLICYHOLDER ACCOUNT OTHER POLICY-RELATED BENEFITS BALANCES BALANCES ----------------- -------------------- -------------------- DECEMBER 31, ----------------------------------------------------------- 2011 2010 2011 2010 2011 2010 -------- -------- ------- ------- ------ ------ (IN MILLIONS) Insurance Products........ $ 70,734 $ 69,529 $19,452 $19,317 $5,565 $5,322 Retirement Products....... 7,606 6,681 21,691 21,280 48 44 Corporate Benefit Funding. 30,632 26,391 47,689 48,296 167 179 Corporate & Other......... 361 349 24 29 96 104 -------- -------- ------- ------- ------ ------ Total.................... $109,333 $102,950 $88,856 $88,922 $5,876 $5,649 ======== ======== ======= ======= ====== ======
See Note 9 for discussion of affiliated reinsurance liabilities included in the table above. VALUE OF DISTRIBUTION AGREEMENTS AND CUSTOMER RELATIONSHIPS ACQUIRED Information regarding VODA and VOCRA, which are reported in other assets, was as follows:
AMOUNT ------------- (IN MILLIONS) Balance at January 1, 2009... $ 427 Acquisitions................. -- Amortization................. (15) ------------- Balance at December 31, 2009. $ 412 Acquisitions................. 7 Amortization................. (19) ------------- Balance at December 31, 2010. $ 400 Acquisitions................. -- Amortization................. (22) ------------- Balance at December 31, 2011. $ 378 =============
The estimated future amortization expense allocated to other expenses for the next five years for VODA and VOCRA is $25 million in 2012, $27 million in 2013, $30 million in 2014, $30 million in 2015 and $30 million in 2016. F-117 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SALES INDUCEMENTS Information regarding deferred sales inducements, which are reported in other assets, was as follows:
AMOUNT ------------- (IN MILLIONS) Balance at January 1, 2009... $ 144 Capitalization............... 51 Amortization................. (22) ------------- Balance at December 31, 2009. 173 Capitalization............... 42 Amortization................. (25) ------------- Balance at December 31, 2010. 190 Capitalization............... 29 Amortization................. (35) ------------- Balance at December 31, 2011. $ 184 =============
SEPARATE ACCOUNTS Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $62.7 billion and $63.8 billion at December 31, 2011 and 2010, respectively, for which the policyholder assumes all investment risk, and separate accounts for which the Company contractually guarantees either a minimum return or account value to the policyholder which totaled $44.0 billion and $34.0 billion at December 31, 2011 and 2010, respectively. The latter category consisted primarily of funding agreements and participating close-out contracts. The average interest rate credited on these contracts was 3.12% and 3.30% at December 31, 2011 and 2010, respectively. For the years ended December 31, 2011, 2010 and 2009, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. OBLIGATIONS UNDER FUNDING AGREEMENTS The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain special purpose entities ("SPEs") that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. During the years ended December 31, 2011, 2010 and 2009, the Company issued $27.4 billion, $15.0 billion and $14.1 billion, respectively, and repaid $28.2 billion, $12.3 billion and $16.8 billion, respectively, of such funding agreements. At December 31, 2011 and 2010, funding agreements outstanding, which are included in PABs, were $20.1 billion and $20.6 billion, respectively. Metropolitan Life Insurance Company and General American Life Insurance Company ("GALIC"), a subsidiary, are members of the Federal Home Loan Bank ("FHLB"). Holdings of FHLB common stock by branch, included in equity securities, were as follows at:
DECEMBER 31, ------------ 2011 2010 - ---- ---- (IN MILLIONS) FHLB of New York ("FHLB of NY"). $658 $890 FHLB of Des Moines.............. $ 31 $ 10
F-118 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has also entered into funding agreements. The liability for funding agreements is included in PABs. Information related to the funding agreements was as follows:
LIABILITY COLLATERAL --------------- ----------------------- DECEMBER 31, --------------------------------------- 2011 2010 2011 2010 ------- ------- ----------- ----------- (IN MILLIONS) FHLB of NY (1)......... $11,655 $12,555 $13,002 (2) $14,204 (2) Farmer Mac (3)......... $ 2,550 $ 2,550 $ 2,927 (4) $ 2,928 (4) FHLB of Des Moines (1). $ 475 $ -- $ 662 (2) $ -- (2)
---------- (1)Represents funding agreements issued to the FHLB in exchange for cash and for which the FHLB has been granted a lien on certain assets, including RMBS, to collateralize obligations under the funding agreements. The Company maintains control over these pledged assets, and may use, commingle, encumber or dispose of any portion of the collateral as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by the Company, the FHLB's recovery on the collateral is limited to the amount of the Company's liability to the FHLB. (2)Advances are collateralized by mortgage-backed securities. The amount of collateral presented is at estimated fair value. (3)Represents funding agreements issued to certain SPEs that have issued debt securities for which payment of interest and principal is secured by such funding agreements, and such debt securities are also guaranteed as to payment of interest and principal by the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States ("Farmer Mac"). (4)Secured by a pledge of certain eligible agricultural real estate mortgage loans. The amount of collateral presented is at carrying value. F-119 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES Information regarding the liabilities for unpaid claims and claim expenses relating to group accident and non-medical health policies and contracts, which are reported in future policy benefits and other policy-related balances, was as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2011 2010 2009 -------- -------- -------- (IN MILLIONS) Balance at January 1,........... $ 6,539 $ 6,302 $ 5,669 Less: Reinsurance recoverables. 448 354 266 -------- -------- -------- Net balance at January 1,....... 6,091 5,948 5,403 -------- -------- -------- Incurred related to: Current year................... 3,856 3,733 4,480 Prior years.................... (79) 13 (14) -------- -------- -------- Total incurred............... 3,777 3,746 4,466 -------- -------- -------- Paid related to: Current year................... (2,282) (2,244) (2,664) Prior years.................... (1,288) (1,359) (1,257) -------- -------- -------- Total paid................... (3,570) (3,603) (3,921) -------- -------- -------- Net balance at December 31,..... 6,298 6,091 5,948 Add: Reinsurance recoverables... 324 448 354 -------- -------- -------- Balance at December 31,......... $ 6,622 $ 6,539 $ 6,302 ======== ======== ========
During 2011 and 2009, claims and claim adjustment expenses associated with prior years decreased by $79 million and $14 million, respectively, due to improved loss ratios for non-medical health claim liabilities. During 2010, claims and claim adjustment expenses associated with prior years increased by $13 million due to differences between the actual benefits paid and expected benefits owed during those periods. GUARANTEES The Company issues annuity contracts which may include contractual guarantees to the contractholder for: (i) return of no less than total deposits made to the contract less any partial withdrawals ("return of net deposits"); and (ii) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary, or total deposits made to the contract less any partial withdrawals plus a minimum return ("anniversary contract value" or "minimum return"). The Company also issues annuity contracts that apply a lower rate of funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize ("two tier annuities"). These guarantees include benefits that are payable in the event of death or at annuitization. The Company also issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit. F-120 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts was as follows:
DECEMBER 31, --------------------------------------------------------- 2011 2010 ---------------------------- ---------------------------- IN THE AT IN THE AT EVENT OF DEATH ANNUITIZATION EVENT OF DEATH ANNUITIZATION -------------- ------------- -------------- ------------- (IN MILLIONS) ANNUITY CONTRACTS (1) RETURN OF NET DEPOSITS Separate account value.................. $ 4,311 $ N/A $ 4,610 $ N/A Net amount at risk (2).................. $ 126 (3) $ N/A $ 78 (3) $ N/A Average attained age of contractholders. 62 years N/A 61 years N/A ANNIVERSARY CONTRACT VALUE OR MINIMUM RETURN Separate account value.................. $ 44,360 $ 18,378 $ 40,114 $ 13,797 Net amount at risk (2).................. $1,768 (3) $2,563 (4) $1,241 (3) $1,271 (4) Average attained age of contractholders. 63 years 60 years 63 years 59 years TWO TIER ANNUITIES General account value................... N/A $ 276 N/A $ 280 Net amount at risk (2).................. N/A $ 49 (5) N/A $ 49 (5) Average attained age of contractholders. N/A 63 years N/A 62 years
DECEMBER 31, ---------------------------------------------- 2011 2010 ---------------------- ----------------------- SECONDARY PAID-UP SECONDARY PAID-UP GUARANTEES GUARANTEES GUARANTEES GUARANTEES ----------- ---------- ----------- ----------- (IN MILLIONS) UNIVERSAL AND VARIABLE LIFE CONTRACTS (1) Account value (general and separate account)................................ $ 6,535 $ 1,206 $ 6,194 $ 1,250 Net amount at risk (2).................... $88,999 (3) $9,977 (3) $88,425 (3) $10,713 (3) Average attained age of policyholders..... 51 years 58 years 50 years 57 years
---------- (1)The Company's annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2)The net amount at risk is based on the direct amount at risk (excluding ceded reinsurance). (3)The net amount at risk for guarantees of amounts in the event of death is defined as the current GMDB in excess of the current account balance at the balance sheet date. (4)The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. (5)The net amount at risk for two tier annuities is based on the excess of the upper tier, adjusted for a profit margin, less the lower tier. F-121 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity and universal and variable life contracts was as follows:
UNIVERSAL AND VARIABLE ANNUITY CONTRACTS LIFE CONTRACTS ------------------------ --------------------- GUARANTEED GUARANTEED DEATH ANNUITIZATION SECONDARY PAID-UP BENEFITS BENEFITS GUARANTEES GUARANTEES TOTAL ---------- ------------- ---------- ---------- ----- (IN MILLIONS) DIRECT Balance at January 1, 2009... $ 69 $ 89 $ 27 $13 $ 198 Incurred guaranteed benefits. 21 -- 40 8 69 Paid guaranteed benefits..... (33) -- -- -- (33) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2009. 57 89 67 21 234 Incurred guaranteed benefits. 10 24 179 28 241 Paid guaranteed benefits..... (6) -- -- -- (6) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2010. 61 113 246 49 469 Incurred guaranteed benefits. 30 45 15 9 99 Paid guaranteed benefits..... (7) -- -- -- (7) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2011. $ 84 $158 $261 $58 $ 561 ========== ============= ========== ========== ===== CEDED Balance at January 1, 2009... $ 40 $ 26 $ -- $-- $ 66 Incurred guaranteed benefits. 30 2 44 8 84 Paid guaranteed benefits..... (33) -- -- -- (33) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2009. 37 28 44 8 117 Incurred guaranteed benefits. 13 8 165 26 212 Paid guaranteed benefits..... (6) -- -- -- (6) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2010. 44 36 209 34 323 Incurred guaranteed benefits. 25 16 3 7 51 Paid guaranteed benefits..... (7) -- -- -- (7) ---------- ------------- ---------- ---------- ----- Balance at December 31, 2011. $ 62 $ 52 $212 $41 $ 367 ========== ============= ========== ========== ===== NET Balance at January 1, 2009... $ 29 $ 63 $ 27 $13 $ 132 Incurred guaranteed benefits. (9) (2) (4) -- (15) Paid guaranteed benefits..... -- -- -- -- -- ---------- ------------- ---------- ---------- ----- Balance at December 31, 2009. 20 61 23 13 117 Incurred guaranteed benefits. (3) 16 14 2 29 Paid guaranteed benefits..... -- -- -- -- -- ---------- ------------- ---------- ---------- ----- Balance at December 31, 2010. 17 77 37 15 146 Incurred guaranteed benefits. 5 29 12 2 48 Paid guaranteed benefits..... -- -- -- -- -- ---------- ------------- ---------- ---------- ----- Balance at December 31, 2011. $ 22 $106 $ 49 $17 $ 194 ========== ============= ========== ========== =====
F-122 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Account balances of contracts with insurance guarantees were invested in separate account asset classes as follows at:
DECEMBER 31, --------------- 2011 2010 ------- ------- (IN MILLIONS) Fund Groupings: Equity.......... $18,240 $19,167 Balanced........ 14,368 11,640 Bond............ 4,221 3,875 Specialty....... 787 886 Money Market.... 211 218 ------- ------- Total.......... $37,827 $35,786 ======= =======
9. REINSURANCE The Company's Insurance Products segment participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth. For its individual life insurance products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or a quota share basis. The Company currently reinsures 90% of the mortality risk in excess of $1 million for most products and reinsures up to 90% of the mortality risk for certain other products. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. On a case by case basis, the Company may retain up to $20 million per life and reinsure 100% of amounts in excess of the amount the Company retains. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. For other policies within the Insurance Products segment, the Company generally retains most of the risk and only cedes particular risks on certain client arrangements. The Company's Retirement Products segment reinsures 90% of the new production of fixed annuities from several affiliates. The Company's Retirement Products segment also reinsures 100% of the living and death benefit guarantees associated with its variable annuities issued since 2004 to an affiliated reinsurer and certain portions of the living and death benefit guarantees associated with its variable annuities issued prior to 2004 to affiliated and non-affiliated reinsurers. Under these reinsurance agreements, the Company pays a reinsurance premium generally based on fees associated with the guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations. The Company's Corporate Benefit Funding segment periodically engages in reinsurance activities, as considered appropriate. The impact of these activities on the financial results of this segment has not been significant. The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks. The Company reinsures its business through a diversified group of well-capitalized, highly rated reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial F-123 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at December 31, 2011 and 2010, were immaterial. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $2.3 billion of unsecured unaffiliated reinsurance recoverable balances at both December 31, 2011 and 2010. At December 31, 2011, the Company had $5.4 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $4.2 billion, or 78%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.6 billion of which were unsecured. At December 31, 2010, the Company had $5.6 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $4.6 billion, or 82%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.6 billion of which were unsecured. The Company has reinsured with an unaffiliated third-party reinsurer, 49.25% of the closed block through a modified coinsurance agreement. The Company accounts for this agreement under the deposit method of accounting. The Company, having the right of offset, has offset the modified coinsurance deposit with the deposit recoverable. F-124 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amounts in the consolidated statements of operations include the impact of reinsurance. Information regarding the effect of reinsurance was as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2011 2010 2009 -------- -------- -------- (IN MILLIONS) PREMIUMS: Direct premiums............................................... $ 18,435 $ 18,793 $ 19,285 Reinsurance assumed........................................... 1,240 1,155 1,197 Reinsurance ceded............................................. (1,387) (1,429) (1,853) -------- -------- -------- Net premiums............................................... $ 18,288 $ 18,519 $ 18,629 ======== ======== ======== UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES: Direct universal life and investment-type product policy fees. $ 2,686 $ 2,627 $ 2,565 Reinsurance assumed........................................... 38 13 9 Reinsurance ceded............................................. (522) (565) (507) -------- -------- -------- Net universal life and investment-type product policy fees. $ 2,202 $ 2,075 $ 2,067 ======== ======== ======== OTHER REVENUES: Direct other revenues......................................... $ 836 $ 750 $ 779 Reinsurance assumed........................................... (6) (5) (5) Reinsurance ceded............................................. 978 980 965 -------- -------- -------- Net other revenues......................................... $ 1,808 $ 1,725 $ 1,739 ======== ======== ======== POLICYHOLDER BENEFITS AND CLAIMS: Direct policyholder benefits and claims....................... $ 21,100 $ 21,246 $ 21,570 Reinsurance assumed........................................... 1,069 1,235 1,045 Reinsurance ceded............................................. (1,488) (1,774) (1,953) -------- -------- -------- Net policyholder benefits and claims....................... $ 20,681 $ 20,707 $ 20,662 ======== ======== ======== INTEREST CREDITED TO POLICYHOLDER ACCOUNT BALANCES: Direct interest credited to policyholder account balances..... $ 2,434 $ 2,581 $ 2,734 Reinsurance assumed........................................... 32 28 13 Reinsurance ceded............................................. (94) (86) (78) -------- -------- -------- Net interest credited to policyholder account balances..... $ 2,372 $ 2,523 $ 2,669 ======== ======== ======== POLICYHOLDER DIVIDENDS: Direct policyholder dividends................................. $ 1,386 $ 1,475 $ 1,643 Reinsurance ceded............................................. (31) (32) (31) -------- -------- -------- Net policyholder dividends................................. $ 1,355 $ 1,443 $ 1,612 ======== ======== ======== OTHER EXPENSES: Direct other expenses......................................... $ 5,223 $ 5,140 $ 4,945 Reinsurance assumed........................................... 458 462 427 Reinsurance ceded............................................. 733 657 637 -------- -------- -------- Net other expenses......................................... $ 6,414 $ 6,259 $ 6,009 ======== ======== ========
F-125 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amounts in the consolidated balance sheets include the impact of reinsurance. Information regarding the effect of reinsurance was as follows at:
DECEMBER 31, 2011 --------------------------------- TOTAL BALANCE DIRECT ASSUMED CEDED SHEET -------- ------- ------- -------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables...................... $ 1,383 $ 485 $26,113 $ 27,981 Deferred policy acquisition costs and value of business acquired. 7,793 386 (400) 7,779 -------- ------- ------- -------- Total assets.................................................... $ 9,176 $ 871 $25,713 $ 35,760 ======== ======= ======= ======== LIABILITIES: Future policy benefits........................................... $107,713 $1,620 $ -- $109,333 Policyholder account balances.................................... 88,557 299 -- 88,856 Other policy-related balances.................................... 5,631 294 (49) 5,876 Other liabilities................................................ 8,068 7,574 20,972 36,614 -------- ------- ------- -------- Total liabilities............................................... $209,969 $9,787 $20,923 $240,679 ======== ======= ======= ========
DECEMBER 31, 2010 --------------------------------- TOTAL BALANCE DIRECT ASSUMED CEDED SHEET -------- ------- ------- -------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables...................... $ 1,010 $ 476 $25,316 $ 26,802 Deferred policy acquisition costs and value of business acquired. 8,322 342 (473) 8,191 -------- ------- ------- -------- Total assets.................................................... $ 9,332 $ 818 $24,843 $ 34,993 ======== ======= ======= ======== LIABILITIES: Future policy benefits........................................... $101,227 $1,723 $ -- $102,950 Policyholder account balances.................................... 88,602 320 -- 88,922 Other policy-related balances.................................... 5,448 279 (78) 5,649 Other liabilities................................................ 7,515 7,543 20,055 35,113 -------- ------- ------- -------- Total liabilities............................................... $202,792 $9,865 $19,977 $232,634 ======== ======= ======= ========
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on reinsurance were $17.9 billion and $18.2 billion at December 31, 2011 and 2010, respectively. The deposit liabilities on reinsurance were $7.0 billion and $7.1 billion at December 31, 2011 and 2010, respectively. RELATED PARTY REINSURANCE TRANSACTIONS The Company has reinsurance agreements with certain of MetLife, Inc.'s subsidiaries, including Exeter, First MetLife Investors Insurance Company, MetLife Insurance Company of Connecticut ("MICC"), MetLife Investors USA Insurance Company, MetLife Investors Insurance Company, MetLife Reinsurance Company of Charleston ("MRC"), MetLife Reinsurance Company of Vermont and Metropolitan Tower Life Insurance Company, all of which are related parties. F-126 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the effect of affiliated reinsurance included in the consolidated statements of operations was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ------ ------ (IN MILLIONS) PREMIUMS: Reinsurance assumed........................................... $ 169 $ 88 $ 66 Reinsurance ceded............................................. (51) (63) (43) ------ ------ ------ Net premiums............................................... $ 118 $ 25 $ 23 ====== ====== ====== UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES: Reinsurance assumed........................................... $ 38 $ 13 $ 9 Reinsurance ceded............................................. (170) (230) (177) ------ ------ ------ Net universal life and investment-type product policy fees. $(132) $(217) $(168) ====== ====== ====== OTHER REVENUES: Reinsurance assumed........................................... $ (7) $ (5) $ (4) Reinsurance ceded (1)......................................... 916 908 901 ------ ------ ------ Net other revenues......................................... $ 909 $ 903 $ 897 ====== ====== ====== POLICYHOLDER BENEFITS AND CLAIMS: Reinsurance assumed........................................... $ 175 $ 112 $ 75 Reinsurance ceded............................................. (121) (129) (91) ------ ------ ------ Net policyholder benefits and claims....................... $ 54 $ (17) $ (16) ====== ====== ====== INTEREST CREDITED TO POLICYHOLDER ACCOUNT BALANCES: Reinsurance assumed........................................... $ 28 $ 26 $ 10 Reinsurance ceded............................................. (94) (86) (78) ------ ------ ------ Net interest credited to policyholder account balances..... $ (66) $ (60) $ (68) ====== ====== ====== POLICYHOLDER DIVIDENDS: Reinsurance assumed........................................... $ -- $ -- $ -- Reinsurance ceded............................................. (14) (16) (18) ------ ------ ------ Net policyholder dividends................................. $ (14) $ (16) $ (18) ====== ====== ====== OTHER EXPENSES: Reinsurance assumed........................................... $ 352 $ 362 $ 331 Reinsurance ceded (1)......................................... 914 826 791 ------ ------ ------ Net other expenses......................................... $1,266 $1,188 $1,122 ====== ====== ======
---------- (1)In connection with the cession of a portion of its closed block liabilities on a coinsurance with funds withheld basis to MRC, the Company recognized interest earned of $916 million and $908 million for the years ended December 31, 2011 and 2010, respectively, on the deposit, which is recorded in premiums, reinsurance and other receivables. The Company also recognized in other expenses $906 million, $898 million and $888 million of interest expense associated with the funds withheld for the years ended December 31, 2011, 2010 and 2009, respectively. F-127 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the effect of affiliated reinsurance included in the consolidated balance sheets was as follows at:
DECEMBER 31, ------------------------------- 2011 2010 --------------- --------------- ASSUMED CEDED ASSUMED CEDED ------- ------- ------- ------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables...................... $ 44 $20,469 $ 14 $19,423 Deferred policy acquisition costs and value of business acquired. 359 (292) 310 (323) ------- ------- ------- ------- Total assets.................................................... $ 403 $20,177 $ 324 $19,100 ======= ======= ======= ======= LIABILITIES: Future policy benefits........................................... $ 442 $ -- $ 401 $ -- Policyholder account balances.................................... 266 -- 281 -- Other policy-related balances.................................... 59 (49) 49 (78) Other liabilities................................................ 7,114 18,707 7,059 17,844 ------- ------- ------- ------- Total liabilities............................................... $7,881 $18,658 $7,790 $17,766 ======= ======= ======= =======
MLIC cedes two blocks of business to an affiliate on a 75% coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as an embedded derivative, which is separately accounted for at estimated fair value on the Company's consolidated balance sheets. The embedded derivative related to the funds withheld associated with this reinsurance agreement is included within other liabilities and increased the funds withheld balance by $20 million at December 31, 2011, and decreased the funds withheld balance by $9 million at December 31, 2010. Net derivative gains (losses) associated with the embedded derivative were ($29) million and $9 million for the years ended December 31, 2011 and 2010, respectively. The reinsurance agreement also includes an experience refund provision, whereby some or all of the profits on the underlying reinsurance agreement are returned to MLIC from the affiliated reinsurer during the first several years of the reinsurance agreement. The experience refund reduced the funds withheld by MLIC from the affiliated reinsurer by $12 million and $27 million at December 31, 2011 and 2010, respectively, and is considered unearned revenue, amortized over the life of the contract using the same assumptions as used for the DAC associated with the underlying policies. Amortization and interest of the unearned revenue associated with the experience refund was $5 million for both the years ended December 31, 2011 and 2010, and is included in premiums and universal life and investment-type product policy fees in the consolidated statements of operations. At December 31, 2011 and 2010, unearned revenue related to the experience refund was $30 million and $22 million, respectively, and is included in other policy-related balances in the consolidated balance sheets. The Company cedes risks to an affiliate related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were assets of $1.2 billion and $295 million at December 31, 2011 and 2010, respectively. Net derivative gains (losses) associated with the embedded derivatives were $727 million, ($66) million and ($596) million, for the years ended December 31, 2011, 2010 and 2009, respectively. Certain contractual features of the closed block agreement with MRC create an embedded derivative, which is separately accounted for at estimated fair value on the Company's consolidated balance sheets. The embedded derivative related to the funds withheld associated with this reinsurance agreement was included within other liabilities and increased the funds withheld balance by $1.5 billion and $697 million at December 31, 2011 and F-128 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2010, respectively. Net derivative gains (losses) associated with the embedded derivative were ($811) million, ($596) million and ($1.3) billion, for the years ended December 31, 2011, 2010 and 2009, respectively. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $1.5 billion and $1.4 billion of unsecured affiliated reinsurance recoverable balances at December 31, 2011 and 2010, respectively. Affiliated reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on affiliated reinsurance were $15.7 billion and $15.8 billion at December 31, 2011 and 2010, respectively. The deposit liabilities on affiliated reinsurance were $6.9 billion and $7.0 billion at December 31, 2011 and 2010, respectively. 10.CLOSED BLOCK On April 7, 2000 (the "Demutualization Date"), Metropolitan Life Insurance Company converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance (the "Superintendent") approving Metropolitan Life Insurance Company's plan of reorganization, as amended (the "Plan"). On the Demutualization Date, Metropolitan Life Insurance Company established a closed block for the benefit of holders of certain individual life insurance policies of Metropolitan Life Insurance Company. Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience. The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years. The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities over closed block assets at the Demutualization Date (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the closed block expected to result from operations attributed to the closed block after income taxes. Earnings of the closed block are recognized in income over the period the policies and contracts in F-129 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the closed block remain in-force. Management believes that over time the actual cumulative earnings of the closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the period the closed block remains in existence, the actual cumulative earnings of the closed block are greater than the expected cumulative earnings of the closed block, the Company will pay the excess of the actual cumulative earnings of the closed block over the expected cumulative earnings to closed block policyholders as additional policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed block are less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However, the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual cumulative earnings equal the expected cumulative earnings. Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company's net income continues to be sensitive to the actual performance of the closed block. F-130 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block liabilities and assets designated to the closed block was as follows:
DECEMBER 31, ---------------- 2011 2010 -------- ------- (IN MILLIONS) CLOSED BLOCK LIABILITIES Future policy benefits............................................................... $ 43,169 $43,456 Other policy-related balances........................................................ 358 316 Policyholder dividends payable....................................................... 514 579 Policyholder dividend obligation..................................................... 2,919 876 Current income tax payable........................................................... -- 178 Other liabilities.................................................................... 613 627 -------- ------- Total closed block liabilities.................................................... 47,573 46,032 -------- ------- ASSETS DESIGNATED TO THE CLOSED BLOCK Investments: Fixed maturity securities available-for-sale, at estimated fair value............... 30,407 28,768 Equity securities available-for-sale, at estimated fair value....................... 35 102 Mortgage loans...................................................................... 6,206 6,253 Policy loans........................................................................ 4,657 4,629 Real estate and real estate joint ventures held-for-investment...................... 364 328 Short-term investments.............................................................. -- 1 Other invested assets............................................................... 857 729 -------- ------- Total investments................................................................. 42,526 40,810 Cash and cash equivalents............................................................ 249 236 Accrued investment income............................................................ 509 518 Premiums, reinsurance and other receivables.......................................... 109 95 Current income tax recoverable....................................................... 53 -- Deferred income tax assets........................................................... 362 474 -------- ------- Total assets designated to the closed block....................................... 43,808 42,133 -------- ------- Excess of closed block liabilities over assets designated to the closed block........ 3,765 3,899 -------- ------- Amounts included in accumulated other comprehensive income (loss): Unrealized investment gains (losses), net of income tax............................. 2,394 1,101 Unrealized gains (losses) on derivative instruments, net of income tax.............. 11 10 Allocated to policyholder dividend obligation, net of income tax.................... (1,897) (569) -------- ------- Total amounts included in accumulated other comprehensive income (loss).............. 508 542 -------- ------- Maximum future earnings to be recognized from closed block assets and liabilities. $ 4,273 $ 4,441 ======== =======
F-131 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block policyholder dividend obligation was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ---- ---- (IN MILLIONS) Balance at January 1,......................................... $ 876 $ -- $-- Change in unrealized investment and derivative gains (losses). 2,043 876 -- ------ ---- ---- Balance at December 31,....................................... $2,919 $876 $-- ====== ==== ====
Information regarding the closed block revenues and expenses was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ------ ------ (IN MILLIONS) REVENUES Premiums...................................................................... $2,306 $2,461 $2,708 Net investment income......................................................... 2,233 2,294 2,197 Net investment gains (losses): Other-than-temporary impairments on fixed maturity securities................ (14) (32) (107) Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss).......................................... 3 -- 40 Other net investment gains (losses).......................................... 43 71 327 ------ ------ ------ Total net investment gains (losses)........................................ 32 39 260 Net derivative gains (losses)................................................ 8 (27) (128) ------ ------ ------ Total revenues............................................................. 4,579 4,767 5,037 ------ ------ ------ EXPENSES Policyholder benefits and claims.............................................. 2,991 3,115 3,329 Policyholder dividends........................................................ 1,137 1,235 1,394 Other expenses................................................................ 193 199 203 ------ ------ ------ Total expenses............................................................. 4,321 4,549 4,926 ------ ------ ------ Revenues, net of expenses before provision for income tax expense (benefit)... 258 218 111 Provision for income tax expense (benefit).................................... 90 72 36 ------ ------ ------ Revenues, net of expenses and provision for income tax expense (benefit)...... $ 168 $ 146 $ 75 ====== ====== ======
The change in the maximum future earnings of the closed block was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ------ ------ (IN MILLIONS) Balance at December 31,........... $4,273 $4,441 $4,587 Less: Closed block adjustment (1). -- -- 144 Balance at January 1,............. 4,441 4,587 4,518 ------ ------ ------ Change during year................ $(168) $(146) $ (75) ====== ====== ======
---------- (1)The closed block adjustment represents an intra-company reallocation of assets which affected the closed block. The adjustment had no impact on the Company's consolidated financial statements. F-132 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Metropolitan Life Insurance Company charges the closed block with federal income taxes, state and local premium taxes and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan. Metropolitan Life Insurance Company also charges the closed block for expenses of maintaining the policies included in the closed block. 11.LONG-TERM AND SHORT-TERM DEBT Long-term and short-term debt outstanding was as follows:
INTEREST RATES -------------------- DECEMBER 31, WEIGHTED ------------- RANGE AVERAGE MATURITY 2011 2010 ----------- -------- --------- ------ ------ (IN MILLIONS) Surplus notes -- affiliated............. 3.00%-7.38% 5.97% 2014-2037 $1,099 $1,874 Surplus notes........................... 7.63%-7.88% 7.85% 2015-2025 700 699 Capital notes -- affiliated............. 7.13% 7.13% 2032-2033 -- 500 Mortgage loans -- affiliated............ 2.24%-7.26% 7.18% 2015-2020 307 199 Other notes with varying interest rates. 3.76%-8.56% 4.45% 2016-2017 -- 102 Secured demand note -- affiliated....... 0.50% 0.50% 2011 -- 25 Capital lease obligations............... 26 27 ------ ------ Total long-term debt (1)................ 2,132 3,426 Total short-term debt................... 101 102 ------ ------ Total.................................. $2,233 $3,528 ====== ======
---------- (1)Excludes $116 million and $184 million at December 31, 2011 and 2010, respectively, of long-term debt relating to CSEs. See Note 3. The aggregate maturities of long-term debt at December 31, 2011 for the next five years and thereafter are $1 million in 2012, $2 million in 2013, $219 million in 2014, $500 million in 2015, $2 million in 2016 and $1.4 billion thereafter. Capital lease obligations, mortgage loans and the secured demand note are collateralized and rank highest in priority, followed by unsecured senior debt which consists of other notes with varying interest rates. Payments of interest and principal on the Company's surplus notes and capital notes are subordinate to all other obligations. Payments of interest and principal on surplus notes may be made only with the prior approval of the insurance department of the state of domicile, whereas such payments on capital notes may or may not require this prior approval. Certain of the Company's debt instruments, credit facilities and committed facilities contain various administrative, reporting, legal and financial covenants. The Company believes it was in compliance with all such covenants at December 31, 2011. SURPLUS NOTES -- AFFILIATED On April 25, 2011, Metropolitan Life Insurance Company repaid in cash a $775 million surplus note issued to MetLife, Inc. in December 2009, with an original maturity of December 31, 2011 and an interest rate of six-month LIBOR plus 1.80%. The early redemption was approved by the Superintendent. F-133 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In December 2010, Metropolitan Life Insurance Company repaid a $300 million surplus note to MetLife, Inc. in cash. The note was issued in December 2009, with an original maturity of 2011 and an interest rate of six-month LIBOR plus 1.80%. The issuance was settled by the transfer of securities from MetLife, Inc. to the Company. In November 2010, Metropolitan Life Insurance Company issued a $188 million surplus note to MetLife Mexico, S.A. ("MetLife Mexico"), an affiliate, maturing in 2015 with an interest rate of 3.0%. In September 2009, Metropolitan Life Insurance Company issued a $217 million surplus note to MetLife Mexico, maturing in 2014 with an interest rate of 6.46%. CAPITAL NOTES -- AFFILIATED On December 15, 2011, Metropolitan Life Insurance Company repaid in cash the $400 million and $100 million capital notes issued to MetLife, Inc. in December 2002, each with an interest rate of 7.129% and with original maturities of December 15, 2032 and January 15, 2033, respectively. Although prior approval was not required, the Superintendent was notified of these early repayments. MORTGAGE LOANS -- AFFILIATED On December 28, 2011, a wholly-owned real estate subsidiary of the Company issued a note for $110 million to MICC. This affiliated mortgage loan is secured by real estate held by the Company for investment. This note bears interest at a rate of one-month LIBOR plus 1.95%, which is payable quarterly through maturity in 2015. In December 2009, two wholly-owned real estate subsidiaries of the Company issued notes aggregating $200 million to MICC and its wholly-owned subsidiary, MetLife Investors USA Insurance Company. These affiliated mortgage loans are secured by real estate held by the Company for investment. Of these loans, $60 million bears interest at a rate of 7.01%, which is payable quarterly through maturity in 2020. Additionally, $140 million bears interest at a rate of 7.26%, with principal and interest payable quarterly through maturity in 2020. SECURED DEMAND NOTE -- AFFILIATED Effective September 2008, the Company entered into a secured demand note collateral agreement with an affiliate pursuant to which the affiliate pledged securities to the Company to collateralize its obligation to lend $25 million to the Company. The secured demand note matured in February 2011. SHORT-TERM DEBT Short-term debt with original maturities of one year or less consisted entirely of commercial paper. During the years ended December 31, 2011, 2010 and 2009, the weighted average interest rate on short-term debt was 0.16%, 0.21% and 0.35%, respectively. During the years ended December 31, 2011, 2010 and 2009, the average daily balance of short-term debt was $102 million, $311 million and $365 million, respectively, and the average days outstanding was 44 days, 29 days and 23 days, respectively. F-134 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INTEREST EXPENSE Interest expense related to the Company's indebtedness included in other expenses was $185 million, $202 million and $166 million for the years ended December 31, 2011, 2010 and 2009, respectively. These amounts include $125 million, $143 million and $105 million of interest expense related to affiliated debt for the years ended December 31, 2011, 2010 and 2009, respectively. CREDIT AND COMMITTED FACILITIES The Company maintains unsecured credit facilities and a committed facility, which aggregated $4.0 billion and $500 million, respectively, at December 31, 2011. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. Credit Facilities. The unsecured credit facilities are used for general corporate purposes, to support the borrowers' commercial paper program and for the issuance of letters of credit. Total fees expensed by the Company associated with these credit facilities were $6 million, $8 million and $6 million for the years ended December 31, 2011, 2010 and 2009, respectively. Information on these credit facilities at December 31, 2011 is as follows:
LETTER OF CREDIT UNUSED BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS -------------------------------------------- --------------------- -------- --------- --------- ----------- (IN MILLIONS) MetLife, Inc. and MetLife Funding, Inc....... October 2013 (1), (2) $1,000 $ 104 $-- $896 MetLife, Inc. and MetLife Funding, Inc....... August 2016 (1) 3,000 2,980 -- 20 -------- --------- --------- ----------- Total...................................... $4,000 $3,084 $-- $916 ======== ========= ========= ===========
---------- (1)In August 2011, the 364-day, $1.0 billion senior unsecured credit agreement entered into in October 2010 by MetLife, Inc. and MetLife Funding, Inc., a subsidiary of Metropolitan Life Insurance Company, was amended and restated to provide a five-year, $3.0 billion senior unsecured credit facility. Concurrently, MetLife, Inc. and MetLife Funding, Inc. elected to reduce the outstanding commitments under the three-year, $3.0 billion senior unsecured credit facility entered into in October 2010 to $1.0 billion with no change to the original maturity of October 2013. The Company incurred costs of $5 million related to the five-year credit facility, which have been capitalized and included in other assets. These costs will be amortized over the amended terms of the facilities. Due to the reduction in total capacity of the three-year facility, the Company subsequently expensed $2 million of the remaining deferred financing costs associated with the October 2010 credit agreement, which are included in other expenses. (2)All borrowings under the credit agreement must be repaid by October 2013, except that letters of credit outstanding upon termination may remain outstanding until October 2014. F-135 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Committed Facility. The committed facility is used for collateral for certain of the Company's affiliated reinsurance liabilities. Total fees expensed by the Company associated with this committed facility were $3 million, $4 million and $3 million for the years ended December 31, 2011, 2010 and 2009, respectively. Information on the committed facility at December 31, 2011 is as follows:
LETTER OF CREDIT UNUSED MATURITY ACCOUNT PARTY/BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS (YEARS) --------------------------------------- ---------- -------- --------- --------- ----------- -------- (IN MILLIONS) Exeter Reassurance Company Ltd., MetLife, Inc. & Missouri Reinsurance (Barbados), Inc...................... June 2016 $500 $490 (1) $-- $10 4
---------- (1)Missouri Reinsurance (Barbados), Inc., a subsidiary of Metropolitan Life Insurance Company, had outstanding $390 million in letters of credit at December 31, 2011. 12.INCOME TAX The provision for income tax from continuing operations was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ---- -------- (IN MILLIONS) Current: Federal.......................................... $ 552 $305 $ 206 State and local.................................. 2 4 3 Foreign.......................................... 116 46 174 ------ ---- -------- Subtotal....................................... 670 355 383 ------ ---- -------- Deferred: Federal.......................................... 789 354 (2,226) Foreign.......................................... 22 69 (53) ------ ---- -------- Subtotal....................................... 811 423 (2,279) ------ ---- -------- Provision for income tax expense (benefit)... $1,481 $778 $(1,896) ====== ==== ========
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations was as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2011 2010 2009 ------ ------ -------- (IN MILLIONS) Tax provision at U.S. statutory rate.......... $1,685 $ 891 $(1,554) Tax effect of: Tax-exempt investment income................. (102) (100) (149) State and local income tax................... 3 1 -- Prior year tax............................... 10 48 (11) Tax credits.................................. (119) (72) (85) Foreign tax rate differential................ (2) (6) (89) Change in valuation allowance................ -- 13 12 Other, net................................... 6 3 (20) ------ ------ -------- Provision for income tax expense (benefit). $1,481 $ 778 $(1,896) ====== ====== ========
F-136 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:
DECEMBER 31, --------------- 2011 2010 -------- ------ (IN MILLIONS) Deferred income tax assets: Policyholder liabilities and receivables.... $ 2,558 $2,787 Net operating loss carryforwards............ 26 24 Employee benefits........................... 840 632 Capital loss carryforwards.................. 11 12 Tax credit carryforwards.................... 249 287 Litigation-related and government mandated.. 200 220 Other....................................... 94 17 -------- ------ 3,978 3,979 Less: Valuation allowance................... 38 38 -------- ------ 3,940 3,941 -------- ------ Deferred income tax liabilities: Investments, including derivatives.......... 1,754 1,219 DAC......................................... 2,250 2,235 Net unrealized investment gains............. 2,540 1,239 Intangibles................................. 207 189 Other....................................... 16 9 -------- ------ 6,767 4,891 -------- ------ Net deferred income tax asset (liability). $(2,827) $(950) ======== ======
The following table sets forth the domestic, state, and foreign net operating and capital loss carryforwards for tax purposes at December 31, 2011:
NET OPERATING LOSS CAPITAL LOSS CARRYFORWARDS CARRYFORWARDS -------------------------------------- ------------------------------- AMOUNT EXPIRATION AMOUNT EXPIRATION ------------- ------------------------ ------------- ----------------- (IN MILLIONS) (IN MILLIONS) Domestic..... $23 Beginning in 2018 $-- N/A State........ $ 4 Beginning in 2012 $-- N/A Foreign...... $50 Five years to indefinite $31 Beginning in 2014
Tax credit carryforwards of $249 million at December 31, 2011 will expire beginning in 2021. The Company has recorded a valuation allowance increase related to tax benefits of $2 million related to certain state and foreign net operating loss carryforwards and a decrease of $2 million related to certain foreign capital loss carryforwards. The valuation allowance reflects management's assessment, based on available information, that it is more likely than not that the deferred income tax asset for certain foreign net operating and capital loss carryforwards and certain state net operating loss carryforwards will not be realized. The tax benefit will be recognized when management believes that it is more likely than not that these deferred income tax assets are realizable. F-137 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company files income tax returns with the U.S. federal government and various state and local jurisdictions, as well as foreign jurisdictions. The Company is under continuous examination by the Internal Revenue Service ("IRS") and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2000. In early 2009, the Company and the IRS completed and substantially settled the audit years of 2000 to 2002. A few issues not settled have been escalated to the next level, IRS Appeals. The IRS exam of the current audit cycle, years 2003 to 2006, began in April 2010. The Company's liability for unrecognized tax benefits may decrease in the next 12 months pending the outcome of remaining issues, tax-exempt income and tax credits associated with the 2000 to 2002 IRS audit. A reasonable estimate of the decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the issues will not result in a material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company's effective tax rate for a particular future period. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
YEARS ENDED DECEMBER 31, ---------------- 2011 2010 2009 ---- ----- ----- (IN MILLIONS) Balance at January 1,......................................................... $499 $ 592 $ 593 Additions for tax positions of prior years.................................... 26 2 42 Reductions for tax positions of prior years................................... -- (54) (30) Additions for tax positions of current year................................... 1 2 34 Reductions for tax positions of current year.................................. (1) (1) (2) Settlements with tax authorities.............................................. -- (31) (45) Lapses of statutes of limitations............................................. -- (11) -- ---- ----- ----- Balance at December 31,....................................................... $525 $ 499 $ 592 ==== ===== ===== Unrecognized tax benefits that, if recognized would impact the effective rate. $459 $ 432 $ 490 ==== ===== =====
The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses, while penalties are included in income tax expense. Interest and penalties were as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 - ---- ---- ---- (IN MILLIONS) Interest and penalties recognized in the consolidated statements of operations. $27 $27 $38
DECEMBER 31, ------------ 2011 2010 ---- ---- (IN MILLIONS) Interest and penalties included in other liabilities in the consolidated balance sheets. $203 $176
The U.S. Treasury Department and the IRS have indicated that they intend to address through regulations the methodology to be followed in determining the dividends received deduction ("DRD"), related to variable F-138 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) life insurance and annuity contracts. The DRD reduces the amount of dividend income subject to tax and is a significant component of the difference between the actual tax expense and expected amount determined using the federal statutory tax rate of 35%. Any regulations that the IRS ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance companies and other interested parties will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown at this time. For the years ended December 31, 2011 and 2010, the Company recognized an income tax benefit of $69 million and $38 million, respectively, related to the separate account DRD. The 2011 benefit included a benefit of $4 million related to a true-up of the 2010 tax return. The 2010 benefit included an expense of $23 million related to a true-up of the 2009 tax return. 13. CONTINGENCIES, COMMITMENTS AND GUARANTEES CONTINGENCIES LITIGATION The Company is a defendant in a large number of litigation matters. In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law. The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities have been established for a number of the matters noted below. It is possible that some of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at December 31, 2011. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known to management, management does not believe any such charges are likely to have a material effect on the Company's financial position. Matters as to Which an Estimate Can Be Made For some of the matters disclosed below, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. As of December 31, 2011, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be approximately $0 to $175 million. F-139 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Matters as to Which an Estimate Cannot Be Made For other matters disclosed below, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews. Asbestos-Related Claims Metropolitan Life Insurance Company is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive damages. Metropolitan Life Insurance Company has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products nor has Metropolitan Life Insurance Company issued liability or workers' compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits principally have focused on allegations with respect to certain research, publication and other activities of one or more of Metropolitan Life Insurance Company's employees during the period from the 1920's through approximately the 1950's and allege that Metropolitan Life Insurance Company learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life Insurance Company believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain and can be impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of the alleged injury and factors unrelated to the ultimate legal merit of the claims asserted against Metropolitan Life Insurance Company. Metropolitan Life Insurance Company employs a number of resolution strategies to manage its asbestos loss exposure, including seeking resolution of pending litigation by judicial rulings and settling individual or groups of claims or lawsuits under appropriate circumstances. Claims asserted against Metropolitan Life Insurance Company have included negligence, intentional tort and conspiracy concerning the health risks associated with asbestos. Metropolitan Life Insurance Company's defenses (beyond denial of certain factual allegations) include that: (i) Metropolitan Life Insurance Company owed no duty to the plaintiffs -- it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of Metropolitan Life Insurance Company; (iii) Metropolitan Life Insurance Company's conduct was not the cause of the plaintiffs' injuries; (iv) plaintiffs' exposure occurred after the dangers of asbestos were known; and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial courts have granted motions dismissing claims against Metropolitan Life Insurance Company, while other trial courts have denied Metropolitan Life Insurance Company's motions to dismiss. There can be no assurance that Metropolitan Life Insurance Company will receive favorable decisions on motions in the future. While most cases brought to date have settled, Metropolitan Life Insurance Company intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials. F-140 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The approximate total number of asbestos personal injury claims pending against Metropolitan Life Insurance Company as of the dates indicated, the approximate number of new claims during the years ended on those dates and the approximate total settlement payments made to resolve asbestos personal injury claims at or during those years are set forth in the following table:
DECEMBER 31, ------------------------------ 2011 2010 2009 ------- ------- ------- (IN MILLIONS, EXCEPT NUMBER OF CLAIMS) Asbestos personal injury claims at year end. 66,747 68,513 68,804 Number of new claims during the year........ 4,972 5,670 3,910 Settlement payments during the year (1)..... $ 34.2 $ 34.9 $ 37.6
---------- (1)Settlement payments represent payments made by Metropolitan Life Insurance Company during the year in connection with settlements made in that year and in prior years. Amounts do not include Metropolitan Life Insurance Company's attorneys' fees and expenses and do not reflect amounts received from insurance carriers. In 2008, Metropolitan Life Insurance Company received approximately 5,063 new claims, ending the year with a total of approximately 74,027 claims, and paid approximately $99 million for settlements reached in 2008 and prior years. In 2007, Metropolitan Life Insurance Company received approximately 7,161 new claims, ending the year with a total of approximately 79,717 claims, and paid approximately $28.2 million for settlements reached in 2007 and prior years. In 2006, Metropolitan Life Insurance Company received approximately 7,870 new claims, ending the year with a total of approximately 87,070 claims, and paid approximately $35.5 million for settlements reached in 2006 and prior years. In 2005, Metropolitan Life Insurance Company received approximately 18,500 new claims, ending the year with a total of approximately 100,250 claims, and paid approximately $74.3 million for settlements reached in 2005 and prior years. In 2004, Metropolitan Life Insurance Company received approximately 23,900 new claims, ending the year with a total of approximately 108,000 claims, and paid approximately $85.5 million for settlements reached in 2004 and prior years. In 2003, Metropolitan Life Insurance Company received approximately 58,750 new claims, ending the year with a total of approximately 111,700 claims, and paid approximately $84.2 million for settlements reached in 2003 and prior years. The number of asbestos cases that may be brought, the aggregate amount of any liability that Metropolitan Life Insurance Company may incur, and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year. The ability of Metropolitan Life Insurance Company to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against Metropolitan Life Insurance Company when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts. The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company's judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company's total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. To the extent the Company can estimate reasonably possible losses in excess of amounts F-141 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) accrued, it has been included in the aggregate estimate of reasonably possible loss provided above. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material effect on the Company's financial position. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. Metropolitan Life Insurance Company's recorded asbestos liability is based on its estimation of the following elements, as informed by the facts presently known to it, its understanding of current law and its past experiences: (i) the probable and reasonably estimable liability for asbestos claims already asserted against Metropolitan Life Insurance Company, including claims settled but not yet paid; (ii) the probable and reasonably estimable liability for asbestos claims not yet asserted against Metropolitan Life Insurance Company, but which Metropolitan Life Insurance Company believes are reasonably probable of assertion; and (iii) the legal defense costs associated with the foregoing claims. Significant assumptions underlying Metropolitan Life Insurance Company's analysis of the adequacy of its recorded liability with respect to asbestos litigation include: (i) the number of future claims; (ii) the cost to resolve claims; and (iii) the cost to defend claims. Metropolitan Life Insurance Company reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants and the jurisdictions in which claims are pending. As previously disclosed, in 2002 Metropolitan Life Insurance Company increased its recorded liability for asbestos-related claims by $402 million from approximately $820 million to $1.2 billion. Based upon its regular reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its liability analysis for asbestos-related claims through December 31, 2011. Regulatory Matters The Company receives and responds to subpoenas or other inquiries from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the U.S. Securities and Exchange Commission ("SEC"); federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority ("FINRA") seeking a broad range of information. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries. United States of America v. EME Homer City Generation, L.P., et al. (W.D. Pa., filed January 4, 2011). On January 4, 2011, the U.S. commenced a civil action in United States District Court for the Western District of Pennsylvania against EME Homer City Generation L.P. ("EME Homer City"), Homer City OL6 LLC, and other defendants regarding the operations of the Homer City Generating Station, an electricity generating facility. Homer City OL6 LLC, an entity owned by Metropolitan Life Insurance Company, is a passive investor with a noncontrolling interest in the electricity generating facility, which is solely operated by the lessee, EME Homer City. The complaint sought injunctive relief and assessment of civil penalties for alleged violations of the federal Clean Air Act and Pennsylvania's State Implementation Plan. The alleged violations were the subject of Notices of Violations ("NOVs") that the Environmental Protection Agency ("EPA") issued to EME Homer City, Homer City OL6 LLC, and others in June 2008 and May 2010. On January 7, 2011, the United States District Court for the Western District of Pennsylvania granted the motion by the Pennsylvania Department of F-142 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Environmental Protection and the State of New York to intervene in the lawsuit as additional plaintiffs. On February 16, 2011, the State of New Jersey filed an Intervenor's Complaint in the lawsuit. On January 7, 2011, two plaintiffs filed a putative class action titled Scott Jackson and Maria Jackson v. EME Homer City Generation L.P., et al. in the United States District Court for the Western District of Pennsylvania on behalf of a putative class of persons who have allegedly incurred damage to their persons and/or property because of the violations alleged in the action brought by the U.S. Homer City OL6 LLC is a defendant in this action. On October 12, 2011, the court issued an order dismissing the U.S.'s lawsuit with prejudice. The Government entities have appealed from the order granting defendants' motion to dismiss. On October 13, 2011, the court also issued an order dismissing the federal claims in the putative class actions with prejudice and dismissing the state law claims in the putative class actions without prejudice to re-file in state court. EME Homer City has acknowledged its obligation to indemnify Homer City OL6 LLC for any claims relating to the NOVs. Due to the acknowledged indemnification obligation, this matter is not included in the aggregate estimate of range of reasonably possible loss. In a February 13, 2012, letter to EME Homer City, Homer City OL6 LLC and others, the Sierra Club indicated its intent to sue for alleged violations of the Clean Air Act and to seek to enjoin the alleged violations, seek unspecified penalties and attorneys' fees, and other relief. Homer City OL6 LLC has served a claim for indemnification on EME Homer City. In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida. In July 2010, the EPA advised Metropolitan Life Insurance Company that it believed payments were due under two settlement agreements, known as "Administrative Orders on Consent," that New England Mutual Life Insurance Company ("New England Mutual") signed in 1989 and 1992 with respect to the cleanup of a Superfund site in Florida (the "Chemform Site"). The EPA originally contacted Metropolitan Life Insurance Company (as successor to New England Mutual) and a third party in 2001, and advised that they owed additional clean-up costs for the Chemform Site. The matter was not resolved at that time. The EPA is requesting payment of an amount under $1 million from Metropolitan Life Insurance Company and such third party for past costs and an additional amount for future environmental testing costs at the Chemform Site. The Company estimates that the aggregate cost to resolve this matter will not exceed $1 million. Sales Practices Regulatory Matters. Regulatory authorities in a small number of states and FINRA, and occasionally the SEC, have had investigations or inquiries relating to sales of individual life insurance policies or annuities or other products by Metropolitan Life Insurance Company, New England Life Insurance Company ("NELICO"), GALIC, and New England Securities Corporation. These investigations often focus on the conduct of particular financial services representatives and the sale of unregistered or unsuitable products or the misuse of client assets. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief, including restitution payments. The Company may continue to resolve investigations in a similar manner. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for these sales practices related investigations or inquiries. Unclaimed Property Inquiries and Related Litigation More than 30 U.S. jurisdictions are auditing MetLife, Inc. and certain of its affiliates, including Metropolitan Life Insurance Company, for compliance with unclaimed property laws. Additionally, Metropolitan Life Insurance Company and certain of its affiliates have received subpoenas and other regulatory inquiries from certain regulators and other officials relating to claims-payment practices and compliance with unclaimed property laws. An examination of these practices by the Illinois Department of Insurance has been converted into a multistate targeted market conduct exam. On July 5, 2011, the New York Insurance Department issued a letter requiring life insurers doing business in New York to use data available on the U.S. Social Security Administration's Death Master File or a similar database to identify instances where death benefits under life F-143 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) insurance policies, annuities, and retained asset accounts are payable, to locate and pay beneficiaries under such contracts, and to report the results of the use of the data. It is possible that other jurisdictions may pursue similar investigations or inquiries, may join the multistate market conduct exam, or issue directives similar to the New York Insurance Department's letter. In the third quarter of 2011, Metropolitan Life Insurance Company incurred a $110 million after tax charge to increase reserves in connection with the Company's use of the U.S. Social Security Administration's Death Master File and similar databases to identify potential life insurance claims that have not yet been presented to the Company. It is possible that the audits, market conduct exam, and related activity may result in additional payments to beneficiaries, additional escheatment of funds deemed abandoned under state laws, administrative penalties, interest, and changes to the Company's procedures for the identification and escheatment of abandoned property. The Company believes that payments for life insurance claims not yet presented and interest thereon will not be materially different from the reserve charge noted above. To the extent the Company can estimate the reasonably possible amount of potential additional payments, it has been included in the aggregate estimate of reasonably possible loss provided above. It is possible that there will be additional payments or other expenses incurred with respect to changes in procedures, and the Company is not currently able to estimate these additional possible amounts but such costs may be substantial. Total Asset Recovery Services, LLC on behalf of the State of Illinois v. MetLife, Inc., et. al. (Cir. Ct. Cook County, IL, filed January 24, 2011). Alleging that MetLife, Inc. and another company have violated the Illinois Uniform Disposition of Unclaimed Property Act by failing to escheat to Illinois benefits of 4,766 life insurance contracts, Total Asset Recovery Services, LLC ("the Relator") has brought an action under the Illinois False Claims Whistleblower Reward and Protection Act seeking to recover damages on behalf of Illinois. Based on the allegations in the complaint, it appears that plaintiff may have improperly named MetLife, Inc. as a defendant instead of Metropolitan Life Insurance Company. The action was sealed by court order until January 18, 2012. The Relator alleges that the aggregate damages, including statutory damages and treble damages, is $1,572,780,000. The Relator does not allocate this claimed damage amount between MetLife, Inc. and the other defendant. The Relator also bases its damage calculation in part on its assumption that the average face amount of the subject policies is $110,000. MetLife, Inc. strongly disputes this assumption, the Relator's alleged damages amounts, and other allegations in the complaint, and intends to defend this action vigorously. Total Asset Recovery Services, LLC on behalf of the State of Minnesota v. MetLife, Inc., et. al. (District Court, County of Hennepin, MN, filed January 31, 2011). Alleging that MetLife, Inc. and another company have violated the Minnesota Uniform Disposition of Unclaimed Property Act by failing to escheat to Minnesota benefits of 584 life insurance contracts, Total Asset Recovery Services, LLC ("the Relator") has brought an action under the Minnesota False Claims Act seeking to recover damages on behalf of Minnesota. Based on the allegations in the complaint, it appears that plaintiff may have improperly named MetLife, Inc. as a defendant instead of Metropolitan Life Insurance Company. The action was sealed by court order until March 22, 2012. The Relator alleges that the aggregate damages, including statutory damages and treble damages, is $227,750,000. The Relator does not allocate this claimed damage amount between MetLife, Inc. and the other defendant. The Relator also bases its damage calculation in part on its assumption that the average face amount of the subject policies is $130,000. MetLife, Inc. strongly disputes this assumption, the Relator's alleged damages amounts, and other allegations in the complaint, and intends to defend this action vigorously. Total Control Accounts Litigation Metropolitan Life Insurance Company is a defendant in lawsuits related to its use of retained asset accounts, known as Total Control Accounts ("TCA"), as a settlement option for death benefits. The lawsuits include claims of breach of contract, breach of a common law fiduciary duty or a quasi-fiduciary duty such as a confidential or special relationship, or breach of a fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"). F-144 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Clark, et al. v. Metropolitan Life Insurance Company (D. Nev., filed March 28, 2008). This putative class action lawsuit alleges breach of contract and breach of a common law fiduciary and/or quasi-fiduciary duty arising from use of the TCA to pay life insurance policy death benefits. As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. In March 2009, the court granted in part and denied in part Metropolitan Life Insurance Company's motion to dismiss, dismissing the fiduciary duty and unjust enrichment claims but allowing a breach of contract claim and a special or confidential relationship claim to go forward. On September 9, 2010, the court granted Metropolitan Life Insurance Company's motion for summary judgment. Plaintiffs appealed this order and on December 7, 2011, the United States Court of Appeals for the Ninth Circuit affirmed the district court's grant of summary judgment to Metropolitan Life Insurance Company, finding no breach of contract because plaintiffs suffered no damages and finding that no special or confidential relationship existed between the parties under Nevada law. Faber, et al. v. Metropolitan Life Insurance Company (S.D.N. Y., filed December 4, 2008). This putative class action lawsuit alleges that Metropolitan Life Insurance Company's use of the TCA as the settlement option under group life insurance policies violates Metropolitan Life Insurance Company's fiduciary duties under ERISA. As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. On October 23, 2009, the court granted Metropolitan Life Insurance Company's motion to dismiss with prejudice. On August 5, 2011, the United States Court of Appeals for the Second Circuit affirmed the dismissal of the complaint. Plaintiffs' petition for a rehearing or rehearing en banc with the Second Circuit was denied by the Second Circuit on November 1, 2011. Keife, et al. v. Metropolitan Life Insurance Company (D. Nev., filed in state court on July 30, 2010 and removed to federal court on September 7, 2010). This putative class action lawsuit raises a breach of contract claim arising from Metropolitan Life Insurance Company's use of the TCA to pay life insurance benefits under the Federal Employees' Group Life Insurance program ("FEGLI"). As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. In September 2010, plaintiffs filed a motion for class certification of the breach of contract claim, which the court has denied. On April 28, 2011, the court denied Metropolitan Life Insurance Company's motion to dismiss. Simon v. Metropolitan Life Insurance Company (D. Nev., filed November 3, 2011). Similar to Keife v. Metropolitan Life Insurance Company (pending in the same court), in this putative class action the plaintiff alleges that Metropolitan Life Insurance Company improperly paid interest to FEGLI beneficiaries. Specifically, plaintiff alleges that under the terms of the FEGLI policy, Metropolitan Life Insurance Company is required to make "immediate" payment of death benefits in "one sum." Metropolitan Life Insurance Company, plaintiff alleges, breached this duty by instead retaining the death benefits in its general investment account and sending beneficiaries a "book of drafts" known as the "TCA Money Market Option" as the only means by which funds can be accessed. Plaintiff further alleges that Metropolitan Life Insurance Company manipulates interest rates paid to policy beneficiaries. This matter has been consolidated with Keife. The Company is unable to estimate the reasonably possible loss or range of loss arising from the TCA matters. Other Litigation Sun Life Assurance Company of Canada v. Metropolitan Life Ins. Co. (Super. Ct., Ontario, October 2006). In 2006, Sun Life Assurance Company of Canada ("Sun Life"), as successor to the purchaser of Metropolitan Life Insurance Company's Canadian operations, filed this lawsuit in Toronto, seeking a declaration that Metropolitan Life Insurance Company remains liable for "market conduct claims" related to certain F-145 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) individual life insurance policies sold by Metropolitan Life Insurance Company and that have been transferred to Sun Life. Sun Life had asked that the court require Metropolitan Life Insurance Company to indemnify Sun Life for these claims pursuant to indemnity provisions in the sale agreement for the sale of Metropolitan Life Insurance Company's Canadian operations entered into in June of 1998. In January 2010, the court found that Sun Life had given timely notice of its claim for indemnification but, because it found that Sun Life had not yet incurred an indemnifiable loss, granted Metropolitan Life Insurance Company's motion for summary judgment. Both parties appealed. In September 2010, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Toronto, Kang v. Sun Life Assurance Co. (Super. Ct., Ontario, September 2010), alleging sales practices claims regarding the same individual policies sold by Metropolitan Life Insurance Company and transferred to Sun Life. An amended class action complaint in that case was served on Sun Life, again without naming Metropolitan Life Insurance Company as a party. On August 30, 2011, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Vancouver, Alamwala v. Sun Life Assurance Co. (Sup. Ct., British Columbia, August 2011), alleging sales practices claims regarding certain of the same policies sold by Metropolitan Life Insurance Company and transferred to Sun Life. Sun Life contends that Metropolitan Life Insurance Company is obligated to indemnify Sun Life for some or all of the claims in these lawsuits. The Company is unable to estimate the reasonably possible loss or range of loss arising from this litigation. Merrill Haviland, et al. v. Metropolitan Life Insurance Company (E.D. Mich., removed to federal court on July 22, 2011). This lawsuit was filed by 45 retired General Motors ("GM") employees against Metropolitan Life Insurance Company and includes claims for conversion, unjust enrichment, breach of contract, fraud, intentional infliction of emotional distress, fraudulent insurance acts, and unfair trade practices, based upon GM's 2009 reduction of the employees' life insurance coverage under GM's ERISA-governed plan. The complaint includes a count seeking class action status. Metropolitan Life Insurance Company is the insurer of GM's group life insurance plan and administers claims under the plan. According to the complaint, Metropolitan Life Insurance Company had previously provided plaintiffs with a "written guarantee" that their life insurance benefits under the GM plan would not be reduced for the rest of their lives. Metropolitan Life Insurance Company has removed the case to federal court based upon complete ERISA preemption of the state law claims. Plaintiffs filed an amended complaint recasting the state law claims and asserting ERISA claims. Metropolitan Life Insurance Company has filed a motion to dismiss. Sales Practices Claims. Over the past several years, the Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. Some of the current cases seek substantial damages, including punitive and treble damages and attorneys' fees. The Company continues to vigorously defend against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters. Summary Putative or certified class action litigation and other litigation and claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company's consolidated financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, very large and/or indeterminate amounts, including punitive and F-146 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company's financial position, based on information currently known by the Company's management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods. INSOLVENCY ASSESSMENTS Most of the jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. Assets and liabilities held for insolvency assessments were as follows:
DECEMBER 31, ------------ 2011 2010 ---- ---- (IN MILLIONS) Other Assets: Premium tax offset for future undiscounted assessments....... $ 63 $42 Premium tax offsets currently available for paid assessments. 13 7 ---- ---- $ 76 $49 ==== ==== Other Liabilities: Insolvency assessments....................................... $113 $63 ==== ====
On September 1, 2011, the New York State Department of Financial Services filed a liquidation plan for Executive Life Insurance Company of New York ("ELNY"), which had been under rehabilitation by the Liquidation Bureau since 1991. The plan will involve the satisfaction of insurers' financial obligations under a number of state life and health insurance guaranty associations and also contemplates that additional industry support for certain ELNY policyholders will be provided. The Company recorded a net charge of $21 million, after tax, related to ELNY. COMMITMENTS LEASES In accordance with industry practice, certain of the Company's income from lease agreements with retail tenants are contingent upon the level of the tenants' revenues. Additionally, the Company, as lessee, has entered into various lease and sublease agreements for office space, information technology and other equipment. Future F-147 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) minimum rental and sublease income, and minimum gross rental payments relating to these lease agreements are as follows:
GROSS RENTAL SUBLEASE RENTAL INCOME INCOME PAYMENTS ------ -------- -------- (IN MILLIONS) 2012....... $305 $14 $181 2013....... $296 $16 $172 2014....... $270 $12 $132 2015....... $224 $12 $124 2016....... $169 $12 $110 Thereafter. $681 $74 $840
MetLife, Inc. previously moved certain of its operations in New York from Long Island City, Queens to Manhattan. Market conditions, which precluded MetLife, Inc.'s immediate and complete sublet of all unused space following this movement of operations, resulted in a lease impairment charge of $52 million during 2009, which is included in other expenses within Corporate & Other. The impairment charge was determined based upon the present value of the gross rental payments less sublease income discounted at a risk-adjusted rate over the remaining lease terms which range from 15-20 years. The Company has made assumptions with respect to the timing and amount of future sublease income in the determination of this impairment charge. See Note 16 for discussion of $28 million of such charges related to restructuring. Additional impairment charges could be incurred should market conditions change. COMMITMENTS TO FUND PARTNERSHIP INVESTMENTS The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $2.5 billion and $2.4 billion at December 31, 2011 and 2010, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years. MORTGAGE LOAN COMMITMENTS The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $2.3 billion and $2.5 billion at December 31, 2011 and 2010, respectively. COMMITMENTS TO FUND BANK CREDIT FACILITIES, BRIDGE LOANS AND PRIVATE CORPORATE BOND INVESTMENTS The Company commits to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $986 million and $2.0 billion at December 31, 2011 and 2010, respectively. GUARANTEES In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants F-148 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $1 million to $800 million, with a cumulative maximum of $1.1 billion, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. During the year ended December 31, 2011, the Company recorded $1 million of additional liabilities for indemnities, guarantees and commitments. The Company's recorded liabilities were $4 million and $3 million at December 31, 2011 and 2010, respectively, for indemnities, guarantees and commitments. 14. EMPLOYEE BENEFIT PLANS PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS The Company sponsors and administers various U.S. qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited service and final average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. At December 31, 2011, the majority of active participants were accruing benefits under the cash balance formula; however, approximately 90% of the Company's obligations result from benefits calculated with the traditional formula. The non-qualified pension plans provide supplemental benefits in excess of limits applicable to a qualified plan. Participating affiliates are allocated a proportionate share of net expense related to the plans as well as contributions made to the plans. The Company's proportionate share of net pension expense related to its sponsored pension plans was $316 million, $309 million and $355 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Employees of the Company who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for the Company may become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total costs of postretirement medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits. Participating affiliates are allocated a proportionate share of net expense and contributions related to the postemployment and other postretirement plans. The Company's proportionate share of net other postretirement expense related to its sponsored other postretirement plans was ($22) million, less than $1 million and $70 million for the years ended December 31, 2011, 2010 and 2009, respectively. A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. F-149 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OBLIGATIONS, FUNDED STATUS AND NET PERIODIC BENEFIT COSTS
OTHER PENSION POSTRETIREMENT BENEFITS (1) BENEFITS --------------- ------------- DECEMBER 31, ----------------------------- 2011 2010 2011 2010 -------- ------ ------ ------ (IN MILLIONS) Change in benefit obligations: Benefit obligations at January 1,................................. $ 6,690 $6,287 $1,819 $1,829 Service costs.................................................... 165 150 16 17 Interest costs................................................... 384 375 107 111 Plan participants' contributions................................. -- -- 28 33 Net actuarial (gains) losses..................................... 897 277 269 68 Curtailments..................................................... -- 6 -- -- Plan amendments, change in benefits, and other (2)............... 128 -- -- (81) Net transfer in (out) of controlled group........................ (12) -- -- (17) Prescription drug subsidy........................................ -- -- -- 12 Benefits paid.................................................... (385) (405) (133) (153) -------- ------ ------ ------ Benefit obligations at December 31,............................... 7,867 6,690 2,106 1,819 -------- ------ ------ ------ Change in plan assets: Fair value of plan assets at January 1,........................... 5,976 5,419 1,184 1,118 Actual return on plan assets..................................... 787 673 81 98 Plan amendments, change in benefits, and other (2)............... 110 -- -- -- Plan participants' contributions................................. -- -- 28 33 Employer contributions........................................... 223 289 80 87 Net transfer in (out) of controlled group........................ (12) -- -- (12) Benefits paid.................................................... (385) (405) (133) (140) -------- ------ ------ ------ Fair value of plan assets at December 31,......................... 6,699 5,976 1,240 1,184 -------- ------ ------ ------ Over (under) funded status at December 31,....................... $(1,168) $(714) $(866) $(635) ======== ====== ====== ====== Amounts recognized in the consolidated balance sheets consist of: Other assets..................................................... $ -- $ 107 $ -- $ -- Other liabilities................................................ (1,168) (821) (866) (635) -------- ------ ------ ------ Net amount recognized.......................................... $(1,168) $(714) $(866) $(635) ======== ====== ====== ====== Accumulated other comprehensive (income) loss: Net actuarial losses............................................. $ 2,403 $2,058 $ 621 $ 399 Prior service costs (credit)..................................... 29 16 (179) (287) -------- ------ ------ ------ Accumulated other comprehensive (income) loss, before income tax.......................................................... $ 2,432 $2,074 $ 442 $ 112 ======== ====== ====== ======
---------- (1)Includes non-qualified unfunded plans, for which the aggregate projected benefit obligation was $997 million and $821 million at December 31, 2011 and 2010, respectively. (2)During 2011, the Company became the sole sponsor of a certain qualified defined pension plan. Accordingly, the Company transitioned its accounting for that plan from a multiemployer to a single employer plan as of December 31, 2011. F-150 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The accumulated benefit obligations for all defined benefit pension plans were $7.4 billion and $6.4 billion at December 31, 2011 and 2010, respectively. The aggregate pension accumulated benefit obligation and aggregate fair value of plan assets for pension benefit plans with accumulated benefit obligations in excess of plan assets was as follows:
DECEMBER 31, ------------- 2011 2010 ------ ---- (IN MILLIONS) Projected benefit obligations... $1,129 $821 Accumulated benefit obligations. $1,011 $748 Fair value of plan assets....... $ 110 $ --
Information for pension and other postretirement benefit plans with a projected benefit obligation in excess of plan assets were as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ----------- ------------- DECEMBER 31, ------------------------- 2011 2010 2011 2010 ------ ---- ------ ------ (IN MILLIONS) Projected benefit obligations. $7,867 $821 $2,106 $1,819 Fair value of plan assets..... $6,699 $ -- $1,240 $1,184
Net periodic pension costs and net periodic other postretirement benefit plan costs are comprised of the following: i) Service Costs -- Service costs are the increase in the projected (expected) pension benefit obligation resulting from benefits payable to employees of the Company on service rendered during the current year. ii)Interest Costs -- Interest costs are the time value adjustment on the projected (expected) pension benefit obligation at the end of each year. iii)Settlement and Curtailment Costs -- The aggregate amount of net gains (losses) recognized in net periodic benefit costs due to settlements and curtailments. Settlements result from actions that relieve/eliminate the plan's responsibility for benefit obligations or risks associated with the obligations or assets used for the settlement. Curtailments result from an event that significantly reduces/eliminates plan participants' expected years of future services or benefit accruals. iv)Expected Return on Plan Assets -- Expected return on plan assets is the assumed return earned by the accumulated pension and other postretirement fund assets in a particular year. v) Amortization of Net Actuarial (Gains) Losses -- Actuarial gains and losses result from differences between the actual experience and the expected experience on pension and other postretirement plan assets or projected (expected) pension benefit obligation during a particular period. These gains and losses are accumulated and, to the extent they exceed 10% of the greater of the PBO or the fair value of plan assets, the excess is amortized into pension and other postretirement benefit costs over the expected service years of the employees. vi)Amortization of Prior Service Costs (Credit) -- These costs relate to the recognition of increases or decreases in pension and other postretirement benefit obligation due to amendments in plans or F-151 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) initiation of new plans. These increases or decreases in obligation are recognized in accumulated other comprehensive income (loss) at the time of the amendment. These costs are then amortized to pension and other postretirement benefit costs over the expected service years of the employees affected by the change. The components of net periodic benefit costs and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS -------------------- ------------------- YEARS ENDED DECEMBER 31, ---------------------------------------- 2011 2010 2009 2011 2010 2009 ------ ------ ------ ------ ----- ------ (IN MILLIONS) Net Periodic Benefit Costs: Service costs............................................. $ 165 $ 150 $ 147 $ 16 $ 17 $ 22 Interest costs............................................ 384 375 374 107 111 123 Settlement and curtailment costs.......................... -- 8 18 -- -- -- Expected return on plan assets............................ (423) (422) (414) (76) (79) (74) Amortization of net actuarial (gains) losses.............. 189 192 223 42 38 43 Amortization of prior service costs (credit).............. 3 6 8 (108) (83) (36) ------ ------ ------ ------ ----- ------ Total net periodic benefit costs (credit)............. 318 309 356 (19) 4 78 ------ ------ ------ ------ ----- ------ Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Net actuarial (gains) losses.............................. 532 24 251 264 49 284 Prior service costs (credit).............................. 18 -- (12) -- (81) (167) Amortization of net actuarial gains (losses).............. (189) (192) (223) (42) (38) (43) Amortization of prior service (costs) credit.............. (3) (6) (8) 108 83 36 ------ ------ ------ ------ ----- ------ Total recognized in other comprehensive income (loss)................................................ 358 (174) 8 330 13 110 ------ ------ ------ ------ ----- ------ Total recognized in net periodic benefit costs and other comprehensive income (loss)................... $ 676 $ 135 $ 364 $ 311 $ 17 $ 188 ====== ====== ====== ====== ===== ======
For the year ended December 31, 2011, included within other comprehensive income (loss) were other changes in plan assets and benefit obligations associated with pension benefits of $358 million and other postretirement benefits of $330 million for an aggregate reduction in other comprehensive income (loss) of $688 million before income tax and $439 million, net of income tax. The estimated net actuarial (gains) losses and prior service costs (credit) for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs over the next year are $172 million and $6 million, respectively. The estimated net actuarial (gains) losses and prior service costs (credit) for the defined benefit other postretirement benefit plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs over the next year are $54 million and ($104) million, respectively. The Medicare Modernization Act of 2003 created various subsidies for sponsors of retiree drug programs. Two common ways of providing subsidies were the Retiree Drug Subsidy ("RDS") and Medicare Part D Prescription Drug Plans ("PDP"). From 2006 through 2010, the Company applied for and received the RDS each year. The RDS program provides the subsidy through cash payments made by Medicare to the Company, F-152 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) resulting in smaller net claims paid by the Company. A summary of the reduction to the APBO and the related reduction to the components of net periodic other postretirement benefits plan costs resulting from receipt of the RDS is presented below. As of January 1, 2011, as a result of changes made under the Patient Protection and Affordable Care Act of 2010, the Company, no longer applies for the RDS. Instead it has joined PDP and will indirectly receive Medicare subsidies in the form of smaller gross benefit payments for prescription drug coverage.
DECEMBER 31, ------------ 2010 2009 ------ ----- (IN MILLIONS) Cumulative reduction in other postretirement benefits obligations: Balance at January 1,............................................. $ 247 $ 317 Service costs..................................................... 3 2 Interest costs.................................................... 16 16 Net actuarial (gains) losses...................................... (255) (76) Expected prescription drug subsidy................................ (11) (12) ------ ----- Balance at December 31,........................................... $ -- $ 247 ====== =====
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 ---- ---- (IN MILLIONS) Reduction in net periodic other postretirement benefit costs: Service costs................................................ $ 3 $ 2 Interest costs............................................... 16 16 Amortization of net actuarial (gains) losses................. 10 11 ---- ---- Total reduction in net periodic benefit costs.............. $29 $29 ==== ====
The Company received subsidies of $3 million, $8 million and $12 million for the years ended December 31, 2011, 2010 and 2009, respectively. ASSUMPTIONS Assumptions used in determining benefit obligations were as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ------------------- -------------- DECEMBER 31, ---------------------------------- 2011 2010 2011 2010 --------- --------- ----- ----- Weighted average discount rate. 4.95% 5.80% 4.95% 5.80% Rate of compensation increase.. 3.5%-7.5% 3.5%-7.5% N/A N/A
F-153 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Assumptions used in determining net periodic benefit costs were as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ----------------------------- ----------------- DECEMBER 31, ----------------------------------------------- 2011 2010 2009 2011 2010 2009 --------- --------- --------- ----- ----- ----- Weighted average discount rate.............. 5.80% 6.25% 6.60% 5.80% 6.25% 6.60% Weighted average expected rate of return on plan assets............................... 7.25% 8.00% 8.25% 7.25% 7.20% 7.36% Rate of compensation increase............... 3.5%-7.5% 3.5%-7.5% 3.5%-7.5% N/A N/A N/A
The weighted average discount rate is determined annually based on the yield, measured on a yield to worst basis, of a hypothetical portfolio constructed of high quality debt instruments available on the valuation date, which would provide the necessary future cash flows to pay the aggregate projected benefit obligation when due. The weighted average expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the plan invests, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan assets by sector, adjusted for the Company's long-term expectations on the performance of the markets. While the precise expected rate of return derived using this approach will fluctuate from year to year, the Company's policy is to hold this long-term assumption constant as long as it remains within reasonable tolerance from the derived rate. The weighted average expected rate of return on plan assets for use in that plan's valuation in 2012 is currently anticipated to be 7.00% for pension benefits and 6.22% for other postretirement benefits. The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows:
DECEMBER 31, ------------------------------------------------------------------------- 2011 2010 ------------------------------------ ------------------------------------ Pre-and 7.3% in 2012, gradually decreasing 7.8% in 2011, gradually decreasing Post-Medicare each year until 2083 each year until 2083 eligible claims... reaching the ultimate rate of 4.3%. reaching the ultimate rate of 4.4%.
Assumed healthcare costs trend rates may have a significant effect on the amounts reported for healthcare plans. A 1% change in assumed healthcare costs trend rates would have the following effects:
ONE PERCENT ONE PERCENT INCREASE DECREASE ----------- ----------- (IN MILLIONS) Effect on total of service and interest costs components. $ 8 $ (9) Effect of accumulated postretirement benefit obligations. $196 $(161)
F-154 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PLAN ASSETS The pension and other postretirement benefit plan assets are categorized into the three-level fair value hierarchy, as defined in Note 1, based upon the priority of the inputs to the respective valuation technique. The following summarizes the types of assets included within the three-level fair value hierarchy presented below. Level 1 This category includes investments in fixed maturity securities, equity securities, derivative securities, and short-term investments which have unadjusted quoted market prices in active markets for identical assets and liabilities. Level 2 This category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate account is based upon reported NAV provided by fund managers and this value represents the amount at which transfers into and out of the respective separate account are effected. These separate accounts provide reasonable levels of price transparency and can be corroborated through observable market data. Certain separate accounts are invested in investment partnerships designated as hedge funds. The values for these separate accounts is determined monthly based on the NAV of the underlying hedge fund investment. Additionally, such hedge funds generally contain lock out or other waiting period provisions for redemption requests to be filled. While the reporting and redemption restrictions may limit the frequency of trading activity in separate accounts invested in hedge funds, the reported NAV, and thus the referenced value of the separate account, provides a reasonable level of price transparency that can be corroborated through observable market data. Directly held investments are primarily invested in U.S. and foreign government and corporate securities. Level 3 This category includes separate accounts that are invested in fixed maturity securities, equity securities, pass-through securities, derivative securities and other invested assets that provide little or no price transparency due to the infrequency with which the underlying assets trade and generally require additional time to liquidate in an orderly manner. Accordingly, the values for separate accounts invested in these alternative asset classes are based on inputs that cannot be readily derived from or corroborated by observable market data. The Company has issued group annuity and life insurance contracts supporting the pension and other postretirement benefit plan assets, which are invested primarily in separate accounts. The underlying assets of the separate accounts are principally comprised of cash and cash equivalents, short term investments, fixed maturity and equity securities, mutual funds, real estate, private equity investments and hedge funds investments. F-155 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The pension and postretirement plan assets and liabilities measured at estimated fair value on a recurring basis were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:
DECEMBER 31, 2011 ----------------------------------------------------------------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ---------------------------------------------- ------------------------------------ FAIR VALUE MEASUREMENTS AT FAIR VALUE MEASUREMENTS AT REPORTING DATE USING REPORTING DATE USING ------------------------------------ ------------------------------------ QUOTED QUOTED PRICES PRICES IN ACTIVE IN ACTIVE MARKETS MARKETS FOR SIGNIFICANT FOR SIGNIFICANT IDENTICAL OTHER SIGNIFICANT TOTAL IDENTICAL OTHER SIGNIFICANT ASSETS AND OBSERVABLE UNOBSERVABLE ESTIMATED ASSETS AND OBSERVABLE UNOBSERVABLE LIABILITIES INPUTS INPUTS FAIR LIABILITIES INPUTS INPUTS (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE (LEVEL 1) (LEVEL 2) (LEVEL 3) ----------- ----------- ------------ --------- ----------- ----------- ------------ (IN MILLIONS) ASSETS: Fixed maturity securities: Corporate.......................... $ -- $1,820 $ 30 $1,850 $ -- $139 $ 4 Federal agencies................... 1 270 -- 271 -- 29 -- Foreign bonds...................... -- 200 5 205 -- 13 -- Municipals......................... -- 174 -- 174 -- 59 1 Preferred stocks................... -- 1 -- 1 -- -- -- U.S. government bonds.............. 949 176 -- 1,125 160 1 -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total fixed maturity securities.. 950 2,641 35 3,626 160 241 5 ----------- ----------- ------------ --------- ----------- ----------- ------------ Equity securities: Common stock -- domestic........... 1,082 36 194 1,312 240 2 -- Common stock -- foreign............ 271 -- -- 271 55 -- -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total equity securities.......... 1,353 36 194 1,583 295 2 -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Money market securities............. 2 -- -- 2 -- 1 -- Pass-through securities............. -- 444 2 446 -- 84 5 Derivative securities............... 28 9 4 41 -- -- 1 Short-term investments.............. 4 378 -- 382 6 435 -- Other invested assets............... -- 65 501 566 -- -- -- Other receivables................... -- 45 -- 45 -- 4 -- Securities receivable............... -- 8 -- 8 -- 1 -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total assets.................... $2,337 $3,626 $736 $6,699 $461 $768 $11 =========== =========== ============ ========= =========== =========== ============
---------- ---------- TOTAL ESTIMATED FAIR VALUE --------- ASSETS: Fixed maturity securities: Corporate.......................... $ 143 Federal agencies................... 29 Foreign bonds...................... 13 Municipals......................... 60 Preferred stocks................... -- U.S. government bonds.............. 161 --------- Total fixed maturity securities.. 406 --------- Equity securities: Common stock -- domestic........... 242 Common stock -- foreign............ 55 --------- Total equity securities.......... 297 --------- Money market securities............. 1 Pass-through securities............. 89 Derivative securities............... 1 Short-term investments.............. 441 Other invested assets............... -- Other receivables................... 4 Securities receivable............... 1 --------- Total assets.................... $1,240 =========
F-156 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2010 ----------------------------------------------------------------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ---------------------------------------------- ------------------------------------ FAIR VALUE MEASUREMENTS AT FAIR VALUE MEASUREMENTS AT REPORTING DATE USING REPORTING DATE USING ------------------------------------ ------------------------------------ QUOTED QUOTED PRICES PRICES IN ACTIVE IN ACTIVE MARKETS MARKETS FOR SIGNIFICANT FOR SIGNIFICANT IDENTICAL OTHER SIGNIFICANT TOTAL IDENTICAL OTHER SIGNIFICANT ASSETS AND OBSERVABLE UNOBSERVABLE ESTIMATED ASSETS AND OBSERVABLE UNOBSERVABLE LIABILITIES INPUTS INPUTS FAIR LIABILITIES INPUTS INPUTS (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE (LEVEL 1) (LEVEL 2) (LEVEL 3) ----------- ----------- ------------ --------- ----------- ----------- ------------ (IN MILLIONS) ASSETS: Fixed maturity securities: Corporate........................... $ -- $1,444 $ 45 $1,489 $ -- $ 67 $ 4 Federal agencies.................... -- 165 -- 165 -- 15 -- Foreign bonds....................... -- 138 4 142 -- 3 -- Municipals.......................... -- 129 -- 129 -- 37 1 Preferred stocks.................... -- 4 -- 4 -- -- -- U.S. government bonds............... 614 129 -- 743 82 -- -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total fixed maturity securities... 614 2,009 49 2,672 82 122 5 ----------- ----------- ------------ --------- ----------- ----------- ------------ Equity securities: Common stock -- domestic............ 1,329 88 228 1,645 359 3 -- Common stock -- foreign............. 436 -- -- 436 77 -- -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total equity securities........... 1,765 88 228 2,081 436 3 -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Money market securities.............. 189 95 -- 284 1 1 -- Pass-through securities.............. -- 303 2 305 -- 73 6 Derivative securities................ 2 (4) (1) (3) -- -- -- Short-term investments............... (10) 96 -- 86 8 443 -- Other invested assets................ -- 59 446 505 -- -- -- Other receivables.................... -- 37 -- 37 -- 3 -- Securities receivable................ -- 66 -- 66 -- 2 -- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total assets..................... $2,560 $2,749 $724 $6,033 $527 $647 $11 =========== =========== ============ ========= =========== =========== ============ LIABILITIES: Securities payable................... $ -- $ 57 $ -- $ 57 $ -- $ 1 $-- ----------- ----------- ------------ --------- ----------- ----------- ------------ Total liabilities................ $ -- $ 57 $ -- $ 57 $ -- $ 1 $-- =========== =========== ============ ========= =========== =========== ============ Total assets and liabilities.... $2,560 $2,692 $724 $5,976 $527 $646 $11 =========== =========== ============ ========= =========== =========== ============
---------- ---------- TOTAL ESTIMATED FAIR VALUE --------- ASSETS: Fixed maturity securities: Corporate........................... $ 71 Federal agencies.................... 15 Foreign bonds....................... 3 Municipals.......................... 38 Preferred stocks.................... -- U.S. government bonds............... 82 --------- Total fixed maturity securities... 209 --------- Equity securities: Common stock -- domestic............ 362 Common stock -- foreign............. 77 --------- Total equity securities........... 439 --------- Money market securities.............. 2 Pass-through securities.............. 79 Derivative securities................ -- Short-term investments............... 451 Other invested assets................ -- Other receivables.................... 3 Securities receivable................ 2 --------- Total assets..................... $1,185 ========= LIABILITIES: Securities payable................... $ 1 --------- Total liabilities................ $ 1 ========= Total assets and liabilities.... $1,184 =========
F-157 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A rollforward of all pension and other postretirement benefit plan assets measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs was as follows:
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) -------------------------------------------------------------------------------------------- PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS ------------------------------------------------------------ ------------------------------- FIXED MATURITY EQUITY FIXED MATURITY SECURITIES: SECURITIES: SECURITIES: ----------------- ----------- -------------------- COMMON PASS- OTHER PASS- FOREIGN STOCK- THROUGH DERIVATIVE INVESTED THROUGH CORPORATE BONDS DOMESTIC SECURITIES SECURITIES ASSETS CORPORATE MUNICIPALS SECURITIES --------- ------- ----------- ---------- ---------- -------- --------- ---------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2011: Balance, January 1,............. $ 45 $ 4 $ 228 $ 2 $(1) $ 446 $ 4 $ 1 $ 6 Total realized/unrealized gains (losses) included in: Earnings: Net investment income........ -- -- -- -- -- -- -- -- -- Net investment gains (losses).................... -- -- (57) (1) 1 80 -- -- (1) Net derivative gains (losses).................... -- -- -- -- -- -- -- -- -- Other comprehensive income (loss)....................... (3) (2) 110 1 6 42 -- -- 1 Purchases..................... -- 3 7 1 -- 91 -- -- -- Sales......................... (13) -- (94) (2) (2) (158) -- -- (1) Issuances..................... -- -- -- -- -- -- -- -- -- Settlements................... -- -- -- -- -- -- -- -- -- Transfers into Level 3.......... 1 -- -- 1 -- -- -- -- 1 Transfers out of Level 3........ -- -- -- -- -- -- -- -- (1) --------- ------- ----------- ---------- ---------- -------- --------- ---------- ---------- Balance, December 31,........... $ 30 $ 5 $ 194 $ 2 $ 4 $ 501 $ 4 $ 1 $ 5 ========= ======= =========== ========== ========== ======== ========= ========== ==========
DERIVATIVE SECURITIES ---------- YEAR ENDED DECEMBER 31, 2011: Balance, January 1,............. $-- Total realized/unrealized gains (losses) included in: Earnings: Net investment income........ -- Net investment gains (losses).................... -- Net derivative gains (losses).................... -- Other comprehensive income (loss)....................... 1 Purchases..................... -- Sales......................... -- Issuances..................... -- Settlements................... -- Transfers into Level 3.......... -- Transfers out of Level 3........ -- ---------- Balance, December 31,........... $ 1 ==========
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) -------------------------------------------------------------------------------------------- PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS ------------------------------------------------------------ ------------------------------- FIXED MATURITY EQUITY FIXED MATURITY SECURITIES: SECURITIES: SECURITIES: ----------------- ----------- -------------------- COMMON PASS- OTHER PASS- FOREIGN STOCK- THROUGH DERIVATIVE INVESTED THROUGH CORPORATE BONDS DOMESTIC SECURITIES SECURITIES ASSETS CORPORATE MUNICIPALS SECURITIES --------- ------- ----------- ---------- ---------- -------- --------- ---------- ---------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: Balance, January 1,............. $ 64 $ 5 $229 $ 66 $ -- $354 $-- $-- $ 9 Total realized/unrealized gains (losses) included in: Earnings: Net investment income........ -- -- -- (11) 2 74 -- -- (4) Net investment gains (losses).................... -- -- -- -- -- -- -- -- -- Net derivative gains (losses).................... -- -- -- -- -- -- -- -- -- Other comprehensive income (loss)................ 7 1 (2) 13 (2) (4) 1 -- 1 Purchases, sales, issuances and settlements.................... (17) (2) 1 (67) (1) 22 -- -- (1) Transfers into Level 3.......... 4 -- -- 2 -- -- 3 1 1 Transfers out of Level 3........ (13) -- -- (1) -- -- -- -- -- --------- ------- ----------- ---------- ---------- -------- --------- ---------- ---------- Balance, December 31,........... $ 45 $ 4 $228 $ 2 $(1) $446 $ 4 $ 1 $ 6 ========= ======= =========== ========== ========== ======== ========= ========== ==========
F-158 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------------------------------------------------------------------------------------ PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS ------------------------------------------------------------ ----------------------------- FIXED MATURITY EQUITY SECURITIES: SECURITIES: ----------------- ----------- COMMON PASS- OTHER PASS- FOREIGN STOCK- THROUGH DERIVATIVE INVESTED THROUGH CORPORATE BONDS DOMESTIC SECURITIES SECURITIES ASSETS SECURITIES --------- ------- ----------- ---------- ---------- -------- ----------------------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: Balance, January 1,.................. $ 54 $ 4 $ 437 $ 76 $ 38 $ 372 $ 13 Total realized/unrealized gains (losses) included in: Earnings:.......................... Net investment income............. (5) (1) -- (2) 34 4 (17) Net investment gains (losses)..... -- -- -- -- -- -- -- Net derivative gains (losses)..... -- -- -- -- -- -- -- Other comprehensive income (loss)............................ 20 5 (220) 8 (37) (56) 17 Purchases, sales, issuances and settlements......................... (3) (3) 12 (23) (35) 34 (4) Transfers into and/or out of Level 3. (2) -- -- 7 -- -- -- --------- ------- ----------- ---------- ---------- -------- ----------------------------- Balance, December 31,................ $ 64 $ 5 $ 229 $ 66 $ -- $ 354 $ 9 ========= ======= =========== ========== ========== ======== =============================
See Note 5 for further information about the valuation techniques and inputs by level of major assets of invested assets that affect the amounts reported above. The Company provides employees with benefits under various ERISA benefit plans. These include qualified pension plans, postretirement medical plans and certain retiree life insurance coverage. The assets of the Company's qualified pension plans are held in insurance group annuity contracts, and the vast majority of the assets of the postretirement medical plan and backing the retiree life coverage are held in insurance contracts. All of these contracts are issued by the Company and the assets under the contracts are held in insurance separate accounts that have been established by the Company. The insurance contract provider engages investment management firms ("Managers") to serve as sub-advisors for the separate accounts based on the specific investment needs and requests identified by the plan fiduciary. These Managers have portfolio management discretion over the purchasing and selling of securities and other investment assets pursuant to the respective investment management agreements and guidelines established for each insurance separate account. The assets of the qualified pension plans and postretirement medical plans (the "Invested Plans") are well diversified across multiple asset categories and across a number of different Managers, with the intent of minimizing risk concentrations within any given asset category or with any given Manager. The Invested Plans, other than those held in participant directed investment accounts, are managed in accordance with investment policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters. Specifically, investment policies are oriented toward (i) maximizing the Invested Plan's funded status; (ii) minimizing the volatility of the Invested Plan's funded status; (iii) generating asset returns that exceed liability increases; and (iv) targeting rates of return in excess of a custom benchmark and industry standards over appropriate reference time periods. These goals are expected to be met through identifying appropriate and diversified asset classes and allocations, ensuring adequate liquidity to pay benefits and expenses when due and controlling the costs of administering and managing the Invested Plan's investments. Independent investment consultants are periodically used to evaluate the investment risk of Invested Plan's assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and management strategies and to recommend asset allocations. F-159 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile of an asset or asset class. Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure to an asset, asset class, interest rates or any other financial variable. Derivatives are also prohibited for use in creating exposures to securities, currencies, indices or any other financial variable that are otherwise restricted. The table below summarizes the actual weighted average allocation of the fair value of total plan assets by asset class at December 31 for the years indicated and the approved target range allocation by major asset class as of December 31, 2011 for the Invested Plans:
DEFINED BENEFIT PLAN POSTRETIREMENT MEDICAL POSTRETIREMENT LIFE ------------------------ ------------------------- --------------------- ACTUAL ALLOCATION ACTUAL ALLOCATION ACTUAL ALLOCATION TARGET -------------- TARGET -------------- TARGET -------------- RANGE 2011 2010 RANGE 2011 2010 RANGE 2011 2010 --------- ---- ---- ---------- ---- ---- ------ ---- ---- ASSET CLASS: Fixed maturity securities: Corporate...................... 28% 24% 17% 10% --% --% Federal agency................. 4 3 4 2 -- -- Foreign bonds.................. 3 3 2 -- -- -- Municipals..................... 3 2 8 5 -- -- U.S. government bonds.......... 17 12 20 11 -- -- ---- ---- ---- ---- ---- ---- Total fixed maturity securities................... 50% - 80% 55% 44% 50% - 100% 51% 28% 0% --% --% ---- ---- ---- ---- ---- ---- Equity securities: Common stock -- domestic....... 20% 27% 30% 49% --% --% Common stock -- foreign........ 4 8 7 10 -- -- ---- ---- ---- ---- ---- ---- Total equity securities....... 0% - 40% 24% 35% 0% - 50% 37% 59% 0% --% --% ---- ---- ---- ---- ---- ---- Alternative securities: Money market securities........ --% 5% 1% --% --% --% Pass-through securities........ 6 5 11 11 -- -- Derivatives.................... 1 -- -- -- -- -- Short-term investments......... 5 1 -- 1 100 100 Other invested assets.......... 8 8 -- -- -- -- Other receivables.............. 1 1 -- 1 -- -- Securities receivable.......... -- 1 -- -- -- -- ---- ---- ---- ---- ---- ---- Total alternative securities.. 10% - 20% 21% 21% 0% - 10% 12% 13% 100% 100% 100% ---- ---- ---- ---- ---- ---- Total assets................. 100% 100% 100% 100% 100% 100% ==== ==== ==== ==== ==== ====
EXPECTED FUTURE CONTRIBUTIONS AND BENEFIT PAYMENTS It is the Company's practice to make contributions to the qualified pension plan to comply with minimum funding requirements of ERISA. In accordance with such practice, no contributions were required for 2012. The Company expects to make discretionary contributions to the qualified pension plan of $176 million in 2012. For information on employer contributions, see "-- Obligations, Funded Status and Net Periodic Benefit Costs." F-160 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Benefit payments due under the non-qualified pension plans are primarily funded from the Company's general assets as they become due under the provision of the plans, therefore benefit payments equal employer contributions. The Company expects to make contributions of $88 million to fund the benefit payments in 2012. Postretirement benefits are either: (i) not vested under law; (ii) a non-funded obligation of the Company; or (iii) both. Current regulations do not require funding for these benefits. The Company uses its general assets, net of participant's contributions, to pay postretirement medical claims as they come due in lieu of utilizing any plan assets. The Company expects to make contributions of $75 million towards benefit obligations in 2012 to pay postretirement medical claims. As noted previously, the Company no longer expects to receive the RDS under the Medicare Modernization Act of 2003 to partially offset payment of such benefits. Instead, the gross benefit payments that will be made under the PDP will already reflect subsidies. Gross benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to be as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS -------- -------------- (IN MILLIONS) 2012...... $ 435 $110 2013...... $ 410 $112 2014...... $ 440 $115 2015...... $ 439 $117 2016...... $ 454 $119 2017-2021. $2,543 $609
ADDITIONAL INFORMATION As previously discussed, most of the assets of the pension and other postretirement benefit plans are held in group annuity and life insurance contracts issued by the Company. Total revenues from these contracts recognized in the consolidated statements of operations were $47 million, $46 million and $42 million for the years ended December 31, 2011, 2010 and 2009, respectively, and included policy charges and net investment income from investments backing the contracts and administrative fees. Total investment income (loss), including realized and unrealized gains (losses), credited to the account balances was $885 million, $767 million and $689 million for the years ended December 31, 2011, 2010 and 2009, respectively. The terms of these contracts are consistent in all material respects with those the Company offers to unaffiliated parties that are similarly situated. SAVINGS AND INVESTMENT PLANS The Company sponsors savings and investment plans for substantially all Company employees under which a portion of employee contributions are matched. The Company contributed $73 million, $72 million and $79 million for the years ended December 31, 2011, 2010 and 2009, respectively. F-161 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. EQUITY CAPITAL CONTRIBUTIONS During the year ended December 31, 2011, United MetLife Insurance Company Limited ("United"), an insurance underwriting joint venture of the Company accounted for under the equity method, merged with Sino-US MetLife Insurance Company Limited ("Sino"), another insurance underwriting joint venture of an affiliate of the Company. The Company's ownership interest in the merged entity, Sino-US United MetLife Insurance Company Limited ("Sino-United") was determined based on its contributed capital and share of undistributed earnings of United compared to the contributed capital and undistributed earnings of all other owners of United and Sino. Since both of the joint ventures were under common ownership both prior to and subsequent to the merger, the Company's investment in Sino-United is based on the carrying value of its investment in United. Pursuant to the merger, the Company entered into an agreement whereby the affiliate will pay an amount to the Company based on the relative fair values of their respective investments in Sino-United. Accordingly, upon completion of the estimation of fair value, $47 million, representing a capital contribution, was received during the year ended December 31, 2011. The Company's investment in Sino-United is accounted for under the equity method and is included in other invested assets. During each of the years ended December 31, 2011, 2010 and 2009, MetLife, Inc. contributed $3 million in the form of payment of line of credit fees on the Company's behalf. STOCK-BASED COMPENSATION PLANS Overview The stock-based compensation expense recognized by the Company is related to awards payable in shares of MetLife, Inc. common stock, or options to purchase MetLife, Inc. common stock. The Company does not issue any awards payable in its common stock or options to purchase its common stock. Description of Plans for Employees and Agents -- General Terms The MetLife, Inc. 2000 Stock Incentive Plan, as amended (the "2000 Stock Plan") authorized the granting of awards to employees and agents in the form of options to buy shares of MetLife, Inc. common stock ("Stock Options") that either qualify as incentive Stock Options under Section 422A of the Code or are non-qualified. By December 31, 2009 all awards under the 2000 Stock Plan had either vested or been forfeited. No awards have been made under the 2000 Stock Plan since 2005. Under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the "2005 Stock Plan"), awards granted to employees and agents may be in the form of Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Shares or Performance Share Units, Cash-Based Awards and Stock-Based Awards (each as defined in the 2005 Stock Plan with reference to MetLife, Inc. common stock). The aggregate number of shares authorized for issuance under the 2005 Stock Plan is 68,000,000, plus those shares available but not utilized under the 2000 Stock Plan and those shares utilized under the 2000 Stock Plan that are recovered due to forfeiture of Stock Options. Each share issued under the 2005 Stock Plan in connection with a Stock Option or Stock Appreciation Right reduces the number of shares remaining for issuance under that plan by one, and each share issued under the 2005 Stock Plan in connection with awards other than Stock Options or Stock Appreciation Rights reduces the number of shares remaining for issuance under that plan by 1.179 shares. At December 31, 2011, the aggregate number of shares of MetLife, Inc. common stock remaining available for issuance pursuant to the 2005 Stock Plan was 31,803,801. Stock Option exercises and other awards F-162 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) settled in shares are satisfied through the issuance of shares held in treasury by MetLife, Inc. or by the issuance of new shares. Of the stock-based compensation for the years ended December 31, 2011, 2010 and 2009, 70%, 79% and 88%, respectively, was allocated to the Company. No expense amounts related to stock-based awards to MetLife, Inc. non-management directors were allocated to the Company. This allocation represents substantially all stock-based compensation recognized in the Company's consolidated results of operations. Accordingly, this discussion addresses MetLife, Inc.'s practices for recognizing expense for awards under the Incentive Plans. References to compensation expense in this note refer to the Company's allocated portion of that expense. All other references relevant to awards under the Incentive Plans pertain to all awards under those plans. Compensation expense related to awards under the 2005 Stock Plan is recognized based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable. Compensation expense related to awards under the 2005 Stock Plan is principally related to the issuance of Stock Options, Performance Shares and Restricted Stock Units. The majority of the awards granted by MetLife, Inc. each year under the 2005 Stock Plan are made in the first quarter of each year. Compensation Expense Related to Stock-Based Compensation The components of compensation expense related to stock-based compensation was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ---- ---- ---- (IN MILLIONS) Stock Options............... $ 48 $39 $48 Performance Shares (1)...... 37 19 10 Restricted Stock Units...... 15 9 3 ---- ---- ---- Total compensation expenses. $100 $67 $61 ==== ==== ==== Income tax benefits......... $ 35 $23 $21 ==== ==== ====
---------- (1)Performance Shares expected to vest and the related compensation expenses may be further adjusted by the performance factor most likely to be achieved, as estimated by management, at the end of the performance period. At December 31, 2011, the Company's allocated portion of expense for Stock Options, Performance Shares and Restricted Stock Units was 85%, 54% and 84%, respectively. F-163 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the total unrecognized compensation expense related to stock-based compensation and the expected weighted average period over which these expenses will be recognized at:
DECEMBER 31, 2011 ------------------------------ WEIGHTED AVERAGE EXPENSE PERIOD ------------- ---------------- (IN MILLIONS) (YEARS) Stock Options.......... $52 1.82 Performance Shares..... $44 1.76 Restricted Stock Units. $23 1.82
Stock Options Stock Options are the contingent right of award holders to purchase shares of MetLife, Inc. common stock at a stated price for a limited time. All Stock Options have an exercise price equal to the closing price of MetLife, Inc. common stock reported on the New York Stock Exchange on the date of grant, and have a maximum term of 10 years. The vast majority of Stock Options granted have become or will become exercisable at a rate of one-third of each award on each of the first three anniversaries of the grant date. Other Stock Options have become or will become exercisable on the third anniversary of the grant date. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. A summary of the activity related to Stock Options for the year ended December 31, 2011 was as follows:
WEIGHTED AVERAGE REMAINING AGGREGATE SHARES UNDER WEIGHTED AVERAGE CONTRACTUAL INTRINSIC OPTION EXERCISE PRICE TERM VALUE (1) ------------ ---------------- ----------- ------------- (YEARS) (IN MILLIONS) Outstanding at January 1, 2011........................ 32,702,331 $38.47 5.30 $195 Granted (2)........................................... 5,471,447 $45.16 Exercised............................................. (2,944,529) $29.83 Expired............................................... (317,342) $42.32 Forfeited............................................. (198,381) $38.34 ----------- Outstanding at December 31, 2011...................... 34,713,526 $40.22 5.35 $ -- ============ ================ =========== ============= Aggregate number of stock options expected to vest at a future date as of December 31, 2011............... 33,596,536 $40.31 5.25 $ -- ============ ================ =========== ============= Exercisable at December 31, 2011...................... 24,345,356 $41.06 4.02 $ -- ============ ================ =========== =============
---------- (1)The aggregate intrinsic value was computed using the closing share price on December 30, 2011 of $31.18 and December 31, 2010 of $44.44, as applicable. (2)The total fair value of the shares MetLife, Inc. granted on the date of the grant was $78 million. The fair value of Stock Options is estimated on the date of grant using a binomial lattice model. Significant assumptions used in MetLife, Inc.'s binomial lattice model, which are further described below, include: expected volatility of the price of MetLife, Inc. common stock; risk-free rate of return; expected dividend yield on MetLife, Inc. common stock; exercise multiple; and the post-vesting termination rate. F-164 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Expected volatility is based upon an analysis of historical prices of MetLife, Inc. common stock and call options on that common stock traded on the open market. MetLife, Inc. uses a weighted-average of the implied volatility for publicly traded call options with the longest remaining maturity nearest to the money as of each valuation date and the historical volatility, calculated using monthly closing prices of MetLife, Inc.'s common stock. MetLife, Inc. chose a monthly measurement interval for historical volatility as it believes this better depicts the nature of employee option exercise decisions being based on longer-term trends in the price of the underlying shares rather than on daily price movements. The binomial lattice model used by MetLife, Inc. incorporates different risk-free rates based on the imputed forward rates for U.S. Treasury Strips for each year over the contractual term of the option. The table below presents the full range of rates that were used for options granted during the respective periods. Dividend yield is determined based on historical dividend distributions compared to the price of the underlying common stock as of the valuation date and held constant over the life of the Stock Option. The binomial lattice model used by MetLife, Inc. incorporates the contractual term of the Stock Options and then factors in expected exercise behavior and a post-vesting termination rate, or the rate at which vested options are exercised or expire prematurely due to termination of employment, to derive an expected life. Exercise behavior in the binomial lattice model used by MetLife, Inc. is expressed using an exercise multiple, which reflects the ratio of exercise price to the strike price of Stock Options granted at which holders of the Stock Options are expected to exercise. The exercise multiple is derived from actual historical exercise activity. The post-vesting termination rate is determined from actual historical exercise experience and expiration activity under the Incentive Plans. The following table presents the weighted average assumptions, with the exception of risk-free rate, which is expressed as a range, used to determine the fair value of Stock Options issued:
YEARS ENDED DECEMBER 31, ----------------------------------- 2011 2010 2009 ----------- ----------- ----------- Dividend yield........................................... 1.65% 2.11% 3.15% Risk-free rate of return................................. 0.29%-5.51% 0.35%-5.88% 0.73%-6.67% Expected volatility...................................... 32.64% 34.41% 44.39% Exercise multiple........................................ 1.69 1.75 1.76 Post-vesting termination rate............................ 3.36% 3.64% 3.70% Contractual term (years)................................. 10 10 10 Expected life (years).................................... 7 7 6 Weighted average exercise price of stock options granted. $ 45.16 $35.06 $23.61 Weighted average fair value of stock options granted..... $ 14.27 $11.29 $8.37
MetLife, Inc. deducts 35% of the compensation amount of a Stock Option from its income on its tax return. The compensation amount is the price of shares on the date the Stock Option is exercised less the exercise price of the Stock Option. This tax benefit is allocated to the subsidiary of MetLife, Inc. that is the current or former employer of the associate, or is or was the principal for the non-employee insurance agent, who exercised the Stock Option. F-165 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents a summary of Stock Option exercise activity:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ---- ---- ---- (IN MILLIONS) Total intrinsic value of stock options exercised.. $41 $22 $ 1 Cash received from exercise of stock options...... $88 $52 $ 8 Tax benefit realized from stock options exercised. $13 $ 8 $--
Performance Shares Performance Shares are units that, if they vest, are multiplied by a performance factor to produce a number of final Performance Shares which are payable in shares of MetLife, Inc. common stock. Performance Shares are accounted for as equity awards, but are not credited with dividend-equivalents for actual dividends paid on MetLife, Inc. common stock during the performance period. Accordingly, the estimated fair value of Performance Shares is based upon the closing price of MetLife, Inc. common stock on the date of grant, reduced by the present value of estimated dividends to be paid on that stock during the performance period. Performance Share awards normally vest in their entirety at the end of the three-year performance period. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. Vested Performance Shares are multiplied by a performance factor of 0.0 to 2.0 based largely on MetLife, Inc.'s performance in change in annual net operating earnings and total shareholder return over the applicable three-year performance period compared to the performance of its competitors. The performance factor was 0.90 for the January 1, 2008 -- December 31, 2010 performance period. The following table presents a summary of Performance Share activity for the year ended December 31, 2011:
WEIGHTED AVERAGE PERFORMANCE GRANT DATE SHARES FAIR VALUE ----------- ---------------- Outstanding at January 1, 2011............................................... 4,155,574 $31.91 Granted (1).................................................................. 1,783,070 $42.84 Forfeited.................................................................... (89,725) $32.79 Payable (2).................................................................. (824,825) $57.95 --------- Outstanding at December 31, 2011............................................. 5,024,094 $31.50 =========== ================ Performance Shares expected to vest at a future date as of December 31, 2011. 4,729,890 $32.35 =========== ================
---------- (1)The total fair value of the shares MetLife, Inc. granted on the date of the grant was $76 million. (2)Includes both shares paid and shares deferred for later payment. Performance Share amounts above represent aggregate initial target awards and do not reflect potential increases or decreases resulting from the performance factor determined after the end of the respective performance periods. At December 31, 2011, the three year performance period for the 2009 Performance Share grants was completed, but the performance factor had not yet been calculated. Included in the immediately preceding table are 1,791,609 outstanding Performance Shares to which the 2009-2011 performance factor will be applied. F-166 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Restricted Stock Units Restricted Stock Units are units that, if they vest, are payable in shares of MetLife, Inc. common stock. Restricted Stock Units are accounted for as equity awards, but are not credited with dividend-equivalents for actual dividends paid on MetLife, Inc. common stock during the performance period. Accordingly, the estimated fair value of Restricted Stock Units is based upon the closing price of MetLife, Inc. common stock on the date of grant, reduced by the present value of estimated dividends to be paid on that stock during the performance period. The vast majority of Restricted Stock Units normally vest in their entirety on the third anniversary of their grant date. Other Restricted Stock Units normally vest in their entirety on the fifth anniversary of their grant date. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. The following table presents a summary of Restricted Stock Unit activity for the year ended December 31, 2011:
WEIGHTED AVERAGE RESTRICTED STOCK GRANT DATE UNITS FAIR VALUE ---------------- ---------------- Outstanding at January 1, 2011.............................................. 937,172 $29.63 Granted (1)................................................................. 734,159 $41.94 Forfeited................................................................... (61,160) $35.36 Payable (2)................................................................. (47,322) $44.35 ---------------- ---------------- Outstanding at December 31, 2011............................................ 1,562,849 $34.74 ================ ================ Restricted Stock Units expected to vest at a future date as of December 31, 2011...................................................................... 1,562,849 $34.74 ================ ================
---------- (1)The total fair value of the shares MetLife, Inc. granted on the date of the grant was $31 million. (2)Includes both shares paid and shares deferred for later payment. STATUTORY EQUITY AND INCOME Each insurance company's state of domicile imposes minimum risk-based capital ("RBC") requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. Metropolitan Life Insurance Company and each of its U.S. insurance subsidiaries exceeded the minimum RBC requirements for all periods presented herein. The NAIC has adopted the Codification of Statutory Accounting Principles ("Statutory Codification"). Statutory Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. Modifications by the various state insurance departments may impact the effect of Statutory Codification on the statutory capital and surplus of Metropolitan Life Insurance Company and its insurance subsidiaries. 167 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt, reporting of reinsurance agreements and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant assets not admitted by the Company are net deferred income tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within three years. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. Statutory net income (unaudited) of Metropolitan Life Insurance Company, a New York domiciled insurer, was $2.0 billion, $2.1 billion and $1.2 billion for the years ended December 31, 2011, 2010 and 2009, respectively. Statutory capital and surplus (unaudited), as filed with the New York State Department of Insurance, was $13.5 billion and $13.2 billion at December 31, 2011 and 2010, respectively. DIVIDEND RESTRICTIONS Under New York State Insurance Law, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to MetLife, Inc. as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). Metropolitan Life Insurance Company will be permitted to pay a dividend to MetLife, Inc. in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Superintendent and the Superintendent does not disapprove the dividend within 30 days of its filing. Under New York State Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its shareholders. During the year ended December 31, 2011, Metropolitan Life Insurance Company paid a dividend of $1.3 billion, of which $170 million was a transfer of securities. During the year ended December 31, 2010, Metropolitan Life Insurance Company paid a dividend of $631 million, of which $399 million was a transfer of securities. During the year ended December 31, 2009, Metropolitan Life Insurance Company did not pay a dividend. The maximum amount of dividends which Metropolitan Life Insurance Company may pay in 2012 without prior regulatory approval is $1.3 billion. Under Massachusetts State Insurance Law, NELICO is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to Metropolitan Life Insurance Company as long as the amount of such dividends, when aggregated with all other dividends in the preceding 12 months, does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year. NELICO will be permitted to pay a dividend to Metropolitan Life Insurance Company in excess of the greater of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Massachusetts Commissioner of Insurance (the "Commissioner") and the Commissioner does not disapprove the payment within 30 days of its filing. Under Massachusetts State Insurance Law, the Commissioner has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its shareholders. In addition, any dividend that exceeds statutory unassigned funds surplus as of the last filed annual statutory statement requires insurance regulatory approval. During the years ended December 31, 2011, 2010 and 2009, NELICO paid a dividend of $107 million, $84 million and $19 million, respectively. The maximum amount of dividends which NELICO may pay to Metropolitan Life Insurance Company in 2012 without prior regulatory approval is $46 million. F-168 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Under Missouri State Insurance Law, GALIC is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to Metropolitan Life Insurance Company as long as the amount of the dividend when aggregated with all other dividends in the preceding 12 months does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding net realized capital gains). GALIC will be permitted to pay a cash dividend to Metropolitan Life Insurance Company in excess of the greater of such two amounts only if it files notice of the declaration of such a dividend and the amount thereof with the Missouri Director of Insurance (the "Missouri Director") and the Missouri Director does not disapprove the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined by the Company as unassigned funds) as of the last filed annual statutory statement requires insurance regulatory approval. Under Missouri State Insurance Law, the Missouri Director has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its shareholders. During the year ended December 31, 2011, GALIC paid an extraordinary cash dividend to GenAmerica Financial, LLC ("GenAmerica"), its former parent, of $183 million and GenAmerica subsequently paid an ordinary dividend to its parent, Metropolitan Life Insurance Company of $183 million. During the years ended December 31, 2010 and 2009, GALIC paid a dividend to GenAmerica, which was subsequently paid by GenAmerica to Metropolitan Life Insurance Company, of $149 million and $107 million, respectively. The maximum amount of dividends which GALIC may pay to Metropolitan Life Insurance Company in 2012 without prior regulatory approval is $70 million. For the years ended December 31, 2011, 2010 and 2009, Metropolitan Life Insurance Company received dividends from non-insurance subsidiaries of $518 million, $248 million and $41 million, respectively. F-169 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the balance and changes in accumulated other comprehensive income (loss) including reclassification adjustments required for the years ended December 31, 2011, 2010 and 2009 in other comprehensive income (loss) that are included as part of net income for the current year that have been reported as a part of other comprehensive income (loss) in the current or prior year:
YEARS ENDED DECEMBER 31, -------------------------- 2011 2010 2009 -------- -------- -------- (IN MILLIONS) Holding gains (losses) on investments arising during the year................... $ 9,190 $ 7,350 $ 12,267 Income tax effect of holding gains (losses)..................................... (3,219) (2,568) (4,233) Reclassification adjustments for recognized holding (gains) losses included in current year income........................................................... (45) (545) 562 Income tax effect of reclassification adjustments............................... 16 190 (194) Allocation of holding (gains) losses on investments relating to other policyholder amounts.......................................................... (5,430) (2,329) (1,948) Income tax effect of allocation of holding (gains) losses to other policyholder amounts....................................................................... 1,902 814 672 -------- -------- -------- Net unrealized investment gains (losses), net of income tax..................... 2,414 2,912 7,126 Foreign currency translation adjustments, net of income tax..................... 4 (16) (92) Defined benefit plans adjustment, net of income tax............................. (422) 98 (90) -------- -------- -------- Other comprehensive income (loss)............................................... 1,996 2,994 6,944 Other comprehensive income (loss) attributable to noncontrolling interests...... -- (6) 5 -------- -------- -------- Other comprehensive income (loss) attributable to Metropolitan Life Insurance Company, excluding cumulative effect of change in accounting principle........ 1,996 2,988 6,949 Cumulative effect of change in accounting principle, net of income tax expense (benefit) of $0, $6 million and ($19) million (see Note 1).................... -- 10 (36) -------- -------- -------- Other comprehensive income (loss) attributable to Metropolitan Life Insurance Company............................................................ $ 1,996 $ 2,998 $ 6,913 ======== ======== ========
F-170 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 16. OTHER EXPENSES Information on other expenses was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ------ ------ ------ (IN MILLIONS) Compensation............................................... $2,260 $2,230 $2,433 Pension, postretirement & post employment benefit costs.... 330 331 411 Commissions................................................ 724 651 758 Volume-related costs....................................... 196 173 36 Affiliated interest costs on ceded and assumed reinsurance. 1,393 1,386 1,236 Capitalization of DAC...................................... (893) (804) (857) Amortization of DAC and VOBA............................... 987 950 415 Interest expense on debt and debt issuance costs........... 194 217 166 Premium taxes, licenses & fees............................. 302 288 317 Professional services...................................... 832 743 701 Rent, net of sublease income............................... 129 147 262 Other...................................................... (40) (53) 131 ------ ------ ------ Total other expenses...................................... $6,414 $6,259 $6,009 ====== ====== ======
CAPITALIZATION OF DAC AND AMORTIZATION OF DAC AND VOBA See Note 6 for DAC and VOBA by segment and a rollforward of each including impacts of capitalization and amortization. See also Note 10 for a description of the DAC amortization impact associated with the closed block. INTEREST EXPENSE ON DEBT AND DEBT ISSUANCE COSTS See Note 11 for attribution of interest expense by debt issuance. Interest expense on debt and debt issuance costs includes interest expense related to CSEs. See Note 3. AFFILIATED EXPENSES Commissions, capitalization of DAC and amortization of DAC and VOBA include the impact of affiliated reinsurance transactions. See Notes 9, 11 and 19 for a discussion of affiliated expenses included in the table above. LEASE IMPAIRMENTS See Note 13 for description of lease impairments included within other expenses. RESTRUCTURING CHARGES In September 2008, MetLife, Inc. began an enterprise-wide cost reduction and revenue enhancement initiative which was fully implemented by December 31, 2011. This initiative was focused on reducing complexity, leveraging scale, increasing productivity and improving the effectiveness of MetLife, Inc.'s and its subsidiaries' operations, as well as providing a foundation for future growth. F-171 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) These restructuring charges are included in other expenses. As the expenses relate to an enterprise-wide initiative, they are reported within Corporate & Other. Restructuring charges associated with this enterprise-wide initiative were as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 ---- ----- ------ (IN MILLIONS) Balance at January 1,.............................................. $ 3 $ 19 $ 61 Severance charges.................................................. 2 14 70 Change in severance charge estimates............................... 1 (2) (8) Cash payments...................................................... (6) (28) (104) ---- ----- ------ Balance at December 31,............................................ $ -- $ 3 $ 19 ==== ===== ====== Restructuring charges incurred in current period................... $ 3 $ 12 $ 62 ==== ===== ====== Total restructuring charges incurred since inception of initiative. $138 $ 135 $ 123 ==== ===== ======
Changes in severance charge estimates were due to changes in estimates for variable incentive compensation, COBRA benefits, employee outplacement services and for employees whose severance status changed. In addition to the above charges, the Company has recognized lease charges of $28 million associated with the consolidation of office space since the inception of the initiative. 17. BUSINESS SEGMENT INFORMATION The Company is organized into three segments: Insurance Products, Retirement Products and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in Corporate & Other. On November 21, 2011, MetLife, Inc. announced that it will be reorganizing its business into three broad geographic regions and creating a global employee benefits business. While MetLife, Inc. has initiated certain changes in response to this announcement, the Company continued to evaluate the performance of its operating segments under the existing segment structure as of December 31, 2011. Insurance Products offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into three distinct businesses: Group Life, Individual Life and Non-Medical Health. Group Life insurance products and services include variable life, universal life and term life products. Individual Life insurance products and services include variable life, universal life, term life and whole life products. Non-Medical Health products and services include dental insurance, group short- and long-term disability, individual disability income, LTC, critical illness and accidental death & dismemberment coverages. Retirement Products offers a variety of variable and fixed annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. Corporate & Other contains the excess capital not allocated to the segments, various start-up and run-off entities, as well as interest expense related to the majority of the Company's outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings. F-172 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP accounting guidance for segment reporting, operating earnings is the Company's measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for GAAP income (loss) from continuing operations, net of income tax. The Company believes the presentation of operating earnings as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Operating earnings is defined as operating revenues less operating expenses, both net of income tax. Operating revenues excludes net investment gains (losses) and net derivative gains (losses). The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues: . Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees ("GMIB Fees"); and . Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations, and (iii) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP. The following adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses: . Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (iii) benefits and hedging costs related to GMIBs ("GMIB Costs"), and (iv) market value adjustments associated with surrenders or terminations of contracts ("Market Value Adjustments"); . Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of PABs but do not qualify for hedge accounting treatment; . Amortization of DAC and VOBA excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB Fees and GMIB Costs, and (iii) Market Value Adjustments; . Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and . Other expenses excludes costs related to noncontrolling interests. In 2011, management modified its definition of operating earnings to exclude impacts related to certain variable annuity guarantees and Market Value Adjustments to better conform to the way it manages and assesses its business. Accordingly, such results are no longer reported in operating earnings. Consequently, prior years' results for Retirement Products and total consolidated operating earnings have been decreased by $15 million, net of $8 million of income tax, and $18 million, net of $10 million of income tax, for the years ended December 31, 2010 and 2009, respectively. Set forth in the tables below is certain financial information with respect to the Company's segments, as well as Corporate & Other for the years ended December 31, 2011, 2010 and 2009 and at December 31, 2011 and F-173 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2010. The accounting policies of the segments are the same as those of the Company, except for operating earnings adjustments as defined above, the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in consolidation. Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in MetLife, Inc.'s business. Effective January 1, 2011, MetLife, Inc. updated its economic capital model to align segment allocated equity with emerging standards and consistent risk principles. Such changes to MetLife, Inc.'s economic capital model are applied prospectively. Segment net investment income is also credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company's consolidated net investment income, operating earnings or income (loss) from continuing operations, net of income tax.
OPERATING EARNINGS ------------------------------------------------ CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2011 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ------------------------------------- --------- ---------- --------- --------- ------- ----------- ------------ (IN MILLIONS) REVENUES Premiums.............................. $16,346 $ 594 $1,347 $ 1 $18,288 $ -- $18,288 Universal life and investment-type product policy fees.................. 1,406 559 196 -- 2,161 41 2,202 Net investment income................. 5,216 2,154 3,987 391 11,748 (121) 11,627 Other revenues........................ 491 109 242 966 1,808 -- 1,808 Net investment gains (losses)......... -- -- -- -- -- 132 132 Net derivative gains (losses)......... -- -- -- -- -- 1,578 1,578 --------- ---------- --------- --------- ------- ----------- ------------ Total revenues...................... 23,459 3,416 5,772 1,358 34,005 1,630 35,635 --------- ---------- --------- --------- ------- ----------- ------------ EXPENSES Policyholder benefits and claims and policyholder dividends............... 17,994 1,005 2,989 4 21,992 44 22,036 Interest credited to policyholder account balances..................... 502 678 1,138 -- 2,318 54 2,372 Capitalization of DAC................. (398) (475) (20) -- (893) -- (893) Amortization of DAC and VOBA.......... 529 366 14 1 910 77 987 Interest expense on debt.............. 3 3 7 172 185 9 194 Other expenses........................ 3,031 1,396 446 1,247 6,120 6 6,126 --------- ---------- --------- --------- ------- ----------- ------------ Total expenses...................... 21,661 2,973 4,574 1,424 30,632 190 30,822 --------- ---------- --------- --------- ------- ----------- ------------ Provision for income tax expense (benefit)............................ 631 156 421 (229) 979 502 1,481 --------- ---------- --------- --------- ------- ------------ OPERATING EARNINGS.................... $ 1,167 $ 287 $ 777 $ 163 2,394 ========= ========== ========= ========= ======= Adjustments to: Total revenues...................... 1,630 Total expenses...................... (190) Provision for income tax (expense) benefit............................ (502) ------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX........ $ 3,332 $ 3,332 ======= ============
F-174 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE AT DECEMBER 31, 2011 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ----------------------------------- --------- ---------- --------- ----------- ------------ (IN MILLIONS) TOTAL ASSETS....................... $127,169 $80,219 $157,553 $37,255 $402,196 SEPARATE ACCOUNT ASSETS............ $ 7,173 $36,557 $ 62,948 $ -- $106,678 SEPARATE ACCOUNT LIABILITIES....... $ 7,173 $36,557 $ 62,948 $ -- $106,678 OPERATING EARNINGS --------------------------------------------------- CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2010 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ----------------------------------- --------- ---------- --------- ---------- --------- ----------- ------------ (IN MILLIONS) REVENUES Premiums........................... $16,615 $ 608 $ 1,295 $ 1 $ 18,519 $ -- $ 18,519 Universal life and investment-type product policy fees............... 1,363 481 196 -- 2,040 35 2,075 Net investment income.............. 5,344 2,274 3,830 146 11,594 (1) 11,593 Other revenues..................... 444 78 239 964 1,725 -- 1,725 Net investment gains (losses)...... -- -- -- -- -- (170) (170) Net derivative gains (losses)...... -- -- -- -- -- (266) (266) --------- ---------- --------- ---------- --------- ----------- ------------ Total revenues................... 23,766 3,441 5,560 1,111 33,878 (402) 33,476 --------- ---------- --------- ---------- --------- ----------- ------------ EXPENSES Policyholder benefits and claims and policyholder dividends........ 18,299 963 2,875 (18) 22,119 31 22,150 Interest credited to policyholder account balances.................. 507 712 1,251 -- 2,470 53 2,523 Capitalization of DAC.............. (398) (392) (14) -- (804) -- (804) Amortization of DAC and VOBA....... 546 266 15 1 828 122 950 Interest expense on debt........... 4 4 5 189 202 15 217 Other expenses..................... 2,968 1,320 425 1,181 5,894 2 5,896 --------- ---------- --------- ---------- --------- ----------- ------------ Total expenses................... 21,926 2,873 4,557 1,353 30,709 223 30,932 --------- ---------- --------- ---------- --------- ----------- ------------ Provision for income tax expense (benefit)......................... 645 200 350 (208) 987 (209) 778 --------- ---------- --------- ---------- --------- ------------ OPERATING EARNINGS................. $ 1,195 $ 368 $ 653 $ (34) 2,182 ========= ========== ========= ========== ========= Adjustments to: Total revenues................... (402) Total expenses................... (223) Provision for income tax (expense) benefit............... 209 --------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX............................... $ 1,766 $ 1,766 ========= ============ CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE AT DECEMBER 31, 2010 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ----------------------------------- --------- ---------- --------- ----------- ------------ (IN MILLIONS) TOTAL ASSETS....................... $123,915 $77,622 $143,541 $30,329 $375,407 SEPARATE ACCOUNT ASSETS............ $ 8,343 $34,540 $ 54,946 $ -- $ 97,829 SEPARATE ACCOUNT LIABILITIES....... $ 8,343 $34,540 $ 54,946 $ -- $ 97,829
F-175 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OPERATING EARNINGS - ------------------------------------------------- CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2009 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ------------------------------------- --------- ---------- --------- --------- -------- ----------- ------------ (IN MILLIONS) REVENUES Premiums.............................. $16,651 $ 553 $1,414 $ 11 $ 18,629 $ -- $ 18,629 Universal life and investment-type product policy fees.................. 1,486 416 145 -- 2,047 20 2,067 Net investment income................. 4,968 2,006 3,466 (328) 10,112 63 10,175 Other revenues........................ 511 73 230 925 1,739 -- 1,739 Net investment gains (losses)......... -- -- -- -- -- (1,667) (1,667) Net derivative gains (losses)......... -- -- -- -- -- (4,428) (4,428) --------- ---------- --------- --------- -------- ----------- ------------ Total revenues...................... 23,616 3,048 5,255 608 32,527 (6,012) 26,515 --------- ---------- --------- --------- -------- ----------- ------------ EXPENSES Policyholder benefits and claims and policyholder dividends............... 18,447 923 2,879 7 22,256 18 22,274 Interest credited to policyholder account balances..................... 513 754 1,366 -- 2,633 36 2,669 Capitalization of DAC................. (396) (449) (12) -- (857) -- (857) Amortization of DAC and VOBA.......... 410 248 12 2 672 (257) 415 Interest expense on debt.............. 2 -- 1 163 166 -- 166 Other expenses........................ 3,145 1,391 422 1,320 6,278 7 6,285 --------- ---------- --------- --------- -------- ----------- ------------ Total expenses...................... 22,121 2,867 4,668 1,492 31,148 (196) 30,952 --------- ---------- --------- --------- -------- ----------- ------------ Provision for income tax expense (benefit)............................ 498 51 187 (489) 247 (2,143) (1,896) --------- ---------- --------- --------- -------- ------------ OPERATING EARNINGS.................... $ 997 $ 130 $ 400 $(395) 1,132 ========= ========== ========= ========= ======== Adjustments to: Total revenues...................... (6,012) Total expenses...................... 196 Provision for income tax (expense) benefit............................ 2,143 -------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX........ $(2,541) $(2,541) ======== ============
Net investment income is based upon the actual results of each segment's specifically identifiable asset portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company's product pricing. Operating revenues derived from any customer did not exceed 10% of consolidated operating revenues for the years ended December 31, 2011, 2010 and 2009. Substantially all of the Company's revenues originated in the U.S. 18. DISCONTINUED OPERATIONS REAL ESTATE The Company actively manages its real estate portfolio with the objective of maximizing earnings through selective acquisitions and dispositions. Income related to real estate classified as held-for-sale or sold is presented in discontinued operations. These assets are carried at the lower of depreciated cost or estimated fair F-176 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) value less expected disposition costs. Income from discontinued real estate operations, net of income tax, was $65 million, $20 million and $19 million for the years ended December 31, 2011, 2010 and 2009, respectively. The carrying value of real estate related to discontinued operations was $1 million and $180 million at December 31, 2011 and 2010, respectively. 19. RELATED PARTY TRANSACTIONS SERVICE AGREEMENTS The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include personnel, policy administrative functions and distribution services. For certain agreements, charges are based on various performance measures or activity-based costing. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $2.8 billion, $2.7 billion and $3.0 billion for the years ended December 31, 2011, 2010 and 2009, respectively. The Company also entered into agreements with affiliates to provide additional services necessary to conduct the affiliates' activities. Typical services provided under these agreements include management, policy administrative functions, investment advice and distribution services. Expenses incurred by the Company related to these agreements, included in other expenses, were $1.6 billion, $1.2 billion and $1.1 billion for the years ended December 31, 2011, 2010 and 2009, respectively, and were reimbursed to the Company by these affiliates. The aforementioned expenses and fees incurred with affiliates were comprised of the following:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 - ------ ------ ------ (IN MILLIONS) Compensation........................................... $1,823 $1,770 $2,255 Pension, postretirement & postemployment benefit costs. (10) -- -- Commissions............................................ 905 801 638 Volume-related costs................................... (328) (269) (284) Professional services.................................. (122) (18) -- Rent................................................... (36) (28) -- Other.................................................. (993) (745) (718) ------ ------ ------ Total other expenses.................................. $1,239 $1,511 $1,891 ====== ====== ======
Revenues received from affiliates related to these agreements were recorded as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2011 2010 2009 - ---- ---- ---- (IN MILLIONS) Universal life and investment-type product policy fees. $94 $84 $55 Other revenues......................................... $46 $34 $22
The Company had net payables to affiliates of $238 million and $243 million at December 31, 2011 and 2010, respectively, related to the items discussed above. These payables exclude affiliated reinsurance balances discussed in Note 9. See Notes 3, 8 and 11 for additional related party transactions. F-177 Metropolitan Life Separate Account UL PART C: OTHER INFORMATION ITEM 26. EXHIBITS (a) Resolution of the Board of Directors of Metropolitan Life effecting the establishment of Metropolitan Life Separate Account UL 3 (b) None (c) (i) Form of Broker Agreement 2 (ii) Schedule of Sales Commissions 1 (iii) Forms of Selling Agreement 7 (iv) Form of Retail Sales Agreement 9 (v) Principal Underwriting Agreement with MetLife Investors Distribution Company 11 (vi) Enterprise Sales Agreement between MetLife Investors Distribution Company and broker-dealers dated February 2010. 14 (d) (i) Specimen Group Variable Universal Life Insurance Policy (including any alternative pages as required by state law) with form of riders, if any 2 (ii) Specimen of Group Variable Universal Life Insurance Certificate (including any alternative pages required by state law) with forms of riders 2 (e) (i) Application for Policy and Form of Receipt 2 (ii) Enrollment Form for Certificate and Form of Receipt 2 (iii) Request for Systematic Transfer Option Form 2 (iv) Enterprise Application for Policy 7 (f) (i) Restated Charter and By-Laws of Metropolitan Life 4 (ii) Amended and Restated Charter and By-laws of Metropolitan Life 6 (iii) Amended and Restated By-laws of Metropolitan Life 11 (g) Reinsurance Contracts 7 (h) (i) Participation Agreement with Met Investors Series Trust 6 (ii) Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC and Metropolitan Life Insurance Company (8/31/07) 10 (iii) Amended and Restated Participation Agreement and First Amendment to Participation Agreement among Metropolitan Life Insurance Company, Variable Insurance Products Fund, Variable Insurance Products Fund II, Variable Insurance Products Fund III, Variable Insurance Products Fund IV, Variable Insurance Products Fund V and Fidelity Distributors Corp. 12 (iv) First & Second Amendments to the Participation Agreement with Met Investors Series Trust 13 (v) Summary Prospectus Agreement with Variable Insurance Products Fund 15 (vi) Amendments to Participation Agreements with Met Investors Series Trust and Metropolitan Series Fund, Inc. 16 (i) None (j) None (k) Opinion and Consent of Marie C. Swift as to the legality of the securities being registered 8 (l) None (m) None (n) Consent of Independent Registered Public Accounting Firm (Filed herewith) (o) None (p) None (q) (i) Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 2 (ii) Addendum to Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 5 (r) Powers of Attorney (Filed herewith) 1 Incorporated by reference from sections entitled "Distribution of the Group Policies and Certificates" in the Prospectuses included herein and "Distribution of the Policies" in the Statement of Additional Information. 2 Incorporated herein by reference to Pre-Effective Amendment No. 1 of this Registration Statement of Separate Account UL (File No. 033-91226) on September 8, 1995. 3 Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement of Separate Account UL (File No. 033-47927) filed April 30, 1997. 4 Incorporated herein by reference to Post-Effective Amendment No. 11 to the Registration Statement (File No. 033-47927) filed on April 6, 2000. 5 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-47927) filed on April 10, 2001. 6 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-83716) filed on March 5, 2002. 7 Incorporated herein by reference to Post-Effective Amendment No. 18 to the Registration Statement (File No. 033-47927) filed on April 30, 2004. 8 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-91226) filed on April 29, 2005. 9 Incorporated herein by reference to Post-Effective Amendment No. 20 to the Registration Statement on Form N-6 (File No. 033-47927) filed on April 25, 2006. 10 Incorporation herein by reference to Post-Effective Amendment No. 9 to Metropolitan Life Separate Account E's Registration Statement on Form N-4 (File No. 333-83716) filed September 10, 2007. 11 Incorporation herein by reference to Post-Effective Amendment No. 3 to Paragon Separate Account B's Registration Statement on Form N-6 (File No. 333-133675) filed January 16, 2008. 12 Incorporation herein by reference to Post-Effective Amendment No. 15 to Registrant's Registration Statement on Form N-6 (File No. 033-91226) filed April 18, 2008. 13 Incorporation herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement on Form N-6 (File No. 033-57320) filed April 16, 2009. 14 Incorporation herein by reference to Exhibit 3(b)(ii) to Post-Effective Amendment No. 14 to Metropolitan Life Separate Account E's Registration Statement on Form N-4 (File No. 333-83716) filed April 13, 2010. 15 Incorporated herein by reference to Exhibit (h)(xi) to Post-Effective Amendment No. 24 to Registrant's Registration Statement on Form N-6 (File No. 033-57320) filed April 14, 2011. 16 Incorporated herein by reference to Post-Effective Amendment No. 25 to Registrant's Registration Statement on Form N-6 (File No. 033-57320) filed April 12, 2012. ITEM 27. DIRECTORS AND OFFICERS OF DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR -------------------------------------------- ------------------------------------------ Steven A. Kandarian Chairman of the Board, President and Chief MetLife, Inc, and Metropolitan Life Insurance Executive Officer Company 200 Park Avenue New York, NY 10166 Sylvia Mathews Burwell Director President, WalMart Foundation Corporate Affairs 702 Southwest 8th Street Pole D-48 Bentonville, AR 72716-0150 Eduardo Castro-Wright Director Vice Chairman of Wal-Mart Stores, Inc. 702 Southwest 8th Street Bentonville, AK 72716 Cheryl W. Grise Director c/o MetLife, Inc. 200 Park Avenue New York, NY 10166 R. Glenn Hubbard Director Dean of Graduate School of Business and Russell L. Carson Professor of Finance and Economics Columbia University Uris Hall 3022 Broadway New York, NY 10027-6902 John M. Keane Director Senior Partner of SCP Partners and President of GSI, LLC 2020 K St., N.W. Washington, DC 20006 Alfred F. Kelly, Jr. Director President and Chief Executive Officer 2014 NY/NJ Super Bowl Host Company MetLife Stadium One MetLife Stadium Drive East Rutherford, NJ 07073 James M. Kilts Director Partner Centerview Partners Management, LLC 16 School Street Rye, NY 10580 Catherine R. Kinney Director c/o MetLife, Inc. 200 Park Avenue New York, NY 10166 Hugh B. Price Director Senior Fellow Brookings Institution 1775 Massachusetts Avenue, N.W. Washington, DC 20036 David Satcher Director Director of Satcher Health Leadership Institute and Center of Excellence on Health Disparities Morehouse School of Medicine 720 Westview Drive, S.W. Atlanta, GA 30310-1495 Kenton J. Sicchitano Director c/o MetLife, Inc. 200 Park Avenue New York, NY 10166 Lulu C. Wang Director Chief Executive Officer Tupelo Capital Management LLC 12 E. 49th Street, #17 New York, NY 10017
Set forth below is a list of certain principal officers of Metropolitan Life Insurance Company. The principal business address of each principal officer is 1095 Avenue of Americas, New York, NY 10036.
NAME POSITIONS WITH DEPOSITOR -------------------------------------------- ------------------------------------------- Steven A. Kandarian Chairman of the Board, President and Chief Executive Officer Michel Abbas Khalaf President, Europe/Middle East/Africa Division Eric T. Steigerwalt Executive Vice President and Chief Financial Officer William J. Toppeta Vice Chairman, EMEA/Asia William J. Wheeler President, The Americas Peter M. Carlson Executive Vice President and Chief Accounting Officer Richard S. Collins Deputy General Counsel Steven J. Goulart Executive Vice President and Chief Investment Officer Nicholas D. Latrenta Executive Vice President and General Counsel Donnalee A. DeMaio Executive Vice President Michael K. Farrell Executive Vice President Margaret C. Fechtmann Executive Vice President Shailendra Ghorpade Executive Vice President Franciscus Hijkoop Executive Vice President and Chief Human Resources Officer Beth M. Hirschhorn Executive Vice President of Global Brand, Marketing and Communications William R. Hogan Executive Vice President Todd B. Katz Executive Vice President Robin Lenna Executive Vice President Eugene R. Marks, Jr. Executive Vice President William D. Moore Executive Vice President Anthony J. Nugent Executive Vice President Oscar Schmidt Executive Vice President Marc Sevestre Executive Vice President Peter A. Smyth Executive Vice President Stanley J. Talbi Executive Vice President Andreas E. Vassiliou Executive Vice President
ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR THE REGISTRANT The registrant is a separate account of Metropolitan Life Insurance Company under the New York Insurance law. Under said law the assets allocated to the separate account are the property of Metropolitan Life Insurance Company. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. a publicly traded company. The following outline indicates those persons who are controlled by or under common control with Metropolitan Life Insurance Company: ORGANIZATIONAL STRUCTURE OF METLIFE, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2011 The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2011. Those entities which are listed at the left margin (labeled with capital letters) are direct subsidiaries of MetLife, Inc. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of that other entity and, therefore, an indirect subsidiary of MetLife, Inc. Certain inactive subsidiaries have been omitted from the MetLife, Inc. organizational listing. The voting securities (excluding directors' qualifying shares, if any) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. MetLife Group, Inc. (NY) B. MetLife Bank, National Association (USA) 1. Federal Flood Certification Corp. (TX) 2. MetLife Home Loans LLC (DE) C. Exeter Reassurance Company, Ltd. (Cayman Islands) D. Metropolitan Tower Life Insurance Company (DE) 1. EntreCap Real Estate II LLC (DE) a) PREFCO Dix-Huit LLC (CT) b) PREFCO X Holdings LLC (CT) c) PREFCO Ten Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Ten Limited Partnership is held by EntreCap Real Estate II LLC and 0.1% general partnership is held by PREFCO X Holdings LLC. d) PREFCO Vingt LLC (CT) e) PREFCO Twenty Limited Partnership (CT) - a 99% limited partnership interest of PREFCO Twenty Limited Partnership is held by EntreCap Real Estate II LLC and 1% general partnership is held by PREFCO Vingt LLC. 2. Plaza Drive Properties, LLC (DE) 3. MTL Leasing, LLC (DE) a) PREFCO IX Realty LLC (CT) b) PREFCO XIV Holdings LLC (CT) c) PREFCO Fourteen Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Fourteen Limited Partnership is held by MTL Leasing, LLC and 0.1% general partnership is held by PREFCO XIV Holdings LLC. d) 1320 Venture LLC (DE) i) 1320 Owner LP (DE) - a 99.9% limited partnership of 1320 Owner LP is held by 1320 Venture LLC and .01% general partnership is held by 1320 GP LLC e) 1320 GP LLC (DE) E. MetLife Chile Inversiones Limitada (Chile)- 91.15% is owned by MetLife, Inc., 8.84% is owned by Inversiones MetLife Holdco Dos Limitada and 0.01% is owned by Natiloportem Holdings, Inc. 1. MetLife Chile Seguros de Vida S.A. (Chile)- 68.6071% is held by MetLife Chile Inversiones Limitada, 31.3898% is held by Inversiones Interamericana S.A. and .0031% by International Technical & Advisory Services. a) MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile)- 99.99% is owned by MetLife Chile Seguros de Vida S.A. and 0.01% is owned by MetLife Chile Inversiones Limitada. F. Metropolitan Life Seguros de Vida S.A. (Uruguay) - 99.9994% is owned by MetLife, Inc. and 0.0006% is owned by Oscar Schmidt. G. MetLife Securities, Inc. (DE) H. Enterprise General Insurance Agency, Inc. (DE) 1 I. Metropolitan Property and Casualty Insurance Company (RI) 1. Metropolitan General Insurance Company (RI) 2. Metropolitan Casualty Insurance Company (RI) 3. Metropolitan Direct Property and Casualty Insurance Company (RI) 4. Met P&C Managing General Agency, Inc. (TX) 5. MetLife Auto & Home Insurance Agency, Inc. (RI) 6. Metropolitan Group Property and Casualty Insurance Company (RI) a) Metropolitan Reinsurance Company (U.K.) Limited (United Kingdom) 7. Metropolitan Lloyds, Inc. (TX) a) Metropolitan Lloyds Insurance Company of Texas (TX)- Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides automobile, homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company, serves as the attorney-in-fact and manages the association. 8. Economy Fire & Casualty Company (IL) a) Economy Preferred Insurance Company (IL) b) Economy Premier Assurance Company (IL) J. MetLife Investors Insurance Company (MO) K. First MetLife Investors Insurance Company (NY) L. Walnut Street Securities, Inc. (MO) M. Newbury Insurance Company, Limited (Bermuda) N. MetLife Investors Group, Inc. (DE) 1. MetLife Investors Distribution Company (MO) 2. MetLife Advisers, LLC (MA) 2 O. MetLife International Holdings, Inc. (DE) 1. MetLife Mexico Cares, S.A. de C.V. (Mexico) a) Fundacion MetLife Mexico, A.C. (Mexico) 2. Natiloportem Holdings, Inc. (DE) a) Servicios Administrativos Gen, S.A. de C.V. (Mexico) i) MLA Comercial, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. ii) MLA Servicios, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. 3. MetLife India Insurance Company Limited (India)- 26% is owned by MetLife International Holdings, Inc. and 74% is owned by third parties. 4. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99935% is owned by MetLife International Holdings, Inc. and 0.00065% is owned by Natiloporterm Holdings, Inc. 5. MetLife Seguros de Vida S.A. (Argentina)- 96.7372% is owned by MetLife International Holdings, Inc. and 3.2628% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)- 66.6617540% is owned by MetLife International Holdings, Inc., 33.3382457% is owned by MetLife Worldwide Holdings, Inc. and 0.0000003% is owned by Natiloportem Holdings, Inc. 7. MetLife Global, Inc. (DE) 8. MetLife Administradora de Fundos Multipatrocinados Ltda. (Brazil) - 99.999998% of MetLife Administradora de Fundos Multipatrocinados Ltda. is owned by MetLife International Holdings, Inc. and .000002% by Natiloportem Holdings, Inc. 9. MetLife Insurance Limited (United Kingdom) 10. MetLife Limited (United Kingdom) 11. MetLife Insurance S.A./NV (Belgium) - 99.99999% of MetLife Insurance S.A./NV is owned by MetLife International Holdings, Inc. and 0.00001% by Natiloportem Holdings, Inc. 12. MetLife Services Limited (United Kingdom) 13. MetLife Europe R Limited (Ireland) 14. MetLife Seguros de Retiro S.A. (Argentina) - 96.8488% is owned by MetLife International Holdings, Inc. and 3.1512% is owned by Natiloportem Holdings, Inc. 15. Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, Inc. and 95% is owned by MetLife International Holdings Inc. 16. Compania Previsional MetLife S.A. (Brazil) - 95.46% is owned by MetLife International Holdings, Inc. and 4.54% is owned by Natiloportem Holdings, Inc. a) Met AFJP S.A. (Argentina) - 75.41% of the shares of Met AFJP S.A. are held by Compania Previsional MetLife S.A., 19.59% is owned by MetLife Seguros de Vida S.A., 3.97% is held by Natiloportem Holdings, Inc. and 1.03% is held by MetLife Seguros de Retiro S.A. 17. MetLife Worldwide Holdings, Inc. (DE) a) MetLife Direct Co., LTD. (Japan) b) MetLife Limited (Hong Kong) 18. MetLife NC Limited (Ireland) 19. MetLife Europe Services Limited (Ireland) 20. MetLife International Limited, LLC (DE) 21. MetLife Planos Odontologicos Ltda. (Brazil) - 99.999% is owned by MetLife International Holdings, Inc. and .001% is owned by Natiloportem Holdings, Inc. 22. MetLife Ireland Holdings One Limited (Ireland) a) MetLife Global Holdings Corporation S.A. de C.V. (Mexico) - 98.9% is owned by MetLife Ireland Holdings One Limited and 1.1% is owned by MetLife International Limited, LLC. i) MetLife Ireland Treasury Limited (Ireland) a) MetLife General Insurance Limited (Australia) b) MetLife Insurance Limited (Australia) 1) MetLife Services (Singapore) PTE Limited (Singapore) 2) The Direct Call Centre PTY Limited (Australia) 3) MetLife Investments PTY Limited (Australia) aa) MetLife Insurance and Investment Trust (Australia) - MetLife Insurance and Investment Trust is a trust vehicle, the trustee of which is MetLife Investments PTY Limited ("MIPL"). MIPL is a wholly owned subsidiary of MetLife Insurance Limited. ii) Metropolitan Global Management, LLC (DE) - 99.7% is owned by MetLife Global Holdings Corporation, S.A. de C.V. and 0.3% is owned by MetLife International Holdings, Inc. a) MetLife Pensiones Mexico S.A. (Mexico)- 97.4738% is owned by Metropolitan Global Management, LLC and 2.5262% is owned by MetLife International Holdings, Inc. b) MetLife Mexico Servicios, S.A. de C.V. (Mexico) - 98% is owned by Metropolitan Global Management, LLC and 2% is owned by MetLife International Holdings, Inc. c) MetLife Mexico S.A. (Mexico)- 98.70541% is owned by Metropolitan Global Management, LLC and 1.29459% is owned by MetLife International Holdings, Inc. 1) MetLife Afore, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Mexico S.A. and 0.01% is owned by MetLife Pensiones Mexico S.A. aa) Met1 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. bb) Met2 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. cc) MetA SIEFORE Adicional, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. dd) Met3 SIEFORE Basica, S.A. de C.V. (Mexico) - 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. ee) Met4 SIEFORE, S.A. de C.V. (Mexico) - 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. ff) Met5 SIEFORE, S.A. de C.V. (Mexico) - 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. 2) ML Capacitacion Comercial S.A. de C.V. (Mexico) - 99% is owned by MetLife Mexico S.A. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. d) MetLife Saengmyoung Insurance Co. Ltd. (also known as MetLife Insurance Company of Korea Limited (South Korea)- 14.64% is owned by MetLife Mexico, S.A. and 85.36% is owned by Metropolitan Global Management, LLC. 23. Inversiones Metlife Holdco Dos Limitada (Chile)- 99% is owned by Metlife International Holdings, Inc. and 1% is owned by Natiloportem Holdings, Inc. 24. MetLife Asia Pacific Limited (Hong Kong) P. Metropolitan Life Insurance Company (NY) 1. 334 Madison Euro Investments, Inc. (DE) 2. St. James Fleet Investments Two Limited (Cayman Islands) a) Park Twenty Three Investments Company (United Kingdom) i) Convent Station Euro Investments Four Company (United Kingdom) a) One Madison Investments (Cayco) Limited (Cayman Islands)- 99.99999% voting control of One Madison Investments (Cayco) Limited is held by Convent Station Euro Investments Four Company and 0.00001% by St. James Fleet Investments Two Limited. 3. CRB Co., Inc. (MA)- AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares and AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB, Co., Inc. 4. MLIC Asset Holdings II LLC (DE) 3 5. Thorngate, LLC (DE) 6. Alternative Fuel I, LLC (DE) 7. Transmountain Land & Livestock Company (MT) 8. MetPark Funding, Inc. (DE) 9. HPZ Assets LLC (DE) 10. Missouri Reinsurance (Barbados), Inc. (Barbados) 11. Metropolitan Tower Realty Company, Inc. (DE) a) Midtown Heights, LLC (DE) 12. MetLife Real Estate Cayman Company (Cayman Islands) 13. MetCanada Investments Ltd. (Canada) 14. MetLife Private Equity Holdings, LLC (DE) 15. 23rd Street Investments, Inc. (DE) a) MetLife Capital Credit L.P. (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc. and 99% Limited Partnership interest is held by Metropolitan Life Insurance Company. b) MetLife Capital Limited Partnership (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc. and 99% Limited Partnership interest is held by Metropolitan Life Insurance Company. 16. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 17. MetLife Holdings, Inc. (DE) a) MetLife Credit Corp. (DE) b) MetLife Funding, Inc. (DE) 4 18. MetLife Investments Asia Limited (Hong Kong) 19. MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. 20. MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds 0.01% of MetLife Latin America Asesorias e Inversiones Limitada. 21. New England Life Insurance Company (MA) a) New England Securities Corporation (MA) 22. General American Life Insurance Company (MO) a) GALIC Holdings LLC (DE) 5 23. Corporate Real Estate Holdings, LLC (DE) 24. Ten Park SPC (Cayman Islands) - 1% voting control of Ten Park SPC is held by 23rd Street Investments, Inc. 25. MetLife Tower Resources Group, Inc. (DE) 26. Headland - Pacific Palisades, LLC (CA) 27. Headland Properties Associates (CA) - 1% is owned by Headland - Pacific Palisades, LLC and 99% is owned by Metropolitan Life Insurance Company. 28. WFP 1000 Holding Company GP, LLC (DE) 29. White Oak Royalty Company (OK) 30. 500 Grant Street GP LLC (DE) 31. 500 Grant Street Associates Limited Partnership (CT) - 99% of 500 Grant Street Associates Limited Partnership is held by Metropolitan Life Insurance Company and 1% by 500 Grant Street GP LLC. 32. MetLife Canada/MetVie Canada (Canada) 33. MetLife Retirement Services LLC (NJ) a) MetLife Investment Funds Services LLC (NJ) i) MetLife Associates LLC (DE) 34. Euro CL Investments LLC (DE) 35. MEX DF Properties, LLC (DE) 36. MSV Irvine Property, LLC (DE) - 4% of MSV Irvine Property, LLC is owned by Metropolitan Tower Realty Company, Inc. and 96% is owned by Metropolitan Life Insurance Company 37. MetLife Properties Ventures, LLC (DE) a) Citypoint Holdings II Limited (United Kingdom) 38. Housing Fund Manager, LLC (DE) a) MTC Fund I, LLC (DE) 0.01% of MTC Fund I, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. b) MTC Fund II, LLC (DE) - 0.01% of MTC Fund II, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. c) MTC Fund III, LLC (DE) - 0.01% of MTC Fund III, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. 39. MLIC Asset Holdings, LLC (DE) 40. 85 Broad Street Mezzanine LLC (DE) a) 85 Broad Street LLC (DE) 41. The Building at 575 Fifth Avenue Mezzanine LLC (DE) a) The Building at 575 Fifth LLC (DE) 42. CML Columbia Park Fund I, LLC (DE)- 10% of membership interest is held by MetLife Insurance Company of Connecticut and 90% membership interest is held by Metropolitan Life Insurance Company. 43. Para-Met Plaza Associates (FL)- 75% of the General Partnership is held by Metropolitan Life Insurance Company and 25% of the General Partnership is held by Metropolitan Tower Realty Company, Inc. 44. MLIC CB Holdings LLC (DE) 45. Met II Office Mezzanine, LLC (FL) - 10.4167% of the membership interest is owned by Metropolitan Tower Life Insurance Company and 89.5833% is owned by Metropolitan Life Insurance Company. a) Met II Office, LLC Q. MetLife Capital Trust IV (DE) R. MetLife Insurance Company of Connecticut (CT) - 86.72% is owned by MetLife, Inc. and 13.28% by MetLife Investors Group, Inc. 1. MetLife Property Ventures Canada ULC (Canada) 2. Pilgrim Alternative Investments Opportunity Fund I, LLC (DE) - 67% is owned by MetLife Insurance Company of Connecticut and 33% is owned by third party. 3. Pilgrim Alternative Investments Opportunity Fund III Associates, LLC (CT) - 67% is owned by MetLife Insurance Company of Connecticut and 33% is owned by third party. 4. Metropolitan Connecticut Properties Ventures, LLC (DE) a) ML/VCC UT West Jordan, LLC (DE) 5. MetLife Canadian Property Ventures LLC (NY) 6. Euro TI Investments LLC (DE) 7. Greenwich Street Investments, L.L.C. (DE) a) Greenwich Street Capital Offshore Fund, Ltd. (Virgin Islands) b) Greenwich Street Investments, L.P. (DE) 8. One Financial Place Corporation (DE) - 100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 9. Plaza LLC (CT) a) Tower Square Securities, Inc. (CT) 10. TIC European Real Estate LP, LLC (DE) 11. MetLife European Holdings, LLC (DE) a) MetLife Europe Limited (Ireland) i) MetLife Pension Trustees Limited (United Kingdom) b) MetLife Assurance Limited (United Kingdom) 12. Travelers International Investments Ltd. (Cayman Islands) 13. Euro TL Investments LLC (DE) 14. Corrigan TLP LLC (DE) 15. TLA Holdings LLC (DE) a) The Prospect Company (DE) i) Panther Valley, Inc. (NJ) 16. TRAL & Co. (CT) - TRAL & Co. is a general partnership. Its partners are MetLife Insurance Company of Connecticut and Metropolitan Life Insurance Company. 17. MetLife Investors USA Insurance Company (DE) a) MetLife Renewables Holding, LLC (DE) i) Greater Sandhill I, LLC (DE) 18. TLA Holdings II LLC (DE) 19. TLA Holdings III LLC (DE) 20. MetLife Greenstone Southeast Ventures, LLC (DE) - 95% of MetLife Greenstone Southeast Ventures, LLC is owned by MetLife Insurance Company of Connecticut and 5% is owned by Metropolitan Connecticut Properties Ventures, LLC. a) MLGP Lakeside, LLC (DE) S. MetLife Reinsurance Company of South Carolina (SC) T. MetLife Investment Advisors Company, LLC (DE) U. MetLife Standby I, LLC (DE) 1. MetLife Exchange Trust I (DE) V. MetLife Services and Solutions, LLC (DE) 1. MetLife Solutions Pte. Ltd. (Singapore) a) MetLife Services East Private Limited (India) b) MetLife Global Operations Support Center Private Limited (India) - 99.99999% is owned by MetLife Solutions Pte. Ltd. and 0.00001% is owned by Natiloportem Holdings, Inc. W. SafeGuard Health Enterprises, Inc. (DE) 1. MetLife Health Plans, Inc. (DE) 2. SafeGuard Health Plans, Inc. (CA) 3. SafeHealth Life Insurance Company (CA) 4. SafeGuard Health Plans, Inc. (FL) 5. SafeGuard Health Plans, Inc. (NV) 6. SafeGuard Health Plans, Inc. (TX) X. MetLife Capital Trust X (DE) Y. Cova Life Management Company (DE) Z. MetLife Reinsurance Company of Charleston (SC) AA. MetLife Reinsurance Company of Vermont (VT) AB. Delaware American Life Insurance Company (DE) 1. GBN, LLC (DE) AC. American Life Insurance Company (ALICO) (US) 1. ALICO Nagasaki Operation Yugen Kaisha (Japan) 2. Communication One Kabushiki Kaisha (Japan) 3. Financial Learning Kabushiki Kaisha (Japan) 4. Pharaonic American Life Insurance Company (Egypt) - 84.125% of Pharaonic American Life Insurance Company is owned by ALICO and the remaining interests are owned by third parties. 5. A.I.G. Limited (Nigeria) 6. ALICO Limited (Nigeria) 7. American Life Limited (Nigeria) 8. American Life Insurance Company (Pakistan) Ltd. (Pakistan) - 66.47% of American Life Insurance Company (Pakistan) Ltd. is owned by ALICO and the remaining interests are owned by third parties. 9. American Life Hayat Sigorta A.S. (Turkey) a) Deniz Emeklilik ve Hayat A.S. (Turkey) - 99.86% of Deniz Emeklilik ve Hayat A.S. is owned by American Life Hayat Sigorta A.S., .0000000004% by ALICO and the remaining interests are owned by third parties 10. ALICO (Bulgaria) Zhivotozastrahovatelno Druzestvo EAD (Bulgaria) 11. Amcico pojist'ovna a.s. (Czech Republic) 12. MetLife S.A. (France) a) Hestis S.A.S. (France) - 66.06% of Hestis S.A.S. is owned by ALICO and the remaining interests are owned by third parties. b) MetLife Solutions S.A.S. (France) 13. ALICO Mutual Fund Management Company (Greece) - 90% of ALICO Mutual Fund Management Company is owned by ALICO and the remaining interests are owned by third parties. 14. AHICO First American Hungarian Insurance Company (Elso Amerikai-Magyar Biztosito) Zrt (Hungary) a) First Hungarian-American Insurance Agency Limited (Hungary) 15. ALICO Life International Limited (Ireland) 16. ALICO Italia S.p.A. (Italy) a) Agenvita S.r.L. (Italy) - 95% of Agenvita S.r.L. is owned by ALICO Italia S.p.A., the remaining 5% is owned by ALICO. 17. AMPLICO Life-First American Polish Life Insurance & Reinsurance Company, S.A. (Poland) - 95.74% of AMPLICO Life-First American Polish Life Insurance & Reinsurance Company, S.A. is owned by ALICO and 4.26% by MetLife Worldwide Holdings, Inc. a) Amplico Services Sp z.o.o. (Poland) b) AMPLICO Towartzystwo Funduszky Inwestycyjnych, S.A. (Poland) c) AMPLICO Powszechne Towartzystwo Emerytalne S.A. (Poland) - 50% of AMPLICO Powszechne Towarzystwo Emerytalne S.A. is owned by AMPLICO Life-First American Polish Life Insurance & Reinsurance Company, S.A. and the remaining 50% is owned by ALICO. 18. ALICO Asigurari Romania S.A. (Romania) - 99.99999726375% of ALICO Asigurari Romania S.A. is owned by American Life Insurance Company and the remaining .000001273625% is owned by International Technical and Advisory Services Limited. a) ALICO Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. (Romania) - 99.9748% of ALICO Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. is owned by ALICO Asigurari Romania S.A. and .0252% is owned by AMPLICO Services Sp z.o.o. b) ALICO Training and Consulting S.R.L. (Romania) 19. International Investment Holding Company Limited (Russia) 20. ALICO European Holdings Limited (Ireland) a) ZAO Master D (Russia) i) ZAO ALICO Insurance Company (Russia) - 51% of ZAO ALICO Insurance Company is owned by ZAO Master D and 49% is owned by ALICO. 21. MetLife Akcionarska Drustvoza za Zivotno Osiguranje (Serbia) - 99.96% of MetLife Akcionarska Drustvoza za Zivotno Osiguranje is owned by American Life Insurance Company and the remaining .04% is owned by International Technical and Advisory Services Limited. 22. AMSLICO poist'ovna ALICO a.s. (Slovakia) a) ALICO Services Central Europe s.r.o. (Slovakia) b) ALICO Funds Central Europe sprav.spol., a.s. (Slovakia) 23. ALICO Gestora de Fondos y Planos de Pensiones S.A. (Spain) 24. ALICO Management Services Limited (United Kingdom) 25. ZEUS Administration Services Limited (United Kingdom) 26. ALICO Trustees (UK) Ltd. (United Kingdom) - 50% of ALICO Trustees (UK) Ltd. is owned by ALICO and the remaining interests are owned by International Technical and Advisory Services Limited. 27. PJSC ALICO Ukraine (Ukraine) - 99.9990% of PJSC ALICO Ukraine is owned by American Life Insurance Company, .0005% is owned by International Technical and Advisory Services Limited and the remaining .0005% is owned by Borderland Investment Limited. 28. Borderland Investments Limited (USA-Delaware) a) ALICO Hellas Single Member Limited Liability Company (Greece) 29. International Technical and Advisory Services Limited (USA-Delaware) 30. International Services Incorporated (USA-Delaware) 31. ALICO Operations Inc. (USA-Delaware) a) ALICO Asset Management Corp. (Japan) 32. ALICO Compania de Seguros de Retiro, S.A. (Argentina) - 90% of ALICO Compania de Seguros de Retiro, S.A. is owned by ALICO and 10% by International Technical & Advisory Services. 33. ALICO Compania de Seguros, S.A. (Argentina) - 90% of ALICO Compania de Seguros, S.A. is owned by ALICO and 10% by International Technical & Advisory Services. 34. MetLife Colombia Seguros de Vida S.A. (Colombia) - 94.989811% of MetLife Colombia Seguros de Vida S.A. is owned by ALICO, 5.0100030% is owned by International Technical and Advisory Services Limited and the remaining interests are owned by third parties. 35. Inversiones Interamericana S.A. (Chile) 99.9850% of Inversiones Interamericana S.A. is owned by ALICO and .0150% by International Technical & Advisory Services. a) ALICO Costa Rica S.A. (Costa Rica) - 99% of ALICO Costa Rica S.A. is owned by Inversiones Interamericana S.A. and 1% by La Interamericana Compania de Seguros de Vida S.A. b) Legal Chile S.A. (Chile) - 51% of Legal Chile S.A. is owned by Inversiones Interamericana S.A. and the remaining interests by a third party. i) Legagroup S.A. (Chile) - 99% is owned by Legal Chile and 1% is owned by a third party. 36. ALICO Mexico Compania de Seguros, S.A. de C.V. (Mexico) - 99.999998% of ALICO Mexico Compania de Seguros de Vida, SA de CV is owned by American Life Insurance Company and .000002% is owned by International Technical and Advisory Services Limited. 37. ALICO Services, Inc. (Panama) 38. American Life and General Insurance Company (Trinidad & Tobago) Ltd. (Trinidad and Tobago) - 80.92373% of American Life and General Insurance Company (Trinidad & Tobago) Ltd. is owned by ALICO and the remaining interests are owned by a third party. a) ALGICO Properties, Ltd. (Trinidad & Tobago) - 99.99994% of ALGICO Properties, Ltd. is owned by American Life and General Insurance Company (Trinidad & Tobago), .00003% is owned by American Life Insurance Company and the remaining .00003% is owned by third parties. b) Eleven Dee, LTD. (Trinidad & Tobago) 39. MetLife Seguros de Vida, S.A. (Uruguay) 40. ALICO Properties, Inc. (USA-Delaware) - 51% of ALICO Properties, Inc. is owned by ALICO and the remaining interests are owned by third parties. 41. Global Properties, Inc. (USA-Delaware) 42. Alpha Properties, Inc. (USA-Delaware) 43. Beta Properties, Inc. (USA-Delaware) 44. Delta Properties Japan, Inc. (USA-Delaware) 45. Epsilon Properties Japan, Inc. (USA) 46. Iris Properties, Inc. (USA-Delaware) 47. Kappa Properties Japan, Inc. (USA-Delaware) 48. MetLife Global Holding Company I GmbH (Swiss I) (Switzerland) a) MetLife Global Holding Company II GmbH (Swiss II) (Switzerland) i) MetLife EU Holding Company Limited (Ireland) 49. MetLife ALICO Preparatory Company KK (Japan) 1) The voting securities (excluding directors' qualifying shares, if any) of each subsidiary shown on the organizational chart are 100% owned by their respective parent corporation, unless otherwise indicated. 2) The Metropolitan Money Market Pool and MetLife Intermediate Income Pool are pass-through investment pools, of which Metropolitan Life Insurance Company and/or its subsidiaries and/or affiliates are general partners. 3) The MetLife, Inc. organizational chart does not include real estate joint ventures and partnerships of which MetLife, Inc. and/or its subsidiaries is an investment partner. In addition, certain inactive subsidiaries have also been omitted. 4) MetLife Services EEIG is a cost-sharing mechanism used in the EU for EU affiliated members. 6 ITEM 29. INDEMNIFICATION MetLife, Inc. has secured a Financial Institutions Bond in the amount of $50,000,000 subject to a $5,000,000 deductible. MetLife also maintains Directors' and Officers' Liability insurance coverage with limits of $400 million. The Directors and Officers of Metropolitan Life Insurance Company ("Metropolitan"), as well as certain other subsidiaries of MetLife, Inc., are covered under the Financial Institutions Bond as well as under the Directors' and Officers' Liability Policy. A provision in Metropolitan's by-laws provides for the indemnification (under certain circumstances) of individuals serving as directors or officers of Metropolitan. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Metropolitan pursuant to the foregoing provisions, or otherwise, Metropolitan Life Insurance Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Metropolitan of expenses incurred or paid by a director, officer or controlling person or Metropolitan Life Insurance Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Metropolitan will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 30. PRINCIPAL UNDERWRITERS (a) MetLife Investors Distribution Company is the principal underwriter and distributor of the Policies. MetLife Investors Distribution Company is also the principal underwriter for the following investment companies (other than Registrant): Met Investors Series Trust, Metropolitan Series Fund, Metropolitan Life Separate Account E, MetLife Investors USA Separate Account A, MetLife Investors Variable Annuity Account One, MetLife Investors Variable Life Account One, First MetLife Investors Variable Annuity Account One, General American Separate Account Eleven, General American Separate Account Twenty-Eight, General American Separate Account Twenty-Nine, General American Separate Account Two, Security Equity Separate Account 26, Security Equity Separate Account 27, MetLife of CT Separate Account Eleven for Variable Annuities, MetLife of CT Separate Account QPN for Variable Annuities, MetLife of CT Fund UL for Variable Life Insurance, MetLife of CT Fund UL III for Variable Life Insurance, Metropolitan Life Variable Annuity Separate Account II, Paragon Separate Account A, Paragon Separate Account B, Paragon Separate Account C, and Paragon Separate Account D, Metropolitan Tower Separate Accounts One and Two. (b) The following persons are the officers and directors of MetLife Investors Distribution Company. The principal business address for MetLife Investors Distribution Company is 5 Park Plaza, Suite 1900, Irvine, CA 92614.
Name and Principal Business Office Positions and Offices with Underwriter ----------------------------------- -------------------------------------- Marlene B. Debel (2) Treasurer Michael K. Farrell (3) Director Elizabeth M. Forget (2) Executive Vice President Paul A. LaPiana (1) Executive Vice President, National Sales Manager- Life Craig W. Markham (4) Director and Vice President John G. Martinez (5) Vice President, Chief Financial Officer Paul A. Sylvester (3) President, National Sales Manager- Annuities & LTC William J. Toppeta (2) Director
(1) The principal business address is MetLife Investors, 5 Park Plaza, Suite 1900, Irvine, CA 92614. (2) The principal business address is MetLife, 1095 Avenue of the Americas, New York, NY 10036. (3) The principal business address is MetLife, 10 Park Avenue, Morristown, NJ 07962. (4) The principal business address is MetLife, 13045 Tesson Ferry Road, St. Louis, MO 63128. (5) The principal business address is MetLife, 18210 Crane Nest Drive, Tampa, FL 33647 (c) Compensation from the Registrant.
(1) (2) (3) (4) (5) Compensation on Events Net Underwriting Occasioning the Name of Principal Discounts and Deduction of a Deferred Brokerage Other Underwriter Commissions Sales Load Commissions Compensation ----------------- ---------------- ----------------------- ----------- ------------ MetLife Investors Distribution Company $281,435 $0 $0 $0
Commissions are paid by the Company directly to agents who are registered representatives of the Principal Underwriter or to broker-dealers that have entered into a selling agreement with the principal underwriter with respect to sales of the Contracts. ITEM 31. LOCATION OF ACCOUNTS AND RECORDS The following companies will maintain possession of the documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder: (a) Registrant (b) Metropolitan Life Insurance Company 200 Park Avenue New York, NY 10166 (c) MetLife Investors Distribution Company 5 Park Plaza, Suite 1900 Irvine, CA 92614 ITEM 32. MANAGEMENT SERVICES Not applicable ITEM 33. FEE REPRESENTATION Metropolitan Life represents that the fees and charges deducted under the Policies offered and sold pursuant to this amended Registration Statement, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred, and the risks assumed by Metropolitan Life under the Policies. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Metropolitan Life Separate Account UL, certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 12th day of April, 2012. Metropolitan Life Separate Account UL By: Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------ Paul G. Cellupica, Esq. Chief Counsel SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, Metropolitan Life Insurance Company certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 12th day of April, 2012. Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------ Paul G. Cellupica, Esq. Chief Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons, in the capacities indicated, on April 12, 2012. SIGNATURE TITLE --------- ----- * Chairman of the Board, Chief ------------------------------------- Executive Officer and President Steven A. Kandarian * Executive Vice President and ------------------------------------- Chief Accounting Officer Peter M. Carlson * ------------------------------------- Sylvia Mathews Burwell Director * ------------------------------------- Cheryl W. Grise Director * ------------------------------------- R. Glenn Hubbard Director * ------------------------------------- John M. Keane Director * ------------------------------------- Alfred F. Kelly, Jr. Director * ------------------------------------- James M. Kilts Director * ------------------------------------- Catherine R. Kinney Director * ------------------------------------- Hugh B. Price Director ------------------------------------- David Satcher Director * ------------------------------------- Kenton J. Sicchitano Director * ------------------------------------- Lulu C. Wang Director * Executive Vice President and ------------------------------------- Chief Financial Officer Eric T. Steigerwalt By: /s/ Marie C. Swift --------------------------------- Marie C. Swift, Esq. Attorney-in-fact * Executed by Marie C. Swift, Esq. on behalf of those indicated pursuant to Powers of Attorney filed herewith. Exhibit Index (n) Consent of Independent Registered Public Accounting Firm (r) Powers of Attorney EX-99.N 2 d258076dex99n.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Post-Effective Amendment No. 19/Amendment No. 58 to Registration Statement Nos. 033-91226/811-06025 on Form N-6 of our report dated March 29, 2012, relating to the financial statements and financial highlights comprising each of the Investment Divisions of Metropolitan Life Separate Account UL and our report dated March 30, 2012, relating to the consolidated financial statements of Metropolitan Life Insurance Company and subsidiaries (the "Company") (which report expresses an unqualified opinion and includes an explanatory paragraph referring to changes in the Company's method of accounting for the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009), both appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the reference to us under the heading "Independent Registered Public Accounting Firm" also in such Statement of Additional Information. /s/ DELOITTE & TOUCHE LLP Tampa, Florida April 12, 2012 EX-99.R 3 d258076dex99r.txt POWERS OF ATTORNEY Metropolitan Life Insurance Company POWER OF ATTORNEY Steven A. Kandarian Chairman of the Board, President, Chief Executive Officer and Director KNOW ALL MEN BY THESE PRESENTS, that I, Steven A. Kandarian, Chairman of the Board, President, Chief Executive Officer and a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, and MetLife UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, and Preference Premier File No. 333- 176654), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, and Multi Manager III File No. 333-133671), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of March, 2012. /s/ Steven A. Kandarian ------------------------- Steven A. Kandarian Metropolitan Life Insurance Company POWER OF ATTORNEY Sylvia Mathews Burwell Director KNOW ALL MEN BY THESE PRESENTS, that I, Sylvia Mathews Burwell, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333-176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Sylvia Mathews Burwell -------------------------- Sylvia Mathews Burwell Metropolitan Life Insurance Company POWER OF ATTORNEY Eduardo Castro-Wright Director KNOW ALL MEN BY THESE PRESENTS, that I, Eduardo Castro-Wright, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333-176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of September, 2011. /s/ Eduardo Castro-Wright ------------------------- Eduardo Castro-Wright Metropolitan Life Insurance Company POWER OF ATTORNEY Cheryl W. Grise Director KNOW ALL MEN BY THESE PRESENTS, that I, Cheryl W. Grise, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333-176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Cheryl W. Grise ------------------------- Cheryl W. Grise Metropolitan Life Insurance Company POWER OF ATTORNEY R. Glenn Hubbard Director KNOW ALL MEN BY THESE PRESENTS, that I, R. Glenn Hubbard, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333-176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ R. Glenn Hubbard ------------------------- R. Glenn Hubbard Metropolitan Life Insurance Company POWER OF ATTORNEY John M. Keane Director KNOW ALL MEN BY THESE PRESENTS, that I, John M. Keane, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ John M. Keane ----------------------------- John M. Keane Metropolitan Life Insurance Company POWER OF ATTORNEY Alfred F. Kelly, Jr. Director KNOW ALL MEN BY THESE PRESENTS, that I, Alfred F. Kelly, Jr., a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Alfred F. Kelly, Jr. --------------------------- Alfred F. Kelly, Jr. Metropolitan Life Insurance Company POWER OF ATTORNEY James M. Kilts Director KNOW ALL MEN BY THESE PRESENTS, that I, James M. Kilts, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ James M. Kilts ----------------------------- James M. Kilts Metropolitan Life Insurance Company POWER OF ATTORNEY Catherine R. Kinney Director KNOW ALL MEN BY THESE PRESENTS, that I, Catherine R. Kinney, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Catherine R. Kinney ----------------------------- Catherine R. Kinney Metropolitan Life Insurance Company POWER OF ATTORNEY Hugh B. Price Director KNOW ALL MEN BY THESE PRESENTS, that I, Hugh B. Price, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Hugh B. Price ----------------------------- Hugh B. Price Metropolitan Life Insurance Company POWER OF ATTORNEY Kenton J. Sicchitano Director KNOW ALL MEN BY THESE PRESENTS, that I, Kenton J. Sicchitano, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Kenton J. Sicchitano ------------------------- Kenton J. Sicchitano Metropolitan Life Insurance Company POWER OF ATTORNEY Lulu C. Wang Director KNOW ALL MEN BY THESE PRESENTS, that I, Lulu C. Wang, a director of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Lulu C. Wang ------------------------- Lulu C. Wang Metropolitan Life Insurance Company POWER OF ATTORNEY Peter M. Carlson Executive Vice President and Chief Accounting Officer KNOW ALL MEN BY THESE PRESENTS, that I, Peter M. Carlson, Executive Vice President and Chief Accounting Officer of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of September, 2011. /s/ Peter M. Carlson ----------------------------- Peter M. Carlson Metropolitan Life Insurance Company POWER OF ATTORNEY Eric T. Steigerwalt Executive Vice President and Chief Financial Officer KNOW ALL MEN BY THESE PRESENTS, that I, Eric T. Steigerwalt, Executive Vice President and Chief Financial Officer of Metropolitan Life Insurance Company, a New York company, do hereby constitute and appoint Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, as my attorney-in-fact and agent, each of whom may act individually and none of whom is required to act jointly with any of the others, to sign and file on my behalf and to execute and file any instrument or document required to be filed as part of or in connection with or in any way related to, the Registration Statements and any and all amendments thereto filed by Metropolitan Life Insurance Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, pertaining to: . Metropolitan Life Separate Account UL (Equity Advantage VUL and UL II File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, MetLife UL II File No. 033-32813 and Variable Life File No. 333-__________), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586, Preference Premier File No. 333- 176654, and Variable Annuity File No. 333-__________), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671 and Variable Life File No. 333-__________), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Deferred Variable Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. This Power of Attorney does not revoke any prior powers of attorney. IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of November, 2011. /s/ Eric T. Steigerwalt ----------------------------- Eric T. Steigerwalt